Documente Academic
Documente Profesional
Documente Cultură
7.
Essential Characteristics of Taxation
8. Commonly required to be paid at regular intervals. The
dates for paying of taxes are fixed by the law to comply
with the principle of administrative feasibility; and
9. Imposed by the sovereign state within its jurisdiction.
The enforcement of tax is subject to territorial
jurisdiction and international comity.
Classifications of Taxes
Taxes are grouped according to the following classifications:
1. As to Purpose:
a. Revenue or Fiscal. These taxes are imposed solely for
the purpose of raising revenue for the government (e.g.
Income tax, value added tax, and transfer taxes).
b. Regulatory, Special or Sumptuary. These taxes are
imposed for the purpose of achieving some social or
economic goals having no relation to the raising of
revenue (e.g. Customs duties, Protective tariff on
imports to control foreign trade and excise tax).
b.
Classifications of Taxes
Taxes are grouped according to the following classifications:
2. As to Object or Subject Matter:
a. Personal, Poll, or Capitation. These taxes are fixed in
amount and imposed on persons residing within a
specified territory regardless of the amount of their
property or their occupation or business (e. g.
Community Tax);
b. Property. These taxes are imposed on personal or real
property based on its proportionate value or in
accordance with some other reasonable method of
apportionment, (e.g. Real Estate Tax); and
Classifications of Taxes
c. Excise. These taxes are imposed upon the performance
of a right or act, the enjoyment of a privilege or the
engagement in an occupation (e.g. Professional tax,
Income Tax, Estate Tax, Donor’s Tax and Value-Added
Tax).
3. As to Determination of Amount:
a. Ad Valorem. These taxes are fixed amounts in
proportion to the value of the property with respect to
which the tax is assessed. It requires the intervention of
Assessors to estimate the value of such property before
the amount due from each taxpayer can be determined
Classifications of Taxes
(e.g. Real Estate Tax, Custom Duties and Excise Tax on
fermented liquors, cigars, cigarette, gasoline and
automobiles)
b. Specific. These taxes are fixed amounts imposed and
based on some standard of weight or measurement,
head or number, length or volume. It requires
independent assessment other than a listing or
classification of the subject to be taxed like excise taxes
on distilled spirits, wines, fireworks and
cinematographic films.
Classifications of Taxes
4. As to Who bears the Burden:
a. Direct. These taxes are non-transferable. They are
demanded from persons who are bound by law to pay
the tax. The liability for the payment of tax as well ad
the burden of the tax falls on the same person (e.g.
Community Tax, Income Tax, Transfer Tax, Corporate
Income Tax).
b. Indirect. These taxes are transferable. The liability for
the payment of tax falls on one person but the burden
thereof can be shifted or passed to another.
Classifications of Taxes
4. As to Who bears the Burden:
b. Indirect taxes are are imposed on commodities. They
form part of the purchase price of the commodity or
service and passed on to the customers (e.g. VAT,
Customs Duties, Amusement tax, Excise tax on specified
goods, and Percentage taxes).
5. As to Scope or Authority Collecting the Tax:
a. National. Those taxes collected by the National
Government. Examples of national taxes are:
Classifications of Taxes
1) Estate and Donor’s Taxes;
2) Income Tax;
3) Value - Added Tax;
4) Excise Tax;
5) Customs Duties; and
6) Documentary Stamp Taxes
b. Local or Municipal. Those taxes collected by the
Municipal Governments. Examples of local or municipal
taxes:
Classifications of Taxes
1) Community tax;
2) Municipal licenses taxes;
3) Professional tax; and
4) Real estate tax.
6. As to Rate or Graduation:
a. Proportional or Flat Rate
The rate of the tax is based on a fixed percentage of the
amount of the property, receipt or other basis to be taxed
(e.g. Real estate tax and VAT).
Classifications of Taxes
b. Progressive or Graduated Rate
The rate of the tax increases as the tax base or bracket
increases (e.g. Income Taxes, Estate Taxes and Donor’s
Taxes).
Other Charges/Fees
1. Penalty is any sanction imposed, as a punishment for .
violations of law or acts deemed injurious. It arises from
law and/or contracts. It is imposed to regulate conduct
through punishment and suppression of injurious acts
or unlawful behaviors. The government or a private
person may impose it.
2. Revenue refers to all funds or income derived by the
government whether from tax or from other sources.
For example, all national internal revenue taxes,
financial assistance from another government,
donations from private individuals.
Other Charges/Fees
3. Debt is an obligation to pay or render service for a
definite fuure period of time based on contract. It is
payable in money or in kind, subject to legal
compensation, and may be assigned.
Imprisonment is not covered by non-payment of debt.
Debt draws interest when there is an agreement
between the contracting parties.
4. Toll is a compensation for the use of somebody else’s
property determined by the cost of the improvement. It
is a demand of proprietorship as compensation for the
use of property, which may be imposed by a private
Other Charges/Fees
Individual or entity or the government.
5. License fee is a contribution enforced by the
government primarily to restrain and regulate business
or occupation.
It is required for the commencement of a business or
profession rendering the business illegal in case of non-
payment. However, it is always subject to revocation.
The power to collect license fee does not include the
power to tax.
Nonpayment of tax does not make the business illegal
although it might be a ground for criminal prosecution
against the person(s) violating the law.
Other Charges/Fees
6. Customs duties are imposition on imported goods
brought into the country to protect local industry.
Taxes are broader than customs duties because all
customs duties are taxes but not all taxes are customs
duties.
7. Subsidy is a monetary aid directly granted or given by
the government to an individual or private commercial
enterprises deemed beneficial to the public. A subsidy is
not a tax although a tax may have to be imposed to pay
it.
Other Charges/Fees
8. Tariff is a schedule or list of rates, duties or taxes
imposed on imported goods.
9. Margin fee is a tax on foreign exchange designed to
curb the excessive demands upon our international
reserves.
10. Special Assessment is an amount collected by the
government for the purpose of reimbursing itself for
certain extended benefits regarding construction of
public works. It is levied only on land and not a personal
liability of the person assessed.
Tax Law Defined
Tax Law is that body of laws which codifies all national tax
laws including income, estate, gift, excise, stamp and other
taxes. Such law comprises of the Republic Act 8424 entitled
“The Comprehensive Tax Reform of the Philippines,”
otherwise known as the “National Internal Revenue Code of
1997” or the “Tax Code.” It also includes Republic Act. 9337
- The VAT Reform Law, and local tax ordinances issued by
the local government.
The Tax Code is an example of a special law which prevails
over a general law such as the Civil Code or the Rules of
Court.
Tax Law Defined
Internal Revenue Taxes - taxes imposed by the legislative
body other than custom duties on imports. The following
national taxes are classified as Internal Revenue Taxes under
the administration of the BIR:
1. Income tax;
2. Transfer Taxes (Estate tax and Donor’s Tax);
3. Business Taxes (VAT, Percentage tax and Excise tax);
4. Documentary Stamps Tax (DST); and
5. Such other taxes as may be imposed and collected by
the BIR.
Sequence of the Interpretation of
Tax Laws
The BIR commissioner issues BIR rulings on particular tax
case which could be overruled by BIR rulings of succeeding
BIR Commissioner.
The Revenue Regulations are issued by the Department of
Finance to cover the implementing guidelines pertaining to
a particular Section of the Tax Code.
The Revenue Regulations are overruled by Court decisions
upon issuance of such resolution.
Sources of Philippine Tax Laws
In its endeavor to effectively exercise tax power, the
Philippine Republic makes laws which may be comprised of
the following:
1. Constitution of the Philippines;
2. Statutes;
3. Executive Orders;
4. Tax Treaties and Conventions with foreign countries;
5. Revenue Regulations promulgated by the Department
of Finance;
6. BIR Revenue Memorandum Circulars and Bureau of
Customs
Sources of Philippine Tax Laws
7. BIR Rulings;
8. Judicial Decisions; and
9. Local Tax Ordinances.