POINTERS TO REVIEW FOR FINAL EXAMINATION IN TAXATION

DEFINITION
1. TAXES- the 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.
2. EMINENT DOMAIN- the power of the state or those to whom the power has
been delegated to take private property for public use upon paying to the owner a
just compensation.
3. TAXATION- it is the process or means by which the sovereign, through its
lawmaking body, raises income to defray the necessary expenses of the
government.
4. STOCK DIVIDEND- it is a distribution by a corporation to its shareholders of the
corporation’s own stock.
5. SEPARATION PAY- has been defined as the amount that an employee receives
at the time of his severance and is designed to provide the employee with the
wherewithal during the period, he is looking for another employment.
6. DOUBLE TAXATION- means taxing the same property twice when it should be
taxed only once; that is, "taxing the same person twice by the same jurisdiction
for the same thing." It is obnoxious when the taxpayer is taxed twice, when it
should be but once.
7. SPECIAL CORPORATION-
8. INCOME- means all wealth which flows into the taxpayer other than a mere
return of capital. It includes the forms of income specifically described as gains
derived from the sale or other disposition of capital.
9. FISCAL ADEQUACY- refers to the ability of taxation law to finance government
expenditure.
10. DUE PROCESS- the idea that laws and legal proceedings must be fair. Principle
that the government must respect all of a person's legal rights instead of just
some or most of those legal rights when the government deprives a person of
life, liberty, or property
11. INCOME TAX- is referred to as tax on all yearly profits arising from property,
professions, trades or offices, or as a tax on a person’s income, emoluments,
profits and the like.
12. TAXPAYER SUIT- a taxpayer has sufficient personality and interest to seek
judicial assistance with a view of restraining what he believes to be an attempt to
unlawfully disburse public funds.
13. FRINGE BENEFIT- means any good, service, or other benefit furnished or
granted by an employer in cash or in kin, in addition to basic salaries, to an
individual employee (except rank-and-file employee).
14. REMUNERATORY DONATIONS- are those which remunerate past services
which do not constitute demandable debts.
 15. RESIDENT ALIEN- means any individual whose residence is within the
Philippines and who is not a citizen thereof.
16. AD VALOREM- tax of a fixed proportion of the value of the property with respect
to which the tax is assessed; it requires the intervention of assessors or
appraisers to estimate the value of such property before the amount due from
each taxpayer can be determined.
17. TAX AMNESTY- is an opportunity for people who owe back taxes to pay some
or all of what they owe, often with some penalties and interest waived.
18. GROSS INCOME- is income reduced by exclusions. In other words, it is income
from taxable sources.
19. PASSIVE INCOME- comprises of earnings which are derived via a rental
property, limited partnership, or any other enterprise in which any individual is not
involved in active participation. Usually, passive income is taxable.

IDENTIFICATION
1. GOVERNMENT-OWNED OR CONTROLLED CORPORATION
1) Government Service Insurance System (GSIS)
2) Land Bank of the Philippines
3) Philippine National Railways
4) Cebu Port Authority
5) Philippine Economic Zone Authority
6) Philippine Statistics Authority
7) Securities and Exchange Commission
8) National Food Authority
9) Clark International Airport Corporation
10) Manila International Airport Authority
2. CONSTITUTIONAL LIMITATIONS OF TAXATION
1) Due process
2) Equal protection of the laws
3) Rule of uniformity and equity in taxation
4) Non-imprisonment for non-payment of poll tax
5) Non-impairment of the obligations of contracts
6) Non-infringement of religious freedom
7) No appropriation for religious purposes
8) Exemption of religious, charitable of educational entities non-profit
cemeteries, and churches from taxation
9) Exemption of revenues and assets of non-stock, non-profit educational
institutions and donations for educational purposes from taxation
10) Concurrence by a majority of all the members of the Congress for the
passage of a law granting any tax exemption
 11) Power of the President to veto any particular item or items in a revenue or
tariff bill
12)Non-impairment of the jurisdiction of the Supreme Court in tax cases
3. DISTINCTION OF TAX FROM LICENSE FEE
1) Taxes are levied by virtue of the taxing power; license fees are imposed
by virtue of the police power
2) Taxes are levied for revenues; license fees are imposed for regulation
3) There is generally no limit on the amount of tax that may be imposed;
license fees may not be exceed the amount necessary to defray the cost
of regulation
4) Taxes are imposed on persons, property, business, occupation, or the
exercise of any privilege, whether legal or illegal; license fees may be
imposed only on legitimate businesses and occupation
5) Failure to pay a tax does not render the business or occupation illegal;
non-payment of a license fee renders the business or occupation illegal
4. ESSENTIAL ELEMENTS OF A TAX
1) Enforced contribution
2) Generally payable in money
3) Proportionate in character
4) Levied on persons, property, or the exercise of a right or privilege
5) Levied by the state which has jurisdiction over the subject or object of
taxation
6) Levied by the lawmaking body of the state
5. PASSIVE INCOME SUBJECT TO TAX
1) Interest from any currency bank deposit
2) Yield or any other monetary benefit from deposit substitutes and from trust
funds and similar arrangements
3) Royalties
4) Royalties on books and other literary works and musical compositions
5) Prizes (except prizes amounting to P10,000 or less which shall be subject
to regular tax)
6) Winnings
7) Philippine Charity Sweepstakes winnings and Lotto winnings in the
Philippines amounting to P10,000 or less
8) Philippine Charity Sweepstakes winnings and Lotto winnings in the
Philippines amounting to more than P10,000
9) Interest income received from a depository bank under the Expanded
Foreign Currency Deposit System (OCW-OFW- exempt)
10)Cash and/or property dividends actually or constructively received from
any of the following:
a. Domestic corporation
b. Joint stock company
c. Insurance or mutual fund companies
 d. Regional operating headquarters of multinational companies
6. INHERENT POWER OF THE GOVERNMENT
1) Eminent domain
2) Police power
3) Taxation
7. DIVIDENDS
1) Cash dividend
2) Stock dividend
3) Property dividend
8. INCOME TAXPAYERS
1) Resident citizen
2) Non-resident citizen
3) Resident alien
4) Nonresident alien
DISCUSSION
ANALIZATION & COMPUTATION