12/03/2023

THE PHILIPPINE
TAX SYSTEM
& REFORMS
JAMERAH MARIE M. BALINDONG
Today, we'll
talk about:
taxation

TRAIN & CREATE laws

 executive

legislative judiciary
 executive

legislative judiciary
 police
power

taxation
power

eminent
domain
power
 police
power

INHERENT
taxation
POWERS
power
OF THE
STATES
eminent
domain
power
WHAT’S THE
POWER OF
TAXATION?
TAXATION
POWER
power by which the sovereign
through its law-making body
raises revenue to defray the
necessary expenses of government
from among those who in some
measure are privileged to enjoy its
benefits and must bear its burdens.
 PURPOSES

raising revenues
regulatory purpose
compensatory purpose
 inherent power of the state

CHARAC exclusively lodged with legislative

body
TERISTICS subject to inherent and constitutional
limitations
LIMITATIONS
OF TAXATION
(A) INHERENT LIMITATIONS

Territoriality or Situs of Taxation

Public Purpose of Taxes
International Comity
Non-delegability of the Taxing Power
Tax Exemption of the Government
LIMITATIONS
OF TAXATION

(B) CONSTITUTIONAL LIMITATIONS

A. General or Indirect Constitutional Limitations

1. Due Process Clause (Art. III, Sec. 1, 1987

Constitution)
2. Equal Protection Clause (Art. III, Sec. 1, 1987
Constitution
3. Freedom Of Speech And Of The Press (Art. III,
Sec. 4, 1987 Constitution)
LIMITATIONS
OF TAXATION

4. Non-Infringement Of Religious Freedom And

Worship (Art. III, Sec. 5, 1987 Constitution)
5. Non-Impairment Of Contracts (Art. III, Sec. 10,
1987 Constitution)
6. Presidential power to grant reprieves,
commutations and pardons and remit fines and
forfeitures after conviction (Art. VII, Sec. 19, 1987
Constitution)
LIMITATIONS
OF TAXATION

B. Specific or Direct Constitutional Limitations

1. Non-Imprisonment For Debt Or Non- Payment

Of Poll Tax (Art. III, Sec. 20, 1987 Constitution)
2. Rule Requiring That Appropriations, Revenue
And Tariff Bills Shall Originate Exclusively From
The House Of Representatives (Art. VI, Sec. 24,
1987 Constitution)
3. Uniformity, Equitability And Progressivity Of
Taxation (Art. VI, Sec. 28(1), 1987 Constitution)
LIMITATIONS
OF TAXATION

4. Limitations On The Congressional Power To

Delegate To The President The Authority To Fix
Tariff Rates, Import And Export Quotas, Etc. (Art. VI,
Sec. 28(2), 1987 Constitution)
5. Tax Exemption Of Properties Actually, Directly
And Exclusively Used For Religious, Charitable And
Educational Purposes. (Art. VI, Sec. 28(3) 7, 1987
Constitution)
LIMITATIONS
OF TAXATION

6. Voting Requirement In Connection With The Legislative

Grant Of Tax Exemption (Art. VI, Sec. 28(4), 1987
Constitution)
7. Non-Impairment Of The Jurisdiction Of The Supreme
Court In Tax Cases (Art. VIII, Sec. 2 And 5(2)(B), 1987
Constitution)
8. Exemption From Taxes Of The Revenues And Assets Of
Educational Institutions, Including Grants, Endowments,
Donations And Contributions. (Art. XIV, Sec. 4(3) And (4),
1987 Constitution)
NATURE OF
TAXATION POWER
1. plenary
2. comprehensive
3. supreme
4. not absolute
T enforced contributions from the
persons and property levied by the

A law-making body of the State by

virtue of its sovereignty in support
X of government and for public needs.
CHARAC
TERISTICS
1. forced charge;
2. pecuniary burden payable in money;
3. levied by the legislature;
4. assessed with some reasonable rule
of apportionment;
5. imposed by the State within its
jurisdiction;
6. levied for a public purpose.
The taxation policy in the Philippines is chiefly governed
by the following Republic Acts:

1. The National Internal Revenue Code

2. The 1987 Philippine Constitution
3. Tax Reform for Acceleration and Inclusion (TRAIN)
Law
4. The Corporate Recovery and Tax Incentives for
Enterprises Act (CREATE Act)
5. Local Government Code of 1991
THEORIES OF
TAXATION
LIFEBLOOD THEORY

Taxes are what we pay for

civilized society. Without taxes,
the government would be
paralyzed for lack of the motive
power to activate and operate it.
THEORIES OF
TAXATION NECESSITY THEORY

The power to tax is an attribute

of sovereignty emanating from
necessity. It is a necessary burden
to preserve the State's sovereignty
and a means to give the citizenry
an army to resist an aggression.
THEORIES OF
TAXATION BENEFITS-
PROTECTION THEORY

Taxation is described as a
symbiotic relationship whereby
in exchange of the benefits and
protection that the citizens get
from the Government, taxes are
paid.
TYPES OF NATIONAL
TAXES LOCAL

can be classified into

SPECIAL
three types:
 Capital Gains Tax
Documentary Stamp Tax
Donor’s Tax
Estate Tax
Income Tax

NATIONAL
Percentage Tax
Value-Added Tax
Withholding Tax
- Expanded Withholding Tax
- Final Withholding Tax
- Withholding Tax
Excise Tax
 Basic Real Property Tax
Business of Printing and
Publication Tax
Franchise Tax
Sand, Gravel and other Quarry
Resources Tax
LOCAL Professional Tax
Amusement Tax
Annual Fixed Tax for Delivery
Trucks and Vans
Local Business Tax
Barangay Tax
Community Tax
 Motor Vehicle User’s Charge
(MVUC)

SPECIAL
Travel Tax
Head Tax
Charges on Forest Products
Energy Consumption Tax
 WH O PAY S
THE TAX IN THE PH
?
1. Filipino citizens residing in the Philippines and
generating income from both domestic and
international sources.
2. Overseas Filipino Workers (OFWs), Filipino
immigrants, and other non-resident citizens who
derive income from sources within the
Philippines.
3. Both resident and non-resident foreigners who
earn income from sources within the Philippines.
4. Domestic corporations that earn income from
both domestic and international sources.
5. Foreign corporations with income derived from
sources within the Philippines.
 ASPECTS
OF TAXATION

LEVY ASSESSMENT COLLECTION

BASIC PRINCIPLES OF

SOUND TAX SYSTEM

1. Fiscal Adequacy 2. Administrative
sufficiency to Feasibility/ Convenience
meet government
capability of being
expenditures
effectively enforced.
and other public needs.

3. Theoretical Justice
based on the taxpayer’s
ability to pay; must be
progressive.
 REFORMS

TAX REFORM FOR ACCELERATION THE CORPORATE RECOVERY AND

AND INCLUSION TAX INCENTIVES FOR ENTERPRISES ACT

TRAIN CREATE
Tax Reform for Acceleration
and Inclusion (TRAIN) Law
Republic Act No. 10963, or the Tax Reform for Acceleration and
Inclusion (TRAIN), became effective on January 1, 2018. It aims to
simplify, make fairer, and enhance the efficiency of the Philippine
Tax System, fostering investments, job creation, and poverty
reduction. As part of the Comprehensive Tax Reform Program
(CTRP), it also generates revenue for infrastructure projects and
investments in education, health, and social services. The law
amends various provisions of the National Internal Revenue Code of
1997, affecting income taxation, estate tax, donor's tax, value-added
tax (VAT), excise tax, documentary stamp tax (DST), and tax
administration. Additionally, it introduces new taxes on cosmetic
surgery and sugar-sweetened beverages.
The Corporate
Recovery and Tax
Incentives for
Enterprises Act
(CREATE)
President Rodrigo Duterte signed
the CREATE Act on March 26, 2021,
after vetoing certain provisions. The
enactment was officially published
in the Business Mirror on March 27,
and the law became effective on
April 11, 2021.
Republic Act (RA) No. 11534, also recognized as the Corporate
Recovery and Tax Incentives for Enterprises (CREATE) Act, was
established by the Philippine Congress in response to the COVID-19
pandemic. It serves as a financial relief to both domestic and foreign
corporations engaged in business activities within the Philippines.
The primary objective is to modify specific sections of the Old Tax
Code, emphasizing the reduction of corporate income tax rates and
the systematic restructuring of fiscal incentives. This aims to
enhance the appeal for both local and foreign investments in the
Philippines.
 https://www.moneymax.ph
https://www.youtube.com
REFER https://www.bir.gov.ph
https://www.aseanbriefing.com/
ENCES https://carpolaw.com/
https://ntrc.gov.ph/
San Beda College of Law :
Memory Aid in Taxation Law
Thank you
for listening!