SSP 5 Introduction to

Taxation
2nd Semester SY 2021-2022
Mr. Aris D. Principe, CPA, MBA
 Welcome to Taxation!
• Your Instructor’s Profile
• House Rules –on-time log in, phone to silent mode, no PM
• Grading System & Retention Policy
• Uploading of COM and filling out of Google Sheet
 Introduction to Taxation
• Definition of taxation and tax
• Nature and scope of taxation
• Taxation vs Eminent Domain vs Police Power
• Limitations on the power of taxation
• Principles of a sound tax system
• Essential characteristics of a tax
• Tax vs License Fee vs Special Assessment
• Classification of Taxes
• The Philippine Income Tax
 Taxation and Tax
• Taxation is a power inherent in every state to impose a charge or burden
upon persons, properties or rights, to raise revenues for the use of
government to enable it to discharge its function.
• Tax is forced burden assessed in accordance with some reasonable rule by
authority of state upon persons, properties or rights, to raise revenues for
the use of government to enable it to discharge its function.
• By nature, taxation is an inherent power of the state, a legislative power,
as to scope, it is unlimited and comprehensive in the absence of
limitations
Taxation vs Eminent Domain vs Police Power

• Taxation reaches all persons, properties, rights while ED reaches only a

particular owner of a property while PP if for purposes of regulation
 Inherent & Constitutional Limitations
Inherent Limitations:
• Must be levied for public purpose
• Power to tax cannot be delegated
• No to double taxation
• Government exemption from tax
• Territorial Jurisdiction
• Tax laws cannot apply to property of foreign govt (international comity)
 Inherent & Constitutional Limitations
Constitutional Limitations:
• No law impairing the obligations of contracts shall be passed
• No person shall be imprisoned for debt or non-payment of a poll tax
• The rule on taxation shall be uniform and equitable
• Charitable inst., churches & non-profit cemeteries and all kinds of lands,
bldgs. and improvements actually, directly and exclusively used for
religious or charitable purposes, shall be exempt from taxation
 Principles of a Sound Tax System
• Fiscal adequacy – should meet expenses of the govt
• Theoretical Justice – based on taxpayer’s ability to pay
• Administrative Feasibility – tax must be clear to the taxpayer, not unduly
burdensome and discouraging to business, convenient as to time and
manner of payment, capable of enforcement
 Characteristics of Tax
• Forced contribution
• Exacted pursuant to legislative authority
• Proportionate in character
• Payable in money
• For raising of revenue
• For public purpose
 Tax vs License Fee vs Special
Assessment
• License fee is levied under police power, exacted to regulate business or
occupations, must not reasonably exceed expense of issuing the license
• Special Assessment is imposed because of an increase in the value of land
benefited by public improvements, exceptional both as to time and
locality
 Classification of Taxes
• As to subject matter –
1. Personal, capitation or poll tax
2. Property Tax
3. Excise Tax
• As to who bears the burden
1. Direct
2. Indirect
 Classification of Taxes
• As to the determination of the amount – Specific and Ad Valorem
• As to purpose – General and Special
• As to scope – National and local
• As to proportionality – Progressive, regressive, proportional
 The Philippine Income Tax
• Is a tax on income, whether gross or net
• Is is a national tax, an excise tax, a direct tax, cannot be shifted, a general
tax and ad valorem tax
 Income Tax Laws
• NIRC
• Special Laws
• RRs
• RCs
• BIR Rulings
• Opinions of the secretary of Justice
• Decisions of the Supreme Court, Court of Appeals, Court of Tax appeals, lower courts
THANK YOU!