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POLICE POWER EMINENT DOMAIN POWER OF - taxation is predicated upon necessity to preserve the State’s sovereignty and a
TAXATION means to give the citizenry facilities and protection which a government is supposed
Purpose The use of the The property is The property is to provide.
property is taken for public use taken for the Benefits Protection Theory
regulated for and must be support of the
promoting the compensated government - bases the power of the Stet to demand and receive taxes on the reciprocal
general welfare duties of support and protection.
and is not
-the citizen supports the State by paying the portion from his property that is
compensable
demanded in order that he may, by means thereof, be secured in the enjoyment of
Amount Amount No amount Generally, there
the benefits of an organized society.
of imposed should imposed but rather is no limit on the
impositi not be more the owner is paid by amount of tax Inherent Limitations to the Power of Taxation
on than sufficient just compensation that may be
a. For Public Purpose
to cover license imposed
b. international comity based on Article II Section 2 of !987 Constitution
and necessary
c. Territoriality which provides that the taxing power of a country is limited to persons
expenses or property within and subject to its jurisdiction.
Relations Relatively free Inferior to the Subject to certain d. Non-delegation of the Power to Tax except which is provided under Article VI
hip to from impairment of constitutional Section 28 (2) where the President can impose tariff rates and export quotas.
Constitut constitutional obligations of limitations; e. Exemption from Taxation of Government Agencies/Instrumentalities such as GSIS,
ion limitations; it is contracts including the SSS, PHIC, and PCSO.
superior to the prohibition; impairment of
impairment of government cannot obligation of
Constitutional Limitations to the Power of Taxation
contract expropriate contracts
provision property which a. due process of law
under a contract it b. equal protection of laws
had previously c. uniformity
bound itself to d. progressive system of taxation
purchase e. non-impairment of contracts
f. non-imprisonment for non-payment of a poll tax
g. appropriation, revenue and tariff bills must originate exclusively in the House of
Lifeblood Theory Representatives
h. presidential veto
- Taxes are the lifeblood of the government, for without taxes, the government i. presidential power to fix tariff rates
can neither exist nor endure. j. freedom of the press
k. freedom of religion
l. exemption from property tax of properties of religious, educational, charitable
institutions
Tax Amnesty Compromise - when there is a presence of a clear case of disregard of a constitutional or
statutory prohibition by the public respondent agency or instrumentality of the
- An immunity from all -allows taxpayers to settle government and the lack of any other party with a more direct and specific interest
criminal and civil obligations their internal revenue tax in questions being raised.
arising from non-payment of liabilities for less than the basic
taxes. assessed tax. Doctrine of Ripeness for Judicial Determination
- It partakes of an absolute - an agreement between two
- an issue is riped for judicial determination when litigation is inevitable and
waiver by the government of or more persons who, to avoid
when administrative remedies have been exhausted.
its right to collect what is due a lawsuit, amicably settle their
and give tax evaders who differences on such terms as Authority of Secretary of Finance
which to relent a chance to they can agree on.
start a clean slate. -The Secretary of Finance, upon recommendation of the Commissioner, shall
promulgate all needful rules and regulations for the effective enforcement of the
provisions of the Tax Code.
Citizen’s suit Taxpayer’s suit - Power of Commissioner of Internal Revenue to interpret tax laws is exclusive
and original but subject to review by the Secretary of Finance. Interpretations are not
the person complaining must A remedy available to a judicially binding; interpretation of laws.
allege that he has been or is taxpayer when taxes are used
about to be denied some for illegal activities or when *Doctrine of First Impression
right or privilege to which he public funds are used by the
is lawfully entitled or that he government for projects which
All Events *Control *Doctrine of *Severance - any good, service. Or -these refer to facilities or
Test Test Proprietary Test other benefits furnished privileges furnished or offered
Interest or granted to an by an employer to his
employer, in cash or in employees that are of
- it requires a) - power to - threats - separation kind, in addition to basic relatively small value and are
the fixing of a procure stock from capital salaries of an individual offered or furnished by the
right to the options, od something employee. employer merely as a means of
income or payment shares of which is of - applies to managerial promoting health, goodwill,
liability to pay, of income stock or exchangeable and supervisory contentment or efficiency of
and b) the and enjoy other assets value. employees ONLY. his employees.
availability of the benefit transferred - privileges of relatively small
the thereof. by an value as given by the employer
reasonable employer to to his employees.
accurate an employee
determination to secure
of such better
income or services are
liability. taxable.
-The Most Favored Nation clause allows the taxpayer in one state to avail of more - The sale or other disposition of stock or securities where substantially identical
liberal provisions granted in another tax treaty to which the country of residence of securities are acquired or purchased within 61 day period, beginning 30 days before
such taxpayer is also a party; provided that the subject matter of taxation is the same. the sales and ending 30 days after the sale.
- provides that the citizens or subjects of the contracting nations may enjoy the Net Operating Loss Carry Over
privileges accorded by either party to those of the most favored nation. - The Net Operating Loss of the business which had not been previously offset as
Cohan Principle deduction from gross income shall be carried over as a deduction from gross income
for the next three (3) consecutive taxable years
- if there is a showing that expenses have been incurred but the exact amount cannot
be ascertained due to absence of receipts and vouchers, the BIR has the option to Optional Standard Deduction
make an estimate of the deduction that may be allowed in computing the taxpayer’s - Optional Standard Deduction means an allowable deduction from
taxable income. professional/business income of the persons who are entitled and who may elect to
Itemized Deduction use this kind of deduction in lieu of the itemized deduction.
a. business expenses
b. interest
TAX 1 l EJC l ATTY. VICKY FERNANDEZ 7
Realization of income v. Recognition of income
to constitute receipt, the Income is generally - refers to any investment which generates a profit because one part of the
income must be credited to recognized when the transaction is taxed differently from the other part.
the tax payer without any earning process is complete
substantial limitation or or virtually complete and an NOTES:
restriction as to the time or exchange has taken place.
manner of payment or
condition upon which
payment is to be made.