THE DEPARTMENT OF LEGAL MANAGEMENT

College of Arts and Sciences

San Beda College
Mendiola, Manila
2nd Semester A.Y 2016-2017
BUSINESS AND TRANSFER TAXES
Syllabus
By: Prof. Sarah Jeane Cardona
References:
-NIRC Codal
- Taxation Volume III, Transfer Taxes and Value Added Tax by Abelardo
Domondon 2010 edition
-Assigned Cases
PART I: TRANSFER TAXES
A. INTRODUCTION
1. Transfer tax, defined
2. Nature of transfer taxes
3. Kinds of transfer taxes under the National Internal Revenue Code (NIRC)
4. Governing law
5. Situs of transfer taxes
B. ESTATE TAX
(Read: Revenue Regulations 2-20031
and Sections 84-97 NIRC Inclusive)
1. Succession, basic concepts:
Articles 774-782, 796-803, 886-887, 915-923 and 960-969, Civil Code
Order of Intestate Succession
2. Estate tax, definition
3. Nature of estate tax
4. Purposes of imposing estate tax
5. Law that governs the imposition of estate tax
6. When estate tax accrues
7. Rates
8. Situs of estate taxation
9. Gross estate
a. Real property
b. Personal property
i. Tangible personal property
ii. Intangible personal property
10. Kinds of estates of decedents for the purpose of imposing estate tax
a. Estates of decedent resident citizen, non-resident citizens and resident
aliens
b. Estates of decedent non-resident aliens
11. Gross estate of decedent resident citizen, non-resident citizens and resident
aliens (within and without the Philippines) and non-resident aliens (within the
Philippines)
a. Decedents interest
b. Transfer in contemplation of death
c. Revocable transfer
1 Consolidated Revenue Regulations on Estate Tax and Donors Tax
Incorporating the Amendments Introduced by Republic Act No. 8424 dated
December 16, 2002
1

d. Property passing under general power of appointment

e. Proceeds of life insurance
f. Prior interest
g. Transfers for insufficient consideration
h. Capital of the surviving spouse
12. Deductions allowed to the estate of decedents resident citizen, non-resident
citizen and resident alien.
a. Expenses, losses, indebtedness and taxes
b. Property previously taxed (Vanishing Deductions)
c. Transfers for public use
d. Family home
e. Standard deduction
f. Medical expenses
g. Amount received by heirs under RA 4917
h. Surviving spouses net share in the conjugal property
13. Deductions allowed to the estate decedents non-resident aliens
a. Expenses, losses, indebtedness and taxes
b. Property previously taxed (Vanishing Deductions)
c. Transfers for public use
d. Surviving spouses net share in the conjugal property
14. Tax credit for estate taxes paid to a foreign country
15. Exemption of certain acquisitions and transmissions (Sec. 87, NIRC)
a. Merger of usufruct in the owner of the naked title.
b. Transmission or delivery of the inheritance or legacy by the fiduciary
heir or legatee to the fideicommissary
c. Transmission from the first heir, legatee, or done in favor of another
beneficiary, in accordance with the desire of the predecessor
d. All bequests, devises, legacies or transfers to social welfare, cultural and
charitable institutions
e. Exempt acquisitions and transmissions of intangible personal property
under the principle of reciprocity
16. Common valuation rules for all gross estates whether of decedent Filipinos,
resident or non-resident aliens
a. Date of death valuation rule
b. Rationale for date of death valuation rule
17. Administrative requirements
a. Notice of death
i. Instances when required to be filed
ii. Who should file
iii. Period for filing
b. Estate tax returns
i. Instances when required to be filed
ii. Who should file
iii. Period for filing
iv. Extension of time for filing
18. Payment of estate tax
a. When paid
b. Place of payment
c. Effects of payment, deficiency in payment or failure to pay the estate tax

C. DONORS TAX
(Read: Revenue Regulations 2-20032
and Sections 98-104 NIRC Inclusive)
1. Donation basic concepts (Articles 725-773, Civil Code)
2. Donors tax, definition
3. Donors tax vs. Estate tax
4. Purpose of donors tax
5. Law that governs imposition of donors tax
6. Donation inter vivos distinguished from donation mortis causa
7. Simple vs. Remuneratory vs. Onerous donations
8. Progressive schedular rates
9. Gifts of a resident citizen, non-resident citizen and resident alien , subject to
donors tax
10. Gifts of non- resident alien subject to donors tax
11. Tax Payable by Donor if Donee is a Stranger
12. Transfer for Less Than Adequate and full Consideration.
13. Exempt donations
a. Total net gifts made during the calendar year not exceeding
P100,000.00
i. Donation or gift splitting
b. Donation for political campaign purposes
c. Certain gifts made by a resident citizens, non-resident citizens and
resident aliens
i. Dowries
ii. Gifts made to government or any entity created by any of its
agencies which is not conducted for profit, or to any political
subdivision of the said Government
iii. Gifts in favor of an educational and/or charitable, religious,
cultural or social welfare corporation, institution, accredited
nongovernment organization, trust or philanthrophic organization
or research institution or organization
d. Certain gifts made by non-resident aliens
i. Gifts made to government or any entity created by any of its
agencies which is not conducted for profit, or to any political
subdivision of the said Government
iii. Gifts in favor of an educational and/or charitable, religious,
cultural or social welfare corporation, institution, accredited
nongovernment organization, trust or philanthrophic organization
or research institution or organization
e. Donations of intangibles subject to reciprocity
f. Donations for athletes prizes and awards under Republic Act 7549
g. Donations under the adopt-a-school program under Republic Act 8525
14. Tax credits for foreign donors taxes
a. Requirements
b. Limitations
15. Administrative Requirements
a. Donors tax return
i. Requirements
ii. Time and place of filing
iii. Liabilities for non-filing
16. Payment of donors tax
2 Consolidated Revenue Regulations on Estate Tax and Donors Tax
Incorporating the Amendments Introduced by Republic Act No. 8424 dated
December 16, 2002
3

i. Time and place of payment

ii. Liabilities for non-payment

D. VALUE-ADDED TAX

(Read: Revenue Regulations No. 16-20053 Revenue Regulations No. 16-20114and

Sections 105-115, NIRC Inclusive)
1. Value-added tax defined
2. Characteristics
a. Indirect tax
b. Tax on consumption
c. Percentage tax
3. VAT Principles
a. Destination principle
b. VAT zero-rating
c. Effectively zero-rating
4. Liability for VAT
a. Transactions subject to VAT
b. Meaning of in the course of trade or business
5. Kinds of VAT
a. VAT on sale, barter or exchange of goods or properties
b. VAT on importation of goods
c. VAT on sale of services and use or lease of properties
6. VAT on sale, barter or exchange of goods or properties
a. Rate and tax base
b. Meaning of goods or properties
c. Transactions subject to VAT zero-rating
i. Export sales
ii. Foreign currency denominated sale
iii. Transaction covered by reciprocity rule
d. Transactions deemed sale
7. VAT on importation of goods
a. Rate and tax base
b. Importation, defined
c. Transfer of goods by tax-exempt persons
8. VAT on sale of services and use or lease of properties
a. Rate and base
b. Sale or exchange defined
c. In the ordinary course of business defined
d. Transactions subject to VAT zero-rating
9. Exempt transactions
Take note: Revenue Regulations No. 16-2011 increasing the amount of
threshold on certain exempt transactions
10. Refund or credit of excess input VAT
i. Output tax
ii. Input tax
iii. Transitional input tax credits
iv. Presumptive input tax credits
11. Whom may apply for tax refund or credit
3 Consolidated Value-Added Tax Regulations of 2005 dated September 1, 2005
4 Increasing the Amount of Threshold Amounts for Sale of Residential Lot, Sale
of House and Lot, Lease of Residential Unit and Sale or Lease of Goods or
Properties or Performance of Services covered by Section 109 (P), (Q) and (V) of
NIRC dated October 27, 2011
4

i. Any VAT-registered person, whose sales are zero rated or effectively

zero-rated
ii. A person whose VAT registration has been cancelled
12. Period within which Refund or Tax Credit of Input Taxes shall be Made
13. Compliance Requirements
14. Invoicing and Accounting Requirements for VAT-Registered Persons.
a. Invoicing Requirements
b. Accounting Requirements
15. Return and Payment of Value-Added Tax
a. Time and place of filing the returns
b. Time and place of payment
c. Withholding of Creditable Value-added Tax
16. Power of the Commissioner to Suspend the Business Operations of a Taxpayer
a. Failure to issue receipts or invoices
b. Failure to file a value-added tax return as required under Section 114
c. Understatement of taxable sales or receipts by thirty percent (30%) or
more of his correct taxable sales or receipts for the taxable quarter.
d. Failure of any Person to Register as Required under Section 236