Escolar Documentos
Profissional Documentos
Cultura Documentos
NOTES
COVERAGE OF TAXATION LAW
REVIEW
I. Basic Principles of
Constitutional
Limitation
s
a) Due process clause which
could
be
either
substantive due process
and
procedural
due
process clause
b) Equal protection clause
Read:
Ormoc Sugar Central
vs.
City Treasurer 22
SCRA
603
Tiu vs. CA 301 SCRA 178
c) Article III sec. 1 of
the
1987 Constitution nonimpairment clause
d)
Article III sec. 5
freedom of religion
e) Article III sec. 20
nonpayment of poll tax
f) Article VI sec. 28 par. 2
flexible tariff clause
g) Article VI sec. 28 par. 3
exemption
from
real
property tax
Read:
Herrera vs. Quezon City
3
SCRA 186
Abra vs. Hernando 107
SCRA
104
Abra Valley vs. Aquino
52
SCRA 106
Philippine Lung Center
vs.
Quezon City 433 SCRA
119 h) Article VI sec. 28
par. 4 qualified majority
in tax
exemption
i) International
double
taxation
CIR vs. Johnson 309 SCRA
k)
8
7
j) Doctrine of equitable
recoupment
Doctrine of Set-off or compensation
in taxation
Republic vs. Mambulao 4 SCRA
622
Domingo vs. Garlitos 8 SCRA 443
Francia vs. IAC 162 SCRA
753
Caltex vs. COA 208 SCRA
726
Philex vs. CIR 294 SCRA
687
Aliens Employed in
petroleum
Service Contractors &
Subcontractors sec. 25
(E)
-Corporate Income Taxpayers
Domestic Corporations sec. 23
(E), and sec 27 of NIRC
Resident Foreign Corporations sec.
22 (H) and (28)A
Non-Resident Foreign
Corporations sec. 22 (1) and 28
(B)
-Estates and Trusts sec. 60-66 of NIRC
5. Improperly Accumulated
Earnings Tax of 10% of its
taxable income sec. 29 NIRC
Rev. Reg. 2-2001
Optional Corporate Income Tax of
15% of its gross income sections
27 (A) 4th to 10th par. And 28 A(1)
but only up to the 4th
paragraph
-Proceed to section 42 and 23 of the
NIRC
NDC vs. Comm 151 SCRA 472
Comm. Vs. IAC 127 SCRA 9
-Then go to sec. 39 of NIRC
Calazans vs. Comm. 144 SCRA
664 RR 7-2003
-Then proceed to sec. 24 (A), 25
(A) (1), 25 B,C,D,E, 27 A,B,C; 28
(A) (1),
28 (A) (6) and sec 51 (D)
-Then continue to sec 24 B 1, 25
B,C,D,E; 27 (D) (1)
-Then go to se. 24 (B) (2) sec. 73
Comm. Vs. Manning 66 SCRA 14
Anscor vs. Comm. 301 SCRA 152
-Sec. 25 (A) (2), 25 B, C, C, E, sec. 27 (D)
(4);
28 (A) (7) (D); 32 B (7) (a)
Then you go to sec. 24 C, 25A (3); 25
B, C, D, E, 27 D (2); 28 (A) (7) (C); 28 B
(5) (C) RA 7717 sec. 127 NIRC
- Then you go to sec. 24 D (1); 25 (A)
(3);
25 (B) last par. 27 (D)
(5)
China Bank vs. Court of Appeals 336
SCRA
; RR 7-2003
-Upon reading sec. 24 (D) (2) read RR 131999
-
-Read
RA
9337
-Read ABAKADA vs
Comm. GR 168056, Sept.
1, 2005
VI. Remedies Under the Internal
Revenue
Code
-Sections
202229
-RR 12-99
17
435
Sec. 235
LRT vs. Manila 342 SCRA 692
Cebu City vs. Mactan 261 SCRA 667
codal
Book
stand
Coverage of Taxation Law
Review:
1.
Basic
Principles
including
Constitutional
Provisions
2. Income Tax
3.
Estate
Tax
4. Donors Tax
5.
Remedies
6. Local Tax
7.
Real Property
Tax
8.
Tariff and Customs
Code
9. Court of Tax Appeals
10. VAT (although not part of the coverage
of the Bar Exams, questions have been
asked since 1999)
No computations in the
bar
There are only 1 or 2 questions in the
Bar about Basic Principles
12 questions on Income
Tax
8-10 questions on
remedies
Taxation
the
State
.
is
an
Q:
What
INHERENT?
do
you
inherent
mean
power
by
of
Autonomous Regions
power
conferred by Congress through law. Art. X
Sec. 20 #2 of the Constitution is a non-selfexecuting provision. Thus the power is
granted by Congress because said provision
requires an enabling law.
Process
Protection
1)
of
Reasonable
of
It
Involves
Things:
1.
freedom to choose
religion
2.
freedom to exercise ones
religion
3. prohibition
upon
the
national
government to establish a national religion
Q: Which one limits the power to
tax?
A:
Prohibition upon
the
national
government to establish a national religion
because
this will require a special
appropriation of money coming from the
national treasury which is funded by the
taxes paid by the people.
Non-impairment
Clause
Q: What are the sources of obligation in
the
Civil
Code?
A: Law, Contracts, Quasi-Contracts, Delict,
Quasi-Delict.
Q: What is the obligation contemplated
in this limitation?
A:
Those obligations arising from
contracts.
General Rule:
The power to tax is
pursuant to law, therefore, the obligation to
pay taxes is imposed by law, thus the nonimpairment clause does not apply.
You have to determine first the source
of obligation:
1. If the law merely provides for the
fulfillment of the obligation then the law
is not the source of the obligation.
2. When the law merely recognizes
or
acknowledges
the
existence
of
an
obligation created by an act which may
constitute a contract, quasi-contract, delict,
and quasi- delict, and its only purpose is
to regulate such obligation, then the act
itself is the
source of the obligation, not the
law.
from
payment
of
Real
charitable
institutions,
churches,
and
parsonages
or
convents
appurtenant
thereto, mosque, non-profit cemeteries, and
all lands, buildings, and improvements
ACTUALLY, DIRECTLY and EXCLUSIVELY used
for
RELIGIOUS,
EDUCATIONAL
and
CHARITABLE purposes shall be exempt from
taxation.
HERRERA
v.
QC-BOARD
OF
ASSESSMENT
(1935
Constitution)
Q:
What is involved in this
case?
A:
A
charitable
institution,
St.
Catherines Hospital. The hospital
was
previously exempt from taxation until
it
was
reclassified and
subsequently
assessed for the payment of real
property tax.
The contention of the respondent is
that the hospital was no longer a
charitable institution because it accepts
pay-patients, it also operates a school
for midwifery and nursing, and a
dormitory. Since it is not exclusively
used for charitable purposes it is not
exempt from
taxation.
H:
The Court ruled that petitioner is
not liable for the payment of real
estate
taxes. It is a charitable institution, thus
exempt from the payment of such tax.
The hospital, schools and dormitory
are all exempt fro taxation because
they
are incidental to the primary purpose
of the hospital.
NOTE:
this
arose
during
the
1935
Constitution.
Exempted by virtue of incidental
purpose was merely coined by the
Supreme Court. Thus, it does not apply to
other taxes
except Real Estate
Tax.
PROVINCE
OF
A BR A
v.
HERNANDO
Q:
What is involved in this
case?
A
A religious institution was involved
in this case, the Roman Catholic Bishop
of
Bangued,
Inc.
(bishop
filed
declaratory relief after assessed for
payment of tax). The respondent judge
granted the exemption from taxes of
said church based only on the
allegations of the complaint without
conducting a hearing/trial. The assistant
prosecutor filed a complaint contending
that petitioner was deprived of its right
to due process.
SC: the Court ordered that the case be
remanded to the lower court for further
proceedings. The Court observed that the
cause
action
arose
under
the
1973
Constitution,
not
under
the
1935
Constitution (note the diference). Tax
exemption is not presumed. It must
be strictly construed against the taxpayer
and liberally construed in favor of the
government.
ABRA VALLEY COLLEGE INC.
AQUINO
Q:
What is involved in this
case?
v.
A:
An
educational
institution
is
involved in this case. The ground floor of
the school was leased to Northern
Marketing
Corp.,
a
domestic
corporation. The 2nd floor thereof was
used as the residence of the school
director and his family.
The Province of Abra now contends
that since the school is not exclusively
used for educational purposes, the
school is now liable to pay real estate
tax.
H:
The Court held that the school
is
PARTIALLY liable for real estate
tax.
1. Residence exempt by virtue of
incidental
purpose;
justified
because
it is necessary.
2. Commercial not exempt because
it isnot
pursuant
to
the
primary
purpose;
not
for
educational purposes.
Q: is the doctrine in the case of Herrera the
same with this case?
A:
NO. in the Herrera case, the
exemption
was granted to all the real property
(hospital, school and dorm). But in this
case, the Supreme
Court
made
a
qualification. The Supreme Court said it
depends.
NOTE: both cases arose under the
1935
Constitution despite having been decided
in
1988.
Q: At present, do we still apply the
exemption from tax by virtue of the
Doctrine of Incidental Purpose?
A: Not anymore. The cause of action in
said
case
arose
under
the
1935
Constitution and
it does not apply to the provisions of
the
1987 Constitution.
PHILIPPINE LUNG CENTER v. QUEZON
CITY
Q:
What is involved in this
case?
A:
H:
A:
RP-Germany Treaty provides for
that
20%
of
the
tax
paid
in
the
Philippines shall be credited to their tax
due to be paid in Germany.
The 10% does not apply because
there is no matching credit. Thus,
there is no
similarity
in
the
circumstances.
EQUITABLE RECOUPMENT AND
DOCTRINE OF SET-OFF
Equitable
Recoupment
This doctrine provides that a claim for
refund barred by prescription may be
allowed to offset unsettled tax liabilities.
This is not allowed in this jurisdiction,
because of common law origin. If allowed,
both the collecting agency and the taxpayer
might be tempted to delay and neglect the
pursuit of their respective claims within the
period prescribed by law.
Q:
What
is
the
doctrine
of
Equitable
Recoupment
?
A: When the claim for refund is barred
by prescription, the same is allowed to
be
credited
liabilities.
to
unsettled
tax
v.
FRANCIA v. IAC
Q: This happened in what city?
A: Pasay City
Q: What is the tax being collected? Who is
collecting the same?
A:
Payment for real estate taxes for
the
property of Francia. It appears that
petitioner was
delinquent in
the
payment of his real estate tax liability.
The same is being collected by the
Treasurer of Pasay.
Q: What is the suggestion of petitioner?
A:
Suggested
that
the
just
compensation for
the
payment
of
his expropriated
property be set-off from his unpaid
real
estate taxes. (the other part of his
property was sold at a public auction)
H:
The factual milieu of the case
does not justify legal compensation.
The Court has consistently ruled that
there can be no off-setting of taxes
against the claims that the taxpayer
may have against the government. A
taxpayer cannot refuse to pay a tax on
the ground
that the government owes him an
amount.
is
the
Elements
of
Double
Taxation:
1) Levied by the same taxing authority
2) For the same subject matter
3) For the same taxing period and
4) For the same purpose
INCOME
INDIVIDUAL
Q:
How many kinds of individual
taxpayers are there?
A:
There are seven (7).
Namely:
1. Resident Citizen (23A and 24A);
2. Nonresident Citizen (23B and 24A);
3. OCW and Seaman (23C and 24A);
4. Resident Alien (22F, 23D and 24A);
5.
Nonresident Alien Engaged in
Trade or Business (22G, 23D and
25A)
6. Nonresident Alien NOT Engaged
in
Trade or Business (22G, 23D
and
25B)
7. Aliens Engaged in Multinational
Companies, Offshore Banking Units,
Petroleum
Service
Contractors
(25C,D and E)
engaged
Not
Engaged
Q:
How many
kinds?
A:
Only
one.
from all
OTHER
sources shall be subject to the pertinent
income tax, as the case may be.
Aliens Employed in
and
Ofshore
Banking
Units
Multinational
Q:
How
are
they
classified?
A:
If they derived income from other
sources aside from their employer, you
may classify them either as RA, NRAETB, or
NRANETB.
Aliens
Employed
Service
Contractors
S ubcontractors
in
Petroleum
and
Status:
ALWAYS
NRA.
If
they
derive income from other sources, such
income shall be subject to the pertinent
income tax, as the case may be.
Income derived or coming from their
employer shall be subject to a tax of 15% of
the gross.
II.
TAXPAYER
CORPORATE
1.
Exception:
Partnerships
(GPP
)
General
Professional
Q:
What is a
GPP?
A: It is a partnership formed by persons
for the
sole
purpose
of
exercising
their
TRUST AND
a)
Settlement
and
if
NO
OF
INCOME
1.
2.
3.
4.
NET INCOME
- deductions
Net Income x
Tax Rate
Income Tax Due
Q: What is the rate?
A: Individual: 32%
Corporation:
35%
NOTE: the formula allows for
deduction, personal exemptions and tax
credit.
Q: What are the other terms for NIT?
A: NIRC:
a. taxable income
b. gross income (wlang kasunod)
only income tax from improperly
accumulated earnings does not use this
term.
1. CFA: to be included in the gross
income
2. Revenue Regulations and Statutes:
a. ordinary way of paying
income tax;
b. normal way of paying income tax .
Characteristics:
employee
relationship.
Q:
Who pays this
tax?
A:
DC and RFC
only.
Employer
Relationship
(3 Cs):
1.
contract;
2. control;
3.
compensation;
Employee
employee
relationship, they are merely receiving
royalties. Royalties are subject to final
withholding tax, thus the agent is liable to
pay. (so, distinguish nature of income,
whether royalty or compensation)
RULE:
1. for NIT, whether or not subject to
Creditable Withholding Tax (CWT),
the taxpayer is always liable if he
fails to pay.
2. for GIT and FIT, absolute liability
to pay is upon the withholding agent.
Q: Why is it that the rate of withholding
is always lower, and why is it that the
rate of GIT and FIT is always equal?
A:
1. NIT allows deductions;
2. GIT and FIT do not allow
deductions.
Q: Do you have to determine whether
there is an actual loss or gain?
A: No need to determine because the
formula does not allow deductions. Gain
is
presumed.
No
liability
for
final
withholding
tax except for the sale of shares of stock.
(?)
IV.
MINIMUM CORPORATE INCOME
TAX (MCIT)
Q:
What is the
formula?
A:
Gross Income x
2%
yet
Q:
To what kind of taxpayer does this
apply?
A:
To DC and
RFC.
Q: What kind of taxes are applicable or
imposed upon the 1st
five individual
taxpayers?
A: Only two (2) kinds are applicable out
of the six (6) kinds of income taxes.
1. NIT;
2. FIT;
Q: What kind of income tax will apply
to
AEMOP
?
the
income
is
from
A:
1.
Q: Filipino
Executive,
assigned
to
Hong Kong, receiving two salaries, one from
the Philippines, the other from HK. The
performance of the job was in HK. Is he
liable for both salaries?
A: No, he is not liable for the two incomes.
His status is an OCW (note facts: working
in
HK under contract). The compensation
he
received is not subject to tax pursuant
to
Section 42(c). Compensation for labor or
personal
services
performed
in
the
Philippines is
considered an
income
within.
When it comes to services, it is the place
where the same is rendered which
is
controlling. In the case at bar, the services
were rendered abroad, thus it is an income
derived from sources without, irrespective
of
the
place
of
payment.
Q:
Suppose a DC hired a NRFC to
advertise its products abroad. What is the
liability of the NRFC? Will there be a
withholding tax imposed?
A:
The
income
is
derived
from
sources without since the services in this
case were
performed abroad. As such, the NRFC is
not
liable and therefore exempt from the
payment of tax. If the NRFC is not subject to
NIT, then it is not also subject to
withholding tax.
Q:
What is the controlling
factor?
A:
The controlling factor is the place
where the services were performed and
not where
the
compensation
therefore
was
received.
RENTALS
AND
ROYALTIES
income from sources within
Q:
Granted
by
who?
A:
NRFC
b. industrial,
commercial,
scientific equipment
c. supply of knowledge
d. supply
of
services
by
nonresident
e. supply of technical
assistance f.
supply of
technical advice
g. right to use: motion
picture films, etc.
Q: What is the rule as regards the sale of
real property?
A: Gains, profits, and income from the
sale
of real property located within the
Philippines considered income within.
Q: What about the sale of personal
property, what is the rule?
A: Determine first if the property
produced or merely purchased.
is
1.
the
1,000,000
= 10%
Hence, 10% is the ratable share in
deduction. If the deduction being asked
is
100,000 not all of it will be allowed.
Only
10,000 or 10% of 100,000 will be
allowed as deduction.
CAPITAL
LOSSES
GAINS
AND
Section 39
Q:
What is capital
asset?
A: Capital asset is an asset held by
a taxpayer which is not an ordinary asset.
The
following
are
ordinary
assets:
1.
stock in trade of the taxpayer or
other property of a kind which would
properly
be
included
in
the
inventory
of the taxpayer if on hand at the
close of the taxable year;
2. property held by the taxpayer
primarily for sale to customers in
the ordinary course of trade or
business;
3. property used in trade or business
of a character which is subject to
the
allowance for depreciation provided
in subsection 1.
4. real property used in trade or
business of the taxpayer.
All other property not mentioned in the
foregoing are considered capital assets.
Q: What is a capital gain? What is a capital
loss?
CAPITAL
Q:
What
period?
is
the
holding
ON
A:
NIT
Q:
What is taxable
income?
A:
(memorize section 31) it is the
pertinent items of gross income specified in
the NIRC, less the deductions and/or
personal and additional exemptions, if any,
authorized for such types of income by the
NIRC or other laws. It refers to NIT because
it allows deductions.
Q: What do you mean by the phrase
other
than B, C, and
D?
A: It means that if the elements of
passive income are present, the taxpayer
has to pay
FIT.
Q: Who are the taxpayers mentioned
in section 24?
A:
1. RC
2. NRC
3. OCW
4. RA
Passive
Income
Interest,
winnings
Royalties,
prizes
and
Other
Interes
t
Q:
Bank Interest, what is the
requirement?
A: The bank must be located in the Phils.
because the income must be derived from
sources w/in.
Q: Do you include this in your
ITR?
A: No! because it is subject already to
FIT. The bank is the one liable for the
payment of
this.
NOTE: Liability for NIT, GIT, and MCIT
will depend on the elements present.
Q:
Who are liable for bank
interest?
A:
1. RC }
2. NRC} Sec. 24 B1
3. RA }
4. NRAETB
5. NRANETB Sec. 25 (25%)
6. AEMOP
7. DC
8. RFC
9. NRFC
Q:
What is the rate of
interest?
A:
FIT of
20%
Q: Is there a lower rate?
A: 7 % if under EFCDS
Q: What if the depositor is non
resident alien?
A:
-W/in FIT
- W/out- exempt
Q:
What is the rule on pretermination?
A: If it is pre terminated before 5th year a
FIT shall be imposed on the entire income
1.
2.
3.
4.
5.
6.
RC
NRC
OCW
RA
NRAETB
AEMOP (RC, NRAETB)
Not Liable
1. NRANETB- liable for GIT at 25 %
2. AEMPOP (NRANETB- GIT)
3. DC- NIT 27 D is silent
4. RFC NIT law is silent 28A7a
5. NRFC subject to GIT
1.
2.
3.
4.
5.
6.
RC
NRC
OCW
RA
NRAETB
AEMOP (RC, NRAETB)
Not Liable?
1. NRANETB
2. AEMOP
3. DC
4. RFC
5. NRFC
NOTE: Lower rate of 10% applies to all
except
NRANETB
Q: When do we apply NIT to Royalties?
A:
The income is from w/in
Rate? 20%. Lower rate? 10% on
books, literary works and musical
compositions.
1. TP is RC or DC
2. Income is from w/out
3. TP is RF and income is w/in
If income is from sources abroad all
are exempt except RC and DC
Dividends
Confined with
dividends.
cash and/or
property
cannot
escape
Requirement
:
Gen Rule- the dividends must be
distributed by a DC.
Except- Regular operating- always a
foreign corp.
FIT
Q:
liable?
A:
1.
2.
3.
4.
5.
6.
Who
are
RC
NRC
OCW
RA
NRAETB
AEMOP (RC, NRAETB)
Not liable?
1. NRANETB
2. AEMOP
3. DC
Q: Determine the
following?
A:
4. RFC
5. NRFC
tax
liability
of
the
1.
2.
3.
4.
Subj to FIT
Determine whether there is a loss or
a gain because the tax is impose
upon
the net capital gains realized from
the sale, barter, or exchange or
other disposition of the shares of
stock in a domestic corp.
It is uniformly imposed on all
taxpayer
not subj to w/holding tax.
Requirements
:
1. Shares of stock of a DC
2. It must be capital asset
3. must not be traded in the
stock market
25 R last part: Capital Gains realized
by NRANETB in the Phils. from the sale of
considered.
MCIT
sold
2. It must be a capital
asset
3. The seller must be an
individual, estate or trust or a DC
From
Sale
of
Real
pay
FIT
are
all
Q:
What if all the elements are not
present?
A:
most will be liable to pay NIT
Except NRANETB and NRFC liable for GIT
Q:
Who can claim the
exemption?
A: Only the taxpayer mentioned in Sec.
24
Q:
Which
is
more
advantageous?
A: It depends determine first if theres a
loss or a gain.
If theres a gain choose to be taxed at
6%
FIT. In this case the gain is always
presumed.
If theres a loss choose to be taxed at
32% because losses may be considered an
allowable deduction .
Other
transactions
covered:
1. sale
2. barter
3. exchange
4. other disposition
are
Requirements
:
1. The purpose of the seller is to
acquire new residential real prop
2. MCIT
3. FIT
4. 10%Improperly
Accumulated
Earnings
5. Optional corporate income tax of
15%
of the gross
DC liable for five, but the optional is
not yet applicable so only 4.
Q:
How
many
can
simultaneously?
A: ONLY 3
1. NIT, FIT and 10% IAE
2. MCIT, FIT, 10% IAE
be
applied
Q:
Is Art 14 Sec. 4 of the Consti
obsolete?
A:
NO, if the law is silent apply the
Consti.
SEC. 23:
the
GOVT
.
PAGCOR
included.
no
longer
Pagcor
vs.
if
its
Basco
NOTE:
case
SEC.
D(1)
Mactan-
Cebu
Airport
27
D3:
Q:
What is the expanded foreign
currency?
A: It is a bank authorized by the BSP to
transact
business
in
the
Philippine
Currency
EXEMPT
Ofshore banking units
Other depositary banks under
EFCDS
exemption of NR from
EFCDS:
Q:
Who is the income
earner?
A: Non Residents whether
or
Corporations
Q:
Derived from
whom?
A:
Depositary Bank
EFCDS
individual
under
Q: Can
with
NIT?
27 D5
Real
Prop
.
D(4)-
Capital
Gains
Inter-corporate
from
sale
of
Q:
What is the
tax?
A:
6%
FIT
Q: What is the diference if the seller is
an individual and a DC?
land
and/or
(E)
Q:
Applicable
whom?
A:
DC and
RFC
SEC.
27
dividendsexempt
SEC
27
MCIT
kinds of
it
be
to
applied
simultaneously
28
Sec.
28
CARRIER
A3-
INTL
Kind:
1. Air carrier
2. ships
An intl. carrier doing business in the
Phils. shall pay 2 % on its Gross Phil
Billings (GPB)
Q:
Is 28 A3 the Gen. rule or the
Exception?
A: It is the general rule because it is
under
28 A3
GPB is in the nature of FIT, applies only
if all the requirements are present.
Sec. 28 B2 MCIT on
RFC
27
Income
EXEMPT
without:
International
Carrier:
REQ:
1. Originating from the Phils.
2. Continuous and uninterrupted flight;
3. Irrespective of the place of sale
or issue and the place of the
payment of tickets or passage
document.
Q: Do you consider landing rights to
determine liability? (RR 15-2002)
A:
1. If originates from the Phils and has
landing rights- ONLINE- RFC
2. No landing rights- OFFLINENRFC
Q: If there are stopovers, is it still
uninterrupted?
A: YES, provided that the stopover does
not
exceed 48 hrs.
Q: When will the place of sale of
tickets matter as to the taxpayers liability?
A: The place of tickets is material only if
the two other elements are not present to
be able
to know if its subj to NIT or
exempt.
Revalidated, exchanged or indorsed
tickets
REQ:
1.
Q:
What if its the same airline but
diferent
plane
?
Transshipme
nt
REQ:
it must originate from the
Phils. up to final destination
- regardless of the place of
payments of passenger or freight
documents
REQ:
flight originates from the Phils
transshipment of passenger takes
place
at any port outside the Phils.
the passenger transferred on
another airline
Q:
How do you apply
GPB?
A: Only the aliquot portion of the cost of
the ticket corresponding to the leg flown
from the Phils to the point of transshipment
shall from part of the GPB.
Q:
Is it liable for the whole
flight?
A:
From the Phils to the point
transshipment, it is income w/in
From transshipment to final
destination, its income w/outEXEMPT
International
Shipping
sale or
of
OBUs
1. only acceptable foreign currencies
2. always a foreign corporation (subj to
NIT) except #3
3. Exempt if income is derived by the
OBU from EFCDS
4. Parties:
a) local commercial
banks b) Foreign bank
branch
c) Non Residents
d) OBU in the Phils.
Diference with
EFCDS: EFCDS
10% FIT
If: Lender- OBU
Borrower- Resident Citizen
EXCEPT:
1. OBU
2. Local Commercial Banks
Transactions of Non Residents:
1. Income earner: Non- Residents
2. Lender: OBUs
NOTE:
Non
resident
exempt
transactions with OBUs and EFCDS
from
2. Subsidiaries
NOTE:
1. When a FC establishes branch, it is
always a FC
2. When a FC establishes DC, it is a RFC
Q; It is in addition to NIT- Why?
A: NIT because it is RFC
Q; What kind of tax is imposed under 28
A5?
A: 15% FIT
Q: How do you apply the rate?
A: multiplied to the total profit applied
or earmarked for remittance w/o deductions
It applies for branches that are:
1. the profit remitted is effectively
connected with the conduct of
its trade or business in the Phils.
2. One not registered with PEZA
MARUBENI CASE
F: A branch was established with
AG&P, there was investment with AG&P
Q: Did the petitioner participate with
the negotiation?
A: NO
Q: What did the petitioner pay?
A: 15% Branch Profit Remittance Tax
(BPRT)
10% Intercorporate Dividends
Q: Whats the issue?
A: Petitioner maintains that there was
overpayment of taxes, thus the same
was
asking for a refund of tax erroneously
paid.
Q: Is is subj to FIT?
A: NO, exempt if petitioner is
RFC H: -not correct to pay 15%
To be liable for BPRT
1. It is a RFC
2. Branch did not participate in negotiations
SEC. 28 A6a
Regional or area headquarters (Sec.
22
DD) shall not be subject to tax exempt
from income tax if the requisites are
present.
Q:
What
are
the
requisites?
A:
1. the HQ do not earn or derive
income from the Phils.
2. Acts
only
as
supervisory,
communications, coordinating
centre
for their affiliates, subsidiary or
branches in the Asia- Pacific Region
and other foreign markets.
SEC.
A6b
28
Interests
and
20%FIT
Interests under EFCDS= 7
%
Sec. 28A7b Income derived under
EFCDS
INTERCORPORATE
SEC
B1
28
Q:
What kind of
tax?
A:
35% GIT on the ff
income
1. Interest
2. Dividends
3. Rents
4. Royalties
5. Salaries
6.
Premiums(
except
reinsurance
premiums)
7. annuities
8. emoluments
9. Other fixed and determinable Gains,
profits and income.
SEC 28 B2 Non Resident
Cinematographic film owner, lessor or
distributor
GIT
GIT
liable for 4
Elements
:
1. Chartered
to
or
Corporations
2.
Approved
MARINA
Filipino
Citizens
by
I:
of
Eximbank
H: NO. The contract between the parties
does not contain any direct reference
to Exim Bank, it is strictly between
Mitsubishi as
creditor and Atlas as the seller of
copper. The bank has nothing to do with
the sale of copper to Mitsubishi. Atlas
and
Mitsubishi
had
reciprocal
obligations- Mitsubishi in order to fulfill
its obligations had to obtain a loan, in
its independent capacity with Exim
bank. Laws granting
exemption from tax are construed
strictly against the taxpayer and
liberally in favor of the taxing authority.
SEC. 28
D5
DIVIDENDS:
INTERCORPORATE
Income
tax
is
FIT:
the
withholding agent is the proper
party because he is liable to pay
said taxes
2. actual proof
of
payment not
necessary, what is necessary is
the law of the domicile of the
country providing fro tax credit
equal to 20% of the tax deemed
paid.
Q: What is the rate if the law is
silent?
A:
35%
FIT
be
tax
law
not
29
Q:
Why?
A: because if profits are distributed to the
shareholders, they will be liable for
the
payment of Dividends tax. Now, if the
profits
are undistributed the shareholders will not
incur liability on taxes with respect to
the
undistributed profits of the
Corp.
In a way it is in the form of deterrent
to the avoidance of tax upon shareholders
who are supposed to pay dividends tax on
the earnings distributed to them.
Q:
What is taxable
income?
A: SEC. 31 defines taxable income as the
pertinent items of gross income specified in
this Code, less the deductions and/or
personal and additional exemptions, if any,
authorized for such types of income by this
Code or other special law
Q:
Applies to what
Corp?
A: to DC only under RR 2- 2001( classified
as closely held corporations)
Q:
When not liable to pay
IAET?
A: There are 2 groups of DC exempt from
payment of IAET (RR2-2001)
Q:
Is it in the nature of
sanction?
A: Yes, it is imposed to compel the
corporation to declare dividends.
A)
Corporations
failure
to
declare
dividends because of reasonable needs of
business
Q:
What is the
rate?
A:
10% of the gross income (taxable
income)
to
be
Determine
the
Corporations
exemptions
under Sec. 30 27 C and
22B.
1. Sec 30, the corporations shall not
be taxed under this title (tax on
income) in respect to income
receive by them
as such.
Sec.
August
21,
Midterms
2006
5.
Non-stock
corporation
or
association organized and operated
exclusively for Religious, Charitable,
Scientific, Artistic
or
Cultural
purposes, or for the Rehabilitation
of Veterans (RCSACR), no part of its
net income or
code
specifically
mandates
that the income of exempt organizations
(under section 30) from any of their
properties, real or personal, shall be
subject to tax, including the rent income
of the YMCA from its real prop.
8.
31:
TAXABLE
32:
GROSS
Q:
What are included in the Gross
income?
A:
1. Compensation for services in
whatever form paid including but nor
limited to
fees, salaries, wages, commissions,
and
similar items. [Sec. 32 A (1)]
Q:
What
is
compensation?
A:
all
remuneration
for
services
performed by an employee for his employer
under an employer-employee relationship.
TAKE NOTE: compensation is included in
the ITR if the taxpayer is not liable for NIT.
Thus, if subject to NIT, included in the ITR.
Q: Is there an instance where the salaries
of a RC is not included in the ITR?
A: Yes, if the salary is subject to FIT,
like
when the RC is employed in Multinational,
ofshore
banking,
and
petroleum
companies.
2.
Gross Income derived from the
conduct of trade or business or the
exercise of a profession; [Sec. 32 A (2)]
Q:
What is the income tax
here?
A:
NIT, included in the
ITR.
3.
Gains derived from dealings in
property. [Sec. 32 A (3)]
Q:
Did
the
law
distinguished?
A:
No, the law did not distinguished
between real and personal property.
TAKE NOTE:
1.
Sale
of
real
property
2. Sale of shares of stock (personal
prop.)
if the elements are present, subject
to FIT. Thus, it is not included in the ITR,
the withholding agent will be responsible for
this.
Q: Income form the sale of property, do
you include this in the ITR?
A:
it
depends
a.
if
subject
to
FIT,
not
included.
Withholding agent accomplish the
forms
subject to FIT if the following
elements
are
present:
1.
it is a capital
asset;
2.
located in the Phil.:
and
3. sold by individual, trust, estate,
DC. b. if subject to NIT, included in the
ITR.
NOTE:
R-R
17-
1. DC individual taxpayer =
FIT
2. DC DC & RFC =
EXEMPT
3. DC NRFC =
FWT
only dividends issued by a FC to an
individual taxpayer (RC OR RA) is included
in the computation of the gross income.
Thus, included in the ITR.
derived
from
sources within.
Exempt
:
if
Q:
if the insurance is payable within a
certain time, say 10 years and thereafter
the insured did not die, how much will be
excluded?
A: only the amount received by the
insured as a return of the premiums.
Ex. 1 M 100 thousand =
capital
It
is
exempt
(100K)
900K is taxable.
Q:
Why
is
it
excluded?
A: because the amount received merely
represents a return of capital.
Q: is this subject to Estate Tax under Sec.
85
E?
do
we
have
the
same
requirement?
A: no, the requirement for exemption is
not the same under Section 85 E.
3.
Proceeds of life insurance:
decedent insured himself, inclusion
or exclusion will depend on who the
beneficiary is.
a. the beneficiary is the
estate.
Bequest
and
Devises
Q:
what is included in the gross
income?
A:
income from such
property.
Q:
Why is it considered an
exclusion?
A: because this is just an indemnification
for the injuries or damages sufered.
or
7.
Retirement benefits,
pensions, gratuities [Sec. 32 B
(6)]
Q:
Why do we need to distinguish
retirement pay, separation pay and terminal
leave pay?
A:
because
they
have
diferent
requirements
for exemption.
Q:
What is retirement
pay?
A:
the sum of money received upon
reaching the maximum age of employment.
a. Under RA4917 (with Retirement
Plan)
1.
the private benefit plan is
approved by the BIR (RR2-98);
2. the retiring oficial or employee has
been
in
the
service
of
the
same
employer for the last 10
years;
3. he is at least 50 years old at the
time of retirement; and
4. the oficial or employee avails
himself/herself of the benefit only
once.
b. Under RA7641 (without retirement
plan )
1.
the
13th month pay for every year of
service.
B(6)
retirement
benefits
given
by
the
Philippine Govt through the GSIS, SSS and
PVAO
are
exempt
without
further
qualifications = automatic exclusions.
Take Note of 3
cases.
be reminded of EO 291, Sec. 2.
78.2 par. 97, RR2-98, RR16-200 (3).
Case
of
Zialcita
to
2. Private institutions.
F.
GSIS,
SSS,
Medicare
and
other
contributions
(Sec. 32 B 7
f)
must be deducted from the GI not
NIT
because
it
is
an
exclusion.
-creditable withholding tax is an exclusionmust be deducted first from the GI
before you compute the NIT. Otherwise, you
are including
in
the
GI
something
that is
excluded
from
the
same.
of
shares
Sec.
34
EXPENSES
Feb. 12,
Expenses)
2007
(Sec.
34
A,
the
deduction
be
3.
if the amount of capital outlay
is substantial, it cannot accommodate all of
the
expenses
incurred.
ALLOWANCE
DEPRECIATION
1. There is carry
over
FOR
taxpayers
allowable
deduction
for interest expense shall be deducted by an
amount equal to 42% (RR 10-2000) of the
interest income subject to FIT.
Q:
Who
claims
this
deduction?
A:
the
debtor
claims
deduction.
this
3.
if no payment had been paid on the
principal obligation, the advance interest
paid cannot be claimed as a deduction
on the years that it was paid.
REQUIREMENTS FOR REDISCOUNTING OF
PAPERS:
1. incurred within the taxable
year.
2. individual taxpayer reporting income on a
cash basis.
OPTIONAL
TREATMENT
OF
INTEREST
EXPENSE:
1. interest incurred to acquire property
used
in
trade,
business
or
exercise
of
profession
can be claimed a an itemize
deduction
a. on interest; or
b. depreciation (as capital
expenditure?)
Q: What is this interest
income?
A: the money borrowed was deposited in a
bank so that it will warn interest.
(RR132000)
ILLUSTRATION:
1. loan of 1M from a bank with an interest
of
20
%
2. 20% of 1M is Php200,000 but you
cannot claim this whole amount as a
deduction.
3. when you deposited the 1M in the bank,
it earned a bank interest subject to FIT
worth Php10,000.00.
4. 42% (RR) of 10,000 = 4,200 (RR
9337)
5. Php200K-4,200= Php195,800/ this is
the amount you can claim as a deduction.
34
TAXES:
REQUISITES
:
1. taxes must paid or incurred within
the taxable year
2. it must be incurred in connection
with
trade
or
business.
3. can be claimed
as:
a.
a deduction; or 34 C
1&2
b.
tax credit 34 C
3&7
Q:
Where
deducted?
should
it
be
A:
MERCURY
DRUG
CASE
Discount
of
senior
citizens
SC: discount claimed by senior citizens shall
create a tax credit and must be deducted at
the bottom of the formula.
Q: What is a tax deduction?
Example?
A: example is business
tax.
tax deduction is allowed if the taxes
were
paid or incurred within the taxable year and
it must be connected to the trade, business
or profession of the tax payer.
Q: Who are entitled to claim
it?
A: those liable to pay NIT. (Tax credit only
for
NIT)
Q: What is a tax
credit?
A: refers to the taxpayers right to
deduct from the income tax due the
amount of tax the taxpayer paid to
foreign country, subject to limitations.
A:
Formula:
STEP 1
GI from sources w/in
NIT:
GI from entire world
STEP 2
Quotient x RATE = amount
be claimed as a deduction
w/c
can
The
itemized
deduction
of
losses,
however, is not confined to section 34B. it
is also found under section 86A (1) (e)
which also pertains to deductions available
under the estate tax law.
Losses within six (6) months after the
death
of the decedent can be claimed as
itemized deduction of losses under Section
34B. However, may be claimed as
deduction under estate tax return provided
that the same are not claimed as itemized
deduction of losses under Section 34B.
Q: How many carry-overs do we have
under the Code?
A:
3.
Namely:
1. Section 27 E (32) Carry forward
of excess minimum Tax
2. Section 39 D Net Capital Loss
Carry- over
3. Section 39 D 3 Net Operating
Loss
Carry-Over.
KINDS OF LOSSES AND THEIR CARRYOVERS:
A. ORDINARY LOSS NOLCO ( #3
above)
Q: Why is there a need for a carry over
under Sec. 34 D # when you can claim the
loss from both capital and ordinary loss?
NET CAPITAL
LOSS CARRY-OVER
NET
OPERATING LOSS
1. taxpayers is an 1. taxpayer may be
individual only not an
individual
or
corporation.
corp;
2.
involves
capital loss
NE T
OPERATING
LOSS
CARRY
REQUIREMENT
S:
1.Net operating loss of the business or
enterprise incurred w/in the taxable year
2. not previously of-set as a deduction
from the GI
Q:
Can
the
period
be
extended?
A: yes, for mines other than oil and gas
well.
1. net operating loss w/out the
benefit incentives provided by law;
2. incurred in any of the first 10 years
of operation.
3. carried over as a deduction from the GI
for the next 5 years following such loss.
4. no substantial change in the
ownership of the business or enterprise.
Q: What is the
limit?
A:
75% of the nominal value of
outstanding shares is held by or on behalf
of the same persons/ corporation
if
to a contract of
loan
- no bad debts
instruments.
Q: Who claims
it?
A: a. creditor
b.money
lender
for
loss
of
Q:
What
is
depreciation?
A: It is the gradual dimension in the
service or useful value of tangible property
due from
tear and
normal
(10)
years or such shorter life
as may be
permitted
by
the Commissioner.
4. for property not used directly in
the
production of petroleum (1) depreciated
under the straight line
method,
and useful life is only five (5) years
DEPRECIATION OF PROPERTIES USED
IN MINING OPERATIONS
ALLOWANCE
DEPRECIATION:
FOR
and
MINES
only deduction
self
executing
deduction
Q:
What
is
depletion?
A: the exhaustion wear and tear of
natural resources as in mines, oil, and gas
wells
the
natural
resources
called
wasting
assets
REQUIREMENT
S:
1.
depreciation
is
allowed
as
a
deduction from 61; and
2. contractor notifies the Commissioner
at the beginning of the depreciation
period which depreciation rate shall be
used.
DEPRECIATION DEDUCTIBLE BY NRAETB
OR RFC
reasonable
allowance
for
the
deterioration
of property
arising out of its use or
employment
or non-use in the business, trade
or profession
3. property is located in the
Philippines
1.
2.
34 G DEPLETION
WELLS
OF
OIL
and
GAS
which
DEPRECIATION
DEPLETION
is
not
vs
used
in
mining
operation
in
Q:
Method
for
computing
depletion?
A:
cost
depletion
method
Q:
to
whom
allowed?
A: only mining entities owning
economic interest in mineral deposits
Economic interest: capital investments
in
mineral
deposits
34H CHARITABLE &
OTHER CONTRIBUTIONS
TAKE NOTE:
1.unique because deducted from the
taxable net income and not from the gross
income
second
step
of
the
formula
deduction
Q:
Who
is
deduction?
A:
the
donor
claiming
the
Q:
Who
are
the
Donees?
A: 1.Government of the Philippines or any
of its agencies or any political
subdivision
thereof
exclusively
for
public
purpose
2. Accredited Domestic corporation or
association
organized
and
operated
exclusively for religions, lion, charitable,
scientific,
youth
and
sports
development, cultural or educational
purposes or for
the
rehabilitation
of
veterans,
or to social welfare institution, or to non
government organization and no part
of its net income inures
to the
benefit of
any private
stock
holder or
individual
Q:
How
many
kinds
of
deduction?
A:
Two
(2)
kinds:
1.partial
deduction
10% of taxable income in case of
an
individual
the
two
Rule:
Total
kinds
is
the
Partial
/Full
Donee
is
never
an
Q:
If
the
Donor
is
a
pure
compensation income earner and he
donates P100,000 to the church, can he
claim it as a deduction?
A: No. pure compensation income earner
can only claim a deduction under Sec 34 M
Q:
If
Donee
is
the
Philippine
Government, what is the requirement?
A: it must be made exclusively for public
purposes
Q: What if the Donee is a
province?
A: there must be a qualification that it is
for public purpose
Q: If the Donee is a Domestic
Corporation, what is the requirement?
A: no part of its income inures to the
benefit of any private shareholder or
individual
Q: What are those contributions which can
be deductible in full?
Non
Non
profit
REQUIREMENT
S:
1. organized and operated exclusively for
scientific, research, educational, character
building
and
youth
and
sport
development,
AND
realizes
benefits
from
STANDARD
KINDS
OF
DEDUCTIONS:
1.Itemized deduction
2.Optional Standard Deduction
3.Personal /Additional Deduction
OPTIONAL
STANDARD
DEDUCTION:
can be availed of by an individual who
may
elect a standard deduction in an amount
not exceeding 10% of his gross income
may apply in
lieu of the other
deductions
under
Section
34
the taxpayer must signify in his return
his
intention to elect the optional standard
deduction,
otherwise,
he
shall
be
considered as having availed of the itemized
deduction.
Q:
Who can claim this
deduction?
A: all individual taxpayers except non
resident alien not engaged in trade
or
business
(NRANETB)
Reason: he is not liable to pay by way of
the
NIT, thus, follows he cannot claim this
deduction because he is liable to pay by
way
of GIT.
TAKE NOTE:
can co-exist
additional
exemption
with
personal
and
or
34
M
PREMIUM
PAYMENTS
ON
HEALTH AND /OR HOSPITALIZATION
INSURANCE
OF
AN
INDIVIDUAL
TAXPAYER
TAKE NOTE:
AEMOP: can
NRAETB
BASIC
EXEMPTIONS:
be
RA
or
PERSONAL
also
be
dependent.
Q:
Can
a
widower
claim
exemptions?
A: exemptions must be strictly
construed, widower not included in
the list under
TAKE NOTE:
always
choose the
higher amount
of
exemption if you are filing a return covering
the period within which the change of status
occurred
1. if the taxpayer should (1) marry or (2)
have additional dependents during the
taxable
year,
he
may
claim
the
corresponding exemption in full for the year.
Ill ustration:
1.Single
Jan
1,
2005
2.Married June 1, 2005 on April 15, 2006
status: legally married can claim P
32,000
2. if the taxpayer should die during the
taxable year, estate can claim personal
exemption.
Illustration
1.Jan. 25, 2005 taxpayer married w/ one
child
can claim on April 15,
2006
P32,000+
P8,000
} P40,000
PROPERTY
parties)
(between
1)
between
members
related
family
I N DON OR S
TAX
Relatives
includes
relatives
by
consanguinity within the 4th
civil code.
Nephew is
a
stranger and
relative
ang nephew.
2)
individual
and
corporations
Gen. Rule: NO
DEDUCTION
Except: distribution in liquidation or
less than 50% of the outstanding
capital stock
3)
Two
corporations
4)
Grantor
or
Fiduciary
5) Two fiduciaries of two
trust
6) Fiduciary and beneficiary of
trust
Sec. 37 Special provisions
regarding deductions of
insurance companies.
Codal
Provisions
Section 38: Losses From Wash Sales of
Stock or Securities
Q: What is a wash
sale?
A: It is a sales or other disposition of
stock
securities
where
substantially
identical securities are purchased within 61
days, beginning 30 days before the sale and
ending
30 days after the
sale.
Q:
What
period?
A: 61 day period beginning 30 days
before and ending 30 days after the sale
Q: Jan 20 you purchased share of stock,
and
disposed of the same on Feb 5, 2005. Is
this a wash sale?
A: No
Q: If it is a loss in wash sale,
happens? A: General Rule: (Sec
131 RR No. 2) gains from wash sale
are taxable but losses are nondeductible
Exception
:
unless claim is made by a dealer in stock
or
securities and with respect to a transaction
made in the ordinary course of the
business of such dealer
Q: Reason why losses in wash sale cannot
be deducted?
A:
1. to avoid too much
speculation in the market
2. taxpayer not telling the truth,
incurred
Q: When is there a
gain?
A: excess of the amount realized over the
basis or adjusted basis for determining
gain. (amount realized from the sale or
other disposition of property)
Q: When is there a
loss?
A: the amount realized is not in excess of
B
or AB
Illustration: 1987 Bar (Juan dela
Cruz sold jewelry for 300,000 ) contract
of sale
amount realized is 300,000
Q: What will be the basis of the
gain?
A: Sec. 40 B (1), property was acquired
by purchase
Cost: purchase price + expenses
Q: If there is a gain, is the whole gain
subject to income tax?
A:
it
depends
if ordinary asset = 100% is subject to
income tax
if capital assets
a. short term(less than 12 months) :
100%
taxable
b. long term (more than 12 months):
50%
taxable
Q: suppose property sold is a parcel of land
will the rule be the same?
A:
No,
and
it
depends
ordinary asset: apply the cost
capital asset: 6% FMV or selling price
which ever is higher
Q: Do we apply the holding
period?
A: No, holding period does not apply to the
sale of real property. This is an absolute
rule:
If realty is ordinary holding period
does not apply.
If realty is capital asset 6% FMV or
selling price applies.
Holding period applies only to sale of
personal property which is a capital asset
except sale of shares of stocks.
Holding period also do not
corporations.
apply to
c.
Security
holder
of
a
corporation, party to a merger or
consolidation,
exchanges
his
securities solely for stock or security
in another corporation, also a party
to the merger or consolidation.
person
transfers
property
to
corporation to gain control
40
C
EXCHANGE
PROPERTY
OF
GENERAL RULE:
In sale or exchange
of property, the control amount of gain or
loss shall be recognized.
1.
gain
is
taxable
2.
losses
are
deductible
Exception: If permanent to a merger or
consolidation plan, no gain or loss
shall
be recognized
1. gain is exempt
2. losses are not deductible
REQUISITE
S:
1. the transaction involves a contract
of exchange
2. the
parties
are
members
of
the merger or consolidation
money
and
the
FMV
other property received.
(40
C
(3)
TRANSFEROR
of
such
(b)
or
or
Sec 40 C (1)
(b)
a shareholder
exchanges stock in
a
corporation which is a party to a
merger or consolidation, solely for the
stock of another corporation which is a
party to the merger or consolidation
Sec 40 C (2)
(c)
a
security
corporation
holder
of
2.
loss
deductible
not
40c last
paragraph
the
transferee
becomes
stockholder,
parties are not members of the
merger
the
individual
wants
to
be
a
shareholder but does not want to
purchase shares but willing to give up
property as a result of the exchange ,
the person gains control of the
corporation
The rule is:
a.
gain
is
exempt
b.
loss
not
deductible
Requisites
:
1. There is A contract of exchange
where property was transferred
by the person in exchange of
stock
or unit of participation in a
corporation.
2. As a result, the person alone or
together
with
others
(not
exceeding of 4 persons) gains
control of the corporation.
Q: What is control?
A: ownership of stocks in a corporation
possessing at least 51% of total
voting
power.
Sec 40 B (5)
non applicability of income tax is only
temporar
y
Reason : Basis will be 40 C (5)
1.
40 C (5) (a)
Transferor
basis of stock or securities received
by
the transferor: same as the basis of
the property, stock or securities
exchanged:
decreased by the (1) money and (2)
FMV
of the property received; and
increased by (a) amount treated
as
dividend and (b) amount of
gain recognized
2.
40 C (5) (b)
Transferee
as it would be in the hands of
transferor increased by the amount
of gain recognized.
Sec 40 (c) (4) Assumption of
Liability
1.
2.
Taxpayer,
in
connection
with
the exchanges described receives
securities or stocks permitted (no
gains recognized) it is sole
consideration of the same the
other party assumes liability of the
same the acquisition of liability not
treated as money and / or other
property the exchange still falls
within the exceptions.
If amount of liabilities assumed
+ amount of liabilities to which
property is subjected to exceeds adjusted basis of the property
transferred the excess shall be
considered a gain from the sale of a
capital asset or of property which
is not a capital asset, as the case
may be.
SECTION
INVENTORIES
41
Purpose:
Change of inventory to
determine clearly the income of any
taxpayer/ to reflect the true income.
Limitation:
1.
once every 3
years
2.
approval of the secretary of
finance
Section
43
Accounting
Periods
1.
Fiscal
year
2. use of calendar year
a. no annual
accounting
b. does not keep books of
account c. individuals
Use of method as in the opinion of the
commissioner clearly reflects the income:
1. no
accounting
method
has
been
employed
2.
the method does not clearly
reflect the income
Sec 44 Period in which items of Gross
Income included and Sec 45 Period for
which Deductions and Credit Taken
Under Sec 44 amount of all items
of
Accounting
Q:
Who
are
involved?
A:
applies to
engineers
for
Long
the
professionals
architects
and
of
the
property
A:
Yes
Casual
Sale
has
Requirements:
1. selling price exceeds P1,000
2. initial payment not exceeding
25%
selling price
Regular
sale
no
requirements
Case
of
Baas
1.
subject
matter
2.
sold by
way
3.
agreement
4.
cash
deposit
5. post
dated
promissory
notes
(installments)
3. 1st installment promissory note
was disconnected
4. 2nd installment exchanged with cash
- these two exceeds the selling price
5.
you only compute
cash
H: Initial payment exceeds 25%
installment basis is not applicable
RR 2; Section 175: In payment by way of
installment promissory note, bills of
exchange
and
checks
will
not
be
it
is
great
source
Section
51
Individual
Returns
Who are required to file?
(ITR)
1. RC
2. NRC
3. RA
4.
NRAETB sources
within
Q: Who is not mentioned in Sec 51 but
liable to pay by way of NIT?
A:
OCW/
seaman
Exception:
RC OR ALIENS: engaged in trade or
practice of profession in Phil. Shall file ITR
regardless
of the amount of gross income.
Q: If OFW is exempt from filing a return,
what is he required to file?
A: Information Return
Q: who are not required to file a return?
A:
a.
an
individual
whose
gross
income does not exceed his total
personal and additional exemptions
for dependents
b. worker
(compensation
income
earners) regardless of the amount
of compensation shall not required
to file ITR because the management
files
it. (RR 3-2002)
c. individuals whose sole income
is subject to FIT
d. individuals who are exempt from
income tax
Exception: IT
1. the management files an incorrect
return
2. the
employee
has
two
or
more employer
51 A (3)
A: not required to file ITR may be required
to file information return
51 B - Where to file?
1.
authorized
agent
bank
2.
revenue
district
oficer
3.
collection
agent
4. duly authorized treasurer of the city
or municipality where taxpayer resides
or has principal place of business
5. office of commissioner if no
legal
residence or place of business in
Phil
51 C
Q: When to file?
A: filed on or before the 15th day of April
each year
51 C (1) NIT Payers using CY
two days provided (calendar)
1. on April 15; or
2. before April 15 (January, Feb or March)
not December because the calendar year
is
not
yet
over
Fiscal year: 15th day of the 4th month
following the close of the fiscal year.
51 C (2) individuals subject to tax
on capital gains
Exception: General Rules Sec
58
1. Sale of shares of
stocks
return filed within 30 days after each
transaction and
Final consolidated return on or before
April 15
2.Sale
of
Real
Property
return filed within 30 days following
each
sale
51 D Husband and
Wife
1. Pure compensation income earner
separate
return
RR
3-2000
pure compensation
income
earner
regardless of amount of income not file ITR.
2. Not pure compensation: joint
return
51 E. Return of
Income of
Childre
n
Parent
to
Include
Under
return
A: General Rule: No
Exceptions:
1.engaged in trade or business; or
2.exercise of profession Sec 51 A (2)
Extension of
Q: To whom granted?
A: Corporations
Grounds: Meritorious case
Time
to
subject to
56
Time
Extension
the
provisions
of
Sec
of
and pay
departure
the
tax
due
before
with
Free
Covenant
5.
Commissioner,
with
approval
of
Sec
Finance
2.Tax
deducted
and
withheld
held as a special fund in trust
the
government until paid to the
collecting oficers.
3.Return for final withholding
tax
filed and paid within 25 days
the
close
of
each
calendar
quarter
4.Return
taxes
for
Creditable
for
from
withholding
statement
given
simultaneously
upon
payment at the request of the
payee.
Creditable
withholding
taxes
1. corporate payee not later than
the
20th day following the close of
the quarter
later
b.Impose income as if TP is
corporation c.Impose income as if
estate itself
depends whether there is a (1)
judicial
(2)extra judicial partition or (3) no partition
at all
When there is a judicial settlement which
is final and executory but no partition:
Two possibilities:
1.Creation of unregistered partnership
Income of the Estate: corporate income
tax
2.Creation of Co-ownership
Income of the Estate: Income tax
on
individual
-co-owner liable in their individual company
Ponce Case:
H: After finality heirs did not divide the
property, the applicable income tax is
corporate income tax
because they
contributed money to engage in real estate.
SECTION 61 TAXABLE INCOME
(Important) Taxable income of the estate
or trust shall be computed in the same
manner and on the same basis as ill the use
of an individual.
Section 62: Applies during Pendency
of
Extra Judicial Settlement
Personal Exemption (P20,000)
Individual it will depend whether
he/she is classified as single, head
of the family or married
Estate regardless
Special deductions:Income distributed to
the heirs
if you distribute nothing you cannot
claim this special deductions
if there is a distribution, the heir shall
be liable to pay whether individual
capacity
if there is no distribution, heirs are not
liable to pay anything
Special deduction not apply if individual
tax is paid by the Estate itself.
obligation
of
the
trustee
liability of trust itself
personal
Liability of trustee:
If trust irrevocable
obligation of the grantor
and
not
of
NRA,
German
donates
SOS
of
FG
Q:
Estate
owner
1.Section 87 a contemplates a
situation where the usufruct is
terminated.
2.Section 88a contemplates a usufruct
for
a fixed period. Ex contract of lease
Q: How do you determine the value
of usufruct?
A: Sec. 88 a provides to determine the
value of the right of usufruct, take into
account the probable life of the
beneficiary.
Q: Why definition of gross estate is
longer than definition of gross gift?
A: transfer occurring after death. estate
tax absolute
Transfer during the life time
Normally Donors tax
However there are exceptions:
1.transfer in contemplation of death
(85B)
2.revocable transfer (85
C)
3.transfer
for
insufficient
consideration
B. Transfer in contemplation of death
Roces case:
What are
transfers deemed in
contemplation of death?
A: 1.Property was transferred during
the lifetime but the decedent:
a. retains possession or receive
income or fruits of property; or
b.retains the right to designate persons
who will possess the property or
the right to receive fruits or income
c.Revocable Transfers
same
with
fidel
commissary
substitution
3 parties:
1.testator / decedent
2.1st heir
3.2nd heir
TAKE
NOTE:
To
determine
whether
included in Estate or not, know who has the
choice to designate the 2nd heir:
if decedent instructs the 1st heir that he
can
transfer the property to whomever he
wants included in gross estate
1st heir choice included in gross
estate
E.
Proceed
of
Lif e
Insurance
1.Beneficiary is the
estate
included in gross estate whether
designation is revocable or not
2.Beneficiary is 3rd
person
revocable included
irrevocable not included
F.
Prior
Interest
important only due to the codification of
the tax code B,C,E, included whether
before or after the efectivity of the code
G.
Transfer
consideration
for
ins ufficient
A: paragraphs 85 B, 85 C, 85 D
Sale in good faith as a defense:
1.under Section 100 is not a defense
2. under Section 85 G, it is a defense
H. Capital of Surviving Spouse
correlate with Sec 86 C
both speak of legally married individual
pertains to the separate property
of spouse who survived
capital used in its generic sense
surviving spouse may be man or woman
Section 86 (c)
to determine the limitations of
1. Funeral Expense
2. Whether written notice is required
3. to determine whether gross value
is at least P200,000 (Sec 90)
4.to determine if gross value is at least
42 M
Q: Who are the taxpayers under 86 A?
A: 1.RC
2.NRC
3.RA
Q: Who is the taxpayer under 86 B?
A: NRA
Q: Why do we need to know this?
A: NRA
cannot
avail
of
following deductions:
1.family income
2.standard deduction
3.hospitalization
4.retirement pay under RA 4917
Requirement:
the
Pajonar vs Commissioner
I:
Whether
or
not
extra-judicial
expenses may be allowed as a deduction
H: This law has been copied from U.S. In
US, expenses to be claimed as a
deduction both judicial and extra judicial
expenses.
Claims against the estate
Estate is the debtor
Requirements:
1.at the time the indebtedness was
incurred the debt instrument was
duly
notarized;
2.loan contracted within 3 days before
death;
3.the administrator or executor
shall
submit a statement showing the
disposition of the proceeds of the loan
Claims of the deceased against
insolvent person
Estate is the creditor
3.losses
not
compensated
by
insurance
4.losses not been claimed as a
deduction for income as purpose
5. losses incurred not better than the
last day for the payment of the estate
tax
Property Previously Taxed
Vanishing Deduction Return
Requirement:
1.person acquires the property by virtue
of donation or inheritance
Q: What if acquired through purchase?
A: Not apply, the property must be
acquired by inheritance or donation
2.Estate tax or Donors tax already paid
by the Estate of the Decedent (1st par)
3.Any person who died within five (5)
years prior to the death of the decedent
Q: What are the amounts?
A: Prior Decedent died within:
1.5years
20%
2.4years
40%
3.3 years
-60%
4. 2years
80%
5.
1
year
-100%
in
the
to
Non
Conjugal
D.
Miscellaneous
Provisions
For NRA: No deduction allowed unless
include in the return the value at the
time of his death that part of his gross
estate not situated in the Philippines. For
proper deduction must include E. below
E. Tax Credit
to
Foreign
Country
for
Estate
Tax
Paid
SECTION 87 EXEMPTION OF
CERTAIN ACQUISITION AND
TRANSMISSIONS
in
p ublic
hearing
In Congress, the requirement is not
absolute (by discretion only). Under local
taxation (last phrase of 186), the
requirement is ABSOLUTE.
Go to 151:
The city could impose the tax
already imposed
by
the
province of
by the
municipality
.
Q:
What are the numerous taxes
imposable by the province which a city now
allowed to impose?
A: Those enumerated in 135 to 141 of
the
LGC
Reasons why a municipality wanted to be
converted
in t o
a
city:
1. 151
2. 233 (real estate tax)
of
the
constitutional
tax
Definitions
Local
(132)
Taxing
Authority
for
a
province,
it
is
the
provincial board
or
the
provincial council
(sangguniang panlalawigan)
for a city, we have the city
council
(sangguniang panlusod)
for the municipality, we have
the municipal council (sangguniang
pangbayan)
on
the
Crimes
(under
absolute
relative
absolute
prohibition
III. Estate tax, inheritance, donations
inter vivos,
donations
mortis
causa
EXCEPT in
135 (133(C))
transfer tax on the transfer of
realty to be imposed by provinces
and cities
(135)
NOTE: this is not a real estate
tax, this is a local tax.
IV. Custom duties, charges or fees for
the
registration of vessels or ships, wharfages
fees and wharage dues EXCEPT if the
wharf had been established, maintained
and operated by the locality (133(D))
wharf a
pier
an absolute
prohibition
commodities
marketed
in
a
public
market, lets say in the city of
Pasig, where the commodities came
from Laguna then to Tanay, Cainta,
Taytay; just imagine if each of the
towns will impse
1peso for every head of a chicken
or
50cents
for
every
bundle
of
vegetable.
P A LM A
D E V T
CO R P
v.
M
ALA N GAS
ZAMBOANGA DEL SUR (113 SCRA
572)
F:
Municipal council passed a tax
ordinance entitled police surveillance
fee which provide that ALL motor
vehicle passing through a particular
street in the town proper of Malangas
which will lead to the pier or wharf will
pay a certain sum of
money whether it is camote, copra,
palay,or rice. One of the owners of the
motor vehicle is Palma Devt Corp.
carrying copra, banana and coconut to
be loaded in a ship docked at pier of
Malangas. The lawyer of petitioner
assailed the validity of the ordinance
stating that it is a clear violation
of
133(E).
H: It is not the title of the ordinance which
is controlling but it is the essence of the
substance of the tax ordinance. The
tax ordinance clearly violated 133(E),
therefore, the SC had no option but
to
declare the tax ordinance null and
void for being in violation of the law.
VI. Taxes,
fees
or
charges
on
agricultural and aquatic products when
sold by marginal
farmers
or
fishermen
(133(F))
Q: Don Antonio Florendo, a person
coming from Pampanga who settled
in
Davao City, employed thousands of
workers
in
the
diferent
banana
plantation. Can the LGU impose tax
on the agricultural product which is
a banana?
A:
YES.
The
LGU
can
impose
because Don Antonio is not a marginal
farmer. It is only prohibited if it is
sold by a marginal farmer.
relative
prohibition
since
under
143(H), it says there that taxes
which are
prohibited
such
as
excise tax,
percentage tax and value added tax
nonetheless, the LGU may impose a
tax not exceeding 2% of the gross
receipt (for cities 3%).
Relative
prohibition.
X. Tax, fee or charge on common
carriers whether by land, water or air
(133(J))
FIRST HOLDING CO. v.BATANGAS CITY
(300
SCRA 661)
* 2nd SC ruling discussing both the IRC and
LGC.
F:
absolute
prohibition.
XII. Tax, fee or charge on registration of
motor vehicles and for the issuance of
license
and
permit
for
driving
thereof
EXCEPT
tricycles.
(133(L))
BATUAN CITY v. LTO (322 SCRA
805)
I:
Which function was delegated to the
LGU?
The LTO registering motor vehicles or
the LTFRB granting franchise and
regulation of common carriers?
H: Under 133(L), the function of the LTO is
prohibited, an therefore what may be
delegated to the LGU is the function of
LTFRB.
XIII.
Tax, fee or charge on exportation
of products and is actually exported EXCEPT
under 143(C) where the LGU is authorized
to
impose business tax on exportation
(133(M)) XIV.
Tax, fee or charge on
cooperatives duly registered under the
cooperative cod (RA
6938)
and
Business
Kalakalan
(RA
6810)
(133(N)
)
A:
Because cities are authorized to
increase the rate of 50% of the maximum,
that is 50%
of is 25% (50+25 is
75%).
NOTE: Do not apply transfer of realty
pursuant to RA 6657 (CARP) this is the
Comprehensive Agrarian Reform Program
this is exempt.
II.
tax on printing an publication
(136)
tax
2.
F:
v.
Section 147
are to be imposed
by municipalities
and cities
are applicable to
persons who are
working but are
not required to
take government
examinations
there
is
a
maximum (P300)
NOTE: it is not
always 300,
since the exact
amt must
be fixed by the
ordinance.
VI.
amusement
(140)
if
van
not
delivery
van,
but
I.
H))
Paragraph H: for
the
imposition
of excise tax, percentage tax and value
added tax, the municipality may impose a
tax not exceeding 2% of the gross
receipt (with regard to a city, it may go as
far as 3%)
II. Municipalities in Metro Manila who
can increase their rate (144)
Right now
municipalities:
1. San Juan
2. Pateros
there
III.
Professional
(147)
are
only
two
Tax
Q:
RFM is manufacturing commodities,
one of them is Swift hotdogs, this is being
sold not only in Mandaluyong, Metro
Manila, but also to the inter country
from Batanes to Tawi-tawi. Where should
the business tax of wholesaling or the
business tax of retailing be paid? Should it
be in the principal ofice (Mandaluyong)
or the place where the commodities are
sold?
A: It will be paid in the place where it
had been sold PROVIDED there is a branch
ofice
or
a
sales
outlet
(150(A)).
If it so happens that the company has
a factory different from the place where the
principal office is located 30% should
be
pain in the principal ofice and 70% in the
municipality or city where the branch is
located.
PHIL MATCHES v. CEBU (81 SCRA
99 )
F:
Phil Matches were produced in
Nagtahan, Manila.
In
Cebu
city,
there was a
warehouse where the matches were
stored. Many of the customers, by way
of wholesale in the warehouse in Cebu
City,
they came from diferent towns of the
Visayan Region. May the business tax
ordinance of Cebu be imposed on
those transactions even if the buyers
did not
come from the territorial jurisdiction
of
Cebu?
H: Since in this case the contract booked
and paid, meaning, it was negotiated
perfected and consummated in the
warehouse where it was located in
Cebu City, the Cebu City government
has the
right to collect business
tax.
Q: What if there is an agreement that
commodities would be delivered and that
the buyer would be waiting in some other
town, is the answer still the same?
A:
YES, the answer is still the same
because delivery to the carrier is delivery to
the buyer
where delivery has been termed within
the
territorial
jurisdiction
of
Cebu.
SHELL v. CEBUCOT, CAMARINES SUR
(105
PHIL 1063)
F:
The
petroleum
products
were
purchased at
the
motor
vehicle
traversing the
neighboring towns of Cebucot like
Bason,
Dimalaon, all towns in Camarines
Norte.
4.
For
barangay
clearance
if you want to engage in the
business of retailing
or
wholesaling
if
barangay captain will not approve
that
within 7days go to the municipal
hall or city hall for approval
5.
For the use of barangay
property
Revenue
Raising
Q:
Why
common?
A: All the LGU could impose the same. But
it does not follow that all the provinces,
cities, municipalities could impose the
same. Only the LGU which operate,
establish, maintain the entity
If established by the province, it
should only be the province.
These
are:
1.
service fee and
charges
for services
rendered
2.
public
utility
charges
provided
owned,
operate
and
maintained by them
3.
toll fees and
charges
tax or toll for the use of a bridge or
a street
Tax
This is applied
and juridical persons.
to
both
natural
Requirements
:
1. for a natural person at least 18
years of age
2. for corporations upon registration
with the SEC
Q: What if you become 18 in the month of
January
or
November
or
December? A: For those who celebrated
their birthday before July 1 (that is up to
June 30), they are liable to pay the tax, for
this year.
For
those
who
celebrated
their
birthday on or after July 1, they are not
yet liable to pay this year, but have to wait
until next year.
January 1
THE
INTERNAL
of
the
1. Assessment
2. Collection
Under the NIRC, assessment and collection
have 2 kinds:
1. Normal/Ordinary assessment
collection Sec. 203, NIRC
2. Abnormal/Extraordinary
and
There was:
1. an omission or failure to file
the return;
2. if there was a return filed,
it was fraudulent, or;
1.
the prescriptive period for
assessment shall be 10 years
from the discovery of none filing or
false or fraudulent return (Sec. 222,
par. o, NIRC)
since
there
is
no
assessment
there is no prescriptive period for
assessment
Abnormal/Extraordinary
FORMS
PROTEST
and
OF
1. Local
Tax
(Sec.
125,
Local
Government Code (LGC))
2. Real Property Tax (Sec. 252,
LGC)
3. Tariff and Customs Code (Sec.
2313, RA 7651)
In all protest under the diferent codes,
payment under protest is only necessary
under the Real Estate Tax.
RR 1299
If
the
taxpayer
receives
2
final
assessments, one under the Net Income
Tax (NIT) and the other in VAT. If the
taxpayer dont want to file protest under
VAT but want to file a protest under NIT.
The taxpayer in order to be allowed to file a
protest under the NIT must first pay the VAT
where he does not intend to file a protest.
This is not payment under protest
because, payment under protest is the one
mentioned in Real Property Tax under
Sec.
252, LGC.
Under NIRC, Protest is referred to
as:
1. disputing of final assessment or
not
decide
the
A:
Do not invoke the Lascano case
because it was rejected by RA 9282
In the Lascano case, before you file an
appeal although the 180 days have lapsed,
you have to wait for the BIR to take positive
action.
The case was ruled only by the CTA,
hence it is not a law. The jurisdiction of the
CTA has been amended by RA 9282.
RA 9282 provides that in case of
inaction of the commissioner after the
lapse of
180days, remedy is to file an
appeal.
RR 12-99 says that after lapse of
180days but within 30days after 180days,
that is the
time
to
file
an
appeal.
Q: Supposed the BIR rule within
180?
A: Within 30days from receipt of the
decision file an appeal to the CTA sitting
in division.
Q: Supposed the CTA decided not in your
favor?
A:
File a motion for reconsideration
within
15days to the same division deciding
the case.
Q:
Supposed the
CTA,
in
division
decided not in you favor?
A: File an appeal to the CTA sitting en
banc.
Q: Supposed the CTA en banc decided not
in
your
favor? A:
File an appeal within 15days
from receipt of decision to Supreme Court.
Q: During the pendency of the protest in
the ofice of the Commissioner, supposed
you receive a notice of collection, levy and/
or distraint, what is your remedy?
A:
1. YABES v. COMMISSIONER (150
SCRA
278)
2. UNION
SHIPPING
LINES
v.
COMMISSIONER (185 SCRA
547)
1. GUERRERO v. COMMISSIONER
(19
SCRA 25)
2. BATANGAS v. COLLECTOR
(102
PHIL 822)
GUERRERO v. COMMISSIONER (19 SCRA 25)
H: No. Because it is no longer the
disputed assessment.
BATANGAS v. COLLECTOR (102 PHIL 822)
H: Yes. In order to avoid multiplicity of
suits
ACCORDING TO JUSTICE VITUG:
BATANGAS v. COLLECTOR (102 PHIL 822)
is the better ruling
PROTEST UNDER LOCAL TAX (Sec.
195, LGC)
Under NIRC, protest is filed in the
Ofice
of the Commissioner
Under LGC, protest is filed with the
same
City or Provincial or Municipal Treasurer
who issued the assessment
Period to file Protest
60 days from receipt of
assessment
Q: If the treasurer did not decide within
a
60day period, remedy?
A: Go to the court of competent
jurisdiction
(RTC)
Q: If the RTC decided not in you favor?
A: File an appeal with CTA en banc
(beginning April 23, 2004)
Q: If the CTA decided not in your
favor?
A: Appeal to the SC.
NOTE:
Pursuant to RA 9282, direct appeal to CTA
en banc can be made from:
1. Decision of the RTC involving local
taxation
exercising
appellate
jurisdiction
2. Decision of the Central Board
of
Assessment
Appeal
appellate jurisdiction.
exercising
Board
Appeal.
of
Assessment
Refers
to
the
Order
of
the
Collector
confiscating
the
imported
goods
or
commodities
Doctrine
of
Primary
Jurisdiction
If the Collector ordered the forfeiture
of the imported commodities the order of
the Collector shall be to the exclusion of all
government offices and authority.
(Sec.
204,
c. Tax lien
Q:
final assessment is under normal or
abnormal conditions?
A: It
is
important
because of
the
requirement
under
222.
If
the
final
assessment becomes final and executory,
the
government
(BIR)
can
exercise
the
remedies under 205 in any order or
simultaneously (207). But it is not always
the case, because the
right
of
the
government to collect is
limited
in
case
of
abnormal
assessment/collection
under
222.
Under the
second
option,
the
right
of the
government is limited to judicial action
either civil or criminal.
Administrative
remedies such as distraint, levy, or tax lien
is not available under such condition.
Q: In distraint, levy or tax lien, is the 10
year period of collection applicable?
A:
No, only the 5year period should
apply.
Distrain
t
Kinds:
1. Constructive (Sec. 206)
2. Distraint of Intangible (Sec. 208)
209)
1.
Distraint
Constructive
of
Intangible
Limited
to
3
Intangible
Properties:
1.
Shares of
stocks
2.
Bank
accounts
3.
Credits and
debits
Share
of
stocks
Actual
A: Yes, 213.
Q:
Is
there
redemption?
A:
Yes.
right
of
Q:
After sale, if there was
deficiency?
A:
There shall be no further levy,
because
215 says that it shall be to the
total satisfaction of the taxpayer.
Q:
After sale, if there was an
excess?
A: It shall not be returned to the
taxpayer but shall be remitted to the
national treasury.
under 212:
the real property
is not automatically registered in
the
name
of
the
Government
(purchase)
Q: If sold at a private sale, what is
the requirement?
A: There must be an approval of
the
Secretary
of
Finance
(216)
Sec. 218:
no court shall issue an
injunction to restrain the collection of tax
under this code
Determine what kind of injunction is
referred to here:
1. Prohibitory referred in Sec. 218
because it restrains the collection of
tax.
2. Mandatory
Q: Is the provision limited to tax under
this code?
A: Limited to internal revenue taxes.
EXCEPT: CTA (Regular Court) RA 1125
and
9282:
CTA
is
authorized
to
issue
injunction to restrain the collection of taxes
or fees collected under other code.
Q: Is the rule of distraint or levy the same
under local taxation?
A:
Yes, local
tax.
175 for DISTRAINT
176 for LEVY
Q: How
about
real
property
tax? A: No, distraint is not authorized
(256, LGC), because the remedy is only
Judicial Action and Levy.
Tax
Lien
by
Q:
When is a decision of the cir
appealable to the Secretary of Finance?
A: 4, on matters of interpretation of
tax laws.
SEC. 223:
SUSPENSION OF THE
RUNNING OF PRESCRIPTIVE PERIOD
Q: A Filipino taxpayer went to Canada,
after
15years he went back, he is being
assessed
1.
During
collection
if
there
is
no property found, the period is
suspended
2. If the BIR is prohibited from making
assessment such when the subject
property is under litigation
3. In distraint of levy, the BIR oficer
cant locate the property
CLAIM FOR REFUND (SEC
229)
Written
claim
for
refund:
1. Sec. 229, NIRC
2. Sec. 112, VAT
3. Sec. 136, Local Tax
4. Sec. 253, Real Property Tax
5. None except sec. 1603, Tariff and
Custom
Other
Grounds
Suspension:
Q: Can
we
apply
229
to
VAT? A: Yes, because there is no conflict.
112 is refund under input tax system.
for
Q:
May the commissioner of internal
revenue open the bank account of a
taxpayer?
A:
General Rule: NO.
EXCEPT:
1. To determine the gross value of
the estate; and
2. To
enter
into
a
compromise
agreement. (under 204(A))