Taxation and Tax Administration

Taxation
and Tax
Administrati
on
Prepared by
Dennie Leo Logan
Crishelle Viernes
Grancis Ayra Castro
Gilbert Gabriel
Charlene Mae Culanag
Rina Ananayo
Lady Dominique Lumidao
Kaizen Manuel Antonio
Aubrey Nidea
Lizel de Guzman

Taxation and Tax Administration

Saturday, 14 March, 2015

Taxation Defined
Act of imposing and collecting tax.
A process or means by which a sovereign entity like a government,
through its law-making body, raises revenues to defray the necessary
expenses of the government for the public.

Characteristics of Taxes
Taxes are an enforced distribution government enforce taxes and
the citizens must abide by it. Ultimately, the government will return
these taxes in some other forms including protection, public works and
infrastructures, healthcare, and other basic services.
Taxes are generally payable in money Money is used to pay
taxes. The amount of money depends on a persons earnings, property
values, and their consumption rate.
Taxes are imposed on persons and property They are hinged on
a persons capability to earn and therefore pay.
Taxes are levied by the national or a local government unit
which has a jurisdiction over person or property No other entity
can impose taxes other than the government or state.
It takes a congressional act to put up taxes National tax should
be filled and passes in Congress and approved by the Senate. Local
Government Units are also allowed to tax within the limits of law.
Taxes are imposed solely for public purposes Collected taxes
are intended only for paying the costs of running a government and
other basic public services.

Classification of Taxes
As to subject matter or object
1. Personal, poll or capitation - These are fixed amount taxes
imposed on people residing in a specified territory without regard
to their properties or earnings from their profession.

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2. Property - These are taxes imposed on real or personal property.

3. Excise - This tax imposed on consumption, engagement in the
practice of a profession, performance of an act, or enjoyment of
a privilege.
As to purpose
1. General, fiscal or revenue - All taxes are imposed to generate
income or revenue for the government.
2. Special or regulatory - These are special taxes and more
specifically, regulatory taxes.
As to scope (authority imposing the tax)
1. National - These are taxes imposed by the national government
and are national in scope.
2. Municipal or Local - These are taxes imposed by local
governments.
As to determination of account
1. Specific - These are imposed taxes as specific amounts on a
specific standard of measurement.
2. Ad valorem - A tax in which is added into the assessed value of
a taxable entity.
As to graduation or rate
1. Proportional - These are imposed taxes that are computed as a
fixed proportion of the value of an entity being taxed or the rate
of consumption.
2. Progressive or graduated - These are taxes whose rates
increase as the entity being taxed also increases.
3. Regressive - The tax or tax bracket decreases as the entity
taxed increases.

Different Kinds of Taxes

National Taxes
Income Tax these are earnings that are taxed by the national
government and are progressive in nature.
Donors Tax donor is a certain person in disposing without
considering the money, or giving things in favour of another who

Taxation and Tax Administration

accepts it. Before, the donors tax is different from the donees,
but now it is combined into donors tax.
Estate Tax imposed on the right of a deceased person to
transfer the estate to his lawful heir or beneficiary
Value-added Tax imposed on the sale and/or exchange of
goods and services, or lease of goods and real and personal
properties
Excise Tax imposed on specific domestic goods for local
consumption, and imported goods consumed in the Philippines
Other percentage Taxes imposed and based on the selling
price or gross value of goods and services being sold, imported,
exchanged, or bartered.
Documentary Stamp Taxes taxes on legal documents and
papers
Customs Duties and Tariffs imposed in the importation and
exportation of goods in and out of the country
Travel Tax imposed on travel whether local or foreign
Energy Tax imposed on the use of petroleum products
Private Motor Vehicle imposed on the owners of private
motor vehicles for the use of the vehicles
Tax Levying act of putting up taxes on persons, activities, and
products
Tax Assessment the official action of an officer in authority in
determining the amount of tax due based on tax levied
Tax Collection process of getting taxes imposed by the proper
government agencies.

Limitations on the Power of Taxation

Principle of due process of law a person who has tax liabilities
and not able to pay taxes may not be deprived of his property without being
given due notice, and other legal procedures.
Equal protection of the laws the code of conduct that is applicable
to one is applicable to all.
Rule of uniformity in taxation all taxable properties, activities, or
goods will have the same tax within the same class. There may be develop

Taxation and Tax Administration

differences among different classes of taxable objects and activities,

however the same system is implemented on objects within the same class.
Nobody v=can be imprisoned for non payment of a poll tax.
Non impairment of the obligation of contracts taxation rule
which stipulates that taxation cannot change or impair the stipulations of
contract either by law or party without the agreement of the latter.
Non impairment of religious freedom no taxes shall be imposed
or collected which would impair religious freedom.
No appropriation or use for religious purpose can be done. Taxes
will be used solely for public purposes.
Religious, charitable, educational entities, non profit
cemeteries, churches, non stock, and non profit educational
institutions are exempted from taxes.
Tax exemption cannot be done outright. To be given to a person, or
entity, concurrence by a majority of the Congress for the passage of
a law granting tax exemption is needed.
The president has the ability to veto a particular item or items in a
revenue or tariff bill.
Congress has the power to define and levy taxes, tax cases in all levels
of the court will be under the final jurisdiction of the Supreme Court.

Tax Evasion and Tax Avoidance

Tax Avoidance the use of permissible and legal means to avoid or
reduce tax liability. It is therefore not punishable by law.
Tax Evasion the use of illegal or fraudulent means to reduce/defeat
tax liability. It is punishable by law.
Common administrative approaches enforce tax collections:
1. Distrait of personal property seizure by the government
of personal property to enforce tax collection. It can be done
on tangible or on non-tangible properties.
2. Levy of real property seizure by the government of
personal property to enforce tax collection, but done in real
properties which are then placed to public sale.
3. Enforcement of forfeiture transferring the property title
to another in favour of the government.
4. Entering into a compromise of tax liability government
agencies responsible for tax collection/assessment and the

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5.
6.
7.
8.

taxpayer enter into a compromise or settlement to avoid legal

disputes.
Filing of bonds to ensure compliance with the provisions of
tax regulations.
Surcharge amount imposed as an addition to the primary
tax for law-breaking taxpayers
Interest - amount imposed as an addition to the primary tax
for taxpayers paying late; usually 20% per annum.
Giving of rewards to informers legal way for the
government to get information about delinquent/late
taxpayers or tax evaders.

Arrests, searches, and seizures are allowed by Bureau of

Internal Revenue if the violation is penal in nature of a regulation
administered by the BIR.
Aliens may be deported for refusing or knowingly and
fraudulently evading taxes.
Inspection of books of accounts can be done on individuals,
companies, or other entities, to check the correctness of taxes
paid.
Inquiring into bank deposit accounts can be done on
deceased persons account even with protection from bank
deposit inquiry, likewise to a person who is willing to enter into a
compromise the tax payments who claims to be financially
inadequate.