Mamalateo - Reviewer on Taxation-2.pdf

TABLE OF CONTENTS PART I.

GENERAL PRINCIPLES AND LIMITATIONS ON THE POWER OF TAXATION

CHAPTER I: GENERAL PRINCIPLES !"#$%&%'$(')(&*+*&%'$ ............................................................................... Nature of the power of taxation .............................................................. Attribute of sovereignty ................................................................. Legislative in character ................................................................. Not delegated to executive or judicial department ...................... Subject to and constitutional inherent limitations....................... Aspects of Taxation ........................................................................ Theory or underlying basis of taxation ................................................... Lifeblood theory .............................................................................. ((((((( ,"$"#&-./0'&"1&%'$(&2"'03.............................................................. Power to tax involves the power to destroy ............................................ !"#$%&%'$(')(&*+"- .................................................................................... Attributes or characteristics of taxes ...................................................... Purposes and objectives of taxation ........................................................ Taxation, eminent domain, and police power ......................................... Tax vs. debt ............................................................................................. Tax vs. toll ............................................................................................... Tax vs. license fee .................................................................................... Tax vs. special assessment ...................................................................... Tax vs. penalty ......................................................................................... Double taxation ........................................................................................ Exemption from taxation ......................................................................... Tax laws.................................................................................................... Statutes are construed against the government .......................... Construction of statute by predecessor ......................................... Retroactive application .................................................................. Publication ...................................................................................... Special law prevails over general law ........................................... Tax evasion vs. Tax avoidance....................................................... vii

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CHAPTER II:

INHERENT AND CONSTITUTIONAL LIMITATIONS

Inherent Limitations ............................................................................... Public purpose ................................................................................ Non-delegation of legislative power to tax .................................... Exemption of government entities ................................................ International comity....................................................................... Territorial jurisdiction ................................................................... Constitutional Limitations ...................................................................... Due process of law .......................................................................... Equal protection of the laws .......................................................... Taxation shall be uniform and equitable ...................................... Obligation of contracts ................................................................... Non-infringement of religious freedom ......................................... Freedom of the press ...................................................................... Exemption of properties for religious, charitable and educational purposes ............................................................ Revenue bills shall originate from the House of Representatives .................................................................... No law granting tax exemption shall be passed without concurrence of majority of all members of Congress .......... Every bill passed by Congress shall embrace only one Subject, which shall be expressed in the title thereof ........

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PART II: INCOME AND WITHHOLDING TAXES CHAPTER III: INTRODUCTION Income tax ............................................................................................... Income tax systems .................................................................................. Global system ................................................................................. Schedular system ........................................................................... Semi-schedular or semi-global system .......................................... Features of income tax law ...................................................................... Criteria in imposing income tax .............................................................. Citizenship ...................................................................................... Residence ........................................................................................ Source .............................................................................................. When is income taxable? .........................................................................

viii

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CHAPTER IV: KINDS OF TAXPAYERS Citizens ..................................................................................................... Types of non-resident citizens ....................................................... Aliens ........................................................................................................ Residence ........................................................................................ Engaged in trade or business in the Philippines .......................... Not engaged in trade or business in the Phil................................ Employees entitled to preferential tax rates ................................ Filipino employees of multinational corporations ........................ Estates and trusts .................................................................................... Co-ownerships .......................................................................................... Co-ownership due to death of a decedent ............................................... Before partition of property ..................................................................... After partition of property ....................................................................... General professional partnerships .......................................................... Domestic corporations ............................................................................. Test in determining status of corporation .............................................. Doing Business ........................................................................................ Partnerships ............................................................................................. Joint ventures .......................................................................................... 3 Exempt joint ventures .................................................................. Taxable joint ventures ................................................................... Resident foreign corporations.................................................................. ( 42%56(70*$12(%-(8"0"53(*$("+&"$-%'$(')(2"*9(')#1" ....................... Types of resident foreign corporations ..........................................

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CHAPTER V: GROSS INCOME !"#$%&%'$(')(:0'--(%$1'8" ....................................................................... !"#$%&%'$(')($"&(%$1'8" ........................................................................... To whom income is taxable? .................................................................... Source rules .............................................................................................. Interests .......................................................................................... Dividends ........................................................................................ Services ........................................................................................... International shipping line .................................................. International air carrier ....................................................... Rentals and royalties ..................................................................... Sale of real property ....................................................................... Sale of personal property ............................................................... Enumeration of source rules is not exclusive ......................................... ix

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!"#$%&%'$(')(%$1'8" ................................................................................. Distinction between capital and income ................................................. Tests in determining income ................................................................... Realization test ............................................................................... Claim of right doctrine ................................................................... Income from whatever source ........................................................ (( ;1'$'8%1(7"$"#&(&"-& .....................................................................