Concepts Taxation

Question 1

Define taxation

Answer 1

the process or means by which the sovereign, through its lawmaking body, raises income to defray the necessary expenses of the government

Question 2

What is “lifeblood of the government and their prompt and certain availability are an imperious need” and its meaning?

Answer 2

Taxes, government cannot continue to exist and operate without financial means.

Question 3

What is “indispensable and inevitable price for civilized society” and its meaning?

Answer 3

Taxation, without taxes, the government would be paralyzed.

Question 4

What are the objectives of taxation?

Answer 4

a. raising of revenue for the government
b. achieve various economic and social objectives that includes:
- shifting wealth from the rich to the poor
- maintain price stability
- stimulate economic growth
- encourage full employment

Question 5

State Powers

Answer 5

• Taxation
• Eminent Domain
• Police Power

Question 6

The power of the state by which the sovereign raises revenue to defray the necessary expenses of the government.

Answer 6

Taxation

Question 7

The power of the state to take private property for public use. upon payment of just compensation.

Answer 7

Eminent Domain

Question 8

The power of the state to enact laws to promote public health, public morals, public safety and the general welfare of the people.

Answer 8

Police Power

Question 9

Aspects of Taxation

Answer 9

1. Levying of the tax.
2. Collection of the tax levied.

Question 10

The imposition of tax requires legislative intervention. In the Philippines, it is Congress that levies taxes

Answer 10

Levying of the tax

Question 11

This is essentially an administrative function.

Answer 11

Collection of the tax levied.

Question 12

Basic Principles of a Sound Tax System

Answer 12

1. Fiscal adequacy.
2. Equality or theoretical justice.
3. Administrative feasibility.

Question 13

Sources of revenue are sufficient to meet government expenditures

Answer 13

Fiscal adequacy

Question 13

The tax imposed must be proportionate to taxpayer’s ability to pay

Answer 13

Equality or theoretical justice.

Question 14

The law must be capable of convenient, just and effective administration

Answer 14

Administrative feasibility

Question 15

Limitations on the Power of Taxation

Answer 15

constitutional and inherent limitations

Question 16

limitations are those provided for in the constitution or implied from its provisions

Answer 16

Constitutional Limitations

Question 17

Restrictions to the power to tax attached to its nature.

Answer 17

inherent limitations

Question 18

Purpose

Answer 18

Taxes may be levied only for public purpose

Question 19

Territoriality

Answer 19

The State may tax persons and properties under its jurisdiction

Question 20

International comity

Answer 20

The property of a foreign State may not be taxed by another

Question 21

Exemption

Answer 21

Governmental agencies performing governmental functions are exempt from taxation

Question 22

Non-delegation

Answer 22

The power to tax being legislative in nature may not be delegated

Question 23

Give some doctrines in taxation and its meaning.

Answer 23

1. Prospectivity of Tax Laws
   - Taxes must be imposed prospectively.
2. Double Taxation
   - Same taxpayer is taxed the same tax jurisdiction for the same thing.
3. Set-off of Taxes
   - Taxes are not subject to set-off or legal compensation under Article 1279 of the Civil Code.
4. Escape from Taxation
   - Available to the taxpayer to limit or even avoid the impact of taxation.

Question 24

Types of Double Taxation

Answer 24

- Direct Double Taxation - Indirect Double Taxation

Question 25

Categories of Escape from Taxation

Answer 25

-Tax Avoidance/ Tax Minimization/ Tax Planning - Tax Evasion/ Tax Dodging

Question 26

Situs of Taxation

Answer 26

place of taxation

Question 27

Situs of Persons

Answer 27

Residence of the taxpayer

Question 28

Situs of Real property or tangible personal property

Answer 28

Location of the property

Question 29

Situs of Intangible personal property

Answer 29

Situs is the domicile of the owner unless he has acquired a situs elsewhere

Question 30

Situs of Business, occupation and transaction

Answer 30

Place where business is being operated, occupation being practiced and transaction completed

Question 30

Situs of Income earned

Answer 30

Taxpayer's residence or citizenship, or place where the income was earned

Question 31

Situs of Gratuitous transfer of property

Answer 31

Taxpayer's residence or citizenship, or location of the property

Question 32

Enforced proportional contributions from persons and property levied by the lawmaking body of the State by virtue of its sovereignty for the support of the government and all public needs

Answer 32

Taxes

Question 33

Any contribution imposed by the government upon individuals

Answer 33

Tax

Question 34

Essential Characteristics of a Tax

Answer 34

- enforced contribution - levied by the lawmaking body - proportionate in character - generally payable in money - imposed for the purpose of raising revenues - to be used for public purpose.

Question 35

Types of Tax Rate Structures

Answer 35

- regressive - proportional - progressive

Question 35

The average rate decreases as the tax base increases.

Answer 35

Regressive Tax

Question 36

The average rate of tax remains, constant for all levels of the tax base.

Answer 36

Proportional Tax

Question 37

The average rate increases as the amount of the tax bases increases.

Answer 37

Progressive Tax

Question 38

clarified the constitutional provision on progressive system of taxation

Answer 38

Republic Act (R.A.) 9337 or VAT Reform Act

Question 39

Tax of a fixed amount imposed on individuals, whether citizens or not, residing within a specified territory without regard to their property or the occupation in which they may be engaged. Example: community tax.

Answer 39

Personal Tax/ Poll Tax/ Capitation Tax

Question 39

Tax imposed on property, whether real or personal, in proportion either to its value or in accordance with some other reasonable method of apportionment.

Answer 39

Property Tax

Question 40

Tax imposed upon the performance of an act, the enjoyment of a privilege or the engaging in an occupation

Answer 40

Excise Tax

Question 41

Tax demanded from persons who are intended or bound by law to pay the tax

Answer 41

Direct Tax

Question 42

Tax which the taxpayer can shift to another

Answer 42

Indirect Tax

Question 43

Tax imposed based on a physical unit of measurement, as by head or number, weight, or length or volume.

Answer 43

Specific Tax

Question 44

Tax of a fixed proportion of the value of property; needs an independent appraiser to determine its value

Answer 44

Ad valorem Tax

Question 45

Tax with no particular purpose or object for which the revenue is raised, but is simply raised for whatever need may arise.

Answer 45

General Tax/ Fiscal Tax/ Revenue Tax

Question 46

Tax imposed for a special purpose regardless of whether revenue is raised or not, and is intended to achieve some social or economic end

Answer 46

Special Tax/ Regulatory Tax

Question 47

Tax imposed by the national.

Answer 47

National Tax

Question 48

Tax imposed by municipal governments for specific needs.

Answer 48

Municipal Tax/ Local Tax

Question 49

three branches of the national government are

Answer 49

- President and his administration (executive) - Congress (legislative) - Courts (judicial)

Question 50

Statutory Law

Answer 50

Republic Act 8424, The National Internal Revenue Code (NIRC) of 1997

Question 51

types of administrative tax authorities

Answer 51

- Revenue Regulations - Revenue Rulings

Question 52

administrative interpretations of the statutes enacted by Congress and tend to be somewhat more detailed than the Code itself

Answer 52

Revenue Regulations

Question 53

more detailed, as they are issued in order to explain the tax results of very specific transactions

Answer 53

Revenue Rulings

Question 54

tax 'law,' in general, is composed of all three elements:

Answer 54

(1) the Code (2) Regulations and Rulings, (3) decisions of various courts that hear tax cases

Question 55

Sources of Tax Laws

Answer 55

1. Constitution 2. Statutes and Presidential Decrees 3. Revenue Regulations 4. Rulings by the Commissioner of Internal Revenue and Opinions by the Secretary of Justice 5. Decisions of the Supreme Court and the Court of Tax Appeals 6. Provincial, city, municipal, and barangay ordinances 7. Treaties or international agreements

Question 56

First Philippine Internal Revenue Law was approved by (1)______________ on (2)______________ as (3)______________ effective on (4)______________

Answer 56

1. Philippine Commission 2. July 2, 1904 3. Act 1189 4. August 4, 1904

Question 57

The Bureau was created by (1)______________, approved by the (2)______________ on (3)______________, effective on (4)______________.

Answer 57

1. Commonwealth Act 466 2. National Assembly 3. June 15,1939 4. July 1, 1939

Question 58

(1)______________ an act amending the National Internal Revenue Code, known as (2)______________

Answer 58

1. RA 8424 2. Tax Reform Act of 1997