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Sources of Tax Law

After the constitution, the primary source of specific tax law in the Philippines is the National
Internal Revenue Code (NIRC), the most recent version of which was enacted via the The Tax
Reform Act of 1997. The NIRC establishes basic taxes the government may levy such as
personal income taxes, corporate taxes, sales taxes, excise taxes and estate taxes. It also
codifies the tax collection process and procedures for appeals. Additionally, Philippine tax law
empowers local governments to establish and assess some types of taxes, but which may not
include taxes specifically limited to the national government such as personal income taxes,
estate taxes, and some sales taxes.
Implementation
The Commissioner of Internal Revenue, has the authority to interpret the provisions of the Tax
Code subject to review by the Secretary of Finance. Both the Secretary of Finance and the
Commissioner may issue administrative orders based on these interpretations. The Bureau of
Internal Revenue is responsible for collecting these taxes.
Limitations on The Power of Taxation
The power of taxation, is however, subject to constitutional and inherent
limitations.
Constitutional limitations are those provided for in the constitution or implied from
its provisions, while inherent limitations are restrictions to the power to tax
attached to its nature.
The following are the inherent limitations.
Purpose. Taxes may be levied only for public purpose;
Territoriality. The State may tax persons and properties under its jurisdiction;
International Comity. the property of a foreign State may not be taxed by another.
Exemption. Government agencies performing governmental functions are exempt
from taxation
Non-delegation. The power to tax being legislative in nature may not be
delegated. (subject to exceptions)
Constitutional limitations.
Observance of due process of law and equal protection of the laws. (sec, 1, Art. 3)
Any deprivation of life , liberty or property is with due process if it is done under
the authority of a valid law and after compliance with fair and reasonable
methods or procedure prescribed. The power to tax, can be exercised only for a
constitutionally valid public purpose and the subject of taxation must be within

the taxing jurisdiction of the state. The government may not utilize any form of
assessment or review which is arbitrary, unjust and which denies the taxpayer a
fair opportunity to assert his rights before a competent tribunal. All persons
subject to legislation shall be treated alike under like circumstances and
conditions, both in the privileges conferred in liabilities imposed. Persons and
properties to be taxed shall be group, and all the same class shall be subject to
the same rate and the tax shall be administered impartially upon them.
Rule of uniformity and equity in taxation (sec 28(1)Art VI) All taxable articles or
properties of the same class shall be taxed at the same rate. Uniformity implies
equality in burden not in amount. Equity requires that the apportionment of the
tax burden be more or less just in the light of the taxpayers ability to bear the tax
burden.
No imprisonment for non-payment of poll tax (sec. 20, Art III) A person cannot be
imprisoned for non-payment of community tax, but may be imprisoned for other
violations of the community tax law, such as falsification of the community tax
certificate, or for failure to pay other taxes.
Non-impairment of obligations and contracts, sec 10, Art III . the obligation of a
contract is impaired when its terms and conditions are changed by law or by a
party without the consent of the other, thereby weakening the position or the
rights of the latter. IF a tax exemption granted by law and of the nature of a
contract between the taxpayer and the government is revoked by a later taxing
law, the said law shall not be valid, because it will impair the obligation of
contract.
Prohibition against infringement of religious freedom Sec 5, Art III, it has been said
that the constitutional guarantee of the free exercise and enjoyment of religious
profession and worship, which carries the right to disseminate religious belief and
information, is violated by the imposition of a license fee on the distribution and
sale of bibles and other religious literatures not for profit by a non-stock, nonprofit religious corporation.
Prohibition against appropriations for religious purposes, sec 29, (2) Art. VI,
Congress cannot appropriate funds for a private purpose, or for the benefit of any
priest, preacher or minister or for the support of any sect, church except when
such priest, preacher, is assigned to the armed forces or to any penal institutions,
orphanage or leprosarium.
exemption of all revenues and assets of non-stock, non-profit educational
institutions used actually, directly, and exclusively for educational purposes from
income, property and donors taxes and custom duties (sec. 4 (3 and 4) art. XIV.

Concurrence by a majority of all members of Congress in the passage of a law


granting tax exemptions. Sec. 28 (4) Art. VI.
Congress may not deprive the Supreme Court of its jurisdiction to review, revise,
reverse, modify or affirm on appeal or certiorari, final judgments and orders of
lower courts in all cases involving the legality of any tax, impost, assessment or
any penalty imposed in the relation thereto.

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