TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book Chapter 1 GENERAL PRINCIPLES Taxaton Taxaton – po!er b" !h#h the $o%ere&n' thro(&h t$ )a! *ak *akn& n& bo+" bo+"'' ra$ ra$e$ e$ re%en e%en(e (e to +e,r +e,ra" a" the the ne#e ne#e$$ $$ar ar" " expen$e$ o, &o%ern*ent' -
t $ *ere)" a !a" o, apportonn& the #o$t$ o, &o%ern*en &o%ern*entt a*on& a*on& tho$e tho$e !ho n $o*e *ea$(re *ea$(re ar pr%) pr%)e&e e&e+ + to en.o" en.o" t$ bene/t bene/t$ $ an+ *($t *($t bear bear t$ t$ b(r+en$
Co**$$oner o, Interna) Re%en(e %$ A)&(e 0 - S"*b S"*bo ot t# # re)a re)at ton on$h $hp p - her hereb eb" " n ex#ha ex#han& n&e e ,or ,or the the prot prote# e#t ton on that that the #t2en$ &et ,ro* the Go%ern*ent' taxe$ are pa+ Ratona)e o, Taxaton - taxe$ taxe$ are are !hat !hat !e pa" pa" ,or #% #%)2 )2e+ e+ $o#e $o#et" t" - !tho( !tho(tt tax$' tax$' the &o%er &o%ern* n*ent ent !o()+ !o()+ be be para)"2 para)"2e+ e+ ,or )a#k o, *ot%e po!er to a#t%ate an+ operate t - +e$p +e$pt te e the the nat( nat(ra ra)) re)( re)(#t #tan an#e #e to $(rr $(rren en+e +err part part o, one3$ one3$ har+ earne+ n#o*e to the taxn& a(thort a(thorte$' e$' e%er" per$on !ho $ ab)e *($t #ontrb(te h$ $hare n the r(nnn& o, &o%ern*ent - the the &o%ern &o%ern*e *ent nt ,or t $ expe expe#t #te+ e+ to re$p re$pon on+ + n the the ,or* o, tan&b)e an+ ntan&b)e bene/t$ nten+e+ to *pro%e the )%e$ o, the peop)e an+ en#han#e ther *ora) an+ *atera) %a)(e$ - T4E T4E S56B S56BIO IOTI TIC C RELA RELATI TION ONS4 S4IP IP IS T4E RATION TIONAL ALE E o, Taxaton Taxaton an+ S4OUL7 7ISPEL T4E ERRONEOUS NOTI NOTION ON T4A T4AT IT IS AN ARBI ARBITR TRAR AR5 5 6ET4 6ET4O7 O7 O8 EXACTION B5 T4OSE IN T4E SEAT O8 POER Co**$$oner o, Interna) Re%en(e %$ Tok"o Shppn& Co - tax pa"er$ o!e hone$t" to &o%ern*ent .($t a$ &o%ern*ent o!e$ ,arne$$ to taxpa"er$ BPI 8a*)" Sa%n&$ Bank %$ CA
$a*e $tan+ar+$ a&an$t t$e), xxxx9 No one' not e%en the State' $ho()+ enr#h t$e), at expen$e o, another TAXES TAXES - en,or en,or#e #e+ + propo proport rtona ona)) #ontr #ontrb( b(to ton$ n$ ,ro* per$on per$on$ $ an+ propert" )e%e+ b" the )a! *akn& bo+" o, the State b" %rt(e o, t$ $o%ere&nt" ,or the $(pport o, &o%ern*ent an+ ,or p(b)# nee+$ Chara#ter$t#$ o, taxe$ 0 19 A tax $ a ,or#e+ ,or#e+ #har&e' #har&e' *po$t *po$ton on or #ontrb(t #ontrb(ton on an+ a$ $(#h $(#h t opera operate te$ $ n n% n%t( t(* * – t $ n no !a" +epen+ent on the !)) or #ontra#t(a) a$$ent' expre$$ or *p)e+' o, the per$on taxe+ a9 Not #ontra# #ontra#t$' t$' ether ether expr expre$$ e$$e+ e+ or *p)e+ *p)e+ b(t po$t%e a#t$ o, &o%ern*ent :9 Pe#(na Pe#(nar" r" b(r+en b(r+en pa"ab) pa"ab)e e n *one" *one" a9 Not Not ne#e ne#e$$ $$ar ar) )" " #on/ #on/ne ne+ + to tho$ tho$e e pa"a pa"ab) b)e e n *one"' a$ n the #a$e' ,or n$tan#e' o, ba#kpa" #ert/#ate$ !h#h (n+er RA ;<= #o()+ be ($+ a$ pa"*ent o, taxe$ b9 SC 0 Ba#kpa Ba#kpa" " #ert/#a #ert/#ate$ te$ *a" *a" be ($e+ ($e+ to pa" rea) e$tate taxe$ ;9 It $ )e%e+ )e%e+ b" the )e&$)a )e&$)at%e t%e bo+" bo+" o, the State State be#a($e be#a($e the the taxn taxn& & po!e po!err $ pe#( pe#() )ar ar)" )" an+ an+ ex#) ex#)($ ($% %e) e)" " )e&$)at%e n #hara#ter a9 Taxe$ are ob)&aton$ ob)&aton$ #reate+ b" )a! =9 It $ a$$e$$e+ a$$e$$e+ n a##or+an a##or+an#e #e !th $o*e $o*e rea$onab)e rea$onab)e r()e r()e o, apporton*ent' !h#h *ean$ that #on,or*ab)" !th th #on$tt(tona) *an+ate on pro&re$$%t" o, a taxn& $"$te* a9 Taxe$ axe$ *($t be ba$e+ ba$e+ on ab)t" ab)t" to pa" 7o re&re$$%e taxe$ &o a&an$t the #on$tt(tona) *an+ate n Se#ton :> ?1@ Art#)e VI o, Con$tt(ton Con$tt(ton PAL %$ Se# o, 8nan#e
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Con&re$$ Con&re$$ $ha)) $ha)) e%o)%e e%o)%e a pro&re pro&re$$%e $$%e $"$te* $"$te* o, taxaton taxaton Re$ort e$ort to n+r n+re#t e#t taxe taxe$ $ $ho()+ $ho()+ be *n* *n*2e+ 2e+ b(t b(t not a%o a%o+e +e+ + ent entrre)" e)" be#a be#a($ ($e e t $ +# +#() ()t' t' , not not *po$$b)e' to a%o+ the* b" $(#h taxe$ a##or+n& to the taxpa"er$ ab)t" to pa"
9 It $ *po$ *po$e+ e+ b" the State State on per$on$' per$on$' proper propert"' t"' or $er%#e$ D9 A Tax Tax $ )e%e+ ,or p(b)# p(b)# p(rpo$e p(rpo$e a$ taxaton taxaton n t$e), t$e), n%o n%o)% )%e$ e$ a b(r+ b(r+en en to pro% pro%+ +e e re%e re%en( n(e e ,or ,or p(b) p(b)# # p(rpo$e$ o, a &enera) nat(re
TAXES, PERSONAL TO TAXPAYER TAXPAYER
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A tax #re #reate$ ate$ a #% %) )ab) b)tt" on the the par part o, the the +e)n(ent taxpa"er' a)tho(&h NON PA56ENT T4EREO8 ?hether t be on a##o(nt o, the taxpa"er3$ ,a)(re or re,($a) to pa" t@ #reate$ #r*na) )ab)t"' !h#h #o()+ be the $(b.e#t o, a #r*na) pro$e#(ton (n+er ex$tn& )a!$ In taxat taxaton on ' t $ one3 one3$ $ #%) #%) )ab )ab) )t" t" to pa" pa" taxe$ taxe$ that that &%e$ r$e to #r*na) )ab)t" NOT T4E T4E other other !a" !a" aro(n aro(n+ + a$ n #r* #r*na na)) #a$e$ #a$e$ !her !here e #r*na) )ab)t" &%e$ r$e to a #%) )ab)t"
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IMPORTANCE IMPORTANCE OF TAXES
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),eb)oo+ o, the Go%ern*ent an+ $o $ho()+ be #a)#()ate+ !tho(t (nne#e$$ar" hn+ran#e PRI6 PRI6AR AR5 5 PURPOS PURPOSE E 0 &ene &enera rate te ,(n+$ ,(n+$ ,or the the State State to /nan#e the nee+$ o, the #t2enr" an+ to a+%an#e the #o**on !ea) 7UE PROC PROCESS ESS o, o, )a! (n+er (n+er the the Con$t Con$tt( t(to ton n +oe$ +oe$ not re(re .(+#a) pro#ee+n&$ n tax #a$e$ o Be#a($e t $ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ (t*o$t *portan#e that the *o+e$ *o+e$ a+opte a+opte+ + to en,or en,or#e #e the #o))e# #o))e#to ton n o, taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+
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A #orpora #orporato ton3$ n3$ tax +e)n +e)n(e (en#" n#" #anno #annot' t' ,or n$tan n$tan#e' #e' be en,or#e+ a&an$t t$ $to#kho)+er$ be#a($e not on)" !o()+ th$ r(n #o(nter to the prn#p)e that taxe$ are per$ona) b(t t t !o()+ !o()+ a)$o a)$o not not be n a##o a##or+ r+ !th !th the the r()e r()e that that a #orporaton $ %e$te+ b" )a! !th !th a per$ per$on ona) a)t t" " that that $ $epa $epara rate te an+ +$t +$tn# n#tt ,ro* ,ro* tho$e o the per$on$ #o*po$n& t' a$ !e)) !e)) a$ ,ro* ,ro* that that o, an" an" other other )e&a) )e&a) entt entt" " to !h#h !h#h t *a" be re)ate+ STOC STOCK4 K4OL OL7E 7ERS RS 6A5 6A5 BE 4EL7 4EL7 LIABL LIABLE E 8OR 8OR UNP UNPAI7 AI7 TAXES TAXES O8 A 7ISSOLVE7 7ISSOLVE7 CORPORAT CORPORATION ION I8 IT APPEARS T4AT T4AT T4E CORPORATE CORPORATE ASSETS 4AVE PASSE7 PASSE7 INTO T4EIR 4AN7S 4AN7S OR 4EN STOCK4OL7ERS 4AVE UNPAI7 SUBSCRIPTIONS TO T4E CAPITAL O8 CORPORATION E$ta E$tatte taxe$ a##r( ##r(n n& & (po (pon tran tran$* $*$ $$ $o on o, the the +e#e+ent3$ e$tate to h$ her$ are not )ab)te$ !h#h #an be en,or#e+ a&an$t h$ her$' ,or e$tate taxe$ are $(ppo$e+ to be ob)&aton$ that *($t be pa+ b" the exe#(to exe#(tora+ ra+*n *n$trat $trator or o(t o, the net e$tate' e$tate' be,ore be,ore +e)%er" to an" bene/#ar" o, h$ +$trb(t%e $hare 4OE 4OEVE VER' R' , pro prorr to the pa"* pa"*en entt o, the e$ta e$tate te tax tax +(e on the tran$,er o, +e#e+ent$ e$tate' the properte$ o, the +e#ea$e+ are +$trb( +$trb(te+ te+ to an" bene/#a bene/#ar"' r"' then $(#h bene/#ar" $ha)) be $(b$+ar)" )ab)e ,or the pa"* pa"*en entt o, $(#h $(#h port porto on n o, the the e$ta e$tate te tax tax a$ h$ h$ +$trb(t%e $hare bear$ to the tota) %a)(e o, the net e$tate
NATURE OF THE TAXING POWER - po!er po!er o, o, tax $ $ an attr attrb( b(te te o, o, $o%er $o%ere& e&nt" nt" - t $ nhe nhere rent nt n the the Sta State te (n)*te (n)*te+ + n t$ ran&e ran&e'' a#kno! a#kno!)e+& )e+&n& n& n t$ t$ %er" %er" nat(re nat(re
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Con&re$$ Con&re$$ $ha)) $ha)) e%o)%e e%o)%e a pro&re pro&re$$%e $$%e $"$te* $"$te* o, taxaton taxaton Re$ort e$ort to n+r n+re#t e#t taxe taxe$ $ $ho()+ $ho()+ be *n* *n*2e+ 2e+ b(t b(t not a%o a%o+e +e+ + ent entrre)" e)" be#a be#a($ ($e e t $ +# +#() ()t' t' , not not *po$$b)e' to a%o+ the* b" $(#h taxe$ a##or+n& to the taxpa"er$ ab)t" to pa"
9 It $ *po$ *po$e+ e+ b" the State State on per$on$' per$on$' proper propert"' t"' or $er%#e$ D9 A Tax Tax $ )e%e+ ,or p(b)# p(b)# p(rpo$e p(rpo$e a$ taxaton taxaton n t$e), t$e), n%o n%o)% )%e$ e$ a b(r+ b(r+en en to pro% pro%+ +e e re%e re%en( n(e e ,or ,or p(b) p(b)# # p(rpo$e$ o, a &enera) nat(re
TAXES, PERSONAL TO TAXPAYER TAXPAYER
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A tax #re #reate$ ate$ a #% %) )ab) b)tt" on the the par part o, the the +e)n(ent taxpa"er' a)tho(&h NON PA56ENT T4EREO8 ?hether t be on a##o(nt o, the taxpa"er3$ ,a)(re or re,($a) to pa" t@ #reate$ #r*na) )ab)t"' !h#h #o()+ be the $(b.e#t o, a #r*na) pro$e#(ton (n+er ex$tn& )a!$ In taxat taxaton on ' t $ one3 one3$ $ #%) #%) )ab )ab) )t" t" to pa" pa" taxe$ taxe$ that that &%e$ r$e to #r*na) )ab)t" NOT T4E T4E other other !a" !a" aro(n aro(n+ + a$ n #r* #r*na na)) #a$e$ #a$e$ !her !here e #r*na) )ab)t" &%e$ r$e to a #%) )ab)t"
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IMPORTANCE IMPORTANCE OF TAXES
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),eb)oo+ o, the Go%ern*ent an+ $o $ho()+ be #a)#()ate+ !tho(t (nne#e$$ar" hn+ran#e PRI6 PRI6AR AR5 5 PURPOS PURPOSE E 0 &ene &enera rate te ,(n+$ ,(n+$ ,or the the State State to /nan#e the nee+$ o, the #t2enr" an+ to a+%an#e the #o**on !ea) 7UE PROC PROCESS ESS o, o, )a! (n+er (n+er the the Con$t Con$tt( t(to ton n +oe$ +oe$ not re(re .(+#a) pro#ee+n&$ n tax #a$e$ o Be#a($e t $ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ (t*o$t *portan#e that the *o+e$ *o+e$ a+opte a+opte+ + to en,or en,or#e #e the #o))e# #o))e#to ton n o, taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+
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A #orpora #orporato ton3$ n3$ tax +e)n +e)n(e (en#" n#" #anno #annot' t' ,or n$tan n$tan#e' #e' be en,or#e+ a&an$t t$ $to#kho)+er$ be#a($e not on)" !o()+ th$ r(n #o(nter to the prn#p)e that taxe$ are per$ona) b(t t t !o()+ !o()+ a)$o a)$o not not be n a##o a##or+ r+ !th !th the the r()e r()e that that a #orporaton $ %e$te+ b" )a! !th !th a per$ per$on ona) a)t t" " that that $ $epa $epara rate te an+ +$t +$tn# n#tt ,ro* ,ro* tho$e o the per$on$ #o*po$n& t' a$ !e)) !e)) a$ ,ro* ,ro* that that o, an" an" other other )e&a) )e&a) entt entt" " to !h#h !h#h t *a" be re)ate+ STOC STOCK4 K4OL OL7E 7ERS RS 6A5 6A5 BE 4EL7 4EL7 LIABL LIABLE E 8OR 8OR UNP UNPAI7 AI7 TAXES TAXES O8 A 7ISSOLVE7 7ISSOLVE7 CORPORAT CORPORATION ION I8 IT APPEARS T4AT T4AT T4E CORPORATE CORPORATE ASSETS 4AVE PASSE7 PASSE7 INTO T4EIR 4AN7S 4AN7S OR 4EN STOCK4OL7ERS 4AVE UNPAI7 SUBSCRIPTIONS TO T4E CAPITAL O8 CORPORATION E$ta E$tatte taxe$ a##r( ##r(n n& & (po (pon tran tran$* $*$ $$ $o on o, the the +e#e+ent3$ e$tate to h$ her$ are not )ab)te$ !h#h #an be en,or#e+ a&an$t h$ her$' ,or e$tate taxe$ are $(ppo$e+ to be ob)&aton$ that *($t be pa+ b" the exe#(to exe#(tora+ ra+*n *n$trat $trator or o(t o, the net e$tate' e$tate' be,ore be,ore +e)%er" to an" bene/#ar" o, h$ +$trb(t%e $hare 4OE 4OEVE VER' R' , pro prorr to the pa"* pa"*en entt o, the e$ta e$tate te tax tax +(e on the tran$,er o, +e#e+ent$ e$tate' the properte$ o, the +e#ea$e+ are +$trb( +$trb(te+ te+ to an" bene/#a bene/#ar"' r"' then $(#h bene/#ar" $ha)) be $(b$+ar)" )ab)e ,or the pa"* pa"*en entt o, $(#h $(#h port porto on n o, the the e$ta e$tate te tax tax a$ h$ h$ +$trb(t%e $hare bear$ to the tota) %a)(e o, the net e$tate
NATURE OF THE TAXING POWER - po!er po!er o, o, tax $ $ an attr attrb( b(te te o, o, $o%er $o%ere& e&nt" nt" - t $ nhe nhere rent nt n the the Sta State te (n)*te (n)*te+ + n t$ ran&e ran&e'' a#kno! a#kno!)e+& )e+&n& n& n t$ t$ %er" %er" nat(re nat(re
TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book -
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,o(n+ on)" n the re$pon$b)t" o, the )e&$)at(re !h#h *po$e$ the tax on #on$tt(en#" !ho are to pa" t A!e$o*e po!er – 4o!e%er' NO 6ATTER 4O AESO ESO6E 6E IT 6A5B 6A5BE' E' IT 6UST 6UST NOT NOT BE EXR EXRCISE CISE7 7 ARBITRARIL5 Taxaton axaton $ $ a po!er po!er e*anatn e*anatn& & ,ro* ,ro* ne#e$$ ne#e$$t" t" A ne#e$$ar" b(r+en to pre$er%e the State3$ $o%ere&nt" 6ean$ 6ean$ to &%e &%e #t2e #t2enr" nr" an ar*" ar*" to re$$ re$$tt an a&&re a&&re$$on $$on A na#" na#" to +e,e +e,en+ n+ t$ t$ $hor $hore$ e$ ,ro* ,ro* n%a n%a$o $on n Corp$ Corp$ o, #%) #%) $er%an $er%ant$ t$ to $er%e $er%e P(b)# b)# *pr *pro o%e* %e*ent ent +e$ +e$&ne &ne+ ,or ,or en.o n.o"*e "*ent o, #t2e #t2enr" nr" an+ tho$e tho$e !h#h !h#h #o*e #o*e !th !thn n the State3 State3$ $ terrtor" an+ ,a#)te$ Prote#t Prote#ton on !h#h !h#h a &o%ern &o%ern*ent *ent $ $(ppo $(ppo$e+ $e+ to to pro%+ pro%+e e TAXATION IS A HIGH PREROGATIVE OF SOVEEREINGTY THE RELINQUISHMENT OF WHICH IS NEVER PRESUMED, AND ANY REDUCTION OR DIMUTION THEREOF WITH RESPECT TO ITS MODE OR RATE RATE MUST BE STRICTL STRICTLY CONTRUE CONTRUED D AND THE SAME MUST BE COUCHED INC LEAR TERMS GENE GENERA RAL L RU RULE LE : ANY ANY CLAI CLAIM M FO FOR R EXEM EXEMPT PTIO ION N FROM TAX STA FROM STATUE TUES S SHOU SHOULD LD BE CONSTR CONSTRUED UED STRICTLY AGAINST TAXPAYER
PURPOSES AND OBJECTIVES OF TAXATION
19 Re%en(e Re%en(e – to pro%+e pro%+e ,(n+$ ,(n+$ or propert" propert" !th !h#h !h#h the State pro*ote$ the &enera) !e),are an+ prote#ton o, t$ #t2en$ :9 Re&() e&()at ato on n – *po *po$e $e+ + on toba toba## ##o o an+ an+ a)#o a)#oho ho) )# # pro+( pro+(#t$ #t$'' or a*($e a*($e*e *ent nt p)a#e p)a#e$ $ )ke )ke n&ht n&ht #)(b$' #)(b$' #abaret$ an+ #o#kpt$ Taxaton Taxaton – not *ere)" *ere)" po!er that that $ exer#$e+ exer#$e+ n or+er to to ra$e re%en(e ,or the $(pport o, Go%ern*ent
Taxe$ Taxe$ *a" a)$o be *po$e+ ,or re&()ator" p(rpo$e a$ n the rehab)taton rehab)taton an+ $tab)2aton o, a threatene+ n+($tr" !h#h $ aHe#te+ !th p(b)# ntere$t )ke o) n+($tr" ;9 Pro* Pro*ot oton on o, Genera Genera)) e),ar e),are e – *p)e* *p)e*ent ent o, po)#e po)#e po!er n or+er to pro*ote &enera) !e),are o, peop)e L(t2 %$ Araneta – *po$e+ tax on a *))e+ $(&ar $n#e the p(rp p(rpo$ o$e e o, )a! )a! !a$ !a$ to $tre $tren& n&th then en an n+( n+($t $tr" r" that that $ (n+enab)" %ta) to e#ono*" – the $(&ar n+($tr" O) Pr#e Stab)2aton 8(n+ – A +e%#e +e$+n&e+ to prote#t the p(b)# ,ro* a+%er$e eHe#t$ o, F(#t(aton$ n pr#e$ o, *porte #r(+e o) O$*ena %$ Orbo$ - !h)e !h)e ,(n+$ ,(n+$ #o)) #o))e#t e#te+ e+ (n+er (n+er OPS8 OPS8 *a" *a" be re,e re,err rre+ e+ to a$ taxe$' the" are exa#te+ n the exer#$e exer#$e o, the po)#e po!er o, State - A*o(nt A*o(nt$ $ are +ra! +ra!n n to re*b( re*b(r$e r$e o) o) #o*pa #o*pane ne$ $ !hen !hen approprate $t(aton$ ar$e ,or n#rea$e$ n' a$ !e)) a$ (n+er – re#o%er" o,' the #o$t o, #r(+e o) *portaton =9 Re+(#t Re+(#ton on o, So#a So#a)) ne(a) ne(a)t" t" a9 6a+e 6a+e po$$b po$$b)e )e thro(& thro(&h h pro&r pro&re$$ e$$%e %e $"$te* $"$te* o, taxaton b9 Ob.e#t% Ob.e#t%e e to pre%ent pre%ent the (n+(e #on#ent #on#entrato raton n o, !ea)th n the han+$ o, a ,e! n+%+(a)$ #9 Pro&r Pro&re$$ e$$% %t" t" – be$to be$to!e+ !e+ on the prn# prn#p)e p)e that tho$e !ho are ab)e to pa" $ho()+ $ho()+er the b&&er porton o tax b(r+en +9 Pre$e Pre$ent nt rate$ rate$ o, n#o*e' n#o*e' e$tate e$tate an+ &,t &,t taxe$ taxe$ pre$ent a &oo+ exa*p)e o, pro&re$$%t" 9 En#o(ra& En#o(ra&e e E#ono* E#ono*# # Gro! Gro!th th a9 P(rpo$e P(rpo$e 0 to &rant n#ent n#ent%e$ %e$ an+ exe* exe*pto pton$ n$ n or+er or+er to en#o(r en#o(ra&e a&e n%e$t n%e$t*e *ent nt an+ an+ there thereb" b" pro*ote the #o(ntr"3$ e#ono*# &ro!th b9 The The po!e po!err to exe* exe*pt pt ,ro* ,ro* tax tax $ nher nheren entt n $tate a)$o #9 LOCAL LOCAL GOVERN6 GOVERN6ENT ENT CO7E CO7E 0 )o#a) &o%ern &o%ern*ent *ent$ $
= +9 Rea) propert" taxe$ – no $(#h po!er ex$t$ $a%e n the #a$e o, #on+onaton o, taxe$ !h#h #an be &rante+ on)" ,or #ertan .($t/ab)e rea$on$ !h#h are expre$$)" $tate+ n the )a! D9 Prote#ton$* – pro%+e prote#ton to )o#a) n+($tre$ )ke prote#t%e tarH$ an+ #($to*$ +(te$ Theory a! "a#$# o% &a'a&$o
19 Ne#e$$t" Theor" – ex$ten#e o, &o%ern*ent $ a ne#e$$t" a9 It #annot #ontn(e !tho(t the *ean$ to pa" t$ expen$e$ b9 8or tho$e *ean$ – t ha$ the r&ht to #o*pe) a)) #t2en$ an+ propert" !thn t$ )*t$ to #ontrb(te #9 Taxaton $ a po!er e*anatn& ,ro* ne#e$$t" +9 Ne#e$$ar" b(r+en to pre$er%e State3$ $o%ere&nt" an+ a *ean$ to &%e #t2enr" an ar*" to re$$t a&&re$$on e9 A na%" to +e,en+ ,9 Corp$ o, #%) $er%ant$ to $er%e &9 P(b)# *pro%e*ent +e$&ne+ ,or the en.o"*ent o, #t2enr" an+ tho$e !h#h !thn State3$ terrtor" an+ ,a#)te$' an+ prote#ton !h#h a &o%ern*ent $ $(ppo$e+ to pro%+e :9 Bene/t Prote#ton Theor" a9 State +e*an+$ an+ re#e%e$ taxe$ ,ro* $(b.e#t$ o, taxaton !thn t$ .(r$+#ton $o that t *a" be enab)e+ to #arr" t$ *an+ate nto eHe#t an+ per,or* the ,(n#ton$ o, &o%ern*ent' b9 an+ the #t2en pa"$ ,ro* h$ propert" the porton +e*an+e+ n or+er that he *a"' or&an2e+ $o#et" #9 4OEVER' the ,o(n+aton o, the ob)&aton to pa" taxe$ IS NOT the pr%)e&e$ en.o"e+ or the prote#ton &%en to a #t2en b" the Go%ern*ent'
a)tho(&h the pa"*ent o, taxe$ &%e$ a r&ht to prote#ton +9 Both are en.o"e+ a$ !e)) b" tho$e *e*ber$ o, a State !ho +o not pa" taxe$ be#a($e the" are not ab)e to +o $o9 e9 Spe#a) bene/t$ are not re(re+ ,9 8ro* #ontrb(ton re#e%e+' &o%ern*ent ren+er$ NO SPECIAL or CO66ENSURATE bene/t to an" part#()ar per$on or propert" &9 A tax $ not *po$e+ on the ba$$ o, a $pe#a) or part#()ar bene/t a##r(n& to ea#h #t2en n proporton to the tax pa+ h9 A PERSON CANNOT OBJECT TO OR RESIST T4E PA56ENT O8 TAXES SOLEL5 BECAUSE NO PERSONAL BENE8IT TO 4I6 AN BE POINTE7 OUT AS RISING 8RO6 TAX GO6 VS PALO6AR - S# (phe)+ %a)+t" o, ant tb $ta*p )a! - h#h re(re+ the axt(re o, a $e* po$ta) $ta*p on *a) *atter - A)tho(&h no $pe#a) bene/t a##r(e$ to *a) ($er$ b" $(#h $ta*p' t $ not ne#e$$ar"' to #on$tt(te p(b)# p(rpo$e' that $pe#a) bene/t$ a##r(e to a taxpa"er - Eno(&h that he en.o"$ bene/t$ o, )%n& n an or&an2e+ $o#et SCOPE OF LEGISLATIVE TAXING POWER
Le&$)at%e taxn& po!er or +$#reton ,o))o!n& 0
exten+$ to the
19 the per$on' propert"' or o##(paton to be taxe+ a9 ex#$e$ or pr%)e&e$ pro%+e+ the" are !thn taxn& .(r$+#ton are a)$o n#)(+e+ b9 taxn& a(thort" #an $e)#t $(b.e#t o, taxaton :9 a*o(nt or rate o, tax ;9 p(rpo$e$ ,or !h#h taxe$ $ha)) be )e%e+ pro%+e+ the"
TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book =9 kn+ o, tax tax to be #o))e #o))e#te+ #te+ 9 apporto apporton*en n*entt o, tax !hether !hether tax $ha)) $ha)) be &enera) &enera) or )*te+ to a part#()ar )o#a)t" or part)" &enera) an+ part)" )o#a) D9 $t($ $t($ o, o, taxat taxato on n 9 *etho+ *etho+ o, o, #o))e# #o))e#to ton n PURPOS PURPOSE E O8 LEV5 LEV5 0 ex#) ex#)($ ($%e) %e)" " !th !thn n the +$#r +$#ret eton on o, )e&$)at(re' b(t #o(rt$ *a" +eter*ne !hther the p(rpo$e $ a p(b)# or not
$tate or naton *a" o(tr(n an" h(*an #a)#()aton' $o the po!er to *eet tho$ nee+$ b" taxaton *($t not be )*te+ )*te+ e%en tho(&h tho(&h taxe$ taxe$ be#o*e be#o*e b(r+en$o b(r+en$o*e *e or #on/$#ator" CONSTITU CONSTITUTION TIONAL AL RESTRAIN RESTRAINTS TS RE ) Ta'a&$o a'a&$o $# &he Po*er &o !e#&roy
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Le& Le&$) $)at at(r (re e ha$ ha$ a)$o a)$o ,()) ,()) +$# +$#re ret ton on a$ to the the per$ per$on on$' $' propert"' o##(paton or b($ne$$ to be taxe+ pro%+e+ the$e are a)) !thn the $tate3$ terrtora) .(r$+#ton IS THE POWER TO TAX POWER TO DESTROY (
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po!er po!er to *po$ *po$e e taxe$ taxe$ $ one one $o (n) (n)* *te+ te+ n n ,or#e ,or#e an+ an+ $o $ear#hn& n extent $o that #o(rt$ $#ar#e)" %ent(re to +e#) +e#)ar are e that that t $ $(b. $(b.e# e#tt to an" an" re$t re$tr r#t #to on$ n$ !hate%er' ex#ept $(#h a$ re$t n +$#reton o, a(thort" !h#h exer#$e$ t no attr attrb(t b(te e $o%ere $o%ere&n &nt" t" $ *ore *ore per%a per%a+n +n& & no pon pontt +oe$ the the po!er po!er o, &o%er &o%ern* n*en entt aHe#t aHe#t *ore *ore #on$ta #on$tant) nt)" " an+ nt*a nt*ate) te)" " a)) a)) re)at re)aton on$ $ o, ),e ),e than than thro(&h the exa#ton$ *a+e (n+er t
In the )&ht o, the ,ore&on& +e$#rpton o, the taxn& po!er $ taxaton there,ore po!er to +e$tro" 6# C())o#h %$ 6ar")an+ - - po!e po!err to tax tax n%o n%o)%e )%e$ $ po!er po!er to +e$t +e$tro ro" " - pert pertnent ent on)" !hen !hen ther there e $ no po! po!er to tax a part#()ar $(b.e#t an+ ha$ no re)aton to a #a$e !here $(#h r&ht to tax ex$t$ - o,t o,t (ot (ote+ e+ *ax *ax* * n$t n$tea ea+ + *ax *ax* * n$t n$tea ea+ + o, ben ben& & re&ar+e+ a$ a b)anket a(thor2aton o, the (nre$trane+ ($ o, tax taxn& n& po! po!er ,or ,or an" an+ a)) p(rp p(rpo o$e$' e$' rre$pe#t%e o, re%en(e' $ *ore rea$onab)" #on$tr(e+
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Not (n (n)*te+ hen hen a )e& )e&$) $)at at% %e e bo+" bo+" ha% ha%n& n& the the po!e po!err to tax tax a #ert #erta an n $(b. $(b.e# e#tt *att *atter er a#t( a#t(a) a))" )" *po *po$e $e$ $ $(#h $(#h a b(r+en$o*e tax a$ eHe#t(a))" to +e$tro" the r&ht to per,or* the a#t or to ($e the propert" $(b.e#t to the tax Va)+ a)+t t" " o, ena#t ena#t*e *ent nt +epen +epen+$ +$ (pon (pon the the nat( nat(rre an+ an+ #hara#ter o, the r&ht to +e$tro" I, $o &reat &reat an ab($e ab($e $ *an,e$t *an,e$te+ e+ a$ to +e$tro +e$tro" " nat(ra) nat(ra) an+ ,(n+a* ,(n+a*ent enta) a) r&ht$ r&ht$ !h#h !h#h no ,ree ,ree &o%ern &o%ern*en *entt #o()+ #on$$tent)" %o)ate' %o)ate' t $ the +(t" o, the .(+#ar" to ho)+ $(#h an a#t (n#on$tt(tona) Po!er Po!er to to tax $ $ not the the po!er po!er to to +e$tr +e$tro" o" – be#a( be#a($e $e o, #on$tt(tona) re$trant$ p)a#e+ on a taxn& po!er that %o)ate$ ,(n+a*enta) r&ht$
Taxpa"er Taxpa"er o!e$ hone$t" to the Go%ern*ent Go%ern*ent o!e$ ,arne$$ to taxpa"er$
.($t
a$
To To *antan &enera) p(b)#3$ tr($t an+ #on/+en#e n the &o%e &o%ern rn*e *ent nt th$ th$ po!e po!err *($t *($t b ($e+ ($e+ .($t .($t)" )" an+ an+ not not trea#hero($)" It $ho()+ be exer#$e+ !th #a(ton to a *n*2e n.(r" to the propretar" propretar" r&ht$ o, a taxpa"er
POWER OF JUDICIAL REVIEW IN TAXATION
D CIR %$ Ln&a"en - #o(rt$ #o(rt$ #annot #annot n(re n(re nto the !$+o !$+o* * o, a taxn& taxn& a#t - #o(r #o(rt$ t$ #anno #annott re% re%e! e! the !$+o !$+o* * or a+%$ a+%$ab ab) )t t" " or expe+en#" o, a tax - .(+# .(+#a) a) trb( trb(na) na)$ $ o, $tate $tate ha%e no #on#e #on#ern rn !th !th po)#" po)#" o, )e&$)aton - .(+#a) .(+#a) po!er po!er #annot #annot )e&t )e&t*a *ate)" te)" (e$t (e$ton on or re,($e re,($e to $an#ton $an#ton pro%$on$ pro%$on$ o, an" )a! not n#on$$t n#on$$tent ent !th !th ,(n+a*enta) )a! o, $tate - nor #an #an *ot% *ot%e$ e$ !h#h !h#h ha%e ha%e nF(en#e+ nF(en#e+ the $e)e# $e)e#ton ton o, ob.e#t$ ,or taxaton or +eter*ne+ the rate' be n(re+ nto A$ )on& a$ )e&$)at(re' n *po$n& a tax' +oe$ not %o)ate app)#ab)e #on$tt(tona) #on$tt(tona) )*taton$ or re$tr#ton$' re$tr#ton$' the #o(rt$ ha%e ha%e no #on#er #on#ern n !th !th !$+o* !$+o* or po)#" po)#" o, exa#t exa#to on' n' the po)t#a) or other #o))atera) *ot%e$ behn+ t' the a*o(nt to be ra$e+ or the per$on$ propert" or other pr%)e&e$ to be taxe+ COUR COURT3S POER POER IN TAXATI AXATION ON $ LI6IT LI6ITE7 E7 ONL5 TO T4E T4E APPLICATION AN7 INTERPRETATION O8 LA - pet pett ton oner er3$ 3$ ar&( ar&(*e *ent nt that that axt axt(r (re e o, +o#( +o#(*e *ent ntar ar" " $ta*p on ,re&ht re#ept$ $ *pra#t#ab)e $ho()+ not be entertane+ - be#a be#a($ ($e e a##o a##or+ r+n n& & to #o(r #o(rt' t' *pr *pra# a#t t#a #ab b) )t" t" an+ an+ ab$(r+ #on$e(en#e$ o, )a! $ho()+ be a++re$$e+ to the )e&$)at(re an+ a+*n$trat%e a(thorte$ - It $ not not !thn !thn t$ t$ pro% pro%n#e n#e to to n(r n(re e nto the the !$+o !$+o* * o, )a! ,or n+ee+ #o(rt$ are bo(n+ b" !or+$ n *o(th o, )a!*aker - Verbo erbo )e& )e&$ $ e$t e$t re# re#e+ e+n+ n+(* (* Prn#p) Prn#p)e e o, .(+#a) .(+#a) non nter,er nter,eren#e en#e nto (e$ton (e$ton$ $ o, tax po)#" po)#" #o()+ #o()+ probab) probab)" " exten+ exten+ a)$o nto the a+*n$t a+*n$trat% rat%e e rea)*
Non – ,oo+ a&r#()t(ra) pro+(#t' the $a)e o, !h#h b" pr*ar" pro+(#er$ are exe*pt (n+er VAT )a! The (e$ton a$ to !hether or not BIR3$ re#)a$$/#aton re#)a$$/#aton $ #o(n #o(nte terp rprro+(# o+(#t t%e %e #o() #o()+ + be prop proper er)" )" a++r a++re$ e$$e $e+ + to re$pon+ent$ Se# o, 8nan#e an+ CIR or Con&re$$ A#+e&# o% Ta'a&$o
19 Le%" Le%" or *po *po$ $t ton on o, tax tax on per$ per$on on$' $' prop proper ert" t" or ex#$e$ :9 Co))e#t Co))e#ton on o, taxe$ taxe$ a)rea+" a)rea+" )e%e+ )e%e+ Le%" – )e&$)at%e po!er - n#)(+e$ n#)(+e$ +eter +eter*na *naton ton o, per$on per$on$' $' proper propert" t" or ex#$e$ ex#$e$ to be taxe$ ' the $(* or $(*$ to be ra$e+' the +(e +ate thereo, an+ the t*e an+ *anner o, )e%"n& an+ #o))e#tn& taxe$ Co))e#ton ?n#)(+n& a$$e$$*ent @ – #on$$t$ o, *anner o, en,or#e*ent o, ob)&aton on the part o, tho$e !ho are taxe+ Ba#$ +r$$+-e# o% #o.! &a' #y#&e/
19 /$#a /$#a)) a+e a+e(a (a#" #" – $o(r $o(r#e #e$ $ o, &o%e &o%ern rn*e *ent nt *($t *($t eb $(#ent to *eet &o%ern*ent expen+t(re$ an+ other p(b)# nee+$ a9 e$$ent e$$enta) a) n or+er or+er to a%o+ a%o+ b(+&eta b(+&etar" r" +e/# +e/#t$ t$ an+ to *n*2e ,ore&n an+ )o#a) borro!n&$ :9 Theor Theoret et#a) #a) J($t# J($t#e e a9 ba$e+ ba$e+ on taxpa taxpa"er3$ "er3$ ab)t" ab)t" to to pa" b9 taxaton taxaton *($t *($t be pro&re$$% pro&re$$%e e #on,or*ab #on,or*ab)" )" !th #on$t #on$tt(t t(ton ona) a) *an+at *an+ate e that that #on&r #on&re$$ e$$ $ha)) $ha)) e%o)%e a pro&re$$%e $"$te* o, taxaton ;9 A+*n$ A+*n$trat trat%e %e 8ea$b 8ea$b)t" )t" – taxe$ $ho()+ $ho()+ be #apab)e #apab)e o, ben& eHe#t%e)" en,or#e+
TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book b9 VAT VAT – prn#pa))" prn#pa))" a*e+ a*e+ to ratona)2e the $"$te* o, taxe$ taxe$ on &oo+$ &oo+$ an+ $er%# $er%#e$' e$' $*p) $*p)," ," tax tax a+*n$traton a+*n$traton an+ *ake $"$te* *ore e(tab)e to enab enab)e )e the the #o(n #o(ntr tr" " to atta attan n e#on e#ono* o*# # re#o%er" #9 Taxaton #o()+ #o()+ be enhan#e b" po)#e po!er9 po!er9 +9 I, (n+er Lo#a) Lo#a) &o%ern &o%ern*ent *ent #an #an #)a$$," #)a$$," )an+$ )an+$ a$ re$+ e$+en ent ta) a) an+ an+ #o** #o**er er# #a) a)'' then then $n# $n#e e #on% #on%er er$ $on on o, n+( n+($t $tr ra) a) )an+ )an+$ $ $ ($(a ($(a)) ))" " a$$e$$ a$$e$$e+ e+ on a h&he h&herr a$$e$ a$$e$$*e $*ent nt )e%e)' )e%e)' tax #o))e#ton are n#rea$e+
AS TO PERSONS AFFECTED AS TO AUTHORITY WHICH EXERCISES THE POWER
Ta'a&$o 0# Po-$e Po*er 0# E/$e& Do/a$ TAXATION DISTINGUISHED FROM POLICE POWER AND EMINENT DOMAIN TAXATION POLICE EMINENT POWER DOMAIN the To To pro*ote 8or p(b)# AS TO 8or p(rpo$e &enera) ($e PURPOSE ra$n& !e),are re%en(e thro(&h re&()aton$ The J($t AS TO Prote#ton an+ bene/t$ bene/t$ *antenan#e #o*pen$ato COMPENSATI re#e%e+ o, a hea)th hea)th" " n' not to ON ,ro* the e#ono*# ex#ee+ the the &o%ern*ent9 $tan+a $tan+ar+ r+ o, *arket %a)(e $o#et" b" the o!ner (damnum or absque a+*n$trator injuria) or an"one ha%n& ha%n& )e&a) )e&a) ntere$t n the propert"' or a$ +eter*ne+ b" the
AS TO AMOU AMOUNT NT OF EXACTION
AS TO THE RELATIONSHI P TO THE CONSTITUTIO N
AS TO TRANSFER OF PROPERTY
!h#h !h#he%e e%err $ )o!er9 Operat Operate e (pon (pon #o** #o**(n (nt" t" Operat Operate$ e$ on or a #)a$$ o, n+%+(a)$ the n+%+(a) propert" o!ner Exer#$e+ on)" b" the 6a" be &o%ern*en &o%ern*entt or t$ po)t#a po)t#a)) exer# exer#$e+ $e+ b" $(b+%$on$9 p(b)# $er%#e$ #orp or p(b)# (t)te$ , &ran &rante te+ + b" )a! Genera))" no L*t *te+ e+ to There $ no )* )*tt to the the the the #o$t #o$t o, *po$tonM a*o(nt o, re&()aton rath rather er'' t $ tax that *a" the o!ner o, be *po$e+ I$$( I$$(an an#e #e o, the proper propert" t" )#en$e or taken taken !ho $ $(r%e))an#e pa+ .($t #o*pen$ato n9 S(b.e#t to Re)at%e)" S(b.e#t to #ertan ,ree ,ro* #ertan #on$tt(tona #on$tt(tona #on$tt(tona) ) )*tat )*taton$ on$'' ) )*tat )*taton$ on$ )*taton$' n#)(+n& the an+ $(peror NOT prohbton to the the nonnon- n#)(+n n#)(+n& & the a&an$t *par*ent prohbton *par*ent pro%$on$ a&an$t o, the *par*ent ob)&aton o, o, the #ontra#t$ ob)&at ob)&aton on o, #ontra#t$ Taxe$ Taxe$ pa+ No tran$, tran$,er' er' be#o*e part b(t on)" o, the p(b)# re$tr re$tran antt on
> o, propert" r&ht ex$t$ +re#t AS TO No $pe#a) or No +re#t bene/t$ BENEFITS bene/t re#e%e+9 A RECEIVED re#e%e+ b" hea)th" taxpa"er e#ono*# other than $tan+ar+ o, the ,a#t that $o#et" Go%ern*ent kno!n a$ on)" 7A6NU6 SECURES to ABSUE the #t2en INJURIA that &enera) bene/t re$()tn& ,ro* prote#ton o, h$ per$on' an+ propert" an+ !e),are o, a)) r()e Not app)e+ AS TO NON 1 Th$ $(b$t$ here IMPAIRMENT OF Taxn& a#t CONTRACTS #annot *par ob)&aton o, #ontra#t$
TAXES DISTINGUISHED FROM OTHER IMPOSITIONS 1@ &o-- – a*o(nt #har&e+ ,or the #o$t an+ *antenan#e o, propert" ($e+M REASON 0 Tax $ a +e*an+ o, $o%ere&nt" %or
"2 Sho()+ be note+ that LOCAL GOVERN6ENT CO7E a(thor2e$ the #o))e#ton o, to))$ b" )o#a) &o%ern*ent (nt$ ,or the ($e o, an" p(b)# roa+' per or !har,' !ater!a"' br+&e' ,err" or te)e#o**(n#aton $"$te* ,(n+e+ an+ #on$tr(#te+ b" the* :@ +ea-&y – p(n$h*ent ,or the #o**$$on o, a #r*e a9 #%) )ab)t" b9 A per$on $ on)" be#a($e he ,a)$ to $at$," h$ #%) ob)&aton to pa" taxe$
Natona) 7e%e)op*ent Co*pan" %$ CIR - , a !thho)+n& a&ent )ke N7C ,a)$ to !thho)+ the re($te !thho)+n& tax on the n#o*e re#e%e+ ,ro* P4 $o(r#e$ b" a Japane$e non re$+ent ,ore&n #orporaton' $(#h !thho)+n& a&ent $ LIABLE TO PA5 TAX that t ++ not !thho)+ a$ a pena)t" ,or t$ ,a)(re to !thho)+ the tax o, ,ore&n #orporaton ;@ o/+ro/$#e +ea-&y – a*o(nt #o))e#te+ n )e( o, #r*na) pro$e#(ton n #a$e$ o, tax %o)aton$M a9 nether *po$ton nor a pena)t" b9 #annot be *po$e+ b" the Co**$$oner #9 , taxpa"er re,($e$ to pa" the #o*pro*$e' #r*na) a#ton $ the re*e+" +9 a)tho(&h #annot be )e&a))" *po$e+' the" *a" be #o))e#te+ , taxpa"er ha$ expre$$e+ h$ !))n&ne$$ to pa" the $a*e =@ #+e$a- a##e##/e& – )e%e+ on)" on )an+ ba$e+ !ho))" on the bene/t a##r(n& thereon a$ a re$()t o, *pro%e*ent$ o, p(b)# !ork$ (n+ertaken b" &o%ern*ent !thn the %#nt"9 a9 Ex#eptona) both a$ to t*e an+ )o#a)t" b9 Not taxe$ !thn the #on$tt(tona) or $tat(tor" pro%$on$ on tax exe*pton$ #9 Exe*pton (n+er Se#ton :>???;@ NOT APPL5 TO
TAXATION SURVIVAL KIT – Aban Book +9 Con$tt(tona) exe*pton GRANTE7 (n+er a,ore#te+ pro%$on o, Con$tt(ton #o%er$ 0 9 C4ARITABLE INSTITUTIONS 9 C4URC4ES 9 PARSONAGES %9 CONVENTS APPURTENANTS T4ERETO' %9 6OSUES %9 NON PRO8IT CE6ETARIES %9 AN7 ALL LAN7S BUIL7INGS AN7 I6PROVE6ENTS ACTUALL5 7IRECTL5 AN7 EXCLUSIVEL5 USE7 8OR RELIGIOUS C4ARITABLE OR E7UCATIONAL PRUPOSES e9 SECTION :=< O8 LGC – NATURE O8 SPECIAL ASSESE6ENTS @ -$e#e %ee – re&()ator" *po$ton n the exer#$e o, the po)#e po!er o, the StateM a9 e*anate$ ,ro* po)#e po!er b9 per*t #o))e#te+ ,ro* a)en .ob app)#ant$ $ n ex#e$$ o, the #o$t o, re&()aton' the exa#ton $ a tax #9 exe*pton ,or* tax +oe$ not n#)(+e b()+n& per*t ,ee an+ $pe#a) a$$e$$*ent$ a$ he$e are not taxe$ b(t re&()ator" ,ee$ n the #a$e o, )#en$e ,ee an+ )e%" on a##o(nt o, bene/t$ to )an+ ,or $pe#a) a$$e$$*ent $ +9 6otor %eh#)e re&$traton ,ee$ are taxe$ be#a($e o, the )e&$)at%e ntent $ *an)" to ra$e ,(n+$ ,or #on$tr(#ton an+ *antenan#e o, h&h!a"$ an+ to a *(#h )e$$er +e&ree to pa" ,or the expen$e$ o, LTO a re&()ator" a&en#" o, Go%ern*ent e9 NON- USE8UL OCCUPATIONS – be#a($e (n+er &enera) !e),are #)a($e' *(n#pa) #orporaton$ are a(thor2e+ to ena#t or+nan#e$ to pro%+e ,or hea)th an+ $a,et" an+ to pro*ote the *ora)t"' pea#e' an+ &enera) !e),are o, t$ nhabtant$
19 )#en$e$ ,or re&()aton o, ($e,() o##(paton$ :9 )#en$e$ ,or re&()aton or re$tr#ton o, non-($e,() o##(paton$ or enterpr$e$ ;9 )#en$e$ ,or re%en(e on)" Non – pa"*ent o, a )#en$e ,ee ,or a b($ne$$ *ake$ that b($ne$$ ILLEGAL Non – pa"*ent o, a tax ,or a b($ne$$ +oe$ not ne#e$$ar)" *ake that b($ne$$ ))e&a) a)tho(&h th$ *&ht be a &ro(n+ ,or #r*na) pro$e#(ton a&an$t the per$on or per$on$ %o)atn& the )a! NOT ONL5 BUSINESSSES 4IC4 ARE L A8ULL5 CON7UCTE7 ARE TAXABLE EVEN T4OSE 4IC4 ARE CARRIE7 ON ILLEGALL5 ARE SUBJECT TO TAX EXA6PLE 0 VAT 6A5 BE ASSESE7 ON T4E ILLICIT PRO7UCTION AN7 SALE O8 CASETTE TAPES9 TAX ASSESS6ENTS 6A5 EVEN EXTEN7 TO INCO6E T4AT IS REALIE7 8RO6 SALE O8 T4ESE TAPES BECAUSE INCO6E 8RO6 ILLEGAL SOURCES IS ALSO TAXABLE LGC 0 a(thor2e+ to *po$e re&()ator" ,ee$' $e#ton 1= ex#ept n #a$e o, pro,e$$ona) tax on pra#t#e o, pro,e$$on S(b$tant%e Re(re*ent$ ,or an or+nan#e to be %a)+ 0 19 :9 ;9 =9
6($t not #ontra%ene Con$tt(ton 6($t not be parta) or +$#r*nator" 6($t not prohbt b(t *a" re&()ate tra+e 6($t be &enera) an+ #on$$tent !th p(b)# po)#" 9 6($t not be (nrea$onab)e D@ /ar3$ %ee – exa#ton +e$&ne+ to $tab)2e the #(rren#" a9 not tax b(t a #(rren#" *ea$(re +e$&ne+ to
1< (n+er RA on re*ttan#e o, pro/t$ earne+ n th$ #o(ntr" @ !e"& 1 a tax $ not a +ebt b(t $ an ob)&aton *po$e+ b" )a!9 a9 Expre$$ or *p)e+ b9 Taxe$ are not +ebt9 T!o ob)&aton$ are NOT SUSCEPTIBLE TO SET O88 OR CO6PENSATION UN7ER art 1: o, CC #9 Ca)tex %$ COA – Taxe$ an+ +ebt$ #annot be the $(b.e#t o, #o*pen$aton be#a($e the Go%ern*ent an+ taxpa"er are not *(t(a))" #re+tor$ an+ +ebtor o, ea#h other an+ a #)a* ,or taxe$ $ not a +ebt' +e*an+ #ontra#t or .(+&e*ent a$ $ a))o!ab)e to be $et oH Intere$t on taxe$ #an be +e+(#te+ - S4OUL7 BE UALI8IE79 A$ re&ar+$ ntere$t on taxe$ that are not #onne#te+ !th taxpa"er3$ pro,e$$on' tra+e or b($ne$$e$' t $ee*$ that +e+(#ton $ NOT ALLOE7 - REASON 0 Se#ton :?b@?1@ – $peak$ on)" on the a*o(nt o, ntere$t pa+ or n#(rre+ !thn taxab)e "ear on n+ebte+ne$$ n#(rre+ n #onne#ton !th taxpa"er3$ pro,e$$on' tra+e or b($ne$$ - Ex#epton 0 In #a$e o, #t2en$' or re$+ent a)en$ !o are $e), e*p)o"e+ ?per$on$ !ho are en&a&e+ n b($ne$$ an+ tho$e !ho pra#t#e ther pro,e$$on n Ph)ppne$@ the +e+(#tab)t" o, ntere$t on n+ebte+ne$$ $ )*te+ on)" to ntere$t pa+ or n#(rre+ !thn a taxab)e "ear on )oan$ #ontra#te+ ,ro* a##re+te+ /nan#a) n$tt(ton$ !h#h *($t be pro%en to ha%e been n#(rre+ n #onne#ton !th #on+(#t o, a taxpa"erM$ pro,e$$on tra+e or b($ne$$ - In+%+(a)$' +e+(#tb)t" o, ntere$t on taxe$ $ NO LONGER AUT4ORIE7 , tho$e taxe$ are not n an"!a" #onne#te+ !th pro,e$$on ra+e or b($ne$$
-
Se#ton ;= B 1 NRC – t !o()+ $ee* that +e+(#ton o, ntere$t on taxe$ $ LEGALL5 .($t/e+ pro%+e+ that taxe$ pa+ or n#(rre+ are n #onne#ton !th taxpa"er3$ tra+e or b($ne$$9
A pen+n& #)a* ,or re,(n+ *a" be $et oH a&an$t an ex$tn& tax )ab)t" e%en tho(&h the re,(n+ ha$ not "et been appro%e+ b" Co**$$oner 6a" an ex#e$$ pa"*ent o, (arter)" #orporate n#o*e tax ,or the pre#e+n& taxab)e "ear be a(to*at#a))" #re+te+ or app)e+ a&an$t the #orporaton3$ e$t*ate+ (arter)" n#o*e tax )ab)te$ ,or taxab)e (arter$ o, the $(##ee+n& taxab)e "ear NO9 on#e a taxpa"er opt$ ,or ether a re,(n+ or the a(to*at# tax #re+t $#he*e an+ $&n/e+ h$ poton n a##or+an#e !th the re&()aton' th$ +oe$ not IPSO 8ACTO #on,er on h* the r&ht to a%a) o, $a*e **e+ate)" Pror appro%a) b" the CIR o, tax #re+t (n+er Se#ton >D !o()+ appear to be the *ore rea$onab)e nterpretaton to be &%en $a+ $e#ton An opport(nt" *($t be &%en to Interna) Re%en(e bran#h o, the &o%ern*ent to n%e$t&ate an+ #on/r* the %era#t" o, #)a*$ o, taxpa"er R&ht $ho()+ be #on$tr(e+ a$ an ABSOLUTE RIG4T !h#h $ a%a)ab)e to the axpa"er at h$ $o)e opton A(to*at# #re+t IS NOT AVAILABLE' BUT T4IS 7OES NOT 6EAN T4AT PETITIONER CANNOT GET A RE8UN7 OR CRE7IT O8 EXCESS UARTERL5 PA56ENT )) the non a(to*at# #re+tn& r()n& n the San Car)$
TAXATION SURVIVAL KIT – Aban Book Se#ton D are re(re+ to /)e (arter)" ret(rn$ o, n#o*e tax on a #(*()at%e ba$$ NO9 Re%en(e Re&()aton$ -; 0 An" ex#e$$ o, the tota) (arter)" pa"*ent$ an+ taxe$ !thhe)+ o%er the n#o*e tax #o*p(te+ n the /na) n#o*e tax ret(rn *a" be app)e+ a$ a #re+t a&an$t the (arter)" n#o*e tax )ab)te$ ,or the taxab)e (arter$ o, the **e+ate)" $(##ee+n& "ear9 A%a)ab)e 0 In+%+(a)$ ho +e$re not to a!at an"*ore the pro#e$$n& o, an" tax re,(n+ to !h#h the" are entt)e+ In #a$e pa"*ent #re+te+ are not #o*p)ete)" (t)2e+ or app)e+ n the axab)e (arter$ o, the **e+ate)" $(##ee+n& "ear 0 T4E RE6AINING A6OUNT S4ALL BE CLAI6E7 AS RE8UN7 OR CRE7IT B5 T4E TAXPA5ER PURSUANT TO $e# :< o, Tax Co+e Se#ton D 0 In #a$e #orporaton $ entt)e+ to a tax #re+r or re,(n+ o, the ex#e$$ e$t*ate+ (arter)" n#o*e taxe$ pa+' the EXCESS A6OUNT S4ON ON ITS 8INAL A7JUST6ENT RETURN 6A5 BE CARRIE7 OVER AN7 CRE7ITE7 AGAINST T4E ESTI6ATE7 UARTERL5 TAX LIABILITIES 8OR T4E TAXABLE UARTERS O8 SUCCEE7ING TAXABLE 5EAR On#e the opton to #arr" o%er an+ app)" the ex#e$$ (arter)" n#o*e tax a&an$t n#o*e teax +(e +or taxab)e (arter$ o, the $(##ee+n& taxab)e "ear$ ha$ been *a+e --- SUC4 OPTION S4ALL BE CONSI7ERE7 IRREVOCABLE 8OR T4AT TAXABLE PERIO7 AN7 NO APPLIATION 8OR CAS4 RE8UN7 OR ISSUANCE O8 A TAX CRE7IT CERTI8ICATE S4ALL BE ALLOE7 T4ERE8OR >@ re3.-a&ory %ee# 1 exa#ton +e$&ne+ to re&()ate n+($tre$ a9 6a" an exa#ton be both a tax a$ !e)) a$ a re&()ator" ,ee
#9 P7 1> – re&()ate$ the #+eo&ra* n+($tr" *a" %a)+)" *po$e tax o, ;
TAXES CLASSIFIED
19 Per$ona) Tax – #aptaton or po)) taxe$ a9 Taxe$ o, a /xe+ a*o(nt (pon a)) per$on$ o, a #ertan #)a$$ !thn the .(r$+#ton o, taxn& po!er !tho(t re&ar+ to the a*o(nt o, ther propert" or o##(paton$ or b($ne$$e$ n !h#h the" *a" be en&a&e+
1: :9 Propert" Tax - a$$e$$e+ on a)) propert" or a)) propert" o, a #ertan #)a$$ !thn the .(r$+#ton o, taxn& po!er a9 Exa*p)e 0 Rea) propert" tax an+ a++tona) )e%e$ on rea) propert" ex#ept $pe#a) a$$e$$*ent$ (n+er LGC ;9 7re#t Tax – taxe$ !heren both the n#+en#e o, or )ab)t" ,or the pa"*ent o, tax a$ !e)) a$ the *pa#t or b(+en o, tax ,a))$ on $a*e per$on a9 EXA6PLE 0 n#o*e tax !here per$on $(b.e#t to tax #annot $h,t the b(r+en o, the tax to another per$on 9 E$tate an+ +onor3$ &,t taxe$ =9 In+re#t Tax – taxe$ !heren the n#+en#e o, or the )ab)t" ,or pa"*ent o, tax ,a))$ on one per$on' b(t the b(r+en thereo, #an be $h,te+ or pa$$e+ on to another per$on a9 9 Exa*p)e 0 VAT - pa"ab)e to an" per$on !ho n the #o(r$e o, tra+e or b($en$$' $e))$ barter$ e#han&e$ or e)a$e &oo+$ properte$' ren+er$ $er%#e$ an+ an" per$on !ho *port &oo+$ b9 The b(r+en o, pa"n& the a*o(nt o, tax *a" be $h,te+ or pa$$e+ on to the b("er' tran$,eree or )e$$ee o, the &oo+$' properte$ or $er%#e$ #9 hen the $e))er pa$$e$ on the tax to h$ #($to*er' $ he &on& a&an$t the prn#p)e that taxe$ are per$ona) )ab)te$ the pa"*ent o, !h#h #annot be tran$,erre+ to another per$on 9 NO9 he $ not &on& a&an$t the r()e9 hen the $e))er pa$$e$ on the tax to h$ b("er' he $ on)" $h,tn& the tax b(r+en ?Not the )ab)t" to pa" t@ to the p(r#ha$er a$ part o, the #o$t o, &oo+$ $o)+ or $er%#e$ ren+ere+ 9 Nat(re o, n+re#t tax 00000 Sa)e$ tax that $ pa$$e+ on to the p(r#ha$er $ the tax on the p(r#ha$er not on the b("er 9 I, b("er happen$ to be tax exe*pt' $e))er $ nonethe)e$$ )ab)e ,or pa*ent o, tax a$ $a*e $ a tax not on the b("er h*$e), b(t $ a#t(a))" a tax on $e))er
%9 here tran$a#ton n t$e), $ a tax exe*pt an+ b("er pa"$ the tax part o, p(r#ha$e pr#e' t $ the $e))er3$ ob)&aton' n#a$e he ha$ obtane+ a re,(n+ o, +$p(te+ tax' to ho)+ $(#h re,(n+e+ tax n tr($t ,or the b("er %9 7ESPITE T4E RIG4T TO S4I8T' SELLER 6A5 ELECT TO ABSORB TAX 4I6SEL8 %9 Tax exe*pton$ are per$ona) to the &rantee $ not %o)ate+ be#a($e the o%err+n& ntenton o, the #ontra#tn& parte$ $ to exe*pt the #ontra#tor ,or te bene/t o, #ontra#tee +9 4o! abo(t , the b("er h*$e), $ the one exe*pt' !o()+ be then be entt)e+ to #)a* ,or re,(n+ o, tax that $e))er *&ht ha%e pa$$e+ on to h* 9 A$ an n+re#t tax' )ke $a)e$ tax or VAT &oe$ on to the b("er not a$ a atax' b(t on)" a$ a #o*ponent o, the p(r#ha$e pr#e' t *a" be a$$(*e+ that the b("er ha$ no r&ht to obtan an" re,(n+ 9 I8 IT IS COVERE7 B5 TAX EXE6PTION GRANT ARE IN7IRECT TAXES 4IC4 SELLERS O8 GOO7S AN7 SERVICES USUALL5 PASS ON TO T4EIR CUSTO6ERS' --- then t *a" be $a+ that there $ a %a)+ rea$on ,or a))o!n& the re,(n+ e9 Le&$)at%e ntent $ to &rant **(nt" to NPC ,ro* tax that o) #o*pane$ n%arab)" pa$$ on to ther b("er$ ,9 Lab)t" o, the n+re#t tax )e$ !th $e))er o, &oo,$ or $er%#e$ on)"' not the b("er thereo,9 &9 I*portant to /n+ o(t , tax ex*ptn &rante+ to a taxpa"er $pe%#/#a))" n#)(+e$ the n+re#t tax !h#h $ $h,te+ to h* a$ part o, the p(r#ha$e pr#e NOTEORT45 ?In+re#t Taxe$@ 19 hen #on$(*er or en+ ($er o, a *an(,a#t(re+ pro+(#t $ tax exe*pt' $(#h exe*pton #o%er$ on)" tho$e taxe$ ,or !h#h $(#h #on$(*er or en+ ($er $
TAXATION SURVIVAL KIT – Aban Book :9 In+re#t taxe$ are not n#)(+e+ ;9 6an(,a#t(rer CANNOT CLAI6 EXE6PTION ,ro* pa"*ent o, $a)e$ tax =9 Nether #on$(*er or b("er o, pro+(#t +e*an+ the re,(n+ o, tax tha *an(,a#t(rer *&ht ha%e pa$$e+ on to h* 9 hen tran$a#ton t$e), $ the one that $ tax exe*pt' b(t thro(&h error the $e))er pa"$ the tax an+ $h,t$ the $a*e to the b("er' the $e))er &et$ the re,(n+' b(t *($t ho)+ t n tr($t ,or the b("er D9 here the tax exe*pton ,ro* n+re#t tax $ &%en to the #ontra#tee' b(t the e%+ent ntenton $ to exe*pt the #ontra#tor $o that $(#h #ontra#tor *a" no )on&er $h,t or pa$$ on an" tax to the #ontra#tee' the #ontra#tor *a" #)a* tax exe*pton on tran$a#ton 9 hen the )a! &rantn& tax exe*pton $pe#/#a))" n#)(+e$ n+re#t taxe$ or !hen t $ #)ar)" *an,e$t theren that the )e&$)at%e ntenton to exe*pt e*bra#e$ n+re#t taxe$' then the b("er o, pro+(#t or $er%#e $o)+ ha$ a r&ht to be re*b(r$e+ the a*o(nt o, taxe$ tha the $e))er$ pa$$e+ on to h* h" th$ tax kno!n a$ n+re#t tax One !ho a#t(a))" pa"$ the tax ?a$ part o, the p(r#ha$e pr#e o, #o**o+t" or $er%#e@ $ the p(r#ha$er9 The p(r#ha$er $ n+re#t)" pa"n& the tax 9 Ex#$e Tax – )a+ (pon the *an(,a#t(re' $a)e' #on$(*pton o, #o**o+te$ !thn the #o(ntr" a9 Upon )#en$e$ to p(r$(e #ertan o##(paton$ an+ (pon #orporate pr%)e&$ D9 Genera) Tax – taxe$ )e%e+ ,or the &enera) or or+nar" pr(po$e$ o, Go%ern*ent a9 Exa*p)e$ 0 nterna) re%en(e taxe$' #o))e#ton o, !h#h $ (t)2e+ ,or &enera) expen+t(re$ o, &o%ern*ent 9 Spe#a) Tax – taxe$ )e%e+ ,or $pe#a) p(rpo$e$ a9 A++tona) 1Q rea) e$tate tax
AS SPECIAL 8UN7 AN7 PAI7 OUT 8OR SUC4 PURPOSE ONL59 >9 Spe#/# Tax – tax !h#h *po$e$ a $pe#/# $(* b" the hea+ or n(*ber or b" $o*e $tan+ar+ o, !e&ht or *ea$(re*ent an+ !h#h re(re$ no a$$e$$*ent be"on+ a )$tn& an+ #)a$$/#aton o, $(b.e#t to be taxe+ a9 A)#oho)' toba##o 9 A+ Va)ore* Tax – a tax (pon the %a)(e o, the art#)e or thn& $(b.e#t to taxaton a9 Rea) propert" tax 1<9C($to* 7(te$ - +(te$ #har&e+ (pon #o**o+te$ on ther ben& *porte+ nto or exporte+ ,ro* a #o(ntr" 119Natona) Tax – )e%e+ b" natona) &o%ern*ent a9 Lo#a) a(tono*" po)#" 1:9Pro&re$$%e Tax – taxe$ po$e+ !hereb" rate or a*o(nt o, tax n#rea$e$ a$ the a*o(nt o, n#o*e or earnn& to be taxe+ n#rea$e$ a9 Exa*p)e 0 Pre$ent n#o*e tax – Tab)e on Tax rate$ ,or n+%+(a) #t2en$ 1;9Re&re$$%e Tax – taxe$ !hereb" tax rate +e#rea$e$ a$ a*o(nt o, n#o*e or earnn& to be taxe+ n#rea$e$ 1=9Proportonate Tax – ba$e+ on a /xe+ proporton o, the %a)(e o, the $(b.e#t ben& taxe+ a9 Rea) e$tate tax !h#h $ a /xe+ proporton o, %a)(e o, propert" a$$e$$e+ Ta'+ayer8# S.$&
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taxpa"er ha$ r&ht to /)e an a#ton (e$tonn& the %a)+t" or #on$tt(tona)t" o, a $tat(te or )a! on the theor" that the expen+t(re o, p(b)# ,(n+$ b" an o#er o, Go%ern*ent ,or p(rpo$e o, a+*n$tern& or *p)e*entn& n (n#on$tt(tona) or n%a)+ )a! #on$tt(te$ *$app)#aton o, $(#h ,(n+$
6a#e+a %$ 6a#ara&
1= -
a +()" e)e#te+ Senator o, the Ph)ppne$ an+ a taxpa"er thereo, ha$ the )e&a) #apa#t" to /)e an a#ton ,or #ertorar' prohbton an+ *an+a*($ to (e$ton )e&a)t" o, a #)a*e+ re,(n+ o, n+re#t taxe$ )ke tax on o) pro+(#t$ $n#e the re,(n+ t$e),' , ,o(n+ to be !tho(t )e&a) ba$$' #on$tt(te$ an ))e&a) expen+t(re o, p(b)# ,(n+$
PUBLIC 8UN7S S4OUL7 BE INVOLVE7 RE9UISITES FOR A TAXPAYERS PETITION
1@ That *one" $ ben& extra#te+ an+ $pent n %o)aton o, $pe#/# #on$tt(tona) prote#ton$ a&an$t ab($e$ o, )e&$)at%e po!er :@ That p(b)# *one" $ ben& +eFe#te+ to an" *proper p(rpo$e ;@ That the pettoner $eek$ to re$tran re$pon+ent$ ,ro* !a$tn& p(b)# ,(n+$ thro(&h the en,or#e*ent o, an n%a)+ or (n#on$tt(tona) )a!9
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TEST IN 7ETER6INING PUBLIC PURPOSE IN A TAX 19 hether the thn& to be ,(rthere+ b" the appropraton o, p(b)# re%en(e $ $o*ethn& !h#h $ the +(t" o, State' a$ a &o%ern*ent to pro%+e :9 hether pro#ee+$ o, tax !)) +re#t)" pro*ote the !e),are o, #o**(nt" I e(a) *ea$(re a9 R&ht to tax +epen+$ on the ()t*ate ($e' p(rpo$e an+ ob.e#t ,or !h#h the ,(n+ $ ra$e+ b9 No po!er to tax an ob.e#t !h#h $ not !hthn t$ p(rpo$e$ ,or !h#h &o%ern*ent are e$tab)$he+ #9 PUBLIC PURPOSE IS PRESU6E7 Non – +e)e&ab)t" o, Taxn& Po!er -
Chapter : L*taton$ on the taxn& po!er 19 :9 ;9 =9 9
P(b)# p(rpo$e o, taxe$ Non – +e)e&ab)t" o, taxn& po!er Terrtora)t" or $t($ o, taxaton Tax exe*pton o, Go%ern*ent Internatona) Co*t"
A p(b)# p(rpo$e o, taxe$ 0 a)) po!er$ o, &o%ern*ent' that o, taxaton $ $a+ to be
a$ t #an be rea+)" e*p)o"e+ a&an$t one #)a$$ o, n+%+(a)$ n ,a%or o, another $o a$ to r(n one #)a$$ an+ &%e (n)*te+ !ea)th an+ propert" to another , no *p)e+ )*taton on the ($e$ ,or !h#h $(#h taxn& po!er *a" be exer#$e+
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7$trb(ton o, the po!er$ o, &o%ern*ent nto three +epart*ent$' na*e)"' )e&$)at%e' exe#(t%e' .(+#a)' the po!er o, taxaton $ ex#)($%e)" )e&$)at%e Axn& po!er a$ a GENERAL RULE 6A5 NOT BE 7ELEGATE7
Ex#epton$ to non – +e)e&ab)t" 19 8)exb)e TarH C)a($e a9 Se#ton :>?:@ Art#)e VI 1> Con$tt(ton b9 CONGRESS 6A5 EXPRESSL5 AUT4ORIE T4E PRESI7ENT TO 8IX I4TIN SPECI8IE7 LI6ITS' AN7 SUBJECT TO SUC4 LI6ITATIONS AN7 RESTRICTIONS AS IT 6A5 I6POSE TARI88 RATES
TAXATION SURVIVAL KIT – Aban Book #9 I6PORT AN7 EXPORT UOTAS' TONNAGE AN7 4AR8AGE 7UES AN7 OT4ER 7UTIES OR I6POSTS IT4IN 8RA6EORK O8 T4E NATIONAL 7EVELOP6ENT PRORA6 O8 GOVERN6ENT +9 In#)(+e$ tarH rate$ e%en ,or re%en(e p(rpo$e$ on)" e9 C($to* +(te$ !h#h are a$$$e+ at the pre$#rbe+ tarH rate$ are %er" *(#h )ke taxe$ !h#h are ,re(ent)" *po$e+ ,or both re%en(e ra$n& an+ re&()ator" p(rpo$e$ :9 Lo#a) taxn& po!er a9 Se#ton Art#)e 1< 1> Co$ntt(ton b9 EAC4 LOCAL GOVERN6ENT UNIT S4ALL 4AVE T4E POER TO CREATE ITS ON SOURCES O8 REVENUES AN7 TO LEV5 TAXES #9 8EES' AN7 C4ARGES SUBJECT TO SUC4 GUI7ELINES AN7 LI6IATIONS AS T4E CONGRESS 6A5 PROVI7E' CONSISTENT IT4 BASIC POLIC5 O8 LOCAL AUTONO65 +9 SUC4 TAXES AN7 C4ARGES S4ALL ACCRUE EXCLUSIVEL5 TO T4E LOCAL GOVERN6ENTS e9 Theor" o, non +e)e&aton o, )e&$)at%e po!er 7OES NOT APPL5 n *atter$ o, )o#a) #on#ern ,9 The po!er o, the #t" to *po$e a &ro$$ $a)e$ tax o, one ha)+ per#ent o, &ro$$ ,re&ht an+ ,are$ o, #ar&o an+ pa$$en&er$ $hppe+ or tran$porte+ o(t ,ro* O2a*$ #t" b" %e$$e)$ p)"n& bet!een #t" an+ other port$ AS SUSTAINE7 &9 J($t/#aton o, +e)e&aton o, )e&$)at%e taxn& po!er to )o#a) &o%ern*ent$ 0 Ne#e$$ar" *p)#aton that po!er to #reate po)t#a) #orporaton$ ,or p(rpo$e$ o, )o#a) $e), &o%ern*ent #arre$ !th t po!er to #on,er on $(#h )o#a) &o%ern*ent a&en#e$ the a(thort" to tax h9 A(thort" to )e%" taxe$' the $tate $ NOT LI6ITE7
9
There *a" be +e)e&ate+ $(#h *ea$(re o, po!er to *po$e an+ #o))e#t taxe$ a$ the )e&$)at(re *a" +ee* expe+ent .9 6(n#pa)te$ *a" be per*tte+ to tax $(b.e#t$ !h#h' ,or rea$on$ o, p(b)# po)#"' the State ha$ not +ee*e+ !$e to tax ,or *ore &enera) p(rpo$e$ k9 Tax )e&$)aton %$ tax a+*n$traton – !h" nee+ to kno! the +Heren#e Be#a($e !hat $ +e)e&ate+ $ tax tax )e&$)aton' the +e)e&aton $ INVALI79 B(t , !hat n%o)%e+ $ on)" tax a+*n$traton 0 Non +e)e&ab)t" $ NOT VIOLATE7 T!o part$ o, $"$te* o, Taxaton 19 E)e*ent$ that enter nto *po$ton o, the tax :9 Step$ taken ,or t$ a$$e$$*ent an+ #o))e#ton One $ )e&$)aton' one $ tax a+*n$traton Po!er$ that #annot be +e)e&ate+ to a+*n$trat%e a&en#e$ 0 19 $e)e#ton o, propert" to be taxe+ :9 +eter*naton o, p(rpo$e$ ,or !h#h taxe$ $ha)) be )e%e+ ;9 /xn& o, the rate o, taxaton =9 r()e$ o, taxaton n &enera) 7e)e&ab)e po!er$ !h#h are not )e&$)at%e 19 po!er to %a)(e propert" ,or taxaon n p(r$(an#e o, /xe+ r()e$ :9 e(a)2aton o, a$$e$$*ent$ b" a #entra) bo+" ?a+*n *atter$@ ;9 #o))e#ton o, taxe$ ?a+*n *atter$@ Terr$&or$a-$&y or S$&.# o% Ta'a&$o
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p)a#e o, taxaton
1D -
REASON 0 prn#p)e $ !e)) re#o&n2e+ that ho!e%er broa+ the po!er o, taxaton *a" be a$ to t$ #hara#ter an+ no *atter ho! $ear#hn& t $ n t$ extent' $(#h po!er $ ne#e$$ar)" )*te+ on)" to per$on$' propert" or b($ne$$e$ !thn t$ .(r$+#ton - ALL SUBJECTS OVER 4IC4 T4E SOVEREIGN POER O8 A STATE EXTEN7S ARE OBJECTS O8 TAXATION - BUT T4OSE OVER 4IC4 IT 7OES NOT EXTEN7 ARE' UPON T4E SOUN7EST PRINCIPLES EXE6PT 8RO6 TAXATION So/e Ba#$ Co#$!era&$o# A:e&$3 S$&.# o% Ta'a&$o
19 Prote#ton – ba$# #on$+eraton that .($t/e$ the $t($ o, taxaton a9 Ct2en$hp an+ re$+en#e are ,a#tor$ that .($t," the taxn& $(t$ e%en a$$(*n& that the propert" $ $t(ate+ o(t$+e the taxn& .(r$+#ton )ke the Ph)ppne$ b9 In #a$e o, /re n$(ran#e #o%ern& propert" $t(ate+ n Ph)ppne$' are the n$(ran#e pre*(*$ pa+ thereon taxab)e a$ a&an$t the n$(rer e%en tho(&h the /re n$(ran#e #ontra#t !a$ exe#(te+ o(t$+e the Ph)ppne$ an+ the n$(ran#e po)#" $ +e)%ere+ to be n$(re+ theren 9 Pre*(*$ are taxab)e n the Ph)ppne$ be#a($e Ph)ppne Go%ern*ent *($t &et $o*ethn& n ret(rn ,or prote#ton t &%e$ to the n$(re+ propert" n the Ph)ppne$' an+ b" rea$on o, $(#h prote#ton' the n$(rer $ bene/te+ thereb" :9 7o(b)e Taxaton an+ St($ L*taton – NEVER INVALI7 !here t $ *po$e+ b" +Herent $tate$ a9 1>> Tax Co+e 0 NON RESI7ENT CITIENS' LIKE 8ILIPINO I66IGRANTS ABROA7 ' AN7 NON RESI7ENT ALIENS ARE SUBJECT TO TAX ON INCO6E 7ERIVE7 8RO6 P4ILIPPINE SOURCES
;9 6ax* 6ob)a Se((nt(r Per$ona* an+ St($ o, Taxaton a9 6o%ab)e$ ,o))o! the per$on b9 7o*#)e o, the o!ner #9 Not a))o!e+ to $tan+ n the !a" o, taxaton o, per$ona)t" n the p)a#e !here t ha$ t$ a#t(a) $t($ an+ the re($te )e&$)at%e .(r$+#ton ex$t$ +9 App)e$ to taxaton o, per$ona) propert" e9 Share$ o, $to#k *a" ha%e a $t($ ,or p(rpo$e$ o, taxaton n a $tate n !h#h the" are per*anent)" kept re&ar+)e$$ o, the +o*#)e o, the o!ner' or the $tate n !h#h the #orporaton !a$ or&an2e+ ,9 Share$ o, $to#k *a" ha%e $t($ ,or p(rpo$e$ o, taxaton n a $tate n !h#h the" are per*anent)" kept re&ar+)e$$ o, +o*#)e o, o!ner' or $tate n !h#h the #orporaton !a$ or&an2e+ &9 Share$ o, $to#k )e,t behn+ b" non re$+ent a)en +e#e+ent n an anon"*o($ partner$hp ?,orer(nner o, #orporaton$@ n the Ph)ppne$ are $(b.e#t to Ph)ppne nhertan#e tax noth!th$tan+n& the *ob)a r()e =9 Le&$)at%e Po!er to 8x St($ – , no #on$tt(tona) pro%$on$ are %o)ate+' the po!er o, )e&$)at(re to /x $t($ $ (n+o(bte+ Se#ton > 0 the ,o))o!n& ntan&b)e properte$ are #on$+ere+ a$ properte$ !th a $t($ n Ph)ppne$ 0 9 8ran#h$e !h#h *($t be exer#$e+ n Ph)ppne$ 9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" #orporaton or $o#e+a+ anon*a or&an2e+ or #on$tt(te+ n the Ph)ppne$ n a##or+an#e !th t$ )a!$ 9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" ,ore&n #orporaton e&ht" /%e per#ent(* o, b($ne$$ o,
TAXATION SURVIVAL KIT – Aban Book %9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" ,ore&n #orporaton , $(#h $hare$' ob)&aton ha%e a#(re+ a b($ne$$ $t($ n Ph)ppne$ %9 Share$ or r&ht$ n an" partner$hp' b($ne$$ or n+($tr" e$tab)$he+ n Ph)pne$
NO TAX S4ALL BE COLLECTE7 UN7ER TITLE ; O8 CO7E IN RESPECT O8 INTANGIBLE PERSONAL PROPERT5 0 19 I8 T4E 7ECE7ENT AT T4E TI6E O8 4IS 7EAT4 OR T4E 7ONOR AT T4E TI6E O8 7ONATION – !a$ a #t2en an+ re$+ent o, a ,ore&n #o(ntr" !h#h at the t*e o, h$ +eath or +onaton 7I7 NOT *po$e a tran$,er tax o, an" #hara#ter ' n re$pe#t o, ntan&b)e per$ona) propert" o, #t2en$ n Ph)ppne$ NOT RESI7ING n that ,ore&n #o(ntr" :9 I8 LAS O8 T4E O8 T4E 8OREIGN COUNTR5 O8 4IC4 7ECE7ENT OR 7ONOR AS A CITIEN AN7 RESI7ENT AT T4E TI6E O8 4IS 7EAT4 OR ONATION – a))o!$ a $*)ar exe*pton ,ro* tran$,er or +eath taxe$ o, e%er" #hara#ter or +e$#rpton n re$pe#t o, ntan&b)e per$ona) propert" o!ne+ b" #t2en$ o, Ph)ppne$ not re$+n& that ,ore&n #o(ntr" Intan&b)e a$$et$ are +ee*e+ a$$et$ o, Ph)ppne $t($ a$ +eter*ne+ b" +o*e$t# S(ppo$e there $ an ntan&b)e a$$et o, a +e#e+ent !h#h $ not a*on& tho$e en(*erate+ n the )a!' !o()+ t be .($t/e+ to *antan that t $ an a$$et !th a Ph)ppne $t($ be#a($e the *ob)a r()e$ +oe$ not app)" Or $ho()+ $(#h a$$et be #on$+ere+ a$ ben& #o*prehen+e+ !thn *ob)a prn#p)e A' a non re$+ent a)en +e#e+ent )ea%e$ behn+ a,ter h$ +eath an a##o(nt or note pa"ab)e o, $1<<'<<< pe$o$
that (n+er the abo%e en(*eraton' r ha$ a Ph)ppne $t($ be#a($e the abo%e#te+ )a! $peak$ on)" o, #orporate ob)&aton$ -
Expre$$o (n($ e$t ex#)($on a)ter($ It *a" be $a+ that the +ebt ha$ no Ph)ppne $t($
6a" $(#h ob)&aton ho!e%er' be +ee*e+ #o%ere+ b" *ob)a r()e -
n tho$e #a$e$ !here the $t($ ,or #ertan n ntan&b)e$ are not #ate&or#a))" $pe))e+ o(t a$ n the abo%e $t(aton' there $ roo* ,or app)"n& *ob)a r()e
The SI&.# or Terr$&or$a-$&y Pr$$+-e a# a++-$e! $ Ph$-$++$e Se&&$3 The %o--o*$3 /ay "e &he %a&or# &ha& o.-! $&er+-ay $ a 3$0e -e3a- #$&.a&$o *here #$&.# or &err$&or$a-$&y $# &he %oa- ;.e#&$o)
19 :9 ;9 =9 9 D9
Kn+ or #)a$$/#aton o, tax ben& )e%e+ St($ o, the thn& or propert" taxe+ 7o*#)e or re$+en#e o, the per$on taxe+ Ct2en$hp or natona)t" o, per$on taxe+ So(r#e o, n#o*e taxe+ St($ o, ex#$e' pr%)e&e' b($ne$$ or o##(paton ben& taxe+
S$&.a&$oa- I$!e&# ) 42 Propert" Tax – n #on$+ern& the p)a#e at !h#h propert" $ taxab)e an+ the &o%ern*enta) (nt !h#h *a" r&ht,())" )e%" an+ #o))e#t the propert" tax' the ba$# ,a#tor $ the $t($ o, propert" n (e$ton a9 App)e$ both !th re$pe#t to rea) propert" an+ per$ona) propert"
1> b9 The a(thotr" o, e%er" $tate to tax a)) propert"' rea) an+ per$ona) !thn t$ )*t$ $ (n(e$tonab)e #9 Rea) e$tate $ taxab)e n the $tate !here t $ )o#ate+ re&ar+)e$$ o, the o!ner3$ re$+en#e +9 A $tate ha$ no po!er to tax rea) propert" )o#ate+ o(t$+e t$ )*t$ 62 Tax on per$on$ –a $tate *a" )e%" a per$ona) tax (pon per$on$ $(b.e#t to .(r$+#ton o, t$ $o%ere&nt" a9 Exa*p)e 0 Co**(nt" tax 72 In#o*e Tax – #r(#a) ,a#tor$0 a9 Natona)t" or #t2en$hp o, taxpa"er b9 4$ re$+en#e or +o*#)e #9 So(r#e o, n#o*e - SEC2 672 Geera- Pr$$+-e# o% Io/e Ta'a&$o $ &he Ph$-$++$e#2 - Ex#ept !hen other!$e pro%+e+ n th$ Co+e0 - ?A@ A #t2en o, the Ph)ppne$ re$+n& theren $ taxab)e on a)) n#o*e +er%e+ ,ro* $o(r#e$ !thn an+ !tho(t the Ph)ppne$M -
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?B@ A nonre$+ent #t2en $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$M ?C@ An n+%+(a) #t2en o, the Ph)ppne$ !ho $ !orkn& an+ +er%n& n#o*e ,ro* abroa+ a$ an o%er$ea$ #ontra#t !orker $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$0 Pro%+e+' That a $ea*an !ho $ a #t2en o, the Ph)ppne$ an+ !ho re#e%e$ #o*pen$aton ,or $er%#e$ ren+ere+ abroa+ a$ a *e*ber o, the #o*p)e*ent o, a %e$$e) en&a&e+ ex#)($%e)" n nternatona) tra+e $ha)) be treate+ a$ an o%er$ea$ #ontra#t !orkerM ?7@ An a)en n+%+(a)' !hether a re$+ent or not o,
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?E@ A +o*e$t# #orporaton $ taxab)e on a)) n#o*e +er%e+ ,ro* $o(r#e$ !thn an+ !tho(t the Ph)ppne$M an+
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?8@ A ,ore&n #orporaton' !hether en&a&e+ or not n tra+e or b($ne$$ n the Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$9
Sa+ ar)ne $ taxab)e on the n#o*e rea)2e+ ,ro* the $a)e o, t$ t#ket$ n Ph)ppne$ thro(&h a $a)e$ o#eM b(t at the $a*e t*e' the Co(rt ob$er%e+ that the ar)ne !o()+ not be $(b.e#t to an" b($ne$$$ tax na$*(#h a$ the ab$en#e o, an" )an+n& r&ht$ !o()+ *ean that t $ not en&a&e+ n the exer#$e o, an" pr%)e&e !h#h #o()+ be $(b.e#t to the b($ne$$ or pr%)e&e tax An nternatona) #arrer +on& b($ne$$ n Ph)ppne$ $ taxab)e at t!o an+ one ha), per#ent on &ro$$$ Ph)ppne b))n&$ +er%e+ ,ro* #arra&e o, per$on$' ex#e$$ ba&&a&e' #ar&o an+ *a) or&natn& ,ro* Ph)ppne$ n a #ontno($ an+ (nnterr(pte+ F&ht' rre$pe#t%e o, p)a#e o, $a)e or $$(e an+ p)a#e o, pa"*ent o, t#ket or pa$$a&e +o#(*ent9 Pro%+e+ 0 19 t#ket$ re%a)+ate+ :9 e#han&e+ an+ or n+r$e+ to another nternatona) ar)ne
;9 Ex#$e or Pr%)e&e Taxe$ – !here the tax that $ ben& *po$e+ $ a tax (pon the per,or*an#e o, an a#t' en.o"*ent o, a pr%)e&e or en&a&n& n an o##(paton' or !hat $ $o*et*e$ kno!n a$ ex#$e r pr%)e&e tax
TAXATION SURVIVAL KIT – Aban Book =9 Exe*pton o, Go%ern*ent ,ro* Taxe$ – 6atter o, p(b)# po)#" a9 St($ o, taxaton $ the p)a#e n !h#h the a#t $ per,or*e+ or !here the o##(paton $ en&a&e+ n 4ERE T4E SALE IS EPR8ECTE7 AN7 CONSU66ATE7 – 7ETER6INES T4E SITUS O8 TAXATION Le&$)at%e po!er to /2 the $t($ o, taxaton n#)(+e$ the po!er to /x the p)a#e o, taxaton bet!een +Herent p)a#e$ n $a*e $tate The $t($ o, $a)e ,or tax p(rpo$e$ $ NOT T4E PLACE !here the #ontra#t o, $a)e $ per,e#te+ b(t the p)a#e o, t$ #on$(**aton Sa)e$ tax on the $a)e o, ,(e)$ an+ o)$' $a+ tax *a" no be app)e+ to +e)%ere$ o(t$+e the *(n#pa)t" $n#e the #on$(**aton o, $a)e $ +eter*ne+ b" +e)%er" o, the thn&$ !h#h are the $(b.e#t *atter o, #ontra#t The #t" #an tax the $a)e o, *at#he$ !here $hp*ent$ or +e)%ere$ are *a+e +re#t)" to #($to*er$ o(t$+e the #t" pro%+e+ the $a)e$ are booke+ an+ pa+ ,or n the #t" to a #arrer ,or $hp*ent to the b("er9 GENERALL5 7ELIVER5 TO T4E CARRIER IS 7ELIVER5 TO BU5ER9 A )o#a) broker $ taxab)e n th$ #o(ntr" !th re$pe#t to the #o**$$on$ re#e%e+ b" t ,or ne&otatn& an+ #on$(**atn& the $a)e n Japan o, pro+(#t$ BELONGING to Ph)ppne Corporaton9 hat $ *portant $ that broker3$ tax $ NOT BEING LEVIE7 on $a)e o, &oo+$ n Japan b(t on the taxpa"er3$ brokera&e $er%#e$ n Ph)ppne$
a9 Propert" o, the State an+ o, t$ *(n#pa) $(b+%$on$ +e%ote+ to &o%ern*ent ($e$ an+ p(ro$e $ &enera))" +ee*e+ to be exe*pt ,ro* taxaton a)tho(&h no expre$$ pro%$on n )a! $ *a+e there,or b9 Con$tt(ton +oe$ not #ontan an" pro%$on &rantn& tax exe*pton to Go%ern*ent #9 REASON 0 Go%ern*ent3$ xe*pton ,ro* taxe$ $ IN4ERENT LI6ITATION on the $tate3$ taxn& po!er +9 NO CONSTITUTIONAL LI6ITATION on the po!er o, Con&re$$ to Tax Ar*e+ 8or#e$ o, Ph)ppne$ , t !$he$ to +o $o e9 A #ontra#tor !ho (n+ertake$ a .ob #ontra#t ,or the Go%ern*ent $ not .($t/e+ n #)a*n& that $ $ho()+ be exe*pt ,ro* pa"*ent o, #ontra#tor3$ tax $*p)" b" ar&(n& that , pa"*ent thereo, !ere n$$te+ (pon' he !o()+ .($t $h,t the tax o%er to the Go%ern*entM an+ that a$ a #on$e(en#e' the Go%ern*ent pa"n& tax a$ part o, p(r#ha$e pr#e o, #ontra#t(a) $er%#e$ ren+ere+ !o()+ be taxn& t$e), 9 Internatona) Co*t" a9 Re#pro#t" )e$ at the root o, th$ )*taton ,or t #annot be +ene+ that !th re#pro#t" )o#ate+ at the botto* )ne' har*on($ an+ pro+(#t%e re)aton$hp$ a*on& the %aro($ $tate$ #an be *antane+
:< b9 Internatona) ob)&aton$ #on#o*nant !th o(t a##eptan#e o, the prn#p)e$ o, nternatona) a)! a$ part o, o(r )a! +e*an+ that #ertan repre$entat%e$ o, ,ore&n $tate$ $tatone+ an+ propert" o, $(#h ,ore&n $tate$ ,o(n+ !thn o(r terrtor" be exe*pte+ ,ro* taxaton
=9 Non – n,rn&e*ent o, re)&o($ ,ree+o* an+ !or$hp ?Se#ton ' Art#)e III@ 9 Non – *par*ent o, #ontra#t$ ?Se#ton 1< Art#)e III@ D9 Non – *pr$on*ent ,or +ebt or non pa"*ent o, po)) tax ?Se#ton :<' Art#)e III@
#9 SECTION 1: ' Art#)e II' 1> Con$$tt(ton 9 P4ILIPPINES A7OPTS GENERALL5 ACCEPTE7 PRINCIPLES ON INTERNATIONAL AL AS PART O8 T4E LA O8 T4E LAN7 AN7 A744ERES TO POLIC5 O8 PEACE'EUALIT5' JUSTICE' 8REE7O6' COOPERATION AN7 A6IT5 IT4 ALL NATIONS +9 SECTION 1 – 7IPLO6ATIC AN7 CONSULAR REPRESENTATIVES ARE EXE6PT 8RO6 CO66UNIT5 TAX
9 R()e re(rn& that appropraton$' re%en(e an+ tarH b))$ $ha)) or&nate ex#)($%e)" ,ro* 4o($e o, Repre$entat%e$ ?Se#ton :=' Art#)e VI@ >9 Un,or*t"' e(tab)t" an+ pro&re$$%t" o, taxaton ?Se#ton :>' Art#)e VI @ 9 L*taton$ on the #on&re$$ona) po!er to +e)e&ate to the Pre$+ent the a(thort" to /x tarH rate$' *port an+ export (ota$' et# 1<9Tax exe*pton o, properte$ a#t(a))"' +re#t)" an+ ex#)($%e)" ($e+ ,or re)&o($' #hartab)e an+ e+(#atona) p(rpo$e$ ?Se#ton :>'?;@ Art#)e VI@ 119Votn& re(re*ent n n #onne#ton !th )e&$)at%e &rant o, tax exe*pton ?Se#ton :>?=@' Art#)e VI@
CONSTITUTIONAL LIMITATIONS ON TAXING POWER
19 7(e pro#e$$ #)a($e' !hether t be $(b$tant%e or pro#e+(ra) ?Se#ton 1' Art#)e III@
1:9Non – *par*ent o, .(r$+#ton o, S(pre*e Co(rt n tax #a$e$ ?Se#ton : an+ Art#)e VIII@ 1;9Exe*pton ,ro* taxe$ o, the re%en(e$ an+ a$$et$ o, e+(#atona) n$tt(ton$' n#)(+n& &rant$' en+o!*ent$' +onaton$ an+ #ontrb(ton$
:9 E(a) Prote#ton o, the )a!$ ?Se#ton 1' Art#)e III@ ;9 8ree+o* o, $pee#h an+ o, the pre$$ ?Se#ton =' Art#)e III@
No& a&.a--y -$/$&a&$o# o &a'$3 +o*er BUT *h$h ha0e "ear$3 o &a'a&$o
TAXATION SURVIVAL KIT – Aban Book 19 Con$tt(tona) re(re*ent on $(b.e#t an+ tt)e o, b))$ ?Se#ton :D' Art#)e VI@
9 Pettoner$ ,a)e+ to $ho! that the VAT )a! !a$ $$(e+ #apr#o($)" an+ !h*$#a))" or n an arbtrar" or +e$pot# *anner b" pa$$on or per$ona) ho$t)t" $n#e t appear$ that a #o*prehen$%e $t(+" o, VAT !a$ *a+e be,ore VAT )a! !a$ $$(e+
:9 Po!er o, Pre$+ent to %eto an" part#()ar te* or te*$ n an appropraton' re%en(e or tarH b) ?Se#ton :?:@' Art#)e VI@
9 hen the #on$tt(tona)t" o, the )e&$)at%e taxn& a#t $ (e$tone+ on the &ro(n+ that there $ +ena) o, +(e pro#e$$' an a#t(a) #a$e or #ontro%er$" *($t /r$t ex$t be,ore #o(rt$ #an be #a))e+ (pon to r()e on $a+ $$(e
;9 Pro%$on !h#h re(re$ that no *one" $ha)) be pa+ o(t o, trea$(r" ex#ept n p(r$(an#e o, an appropraton *a+e b" )a! ?Se#ton :?1@ Art#)e VI@ =9 Pro%$on a&an$t the appropraton o, p(b)# *one" or propert" ,or bene/t o, an" #h(r#h' $e#t or $"$te* o, re)&on et# ?Se#ton :??:@ Art#)e VI@ 9 Pro%$on !h#h *an+ate$ that *one" #o))e#te+ on a tax )e%e+ ,or a p(b)# p(rpo$e $ha)) be pa+ o(t ,or $(#h p(rpo$e on)" ?Se#ton :?;@ Art#)e VI@ D9 Pro%$on re&ar+n& a))ot*ent$ to )o#a) &o%ern*ent$ ?Se#ton D' Art#)e X@ Co#&$&.&$oa- L$/$&a&$o# E'+-a$e!
A9 7(e Pro#e$$ o, La! – Se#ton 1' Art#)e ; o, Con$tt(ton 0 No per$on $ha)) be +epr%e+ o, ),e' )bert"' or propert" !tho(t +(e pro#e$$ o, )a!9 a9 There ha%e been o##a$on$ !hen S(pre*e Co(rt r()e+ on the #on$tt(tona)t" o, #ertan taxn& *ea$(re$ !here +(e pro#e$$ o, )a! !a$ the ,o#a) (e$ton$9 b9 Kapatran %$ Tan 0 7(e pro#e$$ !a$ NOT VIOLATE7 !hen the VAT )a! !a$ pro*()&ate+ be#a($e there !a$ no &ra%e ab($e o, +$#reton n#+ent to t$ pro*()&aton
#9 The ab$en#e o, threat o, **e+ate har* *ake$ the nee+ ,or .(+#a) nter%nton$ )e$$ e%+ent an+ (n+er$#ore$ the e$$enta) nat(re o, pettoner3$ atta#k on )a! on &ro(n+ o, +ena) o, +(e pro#e$$ a$ a *ere a#a+e*# +$#($$on o, *ert$ o, )a! +9 There ha%e been no not#e$ o, a$$e$$e*ent $$(e+ to pettoner$ an+ no +eter*naton$ at the a+*n$trat%e )e%e)$ o, ther #)a*$ $o a$ to ))(*nate the a#t(a) operaton o, the )a! an+ enab)e ($ to rea#h $o(n+ .(+&e*ent re&ar+n& $o ,(n+a*enta) (e$ton$ a$ tho$e ra$e+ n the$e $(t$ e9 hen tax t(rn$ o(t to be o, a #on/$#ator" nat(re' $(#h an *po$ton #o()+ %er" !e)) be #on$+ere+ a$ ben& %o)at%e o, the +(e pro#e$$ prn#p)e ,9
7(e pro#e$$ #)a($e n #on$tt(ton *a" be n%oke+ !here a tax $tat(te $ $o arbtrar" that t /n+$ no $(pport n Con$tt(ton
:: &9 Exa*p)e 0 !here the $a*e #an be $ho!n to a*o(nt to #on/$#aton o, propert"9 h9 C)a$$/#aton ,or taxaton *($t not be pro*pte+ b" a $prt o, ho$t)t" or +$#r*naton that /n+$ no $(pport n rea$on 9
.9
6o+/e+ $#he+()er n#o*e tax !hereb" n+%+(a) n#o*e !a$ #)a$$/e+ nto three +Herent #)a$$e$ (n+er +Herent tax rate$ ??#o*pen$aton' b($ne$$other n#o*e an+ pa$$%e n%e$t*ent n#o*e@ $ NOT A 7ENIAL o, 7UE PROCESS be#a($e there $ no proo, o, arbtrarne$$ n *po$ton o, tax rate$ 7UE PROCESS IS NOT VIOLATE7 I8 A GOVERN6ENTAL BI75 LIKE 8ISCAL INCENTIVES REVIE BOAR7 4IC4 AS TASKE7 IT4 7UT5 O8 RECO66EN7ING RESOTRIATION O8 TAX EXE6PTIONS PREVIOUSL5 ABOLIS4E7 UN7ER PRESI7ENTIAL 7ECREES ' IS 4EA7E7 B5 T4E 6INISTER O8 8INANCE' 4O AT T4E SA6E TI6E IS VER5 SA6E PERSON 4O APPROVES OR 7ISAPPROVES T4E 8IRB3S RECO66EN7ATION PROVI7E7 NO TO OPPOSING OR CON8LICTING INTERESTS ARE INVOLVE7 LIKE T4E CASE O8 RESTORE7 TAX EXE6PTION O8 A PARTICULAR TAXPA5ER 4ERE IT APPEARS T4AT T4ERE IS NO INTEREST T4AT IS EXISTING 4IC4 IS IN CON8LICT IT4 INTERESTS O8 SUC4 TAXPA5ER
k9 There $ +ena) o, +(e pro#e$$ on a##o(nt o, pa$$a,e o, an or+nan#e n #t" o, *an)a !h#h *po$e$ a per*t ,ee on a)en$ a$ a #on+ton to e*p)o"*ent or en&a&n& n an" b($ne$$ or o##(paton' !here t appear$ that (n+er $a+
)9
The #o(rt ponte+ o(t that a)en$' on#e a+*tte+ n the Ph)ppne$' #anot be +epr%e+ o, ),e !tho(t +(e pro#e$$ o, )a! an+ th$ &(arantee n#)(+e$ the *ean$ o, )%e)hoo+
*9 7(e pro#e$$ !a$ not ob$er%e+ !hen tra) #o(rt' n an a#ton ,or +e#)arator" re)e,' +e#)are+ that #ertan propert" o!ne+ b" Ro*an Catho)# Ch(r#h $ Ban&(e+ Abra !a$ tax exe*pt (n+er 1; Con$tt(ton' t appearn& that not #o(rt hearn& !a$ #on+(#te+ thereon n9 I*porter o, &oo+$ $ +epr%e+ o, pro#e+(ra) +(e pro#e$$ !hen $o #a))e+ a)ert not#e$ ?%a)(aton o, &oo+$ *a+e b" 8nan#e Atta#he$ abroa+@ !ere not pre$ente+ n the C($to*$ prote$t pro#ee+n&$ n the B(rea( o, C($to*$ a$ !e)) a$ n the CTA !hen the #a$e !a$ on appea) theren9 o9 The a)ert not#e$ #ontane+ a h&her %a)(aton o, *porte+ &oo+$ than %a)(aton n+#ate+ n I*port Entre$ #o%ern& &oo+$ n (e$ton B9 The E(a) Prote#ton o, La! – +oe$ not on)" $peak o, NON 7EPRIVATION o, 7UE PROCESS b(t n Se#ton 1' Art#)e III thereo,' t a)$o e*phat#a))" or+an$ that NOR S4ALL AN5 PERSON BE 7ENIE7 EUAL PROTECTION O8 LAS a9 The po!er o, the $atte to *ae rea$onab)e an+ nat(ra) #)a$$/#aton$ ,or the p(rpo$e$ o, taxaton $ (n(e$tone+ an+ $(#h #)a$$/#aton *a" re)ate to the $(b.e#t taxaton' the kn+ o, propert" the rate$ to be )e%e+ or a*o(nt$ to be ra$e+' an+ the *etho+$ o, a$$e$$*ent' %a)(aton an+ #o))e#ton9
TAXATION SURVIVAL KIT – Aban Book b9 S(#h po!er to #)a$$," n *atter$ o, taxaton $ $a+ to be broa+er than $o*e other exer#$e$ o, )e&$)at%e po!er' entt)e+ to pre$(*pton o, %a)+t" an+ !)) not' a$ a r()e be nter,ere+ !th b" the .(+#ar" !th .(+#ar" n the ab$en#e o, a #)ear $ho!n& o, (nrea$onab)ene$$' +$#r*naton or arbtrarne$$ #9 C)a$$/#aton *($t be ba$e+ (pon rea) an+ $(b$tanta) +Heren#e$ bet!een per$on$' propert" or pr%)e&e$ an+ tho$e not taxe+ *($t bear $o*e rea$onab)e re)aton to the ob.e#t or p(rpo$e o, )e&$)aton or to $o*e per*$$b)e &o%ern*enta) po)#" or )e&t*ate an+ o, &o%ern*enta) a#ton +9 Con&re$$ #an *ake +$tn#ton$ an+ #)a$$/#aton$9 Th($ t #an #)a$$," taxpa"er$ nto #a)en+ar "ear an+ /$#a) "ear taxpa"er$ ,or n#o*e tax p(rpo$e$ e9 The e(a)t" o, taxaton r()e' $ NOT VIOLATE7 , #)a$$/#aton$ r +$tn#ton$ are *a+e a$ )on& a$ the $a*e are ba$e+ on rea$onab)e an+ $(b$tanta) +Heren#e$9 ,9
There $ a rea$onab)e ba$$ ,or *po$n& )o!er rate$ on ,ore&n $o(r#e+ n#o*e o, non – re$+ent #t2en$ a$ e%+en#e+ b" pre,erenta) or )o!er rate$ o, 1Q :Q ;Q be#a($e the$e are the peop)e !ho earn ,ore&n #(rren#" abora+ !h#h are re*tte+ here' a$ #o*pare+ to the re$+ent #t2en$ !ho ha%e to pa" the or+nar" &ra+(ate+ rate$
&9 The pre,erenta) tax rate$ are NO LONGER APPLICABLE ON INCO6E O8 NON RESI7ENT CITIENS ABROA79 Un+er the tax re,or* a#t o,
on n#o*e Ph)ppne$
+er%e+
,ro*
$o(r#e$
!thn
h9 In#o*e o, non re$+ent #t2en$ ,ro* ,ore&n $o(r#e$ are NOT SUBJECT to P4ILIPPINE TAX The Fo--o*$3 a#e# he-! &ha& +r$$+-e WAS NOT VIOLATED )
e;.a-
+ro&e&$o
19 %at )a! +oe$ not +$#r*nate (n+()" a&an$t #($to*$ broker$ !ho are $(b.e#t to $a+ tax :9 the ex#)($on o, $a+ broker$ ,ro* exe*pton &rante+ to pro,e$$ona)$ (n+er Tax Co+e $ .($t/e+ b" the ,a#t that #($to*$ broker$ +Her ,ro* tax exe*pt pro,e$$ona)$ #on$+ern& that the a#t%te$ o, #($to*$ broker$ partake o, the nat(re o, a b($ne$$ rather than a pro,e$$on ;9 the $tate ha$ the nherent po!er to $e)e#t the $(b.e#t$ o, taxaton an+ ne(a)te$ !h#h re$()t ,ro* $n&)n& (t o, one part#()ar #)a$$ ,or taxaton or tax exe*pton$ n,rn&e+ no #on$tt(tona) )*taton =9 the $#he+()er n#o*e tax !h#h *po$e$ &ra+(ate+ rate$ ,ro*
:= taxpa"er$ be)on&n& to one #)a$$ !ere not treate+ a)ke 9 A tax on an n$ta))aton *ana&er $ NOT 7ISCRI6INATOR5 .($t be#a($e at the t*e $a+ tax !a$ *po$e+' there !a$ no other per$on n the )o#a)t" !ho exer#$e+ $(#h o##(paton9 The tax $ an+ !)) be app)#ab)e to an" per$on or /r* !ho exer#$e$ $(#h #a))n& or o##(paton +e$&nate+ a$ n$ta))aton *ana&er >9 A )a! !h#h *po$e$ a pre,erenta) ,ran#h$e tax rate o, :Q on a part#()ar ,ran#h$e &rantee !h)e other ,ran#h$e &rantee$ are $(b.e#t to Q $ NOT VIOLATIVE o, the e(a) prote#ton or e(a)t" o, taxaton r()e n Co$ntt(ton 9 T4E LEGISLATURE 4AS T4E IN4ERENT POER NOT ONL5 TO SELCT T4E SUBJECTS O8 TAXATION BUT ALSO GRANT TAXX EXE6PTIONS 1<9The ,a#t that the taxpa"er $ on)" $(&ar #entra) or re/ner" n the *(n#pa)t" !here the tax or+nan#e $ ena#te+ +oe$ not *ake $a+ or+nan#e +$#r*nator"9 REASON 0 $n#e other re/nere$ to be e$tab)$he+ n the ,(t(re !o()+ a)$o be taxab)e' no $n&)n& o(t o, taxpa"er to t$ +$a+%anta&e ha$ e%er taken p)a#e 119There $ no +$#r*naton or #)a$$ )e&$)aton , a $tat(te a(thor2e$ the Ct" o, 6an)a to )e%" o##(paton taxe$ !herea$ that $a*e a(thort" $ !thhe)+ ,ro* other #te$ an+ *(n#pa)te$ $ho()+ be $o a(thor2e+ ,or that $ a *atter ,or )e&$)at(re to +e#+e 1:9A tax )e%e+ on boar+n& $tab)e$ ,or ra#e hor$e$ $ not +$#r*nator" !here t appear$ that NO SUC4 TAX $
Ca#e# *here VIOLATED )
E;.a-
+ro&e&$o
r.-e#
HAS
BEEN
19 a tax or+nan#e )e%e+ an export tax on #entr,(&a) $(&ar*))e+ b" Or*o# S(&ar Co' *entonn& on)" th$ #o*pan" b" na*e9 The or+nan#e +oe$ not $at$," the re($te$ o, rea$onab)e #)a$$/#aton9 :9 There $ +$#r*naton !here )o#a) tax !a$ *po$e+ on a&ent$ or #o$&nee$ o, o(t$+e +ea)er$ n $o,t+rnk$ !tho(t $a+ tax ben& )e%e+ a)$o on )o#a) +ea)er9 T4E CLASSI8ICATION O8 SUC4 AGENTS AN7 COSIGNEES 4O ARE TAXABLE AN7 LOCAL 7ELAERS 4O ARE EXE6PT IS NOT BASE7 ON SUBSTANTIAL 7ISTINCTION ;9 An e*p)o"*ent per*t ,ee *po$e+ on a)en .ob app)#ant$ re&ar+)e$$ o, the nat(re o, e*p)o"*ent ?!hether #a$(a)' per*anent' part t*e or ,()) t*e or )o!)" pa+ e*)oo"ee or h&h)(&" pa+ exe#(t%e $ #on$tt(tona))" n%a)+ be#a($e t 8AILS TO CONSI7ER VVALI7 SUBSTANTIAL 7I88ERENCES IN SITUATION A6ONG T4E ALIENS REUIRE7 TO PA5 IT9 =9 A CLASSI8ICATION S4OUL7 BE BASE7 ON REAL AN7 SUBSTANTIAL 7I88ERENCES 4AVING A REASOABLE RELATION TO T4E SUBJECT O8 LEGISLATION 9 Lo#a or+nan#e !h#h )e%e$ an a+ %a)ore* tax on *otor %eh#)e$ re&$tere+ n 6an)a !tho(t a)$o taxn& tho$ !h#h are re&$tere+ o(t$+e #t" b(t !h#h enter #t" ($e t$ $treet$ o##a$ona))" %o)ate$ on e(a)t" o, taxaton D9 here t appear$ that Se#ton 1< tax #o+e' !h#h
TAXATION SURVIVAL KIT – Aban Book !arnn& $&n on ther pro+(#t$ $tatn& that $k**e+ *)k $ NOT SUITABLE 8OR 8EE7ING IN8ANTS' $ en,or#e+ on)" a&an$t *an(,a#t(rer$ o, e%aporate+ /))e+ *)k $(#h a#ton $ 7ISCRI6INATOR5 an+ $ a +ena) o, e(a) prote#ton o, )a!
6a" a b($ne$$ )#en$e be re(re+ ,or the $a)e or +$trb(ton o, prnte+ *atera)$ )ke ne!$paper$ NO -
J(+#a) nter%enton $ ALSO (nne#e$$ar" n the ab$en#e o, ,a#t(a) $ettn& or an a#t(a) #ontro%er$" !h#h $ en&en+ere+ b" the $$(an#e o, an a$$e$$*ent a&an$t taxpa"er
to app)" an or+nan#e re(rn& a b($ne$$ )#en$e to be obtane+ be,ore a per$on #o()+ $e)) ne!$paper$ n $treet$ !o()+ be to *po$e a pror re$trant on pre$$ ,ree+o* be#a($e a ne!$paper $ NOT n the $a*e #ate&or" a$ a pneapp)e or a $oap po!+er' or a par o, $hoe$ !ho$e $a)e *a" be #on+tone+ on o$$e$$on o, a b($ne$$$ )#en$e
C2 Free!o/ o% S+eeh a! o% &he Pre##
Se#ton =' Art#)e III o, Con$tt(ton NO LA S4ALL BE PASSE7 ABRI7GING T4E 8REE7O6 O8 SPEEC4' O8 EXPRESSION' OR O8 PRESS' OR RIG4T O8 PEOPLE PEACEABL5 ASSE6BLE AN7 PETITION T4E GOVERN6ENT 8OR RE7RESS O8 GRIEVANCES
)) th$ ,ee NOT CONSTITUTE A RESTRAINT ON PRESS 8REE7O6 OR 8OR T4AT 6ATTER' T4E 8REE7O6 O8 ORS4IP
-
NO9 Th$ ,ee $ NOT *po$e+ ,or the exer#$e o, a pr%)e&e b(t on)" ,or the p(rpo$e o, +e,ra"n& part o, the #o$t o, re&$traton
-
6ere a+*n ,ee one not *po$e+ on exer#$e o, a pr%)e&e' *(#h )e$$ a #on$tt(tona) r&ht
hen $ tax $a+ to be %o)at%e o, pre$$ ,ree+o* or ,ree+o* o, tho(&ht an+ expre$$on -
There $ #(rta)e*ent o, pre$$ ,ree+o* an+ ,ree+o* o, tho(&ht an+ expre$$on , a tax $ e)%e+ n or+er to $(ppre$$ th$ ba$# r&ht o, peop)e (n+er Con$t(ton
A ne!$paper p(b)$her *($t pa" e(tab)e an+ non +$#r*antor" taxe$ on h$ b($ne$$' the #o(rt ponte+ o(t that n Gro$.ean #a$e' the )a! *po$e+ a )#en$e e(%a)ent to :Q o, &ro$$ re#ept$ +er%e+ ,ro* a+%ert$e*ent$ on)" on ne!$paper$ !th a #r#()aton o, *ore than :
Tax !a$ not ba$e+ on the %o)(*e o, a+%ert$e*ent a)one' b(t !a$ *ea$(re+ b" extent o, t$ #r#()aton a$ !e))' the )a! app)e+ on)" to the thrteen )ar&e ne!$paper$ n Lo($ana' )ea%n& (ntaxe+ ,o(r ne!$paper$ !th a #r#()aton o, on)" $)&ht)" )e$$ than :
D2 No 1 $%r$3e/e& o% Re-$3$o.# Free!o/
Se#ton ' Art#)e III Con$tt(ton – NO LA S4ALL BE 6A7E RESPECTING AN ESTABLIS46ENT O8 RELIGION OR PRO4IBTING T4E 8REE EXERCISE T4EREO89 T4E 8REE EXERCISE AN7 ENJO56ENT O8 RELIGIOUS PRO8ESSION AN7 ORS4IP IT4OUT 7ISCRI6INATION OR PRE8ERENCE S4ALL 8OREVER BE ALLOE79 NO RELIGIOUS TEST S4ALL BE REUIRE7 8OR EXERCISE O8 CIVIL OR POLITICAL RIG4TS - a *(n#pa) )#en$e
tax on the $a)e o, bb)e$ an+ re)&o($
:D )tt)e pro/t #on$tt(te$ a #(rta)*ent o, re)&o($ ,ree+o* an+ !or$hp !h#h $ &(arantee+ b" the Con$ttt(ton9 A )#en$e ,ee $ /xe+ n a*o(nt an+ (nre)ate+ to the re#ept$ o, taxpa"er the )#en$e ,ee !hen app)e+ to a re)&o($ $e#t !a$ a#t(a))" ben& *po$+ a$ a #on+ton ,or exer#$e o, $e#t3$ r&ht (n+er Con$tt(ton L#en$e ,ee re$tran$ n a+%an#e tho$e #on$tt(tona) )berte$ o, pre$$ an+ re)&on' an+ ne%tab)" ten+ to $(ppre$$ ther exer#$e Ph)ppne Ar)ne$ Ca$e -
-
the app)#aton o, a )#en$e tax to re)&o($ &ro(p$' $(#h a$ the Jeho%ah3$ !tne$$e$' n #onne#ton !th the )atter3$ $a)e o, re)&o($ book$ an+ pa*ph)et$ $ (n#on$tt(tona)9 It $ one thn& to *po$e a tax on n#o*e or propert" o, a prea#her
Stat(te a$ no! a*ne+e ha$ re$tr#te+ that tax exe*pton o, re)&o($ an+ other or&an2aton$ theren $pe#/e+ on)" to the extent o, !th+ra!n& the exe*pton !th re$pe#t to the n#o*e rea)2e+ ,ro* 0 19 pro+(#t%e ($e o, ther proeprte$' rea) or per$ona) ?rent$' +%+en+$ or ntere$t@ :9 ,ro* pro/tab)e b($ne$$ p(r$(t$' !h#h properte$ or b($ne$$e$ are NOT ESSENTIAL to or ne#e$$ar)" #onne#te+ !th ther re)&o($ #hartab)e or e+(#atona) p(rpo$e$
In an $o)ate+ $a)e o, #h(r#h )ot ben& ($e+ ,or re)&o($ p(rpo$e$' the pro#ee+$ or net #o*e o, !h#h !a$ ($e+ to b(" another )ot' a$ ne! $te to b()+ a #h(r#h' n#o*e ,ro* tran$a#ton !a$ CONSI7ERE7 *ere)" n#+enta) to t$ re)&o($ p(rpo$e$9 The propert" !a$ NOT a#(re+ ,or $pe#()aton or a$ an n%e$te*ent to be e%ent(a))" $o)+ pr*ar)" ,or *onetar" &an BIR ha$ #on$$tent)" r()e+ that pa$$%e n%e$e*ent n#o*e $(#h a$ ntere$t n#o*e ,ro* P4 #(rren#" bank +epo$t an+ "e)+ or an" other *onetar" bene/t ,ro* +epo$t $(b$tt(te$' tr($t ,(n+$' an+ $*)ar arran&e*ent$ o, re)&o($ #orporaton$ an+ other or&an2aton$ E9 No 1 $/+a$r/e& o% Co&ra&# Se#ton 1<' Art#)e III – NO LA I6PAIRING T4 OBLIGATIONS O8 CONTRACTS S4ALL BE PASSE7
here a *nn& #on#e$$on !a$ &rante+ (n+er a Ro"a) 7e#ree an+ !here t appear$ that (n+er $a+ +e#ree no other taxe$ ex#ept tho$e *entone+ theren $ha)) be *po$e+ on *nn& an+ *eta))(r&#a) n+($tre' the )e%" o, a tax on $a+ *nn& #)a* p)($ a+ %a)ore* tax on *nera) o(tp(t (n+er $(b$e(ent )a! #on$tt(te an *par*ent o, #ontra#t be#a($e a *nn& #on#e$$on $ a #ontra#t
Non *par*ent r()e 7OES NOT APPL5 to p(b)# (t)t" ,ran#h$e$9
TAXATION SURVIVAL KIT – Aban Book Se#ton 11' Art#)e XII Con$tt(ton0 No p(b)# (t)t" ,ran#h$e or r&ht $ha)) be &rante+ ex#ept (n+er the #on+ton that t $ha)) be $(b.e#t to a*en+e*ent' a)teraton or repea) b" the Con&re$$ !hen the #o**on &oo+ $o re(re$9 -
Non *par*ent *a" not be n%oke+ n #a$e o, p(b)# (t)t" ,ran#h$e &rantee9
-
Le&$)at(re #an *par a &rantee3$ ,ran#h$e $n#e a ,ran#h$e $ $(b.e#t to a*en+*ent' a)teraton' or repea) b" Con&re$$ !hen p(b)# ntere$t $o re(re$
-
The r()e on non *par*ent $ NOT 7SREGAR7E7 !th the *po$ton o, a &her tax rate on an ex$tn& ,ran#h$e' t apperan& that $a+ ,ran#h$e !a$ &rante+ !th expre$$ (n+er$tan+n& an+ (pon #on+ton that t $ha)) be $(b.e#t to a*en+*ene't a)teraton an+ repea)
F2 No 1 $/+r$#o/e& %or De"& or No +ay/e& o% Po-- Ta'
-
No per$on $ha)) be *pr$one+ ,or +ebt or non pa"*ent o, a po)) tax
7ebt – an" )ab)t" to ap" *one" ar$n& o(t o, a #ontra#t' expre$$ or *p)e+ The prohbton a&an$t *pr$on*ent ,or +ebt !a$ bro(&ht abo(t b" the ,or#e o, p(b)# opnon !h#h )ooke+ !th abhorren#e on $tat(te$ per*ttn& the #r(e) *pr$on*ent o, +ebtor Con$tt(ton $eek$ to pr%ent ($e o, #oer#e the pa"*ent o, +ebt$
G2 Or$3$ o% A++ro+r$a&$o, Re0e.e a! Tar$: B$--#
Se#ton := 0Art#)e VI o, Con$tt(ton pro%+e$ 0 a)) appropraton' re%en(e' or tarH b))$' b))$ a(thor2n& the n#rea$e o, p(b)# +ebt' b))$' o, )o#a) app)#aton an+ pr%ate b))$ $ha)) orn&ate ex#)($%e)" n the 4R b(t the Senate *a" propo$e or #on#(r !th a*en+e*ent$
H2 U$%or/$&y, Ta'a&$o
E;.$&a"$-$&y,
a! Pro3re##$0$&y
o%
Se#ton :> Art#)e VI o, Co$ntt(ton 0 Pro%+e$ the r()e o, a taxaton $ha)) be (n,or* an+ e(tab)e9 The Con&re$$ $ha)) e%o)%e a pro&re$$%e $"$te* o, taxaton Un,or*t" 00 a)) taxab)e art#)e$ or kn+$ o, propert" o, $a*e #)a$$ $ha)) be taxe+ at $a*e rate9 7oe$ not *ean that )an+$' #hatte)$' $e#(rte$' n#o*e' o##(paton$' ,ran#h$e$' pr%)e&e$' ne#e$$te$' an+ )(x(re$' $ha)) be a$$e$$e+ at $a*e rate9
7Herent art#)e$ *a" be taxe+ at +Herent a*o(nt$ pro%+e+ that the rate $ (n,or* on $a*e #)a$$ e%er"!here !th a)) peop)e at a)) t*e$
o, po!er o, $tate to
The #ontro) o, #re+tor o%er the per$on o, h$ +ebtor ha$ been abo)$he+ on h(*antaran #on$+eraton$
A tax $ (n,or* !hen t operate$ !th $a*e ,or#e an+ eHe#t n e%er" p)a#e !here the $(b.e#t o, t $ ,o(n+
:> A tax o, :pe$o$ per $(are *eter on a)) e)e#tr# $&nboar+$ a)) thro(&ho(t the Ph)ppne$ $at$/e$ the re(re*ent o, (n,or*t" The pettoner0 (n,or*t" !a$ %o)ate+ be#a($e (n+er SNITS the )a!' ,or tax p(rpo$e$ $n&e)+ o(t b($ne$$ propretor$ an+ rpo,e$$ona)$ +Herent)" ,ro* #orporaton$ an+ partner$hp$9 The #on$tt(tona) *an+ate ha$ not been +$re&ar+e+9 Un,or*t" o, taxaton' )ke the kn+re+ #on#ept o, e(a) prote#ton' *ere)" re(re$ that a)) $(b.e#t$ or ob.e#t$ o, taxaton' $*)ar)" $t(ate+ are to be treate+ a)ke both n pr%)e&e$ an+ )ab)te$9 Lo#a) tax on tene*ent ho($e$ +oe$ not %o)ate the r()e o, (n,or*t" an+ e(a)t" o, taxaton e%en , the tax n (e$ton $ NOT a)$o )e%e+ on other #)a$$e$ o, b()+n&$ n the )o#a)t" !here $(#h tax $ *po$e+9 Un,or*t" $ a)$o not +$re&ar+e+ , a tax $ )e%e+ on a+*$$on$ to #ne*a' theater$' %a(+e%))e #o*pane$' theatr#a) $ho!$ an+ boxn& exhbton$ b(t +oe$ not tax other p)a#e$ o, a*($e*ent$ $(#h a$ a ra#e tra#k$' #o#kpt$' #arabet$' an+ other p)a#e$ o, a*($e*ent Un,or*t" n taxaton' !h#h *ean$ &eo&raph#a) (n,or*t" on)"' $ a)$o (n+er$#ore+ n rea)* o, )o#a) taxaton9 Pro&re$$%t" o, taxaton $ a)$o *an+ate+ n the Con$tt(ton9 O(r n#o*e tax $"$te* $ one &oo+ exa*p)e o, $(#h pro&re$$%t" be#a($e t $ b()t on prn#p)e o, taxpa"er$ ab)t" to pa" Taxaton $ pro&re$$%e !hen t$ rate &oe$ (p +epen+n& on re$o(r#e$ o, per$on aHe#te+
I2 De-e3a&$o o% Le3$#-a&$0e A.&hor$&y &o F$' Tar$: Ra&e#, I/+or& a! E'+or& 9.o&a#
Se#ton :> ?:@ Art#)e VI Co$ntt(ton 0 Con&re$$ *a"' b" )a!' a(thor2e the Pre$+ent to /x !thn $pe#/e+ )*t$' an+ $(b.e#t to $(#h )*taton$ an+ re$tr#ton$ a$ t a*" *po$e' tarH rate$' *port an+ export (ota$' tonna&e an+ !har,a&e +(e$' an+ other +(te$ or *po$t$' !thn ,ra*e!ork o, natona) +e%e)op*ent pro&ra* o, Go%ern*ent
The pre$+ent *a" n#rea$e tarH rate$ a$ a(thor2e+ b" )a! e%en ,or re%en(e p(rpor$e$ on)"
J2 Ta' E'e/+&$o o% Pro+er&$e# A&.a--y, D$re&-y, a! E'-#.$0e-y .#e! %or re-$3$o.#, Char$&a"-e a! e!.a&$oa- +.r+o#e#
Se#ton :>?;@ Art#)e VI 0 Chartab)e n$tt(ton$' #h(r#he$' an+ par$ona&e$ or #on%ent$ app(rten*ent thereto' *o$(e$' non pro/t #e*etere$ an+ a)) )an+$' b()+n&$ an+ *pro%e*ent$ a#t(a))"' +re#t)"' an+ ex#)($%e)" ($e+ ,or re)&o($' #hartab)e or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* taxaton To !hat kn+ o, tax +oe$ th$ exe*pton app)" -
heren pettoner a$$a)e+ the +onor3$ an+ +onee3$ &,t taxe$ on the #a$h +onaton ,or the #h(r#h b()+n&' SC r()e+ that the abo%e*entone+ #on$tt(tona) rpo% !h#h &rant$ tax exe*pton app)e$ on)" to propert" or rea)t" taxe$ a$$e$$e+ on $(#h properte$ ($e+ +re#t)"' a#t(a))" an+ ex#)($%e)" ,or re)&o($' #hartab)e an+
TAXATION SURVIVAL KIT – Aban Book Un+er ex$tn& )a!' &,t$ *a+e n ,a%or o, re)&o($' #hartab)e or e+(#atona) or&an2aton$' !o()+ ne%erthe)e$$ (a)," ,or +onor3$ &,t tax exe*pton n )&ht o, pro%$on$
1> #on$tt(ton a)$o e*p)o"$ the ter*$ a#t(a))"' +re#t)"' an+ ex#)($%e)" to e*pha$2e the *portan#e o, ($e o, propert" ,or tax exe*pton
EXEMPTION OF CERTAIN GIFT )
the te$t o, exe*pton ,ro* taxaton $ the ($e o, propert" ,or the p(rpo$e$ *entone+ n Con$tt(ton9
19 Ca$e o, &,t$ *a+e b" a re$+ent :9 G,t$ n ,a%or o, e+(#atona) or #hartab)e re)&o($' #()t(ra) or $o#a) !e),are ' n$tt(ton' a##re+te+ non&o%ern*ent or& a9 Pro%+e+ 0 not *ore than ;
Sa*e tax exe*pton pr%)e&e $ a)$o &rante+ to +onaton$ *a+e b" a nonre$+ent !ho $ not a #t2en o, Ph)ppne$ To be entt)e+ to tax exe*pton (n+er Con$tt(ton' $ proo, o, a#t(a) ($e ,or the tax exe*pt p(rpo$e ne#e$$ar" -
a#t(a) ($e $ ne#e$$ar"9
-
Lan+$' b()+n&$' an+ *pro%e*ent$ o, re)&o($ an+ #hartab)e n$tt(ton$ *($t not on)" be ex#)($%e)" b(t a)$o a#t(a))" an+ +re#t)" ($e+ ,or re)&o($ an+ #hartab)e p(rpo$e$
-
It !a$ not n a##or+an#e !th #on$tt(ton ,or the )o!er #o(rt to +e#)are n an a#ton ,or +e#)arator" re)e+ that the properte$ o, Ro*an Catho)# Ch(r#h n ban&(e+ Abra !ere tax exe*pt !tho(t /r$t #on+(#tn& a hearn& thereon to +eter*ne the ,a#t(a) (e$ton o, a#t(a) ($e an+ +re#t ($e
It $ *portant to note that ,or p(rpo$e$ o, tax exe*pton' ($e o%err+e$ o!ner$hp $(#h that , propert" a)tho(&h a#t(a))" o!ne+ b" a re)&o($' #hartab)e' or e+(#atona) n$tt(ton' $ a#t(a))" ,or a non exe*pt p(rpo$e' the exe*pton ,ro* tax o, $a+ propert" %an$he$ The r()n& that the )ea$e b" $#hoo) o, )o!er porton o, t$ $#hoo) b()+n& to a #o**er#a) e$tab)$h*ent kno!n a$ the Northern 6arketn& Corporaton' !h#h $ not e%en n#+enta) to the e+(#atona) ,(n#ton$ o, $(#h $#hoo)$' $ o(t$+e $#opr o, #on$tt(tona) &rant o, tax exe*pton an+ $ $(b.e#t to rea) e$tate tax on a pro rate ba$$ 8or tax exe*pton p(rpo$e$ 0 ex#)($%e)" ($e+0 $ not )*te+ to tota) or ab$o)(te ($e ,or re)&o($' #hartab)e or e+(#atona) p(rpo$e$9 I, a propert" $ n#+enta))" ($e+ ,or the a,ore*entone+ p(rpo$e$' t $ #)ear ,ro* +e#+e+ #a$e$ that ax exe*pton *a" $t)) $(b$$t
here the *an b()+n& o, an e+(#atona) $nt(tton $ ($e+ both a$ #)a$$roo*$ ,or t$ h&h$#hooo) an+ #o))e&e $t(+ent$ a$ !e)) a$ re$+ent#e o, $#hoo) +re#tor an+ h$ ,a*)"' the tax exe*pt #hara#ter o, $(#h propert" re*an$ +e$pte the ,a#t that $ $ ($e+ a$ $(#h a$ the $a*e *a" be .($t/e+ a$ ben&
;<
Se%era) para))e) r()n&$ *a" be #te+ on (e$ton o, tax exe*pton that t $ &rante+ (n+er th$ #on$tt(tona) pro%$on9 Tax exe*pton exten+$ to a %e&etab)e &ar+en n an a+.a#ent )ot an+ another )ot ,or*er)" ($e+ a$ a #e*eter"
Se#ton :' Art#)e VIII – Con&re$$ $ha)) ha%e the po!er to +e/ne' pre$#rbe an+ apporton the .(r$+#ton o, the %aro($ #o(rt$ b(t *a" not +epr%e SC o, t$ .(r$+#ton o%er #a$e$ en(*erate+ n Se#ton 0 19 Re%e!' re%$e' re%er$e' *o+," or ar* or appea) or #ertorar a$ the )a! or ROC *a" pro%+e /na) .(+&e*ent$ an+ or+er$ #o(rt$ n
Ex#)($%e ($e #on$+er$ n#+enta) ($e a)$o
:9 A)) #a$e$ n%o)%n& the e)&a)t" o, an" tax' *po$t' a$$e$$e*ent or to))' or an" pena)t" *po$e+ n re)aton thereto
Exe*pton o, the #on%ent n#)(+e$ not on)" the )an+ o##(pe+ b" the b()+n& b(t a)$o the a+.a#ent &ar+en +e%ote+ to the n#+enta) ($e o, par$h pre$t a$ !e)) a$ )o+&n& p)a#e n#+enta) to re)&o($ ,(n#ton$
M2 Ta' E'e/+&$o o% Re0e.e# a! A##e&#, I-.!$3 3ra&#, e!o*/e&#, !oa&$o# or o&r$&".&$o# &o e!.a&$oa- $#&$&.&$o#
Se#ton =?;@@ an+ ?=@ Art#)e XIV Con$tt(ton 0 Ex#)($%e)" ($e+ ,or e+(#atona) p(rpo$e$ !a$ to n#)(+e' a$ n the #a$e o, ho$pta)' a $#hoo) ,or trann& n(r$e$' ho*e an+ ho($n& ,a#)te$ ,or ntern$ re$+ent +o#tor$' re#reatona) ,a#)te$99 et# <2 Vo&$3 Re;.$re/e& I Coe&$o *$&h &he Le3$#-a&$0e Gra& o% Ta' E'e/+&$o#
Art#)e VI Se#ton :>?=@ – No )a! &rantn& an" tax exe*pton $ha)) be pa$$e+ !tho(t the #on#(rren#e o, a *a.ort" o, a)) *e*ber$ o, Con&re$$ Re,(n+$ partake o, the nat(re o, exe*pton$ Con+onaton$ o, taxe$ a)rea+" pa+ or "et (npa+ are a)$o n the nat(re o, tax exe*pton$ L2 No
I/
$r
& o% SC8# J.r$#!$&$
$ T
?;@ A)) re%en(e$ an+ a$$et$ o, non-$to#k' non-pro/t e+(#atona) n$tt(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* taxe$ an+ +(te$9 Upon the +$$o)(ton or #e$$aton o, the #orporate ex$ten#e o, $(#h n$tt(ton$' ther a$$et$ $ha)) be +$po$e+ o, n the *anner pro%+e+ b" )a!9 Propretar" e+(#atona) n$tt(ton$' n#)(+n& tho$e #ooperat%e)" o!ne+' *a" )ke!$e be entt)e+ to $(#h exe*pton$' $(b.e#t to the )*taton$ pro%+e+ b" )a!' n#)(+n& re$tr#ton$ on +%+en+$ an+ pro%$on$ ,or ren%e$t*ent9 ?=@ S(b.e#t to #on+ton$ pre$#rbe+ b" )a!' a)) &rant$' en+o!*ent$' +onaton$' or #ontrb(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* tax9
TAXATION SURVIVAL KIT – Aban Book Chapter ; 7o(b)e Taxaton an+ Tax Exe*pton$ Sere&ary o% J.#&$e, &he %o--o*$3 -e3a- +o$&# o &he a%ore;.o&e! o#&$&.&$oa+ro0$#$o# /ay "e o#$!ere! $/+or&a& )
19 the exe*pton ,ro* taxe$ an+ +(te$ &rante+ to non $to#k' non pro/t e+(#atona) n$tt(ton$ !th re$pe#t to ther re%en(e$ an+ a$$et$ took eHe#t (pon the rat/#aton o, Co$ntt(ton be#a($e the r()e that a #on$tt(tona) pro%$on +e#)arn& #ertan proeprte$ a$ exe*pt ,ro* taxaton $ $e), exe#(tn& an+ propro %&ore exe*pt$ the propert" $pe#/e+ an+ +oe$ not' there,ore nee+ )e&$)at%e ena#t*ent to p(t nto eHe#t :9 )e&$)aton $ NOT e$$enta) n or+er to pre$#rbe the re(re*ent$ ,ro* exe*pton $(#h a$ !ho !o()+ (a)," a$ non $to#k' non pro/t9 In$tt(ton$ an+ *eann& o, a#t(a))"' +re#t)"' an+ ex#)($%e)" ($e+9 ;9 Tax exe*pton$' ho!e%er o, propretar" e+(#atona) n$tt(ton$ re(re pror )e&$)at%e *p)e*entaton $n#e the ($e o, the per*$$%e ter* *a" n the pro%$ &o%e$ #on&re$$ +$#reton to +etere*ne !hether or not a$$et$ an+ re%en(e$ o, propereta"r e+(#atona) $ntt(ton$ $ho()+ )ke!$e en.o" exe*pton$ ,ro* taxe$ =9 A)) &rant$' en+o!*ent$' +onaton$ or #ontrb(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ are tax exe*pt !here the +one- $#hoo) $ non $to#k or non pro/t T4IS PARTICULAR EXE6PTION TO PROPRIETAR5 E7UCATIONAL INSTITUTIONS ILL APL5 ONL5 A8TER CONGRES 4AS LAI7 7ON T4E CON7ITIONS 8OR ITS ENJO56ENT
7o(b)e Taxaton – taxn& the $a*e propert" t!#e !hen t $ho()+ be taxe+ b(t on#e9 -
taxn& $a*e per$on t!#e b" the $a*e .(r$+#ton o%er $a*e thn&
-
$a*e per$on t!#e b" the $a*e .(r$+#ton ,or $a*e thn& or p(rpo$e
NO PRHOHIBITION AGAINST DOUBLE TAXATION
-
no #on$tt(tona) prohbton a&an$t +o(b)e taxaton n Ph)ppne$
-
$o*ethn& not ,a%ore+' b(t $ ne%erthe)e$$ per*$$b)e
-
NOT ,orb++en b" o(r ,(n+a*enta) )a!
-
Ph)ppne$ 4AS NOT A7OPTE7 the n.(n#ton a&an$t +o(b)e taxaton ,o(n+ n Con$tt(ton o, US an+ n $o*e $tate$ o, A*er#an Unon
-
There,ore' NO PRO4IBITION a&an$t +o(b)e or *()tp)e taxaton
<$!# o% Do."-e Ta'a&$o
-
+(p)#ate taxaton
-
*a" be +re#t or n+re#t
-
7IRECT 7UPLICATE TAXATION 7o(b)e taxaton n the ob.e#tonab)e or prohbte+ $en$e ?a)$o kno!n a$ obnoxo($@
;: o
o
o
-
Sa*e propert" $ taxe+ t!#e !hen t $ho()+ be taxe+ on)" on#e Both taxe$ are *po$e+ on $a*e propert" or $(b.e#t *atter ,or $a*e p(rpo$e' $a*e $tat' &o%ern*ent' or taxn& a(thort" !thn $a*e .(r$+#ton or taxn& +$tr#t +(rn& $a*e taxn& pero+' an+ #o%ern& $a*e kn+ or #hara#ter o, tax NO OBJECTIONABLE 7OUBLE TAXATION I8 A REAL ESTATE TAX AS ELL AS A TENE6ENT TAX ARE I6POSE7 ON SA6E PROEPRT5 BECAUSE T4E TO I6POSITIONS ARE NOT O8 SA6E KIN7 OR C4ARACTER
IN7IRECT 7UPLICATE TAXATION - oppo$te o, +re#t +o(b)e taxaton $ NOT LEGALL5 OBJECTIONABLE9
ILLUSTRATION &he +o$& &ha& $ &he a"#ee o% e-e/e&# o% !$re& !.+-$a&e &a'a&$o, !o."-e $/+o#$&$o# -e0$e! o a +ar&$.-ar #."=e& o% &a'a&$o /ay "e =.#&$>e!
19 The taxpa"er3$ !areho($n& b($ne$$' a)tho(&h #arre+ on n re)aton to the operaton o, t$ $(&ar #entra)' $ a +$tn#t an+ $eparate taxab)e b($ne$$9 a9 There #an be no +o(b)e taxaton !here $tate *ere)" *po$e$ a tax on e%er" $eparate +$ntn#t b($ne$$ n !h#h a per$on $ en&a&e+9 b9 No prohbton a&an$t +o(b)e taxaton n th$ .(r$+#ton
or
*()tp)e
:9 A )#en$e tax *a" be )e%e+ (pon a b($ne$$ or o##(paton a)tho(&h )an+ or propert" ($e+ n #onne#ton there!th $ $(b.e#t to propert" tax a9 The $tate *a" #o))e#t an a+%a)ore* tax on propert" ($e+ n a #a))n& an+ at the $a*e t*e *po$e a )#en$e tax on that #a))n& b9 The *po$tton o, the )atter kn+ o, tax ben& no $en$e a +o(b)e tax #9 NO OBJECTIONABLE 7OUBLE ?OR 6ULTIPLE@ TAXATION I8 TENE6ENTS IN A CIT5 ARE SUBJECT TO REAL ESTATE TAX 4ILE BUSINESS O8 LEASING SAI7 PROPERT5 ARE ALSO SUBJECT TO REAL ESTATE 7EALER3S TAX UN7ER T4E ANTIONAL INTERNAL REVENUE CO7E AS ELL AS TENE6ENT TAX LEVIE7 B5 CIT5 +9 T4ERE IS NOT4ING IN4ERENTL5 OBNOXIOUS IN EXACTION O8 LICENSE 8EES OR TAXES IT4 RESPECT TO SA6E OCCUPATION' CALLING OR ACTIVIT5 B5 BOT4 STATE AN7 A POLITICAL SUB7IVISION T4EREO8 ;9 Both a )#en$e ,ee an+ a tax *a" be *po$e+ on $a*e b($ne$$ or o##(paton ,or $e))n& $a*e art#)e an+ th$ $ not n %o)aton o, r()e$ a&an$t +o(b)e taxaton =9 here a )o#a) tax $ )e%e+ on $a)e or +$po$a) o, e%er" bott)e or #ontaner o, )(or or ntox#atn& be%era&e$ an+ at the $a*e t*e the b($ne$$$ o, $e))n& $(#h pro+(#t $ a)$o $(b.e#t to )(or )#en$e ann(a))" o, D<< pe$o$ ' there $ NO 7OUBLE TAXATION SINCE T4E LIUOR LICENSE CONSTITUTES A REGUALTOR5 6EASURE 4IC4 IS I6POSE7 IN T4E EXERCISE O8
TAXATION SURVIVAL KIT – Aban Book 9 A tax *po$e+ both on o##(paton o, /$hn& an+ on /$hpon+ t$e), +oe$ not #on$tt(te +o(b)e taxaton9 S(b.e#t o, taxaton are 7I88ERENT 8RO6 EAC4 OT4ER D9 NO 7OUBLE TAXATION , a )o#a) or+nan#e *po$e$ a tax on $tora&e o, #opra !here t appear$ that the /n$he+ pro+(#t$ *an(,a#t(re+ o(t o, #opra are $(b.e#t to $a)e$ tax ?NO VAT@ (n+er tax #o+e 9 NO 7OUBLE TAXATION n%o)%e+ n a #a$e !here a tax o, 1Q $ *po$e+ (n+er Se#ton := tax #o+e ,or bank re$er%e +e/#en#" !h)e a pena)t" o, 11< o, 1Q a +a" $ a)$o *po$e+ a$ a pena)t" a$ #on$e(en#e o, $(#h re$er%e +e/#en#" (n+er Centra) bank A#t >9 7o(b)e taxaton *ean$ taxn& $a*e propert" t!#e !hen t $ho()+ be taxe+ on)" on#e9 a9 Poo) *a#hner" n$(rer !a$ he)+ to be a taxab)e entt" +$nt#t ,ro* the n+%+(a) #orporate entte$ o, #e+n& #o*pane$ b9 The tax on t$ n#o*e $ +Herent ,ro* tax on +%+en+$ re#e%e+ b" $a+ #o*pane$' an+ #)ear)" NO 7OUBLE TAXATION IS INVOVLE7
MEANS EMPLOYED TO AVOID DOUBLE TAXATION ?
o(r tax $"$te* pro%+e$ ,or #ertan $#he*e$ n or+er to a%o+ or *n*2e the har$h or b(r+en$o*e eHe#t$ o, +o(b)e taxaton
?
The$e tax re)e,$ or $#he*e$ are $o*et*e$ e*bo+e+
!h)e other$ are *be++e+ n $tat(tor" pro%$on$ ,o(n+ (n+er ex$tn& )a!$ ? The b(r+en o, +o()e taxaton on $a*e +%+en+ n#o*e earne+ n Ph)ppne$ b" a non re$+ent ,ore&n #orporaton @@@?one tax n Ph)ppne$ an+ another tax n +o*#))ar" #o(ntr" $ RE7UCE7 B5 I6POSITION O8 LOER RATE O8 1Q SUBJECT TO CON7ITION T4AT COUNTR5 IN 4IC4 NON RESI7ENT 8OREIGN CORPORATION IS 7O6ICILE7 S4ALL ALLO A CRE7IT AGAINST TAX 7UE 8RO6 NON RESI7ENT 8OREIGN CORPORATION ? Taxe$ +ee*e+ ha%e been pa+ n Ph)ppne$ e(%a)ent :
Exa*p)e$ o, tax re)e,$ 0 tax +e+(#ton$ an+ tax #re+t$
?
7e+(#ton$ ?exa*p)e@ ) 0a$#he! !e!.&$o n or+er to *t&ate the b(r+en$o*e eHe#t$ o, +o(b)e taxaton on $a*e propert" that $ $(b.e#t o, t!o or *ore tran$,er$ pertann& to t!o or *ore +e#e+ent$
?
Exa*p)e o, ?tax #re+t $et (p' o(r pre$ent )a! #ontan$ a n(*ber o, tax re)e, $#he*e$ a)$o@ 0 ,or VAT p(rpo$e$' tax on np(t$ or te*$ that &o nto *an(,a#t(re o, /n$he+ pro+(#t$ *a" be #re+te+ a&an$t or +e+(#te+ ,ro* o(tp(t tax or tax on /n$he+ pro+(#t9
?
Exa*p)e o, ?n#o*e taxaton@ 0 re$+ent #t2en or +o*e$t# #orporaton !ho$e n#o*e ,ro* $o(r#e$ !thn ,ore&n #o(ntr" $ a)$o TAXABLE (n+er Ph)ppne )a!' the tax pa+ to $(#h ,ore&n #o(ntr" *a"' (n+er #ertan )*taton' be #)a*e+ a$ a #re+t a&an$t the Ph)ppne tax on $a*e n#o*e
;= -
a$$(*n& #o*n& on)" one #o(ntr"
? The a*o(nt o, #re+t n re$pe#t to the tax pa+ or n#(rre+ to an" #o(ntr" $ha)) not ex#ee+ $a*e proporton o, tax a&an$t !h#h $(#h #re+t $ taken' !h#h the taxpa"er3$ taxab)e n#o*e ,or $a*e taxab)e "ear an+ tota) a*o(nt o, #re+t $ha)) not ex#ee+ the $a*e proporton o, tax a&an$t !h#h $(#h #re+t $ taken' !h#h taxpa"er3$ taxab)e n#o*e ,ro* $o(r#e$ !tho(t Ph)ppne$ taxab)e (n+er th$ Tt)e bear$ to h$ entre taxab)e n#o*e ,or $a*e taxab)e "ear9
S(ppo$n& taxab)e n#o*e o, X #orp a +o*e$t# #orporaton' ,ro* ,ore&n #o(ntr" 6 $ :'<<< pe$o$ an+ t$ Ph)ppne$ $o(r#e+ n#o*e $ >'<<< pe$o$9 The ,ore&n n#o*e tax a#t(a))" pa+ $ ><< pe$o$9 8ore&n tax #re+t $ #o*p(te+ a$ ,o))o!$0 SEE BOOK9 4A4A ?pa&e 11D@
A)en n+%+(a) !hether a re$+ent or not o, Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn Ph)ppne$9 A ,ore&n #orporaton !hether en&a&e+ or not n tra+e or b($ne$$ n Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn Ph)ppne$ The bene/t o, #re+t a&an$t n#o*e tax ,or taxe$ o, ,ore&n #o(tnre$' S4ALL BE ALLOE7 TO A CITIEN O8 P4ILIPPINES AN7 A 7O6ESTIC CORPORATION I8 TAXPA5ER SO SIGNI8IES IN 4IS RETURN BUT SUC4 BENE8IT S4ALL NOT BE ALLOE7 TO AN ALIEN IN7IVI7UAL AN7 A 8OREIGN CORPORATION A*on& the exa*p)e$ o, tax treate$ ,or re)e, ,ro* or a%o+an#e o, +o(b)e taxaton are the RP – US Tax treat" an+ RP-!e$t Ger*an" Tax treat" !h#h !ere $(b.e#t o, #o*parat%e re%e! TAX EXEMPTIONS
The ,ore&n tax #re+t *etho+' a$ 6EANS O8 6INI6IING 7OUBLE TAXATION APPLIES TO RESI7ENT ALIENS PROVI7E7 T4AT0 19 T4E RECIPROCIT5 REUIRE6ENT IN LA IS SATIS8IE7 :9 SUBJECT TO ALLOCATION RULE AS ESTABLIS4E7 IN TAX CO7E Non re$+ent 8)pno$' $n#e ther ,ore&n $o(r#e+ n#o*e $ $(b.e#t tot !o taxe$ )e%e+ (n+er t!o +Herent .(r$+#ton$' TAX RELIE8 CO6ES IN 8OR6 O8 A 7E7UCTION O8 8OREIGN NATIONAL INCO6E TAX 8RO6 8OREIGN SOURCE7 INCO6E ITSEL89 Tax #re+t $#he*e n th$ n$tan#e $ NOT AVAILABLE
-
&rant o, **(nt"' expre$$ or *p)e+ to part#()ar per$on$ or #orporaton$ ,ro* ob)&aton to pa" taxe$
E'e/+&$o#?
or&nate
,ro*
62 S&a&.&ory E'e/+&$o# 1 e*anate ,ro* )e&$)aton 72 E'+re## e'e/+&$o# 1 !hene%er exe*tpton$ are expre$$)" &rante+ b" or&an2 or $tat(te )a!
TAXATION SURVIVAL KIT – Aban Book @2 I/+-$e! e'e/+&$o# 1 !hene%er part#()ar per$on$' properte$' or ex#$e$ are +ee*e+ exe*pta$ the" ,a)) o(t$+e the $#ope o, taxn& pro%$on t$e),9
I8 A TAX IS LEVIE7 ON TENE6ENT 4OUSES IN A PARTICULAR LOCALIT5 BUT SUC4 LA IS SILENT AS TO T4E TAXABILIT5 O8 OT4ER T5PES O8 7ELLING 4IC4 ARE EXISTING IN T4AT LOCALIT5' IT IS I6PLIE7 T4AT T4E LATTER ARE EXE6PT 8RO6 SAI7 TAX 2 To&a- e'e/+&$o ? ab$o)(te **(nt" 2 Par&$a- e'e/+&$o 1 one !here #o))e#ton o, a part o, tax $ +$pen$e+ !th
=9 Tax exe*pton$ 6UST BE STRICTL5 CONSTRUE7 $(#h that the exe*pton !)) not be he)+ to be #on,erre+ UNLESS the ter*$ (n+er !h#h t $ &rante+ #)ear)" an+ +$tn#t)" $ho! that $(#h !a$ the ntenton o, parte$ 9 Tax exe*pton$ are not pre$(*e+ D9 Con$tt(tona) &rant$ o, tax exe*pton$ are $e), exe#(tn& 9 Con$tt(tona) pro%$on$ +e#)arn& #ertan proeprte$ a$ tax exe*pt +oe$ not nee+ )e&$)at%e ena#t*ent to p(t t nto eHe#t >9 Con$tt(ton are &enera))" $e), exe#(tn&
PRINCIPLES GOVERNING TAX EXEMPTION
19 Exe*pton$ ,ro* taxaton are h&h)" +$,a%ore+ n )a!' an+ he !ho #)a*$ an exe*pton *($t be ab)e to .($t," h$ #)a* b" the #)eare$t &rant o, or&an2e or $tat(te )a! a9 Exe*pton ,or* #o**on b(r+en #annot be per*tte+ to ex$t (pon %a&(e *p)#aton$ b9 To epto*2e the prn#p)e' t $ !e)) $ett)e+ that TAXATION IS T4E RULE' TAX EXE6PTION IS T4E EXCEPTION
9 Other!$e' t !)) be !thn the po!er o, )e&$)at(re to &nore or pra#t#a))" n())," the +re#ton$ o, ,(n+a*enta) )a! 1<9Tax exe*pton$ – PERSONAL 119Non tran$,errab)e 1:97e+(#ton$ ,or n#o*e tax p(rpo$e$ partake o, nat(re o, tax exe*pton$ hen#e , tax exe*pton$ are to be $tr#t)" #on$tr(e+ 1;9It ,o))o!$ #on$tr(e+
that +e+(#ton
*($t a)$o be $tr#t)"
:9 4e !ho #)a*$ an exe*pton ,ro* h$ $hare o, #o**on b(r+en n taxaton *($t .($t," h$ #)a* b" $ho!n& that the )e&$)at(re nten+e+ to exe*pt h* b" !or+$ too p)an to be *$taken9
1=9R()e o, $tr#t #on$tr(#ton o, tax exe*pton$ $ho()+ not ,or ob%o($ rea$on$' be app)e+ to or&an2aton$ per,or*n& $tr#t)" re)&o($' #hartab)e an+ e+(#atona) ,(n#ton$
;9 4e !ho #)a*$ exepton $ho()+ pro%e b" #on%n#n&
19T4IS RULE ON STRICT INTERPRETATION ALSO 7OES
;D 8AVOR O8 GOVERN6ENT POLITICAL SUB7IVISION OR INSTRU6ENTALIT5 1D9A #)a* o, exe*pton ,ro* tax pa"*ent$ *($t be #)ear)" $ho!n an+ ba$e+ on )an&(a&e n )a! too p)an to be *$taken9 19Sn#e a parta) re,(n+ $ n nat(re o, tax exe*ptont *($t be #on$tr(e+ STRICTISSI6I JURIS a&an$t &rantee 1>9NO TAX EXE6PTION $o)e)" on &ro(n+ o, e(t" 19Tax a*ne$t" $ ne%er ,a%ore+ or pre$(*e+ n )a!9 I, &rante+ b" a $tat(te' the ter*$ o, a*ne$t" )ke that o, a tax exe*pton *($t be #on$tr(e+ $tr#t)" a&an$t taxpa"er an+ )bera))" n ,a%or o, taxn& a(thort" a9 Re$o)%e+ n ,a%or o, taxn& a(thort" :<98n+n& pettoner3$ #)a* o, **(nt" ,ro* pro$e#(ton (n+er the $hIe)+ (ntenab)e9 4E 7I7 NOT 6EET TIN REUIRE6ENT :196ERE 8ILING O8 TAX A6NEST5 RETURN 7OES NOT IPSO 8ACTO S4IEL7 4I6 8RO6 I66UNIT5 AGAINST PROSECUTION9 ::9Tax a*ne$t" $ a &enera) par+on to taxpa"er$ !tho(t ha%n& to &o thro(&h te+o($ pro#e$$ o, a tax #a$e :;9To a%a) o, a tax a*ne$t)" &rante+ b" Go%ern*ent an+ to be **(ne ,ro* $(t on t$ +e)n(en#e$' the taxpa"er *($t ha%e %o)(ntar)" +$#)o$e+ h$ pre%o($)" (ntaxe+ n#o*e an+ *($t ha%e pa+ #orre$pon+n& tax on $(#h pre%o($)" (ntaxe+ n#o*e
19 TAX ON PERSON - the re$+en#e ?#o**(nt" tax@ !h#h $ a per$ona) tax $ not *po$e+ on 7IPLO6ATIC an+ CONSULAR repre$entat%e$ a$ !e)) a$ tran$ent %$tor$ !hen ther $ta" n Ph)ppne$ 7OES NOT EXCEE7 T4REE 6ONT4S :9 TAX ON PROPERT5 – Rea) propert" o!ne+ b" Rep(b)# o, Ph)ppne$ or an" o, t$ po)t#a) $(b+%$on$ pro%+e+ the bene/#a) ($e thereo, $ NOT TRANS8ERRE7 to a taxab)e per$onM #hartab)e n$tt(ton$' #h(r#he$' par$ona&e$' or #on%ent$9 ;9 TAX IN EXCISES AN7 PRIVILEGES – $a)e or *portaton o, a&r#()t(ra) an+ *arne ,oo+ pro+(#t$ n ther or&na) $tate are exe*pt ,ro* %a)(e a++e+ tax A9 Con+onaton o, (npa+ tax )ab)te$ $ n the nat(re o, a tax exe*pton a9 I, there $ NO CLEAR CUT pro%$on n )a! #on+onn& $(#h )ab)te$ that taxe$ a)rea+" pa+ are a)$o #on+one+ then no re,(n+ o, pa+ taxe$ $ a(thor2e+ be#a($e exe*pton$ *($t be $($tane+ on)" !hen expre$$e+ n exp)#t ter*$ B9 here a #orporaton en&a&e+ n a #ertan n+($tr" obtane+ exe*pton ,ro* a)) taxe$' the ,o))o!n& taxe$ *a" be !thn the #ope o, the tax exe*pton' tax on pro+(#t$ *an(,a#t(re+ ,or n+($tr"' o##(paton or b($ne$$ tax thereon' *port or #o*pen$atn& tax on *a#hnere$ ($e+ theren' the tax on &a$o)ne an+ o)$ ne#e$$ar" to *o%e or operate t$ *a#hner" a$ !e)) a$ p(r#ha$e o, or&na) $te ,or t$ p)ant a9 BUT T4E ACUISITION b" +onaton o, )ot$'' #ont&(o($ to the or&na) )ot$' a,ter operaton ha$ )a$te+ a ,e!
TAXATION SURVIVAL KIT – Aban Book C9 In the #a$e o, a #orporaton that $ en&a&e+ n *an(,a#t(re o, p)"!oo+' t$ tax exe*pton exten+$ on)" to *a#hner" an+ e(p*ent to be ($e+ ex#)($%e)" n the ne! an+ ne#e$$ar" n+($tr" a9 th or !tho(t the taxpa"er$ o!nn& an" tran$portaton ,a#)t"' the tax exe*pt n+($tr" #o()+ be operate+ 79 here taxpa"er re#e%e$ a$ part o, p(r#ha$e pr#e o, the )an+ exproprate+ b" Go%ern*ent' tax exe*pt bon+$ $$(e+ $(#h tax exe*pt bon+$ $ho()+ be n#)(+e+ n tota) p(r#ha$e pr#e n or+er to +eter*ne the #orre#t taxab)e pro/t there,ro*
G9 A tax exe*pton n the*an(,a#t(re an+ $a)e o, *a#hnere$ ,or *akn& #&arette paper +oe$ not n#)(+e the *an(,a#t(re an+ $a)e o, pro+(#t$ pro+(#e+ b" the *a#hne 49 In the #ontra#t #o%ern& the #on$tr(#ton o, 6a#tan Arport' t !a$ pro%+e+ that no tax o, an" kn+ or +e$#rpton !)) be )e%e+ on an" *atera)' e(p*ent or $(pp)e$ !h#h *a" be p(r#ha$e+ or other!$e a#(re+ n #onne#ton !th pro.e#t (n+er the #ontra#t a9 7oe$ th$ exe*pton n#)(+e the tax on petro)e(* pro+(#t$ ($e+ n pro.e#t b9 NO9 the #o(rt $a+ that the on)" te*$ exe*pt are tho$e a*tera)$ or $(pp)e$ !h#h are n#orporate+ n the #on$tr(#ton o, the ar/e)+ $(#h a$ *ortar' #e*ent' $an+ br#k$ BUT NOR petro)e(* pro+(#t$ !h#h are not *atera)$ or $(pp)e$ $n#e the" +o not &o nto or are #on$(*e+ n the #on$tr(#ton o, pro.e#t b(t are ($e+ n the *a#hnere$ an+ e(p*ent
a9 Pro/t ar$n& ,ro* expropraton $a)e b9 Tax exe*pton$ are $tr#t)" #on$tr(e+ E9 The $)aare$ o, .(+#a) o#er$ are NOT tax exe*pt an+ ther taxab)t" $ NOT CONTRAR5 to the pro%$on$ a9 The #)ear ntent o, #on$tt(tona) #o**$$on that ,ra*e+ the #on$tt(ton $ to $(b.e#t ther $a)are$ to tax a$ n the #a$e o, a)) taxpa"er$ 89 The exe*pton o, #ontra#tee ?4O@ ,ro* a)) n+re#t taxe$ a$ pro%+e+ n the ho$t a&ree*ent bet!een REPUBLIC O8 P4 an+ 4O $ho()+ be *p)e*ente+ to *ean that the entt" or per$on EXE6PT $ the #ontra#tor t$e), !ho #on$tr(#te+ the b()+n& o!ne+ b" #ontra#tee a9 Th$ +oe$ not %o)ate r()e that tax exe*pton$ are per$ona) be#a($e the *an,e$t ntenton o, the a&ree*ent' a$ $tate+ ear)er' $ to exe*pt the #ontra#tor $o that no #ontra#tor3$ tax *a" be $h,te+ to the #ontra#tee 4O
I9 The exe*pton ,ro* n#o*e tax on Ba$e #onne#te+ n#o*e o, NON RESI7ENT A6ERICAN BASE PEROSNNEL UN7ER US ABSES TREAT5 +oe$ not exten+ to the n#o*e rea)2e+ ,ro* $a)e b" an A*er#an #%)an ba$e e*p)o"ee o, h$ #ar n$+e ba$e to another A*er#an natona) J9
Art#)e XVIII o, the ba$e$ treat" exe*pt ,ro* tax &ro$$ re#ept$ o, a ba$e #on#e$$onare ,ro* b($ne$$ o, ha()n& an+ tran$portn& o, #ar&oe$ n$+e the ba$e be)on&n& to the US AR65
K9 here an e)e#tr# )&ht an+ po!er ,ran#h$e ho)+er $ exe*pt (n+er t$ ,ran#h$e ,ro* propert" tax on t$ po)e$' !re$' tran$,or*er$ an+ n$()ator$' t$ exe*pton +oe$ not exten+ to the #o*pen$atn& tax on t$ *poraton o, $a+ art#)e$9
;> a9 Sa+ #o*pen$atn& tax $ not a propert" tax b(t an ex#$e tax b9 Exe*pton$' ben& h&h)" +$,a%ore+ n )a!' *($t be $tr#t)" #on$tr(e+
a9 On)" $a)e to US (arter*a$ter are exe*pt t ,o))o!$ that the $a)e o, ox"&en an+ a#et")ene &a$e$ to the VOA $ taxab)e P9 Tax exe*pton$ are $tr#t)" #on$tr(e+
L9 here t appear$ that (n+er a #ertan )a!' a ra#n& #)(b $ EXE6PT ,ro* pa"*ent o, an" *(n#pa) or natona) tax9 SUC4 exe*pton +oe$ not n#)(+e exe*pton ,or* n#o*e tax on renta)$ re#e%e+ ,ro* the )ea$e o, t$ ra#e tra#k$ to Ph)ppne #hart" $!eep$take$9
9 I, !hat the )a! exe*pt$ ,ro* #o*pen$atn& (n+er then are pa$$en&er an+ or #ar&o %e$$e)$ the t(&boat$ are NOT I4TIN $#ope o, exe*pton be#a($e t(&boat$ are NOT USE7 ,or #arr"n& pa$$en&er$ or #ar&o b(t on)" ,or t!o&n other %e$$e)$9
a9 The $tat(tor" exe*pton #o%er$ on)" taxe$ n #onne#ton !th ra#e$ )ke the *(n#pa) )#en$e ,ee o, D<< pe$o$ per +a" o, ra#n& an+ << pe$o$ /xe+ tax ,or ea#h +a" ra#n& (n+er NIRC
TAX EXEMPT PERSONS RE9UIRED TO
69 RA 1=; a))o!$ a parta) re,(n+ o, :Q $pe#/# tax pa+ on ,(e) o) ($e+ n the operaton$ o, ,ore$t #on#e$$$onare$9 a9 Sn#e tax exe*pton$ are $tr#t)" #o$nt(re+' the exe*pton re,er$ on)" to the operaton$ o, ,ore$t #on#e$$onare$' an+ not to o)+ ($e+ n operaton o, $a!*))$ N9 In the #a$e o, t!o e)e#tr# po!er p)ant$' !h#h are operatn& n $a*e )o#a)t"' t #annot be pre$(*e+ that the exe*pton o, one $ho()+ a)$o be en.o"e+ b" the other9 Tax exe*pton$ ARE NEVER PRESU6E7 O9 In a$ *(#h a$ (n+er the ba$e$ treat" on)" $a)e$ o, &oo+$ ,or the ex#)($%e ($e n #on$tr(#ton' *anten#an#e' operaton or +e,en$e o, the ba$e
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A taxpa"er3$ exe*pt $tat($ +oe$ not .($t," the non keepn& o, book$ o, a##o(nt$ an+ other a##o(ntn& re#or+
-
TAX CO7E 0 an" pro%$on o, ex$tn& &enera) or $pe#a) )a! to the #ontrar" not!th$tan+n&' t
-
he book$ o, a##o(nt$ an+ other pertnent re#or+$ o, tax exe*pt or&an2aton$ or &rantee$ o, tax n#ent%e$
-
$ha)) be $(b.e#t to exa*naton b" the b(rea( o, nterna) re%en(e ,or p(rpo$e$ o, a$#ertann& #o*p)an#e
-
!th #on+ton$ (n+er !h#h the" ha%e been &rante+ tax exe*pton or tax n#ent%e$' an+ ther tax )ab)t" , an"
TAX AVOIDANCE TAX EVASION TAX REFUND
Tax a%o+an#e - $ the *n*2aton o, tax )ab)te$ thro(&h
TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book Tax Tax e%a$on – !hen the *ean$ ($e+ to *n*2e taxe$ are ))e&a)
a##o* a##o*p) p)$h* $h*ent ent an+ an+ pro* pro*ot oton on o, p(rpo$ p(rpo$e$ e$ en(*erate+ n art#)e o, n#poraton o
TAX TAX AVOI7ANCE AVOI7ANCE ILLUSTRA ILLUSTRATION TION 0
Not *ore than ;
Tax a%o+an#e JURIS7ICTION9 JURIS7ICTION9
IS
NOT
8ORBI77EN
IN
OUR
-
$(ppo$e $(ppo$e that that A3$ A3$ n#o*e n#o*e ,ro* h$ propert" propert" rea#he$ rea#he$ the *ax*(* rate (n+er the )a!
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An atte*p atte*ptt to *n* *n*2e 2e one3$ one3$ tax tax +oe$ not not ne#e$$ ne#e$$ar ar)" )" #on$tt(te+ ,ra(+
-
to a%o a%o+ + th$' th$' he +onat +onate$ e$ one one ha)+ ha)+ o, h$ a$$e a$$et$ t$ to an an e+(#atona) n$tt(ton that (a)/e$ ,or tax exe*pton (n+er Art#)e XIV Con$tt(ton Con$tt(ton
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Taxpa axpa"e "err *a" *a" +* +*n n$h $h h$ h$ )ab )ab) )t t" " b" an" an" *ean *ean$ $ !h#h the )a! per*t$
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TO AVOI7 VOI7 IS LEGAL LEGAL BUT BUT TO EVA7E EVA7E IS ILLEGA ILLEGAL L
-
Tax e%a$o e%a$on n *a" *a" be exe* exe*p)/ p)/e+ e+ b" *ean$ *ean$ o, tax ,ra(+' ,ra(+' or the ($e o, +e#et n or+er toe %a+e taxe$
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the the +one ben ben& & a non $to#k $to#k'' non pro/t pro/t e+(# e+(#at ato ona na)) n$tt n$tt(t (ton on !ho$e !ho$e n#o* n#o*e e an+ a$$et a$$et$ $ are are a#t(a a#t(a))" ))"'' +re#t)"' an+ x#)($%)" ($e+ ,or e+(#atona) p(rpo$e$
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A ther there, e,or ore e $(##ee $(##ee+$ +$ n a%o+ a%o+n n& & pa"*en pa"*entt o, tax tax on n#o*e +er%e+ there,ro*
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8ra(+ ho!e%er' ho!e%er' $ $ a $ero( $ero($ $ #har&e #har&e an+ an+ to eb $($ta $($tane+ ne+ t *($t be $(pporte+ b" #)ear an+ #on%n#n& e%+en#e
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4O 4O ABOUT ABOUT 7ONO 7ONOR3 R3S S TAX TAX IS A LIABL LIABLE E No' No' a +oe$ +oe$ not nee+ to ap" an" +onor3$ tax on +onate+ propert"' pro%+e+ the H, re($te$0
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In !heth !hether er ,ra(+ ,ra(+ ex$t ex$t$ $ $(b$tan $(b$tan#e #e an+ an+ not ,or* ,or* $ho() $ho()+ + #ontro)
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hen hen the the p(rpo$ p(rpo$e e o, a taxpa taxpa"er "er'' at )ea$t )ea$t n n part part $ to EVA7E EVA7E taxe$' the #o(rt $ho()+ exa*ne !th part#()ar #are the ,or*$ ($e+ b" h* ,or the a##o*p)$h*ent o, h$ p(rpo$e$ an+ , h$ n&en(t" ,a)$ at an" pont' $(#h #o(rt $ho()+ not )en+ h* t$ a+ b" re$o)%n& +o(bt$ n h$ ,a%or
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O(r .(r+pr(+ .(r+pr(+en#e en#e n#)(+e$ n#)(+e$ #a$e$ #a$e$ !here !here tax e%a$on e%a$on or or &ra(+ !a$ ,o(n+ to ha%e been perpetrate+
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The ,a)(re ,a)(re o, taxpa"er taxpa"er to +e#)ar +e#)are e ,or taxaton taxaton p(rpo$e$ p(rpo$e$
o
o
o
o
7onee n$tt(ton $ a $#hoo)' #o))e&e or (n% In#orp In#orpora orate$ te$ a$ non $to#k $to#k'' non pro/t pro/t entt" entt" pa"n& no +%+en+$ Go%erne+ b" #o*pen$aton
tr($tee$
!ho
re#e%e
no
A)) t$ n#o*e' !hether $t(+ent3$ ,ee$ or &,t$' +ona +onat ton on$ $ $(b$ $(b$+ +e e$ $ are are +e%o +e%ote te+ + to the the
=< an n+ n+#a #at ton on o, h$ h$ &o%ern*ent o, taxe$ -
The net n#o*e n#o*e (n+e# (n+e#)ar )are+ e+ n n 1=D 1=D $ *ore *ore than than 1<' n+e#)are+ net n#o* n#o*e e !a$ :D
-
-
,ra( ,ra(+( +()e )ent nt nte ntent nt to #hea #heatt
Ar*at% Ar*at%e e an+ !)) atte*pt atte*pt *a" be n,erre+ n,erre+ ,ro* ,ro* an" #on+( #on+(#t #t the )ke)" )ke)" eHe#t eHe#t o, !h#h !h#h !o()+ be to *$)ea+ or to #on#ea)
8ra(+ ra(+ !a$ a)$o a)$o ,o(n ,o(n+ + to ha%e ha%e ex$ ex$te te+ + n ,o))o ,o))o! !n& n& #a$e 0 The taxpa"er taxpa"er +e#)ar +e#)are+ e+ ,or 1=D an n#o*e n#o*e o, on)" on)" k !hen h$ a#t(a) a#t(a) n#o* n#o*e e ,or that "ear !a$ 1<<)k9 4$ a#t n $(b*ttn& an n#o*e tax ret(rn o, 1= on)" ,or a*o(nt o, 1:k !hen he a#(ta))" ha+ a net net taxa taxab) b)e e n#o n#o*e *e o, =;k' =;k' an+ an+ )a$t )a$t)" )" h$ h$ a#t a#t o, reportn reportn& & an n#o*e n#o*e ALL T4ESE T4ESE CIRCU6ST CIRCU6STANCES ANCES JUS8IT85 T4E 8IN7ING 8IN7ING T4AT T4AT T4ERE 4AS BEEN 8RAU7 her here e t appe appear ar$ $ that that the taxp taxpa" a"er er'' a)th a)tho( o(&h &h on a##r(a) a##r(a) ba$$' ba$$' ha+ !)),()) !)),())" " (n+er+e#) (n+er+e#)are are+ + t$ 11 n#o*e b" tratn& #opra o(tt(rn !orth a)*o$t 1<
19 the ,a#t ,a#t that the %a)(e %a)(e o, +e#en+e +e#en+en$ n$ $hare$ $hare$ o, $to#k $to#k +Here$ ,ro* the book %a)(e thereo, !h#h appear$ n book$ o, #orporaton +oe$ not o, t$e), n+#ate ,ra(+ $n#e $n#e $hare$ $hare$ o, $to#k $to#k ,re(ent) ,re(ent)" " F(#t(ate F(#t(ate n %%a)(e9 %%a)(e9 6ERE 7I88ERENCE O8 OPINION CANNOT SERVE AS A PROP PROPER ER BASI BASIS S 8OR 8OR ASSE ASSESS SSIN ING G AN INTE INTENT NTIN IN TO 7E8RAU7 T4E GOVERN6ENT :9 !here !here taxpa"er taxpa"er3$ 3$ %a)(ato %a)(aton n o, #erta #ertan n r#e an+ $(&ar $(&ar )an+$ +Her$ ,ro* %a)(aton *a+e b" #o**$$oner o, nterna nterna)) re%en(e re%en(e there $ NO BASIS BASIS to *p(te ,ra(+ !here the +Heren#e n %a)(aton $ on)" ba$e+ on an hone$t +Heren#e o, opnon9 ;9 I, taxpa"e taxpa"err *a+e a *$tak *$take e In %a)(at %a)(aton on the $a*e $a*e $ on)" an hone$t *$teake9 =9 It $ho()+ $ho()+ be note+ note+ that an one$t one$t ntenton ntenton on one3$ part ne&ate$ ,ra(+ 9 her here e a *an *an hone hone$t $t)" )" be) be)e% e%e+ e+ that that the the *eth *etho+ o+ e*p)o"e+ b" h* n #o*(tn& h$ tax )ab)t" $ #orre#t' he +oe$ not n#(r an" ,ra(+' n !h#h #a$e' NO 8RAU7 PENALT5 ATTAC4ES D9 here here t appear$ that that the (n+er+e#)a (n+er+e#)arat raton on o, taxab)e propert" $ on)" n#on$e(enta) an+ $ the re$()t o, taxpa"er3$ na+%erten#e' no ,ra(+ ex$t$ 9 A tax tax ret(r ret(rn n !h#h !h#h +oe$ +oe$ not #orre #orre#t) #t)" " reFe# reFe#tt n#o*e n#o*e *a" on)" be ,a)$e BUT NOT NECESSARIL5 8RAU7ULENT !here t appear$ that the ret(rn AS NOT RPEPARE7 B5 T4E TAXPA5ER 4I6SEL8 BUT B5 4IS ACCOUNTACNT AN7 T4AT T4AT A8TER A8TER T4E T4E ORIGIN ORIGINAL AL 7E8IC 7E8ICIEN IENC5 C5 TAX ASSESS6ENT AS 6A7E' T4E SA6E AS SUBSEUE SUBSEUENTL NTL5 5 RE7UCE7 RE7UCE7 B5 BIR B5 SUBSTANTI SUBSTANTIAL AL
TAXA TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book >9 NOTE7 NOTE7 0 the abo%e*e abo%e*ent ntone one+ + #a$e' #a$e' the taxpa"e taxpa"er3$ r3$ +e/#en# +e/#en#" " n#o*e n#o*e tax !a$ a$$e$$+ a$$e$$+ an+ +eter* +eter*ne+ ne+ thro(&h the ($e o, the $o #a))e+ net !orth *etho+ ot !hat $ other!$e kno!n a$ n%entor" *etho+ n#o*e tax %er/#aton 9 In #ertan #ertan #a$e #a$e +e#+e+ +e#+e+ b" tax #o(rt' #o(rt' r()n& r()n& !a$ to eHe#t eHe#t that !here !here a #o(p) #o(p)e e n P4 re#e re#e%e+ %e+ a +o))a +o))arr re*ttan#e #he#k ,ro* abroa+' $a+ a*o(n+ ben& the re$()t o, an error o, re*ttn& bank a$ $(* that !a$ a#t(a))" $(ppo$e+ to be re*tte+ !a$ on)" 1) +o))ar$ 1<9NO 8RAU7 !a$ *p(te+ a&an$t the* $n#e n#o*e tax ret(rn ' the *ao(nt n (e$ton !a$ 7ECLARE7 IT4 NOTATION 0 TAX PA5ER AS T4E RECEPEITN 8O SO6E 6ONE5 8OR6 ABROA7 4IC4 4E PRESU6E7 TO BE A GI8T BUT TURNE7 OUT TO BE AN ERROR AN7 IS NO T4E SUBJECT O8 O8 LITIGATION LITIGATION 119No ,ra(+ ex$te+ ex$te+ be#a($e be#a($e taxpa"er taxpa"er ha+ )tera))" )tera))" )a+ h$ #ar+$ on the tab)e
Chapter = TAX TAX LAS AN7 REGULAT REGULATIONS IONS NATURE OF TAX LAWS - CIVI CIVIL L IN IN NA NATURE URE - Not po po)t#a) - E%en E%en +(rn& +(rn& pero+ pero+ o, o, ene*" ene*" o##(p o##(pat aton on ?$(# ?$(#h h a$ ,or n$tan#e' +(rn& Japane$e o##(paton o, Ph)ppne$ n or)+ ar II' !h#h )a$te+ ,ro* 1=: – 1= ' tax )a!$ are #ontn(a)) #ontn(a))" " en,or#e+ en,or#e+ a$ the" are +ee*e+ to be )a!$ o, oo##(pe+ terrtor" an+ not tho$e o, o##(p"n& po!er
4ILA7O %$ CIR
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#o(r #o(rtt ++ not a)) a))o! o! the the taxpa taxpa"e "err to +e+(#t +e+(#t ,ro* ,ro* h$ h$ 11 tax ret(rn a #a$(a)t" )o$$ n#(rre+ +(rn& the !a$ - )o$$ )o$$ ,ro* ,ro* /re' /re' $tor* $tor*$' $' $hp! $hp!re re#k #k et# n#)( n#)(+ +n& n& !ar )o$$e$ - a)tho( a)tho(&h &h $(#h $(#h )o$$ )o$$ !a$ !a$ n#(rr n#(rre+ e+ +(rn +(rn& & $a+ $a+ !ar t !a$ !a$ not po$$b)e ,or h* to *ake the +e+(#ton be#a($e' a##or+n& to h*' nterna) re%en(e )a!$ !ere at the t*e (nen,or#eab)e (nen,or#eab)e or n a $tate o, $($pen$on9 - COURT COURT 0 o%err( o%err()e+ )e+ th$ th$ #onte #ontento nton n an+ he)+ that +(rn& +(rn& Japane$e o##(paton' nterna) re%en(e )a!$ o, Ph)ppne$ #ontn(e+ to be n ,or#e NEIT4ER ARE TAX LAS PENAL IN NATURE - the the r()e r()e on retr etroa#t oa#t% %e e eHe# eHe#tt o, pena) pena) a)!$ a)!$ (n+e (n+err art#)e ::: o, RPC !h#h rea+$ 0 pena) )a! $ha)) ha%e retr retroa# oa#t% t%e e eHe#t eHe#t n$o,a n$o,arr a$ the" the" ,a%or ,a%or the per$on per$on &()t" o, a ,e)on"' !ho $ NOT a habt(a) #r*na) a$ +e/ne+ n r()e art#)e D: o, th$ #o+e9 - A)tho( A)tho(&h &h at the the t*e t*e o, p(b)# p(b)#at aton on o, $(#h $(#h )a! )a!$ $ a /na) /na) $enten#e ha$ been prono(n#e+ an+ #on%#t $ $er%n& the $a*e - 8n+$ n+$ no app)# app)#at aton on n tax #a$e$ #a$e$ - Re%en(e e%en(e )a!$ )a!$ !h#h !h#h *po$ *po$e e taxe$ taxe$ #o))e# #o))e#te+ te+ b" *ean$ *ean$ !h#h are or+nar)" re$orte+ to ,or the #o))e#ton o, taxe$ are NOT CLASSES a$ pena) )a!$ an+ there,ore CANNOT BE GIVEN retroa#t%e eHe#t TAX TAX LAS NOT BEING PENAL IN C4ARACTER' C4ARACTER' T4E RULE IN T4E CONSTITUTION CONSTITUTION AGAINST T4E PASSAGE PASSAGE O8 EX PSOT 8ACTO LAS CANNOT BE INVOKE7 - the #on$t #on$tt(t t(tona ona)) prohb prohbton ton a&an$t a&an$t the the pa$$a& pa$$a&e e o, ex ex po$t ,a#to )e&$)aton' a##+& to SC - app) app)e e$ $ on)" on)" to #r*n #r*na) a) or pena pena)) *atte *atter$ r$ an+ an+ not to )a!$ )a!$ !h# !h#h h #one #onern rn #% #%)) *att *atte$ e$ or pro# pro#ee ee+ +n& n&$ $ &enera))"' or !h#h aHe#t or re&()ate #%) or pr%ate r&ht$ - #on$t #on$tt(t t(ton ona) a) prohb prohbt ton on a&an$ a&an$tt ex po$t ,a#to ,a#to a)!$ a)!$ $ NOT APPLICABLE to the #o))e#ton o, ntere$t on ba#k
=: -
Co))e#ton o, ntere$t n tax #a$e$ $ NOT PENAL IN NATURE
INCREASE TAX RATES 6A5 ALSO BE GIVEN RETROACTIVE E88ECT SO AS TO APPL5 INCO6E EARNE7 BE8ORE T4E PASSAGE O8 T4E LA AUT4ORIING SUC4 INCREASE - n #a$e o, ntere$t' no #on$tt(tona) n,rn&e*ent !o()+ ex$t anent the ex po$t ,a#to prohbton INTERPRETATION OF TAX LAWS - a $tat(te !)) not be #on$tr(e+ a$ *po$n& a tax (n)e$$ t +oe$ $o #)ear)"' expre$$)"' an+ (na*b&(o($)" - a tax #annot be *po$e+ !tho(t #)ear an+ expre$$ !or+$ ,or that p(rpo$e - pro%$on$ o, a taxn& a#t are not to be exten+e+ b" *p)#aton -
TAX STATUTES ARE COSNTURE7 STRONGL5 AGAINST GOVERN6ENT AN7 LIBERALL5 IN 8ACOR O8 CITIEN
SINCE OUR INCO6E TAX LAS ARE O8 A6ERICAN ORIGIN' INTERPETATION B5 A6ERICAN COURTS ON OUR PARALLEL TAX LAS 4AVE PERSUASIVE E88ECT
SOURCES OF TAX LAWS
19 Con$tt(ton :9 Tax #o+e$ $(#h a$ NIRC' TarH an+ C($to* Co+e' an+ porton$ o, Lo#a) Go%ern*ent Co+e ;9 Stat(te$ )ke RA 11: an+ RA >=:= – Tax Re,or* A#t M An A#t Creatn& the Co(rt o, Tax Appea)$ =9 Pre$+enta) +e#ree$ 9 Exe#(t%e or+er$ D9 Co(rt 7e#$on$
be#a($e b(r+en$ are not to be *po$e+ be"on+ !hat the $tat(te$ expre$$)" an+ #)ear)" *port
9 Re%en(e re&()aton$ pro*()&ate$ b" 7epart*ent o, 8nan#e
A)tho(&h tax b(r+en$ are not pre$(*e+' t $ *portant to #on$+er' ho!e%er tat tax )a!$ are NOT PRO6ULGATE7 n or+er to en#o(ra&e tax e%a$on or tax a%o+an#e - SC $a+ that propo$e o, Tax Co+e $ to *po$e taxe$' not to enhan#e tax a%o+an#e
>9 A+*n$trat%e $$(an#e$ o, BIR )ke Re%en(! 6e*oran+(* Cr#()ar$' an+ tho$e o, B(rea( o, C($to*$ )ke C($to*$ 6e*roan+(* Or+er$
LIKE OT4ER STATUTES' TAX LAS OPERATE PROSPECTVEL5 !hether the" ENACT' A6EN7 OR REPEAL - UNLESS the p(rpo$e o, )e&$)atre to &%e retroa#t%e eHe#t $ expre$$)" +e#)are+ OR - 6a" be *p)e+ ,ro* )an&(a&e ($e+
1<9Lo#a) Tax Or+nan#e$
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9 BIR R()n&$
119Tax Treate$ an+ Con%enton$ !th ,ore&n #o(ntre$
TAXATION SURVIVAL KIT – Aban Book -
there are pro%$on$ n ex$tn& tax )a!$ !h#h )a" +o!n *an+ator" re(re*ent$ ,or p(rpo$e$ o, %a)+t" o, #ertan a#t$ per,or*e+ b" tho$e !ho are entr($te+ !th en,or#e*ent o, re%en(e )a!$
Exa*p)e$ 0 Tax Co+e 1 Se#ton :< 0 7$trant propert"
rea) propert" o, the +e)n(ent taxpa"er n $(#ent (antt" to $at$," the tax #har&e toðer !th an" n#re*ent thereto n#+ent to +e)n(en#" Another exa*p)e o, a +re#tor" pro%$on $ Se#ton 1: ' RA 11:
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the )a! then re(re+ that $a*e $ho()+ be e*p)o"e+ not ear)er than three *onth$ nor )ater than $x *onth$ ,ro* re#ept o, +e*an+9 xxx
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pro%+e$ that #a$e$ bro(&ht be,ore the #o(rt $ha)) be +e#+e+ !thn thrt" +a"$ a,ter $(b$*$$on thereo, ,or +e#$on
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$(#h a#ton !)) not ne#e$$ar)" re$()t n n())t" o, #o))e#ton
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The CTA $ NOT a *ere $(perror a+*n$trat%e a&en#" or trb(na) rather t $ a part o, .(+#a) $"$te* o, Ph)ppne$
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No nee+ ,or b(rea( o, Interna) Re%en(e to a))o! three *onth$ ,ro* +ate o, re#ept o, a$$e$$*ent to e)ap$e be,ore $(**ar" re*e+e$ ,or #o))e#ton are re$orte+ to – , tax ben& #o))e#te+ $ $e), a$$e$$e+ tax' a$ n the #a$e o, n#o*e tax' !h#h the taxpa"er reFe#t$ n h$ tax ret(rn'
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It !a$ #reate+ b" Con&re$$ a$ a #entra)2e+ #o(rt $pe#a)2n& n tax #a$e$
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It $ a re&()ar #o(rt %e$te+ !th ex#)($%e appe))ate .(r$+#ton o%er #a$e$ ar$n& (n+er the NIRC' TarH' an+ C($to*$ Co+e an+ A$$e$$*ent La!
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A$ a *atter o, pra#t#e an+ prn#p)e' SC !)) not $et a$+e the #on#)($on rea#he+ b" CTA !h#h $ b" the %er" nat(re o, t$ ,(n#ton' +e+#ate+ ex#)($%e)" to the $t(+" an+ #on$+eraton o, tax prob)e*$ an+ ha$ ne#e$$ar)" +e%e)ope+ an expert$e n $(b.e#t' UNLESS T4ERE 4AS BEEN AN ABUSE7 AN7 I6PROVI7E7NT EXERCISES O8 AU4TORIT5 ON ITS PART5
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BUT 4IC4 he ,a)e+ to pa" on the +ate ,or pa"*ent pre$#rbe+ b" )a! Three *onth pero+ app)e+ on)" !hen there !a$ a pre%o($ +e*an+ or a$$e$$*ent ,ro* BIR
Se#ton :< 1 NIRC PUBLICATION REUIRE6ENT -
no )on&er pro%+e$ ,or *an+ator" pero+ o, NOT ERALIER T4AN T4REE 6ONT4S be,ore the BIR #o()+ ($e the $(**ar" re*e+" o, #o))e#ton o, an" +e)n(ent tax b" +$rant o, per$ona) propert" an+or )e%" on rea) propert"
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not a)) $o(r#e$ o, tax )a!$ a$ en(*erate+ abo%e re(re p(b)#aton n O#a) 8axette a$ pro%+e+ n Art#)e : o, CC' !h#h $tate$ that LAS S4ALL TAKE E88ECT A8TER 8I8TEEN 7A5S 8OLLOING T4E CO6PLETION O8 T4EIR PUBLICATION IN O88ICIAL
== -
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p(b)#aton a$ a #on+ton ,or ther eHe#t%t"M $tat(te$' n#)(+n& tho$e o, )o#a) app)#aton an+ pr%ate )a!$' pre$+enta) +e#ree$ an+ exe#(t%e or+er$ pro*()&ate+ b" Pre$+ent' an+ a+*n$trat%e r)e$ an+ re&()aton$ , ther p(rpo$e $ to en,or#e or *p)e*ent ex$tn& )a!' p(r$(ant to a %a)+ +e)e&aton nterpretat%e re&()aton$ an+ tho$e !h#h are *ere)" nterna) n nat(re9 EXA6PLE 0 tho$e !h#h re&()ate on)" the per$onne) o, a+*n$trat%e a&en#" an+ not p(b)# ' nee+ not be p(b)$he+ In BIR n$tan#e' the ,o))o!n& +o not re(re p(b)#aton ,or p(rpo$e$ o, eHet%t"0 REVENUE 6E6ORAN7U6 OR7ERS' REVENUE 6E6ORAN7U6 CIRCULARS' REVENUE A76INISTRATIVE OR7ERS' BIR RULINGS BIR *e*oran+(* Cr#()ar – $ on)" ,or nterna) a+*n$traton o, BIR an+ not a re&()aton !thn the #onte*p)aton o, Se#ton := o, Tax Co+e
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There,ore 0 nee+$ no p(b)#aton n O#a) Ga2ette
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4EN AN7 A76INISTRATIVE REN7ERS AN OPINION B5 6EANS O8 A CIRCULAR OR 6E6ORAN7U6 IT E6REL5 INTERPRETS A PRE EXISTING LA AN7 NO PUBLICATION IS REUIRE7 8OR ITS VALI7IT5
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C($to*$ 6e*oran+(* Or+er$ $$(e+ b" Co**$$oner o, C($to*$ NEE7 NOT BE PUBLIS4E7 IN O88ICIAL GAETTE Con$tr(#ton b" an exe#(t%e bran#h o, Go%ern*ent o, a part#()ar )a!' a)tho(&h not bn+n& on the #o(rt$' *($t be &%en !e&ht a$ the #on$tr(#ton #o*e$ ,ro* the bran#h o, Go%ern*ent #a))e+ (pon to *p)e*ent
ARE TAX LAWS SPECIAL LAWS(
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Tax )a!$ are $pe#a) )a!$
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Tax #o+e $ an exa*p)e o, a tax )a!
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Tax #o+e $ a $pe#a) )a! an+ pre%a)$ o%er a &enera) )a! $(#h a$ C%) Co+e ? REPUBLIC VS GANA5CO@
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In #a$e the pro%$on$ o, a $pe#a) )a! are ,o(n+ to be +e/#ent n a part#()ar $t(aton' the #%) #o+e $ha)) app)"
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RULING 0 to eHe#t that a)tho(&h the Re%$e+ Charter 6an)a $peak$ o, or+nan#e$ n &enera)' rre$pe#t%e o, nat(re an+ $#ope thereo,
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Se#ton =; ' Lo#a) Tax Co+e 0 on p(b)#aton o, tax or+nan#e$ $ho()+ app)" be#a($e the )o#a) tax #o+e re)ate$ to or+nan#e$ )e%"n& or *po$n& taxe$' ,eee$' or #har&e$ n part#()ar
In a#ton n$tt(te+ b" the Go%ern*ent ,or the re#o%er" o, an erroneo($)" re,(n+e+ tax' !h#h pre$#rpt%e pero+ !)) app)" – the $x "ear pre$#rpt%e ,or a (a$ #ontra#t$ (n+er Art#)e 11= o, CC or three "ear pre$#rpt%e pero+ ,or a$$e$$*ent (n+er Se# :;; o, Tax Co+e !h#h $ a $pe#a) )a! -
$n#e an a#ton to re#o%er an erroneo($)" re,(n+e+ tax $ n eHe#t an a$$e$$*ent o, $(#h tax an+ #on$+ern& that a $pe#a) )a! )ke tax #o+e pre%a)$ o%er CC' a &enera) )a!' then t $ the three "ear pero+ (n+er the Tax Co+e that $ho()+ app)"
TAXATION SURVIVAL KIT – Aban Book TAX REGULATIONS
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pro*()&ate$ b" Se#retar" o, 8nan#e n or+er the *p)e*ent the pro%$on$ o, Tax Co+e
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the Se#retar" o, 8nan#e' (pon re#o**en+aton o, Co**$$oner' $ha)) pro*()&ate a)) nee+,() r()e$ an+ re&()aton$ ,or the eHe#t%e en,or#e*ent o, pro%$on$ o, th$ Co+e
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Re&()aton$ *($t not be #ontrar" to )a! ,or a re&()aton pro*()&ate+ on a !ron& nterpretaton o, the )a! or n #ontra%enton thereo, #annot &%e r$e to a %e$te+ r&ht that #an be n%oke+ ether b" taxpa"er or &o%ern*ent
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Ga2ette or n a ne!$paper o, &enera) #r#()aton
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The" *($t be rea$onab)e an+ *($t be !thn the a(thort" #on,erre+ $n#e the po!er to *ake re&()aton $ NOT T4E po!er to )e&$)ate
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SC 0 r()e+ a&an$t the re)axaton o, #ertan re%en(e re&()aton$ b" Re%en(e 6e*oran+(* Cr#()ar No -> a$ t +$re&ar+e+ the : "ear pre$#rpt%e pero+ $et b" )a!
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BIR ++ not $*p)" nterpret the )a!' t )e&$)ate+ &(+e)ne$ #ontrar" to the $tat(te pa$$e+ b" #on&re$$
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COURT UP4EL T4E NULLI8ICATION O8 R6C – -> AS AN A76INISTRTIVE INTERPRETATION 4IC4 IS NOT IN 4AR6ON5 IT4 SECTION :;< O8 1>> NIRC' 8OR BEING CONTRAR5 TO T4E EXPRESS PROVISION O8 A STATUTE' AN7 CONCLU7E7 T4AT T4E SA6E COUL7 NOT BE GIVEN EIG4T 8OR TO 7O SO OUL7 IN E88ECT A6EN7 T4E STATUTE
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6OREOVER' the nterna) re%en(e #o**$$oner #annot' b" a+*n$trat%e /at' a*en+ the )a! b" *akn& #o*p)an#e there!th *ore b(r+en$o*e
TAX RULINGS
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Un+er &($e o, re&()aton' )e&$)aton *a" not be ena#te+
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be$t &(e$$ o, *o*ent an+ n#+enta))" o,ten #ontan $(#h !e)) #on$+ere+ an+ $o(n+ )a!
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A+*n$trat%e ha%e the ,or#e an+ eHe#t o, )a!
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COURTS 0 the" +o not pre%ent an entre #han&e o, ,ront at an" t*e an+ are *ere)" a+%$or" $ort o, an n,or*aton $er%#e to taxpa"er
A+*n$trat%e re&()aton$ pro%$on$ o, the )a!
*($t
be
n
har*on"
!th
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n #a$e o, +$#repan#" bet!een ba$# )a! an+ *p)e*entn& r()e or re&()aton the ,or*er pre%a)$
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R()e$ an+ re&()aton$ *($t not o%err+e b(t *($t re*an #on$tant an+ n har*on" !th the )a! the" $eek to app)"
POWER OF COMMISSIONER TO INTERPRET TAX LAWS AND TO DECIDE TAX CASES
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Se#ton =' NIRC – $pe#/#a))" pro%+e$ that the po!er to nterpret the pro%$on$ o, Tax Co+e an+ other tax )a!$ $ha)) be (n+er the ex#)($%e an+ or&na) .(r$+#ton o, the Co**$$oner' $(b.e#t to re%e! b" the Se#retar" 8nan#e
=D -
-
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The po!er to +e#+e +$p(te+ a$$e$$*ent$' re,(n+$ o, nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto or other *atter$ ar$n& (n+er th$ Co+e or other )a!$ or porton$ there, a+*n$tere+ b" BIR $ %e$te+ n Co**$$oner $(b.e#t to the ex#)($%e appe))ate .(r$+#ton o, CTA RULING O8 CIR 0 a&en#" ta$ke+ !th en,or#e*ent o, tax )a!$' $ a##or+e+ *(#h !e&ht an+ e%en /na)t" !here there $ NO S4OING T4AT IT IS PATENTL5 !ron&' part#()ar)" n a #a$e !here the /n+n&$ an+ #on#)($on$ o, nterna) re%en(e #o**$$oner !ere $(b$e(ent)" ar*e+ b" the CTA ' a $pe#a)2e+ bo+" #reate+ ,or the ex#)($%e p(rpo$e o, re%e!n& tax #a$e$ an+ CA RULING 4IC4 6EREL5 E6BO7IE7 A76INISTRATIVE OPINIONS ON UERIES SUB6ITTE7 7O NOT 4AVE T4E 8ORCE AN7 E88ECT O8 LAS
NON RETORACTIVITY OF RULINGS
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r()n&$ are not retroa#t%e , the" are pre.(+#a) to taxpa"er
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Se#ton :=D o, 1 NIRC an" re%o#aton' *o+/#aton or re%er$a) o, an" o, r()e$ an+ re&()aton$ pro*()&ate+ n a##or+an#e !th pre#e+n& Se#ton$ or an" o, r()n&$ or #r#()ar$ pro*()&ate+ b" Co**$$oner
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#ha-- o& "e 3$0e re&roa&$0e a++-$a&$o $% &he re0oa&$o, /o!$>a&$o or re0er#a- *$-- "e +re=.!$$a&o &he &a'+ayer#, EXCEPT IN FOLLOWING CASES0
19 !here taxpa"er +e)berate)" *$$tate$ or o*t$ *atera) ,a#t$ ,ro* h$ ret(rn or an" +o#(*ent re(re+ o, h* b" the BIR :9 !here the ,a#t$ $(b$e(ent)" &athere+ b" BIR are *atera))" +Herent ,ro* ,a#t$ on !h#h the r()n& $ ba$e+ ;9 here taxpa"er a#te+ n ba+,ath
COURT0 retroa#t%e eHe#t o, VAT RULING >-: ILL NOT BE PREJU7ICIAL TO T4E TAXPA5ER (n+er the a,ore(ote+ ex#epton to the &enera) r()e CASE 1 19 there !a$ a BIR r()n& $$(e+ on Jan(ar" :1' 1>< !heren t !a$ r()e+ that the 1Q bran#h pro/t re*ttan#e tax (n+er Se#ton : ?a@ ?@ o, Tax Co+e $ho()+ be ba$e+ on a*o(nt o, pro/t a#t(a))" re*tte+ b" a ph)ppne bran#h to t$ parent #o*pan" abroa+ :9 4OEVER' n 1>: (n+er Re%en(e 6e*oran+(* Cr#()ar No9 >->:' BIR re%r$e+ the pror r()n& an+ he)+ that the 1Q bran#h pro/t re*ttan#e tax S4OUL7 BE BASE7 NOT ON T4E A6OUNT O8 PRO8ITS ACTUALL5 RE6ITTE7 BUT ON T4E A6OUNT APPLIE7 8OR RE6ITTANCE T4EREB5 6AKING T4E BASIS O8 1Q tax )ar&er than that on !h#h $a+ tax !a$ #o*p(te+ (n+er or&na) 1>< r()n&9 ;9 BIR n t$ $(b$e(ent r()n& n 1>: rea$one+ that the a*o(nt app)e+ ,or re*ttan#e $ho()+ be the tax ba$e' th($ &%n& r$e to a b&&er a*o(nt to tax
TAXATION SURVIVAL KIT – Aban Book SO6E EXTENT CON8IR6ATOR5 T4AT T4E RULING CARRIES OUT T4E LEGISLATIVE PURPOSE ILL T4E REVERSAL RULING IN 1>: RETROACT TO T4E BRANC4 PRO8IT RE6ITTANCES 6A7E BE8ORE T4AT 5EAR OR AS IN T4E CASE O8 BURROUG4S 4EREIN' ILL SAI7 RULING APPL5 TO RE6IRRANCES 6A7E B5 IT IN 1 -
pa"*ent o, bran#h pro/t re*ttan#e ha%n& been *a+e on 1' t ,o))o!$ that BIR *e*oran+(* #r#()ar no >->: $$(e+ on 6ar#h 1' 1>: CANNOT BE GIVEN RETROACTIVE E88ECT
o, a $tat(te $(b$tanta))" ? T4E REENACT6ENT (n#han&e+ $ per$(a$%e n+#aton o, the a+opton b" Con&re$$ o, pror exe#(t%e #on$tr(#ton DOCTRINE OF IMPLICATIONS
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the +o#trne o, *p)#aton$ *ean$ that !h#h $ p)an)" *p)e+ n the )an&(a&e o, a $tat(e $ a$ *(#h a part o, t a$ that !h#h $ expre$$e+
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RA = – !h#h *po$e$ a 1Q a++tona) tax on Rea) propert"' the tota) rea) propert" tax S4OUL7 NOT EXCEE7 A 6AXI6U6 O8 T4REE PER CENTU6' T4E CIT5 O8 6ANILA UN7ER ITS C4ARTER' CAN INCREASE T4E EXISTING REGULAR RATE O8 ONE AN7 ONE 4AL8 PERCENT TO TO PERCENT
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SO T4AT :Q A77E7 TO T4E 1Q EUALS ;Q OR 6AXI6U6 RATE ALLOE7 UN7ER RA =
CASE : -
the a+*n$trat%e r()n&$ o, pre%o($ #o**$$oner$ are not #on#)($%e an+ bn+n& (pon ther $(##e$$or$
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an n#(*bent #o**$$oner *a" REVOKE' REVERSE' OR ABROGATE T4E ACTS OR RULING O8 4IS PRE7ECESSORS IN O88ICE I8 4E BECO6ES CONVICE7 T4AT A STATUTE ARRANTS A 7I88ERENT CONSTRUCTION ?4ILA7O VS CIIR@
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the prn#p)e $' $(b.e#t to the non retroat%t" r()e $ho()+ t appear that the r()n re%er$n& a pre%o($ r()n& o, ,or*er #o**$$oner $ pre.(+#a) to the taxpa"er p(r$(ant to $e# :=D o, Tax Co+e
TAX TREATIES AND ITNERNATIONAL AGREEMENTS
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a)$o #on$tt(te an *portant $o(r#e o, tax )a!
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tax teate$ or+nar)" #o*prehen+ t!o ob.e#t%e$ 0
LEGISLATIVE ADOPTION OF TAX RULINGS
Prn#p)e o, )e&$)at%e appro%a) nterpretaton thro(&h ena#t*ent -
o,
an
a+*n$trat%e
4ERE A STATUTE IS SUSCEPTIBLE O8 T4E 6EANING PLACE7 UPON IT B5 A RULING O8 A GOVERN6ENT AGENC5 C4ARGE7 IT4 ITS EN8ORCE6ENT AN7 T4E LEGISLATURE T4EREA8TER REENACTS T4E PROVS
o
to a%o+ +o(b)e taxaton ?ESPECIALL5 IN CASES 4ERE T4E ICO6E IS TAXE7 TICE@ one b" #o(ntr" !here the n#o*e $ earne+ an+ another b" #o(ntr" !here $(b.e#t o, taxaton $ ether a #t2en or re$+ent ?#o(ntr" o, re$+en#e@
=> o
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to e)*nate or *n*2e tax e%a$on thro(&h a+opton o, the ex#han&e o, n,or*aton $#he*e !hereb" the $&nator" #o(ntre$ to the treat" (n+ertake to ,(rn$h ea#h other on a *(t(a) ba$$ n,or*aton on taxab)e n#o*e an+or a#t%te$ o, an" o, ther natona)$ or re$+ent$
T4E P4ILIPPINES 4AS ENTERE7 INTO A NU6BER O8 TAX TREATIES' NTOABLE O8 4IC4 ARE T4OSE IT4 EUROPEAN COUNTRIES' the US' ASEAN' or So(thea$t A$an naton$ )ke IN7ONESIA SINGapore' 6AKA5SIA an+ other$
CIR %$ John$on an+ Son -
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the p(rpo$e o, the$e nternatona) a&ree*ent$ $ to re#on#)e the natona) /$#a) )e&$)aton$ o, the #ontra#tn& parte$ n or+er to he)p the taxpa"er a%o+ $*()taneo($ taxaton n t!o +Herent .(r$+#ton$ Tax #on%enton$ are +ra,te+ !th a %e! to!ar+$ the e)*naton o, $&era&$oa- =.r$!$a- !o."-e &a'a&$o INTERNATIONAL JURIDICAL DOUBLE TAXATION 1 *po$ton o, #o*parab)e taxe$ n t!o or *ore $tate$ on $a*e taxpa"er n re$pe#t o, the $a*e $(b.e#t *atter an+ ,or +ent#a) pero+$
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RATIONALE ) eo.ra3e %ree o* o% 3oo!# a! #er0$e# a! &he /o0e/e& o% a+$&a-, &eho-o3y a! +er#o# "e&*ee o.&r$e#, o!$&$o# !ee/e! 0$&a- $ rea&$3 ro".#& a! !ya/$ eoo/$e#
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8ore&n n%e$t*ent$ ILL ONL T4RIVE n a ,ar)"
#)*ate an+ prote#ton a&an$t +o(b)e taxaton $ #r(#a) n #reatn& $(#h a #)*ate -
Con$tt(ton re(re$ the #on#(rrn& %ote o, at )ea$t :; o, a)) *e*ber$ o, Senate ,or %a)+t" an+ eHe#t%t"
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SC 0 )e$$ ,or*a) t"pe$ o, nternatona) a&ree*ent$ *a" eb entere+ nto b" the Che, exe#(t%e an+ b#o*e bn+n& !tho(t the #on#(rre#n#e o, )e&$)at%e bo+"
CASE 0 4o$t a&ree*ent o, J()" :: 11' bet!een the Ph)ppne$ an+ the 4O (n+er !h#h 4O $ exe*pt ,ro* n+re#t taxe$ re)at%e to the on$tr(#ton o, t$ re&ona) hea+(arter$ b()+n& n the Ph)ppne$ #o*e$ !thn the )atter #ate&or"9 COURT 0 $a+ a&ree*ent $ VALI7 an+ IN7ING a&ree*ent e%en !tho(t the #on#(rren#e o, $enate
Chapter TAX A76INISTRATION AN7 EN8ORCE6ENT
A3e$e# I0o-0e! $ Ta' A!/$$#&ra&$o
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a&en#e$ o, Go%ern*ent !h#h are n%o)%+ n tax )a! en,or#e*ent or tax a+*n$traton are the B(rea( o, Interna Re%en(e an+ B(rea( o, C($to*$ ,or nterna) re%en(e an+ #($to*$ )a! en,or#e*ent
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Pro%n#a)' #t" an+ *(n#pa) a$$e$$or$ an+ trea$(rer$ ,or )o#a) an+ rea) propert" taxe$
TAXATION SURVIVAL KIT – Aban Book -
COURTS are not part o, a+*n$trat%e pro#e$$ b(t n the tax *)e( the" +o p)a" an *portant ro)e $n#e $o(n+ tax a+*n$traton *($t *o%e a)on& the #orre#t nterpretaton o, tax )a!$
o
B.rea. o% I&era- Re0e.e
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-
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o##(p"n& ,ore,ront tax )a! en,or#e*ent $ the BIR' !h#h $ ta$ke+ !th #o))e#ton o, $(b$tanta) a*o(nt o, re%en(e ,ro #o(ntr" an+ $ (n+er $(per%$on an+ #ontro) o, 7epart*ent o, 8nan#e BIR $ha)) ha%e a #he, to be kno!n a$ Co**$$oner o, Interna) Re%en(e' re,erre+ to a$ Co**$$oner an+ ,o(r a$$$tant #he,$ to be kno!n a$ 7ep(t" Co**$$oner$ Ea#h 7ep(t" Co**$$oner$ re$pe#t%e)" hea+$ o, 0
1; A$$$tant Co**$$oner$ o, +Herent $er%#e$
po)#" an+ p)annn& $er%#e
en,or#e*ent $er%#e
)ar&e taxpa"er$ $er%#e
n,or*aton $"$te*$ operaton$ $er%#e
n,or*aton p)annn& an+ (a)t" $er%#e
n,or*aton $"$te*$ +e%e)op*ent $er%#e
taxpa"er$ a$$$tan#e $er%#e
a$$e$$*ent $er%#e
#o))e#ton $er%#e
)e&a) $er%#e
n$pe#ton $er%#e h(*an re$o(r#e$ +e%e)op*ent $er%#e
o
In,or*aton S"$te*$ Gro(p
o
Operaton$ Gro(p
o
Le&a) an+ In$pe#ton Gro(p
o
Re$o(r#e *ana&e*ent Gro(p
!h)e Re%e! an+ E%a)(aton Gro(p $ p)a#e+ +re#t)" (n+er O#e o, Co**$$oner Toðer !th 0
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/nan#a) an+ a+*n$trat%e $er%#e Con$tt(te the /r$t$enor )e%e) o, a+*n$trat%e a(thort"
Se#on+*++)e *ana&e*ent )e%e) o, a+*n$trat%e o#er$ $ #o*po$e+ o, 0 o
7%$on #he,$ hea+n& ea#h o, %aro($ +%$on ,a))n& (n+er *a.or $er%#e to !t0
<
6ana&e*ent
S"$te*$ +e%e)op*ent
Stat$t#$
S"$te*$ *antenan#e an+ $(pport
Corporate Co**(n#aton$
Taxpa"er n,or*aton an+ e+(#aton
Taxpa"er $er%#e pro&ra* an+ *ontorn&
Tax 8ra(+
Po)#" Ca$e$
A$$e$$*ent pro&ra*
Lar&e Taxpa"er$ A(+t an+ In%e$t&aton
A(+r n,or*aton an+ tax exe*pton
Lar&e taxpa"er$ A(+t an+ In%e$t&aton
A$$et %a)(aton
thho)+n& tax
Re%en(e an+ a##o(ntn&
Co))e#ton en,ore#e*ent
Appe))ate
Lar&e – Taxpa"er$ +o#(*entar" pro#e$$n& an+ (a)t" a$$(ran#e Lar&e taxpa"er$ /e)+ operaton$ Lar&e taxpa"er$ en,or#e*ent
#o))e#ton
an+
Lar&e taxpa"er$ a$$$tan#e
Lt&aton
Lar&e taxpa"er$ pro&ra*$
Pro$e#(ton
S"$te*$ operaton$
Internatona) tax aHar$
S"$te*$ $(pport
Interna) $e#(rt"
Se#(rt" *ana&e*ent
Interna) a(+t
(a)t" a$$(ran#e
Per$onne) n(r"
TAXATION SURVIVAL KIT – Aban Book
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Trann& +e)%er" AGENTS AND DEPUTIES FOR COLLECTION OF NATIONAL INTERNAL REVENUE TAXES
6e+#a)+enta)
8nan#a) an+ a+*n$trat%e
B(+&et
Genera) $er%#e$
A##o(ntn&
Pro#(re*ent
A##o(ntab)e ,or*$
Per$onne) *ana&e*ent $er%#e$
19 Co**$$oner o, C($to*$ an+ h$ $(bor+nate$ !th re$pe#t to the #o))e#ton o, natona) nterna) re%en(e taxe$ on *porte+ &oo+$ :9 The hea+ o, approprate &o%ern*ent o#e an+ h$ $(bor+nate$ !th re$pe#t to the #o))e#ton o, ener&" tax
BIR $ )ar&e)" +e#entra)2e+ n that &reat extent o, tax en,or#e*ent +(te$ are +e)e&ate+ to the Te&ona) 7re#tor$ an+ Re%en(e 7$tr#t O#er$ At PRESENT 0 o
Se#ton 1: o, 1 NIRC' the ,o))o!n& are #on$tt(te+ a$ a&ent$ o, Co**$$oner 0
;9 Bank$ +()" a##re+te+ b" Co**$oner !th re$pe#t to re#ept o, pa"*ent$ o, nterna) re%en(e taxe$ a(thor2e+ to be *a+e thro(&h bank$ An" o#er or e*p)o"ee o, an a(thor2e+ a&ent bank a$$&ne+ to re#e%e nterna) re%en(e tax pa"*ent an+ tran$*t tax ret(rn or +o#(*ent$ to BIR $ha)) be $(b.e#t to $a*e $an#ton$ an+ pena)te$ pre$#rbe+ n Se#ton$ :D – :< o, Tax Co+e
1 re%en(e re&on$ a)) o%er #o(ntr" Po*er# a! D.&$e# o% B.rea. o% I&era- Re0e.e
o
o
o
ea#h re%en(e re&on ben& hea+e+ b" re&ona) +re#tor 11 re%en(e +$tr#t o#e$ re%en(e +$tr#t o#er
ea#h (n+er a
8RONT LINERS O8 BIR 0 rank an+ /)e re%en(e en,or#e*ent o#er$' *ore #o**on)" kno!n a$ exa*ner$' n%e$t&ator$ an+ a&ent$ an+ o, #o(r$e the n(*ero($ #)erk$ an+ other $(pport
The po!er$ an+ +(te$ o, BIR #o*prehen+ the ,o))o!n& 0 19 A$$e$$*ent an+ #o))e#ton o, a)) natona) nterna) re%en(e taxe$' ,ee$ an+ #har&e$ :9 En,or#e*ent o, a)) ,or,et(re$' pena)te$ an+ /ne$ #onne#te+ there!th ;9 Exe#(ton o, .(+&e*ent n a)) #a$e$ +e#+e+ n t$ ,a%or
: =9 EHe#tn& an+ a+*n$tern& the $(per%$or" an+ po)#e po!er$ #on,erre+ to t b" tax #o+e or other )a!$
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POWER AND DUTY OF COMMISSIONER TO INTERPRET TAX LAWS AND TO DECIDE TAX CASES SEC2 @2 Po*er o% &he Co//$##$oer &o I&er+re& Ta' La*# a! &o De$!e Ta' Ca#e#2 - The po!er to nterpret the pro%$on$ o, th$ Co+e an+ other tax )a!$ $ha)) be (n+er the ex#)($%e an+ or&na) .(r$+#ton o, the Co**$$oner' $(b.e#t to re%e! b" the Se#retar" o, 8nan#e9
The po!er to +e#+e +$p(te+ a$$e$$*ent$' re,(n+$ o, nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto' or other *atter$ ar$n& (n+er th$ Co+e or other )a!$ or porton$ thereo, a+*n$tere+ b" the B(rea( o, Interna) Re%en(e $ %e$te+ n the Co**$$oner' $(b.e#t to the ex#)($%e appe))ate .(r$+#ton o, the Co(rt o, Tax Appea)$9 7$p(te+ a$$e$$*ent – a tax a$$e$$*ent that $ a+*n$trat%e)" prote$te+ !thn ;< +a"$ ,ro* +ate the taxpa"er re#e%e+ the a$$e$$*ent -
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n#)(+e$ prote$te+ a$$e$$*ent$ !heren the a+*n$trat%e prote$t $ +ene+ n !ho)e or n part or $ NOT ACTE7 (pon b" BIR !thn one h(n+re+ e&ht" +a"$ ,ro* $(b*$$on o, a)) re(re+ +o#(*entar" e%+en#e taxpa"er a+%er$e)" aHe#te+ b" +e#$on or na#ton appea)e+ the $a*e to CTA !thn ;< +a"$ ,ro* re#ept o, +e#$on' or ,ro* )ap$e o, 1>< +a" pero+ Pen+n& appea)' $(#h a$$e$$*ent$ $ha) #ontn(e to be #on$+ere+ a$ a +$p(te+ a$$e$$*ent
APELLATE JURISDICTION OF COURT OF TAX APPEALS
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CTA $ha)) ha%e ex#)($%e appe))ate .(r$+#ton o%er appea)$ *a+e b" taxpa"er$ a+%er$e)" aHe#te+ b" the +e#$on or na#ton o, Co**$$oner on a+*n$trat%e prote$t$ a&an$t a$$e$$*ent$' #)a*$ ,or re,(n+ or tax #re+t o, nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto' or other *atter$ ar$n& (n+er tax #o+e or other )a!$ or porton$ thereo, a+*n$tere+ b" BIR The +e#$on$ o, Co**$$oner on prote$t$ /)e+ a&an$t a$$e$$*ent$ $$(e+ to +epart*ent$' b(rea($' o#e$ ' a&en#e$ an+ n$tr(*enta)te$ o, Natona) Go%ern*ent' n#)(+n& &o%ern*ent o!ne+ or #ontro))e+ #orporaton$' the appea)$' p(r$(ant to Se#$ DDD'D'D>'D'< o, RAC o, 1>9 Sha)) be $(b*tte+ to an+ $ett)e+ or a+.(+#ate+ b" So)#tor Genera) or Se# o, J($t#e a$ #a$e *a" be 7e#$on o, Se#retar" o, J($t#e a$ !e)) a$ that o, So)#ot Genera)' !hen appro%e+ b" Se# o, J($t#e ' $ha)) be /na) an+ bn+n& (pon parte$ APPEALS' *a" ho!e%er be taken to the Pre$+ent !hen a*o(nt n%o)%e+ EXCEE7S ONE 6ILLION PESOS9 7e#$on o, pre$+ent S4ALL BE 8INAL9
RULES OF NO ESTOPPEL AGAINST THE GOVERNMENT
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n per,or*an#e o, t$ &o%ern*enta) ,(n#ton$' the $tate #annot be e$toppe+ b" ne&)e#t o, t$ a&ent$ an+ o#er$ no!here $ th$ *ore tr(e than n /e)+ o, taxaton SC n CIR %$ ABA7 0 !here a BIR +enat(raton #o**ttee *ake$ a ,a%orab)e /n+n& that a)#oho) ha$ been $(tab)" +enat(re+ an+' there,ore $ exe*pt ,ro* $pe#/# tax' $a+ /n+n& *a" be +$re&ar+e+ b" a $(b$e(ent BIR n$pe#ton tea* I, t appear$ that $#h a)#oho) !a$ *proper)" +enat(re+ an+' hen#e $(b.e#t to tax e) +oe p) )(+e the $(b
TAXATION SURVIVAL KIT – Aban Book -
RULE O8 ESTOPPEL CANNOT BE INVOKE7 B5 A TAXPA5ER IN OR7ER TO PRECLU7E COLLECTION O8 TAXES T4AT ARE RIG48ULL5 UNAUT4ROIE7 PRONOUNCE6ENTS ON A TAXPA5ER3S TAX LIABILITIES9 - COURT 0 e%en , $a+ a&ent$ !ere $o a(thor2e+' ther reo**en+aton$ are a)!a"$ $(b.e#t to the re%e! o, ther $(peror$ !ho *a" be #o(nter*an+ or ar* the* - GOVERN6ENT IS NEVER STOPPE7 TO COLLECT LEGITI6ATE TAXES BECAUSE O8 ERROR CO66ITTE7 B5 ITS AGENTS A 8AVORABLE 8INI7NG OR POSITION TAKEN B5 BIR IN AN INVESTIGATION INVOLVING A PARTICULAR TAXPA5ER S4OUL7 NOT BE A GROUN7 8OR ACCOR7ING T4E SA6E TREAT6ENT TO A 7I88ERENT TAXPA5ER IN ANOT4ER INVESTIGATION I8 IN T4AT PREVIOUS INVESTIGATION ERROR AS CO66ITTE79 -
Go%ern*ent $ NOT BOUN7 b" error$ #o**tte+ b" t$ a&ent$ n pre%o($ n%e$t&aton$ an+ a$$e$$*ent$
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SC 0 BIR $ho()+ not be a))o!e+ to +e,eat an other!$e %a)+ #)a* ,or re,(n+ b" ra$n& (e$ton o, !thho)+n& a&ent3$ a))e&e+ n#apa#t" to /)e #)a* ,or re,(n+ ,or /r$t t*e on appea)9 COURT 0 Go%ern*ent *($t ,o))o! $a*e r()e$ o, pro#e+(re !h#h bn+ pr%ate parte$ In #a$e n%o)%n& a #)a* ,o re,(n+ o, a))e&e+)" o%erpa+ taxe$' the Go%ern*ent !a$ bere,t o, an" ,at(a) ba$$ to oppo$e $(#h #)a* an+ pre$ent e%+en#e t +$p(te the $a*e -
PRINCIPLE IN TAX LA EN8ORCE6ENT IS 0 Go%ern*ent $ not e$toppe+ b" *$take$ or error$ o, t$ a&ent$ -
erroneo($ app)#aton an+ en,or#e*ent o, )a! b" p(b)# o#er$ +o not b)o#k $(b$e(ent #orre#t app)#aton o, $tat(te$
ESTOPPEL 7OES NOT APPL5 TO 7EPRIVE GOVERN6ENT O8 ITS RIG4T TO RAISE 7E8ENSES -
e%en , tho$e +e,en$e$ are ben& ra$e+ on)" ,or /r$t t*e on appea)
Pro#ter an+ Ga*b)e #a$e 0 n%o)%n& re,(n+ o, a))e&e+ o%er !thhe)+ /na) !hto)+n& tax on +%+en+$ pa+ o(t to a non re$+ent ,ore&n #ororaton
the +e,en$e o, Go%ern*ent a&an$t the #)a* ,or re,(n+ to eHe#t a *ere !thho)+n& a&ent $ NOT proper part" that $ho()+ #)a* $(#h re,(n+ AS NOT NTERPOSE7 b" &o%ern*ent n )o!er #o(rt b(t !a$ ra$e+ on)" ,or /r$t t*e on appea)
BECAUSE o, +e)a" an+ na#ton o, a +%$on n BIR to $(b*t the #orre$pon+n& report on n%e$t&aton Go%ern*ent $ NOT +epr%e+ o, t$ r&ht to /)e *oton ,or re#on$+eraton a&an$t a +e#$on o, CTA a))o!n& re,(n+ n (e$ton GOVERN6ENT IS NOT ESTOPPE7 B5 T4E 6ISTAKES OR NEGLIGENCE O8 ITS O88ICIALS AN7 E6PLO5EEES
COURT 0 CIR VS CA -
Go%ern*ent $ NOT ESTOPPE7 ,ro* #o))e#tn& taxe$ )e&a))" +(e be#a($e o, *$take$ or error$ o, t$ a&ent$ - T4IS A76ITS EXCEPTIONS IN INTEREST O8 JUSTICE AN7 8AIR PLA5 ' AS 4ERE INJUSTCIE ILL RESULT TO TAXPA5ER - T4IS COURT IS 6IN78UL O8 T4E ELL ENTRENC4E7 PRINCIPLE T4AT T4E GOVERN6ENT IS NEVER ESTOPPE7 8RO6 COLLECTING TAXES BECAUSE O8 6SITAKES OR ERRORS ON PART O8 ITS AGENTS BUT T4IS RULE A76ITS O8 EXCEPTIONS IN INTEREST O8
=
IS THERE ESTOPPEL AGAINST TAXPAYER(
-
not ne#e$$ar)" tr(e n #a$e o, taxpa"er taxpa"er *a+e $e%era) re(e$t$ ,or ren%e$t&aton o, t$ tax )ab)te$ $(#h that the &o%ern*ent' a##e+n& to taxpa"er3$ re(e$t' po$tpone+ the #o))e#ton o, t$ )ab)t" - TAXPA5ER CANNOT LATER ON BE PER6ITTE7 TO RAISE T4E 7E8ENSE O8 PRESCRIPTION INAS6UC4 AS 4IS PREVIOUS REUESTS 8OR REINVESTIGATION 4AVE T4E E88ECT O8 PLACING 4I6 IN ESTOPPEL NATURE AND
A$$e$$e*ent -
o#a) a#ton o, an a+*n$trat%e o#er n +eter*nn& the a*o(nt o, tax +(e ,ro* a taxpa"er' or t *a" be a not#e to eHe#t that the a*o(nt theren $tate+ $ +(e ,ro* taxpa"er a$ a tax !th a +e*an+ ,or pa"*ent o, tax or +e/#en#" $tate+ theren
CLASSI8ICATION O8 ASSESS6ENTS 0 19 Se), a$$e$$*ent – a$$e$$e+ b" taxpa"er h*$e), a9 A*o(nt o, tax a$$e$$e+ $ reFe#te+ n tax ret(rn that $ /)e+ b" h* b9 Tax a$$e$$e+ $ pa+ at t*e he /)e$ ret(rn #9 Th$ $"$te* o, $*()taneo($ /)n& ,o ret(rn an+ pa*ent o, tax $ kno!n a$ PA5 AS 5OU 8ILE S5STE6
:9 7e/#en#" A$$e$$*ent – *a+e b" tax a$$e$$or !hereb" #orre#t a*o(nt o, tax $ +eter*ne+ a,ter an exa*naton or n%e$t&aton $ #on+(#te+ a9 Lab)t" 0 +eter*ne+ an+ there,ore a$$e$$e+ ,or ,o))o!n& rea$on$ 0 9 T4E A6OUNT ASCERTAINE7 EXCEE7S T4AT 4IC4 IS S4ON AS TAX B5 T4E TAXPA5ER IN 4IS RETURN 9 NO A6OUNT O8 TAX IS S4ON IN RETURN 9 TAXPA5ER 7I7 NOT 8ILE AN5 RETURN AT ALL ;9 I))e&a) an+ Vo+ A$$e$$*ent – a$$e$$*ent !heren tax a$$e$$or ha$ NO POER to a#t at a)) =9 Erroneo($ A$$e$$*ent – a$$e$$*ent !heren a$$e$$or ha$ POER TO ASSESSS BUT ERRS IN EXERCISE O8 T4AT POER PRINCIPLES GOVERNING TAX ASSESSMENTS
19 A$$e$$*ent$ are PRI6A 8ACIE PRESU6E7 CORRECT AN7 6A7E IN GOO7 8AIT4 a9 Taxpa"er ha$ +(t" o, pro%+n& other!$e b9 ABSENCE O8 AN5 PROOO8 O8 AN5 IRREGULARITIES n per,or*an#e o, o#a) +(te$' an a$$e$$*ent !)) not be +$t(rbe+ #9 ALL PRESU6PTIONS ARE IN 8AVOR O8 TAX ASSESS6ENTS +9 8a)(re to pre$ent proo, o, error n a$$e$$*ent !)) .($t," .(+#a) ar*aton o, $a+ a$$e$$*ent e9 A part" #ha))en&n& an appra$er3$ /n+n& o, %a)(e $ REUIRE7 to pro%e not on)" that the appra$e+ %a)(e $ erroneo($ B ,9 BUT ALSO 4AT T4E PORPER VALUE IS :9 A$$e$$*ent$ $ho()+ NOT BE BASE ON PRESU6PTION NO 6ATER 4O LOGICAL T4E PRESU6PTION 6IG4T BE t *($t be ab$e+ on a ) ,a#t$
TAXATION SURVIVAL KIT – Aban Book b9 PRESU6PTION O8 CORRECTNESS O8 AN ASSESS6ENT BEING A 6ERE PRESU6PTION' IT CANNOT BE 6A7E TO REST ON AOT4ER PRESU6PTION T4AT T4E CIRCU6STANCES EXISTING IN A SUBSEUENT INVESTIGATIVE PERIO7 ARE PRESU6E7 TO BE T4OSE EXISTING IN A PREVIOUS PERIO7
+e#)araton$ *a+e or to be *a+e n a ret(rn re(re+ to be /)e+ (n+er pro%$on$ o, Tax Co+e0 o the #o**$$oner' a,ter takn& nto a##o(nt the $a)e$' re#ept$' n#o*e' or other taxab)e ba$e o, other per$on$ en&a&e+ o n $*)ar b($ne$$e$ (n+er $*)ar $t(aton$ or #r#(*$tan#e$ or a,ter #on$+ern& other re)e%ant n,or*aton o *a" pre$#rbe a *n*(* a*o(nt o, $(#h &ro$$ o re#ept$' $a)e$ an+ taxab)e ba$e an+ $(#h a*o(nt $o pre$#rbe+ o #ha-- "e +r$/a %a$e orre& %or +.r+o#e# o% !e&er/$$3 orre& $&era- re0e.e &a' -$a"$-$&$e# o% #.h +er#o
Co))e#tor o, Interna) Re%en(e %$ Benpa"o -
!here taxpa"er !a$ n%e$t&ate+ ,or a*($e*ent tax p(rpo$e$ the BIR exa*ner ,o(n+ that the rato o, a+()t$ patron2n& taxpa"er3$ theater !a$ ; a+()t$ to 1 #h)+ rato !a$ n re%er$e ; #h)+ren to 1 a+()t9 Con#)(+n& 9 =< pe$o$ t#ket ,or a+()t$ !a$ $p)t nto t!o 9:< pe$o$ tax exe*pt t#ker$ ,or #h)+ren exa*ner a$$e$$e+ the #orre$pon+n& tax COURT 0 a$$e$$*ent $ ,a()t" $n#e t *ere)" a$$(*e$ that the rato o, a+()t$ theater&oer$ n 1: to 1; $ $a*e a$ that !h#h obtane+ n 1= to 11
S(r%e))an#e *etho+ 0 taxpa"er3$ b($ne$$ operaton$ *a" be p)a#e+ (n+er ob$er%aton or $(r%e))an#e -
, there $ a rea$on to be)e%e that the taxpa"er $ NOT 7ECALRING 4IS CORRET INCO6E ' SALES ' OR RECEIPTS 8OR ITNERNAL REVENUE TAX PURPOSES 8IN7INGS *($t be ($e+ a$ ba$$ ,or a$$e$$n& taxe$ ,or other *onth$ or (arter$ o, $a*e or +Herent taxab)e "ear$ an+ $(#h a$$e$$*ent$ $ha)) be +ee*e+ pr*a ,a#e #orre#t
PRESU6PTIVE GROSS SALES AN7 RECEIPTS 6ET4O7 -
!hen t $ ,o(n+ that a per$on ha$ ,a)e+ to $$(e re#ept$ an+ n%o#e$ n %o)aton o, )a! OR !hen there $ $on to be)e%e that book$ o, (nt$
;9 A$$e$$*ent CO66ISSIONER -
$
7ISCRETIONAR5
ON
PART
O8
6ana+a*($ !)) not )e to #o*pe) h* to a$$e$$ a tax , a,er n%e$t&aton he /n+$ no &ro(n+ to a$$e$$ 6AN7A6US TO CO6PEL T4E CO66ISSIONER TO ASSESS ILL RESULT IN JU7ICIAL ENCROAC46ENT ON EXECUTIVE 8UNCTIONS COURT 0 CIR *a" be #o*pe))e+ to a$$e$$ b" *an+a*($ , n the exer#$e o, h$ +$#reton there $ e%+en#e o, arbtrarne$$ an+ &ra%e ab($e o, +$#reton a$ to &o be"on+ $tat(tor" a(thort"
=9The a(thort" %e$te+ n Co**$$oner to a$$e$$ taxe$ *a" be +e)e&ate+ - an a$$e$$*ent $&ne+ b" an e*p)o"ee ,or an+ n beha)+ o, #r $ VALI7
D - SETTELE7 0 po!er to *ake /na) a$$e$$*ent$ #annot be +e)e&ate+ #annot )a!,())" +e)e&ate that +(t" to another 9 A$$e$$*ent *($t be +re#te+ to the r&ht part"
a$$o#aton$' .ont %ent(re$ o, #on$orta an+ re&$tere+ partner$hp$' an+ ther *e*ber$M -
- I8 TAXPA5ER BEING ASSESSE7 IN AN ESTATE O8 A 7ECE7ENT' the a+*n$trator $ho()+ be the part" to !ho* a$$e$$*ent $ho()+ be $ent an+ not the her$ o, +e#e+ent INVESTIGATE POWERS OF COMMISSIONERL FACTUAL BASIS OF ASSESSMENTS
-
-
SEC2 2 Po*er o% &he Co//$##$oer &o O"&a$ I%or/a&$o, a! &o S.//o, E'a/$e, a! Tae Te#&$/oy o% Per#o#2 - In a$#ertann& the #orre#tne$$ o, an" ret(rn' or n *akn& a ret(rn !hen none ha$ been *a+e' or n +eter*nn& the )ab)t" o, an" per$on ,or an" nterna) re%en(e tax' or n #o))e#tn& an" $(#h )ab)t"' or n e%a)(atn& tax #o*p)an#e' the Co**$$oner $ a(thor2e+0
-
?A@ To exa*ne an" book' paper' re#or+' or other +ata !h#h *a" be re)e%ant or *atera) to $(#h n(r"M ?B@ To obtan on a re&()ar ba$$ ,ro* an" per$on other than the per$on !ho$e nterna) re%en(e tax )ab)t" $ $(b.e#t to a(+t or n%e$t&aton' or ,ro* an" o#e or o#er o, the natona) an+ )o#a) &o%ern*ent$' &o%ern*ent a&en#e$ an+ n$tr(*enta)te$' n#)(+n& the Ban&ko Sentra) n& P)pna$ an+ &o%ern*ento!ne+ or -#ontro))e+ #orporaton$' an" n,or*aton $(#h a$' b(t not )*te+ to' #o$t$ an+ %o)(*e o, pro+(#ton' re#ept$ or $a)e$ an+ &ro$$ n#o*e$ o, taxpa"er$' an+ the na*e$' a++re$$e$' an+ /nan#a) $tate*ent$ o, #orporaton$' *(t(a) ,(n+ #o*pane$' n$(ran#e #o*pane$' re&ona) operatn& hea+(arter$
-
?C@ To $(**on the per$on )ab)e ,or tax or re(re+ to /)e a ret(rn' or an" o#er or e*p)o"ee o, $(#h per$on' or an" per$on ha%n& po$$e$$on' #($to+"' or #are o, the book$ o, a##o(nt$ an+ other a##o(ntn& re#or+$ #ontann& entre$ re)atn& to the b($ne$$ o, the per$on )ab)e ,or tax' or an" other per$on' to appear be,ore the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e at a t*e an+ p)a#e $pe#/e+ n the $(**on$ an+ to pro+(#e $(#h book$' paper$' re#or+$' or other +ata' an+ to &%e te$t*on"M ?7@ To take $(#h te$t*on" o, the per$on #on#erne+' (n+er oath' a$ *a" be re)e%ant or *atera) to $(#h n(r"M an+ ?E@ To #a($e re%en(e o#er$ an+ e*p)o"ee$ to *ake a #an%a$$ ,ro* t*e to t*e o, an" re%en(e +$tr#t or re&on an+ n(re a,ter an+ #on#ernn& a)) per$on$ theren !ho *a" be )ab)e to pa" an" nterna) re%en(e tax' an+ a)) per$on$ o!nn& or ha%n& the #are' *ana&e*ent or po$$e$$on o, an" ob.e#t !th re$pe#t to !h#h a tax $ *po$e+9 The pro%$on$ o, the ,ore&on& para&raph$ not!th$tan+n&' nothn& n th$ Se#ton $ha)) be #on$tr(e+ a$ &rantn& the Co**$$oner the a(thort" to n(re nto bank +epo$t$ other than a$ pro%+e+ ,or n Se#ton D?8@ o, th$ Co+e9
MEANS EMPLOYED IN ASSESSMENT OF TAXES
?A@ Exa*naton o, ret(rn$ an+ +eter*naton o, tax +(e ?B@ 8a)(re to $(b*t re(re+ ret(rn$' $tate*ent$' report$ + h +
TAXATION SURVIVAL KIT – Aban Book to
pre$#rbe pre$(*pt%e &ro$$ an+ re#ept$ ?7@ A(thort" to ter*nate taxab)e pero+ ?E@ A(thort" o, the Co**$$oner to pre$#rbe rea) propert" %a)(e$ ?8@ A(thort" o, the Co**$$oner to n(re nto bank +epo$t a##o(nt ?G@ A(thort" to a##re+t an+ re&$ter tax a&ent ?4@ A(thort" o, the Co**$$oner to pre$#rbe a++tona) pro#e+(ra) or +o#(*entar" re(re*ent$ ?
SEE TABLE MADE
NET WORTH METHOD ) kno!n a$ n%entor" *etho+ o, n#o*e tax %er/#aton Ver" eHe#t%e *etho+ o, +eter*nn& taxab)e n#o*e an+ +e/#en#" n#o*e tax +(e ,ro* a taxpa"er
19 Ba$# #on#ept an+ theor" a9 Exten$on o, ba$# a##o(ntn& prn#p)e0 ASSETS 6INUS LIABILITIES EUALS NET ORT4 b9 Taxpa"er3$ net !orth $ +eter*ne+ both at the be&nnn& an+ at en+ o, $a*e taxab)e "ear #9 In#rea$e or +e#rea$e n net !orth $ a+.($te+ b" a++n& a)) non +e+(#tb)e te*$ an+ $(btra#tn& there,ro* non taxab)e re#ept$ +9 GENERAL T4EOR5 0 taxpa"er3$ *one" an+ other a$$et$ n ex#e$$ o, )ab)te$ a,ter a##(rate an+ proper a+.($t*ent o, non +e+(#tb)e an+ non taxab)e te*$ not a##o(nte+ ,or n h$ tax ret(rn $ +e*e+ to be nreporte+ n#o*e :9 The )e&a) $o(r#e o, a(thort" ,or t$ ($e a9 SEC2 @72 Geera- R.-e2 - The taxab)e n#o*e $ha)) be #o*p(te+ (pon the ba$$ o, the taxpa"erW$ ann(a) a##o(ntn& pero+ ?/$#a) "ear or #a)en+ar "ear' a$ the #a$e *a" be@ n a##or+an#e !th the *etho+ o, a##o(ntn& re&()ar)" e*p)o"e+ n keepn& the book$ o, $(#h taxpa"er' b(t , no $(#h
n#o*e' the #o*p(taton $ha)) be *a+e n a##or+an#e !th $(#h *etho+ a$ n the opnon o, the Co**$$oner #)ear)" reFe#t$ the n#o*e b9 SECTION D PROVI7ES 8OR A BROA7 AN7 GENERAL INVESTIGATOR5 POER TO ASSESS T4E PROPER TAX ON T4E BEST EVI7ENCE OBTAINEABLE 4ENEVER A REPORT REUIRE7 B5 LA AS BASIS 8OR ASSESS6ENT O8 AN5 NATIONAL INTERNAL REVENUE TAX S4ALL NOT BE 8ORT4CO6ING I4TIN T4E TI6E 8IXE7 B5 LA OR REGULATION' OR 4EN T4ERE IS REASON TO BELIEVE T4AT AN5 SUC4 REPOR IS 8ALSE' INCO6PLETE OR ERRONEOUS ;9 Con+ton$ ,or the U$ o, the Net orth 6etho+ a9 Taxpa"er3$ book$ o, a##o(tn$ 7O NOT CLEARL5 RE8LECT 4IS INCO6E' OR T4E TAXPA5ER 4AS NO BOOKS' OR 4E 4AS BOOKS' 4E RE8USES TO PRO7UCE T4E6 b9 That there $ e%+en#e o, a po$$b)e $o(r#e or $o(r#e$ o, n#o*e to a##o(nt ,or n#rea$e$ n net !orth or exepen+t(re$ #9 There $ a /xe+ $tartn& pont or openn& net !orth 9 A +ate be&nnn& !th a taxab)e "ear or pror to t' at !h#h t*e the taxpa"er3$ /nan#a) #on+ton #an be ar*at%e)" e$tab)$he+ !th $o*e +e/ntne$ 9 Cr#(*$tan#e$ are $(#h that 0 6ET4O7 7OES RE8LECT T4E TAXPA5ER3S INCO6E 19 IT4 REASONABLE ACCURAC5 AN7 CERTAINT5 :9 AN7 PROPER AN7 JUST A77ITIONS O8 PERSONAL EXPENSES ;9 AN7 OT4ER =9 NON 7E7UCTIBLE EXPEN7ITURES ERE 6A7E AN7 CORRECT' 8AIR AN7 9 EUITABLE CRE7IT A7JUST6ENTS ERE GIVEN B5 A5 O8 ELI6INATING NON TAXABLE ITE6S
> 19 INA7EUATE RECOR7S AS A PREREUISITE a9 hene%er no *etho+ o, a##o(ntn& $ e*p)o"e+ b" taxpa"er or b9 !hen the *etho+ +oe$ not #)ear)" reFe#t tr(e n#o*e #9 the Co**$$oner $ a(thor2e+ to re$ort to an" *etho+ !h#h n h$ opnon +oe$ reFe#t the #orre#t n#o*e9 9 Th$ *etho+ o, n#o*e +eter*naton *a" be ($e+ !hen taxpa"er ha$ 0 9 no book$ o, a##o(nt$' or 9 !hen $(#h book$ an+ re#or+ are not a%a)ab)e ,or exa*naton' or !here the book$ are n#o*p)ete an+ na+e(ate %9 GOVERNE6ENT *a" be ,or#e+ to re$ort to the net !orth *etho+ o, proo, !here the ,e! re#or+$ o, taxpa"er !ere +e$tro"e+9 %9 To re(re *ore #o()+ be tanta*o(nt to ho)+n& that $k)),() #on#ea)*ent $ an ne%tab)e barrer to proo,9 :9 NEE7 8OR EVI7ENCE O8 T4E SOURCE O8 INCO6E a9 In a)) )ea+n& #a$e$ on th$ *atter' #o(rt$ are (nan*o($ n ho)+n& that !hen tax #a$e$ n #%) n nat(re' +re#t proo, o, $o(r#e$ o, n#o*e $ NOT ESSENTIAL b9 Go%ern*ent $ NOT REUIRE7 TO ENGATE a)) po$$b)e non taxab)e $o(r#e$ o, he a))e&e+ net !orth n#rea$e$ #9 Proo,$ o, )oan$' &,t$' be(e$t' nhertan#e an+ the )ke nee+ not be a++(#e+ n e%+en#e b" the Go%ern*ent +9 B(r+en o, proo, $ (pon the taxpa"er to $ho! that h$ net !orth n#rea$e !a$ +er%e+ ,ro* non – taxab)e $o(r#e$9 e9 SC 0 n #%) #a$e$ ' the a$$e$$or nee+ not pro%e $pe#/# $o(r#e o, n#o*e , BASIC ASSU6PTION 0 *o$t a$$et$ are +er%e+
tr(e' the taxpa"er $ n a po$ton to exp)an the +$#repan#" &9 4OEVER' !hen a taxpa"er $ #r*na))" pro$e#(te+ ,or tax e%a$on' the nee+ ,or e%+en#e o, a )ke)" $o(r#e o, n#o*e be#o*e$ a prere($te ,or a $(##e$$,() pro$e#(ton h9 BUR7EN O8 PROO8 n #r*na) #a$e 0 a)!a"$ !th Go%ern*ent 9 In#(*bent (pon re%en(e a&ent$ to ne&ate a)) po$$b)e $o(r#e$ o, non-taxab)e re#ept$ n a++ton to a++(#n& e%+en#e$ to $at$," a)) other three #on+ton$ .9 Con%#ton n $(#h #a$e$' a$ n an" #r*na) #a$e' re$t$ on proo, be"on+ rea$onab)e +o(bt9 ;9 A 7E8INITE STARTING POINT OR OPENING NET ORT4 a9 Th$ $ an e$$enta) #on+ton' #on$+ere+ to eb the #orner$tone o, a net !orth #a$e b9 I8 $tartn& pont or openn& net !orth 0 PROVEN TO BE RONG' the !ho)e $(per$tr(#t(re ($(a))" ,a)$ #9 The #o(rt$ ha%e (n,or*)" $tre$$e+ 0 %a)+t" o, re$()t o, an" n%e$t&aton (n+er th$ *etho+ !)) +epen+ entre)" (pon a #orre#t openn& net !orth d. Where the CIR used as part of the opening net worth the small bank deposit of taxpayer at the beginning of year !"#$ e. and taxpayer presents in %ourt the in%ome tax return for !#" of his wife to show that his wife made a gain prior to that period$ f. and that therefore he had opening net worth bigger than that used by the Commissioner$ g. &ut said return does not %ontain any detail to indi%ate how alleged gain was used$ in'ested or deposited$ h2 HELD ) -o*er o.r& *a# orre& $ o#$!er$3 #a$! re&.r a# #e-% #er0$3
TAXATION SURVIVAL KIT – Aban Book a--e3e! e'$#&ee o% a "$33er o+e$3 e& *or&h orre#+o!$3 &o #a$! #.++o#e! 3a$ o% &he *$%e $2 4ERE A TAXPA5ER CLAI6S A BIG OPENING NET ORT4' T4E EVI7ENCE SUPPORTING IT 6UST BOT4 BE CO6PETENT AN7 TRUSTORT45 @2 PROPERA7JUST6ENTS TO CON8OR6 IT4 INCO6E TAX LAS a2 Proper a+.($t*ent$ ,or non-+e+(##tb)e te*$ *($t be *a+e "2 Un+er th$ #ate&or" are0 $2 Per$ona) $$2 L%n& or ,a*)" expen$e$ $$$2 Pre*(*$ pa+ on an" ),e n$(ran#e po)#" $02 Lo$$e$ ,ro* $a)e$ or ex#han&e$ o, propert" bet!een *e*ber$ o, ,a*)" 02 In#o*e taxe$ pa+ 0$2 E$tate 0$$2 Inhertan#e 0$$$2 G,t taxe$ $'2 Other non +(#tb)e tax$ '2 E)e#ton expen$e$ an+ other expen$e$ a&an$t p(b)# po)#" '$2 Non +e+(#tb)e #ontrb(ton$ '$$2 G,t$ to other$ '$$$2 Net #apta) )o$$ '$02 An+ the )ke 2 T4ERE 6UST BE A77E7 TO T4E INCREASE OR 7ECREASE IN NET ORT4 a$ #a$e *a" be !2 Non taxab)e te*$ $ho()+ be +e+(#te+ there,ro*9 e2 The$e te*$ are ne#e$$ar" a+.($t*ent$ to a%o+ the n#)($on o, !hat other!$e are non- taxab)e re#ept$ %2 The" are 0 $2 Inhertan#e $$2 G,t$
02 0$2 0$$2 0$$$2
32
h2
$2
=2
2
-2
Co*pen$aton ,or n.(re$ or $#kne$$ Pro#ee+$ o, ),e n$(ran#e po)#e$ S!eep$take$ !nnn&$ Intere$t o &o%ern*ent $e#(rte$ an+ the )ke CASE 0 ONE 4AL8 O8 T4E LONG TER6 CAPITAL GAINS 8RO6 T4E SALE O8 CAPITAL ASSETS AN7 7EPRECIATION O8 RENTAL PROEPRTIES ERE 7E7UCTE7 B5 COURT 8RO6 INCREASE IN NET ORT4 A$ to )oan$' *portant to #on$+er that ora) te$t*on" o, #re+tor to pro%e a +ebt' a$ a r()e $ INSU88ICIENT 8OR PURPOSES O8 INCO6E TAX LA COURT0 a )oan !a$ not pro%en to ex$t !here the book$ o, taxpa"er ,a)e+ to $ho! $(#h )oan an+ !here no re#ept$ or other e%+en#e !ere a+%an#e+ to pro%e the )oan In#rea$e$ n net !orth are not taxab)e , the" are $ho!n not to be the re$()t o, (nreporte+ n#o*e b(t to be *ere)" the re$()t o, #orre#ton o, error$ n taxpa"er3$ entre$ n book$ re)atn& to t$ n+ebte+ne$$ to #ertan #re+tor$' erroneo($)" )$te+ a)tho(&h a)rea+" pa+ COURT 0 the %er" nat(re o, )oan tran$a#ton$ bet!een n+%+(a)$ $(#h tran$a#ton$ are ea$)" #on#ote+ e$pe#a))" bet!een ,ren+$ an+ re)at%e$' $o that pro*$$or" note$ %a)e$ #he#k$ an+ other $*)ar +o#(*ent' n the ab$en#e o, other re)e%ant e%+en#e +e$er%e $#ant #on$+eraton In or+er 0 $(#h tran$a#ton$ *a" be #on$+ere+' ther ex$ten#e *($t be pro%e+ b" #)ear an+ #on%n#n& e%+en#e n+epen+ent o, pro*$$or" note$' %a)e$ #he#k$ or $*)ar +o#(*ent$
ENFORCEMENT OF FORFEITURES AND PENALTIES
D< The #o**$$oner3$ po!er$ are not on)" )*te+ to a$$e$$*ent an+ #o))e#ton o, taxe$ b(t the" a)$o exten+ to en,or#e*ent o, ,or,et(re$' pena)te$ an+ /ne$9 In #a$e o, %o)aton$ #o**tte+ a&an$t the pro%$on$ o, Tt)e VI o, tax #o+e on ex#$e taxe$' - a$ n #a$e$ !here pro+(#t$ $(b.e#t to ex#$e taxe$ )ke #&arette$ an+ a)#oho)# pro+(#t$ - are re*o%e+ ,ro* p)a#e o, pro+(#ton - !tho(t pa"*ent o, $(#h taxe$' or - !here $(#h art#)e$ are *porte+ BUT ARE RE6OVE7 8RO6 CUSTO6S CUSTO75 IT4OUT T4E PA6ENT O8 SUC4 TAXES - CO66ISIONER IS AU4TORIE7 TO INSTITUTE T4E NECESSAR5 ACTION 8OR T4E CON8ISCATION AN7 8OR8EITURE O8 PROCEE7S O8 CRI6E OR VALUE O8 GOO7S' AN7 T4E INSTRU6ENTS OR TOOLS IT4 4IC4 T4E CRI6E AS CO66ITTE7 NO A$ to en,or#e*ent o, /ne$ an+ pena)te$' Se#ton :; 0 - a(thor2e$ Co**$$oner to re#o**en+ the /)n& o, a #r*na) a#ton ,or the #o))e#ton o, nterna) re%en(e taxe$' ,ee$ an+ #har&e$ Se#ton ::10 - *ore pena)te$ an+ ,or,et(re$ !)) be +$#($$e+ n a )ater porton o, th$ #hapter ACTUAL PRACTICE 0 CO66ISSIONER RECO66EN7S TO T4E STATE' CIT5 OR PROVINCIAL PROSECUTOR T4E 8ILING O8 CRI6INAL ACTION AGIANST TAXPA5ER SUPERVISORY AND POLICE POWERS OF THE BIR
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po!er o, $(per%$on to n$(re eHe#t%e #o*p)an#e !th $tat(tor" re(re*ent$ Se#ton 1: 0 IR ha$ a(thort" to $(per%$e e$tab)$h*ent$ !here art#)e$ $(b.e#t to ex#$e tax )ke
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POLICE POER 0 Tax Co+e e*po!er$ the Co**$$oner' h$ +ep(te$' re&ona) +re#tor$' re%en(e +$tr#t o#er$ an+ other nterna) re%en(e o#er$ to *ake arre$t$ an+ $e2(re$ ,or the %o)aton o, an" pena) )a! or re&()aton a+*n$tere+ b" BIR
AUTHORITY OF COMMISSIONER TO DELEGATE POWER Se&$o , 4 NIRC
SEC2 2A.&hor$&y o% &he Co//$##$oer &o De-e3a&e Po*er2 - The Co**$$oner *a" +e)e&ate the po!er$ %e$te+ n h* (n+er the pertnent pro%$on$ o, th$ Co+e to an" or $(#h $(bor+nate o#a)$ !th the rank e(%a)ent to a +%$on #he, or h&her' $(b.e#t to $(#h )*taton$ an+ re$tr#ton$ a$ *a" be *po$e+ (n+er r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner0 Pro%+e+' ho!e%er' That the ,o))o!n& po!er$ o, the Co**$$oner $ha)) not be +e)e&ate+0
?a@ The po!er to re#o**en+ the pro*()&aton o, r()e$ an+ re&()aton$ b" the Se#retar" o, 8nan#eM ?b@ The po!er to $$(e r()n&$ o, /r$t *pre$$on or to re%er$e' re%oke or *o+," an" ex$tn& r()n& o, the B(rea(M ?#@ The po!er to #o*pro*$e or abate' (n+er Se#9 :<= ?A@ an+ ?B@ o, th$ Co+e' an" tax )ab)t"0 Pro%+e+' ho!e%er' That a$$e$$*ent$ $$(e+ b" the re&ona) o#e$ n%o)%n& ba$# +e/#en#" taxe$ o, 8%e h(n+re+ tho($an+ pe$o$ ?P<<'<<<@ or )e$$' an+ *nor #r*na) %o)aton$' a$ *a" be +eter*ne+ b" r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, /nan#e' (pon re#o**en+aton o, the Co**$$oner' +$#o%ere+ b" re&ona) an+ +$tr#t o#a)$' *a" be
TAXATION SURVIVAL KIT – Aban Book A$$$tant Re&ona) 7re#tor' the hea+$ o, the Le&a)' A$$e$$*ent an+ Co))e#ton 7%$on$ an+ the Re%en(e 7$tr#t O#er ha%n& .(r$+#ton o%er the taxpa"er' a$ *e*ber$M an+ ?+@ The po!er to a$$&n or rea$$&n nterna) re%en(e o#er$ to e$tab)$h*ent$ !here art#)e$ $(b.e#t to ex#$e tax are pro+(#e+ or kept9 REPUBLIC 0# HION ) - $(b.e#t #o*p)ant ,or #o))e#ton o, a tax +e/#en#" !a$ +()" /)e+ (pon a(thort" o, Co**$$oner b" the then BIR Co**$$oner - +e$pte the ,a#t that t !a$ not $&ne+ b" the then BIR #o**$$oner' n #o*p)an#e !th Se#ton :1' !h#h !a$ *p)e*ente+ b" RAO ->; POWERS AND DUTIES OF THE REGIONAL DIRECTOR
19 I*p)e*ent )a!$' po)#e$' p)an$' pro&ra*$' r()e$ an+ re&()aton$ o, the +epart*ent n re&ona) area :9 A+*n$ter an+ en,or#e nterna) re%en(e )a!$ an+ r()e$ an+ re&()aton$' n#)(+n& the a$$e$$*ent an+ #o))e#ton o, a)) nterna) re%en(e taxe$' #har&e$ an+ ,ee$ ;9 I$$(e )etter$ o, a(thort" ,or exa*naton o, taxpa"er$ !thn the re&on =9 Pro%+e e#ono*#a)' e#ent an+ eHe#t%e $er%#e to the peop)e n the area 9 Coor+nate !th re&ona) o#e$ or other +epart*ent$' b(rear($ an+ a&en#e$ n area D9 Coor+nate !th )o#a) &o%ern*ent (nt$ n area 9 Exer#$e #ontro) an+ $(per%$on o%er the o#er$ an+ e*p)o"ee$ !thn the re&on >9 Per,or* $(#h other ,(n#ton$ a$ *a" be pro%+e+ b" )a! an+ a$ *a" be +e)e&ate+ b" Co**$$oner
DUTIES OF REVENUE DISTRICT OFFICERS AND OTHER INTERNAL REVENUE OFFICERS
SEC2 442 D.&$e# o% Re0e.e D$#&r$& Oer# a! O&her I&era- Re0e.e Oer#2 - It $ha)) be the +(t" o, e%er" Re%en(e 7$tr#t O#er or other nterna) re%en(e o#er$ an+ e*p)o"ee$ to en$(re that a)) )a!$' an+ r()e$ an+ re&()aton$ aHe#tn& natona) nterna) re%en(e are ,ath,())" exe#(te+ an+ #o*p)e+ !th' an+ to a+ n the pre%enton' +ete#ton an+ p(n$h*ent o, ,ra(+$ o, +e)n(en#e$ n #onne#ton there!th9
It $ha)) be the +(t" o, e%er" Re%en(e 7$tr#t O#er to exa*ne the e#en#" o, a)) o#er$ an+ e*p)o"ee$ o, the B(rea( o, Interna) Re%en(e (n+er h$ $(per%$on' an+ to report n !rtn& to the Co**$$oner' thro(&h the Re&ona) 7re#tor' an" ne&)e#t o, +(t"' n#o*peten#"' +e)n(en#"' or *a),ea$an#e n o#e o, an" nterna) re%en(e o#er o, !h#h he *a" obtan kno!)e+&e' !th a $tate*ent o, a)) the ,a#t$ an+ an" e%+en#e $($tann& ea#h #a$e9 AUTHORITY OF A REVENUE OFFICER SEC2 472 A.&hor$&y o% a Re0e.e Oer2 - S(b.e#t to the r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner' a Re%en(e O#er a$$&ne+ to per,or* a$$e$$*ent ,(n#ton$ n an" +$tr#t *a"' p(r$(ant to a Letter o, A(thort" $$(e+ b" the Re%en(e Re&ona) 7re#tor0
19 exa*ne taxpa"er$ !thn the .(r$+#ton o, the +$tr#t n or+er to #o))e#t the #orre#t a*o(nt o, tax' :9 to re#o**en+ the a$$e$$*ent o, an" +e/#en#" tax +(e n the $a*e *anner that the $a+ a#t$ #o()+ ha%e been per,or*e+ b" the Re%en(e Re&ona) 7re#tor h*$e),9
D: Le&&er o% A.&hor$&y - re,er$ to the )etter n,or*n& a taxpa"er - that a #ertan re%en(e o#er $ a(thorte$ to exa*ne the book$ o, a##o(nt$ an+ other a##o(ntn& re#or+$ o, - $a+ taxpa"er ,or p(rpo$e o, %er,"n& h$ tax )ab)te$ +(rn& taxab)e "ear
9 nterna) re%en(e o#er$ an+ 1<9an" other e*p)o"ee o, the B(rea( there(nto 119e$pe#a))" +ep(t2e+ b" the Co**$$oner 0 ? #ha-- ha0e &he +o*er &o a!/$$#&er oa&h# a! &o &ae &e#&$/oy $ ay o$a- /a&&er or $0e#&$3a&$o o!.&e! "y &he/ re3ar!$3 /a&&er# *$&h$ &he =.r$#!$&$o o% &he B.rea.2
Ser0$e o% &he Le&&er o% A.&hor$&y - the LA *($t be $er%e+ to the taxpa"er !thn ;< +a"$ ,ro* t$ +ate o, $$(e - other!$e' t be#o*e$ NULL AN7 VOI7 - an+ taxpa"er ha$ a)) the r&ht to re,($e t$ $er%#e
SEC2 42 A.&hor$&y o% I&era- Re0e.e Oer# &o Mae Arre#&# a! Se$.re#2 –
Re%en(e o#er $ha))' !thn 1:< +a"$ ,ro* +ate o, $$(an#e an+ $er%#e o, LA' #on+(#t h$ a(+t an+ $(b*t h$ report o, n%e$t&aton9 - /na) report $ NOT CO6PELETE7 !thn 1:< +a" pero+' A PROGRESS REPORT 6UST BE SUB6ITTE7 TO T4E 4EA7 O8 AU7IT O88ICE - T4E REVALI7ATION S4ALL BE LI6ITE7 TO ONE ISSUANCE ONL5 AN7 IS ONE B5 ISSUING A NE LA
SECTION 4@ ) A.&hor$&y o% Oer# &o A!/$$#&er Oa&h# a! Tae Te#&$/oy
19 :9 ;9 =9 9
The Co**$$oner' the 7ep(t" Co**$$oner$' the Re%en(e Re&ona) 7re#tor$' the Re%en(e 7$tr#t O#er$ other nterna) re%en(e o#er$ $0 a9 Sha)) ha%e a(thort" to *ake arre$t$ an+ $e2(re$ ,or the %o)aton o, an" pena) )a!' r()e or re&()aton a+*n$tere+ b" the B(rea( o, Interna) Re%en(e9 An" per$on $o arre$te+ $ha)) be ,orth!th bro(&ht be,ore a #o(rt' there to be +ea)t !th a##or+n& to )a!9
A##$3/e& o% I&era- Re0e.e Oer I0o-0e! $ E'$#e Ta' F.&$o# Se&$o 4 o% 4 NIRC ) The Co**$$oner $ha)) 0
The 0 19 :9 ;9 =9 9 D9
Co**$$oner 7ep(t" Co**$$oner$ Ser%#e Che,$ A$$$tant Ser%#e Che,$ Re%en(e Re&ona) 7re#tor$ A$$$tant Re%en(e Re&ona) 7re#tor$ Che,$ an+ A$$$tant Che,$ o, 7%$on$ 7$tr#t O#e
19 e*p)o"' :9 a$$&n' ;9 or rea$$&n nterna) re%en(e o#er$ a9 n%o)%e+ n ex#$e tax ,(n#ton$' a$ o,ten a$ the ex&en#e$ o, the re%en(e $er%#e *a" re(re' to e$tab)$h*ent$ or p)a#e$ !here art#)e$ $(b.e#t to ex#$e tax are pro+(#e+ or kept0 b9 7URATION O8 ASSIGN6ENT That nte a)
TAXATION SURVIVAL KIT – Aban Book e$tab)$h*ent $ha)) n no #a$e $ta" n h$ a$$&n*ent ,or *ore than t!o ?:@ "ear$' $(b.e#t to r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner9 SEC2 42 A##$3/e& o% I&era- Re0e.e Oer# a! O&her E/+-oyee# &o O&her D.&$e#2 - The Co**$$oner *a"' $(b.e#t to the pro%$on$ o, Se#ton 1D an+ the )a!$ on #%) $er%#e' a$ !e)) a$ the r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o, 8nan#e (pon the re#o**en+aton o, the Co**$$oner' a$$&n or rea$$&n nterna) re%en(e o#er$ an+ e*p)o"ee$ o, the B(rea( to other or $pe#a) +(te$ pro%+e+ the ,o))o!n& re($te$ are #o*p)e+ !th 0
19 That the a$$&n*ent !o()+ not #han&e the o#a) rank an+ $a)ar" o, per$onne) a$$&ne+ :9 That the a$$&n*ent n%o)%e$ +(te$ #onne#te+ !th en,or#e*ent an+ a+*n$traton o, the re%en(e )a! a$ the ex&en#e$ o, $er%#e *a" re(re ;9 That the a$$&n*ent $ha)) NOT EXCEE7 ONE 5EAR Other or $pe#a) +(te$ – re,er not to a $pe#a) or extraor+nar" (n+ertakn&' b(t to ,(n#ton$ or !ork other than or not re)ate+ to tho$e re&()ar)" +$#har&e+ b" the e*p)o"ee #on#erne+
**e+ate $(peror' &%n& the na*e an+ a++re$$ o, the oHen+er an+ the na*e$ o, the !tne$$e$ , po$$b)e0 Pro%+e+' That n (r&ent #a$e$' the Re%en(e Re&ona) +re#tor or Re%en(e 7$tr#t O#er' a$ the #a$e *a" be' *a" $en+ the report to the #orre$pon+n& pro$e#(tn& o#er n the )atter #a$e' a #op" o, h$ report $ha)) be $ent to the Co**$$oner9 URGENT CASES ) #o%er$ a $t(aton !here the %o)ator $ an a)en or a #t2en - !ho $ atte*ptn& to e$#ape ,ro* #o(ntr" or - one !ho nten+$ to re*o%e' h+e or #on#ea) h$ propert" ,ro* the Ph)ppne$ - ,or the p(rpo$e o, +e,eatn& taxaton
SEC2 642 So.re# o% Re0e.e2 - The ,o))o!n& taxe$' ,ee$ an+ #har&e$ are +ee*e+ to be natona) nterna) re%en(e taxe$0
?a@ In#o*e taxM ?b@ E$tate an+ +onorW$ taxe$M ?#@ Va)(e-a++e+ taxM ?+@ Other per#enta&e taxe$M ?e@ Ex#$e taxe$M ?,@ 7o#(*entar" $ta*p taxe$M an+ ?&@ S(#h other taxe$ a$ are or herea,ter *a" be *po$e+ an+ #o))e#te+ b" the B(rea( o, Interna) Re%en(e9
An nterna) re%en(e o#er a$$&ne+ to per,or* a$$e$$*ent or #o))e#ton ,(n#ton$ $ha)) not re*an n the $a*e a$$&n*ent ,or *ore than three "ear$
S&a&.&ory O:e#e# a! Pea-&$e#
SEC2 4K2 Re+or&# o% V$o-a&$o o% La*#2 - hen an nterna) re%en(e o#er +$#o%er$ e%+en#e o, a %o)aton o, th$ Co+e or o, an" )a!' r()e or re&()aton$ a+*n$tere+ b" the B(rea( o, Interna) Re%en(e o, $(#h #hara#ter a$ to
42 Mea$3 o% a!!$&$o# &o &he &a' a2 A++ton$ to the tax are n#re*ent$ to the ba$# tax n#+ent +(e to the taxpa"er3$ non – #o*p)an#e !th #ertan e)&a) re(re*ent$' )ke taxpa"er3$
A!!$&$o &o &he Ta'
D= re,($a) or ,a)(re to pa" taxe$ on t*e an+ or other %o)aton$ o, taxn& pro%$on$ n the )a! "2 A++ton$ to the tax #on$$t$ o, the 0 $2 C%) pena)t" #.rhar3e5 6 or o% &a' !e+e!$3 .+o a&.re o% 0$o-a&$o $$2 Intere$t ether ,or a +e/#en#" tax or +e)n(en#" a$ to pa"*ent $$$2 Other #%) pena)te$ or a+*n$trat%e /ne$ $(#h a$ ,or ,a)(re to /)e #ertan n,or*aton ret(rn$ an+ %o)aton$ #o**tte+ b" !thho)+n& a&ent$ 62 Geera- Co#$!era&$o# o A!!$&$o# &o Ta'
Chapter VI Tax Re*e+e$ – Re*e+e$ o, Go%ern*ent I*portan#e o, Tax Re*e+e$ 19 $a,e&(ar+$ a&an$t arbtraton :9 h)e taxe$ are ),eb)oo+ o, &o%ern*ent an+ $ho()+ be #o))e#te+ !tho(t (nn#e#e$$ar" hn+ran#e' $(#h #o))e#ton *($t ne%erthe)e$$ be *a+e n a##or+an#e !th )a! ;9 An" arbtrarne$$ !)) ne&ate the %er" rea$on ,or the Go%ern*ent t$e), CASE 0 19 The Go%ern*ent' n or+er to en$(re tax #o))e#ton' *a" a+opt or pre$#rbe #oer#%e *ea$(re a$ n a #a$e !here the pa"*ent o, a )o#a) tax $ *a+e a$ a #on+ton to the re&$traton an+ tran$,er o, *otor %eh#)e$
:9 Capta) &an tax on $a)e ' ex#han&e' or other +$po$ton b" n+%+(a)$ o, rea) propert" !h#h are #apta) a$$et$ ;9 th re$pe#t to the DQ #apta) &an$ tax' Se#ton D pro%+e$ that 0 a9 SEC2 2 Pay/e& a! A##e##/e& o% Io/e Ta' %or I!$0$!.a-# a! Cor+ora&$o#2 - A5 Pay/e& o% Ta'2 b9 NO re&$traton o, an" +o#(*ent tran$,errn& rea) propert" $ha)) be eHe#te+ b" the Re&$ter o, 7ee+$' UNLESS the Co**$$oner o, Interna) Re%en(e or h$ +()" a(thor2e+ repre$entat%e ha$ #ert/e+ that $(#h tran$,er ha$ been reporte+ an+ tat the #apta) &an$ or #re+tab)e !thho)+n& tax' , an"' ha$ been pa+ RULE ON NO INJUNCTION TO RESTRAIN TAX COLLECTION SEC2 64K2 I=.&$o o& A0a$-a"-e &o Re#&ra$ Co--e&$o o% Ta'2 - No #o(rt $ha)) ha%e the a(thort" to &rant an n.(n#ton to re$tran the #o))e#ton o, an" natona) nterna) re%en(e tax' ,ee or #har&e *po$e+ b" th$ Co+e9 Wha& $# &he =.#&$>a&$o %or &h$# r.-e( - COURT 0 a pro%$on n an nterna) re%en(e )a! prohbtn& the #o(rt$ ,ro* en.onn& the #o))e#ton o, an nterna) re%en(e tax $ NOT INVALI7 a$ oppo$e+ to the +(e pro#e$$ an+ e(a) prote#ton #)a($e$ o, the Con$tt(ton - COURT 0 t$ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ the (t*o$t *portan#e that the *ean$ a+opte+ to en,or#e the #o))e#ton o, taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+ !th a$ )tt)e a$ po$$b)e EXCEPTION TO NO INJUNCTION TO RESTRAIN TAX
TAXATION SURVIVAL KIT – Aban Book 19 !hen a +e#$on o, the #o**$$oner on a tax prote$t $ APPEALE7 to CTA p(r$(ant to :9 Se#ton 11 RA 11: ? )a! #reatn& the CTA@ ;9 In re)aton to Se#ton ::> o, 1 NIRC =9 S(#h appea) +oe$ not $($pen+ the pa"*ent' )e%"' +$trant an+or $a)e o, an" o, the taxpa"er3$ propert" ,or the $at$/#aton o, h$ tax )ab)t" 4OEVER' !hen n the opnon o, the CTA the #o))e#ton o, tax *a" .eopar+2e the ntere$t o, the Go%ern*ent an+or taxpa"er' T4E COURT AT AN5 STAGE O8 PROCEE7INGS 6A5 SUSPEN7 OR RESTRAIN T4E COLLECTION AN7 REUIRE TAXPA5ER EIT4ER TO 7EPOSIT T4E A6OUNT CLAI6E7 OR T 8ILE A SURET5 BON7 8OR NOT 6ORE T4AN 7OUBLE T4E A6OUNT IT4 COURT
S(ppo$e the BIR' +(rn& pen+en#" o, appea) n Co(rt o, Tax Appea)$' /)e$ a #%) a#ton n RTC ,or the #o))e#ton o, tax )ab)t"' !hat $ the re*e+" o, the taxpa"er - TAXPA5ER 6A5 8ILE A 6OTION IN RTC 8OR T4E 7IS6ISSAL O8 CASE ON GROUN7 T4AT T4ERE IS NO BASIS 8OR COLLECTING T4E TAX 4ERE T4E ASSESS6ENT T4EREO8 IS STILL UN7ER 7ISPUTE IN CTA COLLECTIBILITY OF TAX AS A BASIS FOR COLLECTION ENFORCEMENT
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!here the (npa+ tax $ a tax +(e per ret(rn a$ n the #a$e o, a $e), a$$e$$e+ n#o*e (n+er the pa" – a$ – "o( - /)e $"$te*' #o))e#ton *a" be n$tt(te+ !tho(t nee+ o, an" a$$e$$*ent
SEC2 66K2 Pro&e#&$3 o% A##e##/e&2 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that
a$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0 ?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o, *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or ?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or ?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o, the $(##ee+n& taxab)e "earM or ?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or ?e@ hen the art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to non-exe*pt per$on$9 The taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 thn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 S(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n&
DD *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$9 thn $xt" ?D<@ +a"$ ,ro* /)n& o, the prote$t' a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 I, the prote$t $ +ene+ n !ho)e or n part' or $ not a#te+ (pon !thn one h(n+re+ e&ht" ?1><@ +a"$ ,ro* $(b*$$on o, +o#(*ent$' the taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9 Ba#$ o#$!era&$o ) !hether the a$$e$$*ent $ /na) an+ (nappea)ab)e' or +e#$on o, the Co**$$oner $ /na)' exe#(tor' an+ +e*an+ab)e' $ 4ET4ER T4E BIR 4AS LEGAL BASIS TO COLLECT T4E TAX LIABILIT5 EIT4ER B5 7ISTRAINT AN7 LEV5 OR B5 CIVIL ACTION
REMEDIES OF GOVERNMENT
19 :9 ;9 =9 9 D9 9 >9
Tax Len Co*pro*$e 7$trant an+ Le%" C%) A#ton Cr*na) A#ton 8or,et(re S($pen$on o, b($ne$$ operaton$ ,or %o)aton$ o, VAT En,or#e*ent o, a+*n$trat%e /ne$
NOTE 0 re*e+e$ o, +$trant an+ )e%" a$ !e)) a$ #o))e#ton b" #%) an+ #r*na) a#ton$' *a" n the +$#reton o, Co**$$oner' be p(r$(e+ - SINGL5 AN7 IN7EPEN7ENTL5 O8 EAC4 OT4ER - Or a)) o, the* $*()taneo($)" The re*e+e$ an+ )e%" S4ALL NOT BE AVAILE7 O8 4ERE T4E A6OUNT O8 TAX INVOLVE7 IS NOT 6ORE T4AN 1<< pe$o$9 - The .(+&*ent n #r*na) #a$e $ha)) not on)" *po$e the pena)t" - BUT S4ALL ALSO OR7ER PA56ENT O8 TAXES - SUBJECT TO CRI6INAL CASE - AS 8INALL5 7ECI7E7 B5 CO66ISSIONER TAX LIENS - hen a taxpa"er ne&)e#t$ or re,($e$ to pa" h$ nterna) re%en(e tax )ab)t" a,ter +e*an' the A6OUNT $o +e*an+e+ S4ALL BE A LIEN - In ,a%or o, the Go%ern*ent ,ro* the t*e a$$e$$*ent !a$ *a+e b" Co**$$oner UNTIL PAI7 !th ntere$t' pena)te$' an+ #o$t$ that *a" a##r(e n a++ton thereto (pon a)) propert" an+ r&ht$ to propert" be)on&n& to taxpa"er
4EN 7OES T4E LIEN O8 T4E GOVERN6ENT 8OR UNPAI7 INTERNAL REVENUE TAXES ARISE - COURT 0 TAX LIEN ATTAC4E7 NOT ONL5 8RO6 SERVICE O8 ARRANT O8 7ISTRATINT O8 PERSONAL PROPERT5 - BUT 8RO6 T4E TI6E TAX BECA6E 7UE AN7 PA5ABLE Se#ton :1' 4OEVER That th$ )en $ha)) not be %a)+ a&an$t an" *ort&a&ee' p(r#ha$er or .(+&*ent #re+tor (nt) not#e o, $(#h )en $ha)) be /)e+ b" the Co**$$oner n the o#e o, the Re&$ter o, 7ee+$ o, the pro%n#e or #t" !here the propert" o, the
TAXATION SURVIVAL KIT – Aban Book ?1@ A rea$onab)e +o(bt a$ to the %a)+t" o, the #)a* a&an$t the taxpa"er ex$t$M or Other t"pe$ o, )en$ )ke 0 LIEN UN7ER VAT LA ? Se#ton 1<B' 1 NIRC@ CASE 0 19 , &oo+$ are *porte+ b" epr$on$' enttte$ or a&en#e$ !h#h are EXE6PT ,ro* tax b(t $(#h &oo+$ are $(b$e(ent)" $o)+' tran$,erre+ or ex#han&e+ n Ph)ppne$ to non – exe*pt per$on$ or entte$' the pr(#ha$er$' tran$,eree$ or re#pent$ :9 S4ALL BE CONSI7ERE7 T4E I6PORTERS T4EREO8 4O S4ALL BE LIABLE 8OR AN5 INTERNAL REVENUE TAX ON SUC4 I6PORTATION ;9 TAX 7UE ON SUC4 I6PORTATION S4ALL CONSITUTE A LIEN ON T4E GOO7S' SUPERIOR TO ALL C4ARGES OR LIENS ON GOO7S' IRRESPECTIVE O8 POSSESSOR T4EREO8 =9 T4IS IS CONSTRUCTIVE I6PORTATION – TAX EXE6PT CASE 0 19 #a$e o, art#)e$ *porte+ nto #o(ntr" ,ree ,ro* ex#$e tax ? tax on toba##o an+ a)#oho)# pro+(#t$' petro)e(*@ :9 B" tax exe*pt per$on$ an+ entte$ an+ $(b$e(ent)" $o)+' ex#han&e+' or tran$,erre+ to non – exe*pt per$on$ !hereb" a $*)ar tax )en on art#)e$ ex$t$ (nt) tax thereon $ pa+ COMPROMISES
SEC2 6@2 A.&hor$&y o% &he Co//$##$oer Co/+ro/$#e, A"a&e a! Re%.! or Cre!$& Ta'e#2 -
&o
The Co**$$oner *a" ?A@ Co*pro*$e the pa"*ent o, an" nterna) re%en(e tax'
?:@ The /nan#a) po$ton o, the taxpa"er +e*on$trate$ a #)ear nab)t" to pa" the a$$e$$e+ tax9
T4E CO6PRO6ISE SETTLE6ENT O8 AN5 TAX LIABILIT5 BASE7 ON 8INANCIAL INCAPACIT5 TO PA5 S4ALL BE SUBJECT TO T4E 6INI6U6 CO6PRO6ISE RATE EUIVALENT TO 1
taxpa"er3$ oHer to #o*pro*$e $ha)) not be #on$+ere+ UNLESS an+ (nt) he !a%e$ n !rtn& h$ pr%)e&e (n+er RA 1=< or (n+er other &enera) or $pe#a) )a!$ $(#h !a%er $ha)) #on$tt(te the a(thort" o, Co**$$oner to n(re nto h$ bank +epo$t$ A *n*(* #o*pro*$e rate e(%a)ent to =
CO6PRO6ISE Re+(#ton o, )ab)t"
ABATE6ENT taxpa"er3$ Entre tax )ab)t" o, taxpa"er $ #an#e))e+ GROUN7S 0 ?1@ The tax or an" porton thereo, appear$ to be (n.($t)" or ex#e$$%e)" a$$e$$e+M or ?:@ The a+*n$traton an+ #o))e#ton #o$t$ n%o)%e+ +o not .($t," the #o))e#ton o, the a*o(nt +(e9
D>
A)) #r*na) %o)aton$ *a" be #o*pro*$e+ ex#ept0 ?a@ tho$e a)rea+" /)e+ n #o(rt' or ?b@ tho$e n%o)%n& ,ra(+ In general$$ the taxpayers %riminal liability arising from his 'iolatiof pertinent pro'ision of %ode may be settled extra judi%ially instead of &IR instituting against taxpayer a %riminal a%tion in Court * %ompromise in extrajudi%ial settlement of taxpayers %riminal liability for his 'iolation is C+,-,-/*0 in %hara%ter - 6A5 NOT BE I6POSE7 ON TAXPA5ER IT4OUT 4IS CONSENT - BIR 6A5 ONL5 SUGGEST SETTLE6ENT O8 TAXPA5ER3S LIABILIT5 T4ROUG4 A CO6PRO6ISE
Extra.(+#a) $ett)e*ent o, taxpa"er3$ #r*na) )ab)t" an+ a*o(nt o, $(&&e$te+ #o*pro*$e pena)t" $ha)) #on,or* !th $#he+()e o, #o*pro*$e pena)te$ pro%+e+ (n+er re)e%ant BIR re&()aton$ or or+er$ DELEGATION OF POWER TO COMPROMISE
#@ The po!er to #o*pro*$e or abate' (n+er Se#9 :<= ?A@ an+ ?B@ o, th$ Co+e' an" tax )ab)t"0 Pro%+e+' ho!e%er' That a$$e$$*ent$ $$(e+ b" the re&ona) o#e$ n%o)%n& ba$# +e/#en#" taxe$ o, 8%e h(n+re+ tho($an+ pe$o$ ?P<<'<<<@ or )e$$' an+ *nor #r*na) %o)aton$' a$ *a" be +eter*ne+ b" r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, /nan#e' (pon re#o**en+aton o, the Co**$$oner' +$#o%ere+ b" re&ona) an+ +$tr#t o#a)$' *a" be #o*pro*$e+ b" a re&ona) e%a)(aton boar+ !h#h
A$$$tant Re&ona) 7re#tor' the hea+$ o, the Le&a)' A$$e$$*ent an+ Co))e#ton 7%$on$ an+ the Re%en(e 7$tr#t O#er ha%n& .(r$+#ton o%er the taxpa"er' a$ *e*ber$ I, taxpa"er ,a)$ to ab+e b" #o*pro*$e arran&e*ent' the Go%ern*ent #o()+ ether INSIST ON COLLECTION O8 CO6PRO6ISE7 SU6' or 7ISREGAR7 T4E CO6PRO6ISE AN7 COLLECT T4E ORIGINAL TAX 7UE POWER TO COMPROMISE NOT ABSOLUTE
6a" a #a$e $t)) be #o*pro*$e+ e%en a,ter /na) .(+&e*ent - NO CASE0 - the &o%ern*ent !on an+ a /ne !a$ *po$e+ ba$e+ on or&na) appra$e*ent o, #ertan .e!e)r" - ho!e%er' )ater on' Co**$$oner o, C($to*$' !th appro%a) o, 7epart*ent o, 8nan#e' or+ere+ a reappra$a) o, art#)e n (e$ton an+ entere+ nto a #o*pro*$e - SC0 CO6PRO6ISE AS I6PROPER o AS A 6ERE AGENT O8 GOVERN6ENT' o T4E CO66ISSIONER O8 CUSTO6S IS NOT AUT4ORIE7 TO ACCEPT AN5T4ING o LESS T4AN 4AT IT IS A7JU7ICATE7 o IN 8AVOR O8 GOVERN6ENT o B5 VIRTUE O8 8INAL JU7GE6ENT 0 GOVERN6ENT 4A7 ALREA75 ACUIRE7 A VESTE7 RIG4T NATURE OF COMPROMISE PENALTY - a #ertan a*o(nt o, *one" !h#h the taxpa"er pa"$ to #o*pro*$e a tax %o)aton - pa+ n )e( o, a #r*na) pro$e#(ton A o/+ro/$#e $/+-$e# /.&.a- a3ree/e&
-
a #o*pro*$e pena)te$ #annot be *po$e+ n ab$en#e
TAXATION SURVIVAL KIT – Aban Book -
-
I, #o**$$oner3$ oHer o, #o*pro*$e $ re.e#te+ b" taxpa"er' the Co**$$oner CANNOT EN8ORCE t b(t he *a" /)e a #r*na) a#ton a&an$t the taxpa"er ,or the tax %o)aton CO66ISSIONER 4AS NO POER TO I6POSE AN7 COLLECT T4E SO CALLE7 CO6PRO6ISE PENALTIES IN ABSENCE O8 A CO6PRO6ISE AGREE6ENT VALI7L5 ENTERE7 INTO BETEEN T4E TAXPA5ER AN7 CO66ISSIONER
Co*pro*$e pena)te$ ben& %o)(ntar" n #hara#ter' the" *a" be #o))e#te+ on)" , taxpa"er $ !))n& to pa" the*9 - !here n an appea) to CTA' the taxpa"er ha$ expre$$e+ h$ !))n&ne$$ to pa" #o*pro*$e pena)te$' $a+ a*o(nt$ *a" be #o))e#te+ a$ part o, .(+&e*ent S(ppo$e the taxpa"er rene&e$ on h$ #on,or*t" to the pa"*ent o, the $(&&e$te+ #o*pro*$e' *a" the Co**$$oner #o))e#t the #o*pro*$e pna)t" thr( an a#ton n #o(rt b" +$rant an+ )e%" -
A COLLECTION ACTION 7OES NOT LIE BECAUSE A CO6PRO6ISE PENALT5 IS NEIT4ER A TAX NOR AN A76INISTRATIVE PENALT5 8OR TAX 7ELINUENC5
COLLECTION BY DISTRAINT AND LEVY
-
re*e+e$ !h#h r(n para))e)' n pont o, *portan#e to re*e+e$ o, #o))e#ton b" #%) an+ #r*na) a#ton$ kno!n a$ $(**ar"' extra.(+#a)' or a+*n$trat%e en,or#e*ent re*e+e$
7ISTRAINT %$ LEV5 7ISTRAINT LEV5 Re*e+" !hereb" #o))e#ton The #o))e#ton en,or#e*ent $ o, taxe$ $ en,or#e+ on eHe#te+ on rea) propert" an+ nter$t n or r&ht$ to rea) - &oo+$ propert" o, +e)n(ent - #hatte)$ taxpa"er - eHe#t$ - other per$ona) - )e%" *a" be *a+e be,ore propert" o, $*()taneo($)" !th or a,ter !hate%er #hara#ter o, the +$trant o, per$ona) taxpa"er n#)(+n& 0 propert" be)on&n& to o $to#k$ +e)n(ent taxpa"er o other $e#(rte$ o +ebt$ #re+t$ o o bank a##o(nt$ o an+ ntere$t$ n an+ r&ht$ to per$ona) propert" ACTUAL %$ COSNTRUCTIVE 7ISTRAINT ACTUAL
CONSTUCTIVE
A$ a #o))e#ton re*e+" $ One !here no a#t(a) re$orte+ to !hen +e)n(en#" +e)n(en#" $ ne#e$$ar" n pa"*ent $et$ n be,ore the $a*e $ re$orte+ to
< re(re+ ,or pa"*ent' a per$on ,a)$ to pa" h$ tax ob)&aton
a#t(a) +e)n(en#" *a" not be ne#e$$ar)" pre$ent@ the re*e+" o, #o$nt(#t%e +$trant *a" be a%a)e+ o,0 19 The taxpa"er $ retrn& ,ro* an" b($ne$$ $(b.e#t to tax :9 4e nten+$ to )ea%e Ph)ppne$ ;9 4e re*o%e$ h$ propert" there,ro* =9 4e per,or*$ an" a#t ten+n& to ob$tr(#t the pro#ee+n&$ ,or #o))e#tn& the tax +(e or !h#h *a" be +(e ,ro* h*
Con$$t$ o,0 -
A#t(a) $e2(re an+ +$trant o, per$ona) propert" o, taxpa"er Goo+$ Chatte)$ EHe#t$ Sto#k$
In $(#ent (antt" to $at$," the tax #har&e' toðer !th an" n#re*ent thereto n#+ent to +e)n(en#"' the expen$e$ o, +$trant an+ #o$t o, $(b$e(ent $a)e
POSSIBLE T4AT 0 #on$tr(#t%e +$trant *a" be app)e+ e%en , an a#t(a) tax +e)n(en#" on part o, taxpa"er a)rea+" ex$t$ - Con$tr(#t%e +$trant $ a pre%ent%e re*e+" the a*e o, !h#h $ to ,ore$ta)) a po$$b)e +$$paton o, taxpa"er3$ a$$et$ !hen +e)n(en#" take$ p)a#e9 PROCE7URE – Che#k han+!rtten note$
CIVIL ACTION – re$orte+ to !hen a tax )ab)t" be#o*e$ #o))e#tb)e
Co))e#tab)t" o, a tax ar$e$ n ,o))o!n& n$tan#e$ 0 19 hen a tax $ a$$e$$e+ an+ the the a$$e$$*ent be#o*e$ /na) an+ (nappea)ab)e be#a($e the taxpa"er ,a)$ to /)e an a+*n$trat%e prote$t !th BIR !thn ;< +a"$ ,ro* re#ept o, a$$e$$*ent :9 hen an a+*n$trat%e prote$t /)e+ b" taxpa"er a&an$t the a$$e$$*ent $ 7ENIE7' n !ho)e or n part a9 Or $ not a#te+ (pon !thn 1>< +a"$ ,ro* $(b*$$on o, +o#(*ent$ b9 Taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton ,a)$ to /)e an appea) #9 th CTA !thn ;<+a"$ ,ro* re#ept$ o, $a+ +e#$on +9 Or ,ro* )ap$e o, 1>< +a" pero+ A #%) a#ton *a" a)$o be /e)+ n or+er to #o))e#t the $o – #a))e+ $e), a$$e$$e+ tax - !h#h $ #o*p(te+ b" the taxpa"er h*$e), an+ reFe#te+ n h$ ret(rn (n+er the pa" – a$ – "o( – /)e $"$te*
TAXATION SURVIVAL KIT – Aban Book NO CIVIL OR CRI6INAL ACTION 8OR RECOVER5 O8 TAXES S4ALL BE 8ILE7 IN COURT I4TOUT APPROVAL O8 CO66ISSIONER NOTES 0 19 Re&ona) 7re#tor$ a*" a)$o appro%e the /)n& o, #%) a#ton ,or tax #o))e#ton , th$ po!er $ expre$$)" +e)e&ate+ to the* b" Co**$$oner (n+er approprate *e*oran+(* or+er$ on the *atter :9 C%) a#ton$ ,or #o))e#ton are /)e+ n re&()at #o(rt$' an+ NOT IN CTA Co*p)ant$ n #%) a#ton$ ,or #o))e#ton o, +e)n(ent taxe$ are re(re+ to be appro%e+ b" So)#tor Genera) be,ore the" are /)e+ 9 - 4o!e%er' BIR e)&a) o#er$ +ep(t2e+ a$ Spe#a) Attorner"$ an+ - $tatone+ o(t$+e 6etro 6an) - *a" /)e %er/e+ #o*p)ant$ !tho(t the appro%a) o, So)#tor Genera) $(b.e#t to ,o))o!n& re(re*ent$0 o So)#tor Genera) $ho()+ be ,(rn$he+ a #op" o, #o*p)ant o So)#tor &enera) /)e$ a not#e o, appearan#e n #o(rt !here a#ton $ /)e+99 o I, #o*p)ant $ 8OUN7 TO BE I6PROPERL5 8ILE7 0 6oton to +$*$$ $ )ke!$e /)e+ !th the #o(rt o SEC2 662 For/ a! Mo!e o% Proee!$3 $ A&$o# Ar$#$3 .!er &h$# Co!e2 - C%) an+ #r*na) a#ton$ an+ pro#ee+n&$ n$tt(te+ n beha), o, the Go%ern*ent (n+er the a(thort" o, th$ Co+e or other )a! en,or#e+ b" the B(rea( o, Interna) Re%en(e $ha)) be bro(&ht n the na*e o, the Go%ern*ent o, the Ph)ppne$ an+ $ha)) be #on+(#te+ b" )e&a) o#er$ o, the B(rea( o, Interna) Re%en(e b(t no #%) or #r*na) a#ton ,or the re#o%er" o, taxe$ or the en,or#e*ent o, an" /ne' pena)t" or ,or,et(re (n+er th$ Co+e
$ha)) be /)e+ n #o(rt !tho(t the appro%a) o, the Co**$$oner9 COLLECTION IN CASES WHERE THE ASSESSMENT IS FINAL AND UNAPPEALABLE Ca$e0 COLLECTIBILIT5 O8 A TAX 7UE TO TAXPA5ER3S INABILIT5 OR 8AILURE TO 7ISPUTE T4E ASSESS6ENT IT4IN ;< 7A5 REGLE6ENTAR5 PERIO7 19 19D6 :9 196 ;9 196 =9 196 9 !ere a$$$e+ a&an$ the e$tate o, )ate $po($e$ Teo+oro D9 her$ then /)e+ a re(e$t o, re#on$+eraton o, the a$$e$$*ent$ an+ at the $a*e t*e a$ke+ that the" be &%en ;< +a"$ !thn !h#h to $(b*t ther po$ton paper n $(pport o, ther #)a* -
hen Go%ern*ent $o(&ht to #o))e#t the tax )ab)te$ n the $ett)e*ent pro#ee+n&$ on the e$tate' the her$ nterpo$e+ the +e,en$e that the a$$e$$e*ent$ ha%e not be#o*e /na) an+ exe#(tor - SC 0 the re(e$t ,or re#on #annot be #on$+ere+ a$ a prote$t a&an$t the a$$e$$*ent9 The ,a)(re o, her$ to $(b$tantate thr #)a* o a&an$t the a$$e$$*ent +(e to the non$(b*$$on o, ther po$ton paper .($t/e+ the Co**$$oner3$ a#ton n #o))e#tnt tax n $ett)e*ent pro#ee+n&$ CASE 0 19 COURT 0 taxpa"er3$ ,a)(re to +$p(te the a$$e$$*ent eHe#t%e)" b" #o*p)"n& !th the #on+ton$ )a+ +o!n b" BIR' $(#h a$ $pe#,"n& (ner oath the &ro(n+$ o, h$ prote$t' pa"n& one-ha), o, a*o(nt a$$e$$e+ an+ p(ttn& (p a bon+ ,or ba)an#e' pro%+e+ a )e&a) ba$$ ,or &o%ern*ent to #o))e#t the taxpa"er3$ )ab)t" b" or+nar" #%) a#ton
: :9 COURT 0 apart ,ro* ,a)n& to $ea$onab)" /)e the re(re+ e$tate tax ret(rn' pettoner an+ the other *ar#o$ her$ 8AILE7 to (e$ton the a$$e$$*ent$ $er%e+ on the* a$ her+ o, )ate pre$+ent' thereb" a))o!n& $a+ a$$e$$*ent to )ap$e nto /na)t"9 a9 Sa+ +e/#en#" tax a$$e$$*ent$ ha%n& be#o*e /na)' exe#(tor an+ +e*an+ab)e $a*e *a" be a)rea+" be #o))e#te+ b" $(**ar" re*e+" o, +$trant or )e%" COLLECTION CASES WHERE THE BIR8S DECISION IS FINAL, EXECUTORY, AND DEMANDABLE
19 taxpa"er /)e+ !th BIR a re(e$t ,or ren%e$t&aton a,ter he !a$ a$$e$$e+ the $(* o, 1Dk a$ +e/#en#" n#o*e tax ,or 1 – 1D<9 S(b$e(ent)"' a )etter +e#$on +e*an+n& pa"*nt !a$ $$(e+9 4OEVER SINCE TAXPA5ER 7I7 NOT APPEA' A CIVIL ACTION 8OR COLLECTION AS 8ILE7 B5 GOVERN6ENT a9 SC 0 taxpa"er3$ ,a)(re to appea) the Co**$$oner3$ e#$on to CTA +epr%e+ h* o, r&ht to (e$ton the Co**$$oner3$ a(thort" to #o))e#t the tax !thn the pre$#rpt%e pero+ pro%+e+ b" )a! :9 SC 0 !here taxpa"er ,a)e+ to #o*p)" !th a #on++ton )a+ +o!n b" Co**$$oner ,or ren%e$t&aton o, #a$e an+ t$ ,a)(re to appea) to CTA *a+e the a$$e$$*ent /na) an+ exe#(tor' $o that , an a#ton to #o))e#t tax a$$e$$e+ + /)e+ b" Go%ern*ent n #o(rt' th$ $ akn to an a#ton to en,or#e a .(+&e*ent $(#h that NO INUIR5 CAN BE 6A7E T4REON AS TO 6ERITS O8 T4E ORGINAL CASE OR T4E JUSTNESS O8 JU7GE6ENT RELIE7 UPON
S(ppo$e there $ a pen+n& prote$t or a re(e$t ,or
/r$t on $(#h pen+n& re(e$t be,ore he #an &o to #o(rt ,or p(rpo$e o, #o))e#tn& tax a$$e$$e+ -
NOT NECESSAR5 SC 0 no!here n tax #o+e $ the #o**$$oner re(re+ to r()e /r$t on taxpa"er3$ r($t ,or rn%$t&aton be,or he #an &o to #o(rt ,or the p(rpo$e o, #o))e#tn& tax a$$e$$e+9 - T4E LEGISLATIV POLIC5 IS TO GIVE CO66ISSIONR 6UC4 LATITU7E IN T4E SPEE75 AN7 PRO6PT COLLECTION O8 TAXS BECAUSE IT IS ON TAXATION T4AT T4E GOVERN6ENT 7EPEN7S TO OBTAIN T4E 6EANS TO CARR5 ITS OPERATIONS 4EN CO66ISSIONER 7I7 NOT REPL5 TO TAXPA5ER3S REUEST 8OR RECONSI7ERATION AN7 ISNTEA7 RE88ERE7 T4E CASE TO SG 8OR JU7ICIAL COLLECTION' T4IS AS IN7ICATIVE O8 4IS 7ECISION AGAINST REINVESTIGATION -
S4OUL7 T4E CO66ISIONER 7ECI7E TO COLLECT TAX ASSESSE7 !tho(t /r$t +e#+n& the taxpa"er3$ prote$t or re(e$t ,or ren%e$t&aton an+or re#on$+eraton' T4E E88ECT IS T4AT T4E CO66ISSIONER3S ACTION IS A 7ECISION O8 7ENIAL IN 4IC4 EVENT T4E TAXPA5ER 6A5 8ILE AN APPEAL IT4 CTA PRUSUANT TO T4E PROVS O8 SECTION 11 RA 11:
8)n& o, ##) a#ton n #o(rt to #o))e#t a tax !h#h !a$ the $(b.e#t *atter o, a pen+n& prote$t n BIR !a$ a .($t/ab)e ba$$ ,or taxpa"er to appea) to CTA - An+ to *o%e ,or +$*$$a) n C o, Go%ern*ent3$ a#ton to #o))e#t the tax )ab)t" (n+er +$p(te DEFENSES PRECLUDED BY FINAL AND EECUTORY ASSESSMENTS 19 VALI7IT5 OR LEGALIT5 O8 ASSESS6ENT – a +$p(te+ a$$e$$*ent ,or nterna) re%en(e taxe$ ,a))$ !thn the ex#)($%e .(r$+#ton o, CTA
TAXATION SURVIVAL KIT – Aban Book a9 here a taxpa"er #an %ent)ate the +e,en$e$ a$ a&an$t the a$$e$$*ent b9 ONCE A 7ECISION O8 BIR ON A 7ISPUTE7 ASSESS6ENT BECO6ES 8INAL' EXECUTOR5 AN7 7E6AN7ABLE 8OR LACK O8 AN A76INISTRATIVE PROTEST AGAINST T4E ASSESS6ENT O8 4IS 8AILURE TO APPEAL TO T4E CTA IT4IN T4E REGLE6ENTAR5 ;< 7A5 PERIO7' 7E8ENSE BEARING ON T4E LEGALIT5 OR VALI7IT5 O8 ASSESS6ENT OUL7 NECESSARIL5 8ALL OTUSI7E T4E JURIS7ICTION O8 REGULAR COURTS :9 PRESCRIPTION O8 GOVERN6ENT3S RIG4T TO ASSESS a9 Not a%a)eb) $n#e $a*e $ho()+ be $(b.e#t o, taxapa"er3$ appea) to the CTA b9 The r&ht o, &o%ern*ent to ob.e#t to the +e,en$e o, pre$#rpton o, &o%ern*ent3$ r&ht to a$$e$$ 6A5 BE AIVE7 #9 I8 IN ANCTION to #o))e#t a /na) an+ exe#(tor a$$e$$*ent' the &o%ern*ent )t&ate+ on the $$(e o, pre$#rpton an+ $(b*tte+ ,or the re$o)(ton o, #o(rt +9 B5 ACTUATION 0&o%ern*ent !a%e+ t$ r&ht to ob.e#t to the $ettn& (p o, $(#h +e,en$e COLLECTION THRU FILING OF BIR8S ANSWER IN CTA
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#an be #o))e#te+ b" &o%ern*ent thr( /)n& an an$!er to taxpa"er3$ petton ,or re%e! n #a$e$ !here the taxpa"er appea)$ to CTA SC0 the ,a#t tha no #%) a#ton to #o))#t the taxpa"er3$ tax )ab)t" !a$ /)e+ b" the Go%ern*ent $ NO GROUN7 ,or #)a*n& that the r&ht o, Go%ern*ent to #o))e#t $a+ )ab)t" ha+ a)rea+" pre$#rbe+ COURT 0 PRESCRIPTION ha+ not $et n a$*(#h a$ &o%ern*ent3$ an$!er n the CTA !a$ /)e+ !e)) !thn the pre$#rpt%e pero+ pre$#rbe+ b" )a! An$!er /)e+ n tax #o(rt !a$ tanta*o(nt to the /)n&
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hen an a#ton ,or #o))e#ton $ /)e+ n re&()ar #o(rt$' pre$#rpton $ to))e+
LIABILITY OF STOC
The +$$o)%n& or reor&an2n& #orporaton $ha))' pror to the $$(an#e b" the Se#(rte$ an+ Ex#han&e Co**$$on o, the Cert/#ate o, 7$$o)(ton or Reor&an2aton' a$ *a" be +e/ne+ b" r()e$ an+ re&()aton$ pre$#rbe+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner' $e#(re a #ert/#ate o, tax #)earan#e ,ro* the B(rea( o, Interna) Re%en(e !h#h #ert/#ate $ha)) be $(b*tte+ to the Se#(rte$ an+ Ex#han&e Co**$$on9 PURPOSE ) to n$(re pa"*ent o, a)) tax )ab)te$ o, the #orporaton to Go%ern*ent9
4OEVER' IN T4E EVENT T4AT T4IS REUIRE6ENT IS NOT CO6PLIE7 IT4 PRIOR TO CORPORATE 7ISSOLUTION' CAN T4E CO66ISSIONER 4OL7 T4E STOCK4OL7ERS O8 T4E
= 7E8UNCT CORPORATION LIABLE 8OR UPAI7 TAXES O8 7ISSOLVE7 ENTIT5 ? NO ? The ob)&aton$ o, the #orporaton are not tho$e o, $to#kho)+er$ ,or t $ a ba$# r()e that a #orporaton $ %e$te+ b" )a! !th a per$ona)t" $eparate an+ +$ntn#t ,ro* tho$e o, per$on$ #o*po$n& t a$ !e)) a$ ,ro* that o, an" other )e&a) entt" to !h#h t *a" be re)ate+ 4OEVER 0 po$$b)e ,or $to#kho)+er$ to he)+ per$ona))" )ab)e ,or (npa+ tax )ab)te$ o, a +e,(n#t #orporaton a$ !hen a$$et$ o, #orporaton ha%e pa$$e+ nto han+$ o, t$ $to#kho)+er$ CASE0 19 Corporaton kno!n a$ the #entra) $"n+#ate ha+ rea)2e+ a net pro/t o, ::k ,ro* t$ $a)e o, $(rp)($ &oo+$9 a9 A,ter $a+ $a)e ha+ taken p)a#e' the #orporaton **e+ate)" )(+ate+ an+ +$trb(te+ t$ a$$et$ on a(&($t 1' 1=> **e+ate)" a,ter $a)e o, $a+ $(rp)($ &oo+$ COURT 0 Sto#kho)+er$ !ere the bene/#are$ o, the +e,(n#t #orporaton an+ a$ $(#h $ho()+ be he)+ )ab)e to pa" taxe$ o, #orporaton n proporton to ther $hare$ I +$trb(ton o, a$$et$ o, +e,(n#t #orporaton COURT 0 A $to#kho)+er !ho ha$ (npa+ $(b$#rpton$ $ )ab)e ,or +ebt$ o, #orporaton JUSTI8ICATION0 (npa+ +ebt o, $to#kho)+er ,or the p(r#ha$e pr#e o, $(b$#rbe+ $hare$ repre$ent$ an a$$et o, the #orporaton n han+$ o, $to#kho)+er$ COLLECTION THRU APPLICATION OF A DISPUTED TAX AGAINST A REFUNDABLE TAX
e%en , a tax ben& #o))e#te+ b" the #o**$$oner $
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en,or#e+ b" a $et oH or b" app)"n& t a&an$t the re,(n+ab)e tax that *a" be +(e the taxpa"er9 ASSU6E7 0 both #o))e#ton an+ r&ht to the re,(n+ o, taxe$ ha$ not "et pre$#rbe+ an+ that re,(n+ #)a* ha$ a)rea+" been appro%e+
CASE 0 19 T4E SET O88 IS JUSTI8IE7 BECAUSE TAXES 6UST BE COLLECE7 IN AS 6UC4 AS T4E5 ARE LI8EBLOO7 O8 GOVERN6ENT AN7 T4AT IT IS A SETTLE7 PRINCIPLE T4AT T4E GOVT IS NOT 7UT5 BOUN7 TO RESOLVE7 A PEN7ING TAX PROTEST BE8ORE IT CAN COLLECT T4E UNPAI7 TAX LIABILIT5 a9 I, pa"*ent o, taxe$ #o()+ be po$tpone+ b" $*p)" (e$tonn& ther %a)+t"' &o%ern*ent ,(n#ton$ !o()+ be para)"2e+ :9 E%en on e(tab)e &ro(n+$' the Go%ern*ent $ho()+ not app)" a tax that ha$ pre$#rbe+ a&an$t a re,(n+ab)e $(* a9 EUITABLE RECOUP6ENT IS NOT RECOGNIE7 In the e%ent o, a $etoH +(rn& the pen+en#" o, a tax prote$t n BIR' !hat $ the re*e+" o, taxpa"er a$$(*n& h$ re,(n+ #)a* $ a)rea+" a $ett)e+ *atter -
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the taxpa"er #o()+ probab)" treat the $et oH a$ a +e#$on o, Co**$$oner +en"n& h$ prote$t n !h#h #a$e he #o()+ /)e an appea) !th CTA !thn the re&)e*entar" pero+ o, ;< +a"$ p(r$(ant to Se#ton ::> n re)aton to $e# 11 SEC2 66K2 Pro&e#&$3 o% A##e##/e&2 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that proper taxe$ $ho()+ be a$$e$$e+' he $ha)) /r$t not," the taxpa"er o, h$ /n+n&$0 Pro%+e+' ho!e%er' That a pre-a$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0
TAXATION SURVIVAL KIT – Aban Book -
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?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o, *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or ?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or ?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o, the $(##ee+n& taxab)e "earM or ?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or ?e@ hen the art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to nonexe*pt per$on$9 The taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 thn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 S(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n& a re(e$t ,or re#on$+eraton or ren%e$t&aton !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the a$$e$$*ent n $(#h ,or* an+ *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$9 thn $xt" ?D<@ +a"$ ,ro* /)n& o, the prote$t' a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 I, the prote$t $ +ene+ n !ho)e or n part' or $ not
aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9
Se&$o 44 o% RA 446 2 Who ma a!!"a#$ "%"&' o( a!!"a# 2 - An" per$on a$$o#aton or #orporaton a+%er$e)" aHe#te+ b" a +e#$on or r()n& o, the Co))e#tor o, Interna) Re%en(e' the Co))e#tor o, C($to*$ or an" pro%n#a) or #t" Boar+ o, A$$e$$*ent Appea)$ *a" /)e an appea) n the Co(rt o, Tax Appea)$ !thn thrt" +a"$ a,ter the re#ept o, $(#h +e#$on or r()n&9 - No appea) taken b" the Co(rt o, Appea)$ ,ro* the +e#$on o, the Co))e#tor o, Interna) Re%en(e or the Co))e#tor o, C($to*$ $ha)) $($pen+ the pa"*ent' )e%"' +$trant' an+ or $a)e o, an" propert" o, the taxpa"er ,or the $at$,a#ton o, h$ tax )ab)t" a$ pro%+e+ b" ex$tn& )a!M Pro%+e+' ho!e%er' That !hen n the opnon o, the Co(rt the #o))e#ton b" the B(rea( o, Interna) Re%en(e or the Co**$$oner o, C($to*$ *a" .eopar+2e the ntere$t o, the Go%ern*ent an+or the taxpa"er the Co(rt at an" $ta&e o, the pro#ee+n& *a" $($pen+ the $a+ #o))e#ton an+ re(re the taxpa"er ether to +epo$t the a*o(nt #)a*e+ or to /)e a $(ret" bon+ ,or not *ore than +o(b)e the a*o(nt !th the Co(rtM
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CRIMINAL ACTION
19 GENERAL – #r*na) a#ton a$ a #o))e#ton re*e+"' $ a(thor2e+ (n+er Se#ton :< a9 The .(+&*ent n the #r*na) #a$e $ha)) not on)" *po$e the pena)t" b(t $ha)) a)$o or+er pa"*ent
D o, the taxe$ $(b.e#t o, the #r*na) #a$e a$ /na))" +e#+e+ b" the Co**$$oner9
Art#)e 1<< RPC pro%+e$ that e%er" per$on #r*na))" )ab)e ,or a ,e)on" $ a)$o #%))" )ab)e
Cr*na) a#ton $ NOT RESORTE7 TO AS A COLLECTION RE6E75 ONL5
Taxaton – #%) )ab)t" to pa" taxe$ ar$e$ NOT BECAUSE O8 AN5 8ELON5 b(t (pon taxpa"er3$ ,a)(re to pa" taxe$
Ca$e$ not n%o)%n& non – pa"*ent o, taxe$ !here #r*na) a#ton $ (t)2e+ - Se#ton ::1 o, 1 NIRC a9 The re*e+" ,or en,or#e*ent o, $tat(tor" pena)te$ o, a)) $ort$ $ha)) be b" #r*na) or #%) a#ton' a$ the part#()ar $t(aton *a" re(re' $(b.e#t to the appro%a) o, the Co**$$oner9 - Per$on !ho' ben& re(re+ to $$(e re#ept$ or $a)e$ or #o**er#a) n%o#e$' ,a)$ or re,($e$ to $$(e $(#h re#ept$ or n%o#e$ b9 Upon #on%#ton ,or ea#h a#t or o*$$on' a /ne o, not )e$$ than 1k pe$o$ BUT NOT 6ORE T4AN
Cr* )ab)t" n taxaton ar$e$ a a re$()t o, one3$ )ab)t" to pa" h$ taxe$
In or+nar" #r* #a$e$' CIVIL LIABILIT5 $ n#(rre+ b" rea$on o, oHen+er3$ #r*na) a#t
Extn#ton o, one3$ #r*na) )ab)t" 7OES NOT NECESSARIL5 re$()t n extn&($h*ent o, h$ #%) )ab)t" to pa" taxe$
RATIONALE0 th re&ar+ to tax proper' the $tate #orre#t)" pont$ o(r n t$ bre, that the a#(tta) n #r* #a$e #o()+ not operate to +$#har&e the pettoner ,ro* +(t" to pa" tax -
$n#e that +(t" $ *po$e+ b" $tat(te pror to an+ n+epen+ent o, an" atte*p" on the part o, taxpa"er to e%a+e pa"*ent OBLIGATIN TO PA5 TAX 0 not a *ere #on$e(en#e o, ,e)ono($ a#t$ #har&e+ n n,or*aton' nor $ to a *ere #%) )ab)t" +er%e+ ,ro* a #r*e that !o()+ be !pe+ o(t b" the .(+#a) +e#)araton that the #r*na) a#t$ #har&e+ ++ not ex$t
hen #%) a#ton ar$n& o(t o, a tax +e)n(en#" $ extn&($he+ b" pre$#rpton ?#on$+ern& that (n+er the )a!' the Go%ern*ent ha$ on)" three "ear$ ,or* +ate o, a$$e$$*ent o, tax !thn !h#h to #o))e#t the tax@' -
t $ t)) po$$b)e ,or $(#h tax to be #o))e#te+ b" #r*na) a#ton na$*(#h a$ a#ton$ o, th$ kn+ pre$#rbe on)"
TAXATION SURVIVAL KIT – Aban Book +9 In #* a#ton that !a$ n$tt(te+ a&an$t taxpa"er ,or ha%n& /)e+ a ,a)$e an+ ,ra(+()ent ret(rn an+ ,or ,a)(re to ap" taxe$0 9 SC 0 $(b$e(ent $at$,a#ton o, tax )ab)t" b" pa"*ent or pre$#rpton !)) not operate to extn&($h the taxpa"er3$ #r*na) )ab)t" 9 COURT 0 !hether (n+er tax #o+e or re%$e+ pena) #o+e' the $at$,a#ton o, #%) )ab)t" $ NOT ONE o, the &ro(n+$ ,or extn#ton o, #r*na) a#ton 9 NOTE7 0 th$ $ a)$o pro%+e+ n Tax #o+e Se :; 19 pa"*ent o, the tax +(e a,ter apprehen$on $ha)) not #on$tt(te a %a)+ +e,en$e n an" pro$e#(ton ,or %o)aton o, an" pro%$on o, th$ Co+e or n an" a#ton ,or the ,or,et(re o, (ntaxe+ art#)e$9 e9 In #r* a#ton n$tt(te+ a&an$t a taxpa"er ,or )atter3$ ,a)(re to pa" n#o*e taxe$' 9 $(b$+ar" *pr$on*ent #annot be *po$e+ n #a$e o, n$o)%en#" on part o, taxpa"er a$ re&ar+$ the tax !h#h he $ $enten#e+ to pa" 9 NOTE 0 Se#ton :>< 00 SUBSI7IAR5 I6PRISON6ENT ONL5 IN CASES O8 8AILURE TO PA5 8INE I6POSE7 AN7 IS SILENT ABOUT TAXPA5ER3S 8AILURE TO PA5 T4E TAXES ASSESSE7
S(ppo$e a taxpa"er $ a$$e$$e+ ,or taxe$ an+ a$$(*n& that a&an$t that a$$e$$*ent' he /)e$ an a+*n$trat%e prote$t n BIR9 a9 6a" the Go%ern*ent' +(rn& pen+en#" o, that prote$t' /)e a #r*na) a#ton a&an$t the taxpa"er ,or /)n& a ,a)$e a+ ,ra(+()ent ret(rn
SC0 Cr* a#ton $ )e&a))" proper9 - hat $ n%o)%e+ here n #r* a#ton $ )e&a))" not the #o))e#ton o, taxe$ !here the a$$e$$*ent o, CIR *a" be re%e!e+ b" Co(rt o, Tax Appea)$ - - b(t a #r*na) pro$e#(ton ,or %o)aton$ o, Natona) Interna) Re%en(e Co+e !h#h $ !thn the #o&n2an#e o, Co(rt o, 8r$t In$tan#e ?RTC@ - there #an be no #%) a#ton to en,or#e #o))e#ton be,ore the a$$e$$*ent pro#e+(re$ n #o+e ha%e been ,o))o!e+There $ no re(re*ent ,or the pre#$e #o*p(taton an+ a$$e$$*ent o, tax be,ore there #an be a #r*na) pro$e#(ton - Prote$t o, pettoner a&an$t a$$e$$*ent #annot $top h$ pro$e#(ton ,or %o)aton o, Natona) nterna) Re%en(e Co+e CIR %$ pa$#or Rea)t" SC0 reterate+ the &enera) r()e that an a$$e$$*ent $ not nexe$$ar" be,ore a #r*na) #har&e #an be /)e+9 - the #r*na) #har&e nee+ on)" be pro%e+ b" a pr*a ,a#e $ho!n& o, ,a)(re to /)e a re(re+ tax ret(rn an+ $(#h ,a#t nee+ not be pro%e+ b" an a$$e$$*ent - Se#ton ::: 0 n #a$e$ !here a ,a)$e or ,ra(+()ent ret(rn $ $(b*tte+ or n #a$e$ o, ,a)(re to /)e a ret(rn $(#h a$ th$ #a$e' pro#ee+n&$ n #o(rt *a" be #o**en#e+ !tho(t an a$$e$$*ent - Se#ton :< 0 #%) an+ #r* a$pe#t$ o, #a$e *a" be p(r$(e+ $*()taneo($)" - UNGAB #a$e 0 pettoner theren $o(&ht the +$*$$a) o, #r* #o*p)ant$ ,or ben& a pre*at(re' $n#e h$ prote$t to CTA ha+ not "et been re$o)%e+9 - COURT 0 $(#h prote$t #o()+ not $top or $($pen+ the #r* a#ton !h#h !a$ n+epen+ent o, the re$o)(ton o, prote$t n CTA - REASON 0 #r ha+' n $(#h ta# e%a$on #a$e$ +$#reton on !hether to $$(e an a$$e$$*ent or to /)e a #r*
> ,9 In #a$e o, %)aton$ o*tte+ b" a$$o#aton$' partner$hp$ or #orporaton$' the pena)t" $ha)) be *po$e+ on parner' pre$+ent' &enera) *ana&er' bran#h *ana&er' trea$(rer ' o#er n #har&e an+ e*p)o"ee$ re$pon$b)e ,or %o)aton 9 The re$pon$b)e #orporate o#er$' partner$ or e*p)o"ee$ o, an" #orporaton' a$$o#aton or &enra) #o-partner$hp )ab)e ,or an" o, the a#t$ or o**$$on$ pena)2e+ there(n+er $ha)) (pon #on%#ton' be /ne+ not )e$$ than
COURT 0 A #orporaton #an a#t on)" thro(&h t$ o#er$ an+ a&ent$ an+ !here the b($ne$$ t$e), n%o)%e$ a %o)aton o, )a! Corre#t r()e 0 a)) !ho part#pate n t are )ab)e - a$ the /)n& o, a)$e ret(rn #on$tt(te$ a %o)aton o, )a!' +e,en+ant a$ a(thor o, ))e&a) a#t' *($t ne#e$$ar)" an$!er ,or t$ #on$e(en#e$ pro%+e+ that the a))e&aton$ are pro%en Chapter Tax Re*e+e$ – Re*e+e$ o, the Go%ern*ent Stat(e o, L*taton$ PRESCRIPTION OF GOVERNMENT RIGHT TO ASSESS TAXES
SEC2 672 Per$o! o% L$/$&a&$o U+o A##e##/e& a! Co--e&$o2 - Ex#ept a$ pro%+e+ n Se#ton :::' nterna) re%en(e taxe$ $ha)) be a$$e$$e+ !thn three ?;@ "ear$ a,ter the )a$t +a" pre$#rbe+ b" )a! ,or the /)n& o, the ret(rn' an+ no pro#ee+n& n #o(rt !tho(t a$$e$$*ent ,or the #o))e#ton o, $(#h taxe$ $ha)) be be&(n a,ter the expraton o, $(#h pero+0 Pro%+e+' That n a #a$e !here a ret(rn $ /)e+ be"on+ the pero+ pre$#rbe+ b" )a!' the three ?;@-"ear pero+ $ha)) be #o(nte+ ,ro* the +a" the ret(rn !a$ /)e+9 8or p(rpo$e$ o, th$ Se#ton' a ret(rn /)e+ be,ore the )a$t +a" pre$#rbe+ b" )a! ,or the /)n& thereo, $ha)) be #on$+ere+ a$ /)e+ on $(#h )a$t +a"9 IMPORTANT BECAUSE ) , $(#h tax $ a$$e$$e+ be"on+ the three "ear pre$#prt%e pero+ a$ $tate+ abo%e' the taxpa"er $ &%en the 0
19 RIG4T TO PROTEST AGAINST T4E ASSESS6ENT AN7 :9 TO APPEAL TO T4E CTA ;9 $ho()+ the &o%t3$ +e#$on on (e$ton o, pre$#rpton be a+%r$e to h$ po$ton hen an a$$e$$*ent $ n%a)+ be#a($e t !a$ *a+e a,ter )ap$e o, the pre$#rpt%e pero+ – then the #o))e#ton o, tax' !h#h $ #o%ere+ b" pre$#rbe+ a$$e$$*ent' be#o*e$ INE88CTUAL 6a+ate+ b" )a! 0 Go%ern*nt *($t a$$e$$ ON TI6E - not )ater than three "ear$ #o(nte+ ,ro* an+ a,ter the pero+ /xe+ b" )a! ,or /)n& o, the tax ret(rn or a#t(a) +ate o, /)n& - 4IC4EVER IS T4E LATER 7ATE T4US I8 TAXPA5ER ,or exa*p)e /)e+ h$ n#o*e tax ret(rn ,or 1D on 6ar 1' or one *onth be,ore the )a$t +a" /xe+ b" )a! ,or /)n& o, n#o*e tax ret(rn$ ,or 1D on apr) 1' 1' then three "ear pero+ $ #o(nte+ ,ro* apr) 1D' 1
TAXATION SURVIVAL KIT – Aban Book I, the ret(rn $ /)e+ )ate' or on 6a" 1' 1' then the three "ear pero+ $ COUNTE7 ,ro* +ate o, a#t(a) /)n& or on 6a" 1' 1 a)$o9 In #a$e o, $e), a$$e$$e+ taxe$ )ke n#o*e tax that the taxpa"er h*$e), a$$e$$ an+ reFe#t$ on h$ ret(rn0 - the #o))e#ton thereo, a" pro#ee+ !tho(t an" ,(rther a$$e$$*ent - the pre$#rpt%e pero+ o, #o))e#ton app)e$ - BIR *($t #o))e#t $(#h tax - Ether b" SU66AR5 OR JU7ICIAL re*e+e+ - thn ; "ear$ ,ro* +ate o, /)&n o, tax ret(rn - REASON 0 +ate o, a$$e$$*ent n #a$e o, $e), a$$e$$e+ taxe$ !o()+ be the +ate o, a#t(a) /)n& o, ret(rn a$ t $ on $(#h +ate !hen the tax $ $a+ to ha%e been a$$e$$e+ SUBJECT ASSSES6SENTS ERE 6A7E BE5ON7 T4E PRESCRIPTIVE PERIO7 UN7ER T4E TAX CO7E -
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SC 0 ,or the p(rpo$e o, $a,e&(ar+n& taxpa"er$ ,ro* (nrea$onab)e exa*naton' n%e$t&aton or a$$e$$*ent' o(r tax )a! pro%+e$ a $tat(te o, )*taton$ n #o))e#ton o, taxe$ The )a! on pre$#rpton' ben& a re*e+a) *ea$(re' $ho()+ be )bera))" #on$tr(e+ n or+er to aHor+ $(#h prote#ton EXCEPTIONS 0 $ho()+ per,or#e be $tr#t)" #on$tr(e+ Ne&)&en#e or o%er$&ht on part o, the BIR #annot pre.(+#e taxpa"er$' #on$+ern& that the pre$#rpt%e pero+ !a$ pre#e$e)" nten+e+ to &%e the* pea#e o, *n+
WHEN IS A TAX ASSESSMENT DEEMED MADE( - BIR3$ a$$e$$*ent $ ($(a))" e*bo+e+ n a +e*an+ )etter or n a BIR ,or* kno!n a$ an a$$e$$*ent not#e - Soe*t*e$' BIR3$ pra#t#e $ to SEN7 OUT to taxpa"er both 7E6AN7 LETTER an+ ASSESS6ENT NOTICE
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ISSUE +ate$ are ne#e$$e$ar)" anteror to the +ate o, a#t(a) re)ea$e or *)n& o, the +e*an+ )etter ACTUAL RELEASE IS 7ONE B5 6AILING T4ESE 7OCU6ENTS' BUT SO6ETI6ES PERSONAL 7ELIVER5 OR SERVICE IS 7ONE
Ca$e 0 19 t $ not the $$(e +ate o, +e*an+ )etter an+or not#e o, a$$e$$*ent that $ the RECKONING POINT IN PRESCRIPTION a9 BUT the +ate !hen $a+ +e*an+ )etter or not#e $ re)ea$e+ ' *a)e+ or $ent to taxpa"er that #on$tt(te$ ACTUAL ASSESS6ENT :9 An a$$e$$*ent #ontan$ NOT ONL5 CO6PUTATION O8 TAX LIABILITIES' BUT ALSO A 7E6AN7 8OR PA56ENT I4TIN PRESCRIBE7 PERIO7 ;9 It $&na)$ t*e !hen pena)te$ an+ ntere$t$ be&n to a##r(e a&an$t the taxpa"er =9 To enab)e the taxpa"er to +eter*ne the re*e+e$ thereon' +(e pro#e$$ re(re$ that t *($t be $er%e+ an+ re#e%e+ b" taxpa"er 9 An a+a%t !h#h !a$ exe#(te+ b" re%en(e o#er$ $tatn& the tax )ab)te$ o, a taxpa"er an+ atta#he+ to a #r*na) #o*p)ant ,or tax e%a$on' CANNOT BE 7EE6E7 AN ASSESS6ENT T4AT CAN BE UESTIONE7 BE8ORE CTA T(pa2 %$ U)ep - nterna) re%en(e taxe$ are $e), a$$e$$n& - no ,(rther a$$e$$*ent b" the &o%ern*ent $ re(re+ to #reate tax )ab)t" - a$$e$$e*ent $ NOT ALTOGET4ER INCONSEUENTIAL - t $ re)e%ant n proper p(r$(t o, .(+#a) an+ extra.(+#a) re*e+e$ - to en,or#e taxpa"er )ab)te$ an+ #ertan *atter$ that re)ate to t - $(#h a$ 0 o *po$ton o, $(r#har&e$ an+
>< o o
n app)#aton o, $tat(te$ o, )*taton$ an+ e$tab)$he*ent o, tax )en$
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ULTI6ATE PURPOSE O8 ASSESS6ENT 0 TO ASCERTAIN T4E A6OUNT T4AT EAC4 TAXPA5ER IS TO PA5 AN ASSESS6ENT IS A NOTICE TO T4E E88ECT T4AT T4E A6OUNT T4EREIN STATE7 IS 7UE AS TAX AN7 A 7E6AN7 8OR PA56ENT T4EREO89 ASSESS6ENTS 6A7E BE5N7 T4E PRESCRIBE7 PERIO7 OUL7 NOT BE BIN7ING ON TAXPA5ER UNLESS REBUTTE7 0 ALL PRESU6PTIONS GENERALL5 ARE IN7ULGE7 IN 8AVOR O8 CORRECTNESS O8 ASSESS6ENT B5 T4E CO66ISSIONER O8 INTERNAL REVENUE AGAINST TAXPA5ER
NOTE 0 19 !here the taxpa"er-a+re$$ee *ake$ a +re#t +ena) o, re#ept o, *a)e+ e*an+ )etter' $#h +ena) $h,t$ the b(r+en to the &o%ern*ent to pro%e that $(#h )etter !a$ n+ee+ re#e%e+ b" the taxpa"er9 :9 The part" ,a%ore+ b" pre$(*pton o, re#ept o, +e*an+ )etter $ the &o%ern*ent R()e 1;1 Se#ton ; ROC 0 -
RELEASE OF ASSESSMENT NOTICE OR DEMAND BEFORE THE LAPSE OF PRESCRIPTIVE PERIOD COURT ) a$ )on& a$ the re)ea$e thereo, $ eHe#te+ be,ore pre$#rpton $et$ n' the a$$e$$*ent $ +ee*e+ *a+e on t*e e%en tho(&h the $a*e $ a#t(a))" re#e%e+ b" taxpa"er a,ter expraton o, pre$#rpt%e pero+
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$o that , $(#h pre$(*e+ re#ept $ $t)) !thn the pre$#rpt%e pero+' the taxpa"er3$ #ontenton that the Go%ern*ent3$ r&ht to a$$e$$ the tax ha$ a)rea+" pre$#rbe+ #annot be &%en #re+t
There $ +$p(tab)e pre$(*pton that a )etter +()" +re#te+ an+ *a)e+ !a$ re#e%e+ n re&()ar #o(r$e o, *a) The #orre#t a++re$$ o, taxpa"er $ n+#ate+ n +e*an+ )etter or not#e o, a$$e$$*ent
I, the +ate on !h#h the a$$e$$*ent $ +(e to pre$#rbe ,a))$ on a Sat(r+a"' the ,o))o!n& +a" ben& S(n+a"' t $ (n+er$too+ that the Go%ern*ent ha$ (nt) the next $(##ee+n& b($ne$$ +a" or 6on+a" !thn !h#h to a$$e$$ the tax
)a! +oe$ not re(re that the +e*an+ or not#e be re#e%e+ !thn pre$#rpt%e pero+
hen an a$$e$$*ent not#e $ $ent b" *a) ?or+nar" *a) exa*p)e@0 - RULE 0 t $ pre$(*e+ that the taxpa"er re#e%e+ *a)e+ not#e !thn the pero+ o, t*e !hen *a) o, $(#h kn+ ar r+nar) e#e%e+
IMPORTANT CONSIDERATIONS RE PRESCRIPTION OF GOVERNMENT8S RIGHT TO ASSESS TAXES
TAXATION SURVIVAL KIT – Aban Book A9 7ate o, 8)n& o, Tax Ret(rn$ – A 6atera) 8a#tor n Re$o)%n& (e$ton$ on Pre$#rpton a9 I*portant ,or p($rpo$e$ o, +eter*nn& !hether or not the tax !a$ a$$e$$e+ !thn the pre$#rpt%e pero+9 b9 COURT 0 !here t appear$ that the taxpa"er ha$ /)e+ t$ n#o*e tax ret(rn$ ,or 1< on 6ar D 11' !h)e the a$$e$$*ent !a$ *a+e on No% : 1= or three "ear$ an+ e&ht *onth$ a,ter the /)n& o, ret(rn ,or $a+ " ear' t ,o))o!$ that +e/#en#" a$$e$$*ent *a+e b" #o**$$oner !a$ VALI7 #9 COURT 0 t $ n#(*bent on the taxpa"er to pro%e that a ret(rn ha+ been /)e+ b" h* n or+er that "ear pre$#rpt%e pero+ *a" app)" OT4ERISE ' there $ a ba$$ ,or BIR to a$$e$$ the tax !thn the ten "ear pero+ on &ro(n+ that NO RETURN AS 8ILE7 B5 TAXPA5ER ARE TRANSCRIPT S4EETS OR CO6PAN5 RECOR7S S4OING T4E RA 6ATERIALS ENTERING T4E TAXPA5ER3S 8ACTOR5 OR 7ISTILLER5 AN7 T4E 8INIS4E7 GOO7S PRO7UCE7 AN7 RE6OVE7 T4ERE8RO6 EVER57A5 7EE6E7 TAX RETURNS 8OR PURPOSES O8 PRESCRIPTVE PERIO7 8OR ASSESS6ENT COURT 0 the$e tran$#rpt $heet$ are not ret(rn$ - the" #annot be treate+ a$ ret(rn$ be#a($e the" +o not #ontan n,or*aton ne#e$$ar" an+ re(re+ to per*t the #o*p(taton an+ a$$e$$*ent o, taxe$ )ke $pe#/# tax B9 EHe#t o, 8)n& an A*en+e+ Ret(rn In #a$e the taxpa"er /)e$ an a*en+e+ ret(rn' $ho()+ the pre$#rpt%e pero+ be #o(nte+ ,ro* /)n& o, $(#h a*en+e+ ret(rn -
I6PORTANT UESTION BECAUSE I8 POINT O8
IS LIKEL5 TO PRESCRIBE OR 6IG4T 4AVE ALREA75 PRESCRIBE7 COURT0 , a$$e$$*ent $ #o(nte+ ,ro* /)n& o, or&na) ret(rn' th$ !o()+ per*t taxpa"er$ to e%a+e taxe$ b" $*p)" reportn& n ther or&na) ret(rn' hea%" )o$$e$ an+ a*en+n& the $a*e a,ter the )ap$e o, pre$#rpt%e pero+ !hen the Co**$$oner ha$ a)rea+" )o$t h$ a(thort" to a$$e$$ the tax COURT 0 ob.e#t%e o, Tax Co+e $ to *po$e taxe$' not to en#ha#e tax a%o+an#e to pre.(+#e Go%ern*ent Pre$#rpt%e pero+ ,or a$$e$$*ent $tart$ to r(n ,ro* /)n& o, or&na) ret(rn , the $a*e $ $(#ent)" #o*p)ete to enab)e the Co**$$oner to nte))&ent)" +eter*ne the porper a*o(nt o, tax to be a$$e$$e+ A*ene+e ret(rn$ !ere /)e+ )ater nether $tart$ a ne! the r(nnn& o, $tat(te o, )*taton$ nor exten+$ the pre$#rpt%e pero+ 8)n& o, an a*en+e+ ret(rn an+ #)a* ,or re,(n+ o, o%erpa"*ent +oe$ not #on$tt(te an" !a%er o, +e,en$e o, pre$#rpton C9 EHe#t o, 8)n& a ron& Ret(rn hat happen$ !hen the taxpa"er /)e$ a !ron& ret(rn I$ the BIR .($t/e+ n app)"n& the ten "ear pre$#rpt%e pero+ ,or #a$e$ !here no ret(rn $ /)e+ b" the taxpa"er' a$$(*n& that the n,or*aton e*bo+e+ n !ron& ret(rn #o()+ enab)e the BIR to a$$e$$ the tax #o()+ ha%e been a$#ertane+ ha+ the taxpa"er /)e+ a #orre#t ret(rn COURT0 $n#e no per#enta&e tax ret(rn !a$ a#t(a))" /)e+ b" the taxpa"er to reFe#t the $a)e$ o, t$ )o&$ to Japan' the ten "ear pre$#rpt%e pero+ ,or #a$e$ !here ret(rn$ are not /)e+ app)e$
>: -
e%en , an n#o*e tax ret(rn !h#h happen$ to be the !ron& ret(rn ha+ been /)e+ an+ e%en #on$+ern& that the n#o*e ,ro* $a+ $a)e$ !ere a)) reFe#te+ theren' $t))' th$ !o()+ not take the p)a#e o, #orre#t ret(rn !h#h ,or p(rpo$e$ o, tax n (e$ton $ho()+ a#t(a))" be the per#enta&e tax ret(rn
Per#enta&e tax on $a)e$ ha$ NO BEEN rep)a#e+ b" 1
4e +oe$ not /)e a ret(rn at a))' then an a$$e$$*ent *a" be *a+e at an" t*e !thn the ten "ear pre$#rpt%e pero+ E9 App)#ab)e Pre$#rpt%e Pero+ , Taxpa"er 8a)e$ to 8)e a retr(n I, no ret(rn $ /)e+ b" taxpa"er' the #o**$$oner *a" a$$e$$ the tax an"t*e !thn ten "ear$ a,ter +$#o%er" o, o*$$on
SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o% A##e##/e& a! Co--e&$o o% Ta'e#2 -
?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o, $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on
The +e#$on$ are (nan*o($ n ho)+n& that 0 !here taxpa"er ,a)e+ to /)e an" ret(rn' ten "ear pre$#rpt%e pero+ app)e$ Sn#e pre$#rpton o, Go%ern*ent3$ r&ht to a$$e$$ taxe$ $ an ar*at%e +e,en$e 0 t $ n#(*bent on taxpa"er to pro%e that tax ret(rn !ere a#t(a))" /)e+ $o that the bene/t o, three "ear pre$#rpt%e pero+ *a" be a%a)e+ o, S(ppo$e a #orporate taxpa"er /)e$ a ret(rn b(t t ,a)e+ to n#)(+e #ertan te*$ n t$ ret(rn an+ non n#)($on o, tho$e te*$ $ not +(e to an" !)),() o*$$on or ,ra(+' +oe$ th$ #r#(*$tan#e #on$tt(te a ,a)(re to /)e a ret(rn !th re$pe#t to the o*tte+ te*$ !thn the *eann& o, Se# ::: o, tax #o+e
TAXATION SURVIVAL KIT – Aban Book -
Co(rt 0 no o*$$on to /)e a tax ret(rn on part o, taxpa"er
$ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9
4o! abo(t the tran$#rpt $heet$ !h#h a taxpa"er $(b*tte+ to the *(n#pa) trea$(rer ,or $pe#/# tax p(rpo$e$' are the" #on$+ere+ ret(rn$ $o a$ to .($t," the app)#aton o, three "ear pre$#rpt%e pero+
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CTA 0 the$e tran$#rpt $heet$ +o not (a)," a$ ret(rn$ a$ ponte o(t ea)er - /)n& thereo, +o not' (a)," a$ re(trn$ - $a+ /)n& +oe$ not pre#)(+e a$$e$$*ent on ba$$ o, 1<"ear pero+ )*taton
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89 Pre$#rpt%e pero+ o, a$$e$$*ent !hen there $ ,ra(+ 19 8ra(+ n Genera) a9 NECESSIT5 o, proo, o, ,ra(+ 0 !hen there $ ,ra(+()ent /)n& o, tax ret(rn$' the ten "ear pero+ app)e$ n )e( o, three "ear pre$#rpt%e )*t b9 Pre$#rpt%e pero+ n th$ n$tan#e $ #o(nte+ ,ro* +$#o%er" o, ,ra(+' not ,ro* /)n& o, ,ra(+()ent ret(rn #9 NO PERIO7 ,or +$#o%er" o, ,ra(+ $ /xe+ n the )a!
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Cr#(*$tan#e$ that *ht ne&ate ,ra(+ an+ th($ pre#)(+e the app)#aton o, ten "ear pre$#rpt%e pero+ I9
II9
III9 SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o% A##e##/e& a! Co--e&$o o% Ta'e#2 -
IV9 ?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o, $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on0 Pro%+e+' That n a ,ra(+ a$$e$$*ent
8RAU7 6UST BE PROVE7 AS A 8ACT So that ten "ear pre$#rpt%e pero+ *a" app)" SC 0 8RAU7 IS A UESTION O8 8ACT AN7 CIRCU6STANCES COSNTITUTING 8RAU7 6UST BE ALLEGE7 AN7 PROVE7 IN COURT BELO 8n+n& o, tra) #o(rt a$ to t$ non ex$ten#e $ /na) an+ #annot be re%e!e+ (n)e$$ #)ear)" $ho!n to be erroneo($ 8RAU7 IS NEVER LIG4TL5 TO BE PRESU6E7 BECAUSE IT IS A SERIOUS C4ARGE
V9
!hen #o**$$oner ,a)$ to *p(te ,ra(+ n a$$e$$*ent not#e or +e*an+ ,or pa"*ent' or ,a)(re to a))e&e t n h$ an$!er to the taxpa"er3$ petton ,or re%e! !hen #a$e $ appea)e+ to CTA non ex$ten#e o, ,ra(+ $ ,(rther (n+er$#ore+ b" ,a#t the #o**$$oner ra$e+ the (e$ton o, ,ra(+ ONL5 8OR T4E 8IRST TI6E IN 4IS 6E6ORAN7U6 !h#h !a$ /)e+ !th CTA a,ter he ha+ re$te+ h$ #a$e #o**$$oner3$ ,a)(re to rpo%e ,ra(+ #an' be ,ata) to the a$$e$$*ent a$ !hen tax )ab)t" $ a$$e$$e+ be"on+ the ($(a) three "ear pre$#rpt%e pero+ Tax COURT 0 the ,a#t that the #o**$$oner ++ not n#)(+e the ,ra(+ pena)t" n h$ +e/#en#" a$$e$$*ent !h#h !a$ $$(e+ a,ter /)n& o, taxpa"er3$ ret(rn $ an n+#aton that the Co**$$oner h*$e), +oe$ not be)e%e hat there !a$ ,ra(+ here BIR appeare+ NOT TOO SURE a$ to the rea) a*o(nt o, taxpa"erM$ net n#o*e' a$ !here the BIR
>= VI9
VII9 VIII9 IX9 X9 XI9 XII9
XIII9 XIV9
There !a$ NO 8RAU7 I8 CO66ISSIONER 6EREL5 RELIE7 UPON AN ALLEGE7 SUBSTANTIAL UN7ER 7ECLARATION O8 INCO6E TAX RESULTING 8RO6 4IS ON CO6PUTATION O8 COST BASIS O8 LAN7S AN7 I6PROVE6ENTS SOL7 B5 TAXPA5ER TO GOVERN6ENT 6ere (n+er$tate*ent o, n#o*e n t$e), +oe$ not pro%e ,ra(+ 6ere (n+er$tate*ent o, &ro$$ earnn& +oe$ not t$e), pro%e ,ra(+ A))e&aton$ o, ,ra(+ !th ntenton to e%a+e the ,ran#h$e tax ha$ not been pro%e+ $at$,a#tor)" Re#or+$ $ho!e+ 0 ,ro* /r$t (arter o, 1D<' &ro$$ re#ept$ o, pettoner taxpa"er a$ a ,ran#h$e &rantee a*o(nte+ to 16 pe$o$ O(t o, $a+ a*o(nt' on)" 1Dk repre$ente+ the a))e&e+ (nre#or+e+ an+ (n+erreporte+ re#ept$ o, pettoner COURT00 a b& porton o, (n+ere#or+e+ re#ept$ o, 1Dk !a$ not reFe#te+ n book$ o, a##o(nt$ o, taxpa"er be#a($e t repre$ente+ the #o$t o, e)e#tr# #(rrent ($e+ ,ree o, #har&e b" t$ o#er$ an+ e*p)o"ee$ COURT0 t #annot #har&e+ that pettoner nten+e+ to +e,ra(+ the &o%ern*ent o, ,ran#h$e tax GRAU7 BEING ABSENT I N T4IS CASE' RIG4T O8 GOVERN6ENT TO ASSESS T4E 8RANC4ISE TAX 4A7 ALREA75 PRESCRIBE7
:9 )) Un+er+e#)araton o, propert" ne#e$$ar)" #on$tt(te ,ra(+ a9 8RAU7 n or+er to .($t," a a$$e$$*ent ba$e+ on ten "ear pre$#rpt%e pero+' *($t be the pro+(#t o, a +e)berate ntent to e%a$+e taxe$ b9 6ere (n+er+e)#araton n tax ret(rn$ o, propert" $(b.e#t to e$tate tax !)) not ne#e$$ar)" *p)" ,ra(+
#9 Ja)an+on #a$e 0 there !a$ an a))e&aton on part o, BIR to eHe#t a*on& other$' there !a$ an o*$$on o, )ot$ o, +e#e+ent ,ro* e$tate tax ret(rn /)e+ +9 COURT 0 $e%en )to$ !h#h !ere a))e&e+)" ex#)(+e+' three !ere a#t(a))" n#)(+e+ !th part#()art" n that the" !ere the *o$t %a)(ab)e to !th 0 Lot =; !th *arket %a)(e o, :1k e9 Ben& #on.(&a)' one ha), thereo, $ho()+ be +e+(#te+ th($ )ea%n& a re)at%e)" $*a)) ba)an#e o, 19k ,9 COURT L I8 E A77 T4REE LOTS !ere a)rea+" +e#)are+ b" .a)an+on a$ part o, h$ propert" an+ h$ !,e ,or pr(po$e$ o, n#o*e tax' there $ rea$on to be)e%e that ther o*$$on ,ro* e$tate an+ nhertan#e tax ret(rn $ +(e to an hone$t *$take or na+%erten#e &9 On)" e$tate taxe$ are #o))e#te+ on 6ORTIS CAUSE tran$,er$ (n+er pre$ent )a! a$ nhertan#e tax ha$ a)rea+" been abo)$he+ CIR %$ Goo+r#h - SC +$re&ar+e+ pettoner3$ #)a* o, ,a)$t" n an atte*pt to take the (e$tone+ a$$e$$*ent o(t o, a*bt o, $tat(te o, )*taton$ - Ca$e 0 PR propert" !a$ $o)+ ,or a pr#e )e$$ than t$ +e#)are+ ,ar *arket %a)(e an+ ,o(n+ that $(#h ,a#t a)one ++ not #on$tt(te a ,a)$e ret(rn !h#h #ontan$ !ron& n,or*aton +(e to *$take' #are)e$$ne$$ or &noran#e - COURT 0 t $ po$$b)e that rea) propert" *a" be $o)+ ,or )e$$ than a+e(ate #on$+eraton ,or a bona /+e b($ne$$ p(rpo$e n $(#h e%ent' the $a)e re*an$ an ar*$ )en&th tran$a#ton
TAXATION SURVIVAL KIT – Aban Book a9 I, there are #r#(*$tan#e$ that neate ,ra(+' $t(aton$ a)$o ex$t !here the e%+en#e o, ,ra(+ $ *an,e$t b9 Un+er+e#)araton o, n#o*e !th e%+en#e o, ,ra(+()ent ntent $ one n$tan#e o, ,ra(+ #9 CASE0 n#o*e !h#h !a$ reporte+ b" taxpa"er n h$ ret(rn !a$ the n#o*e ,ro* rent$ +9 Sb$tanta) n#o*e +er%e+ ,ro* other $o(r#e$ !ere not n#)(+e+ e9 COUR0 $*p)e $tate*ent that the ret(rn$ !ere not ,ra(+()ent $ not $(#ent to o%erthro! the /n+n&$ o, #o**$$oner a$ to the rea$on ,or o*$$on ,9 Tax *a" be a$$e$$e+ !thn ten "ear$ ,ro* +$#o%er" o, ,ra(+ Co**$$oner3$ +eter*naton ba$e+ on #r#(*$tan#e$ o, the #a$e that ,ra(+ $ pre$ent $tan+$ , no e%+en#e $ pre$ente+ b" taxpa"er to $ho! that the ret(rn /)e+ b" h* !a$ not ,ra(+()ent SC 0 #o**$$oner3$ /n+n&$ o, ra(+ bro(&ht abo(t b" the pre$en#e o, /#tto($ expen$e$' !h#h !ere #)a*e+ b" taxpa"er a$ +e+(#ton$ ,ro* &ro$$ n#o*e -
Co**$$oner3$ /n+n&$ on ,a#t$ #on$tt(tn& ,ra(+ !h#h !ere pro%e+ n an+ ,o(n+ e$tab)$he+ b" CTA !a$ not reb(tte+ b" taxpa"er SC 0 /n+n& o, ,a)$t" or ,ra(+ n taxpa"er3$ ret(rn $ho()+ not be +$t(rbe+
=9 EHe#t o, 8ra(+ A$$e$$*ent$ !h#h are /na) an+ exe#(tor Se#ton ::: n a ,ra(+ a$$e$$*ent !h#h ha$ be#o*e /na) an+ exe#(tor"' the ,a#t o, ,ra(+ $ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9
the nee+ ,or proo, there,or' tho$e ,ra(+ a$$e$$*ent$ !h#h ha%e be#o*e /na) an+ exe#(tor (n+er the )a!
Se#ton ::> 0 a$$e$$*ent$ be#o*e /na) , taxpa"er +oe$ not /)e an a+*n$trat%e prote$t a&an$t an a$$e$$*ent !thn ;< +a"$ ,ro* re#ept thereo, -
!hen an a+%er$e +e#$on o, Co**$$oner on an a+*n$trat%e prote$t $ NOT appea)e+ to Co(rt o, tax appea)$ !thn ;< +a"$ ,ro* re#ept thereo,' or ,ro* )ap$e o, 1>< +a"$ ,ro* $(b*$$on o, re)e%ant $(pportn& +o#$ !tho(t $a+ prote$t ben& a#te+ (pon' +e#$on $ha)) be#o*e /na)' exe#(tor an+ +e*an+ab)e
here' ho!e%er' the #a($e o, a#ton n #r*na) #a$e $ !)),() atte*pt n an" *anner to e%a+e or +e,eat an" tax )e%e+ (n+er $a+ #o+e' $ proo, o, ,ra(+ a)$o not ne#e$$ar" -
proo, o, ,ra(+ #annot be +$pen$e+ !th9 A po$$b)e $t(aton $ !hen a per$on' ,or n$tan#e !th #)ear ntent to +e,ra(+ the &o%ern*ent o, re%en(e$' $(b*t$ a ,a)$e an+ ,ra(+()ent n#o*e tax ret(rn
INTENTION O8 T4E LA 0 to )*t app)#ab)t" o, r()e on)" to #a$e$ n%o)%n& non pa"*ent #an be #)ear)" $een n the phra$e T4E 8ACT O8 8RAU7 S4ALL BE JU7ICIALL5 TAKEN COGNIANCE O8 IN CIVIL OR CRI6INAL ACTION 8OR COLLECTION T4EREO8
9 Are the Tax Ret(rn$ that are 8a)$e b(t Not 8ra(+()ent
>D -
A2nar +e+ on 6ar" 1' 1>9 4 n#o*e tax ret(rn$ ,ro* 1= – 11 !ere exa*ne+ b" BIR 7o(btn& tr(th o, n#o*e that he ha+ reporte+' #o**$$oner or+ere+ n%e$t&aton o, #a$e on ba$$ o, NET ORT4 6ET4O7 S(b$tanta) (n+er +e#)araton$ o, n#o*e !ere +$#o%ere+ No% :> 1:BIR not/e+ A2nar o, tax +e)n(en#" o, :;k pe$o$ !h#h !a$ )ater re+(#e+ to ;>
-
the pero+ o, ten "ear$ pro%+e+ ,or n the )a! ,ro* +$#o%er" o, ,a)$t"' ,ra(+ or o*$$on e%en $een$ to be na+e(ate an+ $ho)+ be the one en,or#e+
COURT 0 NO 8RAU7 -
-
no +$tn#ton ha$ been *a+e bet!een ,a)$e ret(rn$?+(e to *$take$ ' #are)e$$ne$$ $or &noran#e@ an+ ,ra(+)ent ret(rn$ ?!th ntent to e%a+e taxe$@ LC ba$e+ t$ #on#)($on on pet3$ a))e&e+ ,ra(+()ent ntent to e%a+e taxe$ on $(b$tanta) +Heren#e bet!een a*o(nt$ o, net n#o*e on ,a#e o, ret(rn$ a$ /)e+ b" h* ,or "ear 1=D-11 LC ba$e+ t$ #on#)($on on a pre$(*pton that ,ra(+ #an be +e+(#e+ ,ro* $(b$tanta) +$part" , n#o*e a$ reporte+ an+ +eter*ne+ b" n%entor" *etho+ an+ on $*)art"o, #on$e#(t%e +$parte$ xxxx
ISSUES IN T4E CASE 0 D9 Are there *pre$#rptb)e a$$e$$*ent$ -
-
n r&ht o, #o**$$oner to a$$e$$ a2nar3$ +e/#en#" n#o*e taxe$ ,or 1=D – 1= an+ 1=> ha+ a)rea+" been pre$#rbe+ at t*e o, a$$e$$*ent !a$ *a+e on o% :> 1: !n < $(r#har&e ,or ,ra(+ #an be *po$e+
-
COURT 0 app)e+ 1< "ear pre$#rpt%e pero+ an+ r()e$ that pre$#rpton ha+ not $et n9 -
a2nar3$ retr(rn$ !ere ,a)$e be#a($e the (n+er +e#)araton o, n#o*e #on$tt(te+ a +e%aton ,ro* tr(th or+nar" pre$#rpt%e pero+ o, "ear$ no! three "ear$ !o()+ app)" (n+er nor*a) #r#(*$tn#e$' b(t !hene%er the &o%ern*ent $ p)a#e+ at a +$a+%anta&e $o a$ to pre%ent t$ )a!,() a&ent ,ro* *akn& a proper a$$e$$*ent o, tax )ab)te$ +(e to ,a)$e or ,ra(+()ent
-
here n a &%en $t(aton ?$(#h a$ the a$$e$$*ent o, :Q $(rtax on *proper)" a##(*()ate+ $(rp)($ o, #orporaton (n+er Se# : o, tax #o+e be,ore t$ e)*naton n 1>D b" eo ;@ The )a! 7OES NOT PROVI7E 8OR AN5 PARTICULAR PRESCRIPTIVE PERIO7 O8 ASSESS6ENT T4R RULE IS T4AT T4E TAX SOUG4T TO BE ASSESSSE7 BECO6ES I6PRESCRIPTIBLE
Se#ton : Tax Co+e -
*po$e+ :Q $(rtax or a++tona) tax on #orporaton !a$ $t)) n ,or#e the r()e0 $(rtax !a$ not $(b.e#t to an" pre$#rpt%e pero+ RULES 0 no +e/nte pro% on pre$#rpton o, a$$e$$*ent
TAXATION SURVIVAL KIT – Aban Book PRESCRIPTION OF GOVERNMENT RIGHT TO COLLECT TAXES 42 La! &o%ernn& Pre$#rpton o, Co))e#ton SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o% A##e##/e& a! Co--e&$o o% Ta'e#2 –
– 1: *onth$ (n+er Stat(te o, #)a*$ or $ho()+ t be the three "ear pre$#rpt%e pero+ ,or a$$e$e*ent (n+er :<; tax #o+e SC0 Vera %$ 8ernan+e2 #a$e -
#@ An" nterna) re%en(e tax !h#h ha$ been a$$e$$e+ !thn the pero+ o, )*taton a$ pre$#rbe+ n para&raph ?a@ hereo, *a" be #o))e#te+ b" +$trant or )e%" or b" a pro#ee+n& n #o(rt !thn /%e ?@ "ear$ ,o))o!n& the a$$e$$*ent o, the tax9
-
SC 0 n #o))e#ton o, +e/#en#" ,ran#h$e taxe$' the pro%$on$ o, Tax Co+e' an+ not tho$e o, CC $ho()+ app)"
NOTE 0 ,ran#h$e tax' a)tho(&h or&na))" #o))e#te+ b" *(n#pa) &o%ern*ente$ )ke Ct" o, Ceb(' the #o))e#ton o, $(#h tax ha$ a)rea+" been tran$,erre+ to BIR -
here the Go%ern*ent3$ a#ton $ on a bon+ !h#h the ta2pa"er exe#(te$ n or+er to $e#(re the pa"*ent o, h$ tax ob)&aton' the app)#ab)e pre$#rpt%e pero+ $ NO LONGER T4REE 5EARS BUT TEN 5EARS UN7ER ARITCLE 11=1 o, CC
hen &o%ern*ent pro#ee+$ b" #o(rt a#ton to ,or,et a bon+' the a#ton $ ,or en,or#e*ent o, a #ontra#t(a) ob)&aton' the pre$#rpt%e pero+ ,or !h#h $ ten "ear$ th re,eren#e to the #)a* o, #o**$$oner a&an$t the +e#e+ent3$ e$tate ,or (npa+ taxe$ o, +e#+ent' !h#h pero+
-
pre$#rpt%e pero+ ,or /)n& #)a*$ a&an$t e$tate (n+er a,or#te+ pro%$ o, ROC +oe$ not app)" a per($a) o, the ROC $ho!$ that t *ake$ no *enton o, #)a*$ ,or *oentar" ob)&aton ,o +e#e+ent #reate+ b" )a! $(#h taxe$' !h#h $ entre)" o, a +Herent #hara#ter ,ro* the #)a*$ expre$$)" en(*erate+ n R()e$ o, Co(rt app)"n& r()e o, $tat(tor" #on$tr(#ton o, expre$$on (non e$t ex#)($on a)ter($ PINE7A CASE 0 propert" o, e$tate a)rea+" n han+$ o, an her *a" be $(b.e#t to pa"*ent o, tax +(e ,ro* e$tate A ,ortor ' be,ore nhertan#e ha$ pa$$e+ to the her$' the (npa+ taxe$ +(e ,ro* the +e#+ent3$ e$tate *a" be #o))e#te+ e%en !tho(t pre$ent*ent (n+er ROC
hen +oe$ the "ear pre$#rpt%e pero+ ,or #o))e#ton $tart to r(n -
,ro* the a$$e$$*ent o, tax
hen $ a part#()ar tax #on$+ere+ to ha%e been a$$e$$e+ -
at the t*e the )etter o, +e*an+ or a$$e$$*ent noet# ha$ been $ent' re)ea$e+ or *a)e+ to taxpa"er CASE0 /)e+ ,or #o))e#ton o, a tax )ab)t" !h#h !a$ #o%ere+ b" a r(bber #he#k' SC0 the r&ht to #o))e#t tax be&n$ a,ter the +e*an+ ha$ been $ent to taxpa"er A#t(a) $en+n& or re)ea$e tot axpa"er o, a$$e$$*ent not#e or +e*an+ )etter $ ne#e$$ar" n or+er to +eter*ne the a#t(a) +ate !hen tax ben& #o))e#te+ !a$ a$$e$$e+
>> GOVERN6ENT 8AILE7 TO PROVE T4AT ASSESS6ENT NOTEICE COVERING TAX LIABILIT5 ASSESSE7 AS ELL AS T4E OT4ER SUPPOSE7L5 RITTEN 7E6AN7 LETTERS SUBSEUENT T4ERETO ERE IN 8ACT ISSUE7 OR SENT TO TAXPA5ER' T4ERE AS 0 -
no %a)+ an+ eHe#t%e $$(an#e or re)ea$e o, $a+ a$$e$$*ent not#e an+ other +e*an+ )etter$ or not#e$ $(b$e(ent threto the +ate$ on !h#h the a$$e$$*ent not#e an+ $(b$e(ent +e*an+ )etter$ !ere $(ppo$e+)" $ent or re)ea$e+ to taxpa"er #annot be re#knone+ !th n #o*p(tn& the pero+ o, pre$#rpton !thn !h#h a #o(rt a#ton to #o))e#t the tax )ab)t" *a" be bro(&ht
hen tax $ +ee*e+ #o))e#te+ ,or p(rpo$e$ o, pre$#rpt%e pero+ -
#o))e#ton thr( $(**ar" re*e+e$ $ eHe#t(ate+ b" $(**ar" *etho+$ !hen the Go%ern*ent a%a)$ o, a +$trant an+ )e%" pro#e+(re pre$#rbe+ n Tax #o+e
, #o))e#ton $ to be eHe#te+ thr( .(+#a) re*e+e$' the #o))e#ton o, ta2 $ be&(* b" /)n& the o#*p)ant !th proper #o(rt
I, +e#$on o, #o**$$oner on a prote$te+ a$$e$$*ent $ appea)e+ to CTA' #o))e#ton o, tax $ #on$+ere+ be&(n !hen &o%ern*ent /)e$ t$ an$!er to taxpa"er3$ petton ,or re%e! 6a" there be a .(+#a) a#ton to #o))e#t a tax )ab)t" e%en , there $ NO PREVIOUS ASSESS6ENT
-
po$$b)e to #o))e#t tax )ab)t" n #o(rt !tho(t an" pre%o($ a$$e$$*ent SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o% A##e##/e& a! Co--e&$o o% Ta'e#2 -
?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o, $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on0 Pro%+e+' That n a ,ra(+ a$$e$$*ent !h#h ha$ be#o*e /na) an+ exe#(tor"' the ,a#t o, ,ra(+ $ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9 Ana)"2n& the abo%e pro%$on' there are TO POSSIBILITIES that #o()+ ar$e n part#()ar )e&a) $t(aton$0 19 taxpa"er /)e$ a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e taxe$ :9 taxpa"er +oe$ not /)e an" ret(rn a a))
A9 taxpa"er /)e$ a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e taxe$ 19 S(ppo$e taxpa"aer /)e$ a ,a)$e or ,ra(+)ent ret(rn an+ &o%ern*ent' a,ter +$#o%ern& the ,a)$t" or ,ra(+' +oe$ not a$$e$$ tax' #an t then pro#ee+ to #o))e#t tax )ab)t" b" #o(rt a#ton a9 5ES b9 Rep(b)# %$ Patanao #9 A))o!n& .(+#a) #o))e#ton o, a tax !tho(t an" pre%o($ a$$e$$*ent $ho()+ app)" +9 It appearn& that ,ra(+ n /)n& o, taxpa"er$11 n#o*e tax ret(rn !a$
TAXATION SURVIVAL KIT – Aban Book e9 Taxpa"er3$ )ab)t" !a$ a$$e$$e+ on 8eb 1=' 1> or be"on+ the "ear pre$#rpt%e pero+ /xe+ b" )a! ,9 TEN 5EAR PRESCRIPTIVE PERIO7 8OR COLLECTION T4ROUG4 COURT ACTION 7OES NOT APL5 I8 IT APPEARS T4AT T4ERE AS AN ASSESS6ENT &9 T4E ORI7NAR5 5EAR PERIO7 NO ; 5EAR PERIO7 OUL7 STILL APPL5 :9 Taxpa"er +oe$ not /)e an" ret(rn at a)) a9 Ja A)a Corporaton b9 In %e! o, $(#h ,a)(re to /)e a !thho)+n& tax ret(rn on part o, !thho)+n& a&ent' the &o%ern*ent ha+ r&ht to #o))e#t the !thho)+n& tax !thn ten "ear$ #o(te+ ,ro* +$#o%er" o, o*$$on to /)e the re($te ret(rn #9 )) th$ pro#e+(re not be n #onF#t !th Se# ::>' 1 NIRC ' !h#h enab)e$ the taxpa"er to +$(te a tax a$$e$$*ent be,ore #o))e#ton re*e+e$ are re$orte+ to +9 A))o!$ taxpa"er to a+*n$trat%e)" prote$t the a$$e$$*ent e9 I$$(an#e o, an a$$e$$*ent not#e $ee*$ to be *an+ator" (n+er the ex$tn& pro#e+(re on tax prote$t Pre$#rpton o, Go%ern*ent3$ r&ht to re#o%er an erroneo($)" re,(n+e+ tax -
three "ear pre$#rpt%e pero+ ,or *akn& a$$e$$*ent$ (n+er Se#ton :<; SC0 #a$e n%o)%e+ re#o%er" o, erroneo($)" re,(n+e+ ,ran#h$e tax' pre$#rpt%e pero+ ,or tax a$$e$$*ent$ $ho()+ app)" be#a($e the +e*an+ o, &o%ern*ent on taxpa"er to ap" erroneo($)" re,(n+e+ tax $ n eHe#t an a$$e$$*ent ,or +e/#en#" ,ran#h$e tax
a%er o, $tat(te o, )*taton$ – Exten$on o, pre$#rpt%e pro+ -
ne#e$$ar" that !a%er be exe#(te+ b" the parte$ be,ore the )ap$e o, "ear pre$#rpt%e pero+ !a%er $ neHe#t%e , t $ exe#(te+ be"on+ the or&na) three "ear no! "ear pero+ the )a! +oe$ not a(thor2e the exten$on o, pre$#rpt%e pero+ one pre$#rpton ha$ $et n
here taxpa"er3$ !a%er !a$ not .($t an exten$on o, pre$#rpt%e pero+ b(t a ren(n#aton o, her r&ht to n%oke +e,en$e o, pre$#rpton !h#h !a$ then a%a)ab)e to her' the !a%er *a+e be"on+ $(#h pre$#rpt%e pero+ – BIN7ING ON TAXPA5ER -
notn& (n)a!,() or **ora) abo(t th$ kn+ o, !a%er r&ht to a%a) o, +e,en$e o, pre$#rpton $ !a%ab)e
CIR %$ CA -
SC r()e+ a&an$t %a)+t" an+ bn+n& eHe#t o, !a%er$ $&ne+ b" pro%ate re$pon+ent #arnaton Ph)ppne$ h#h !ere not $&ne+ b" BIR #o**$$oner or an" o, h$ a&ent$ a%er n (e$ton$ re%ea) that the" are IN NO ISE UNEUIVOCAL NECESSITATE 8OR ITS BIN7ING E88ECT T4E CONCURRENCE O8 CIR
Tax !a%er$ are $(ppo$e+ to exten+' NOT RE7UCE the pre$#rpt%e pero+$ pro%+e+ b" )a! Co**$$oner #annot %a)+)" a&ree to re+(#e the pre$#rpt%e pero+ to )e$$ than that &rante+ b" )a! to the +etr*ent o,
< =9 hen the !arrant o, +$trant or )e%" $ +()" $er%e+ (pon the taxpa"er' h$ a(thor2e+ repre$entat%e' or a *e*ber o, h$ ho($eho)+ !th $(#ent +$#reton' an+ no propert" #o()+ be )o#ate+M an+ 9 hen the taxpa"er $ o(t o, the Ph)ppne$9
E9UITABLE RECOUPMENT AND PRESCRIPTION
In the e%ent that #o))e#ton o, tax ha$ a)rea+" )ap$e+ +(e to pre$#rpton' an the Go%ern*ent n%oke prn#p)e o, e(tab)e re#o(p*ent b" $ettn& oH the pre$#rbe+ tax a&an$t a tax re,(n+ to !h#h taxpa"er *a" be entt)e+ -
NOT TO ALLO T4E SET OO7 8or , that !ere $o' th$ !o()+ ONL5 ENCOURAGE NEGLIGENCE ON PART O8 OUR COLLECTING O88ICERS ho !o()+ ,ee) $e#(re +e$pte pre$#rpton n tho(&h that the" #o()+ a)!a"$ #o))e#t pre$#rbe+ tax Thro(&h the expe+ent o, $et oH
INTERRUPTION OF THE PRESCRIPTIVE PERIOD
The r(nnn& o, the Stat(te o, L*taton$ pro%+e+ n Se#9 :<; an+ ::: on the *akn& o, a$$e$$*ent an+ the be&nnn& o, +$trant or )e%" or a pro#ee+n& n #o(rt ,or #o))e#ton' n re$pe#t o, an" +e/#en#"' $ha)) be $($pen+e+ (n+er an" o, the ,o))o!n& #r#(*$tan#e$0 19 hen the ,ro* *akn& the a$$e$$*ent or be&nnn& the +$trant' )e%"' or pro#ee+n& n #o(rt an+ ,or $xt" +a"$ therea,terM :9 hen the taxpa"er re(e$t$ ,or a ren%e$t&aton !h#h $ &rante+ b" the Co**$$onerM ;9 hen the taxpa"er #annot be )o#ate+ n the a++re$$ &%en b" h* n the ret(rn /)e+ (pon !h#h tax $ ben& a$$e$$e+ or #o))e#te+' (n)e$$ the taxpa"er ha$ n,or*e+ the Co**$$oner o,
Whe &he Co//$##$oer $# +roh$"$&e! %ro/ a##e##$3 or o--e&$3 &he &a' 1 $ *ha& +o##$"-e $#&ae# /ay &here "e a +roh$"$&$o o Co//$##$oer &o a##e## or o--e& &he &a'(
SC 0 /)n& o, a petton ,or re%e! n CTA ,ro* +e#$on o, Co**$$oner on a prote$te+ a$$e$$*ent nterr(pt$ r(nnn& o, pre$#rpt%e pero+ ,or #o))e#ton Interr(pton $ ,ro* the t*e the appea) $ /)e+ n CTA (nt) t$ ter*naton n SC $ho()+ there be $(b$e(ent)" be an appea) to a h&her #o(rt REASON 0 !hen a #a$e $ on appea) to CTA' the #o**$$oner $ pre%ente+ ,ro* /)n& an or+nar" a#ton to #o))e#t tax n re&()ar #o(rt$ I, th$ !ere not $o' #o))e#ton n re&()ar #o(rt$ !o()+ r(n #o(nter to the .(+#a) po)#" o, a%o+n& *()tp)#t" o, $(t$ an+ ther()e o, )$ pen+en$
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.(+#a) #o))e#ton !a$ bro(&h n #o(rt a,ter "ear$ ,ro* a$$e$$*ent' !h)e appea) n CTA an+ e%ent(a))"
TAXATION SURVIVAL KIT – Aban Book !h#h #o**$$oner !a$ prohbte+ ,ro* #o))e#tn& the tax b" .(+#a) a#ton (pon proo, that t$ #o))e#ton +(rn& the pen+en#" o, appea) *a" .eopar+2e the ntere$t o, &o%ern*ent an+ or the taxpa"er9 S($pen$on o, #o))e#ton *a" be &rante+ b" CTA (pon th$ &ro(n+ b(t taxpa"er *($t ether +epo$t the a*o(nt o, taxe$ a$$e$$e+ or /)e a bon+ a*o(ntn& to not *ore than t!#e the %a)(e o, tax ben& a$$e$$e+9 No appea) taken to the CTA ,ro* the +e#$on o, CIR $ha)) $($pen+ the pa"*ent' )e%"' +$trant an+or $a)e o, an" propert" o, taxpa"er ,or the $at$,a#ton o, h$ tax )ab)t" a$ pro%+e+ b" ex$tn& )a! a)tho(&h' a$ a)rea+" *entone+ ' #o))e#ton *a" be $($pen+e+ ,or the rea$on$ a)rea+" $tate+ abo%e
S(ppo$e a #r*na) #a$e $ /)e+ a&an$t a taxpa"er9 The oHen$e #har&e+ #on$$t$ o, /)n& a ,a)$e or ,ra(+)ent ret(rn n %)aton o, $e#ton := o, tax #o+e !h#h $ pena)2e+ (n+er tt)e X thereo,9 ILL PEN7ENC5 O8 CRI6INAL CASE SUSPEN7 T4E RUNNING O8 PRESCRIPTIVE PERIO7 8OR COLLECTION O8 TAX LIABILIT5 4IC4 4AS BEEN ASSESSE7 -
NO CASE 0 Repb)# %$ Ret Ret /)e+ t!o ,a)$e an+ ,ra(+()ent ret(rn$ ,or 1=> an+ 1= ,o !h#h he !a$ a$$e$$e+ b" BIR the $(*$ o, ;=) an+ D>k n#)(+n&
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a,ter #on%#ton' &o%ern*ent /)e+ a #o*p)ant ,or #o))e#ton o, ret3$ n#o*e taxe$ b(t LC +$*$$e+ the #a$e on &ro(n+ that &o%t3$ r&ht to #o))e#t b" .(+#a) a#ton ha+ pre$#rbe+ a$ *ore than here "ear$ ha+ e)ap$e+ Go%t 000 pre$#rpton ++ not take p)a#e be#a($e the pre$#rpt%e pero+ ,or #o))e#ton !a$ $($pen+e+ !hen t!o n,or*aton$ !ere /)e+ an+ be&an to r(n a&an ,ro* re#ept o, #o(rt3$ +e#$on SC 0 PRESCRIPTIVE PERIO7 8OR CIVIL ACTION IS SUSPEN7E7 7URING PEN7ENC5 O8 CRI6INA ACTION ONL5 4EN CIVIL LIABILIT5 ARISES 8RO6 O88ENSE CO66ITTE7 4o!e%er' $(#h r()e$ +oe$ not app)" here be#a($e #r*na) a#ton$ ,or %o)aton are entre)" $eparate an+ +$tn#t #%) $(t COURT0 there $ nothn& n )a! !h#h !o()+ ha%e $tope+ the p)antH appe))ant ,ro* /)n& #%) $(t $*()taneo($)" !th or +(rn& pen+en#" #r*na) #a$e
hen taxpa"er re(e$t$ ,or ren%e$t&aton !h#h $ &rante+ b" Co**$$oner -
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!hen an a$$e$$*ent $ re%$e+ an+ $*a e$ $$(e+ be"on+ the $tat(tor" pero+ o, three "ear$ ,ro* +ate o, /)n& o, ret(rn or a,ter +(e +ate ,or /)n& !h#he%er $ )ater' tax $ $t)) #on$+ere+ %a)+)" a$$e$$e+ PROVI7E7 that the REVISION O8 ASSESS6ENT AS IN7UCE B5 TAXPA5ER3S POSITIVE ACTS a$ !here #o(n$e) t!#e a$ke+ the #o**$$oner ,or po$tpone*ent o, a #on,eren#e on )ab)t" n (e$ton$ a$ !e)) a$ h$ !rtten re(e$t that the a$$e$$*ent be #an#e))e+ or !th+ra!n ,or )a#k o, )e&a) ba$$
T4ERE ARE CASES 4EREI TAXPA5ER 6A5 BE PREVENTE7 8RO6 SETTING UP 7E8ENSE O8 PRESCRIPTION EEVEN I8 4E
: -
a$ !hen b" h$ repeate+ or po$t%e a#t' the Go%enr*ent ha$ been' ,or &oo+ rea$on$' per$(a+e+ to po$tpone #o))e#ton to *ake h* ,ee) that the +e*an+ !a$ not (nrea$onab)e or that no hara$$*ent or n.($t#e $ *eant b" Go%ern*ent
*ere re(e$t ,or ren%e$t&aton !tho(t an" #orre$pon+n& a#ton on part o, the #o**$$oner +oe$ not nterr(pt r(nnn& o, pre$#rpt%e pero+
SC 0 taxpa"er3$ re(e$t ,or ren%e$t&aton ++ not $($pen+ the r(nnn& o, pre$#rpt%e pero+ ,or .(+#a) #o))e#ton n a$ *(#h a$ there $ no e%+en#e that th$ re(e$t !a$ #on$+re+ or a#te+ (pon Co**$$oner e%en $$(e+ a !arrant o, +$trant an+ )e%" ,or #o))e#ton o, ,()) a*o(nt o, a$$e$$*ent b(t there !a$ no ,o))o! (p o, h$ !arrant
It $ the Appe))ate 7%$on n BIR that a#t$ on a+*n$trat%e prote$t$ /)e+ b" taxpa"er$ a&an$t tax a$$e$$*ent$ be,ore the Co**$$oner3$ +e#$on thereon $ appea)e+ to CTA )) a re(e$t b" the taxpa"er ,or a #op" o, +eta)e+ #o*p(taton b" BIR o, h$ tax )ab)t" +(rn& the pen+en#" o, the ren%e$t&aton o, h$ #a$e #on$tt(te another re(e$t ,or ren%e$t&aton an+ th($ ha%e the eHe#t o, nterr(ptn& the pre$#rpt%e pero+ ,or #o))e#ton -
SC 0 $(#h re(e$t *a" not be nterprete+ to a(thor2e or .($t," the #ontn(an#e or $($pen$on o, pero+ o, )*taton$
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4$ pre%o($ re(e$t ,or ren%e$t&aton a)rea+" ha+ the eHe#t o, $($pen+n& the pero+ o, )*taton on Go%ern*ent3$ r&ht to #o))e#t taxe$ that !ere a##e$$e+ a&an$t h*
- The pre$#rpt%e pero+ ,or #o))e#ton $ $($pen+e+ !hen the taxpa"er re(e$te+ ,or n,or*aton on the tte*$ o, +e+#ton$ !h#h ha+ been +$a))o!e+ b" BIR - n taxpa"er3$ re(e$t' no *enton !a$ e%er *a+e o, re%e! o, re#on$+eraton o, the a$$e$$*ent - there !a$ a re(e$t ,or n,or*aton' !h#h !a$ reterate+ b" the taxpa"er' ,o))o!e+ (p b" a thr+ re(e$t I !h#h the taxpa"er exp)ane+ the +$a))o!e+ te*$ an+ !heren he a)$o a$ke+ ,or ren%e$t&aton thereo, - the$e pero+ o, $($pen$on ,ro* /%e "ear no! three "ear$ ,or #o))e#ton' t ,o))o!$ that !hen the Go%ern*ent $o(&ht to #o))e#t the tax a$$e$$e+ !hen t /)e+ t$ an$!er to the taxpa"er3$ petton ,or re%e! n CTA' $a*e !a$ t*e)" pre$ente+ )) a re(e$t ,or re#on$+eraton !h#h +oe$ not ra$e ,a#t$ an+or $$(e$ +Herent ,ro* tho$e !h#h are #o*prehen+e+ n the or&na) n%e$t&aton #on$tt(te a &ro(n+ ,or $($pen$on o, a pre$#rpt%e pero+ Se#ton ::; o+ NIRC *enton$ that $($pen$on take$ p)a#e !hen the taxpa"er re(e$t$ ,or ren%e$t&aton !h#h $ &rante+ b" the Co**$$oner -
nterr(pton o, pre$#rpt%e pero+ ,or #o))e#ton take$ p)a#e !hen the taxpa"er re(e$t$ ,or the
TAXATION SURVIVAL KIT – Aban Book -
COURT 0 o T4E PRESCRIPTIVE PERIO7 PROVI7E7 B5 LA TO 6AKE A COLLECTION B5 7ISTRAINT AN7 LEV5 OR B5 A PROCEE7ING IN COURT IS INTERRUPTE7 ONCE A TAXPA5ER REUESTS 8OR REINVESTIGATION OR RECONSI7ERATION O8 ASSESS6ENT
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n a #%) #a$e /)e+ a&an$t the taxpa"er – +e,en+ant' $(**on$ !a$ not $er%e+ be#a($e the +e,en+ant #o()+ not be )o#ate+ the #a$e !a$ +$*$$e+ !tho(t pre.(+#e the r&ht o, &o%ern*ent to #o))e#t the tax ha+ not pre$#rbe+ be#a($e the pero+ +(rn& !h#h the appe))ant3$ !hereabo(t !ere (nkno!n $($pen+e+ the r(nnn& o, the pero+ o, )*taton
taxpa"er3$
a(thor2e+
Pa)an#a #a$e -
hen the taxpa"er #annot be )o#ate+ n the a++re$$ &%en b" h* n ret(rn -
Ser%#e o, !arrant on repre$entata%e $ $(#ent
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here !a$ eHe#t%e $er%#e o, !arrant !hen $a*e !a$ $er%e+ (pon Att" Sna.o$e' the )a!"er o, e$tate an+ her$ o, +e#e+ent' or the )a!"er3$ $e#retar" n #onne#ton !th the e$tate an+ nhertan#e taxe$ +(e ,ro* +e#e+ent3$ e$tate be#a($e a##or+n& to #o(rt' there $ nothn& n )a! that !o()+ pre%ent the $er%#e o, $a+ !arrant to be *a+e (pon the taxpa"er3$ a(thor2e+ repre$entat%e It $ a+*tte+ – Co(rt $a+ That att" $an.o$e !a$ +()" a(thor2e+ repre$entat%e o, e$tate an+ her$
hen a #%) #a$e ,or #o))e#ton o, tax $ /)e+ n #o(rt' the r(nnn& o, pre$#rpt%e pero+ $ )ke!$e nterr(pte+ Pre$#rpt%e pero+ (n+er Se#ton ;; NIRC !a$ to))e+ be#a($e the taxpa"er #annot be )o#ate+ at the a++re$$ &%en n the n,or*aton ret(rn /)ee+ an+ ,or !h#h rea$on there !a$ +e)a" n $en+n& the a$$e$$*ent In #a$e o, #han&e o, a++re$$ o, taxpa"er' $a+ per$on !)) be $($pen+e+ on)" , taxpa"er n,or*$ the Co**$$oner o, $a+ #han&e a++re$$
)) an extra.(+#a) pre$#rpton -
hen the !arrant o, +$trant an+ )e%" $ +()" $er%e+ -
a !arrant o, +$trant an+ )e%" !h#h $ *ere)" $$(e+ +oe$ not $($pen+ the r(nnn& o, pre$#rpt%e pero+ ,or #o))e#ton (n)e$$ $a+ !arrant $ +()" $er%e+ on taxpa"er or h$ a(thor2e+ repre$entat%e or a *e*ber
+e*an+
on
taxpa"er
nterr(pt
an extra.(+#a) +e*an+ nterr(pt$ the r(nnn& o, the pre$#rpt%e pero+ I8 IT IS RITTEN ?Art#)e 11 CC@@@ BUT T4IS RULE SIS NOT APPLICABLE TO T4E COLLECTION O8 TAXES REASON 0 nterr(pton o, pero+ o, )*taton n taxaton $ &o%erne+ b" $e#ton ::; tax #o+e' a $pe#a) )a! !h#h pre%a)$ o%er &enera) )a! )ke CC
= -
the taxpa"er3$ ab$en#e ,ro* Ph)ppne$ $ a)$o one o, the n$tan#e$ !hen the r(nnn& o, pre$#rpt%e pero+ o, a$$e$$*ent an+ #o))e#ton $ $($pen+e+
RULE OF PRESCRIPTION IN CRIMINAL CASES SEC2 6K42 Pre#r$+&$o %or V$o-a&$o# o% ay Pro0$#$o o% &h$# Co!e2 - A)) %o)aton$ o, an" pro%$on o, th$ Co+e $ha)) pre$#rbe a,ter 8%e ?@ "ear$9
Pre$#rpton $ha)) be&n to r(n ,ro* the +a" o, the #o**$$on o, the %o)aton o, the )a!' an+ , the $a*e be not kno!n at the t*e' ,ro* the +$#o%er" thereo, an+ the n$tt(ton o, .(+#a) pro#ee+n&$ ,or t$ n%e$t&aton an+ p(n$h*ent9 The pre$#rpton $ha)) be nterr(pte+ !hen pro#ee+n&$ are n$tt(te+ a&an$t the &()t" per$on$ an+ $ha)) be&n to r(n a&an , the pro#ee+n&$ are +$*$$e+ ,or rea$on$ not #on$tt(tn& .eopar+"9 The ter* o, pre$#rpton $ha)) not r(n !hen the oHen+er $ ab$ent ,ro* the Ph)ppne$9 NOTE ) )ap$e o, .($t one +a" a,ter the /%e "ear pre$#rpt%e pero+ ha+ expre+ !a$ eno(&h $tat(tor" ba$$ ,or ho)+n& that the #r*na) a#ton ha+ a)rea+" pre$#rbe+ WHEN DEFENSE OF PRESCRIPTION MAY BE RAISED EVEN ON APPEAL
-n #r* #a$e$ n%o)%n& tax %o)aton' the +e,en$e o, pre$#rpton #an be ra$e+ or n%oke+ b" a##($e+ e%en , #a$e ha+ a)rea+" been +e#+e+ b" the )o!er #o(rt b(t pen+n& +e#$on on appea)
- #%) a#ton ,or #o))e#ton o, taxe$ !here the +e,en$e o, pre$#rpton' , not ra$e+ n )o!er#or(t' $ barre+ per*anent)" - t $ .($t/e+ to ,a)) ba#k on the prn#p)e that $$(e$ or +e,en$e$ not ra$e+ n a+*n$trat%e pro#ee+n& an+or )o!r #o(rt #annot be ra$e+ ,or /r$t t*e on appea) PRESCRIPTIVE PERIOD IN CRIMINAL CASES 1 WHN DOES IT START TO RUN( Whe !oe# &he +re#r$+&$0e +er$o! %or r$/ a#e o//ee &o r.(
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the re#knonn& pont ,or p(rpo$e$ o, pre$#rpton !)) +epen+ on the nat(re o, tax a%o+an#e - a petton ,or re%e! on #ertorar !a$ /)e+ b" taxpa"er$ n SC $een& re%e$a) o, +e#$on o, CA +ate+ Septe*ber 1' 1 !h#h ar*e+ n toto the .(+&e*ent o, then C8I o, 6an)a' n ,o(r #r* #a$e$ n$tt(te+ to #o*pe) +e,en+ant$ to pa" +e/#en#e$9 Pettoner$ #onten+e+ that appe))ate #o(rt erre+ n ho)+n& that O88ENSES C4ARGE7 INC RI6 CASE an+ pre$#rbe+ n ten "ear$ n$tea+ o, "ear$' that pre$#rpt%e pero+ !th re$pe#t to ,a)(re or re,($a) to ap" n#o*e tax #o**en#e+ to r(n on)" - ISSUE 0 4A7 T4E CRI6INAL CASES ALREA75 PRESCRIBE7 4EN T4E5 ERE 8ILE7 IN TRIAL COURT - It *($t be *a+e #)ear that !hat !e are +ea)n& !th here are #r*na) pro$e#(ton$ ,or /)n& ,ra(+()ent n#o*e tax ret(rn$ an+ ,or re,($n& tp pa" +e/#en#" taxe$
TAXATION SURVIVAL KIT – Aban Book
Chapter > TAXPA5ER3S RE6E7IES
A76INISTRATIVE PROTESTS -
*portant re*e+" !h#h #an be a%a)e+ b" taxpa"er #o**on)" re,erre+ to n BIR a$ a PROTEST AGAINST ASSESS6ENT a re*e+" be,ore pa"*ent' !h)e a tax re,(n+ or tax #re+t $ a re*e+" o, taxpa"er a,ter he ha$ pa+ the tax
YSECTION ::>9 Prote$tn& o, A$$e$$*ent9 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that proper taxe$ $ho()+ be a$$e$$e+' he $ha)) /r$t not," the taxpa"er o, h$ /n+n&$0 Pro%+e+' ho!e%er' That a prea$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0 Y?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o, *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or Y?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or Y?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o, the $(##ee+n& taxab)e "earM or Y?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or Y?e@ hen an art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to non-exe*pt per$on$9 YThe taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 Ythn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 YS(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n& a re(e$t ,or re#on$+eraton or ren%e$t&aton !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the a$$e$$*ent n $(#h ,or* an+ *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+
D a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 YI, the prote$t $ +ene+ n !ho)e or n part' or $ not a#te+ (pon !thn one h(n+re+ e&ht" ?1><@ +a"$ ,ro* $(b*$$on o, +o#(*ent$' the taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, the one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9 Re%en(e Re&()aton No 1: – Septe*ber D 1
7e#$on$ ren+ere+ b" Re&ona) 7re#tor $ha)) be appea)ab)e to O#e o, Co**$$oner thro(&h the Appe))ate 7%$on o, B(rea(3$ Le&a) Ser%#e !thn ;< +a"$ ,ro* re#ept o, +e#$on9 OT4ERISE $a+ +e#$on $ha)) be#o*e /na)' exe#(tor' an+ +e*an+ab)e In /)n& a re(e$t ,or re#on$+eraton o, +e#$on ren+ere+ b" Re&ona) 7re#tor to the O#e o, Co**$$oner' the TAXPA5ER 6UST BE ABLE TO S4O T4AT 4IS REUEST 8OR RECONSI7ERATION RAISES NE ISSUES OR ARGU6ENTS OR NE 8ACTUAL SITUATIONS OT4ER T4AN T4OSE COVERE7 B5 4IS PREVIOUS PROTEST
SEE NOTES
hen prote$tn& an a$$e$$*ent' the taxpa"er *($t $ee to t that the prote$t $ ATTAC4E7 to or n#orporate+ !th the BIR3$ +o#ket o, the a$$e$$*ent
Note 0 h)e the re&ona) +re#tor *a" ren+er +e#$on$ on prote$t$ a&an$t a$$e$$*ent$' a taxpa"er a+%er$e)" aHe#te+ b" the +e#$on to the Co**$$oner' thro(&h Appe))ate 7%$on' !thn re&)e*entar" pero+ an+ t $ the /na) +e#$on o, Co**$$oner o, Interna) Re%en(e on prote$t that $ APPEALABLE TO CTA p(r$(ant to RA 11: Se#ton 9
The taxpa"er prote$tn& an a$$e$$*ent *a" /)e a !rtten re(e$t ,or re#on$+eraton or ren%e$t&aton !th the re%en(e re&ona) o#e ha%n& .(r$+#ton o%er the #a$e In #a$e o, re&ona) o#e #a$e$' or !th O#e o, the Co**$$oner' ,or re,erra) to an+ approprate a#ton b" +%$on o, BIR Natona) O#e #on#erne+ I, prote$t ra$e$ (e$ton$ o, ,a#t' the #a$e *a" be a$$&ne+ ,or ren%e$t&aton I, prote$t ra$e$ p(re (e$ton$ o, )a!' t !)) be en+or$e+ ,or $t(+" b" )e&a) +%$on o, Re%en(e Re&ona) O#e$ or b" Le&a) Ser%#e n BIR Natona) O#e
Re(e$t ,or re#on$+eraton
Re(e$t ,or ren%e$t&aton
A p)ea ,or re- e%a)(atoon o, an a$$e$$*ent on the ba$$ o, ex$tn& re#or+$ !tho(t nee+ o, a++tona) e%+en#e
P)ea ,or ren%e$t&aton o, an a$$e$$*ent on ba$$ o, ne!)" +$#o%ere+ or a++tona) e%+en#e that a taxpa"er nten+$ to pre$ent n the ren%e$t&aton
TAXATION SURVIVAL KIT – Aban Book 6a" n%o)%e (e$ton o, ,a#t or )a! or BOT4
6a" n%o)%e a (e$ton o, ,a#t or )a! or both
One #a$e that ))($trate$ the eHe#t o, taxpa"er3$ ,a)(re to /)e a prote$t $ the #a$e o, 7A5RIT -
EFFECTS OF TAXPAYER8S ADMINISTRATIVE PROTEST DECISION TO THE CTA
FAILURE TO FILE AN OR TO APPEAL BIR8S
Se#ton ::>' Tax Co+e 0 I, taxpa"er ,a)$ to /)e an a+*n$trat%e prote$t !thn the re&)e*entar" ;< +a" pero+ ,ro* re#ept o, a$$e$$*ent not#e' the a$$e$$*ent BECO6ES 8INAL 6EANING 0 a,ter the )ap$e o, $a+ pero+' the a$$e$$*ent #an no )on&er be +$p(te+ ether a+*n$trat%e)" or .(+#a))" thro(&h an appea) n CTA E88ECT 0 *akn& the a$$e$$e+ tax #o))e#tb)e NO APPEAL to CTA #an be po$$b)" taken a$ there $ NO BIR +e#$on that *a" be appea)e+ p(r$(ant to Se#ton n re)aton to Se#ton 11 o, RA 11: On)" /na) +e#$on$ ?NOT 6ERE ASSESS6ENTS@ Co**$$oner are appea)ab)e to the CTA
o,
I, a taxpa"er or the Go%ern*ent $ NOT SATIS8IE7 !th CTA3$ +e#$on' he t *a" /)e a petton ,or re%e! !th CTA !thn 1 +a"$ ,ro* re#ept o, CTA3$ +e#$on I, $t)) +$$at$/e+ !th CA3$ +e#$on' het *a" /)e a petton ,or re%e! on #ertorar !th the SC !thn 1 +a"$ ,ro*
an a$pe#t o, !h#h ha$ been +$#($$e+ n a pre%o($ #hapter the e$tate o, the )ate 7on Torbo Teo+or' a,ter ben& a$$e$$e+' /)e+ a *oton ,or re#on$+eraton !th a pro*$e to /)e a po$ton paper or !hat a#t(a))" $ho()+ ha%e been the taxpa"er3$ prote$t #ontann& the e$tate3$ ar&(*ent a&an$t the a$$e$$*ent
The e$tate ho!e%er' 7I7 NOT 8ILE the po$ton paper a$ pro*$e+9 Go%ern*ent /)e+ t$ #orre$pon+n& proo, o, #)a* a&an$t the e$tate hen th$ #)a* ,or tax xo))e#ton !a$ #onte$te+ b" e$tate' the $ett)e*ent #o(rt $($tane+ the a#ton taken b" BIR SC on appea) that t $ NOT n#(*bent on part o, Go%ern*ent that t *($t /r$t r()e on pen+n& prote$t a&an$t an a$$e$$*ent be,ore t #o()+ #o))e#t the taxe$ that are +(e on t 6ARCOS %$ CA -
o*$$on to /)e an e$tate tax ret(rn' an+ the $(b$e(ent ,a)(re to #onte$t or appea) the a$$e$$*ent *a+e b" BIR $ ,ata) to pettoner3$ #a($e' a$ (n+er the abo%e#te+ pro%$on
In #a$e o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+ at an" t*e !hn 1< "ear$ ,o))o!n& the a$$e$$*ent tax Sn#e e$tate tax ha+ been /na) an+ (nappea)ab)e b" pettoner3$ o!n +e,a()t a$ re&ar+$ prote$tn& the %a)+t" o, $a+ a$$e$$*ent' there $ no! no rea$on !h" the BIR #annot
> E%en , taxpa"er /)e$ an a+*n$trat%e prote$t' on#e an a+%er$e +e#$on thereon $ ren+ere+ b" Co**$$oner' the $a*e *($t be appea)e+ to CTA !thn re&)e*entar" pero+ o, ;< +a"$ ,ro* re#ept o, Co**$$oner3$ +e#$on OT4ERISE $a*e be#o*e$ /na) an+ exe#(tor
REFUND OR RECOVERY OF ERRONEOUSLY OR ILLEGALY COLLECTED TAXES
;9 An" $(* a))e&e+ to ha%e been ex#e$$%e or n an" *anner !ron&,())" #o))e#te+ Re#o%er" *a" a)$o be he)+ !th re$pe#t to the %a)(e o, nterna) re%en(e $ta*p$ !hen the" are ret(rne+ n a &oo+ #on+ton b" the p(r#ha$er9 In h$ +$#reton' Co**$$oner *a" re+ee* or #han&e (n($e+ $ta*p$ that ha%e been ren+ere+ (n/t ,or ($e an+ re,(n+ ther %a)(e (pon proo, o, +e$tr(#ton Nee##$&y o% Proo% %or Re%.! C-a$/#
19 Le&a) Ba$$ o, Tax Re,(n+$ – tax re,(n+$ are ba$e+ on )e&a) prn#p)e o, (a$- #ontra#t or $o)(ton n+ebt a9 Art#)e :1=: an+ :1= C%) Co+e b9
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I*portant 0 Go%ern*ent #o*e$ !thn the $#opr o, the $o)(ton n+ebt prn#p)e No per$on $ha)) (n.($t)" enr#h h*$e), at the expen$e o, another9 It &oe$ !tho(t $a"n& that the Go%enr*ent $ not exe*pte+ ,ro* app)#aton o, th$ +o#trne R()e$ n Tax re#o%er" or re,(n+$ @Se#ton :<= an+ ::
E**an(e) ena+a A&()ar Ca$e -
SEE NOTES So+e o% C-a$/# %or Re%.!
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Tax re#o%er" or re,(n+$ *a" en#o*pa$$ the ,o))o!n& pa"*ent$ 0 19 Erroneo($)" or ))e&a))" a$$e$$e+ or #o))e#te+ nterna) re%en(e taxe$
A #)a* ,or re,(n+ partake$ o, nat(re o, an exe*pton !h#h #annot be a))o!e+ UNLESS &rante+ n the *o$t exp)#t an+ #ate&or#a) )an&(a&e Ben& n the nat(re o, an exe*pton ,ro* taxaton' a #)a* ,or re,(n+ $ $tr#t)" #on$tr(e+ a&an$t the #)a*ant an+ ,a)(re to +$#har&e $tr#t)" #on$tr(e+ a&an$t the #)a*ant an+ ,a)(re to +$#har&e $a+ b(r+en $ 8ATAL to the #)a*
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pettoner3$ #)a* ,or re,(n+ o, !thho)+n& taxe$ AS 7ENIE7 ,or ,a)(re o, #)a*ant to pro%e the ,a#t o, a#t(a) !thho)+n& o, taxe$ n (e$ton9 COURT 0 took note o, taxpa"er3$ nab)t" to pro+(#e the re#ept$ ,or n#o*e tax pa"*ent$ an+ the %aro($ !thho)+n& tax #ert/#ate$$$(e+ to pettoner$ Nether re#ept$ nor #ert/#ate$ !ere ntro+(#e+ n e%+en#e +(rn& tra)
CIR %$ L 5ao
