5.

General Concepts
A. PROSPECTIVITY OF TAX LAWS
-tax laws are prospective in operastion, unless the language of the statute clearly
provides otherwise.
If the law will result to a harsh and oppresive imposition of taxes, it must not be
retroactively applied, because it will violate the due process clause

B. IMPRESCRIPTIBILITY OF TAXES
-Taxes, as a general rule, are imprescriptible
-The rights to assess and collect are not bound by any statute of limitations,
unless the congress has clearly manifested its intention that it is should be so
bound.

C. SITUS OF TAXATION
Situs of income tax
1. from sources within the Phil
2. from sources without the Phil
3. Income partly within and partly without

Situs of property taxes

1. taxes on real
2. taxes on personal

Situs on excise tax

1. estate
\2. donors

situs ob business tax

1. sale on real
personal
3. VAT

D. DOUBLE TAXATION
1. direct double taxation- both taxes must be imposed on the same property or
subject matter; for the same purpose; by the same taxing authority; within the same
jurisdiction or taxing district; during the same taxing period; and they must be
the same kind or character of tax
-not allowed

2. Indirect double taxation-

both taxes must be imposed on the same property or subject matter; for the same
purpose; within the same jurisdiction or taxing district; during the same taxing
period; and they must be the same kind or character of tax; by different taxing
authorities
-not allowed

Tax treaties as a relief

- to countervail the effects of double taxation
- tax exemption or tax credit

-The denial of the availment of tax relief for the failure of a taxpayer to apply
within the prescribed period under the administrative issuace would impair the
value of the tax treaty
-CIR cannot imposed additional conditions not included in the tax treaty

E. ESCAPE FROM TAXTION

Resulting to loss
1. Tax Evasion- scheme used outside lawful means, which subjects the taxpayer to
further or additional civil or criminal liabilities
2. Tax Avoidance- tax minimization, tax saving device within the means sanctioned
by law. This should be exercised by the taxpayer in good faith and at arms length
3. Tax Exemption

3 important factors tax evasion

1. the end achieved
2. accompanying state of mind
3. course of action or failure of action which is unlawful

EXEMPTION FROM TAXATION

-immunity or freedom from a charge or burden to which others are subjected
1. express
2. implied
3. contractual

ESCAPE FROM TAXATION

NOT RESULTING TO LOSS
1. shifting- transfer of the burden or incidence of taxation

2. capitalization- it is the reduction in the price in order to reduce the amount

of taxes

3. transformation- it is a scheme where the producer absorbs the payment of the tax
in order to reduce the prices and to maintain market share. He recovers additional
tax expemse by improving the process of production . Tax is transformed into a gain
through the medium of production

Shifting of tax burden

Incidence of Tax- refers to the burden of tax
Impact of tax- tax liability

Equitable Recoupment- claim for redund, which is prevented by prescription, may be

allowed to be used as payment for unsettled tax liabilities if boyh taxes arise
from the same transaction

Prohibition on compensation and setoff- taxes cannot be subject to compensation -

taxpayer and government are not creditors and debtors of each other.

- the collection of a tax cannot await the result of a lawsuit against the
government.

COMPROMISE- can be applied for when there is a reasomnable doubt in the assessment
or when the taxpayer has financial inability to pay.

TAX AMNESTY- special provisions which normally involve a one-time opportunity

offered to errant taxpayers to settle their previously unpaid taxes without the
need to pay penalties and/or face prosecution.- any amnbiguity in the provisions of
the law which grants the amnesty strictly construed against the taxpayer and
liberally in favor of the government

TAX ASSUMPTION- the obligation or liability remains, although the same is merely
passed on to a different person or entity

TAX EXEMPTION V. TAX AMNESTY

E-no liability at all
A- pre existing obligation that has been condoned by the government

TAX EXEMPTION V. TAX EXCLUSION

EE-immunity ot privilege; freedom from a charge or burden to which others are
subjected
EC- removal of otherwise taxable items from the reach of taxation

F. CONSTRUCTION AND INTTERPRETATION

Principle of strictissimi Juris- laws granting tax exemption from tax are construed
strictissimi juris against the taxpayer and liberally in favor of the taxing power.

Strict interpretation- a statute will not be construed as imposing a tax unless it

does so clearly, expressly, and unambiguously - apply first.

Rule in the grant of the power of taxation- any ambiguity shall be resolved in
favor of the grant of the taxing power of the state- taxing power is inherent- no
enabling law is required