Taxes, Tax, and Tax

Administration
Types of Taxation Laws

1. Tax laws – provide for the assessment and collection of taxes

2. Tax exemption laws – grant certain immunity from taxation
Tax laws

Examples:

1. The National Internal Revenue Code (NIRC)

2. The Tariff and Customs Code
3. The Local Tax Code
4. The Real Property Tax Code
Tax exemption laws

1. The Minimum Wage Law

2. The Omnibus Investment Code of 1987 (E.O. 226)
3. Barangay Micro-Business Enterprise (BMBE) Law
4. Cooperative Development Act
Sources of Taxation Laws (accdg to hierarchy)

1. Constitution
2. Statutes and Presidential Decrees
3. Judicial Decisions or case laws
4. Executive Orders and Batas Pambansa
5. Administrative Issuances
6. Local Ordinances
7. Tax Treaties and Conventions with foreign countries
8. Revenue Regulations
Sources of Taxation Laws (accdg to hierarchy)

1. Constitution
2. Statutes and Presidential Decrees
3. Judicial Decisions or case laws
4. Executive Orders and Batas Pambansa
5. Administrative Issuances
6. Local Ordinances
7. Tax Treaties and Conventions with foreign countries
8. Revenue Regulations
Types of Administrative Issuances

1. Revenue regulations
2. Revenue memorandum orders
3. Revenue memorandum rulings
4. Revenue memorandum circulars
5. Revenue bulletins
6. BIR rulings
GAAP vs. Tax Laws

GAAP accounting reports are intended to meet the common needs of a vast number of users in the
general public.

In preparation and filing of tax returns, taxpayers are mandated to follow the tax law in cases of conflict
with GAAP.
Classification of Taxes

A. As to purpose
a. Fiscal or revenue tax
b. Regulatory
c. Sumptuary
B. As to subject matter
a. Personal, poll or capitation
b. Property tax
c. Excise or privilege tax
C. As to incidence
a. Direct tax
b. Indirect tax
D. As to amount
a. Specific tax
b. Ad valorem
E. As to rate
a. Proportional tax
b. Progressive or graduated tax
c. Regressive tax
d. Mixed tax
F. As to imposing authority
a. National tax
b. Local tax
Distinction of Taxes with Similar Items
Tax Collection Systems

A. Withholding system on income tax

a. Creditable withholding tax
i. Withholding tax on compensation
ii. Expanded withholding tax
b. Final withholding tax
B. Withholding system on business tax
Forms of Escape from Taxation

1. Shifting
2. Capitalization
3. Transformation
4. Tax Avoidance
5. Tax Exemption
Tax Administration

- Management of the tax system

- Entrusted to the BIR which is under the supervision and administration of Dept of Finance
Chief Officials of the BIR
- 1 Commissioner
- 4 Deputy Commissioners: Operations group, Legal enforcement group, Information systems
group, Resource management group
Powers of the BIR

1. Assessment and collection of taxes

2. Enforcement of all forfeitures, penalties and fines, and judgments in all cases decided in its favor
by the courts
3. Giving effect to, and administering the supervisory and police powers conferred to it by the NIRC
and other laws
4. Assignment of internal revenue officers and other employees to other duties
5. Provision and distribution of forms, receipts, certificates, stamps, etc. to proper officials
6. Issuance of receipts and clearances
7. Submission of annual report, pertinent information to Congress and reports to the Congressional
Oversight Committee in matters of taxation
Powers of the Commissioner

1. To interpret the provisions of the NIRC, subject to review by the Secretary of Finance
2. To decide tax cases, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals
3. To obtain information and to summon, examine and take testimony of persons to effect tax
collection
4. To make assessment and prescribe additional requirement for tax administration and enforcement
5. To examine tax returns and determine tax due thereon
6. To conduct inventory taking or surveillance
7. To prescribe presumptive gross sales and receipts for a taxpayer when:
a. The taxpayer failed to issue receipts
b. The CIR believes that the books or other records of the taxpayer do not correctly reflect the declaration in
the return
8. To terminate tax period when the taxpayer is
a. Retiring from business
b. Intending to leave the Philippines
c. Intending to remove, hide, or conceal his property
d. Intending to perform any act tending to obstruct the proceedings for the collection of the tax or render the
same ineffective

9. To prescribe real property values

10. To compromise tax liabilities of taxpayers
11. To accredit and register tax agents
a. Determination of the gross estate of a decedent
b. To substantiate the taxpayer's claim of financial incapacity to pay tax in an application for
tax compromise
12. To refund or credit internal revenue taxes
13. To abate or cancel tax liabilities in certain cases
14. To prescribe additional procedures or documentary requirements
15. To prescribe additional procedures or documentary requirements
16. To delegate his powers to any subordinate officer with a rank equivalent to a division chief of an
office
Powers of the Commissioner that cannot be
delegated
Rules in assignments to other duties

Revenue officers assigned to perform assessment and collection function shall not remain in the same
assignment for more than 3 years. Assignment of internal revenue officers and employees of the
Bureau to special duties shall not exceed 1 year