Business and Transfer Taxes

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Business Taxes

Module 1: Business Taxes

At the end of this module, you will be able to:

1. Exhibit sophisticated knowledge related to tax accounting rules and
regulations and analyze and resolve business tax problems
2. Identify, define, and resolve tax issues through their understanding,
knowledge, and application of business tax principles
"Ignorance of the law excuses no one.". It is therefore imperative to have the basic
knowledge of the sections discussing various business taxes. The following is an overview
of the different business taxes. The next modules shall provide lengthy discussions on these
taxes.

RULES AND REGULATIONS

SEC. 244. Authority of Secretary of Finance to Promulgate Rules and Regulations. -
The Secretary of Finance, upon recommendation of the Commissioner, shall promulgate all
needful rules and regulations for the effective enforcement of the provisions of this Code.
SEC. 245. Specific Provisions to be Contained in Rules and Regulations. -The rules and
regulations of the Bureau of Internal Revenue shall, among other things, contain provisions
specifying, prescribing, or defining:
(a) The time and manner in which Revenue Regional Director shall canvass their respective
Revenue Regions for the purpose of discovering persons and property liable to national
internal revenue taxes, and the manner in which their lists and records of taxable persons
and taxable objects shall be made and kept;(b) The forms of labels, brands or marks to be
required on goods subject to an excise tax, and the manner in which the labelling, branding
or marking shall be effected;(c) The conditions under which and the manner in which
goods intended for export, which if not exported would be subject to an excise tax, shall be
labelled, branded or marked;(d) The conditions to be observed by revenue officers
respecting the institutions and conduct of legal actions and proceedings;(e) The conditions
under which goods intended for storage in bonded warehouses shall be conveyed thither,

Course Module
their manner of storage and the method of keeping the entries and records in connection
therewith, also the books to be kept by Revenue Inspectors and the reports to be made by
them in connection with their supervision of such houses;(f) The conditions under which
denatured alcohol may be removed and dealt in, the character and quantity of the
denaturing material to be used, the manner in which the process of denaturing shall be
effected, so as to render the alcohol suitably denatured and unfit for oral intake, the bonds
to be given, the books and records to be kept, the entries to be made therein, the reports to
be made to the Commissioner, and the signs to be displayed in the business or by the
person for whom such denaturing is done or by whom, such alcohol is dealt in;(g) The
manner in which revenue shall be collected and paid, the instrument, document or object to
which revenue stamps shall be affixed, the mode of cancellation of the same, the manner in
which the proper books, records, invoices and other papers shall be kept and entries
therein made by the person subject to the tax, as well as the manner in which licenses and
stamps shall be gathered up and returned after serving their purposes;(h) The conditions
to be observed by revenue officers respecting the enforcement of Title III imposing a tax on
estate of a decedent, and other transfers mortis causa, as well as on gifts and such other
rules and regulations which the Commissioner may consider suitable for the enforcement
of the said Title III;(i) The manner in which tax returns, information and reports shall be
prepared and reported and the tax collected and paid, as well as the conditions under
which evidence of payment shall be furnished the taxpayer, and the preparation and
publication of tax statistics;(j) The manner in which internal revenue taxes, such as income
tax, including withholding tax, estate and donor's taxes, value-added tax, other percentage
taxes, excise taxes and documentary stamp taxes shall be paid through the collection
officers of the Bureau of Internal Revenue or through duly authorized agent banks which
are hereby deputized to receive payments of such taxes and the returns, papers and
statements that may be filed by the taxpayers in connection with the payment of the tax:
Provided, however, That notwithstanding the other provisions of this Code prescribing the
place of filing of returns and payment of taxes, the Commissioner may, by rules and
regulations, require that the tax returns, papers and statements that may be filed by the
taxpayers in connection with the payment of the tax. Provided, however, That
notwithstanding the other provisions of this Code prescribing the place of filing of returns
and payment of taxes, the Commissioner may, by rules and regulations, require that the tax
returns, papers and statements, and taxes of large taxpayers be filed and paid, respectively,
through collection officers or through duly authorized agent banks: Provided, further, That
the Commissioner can exercise this power within six (6) years from the approval of
Republic Act No. 7646 or the completion of its comprehensive computerization program,
whichever comes earlier: Provided, finally, That separate venues for the Luzon, Visayas and
Mindanao areas may be designated for the filing of tax returns and payment of taxes by
said large taxpayers.
For the purpose of this Section, "large taxpayer" means a taxpayer who satisfies any of the
following criteria;
(1) Value-Added Tax (VAT). - Business establishment with VAT paid or payable of at least
One hundred thousand pesos (P100,000) for any quarter of the preceding taxable year;
(2) Excise Tax. - Business establishment with excise tax paid or payable of at least One
million pesos (P1,000,000) for the preceding taxable year;
 Business and Transfer Taxes
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Business Taxes

(3) Corporate Income Tax. - Business establishment with annual income tax paid or
payable of at least One million pesos (P1,000,000) for the preceding taxable year; and
(4) Withholding Tax. - Business establishment with withholding tax payment or remittance
of at least One million pesos (P1,000,000) for the preceding taxable year.
Provided, however, That the Secretary of Finance, upon recommendation of the
Commissioner, may modify or add to the above criteria for determining a large taxpayer
after considering such factors as inflation, the volume of business, wage and employment
levels, and similar economic factors.
The penalties prescribed under Section 248 of this Code shall be imposed on any violation
of the rules and regulations issued by the Secretary of Finance, upon recommendation of
the Commissioner, prescribing the place of filing of returns and payments of taxes by large
taxpayers.
SEC. 246. Non-Retroactivity of Rulings. - Any revocation, modification, or reversal of any
of the rules and regulations promulgated in accordance with the preceding Sections or any
of the rulings or circulars promulgated by the Commissioner shall not be given retroactive
application if the revocation, modification, or reversal will be prejudicial to the taxpayers,
except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the Bureau of Internal Revenue; (b) Where the facts
subsequently gathered by the Bureau of Internal Revenue are materially different from the
facts on which the ruling is based; or(c) Where the taxpayer acted in bad faith.

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Glossary
Promulgate: To put into action or force
Thither: To that place
Inflation: A continuing rise in the general price level is usually attributed to an increase
in the volume of money and credit relative to available goods and services
Retroactivity: To make effective as of a date prior to enactment, promulgation, or
imposition
Prejudicial: Leading to premature judgment or unwarranted opinion
Decedent: A diseased person
Mortis causa: Made or done in contemplation of one’s impending death
Current ratio: a liquidity test that will show how a company's current assets can meet its
short-term liabilities
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Business Taxes

References and Supplementary Materials

Books
Revised EVAT Law (R.A. 9337)
The Comprehensive Tax Reform Program (R.A. 8424)

Ampongan, Omar (2012). Transfer and Business Taxation. Philippines.

Valencia and Roxas (2012). Transfer and Business Taxation. Baguio City. Valencia
Educational Supply.

De Leon (2012). Transfer and Business Taxation. Manila. Rex Bookstore.

Online Supplementary Reading Materials

Bureau of Internal Revenue website; https://www.bir.gov.ph/; May 10, 2017

Journal
Tax Law Review. ISSN 0040-0041.New York University School of Law.

Video

Course Module
 https://www.washingtonpost.com/video/politics/fact-check-are-american-businesss-
tax-rates-some-of-the-highest-in-the-world/2017/09/18/ec56026c-9a6b-11e7-af6a-
6555caaeb8dc_video.html