Nature of Taxes

Taxes are forced burdens, charge, exactions, impositions or contributions assessed in accordance
with some reasonable rule of appointment, by authority of a sovereign staes, upon the perso,
property, or rights exercised, within its jurisdiction, to provide public revenues for the support of
the government, the administration of the law, or the payment of public expenses. Taxes are
obligation created by law. Taxes arise from law and imposed even without previous agreement
between the government and the taxpayer.
In taxation, It is one’s civil liability to pay taxes that gives rise to criminal liability, unlike
criminal cases where criminal liability gives rise to civil liability.
Taxes are generally personal to the taxpayer. Their payment should be borne specifically by
the person with tax liability.
Since law vests a corporation with personality that is separate and distinct from those persons
composing it, its tax delinquency cannot be enforced against its stockholders.
The stockholders, however, may be held liable for the unpaid taxes of a dissolved corporation if
it appears that the corporate assets have been transferred in favor of the said stockholders.
Essential Characteristics of Taxes
The essential characteristics of tax are:
1. Enforced contribution. The imposition shall not be dependent upon the will of the
taxpayer
2. Imposed by the legislative body. The congress makes tax laws
3. Proportionate in character. The “ability to pay principle” is the basic rule in collecting
taxes. Those who earn more contribute to the government’s coffer more than those with
lesser earnings.
4. Payable in the form of money. Money is the preferred payment of taxes. If property is
taken to satisfy tax liability, the property is sold through public auction to satisfy the tax
obligation.
5. Imposed for the purpose of raising revenue. Taxes are the primary source of
government funds to finance its expenditures and projects
6. Used for a public purpose. Money is taken from the public so it can be returned to them
in the form of public benefits
7. Enforced on some person, properties or rights. Objects of taxation are either tangible
properties, including bisiness transaction
8. Commonly required to be paid at regular intervals. The dtas for oaying of taxes are
fixed by the law to comply with the principle of administrative feasibility;and
9. Imposed by the sovereign state within its jurisdiction. The enforcement of tax is
subject to territorial jurisdiction and international comity.
SUMMARY OF TAXES
OBJECT MAJOR DESCRIPTION INCOME
 CLASSIFICA CLASSIFICA
TION TION
1. Person Personal tax Community tax

2. Property Property tax Real property tax

a. Rights Business taxes b. Value-

added tax
(normal c. Other
course of percentag
business) e tax

d. Exercise
tax

Transfer taxes a. Estate tax

(gratuitous b. Donor’s tax
transfer)

Income taxes a. Final Passive

withholding tax income within
Sale of real
property
(capital asset)
Capital gain
on sale of
Share of stock
outside
Stock
exchange

b. Creditable with Compensation

tax income
Professional
 fee
Rent,
brokers,agent
fee

c. Annual income Compensation

tax income
Business
income
Gain,sale of
other capital
assets
Passive
income earned
outside