Taxation - Aban Book

Transcript

 TAXA  TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book Chapter 1 GENERAL PRINCIPLES  Taxaton  Taxaton – po!er b" !h#h the $o%ere&n' thro(&h t$ )a! *ak *akn& n& bo+" bo+"'' ra$ ra$e$ e$ re%en e%en(e (e to +e,r +e,ra" a" the the ne#e ne#e$$ $$ar ar" " expen$e$ o, &o%ern*ent' - t $ *ere)" a !a" o, apportonn& the #o$t$ o,  &o%ern*en &o%ern*entt a*on& a*on& tho$e tho$e !ho n $o*e *ea$(re *ea$(re ar pr%) pr%)e&e e&e+ + to en.o" en.o" t$ bene/t bene/t$ $ an+ *($t *($t bear bear t$ t$ b(r+en$ Co**$$oner o, Interna) Re%en(e %$ A)&(e 0 - S"*b S"*bo ot t# # re)a re)at ton on$h $hp p - her hereb eb" " n ex#ha ex#han& n&e e ,or ,or the the prot prote# e#t ton on that that the #t2en$ &et ,ro* the Go%ern*ent' taxe$ are pa+ Ratona)e o, Taxaton - taxe$ taxe$ are are !hat !hat !e pa" pa" ,or #% #%)2 )2e+ e+ $o#e $o#et" t" - !tho( !tho(tt tax$' tax$' the &o%er &o%ern* n*ent ent !o()+ !o()+ be be para)"2 para)"2e+ e+ ,or )a#k o, *ot%e po!er to a#t%ate an+ operate t - +e$p +e$pt te e the the nat( nat(ra ra)) re)( re)(#t #tan an#e #e to $(rr $(rren en+e +err part part o,  one3$ one3$ har+ earne+ n#o*e to the taxn& a(thort a(thorte$' e$' e%er" per$on !ho $ ab)e *($t #ontrb(te h$ $hare n the r(nnn& o, &o%ern*ent - the the &o%ern &o%ern*e *ent nt ,or t $ expe expe#t #te+ e+ to re$p re$pon on+ + n the the ,or* o, tan&b)e an+ ntan&b)e bene/t$ nten+e+ to *pro%e the )%e$ o, the peop)e an+ en#han#e ther *ora) an+ *atera) %a)(e$ - T4E T4E S56B S56BIO IOTI TIC C RELA RELATI TION ONS4 S4IP IP IS T4E RATION TIONAL ALE E o,   Taxaton  Taxaton an+ S4OUL7 7ISPEL T4E ERRONEOUS NOTI NOTION ON T4A T4AT IT IS AN ARBI ARBITR TRAR AR5 5 6ET4 6ET4O7 O7 O8 EXACTION B5 T4OSE IN T4E SEAT O8 POER Co**$$oner o, Interna) Re%en(e %$ Tok"o Shppn& Co - tax pa"er$ o!e hone$t" to &o%ern*ent .($t a$ &o%ern*ent o!e$ ,arne$$ to taxpa"er$ BPI 8a*)" Sa%n&$ Bank %$ CA - I, the State State expe expe#t$ #t$ t$ t$ taxpa taxpa"er "er$ $ to ob$er% ob$er%e e ,arne$ ,arne$$ $ an+ hone$t" n pa"n& ther taxe$' $o *($t t app)" the 1 6ran+a' C)ar$$e Ann $a*e $tan+ar+$ a&an$t t$e), xxxx9 No one' not e%en the State' $ho()+ enr#h t$e), at expen$e o, another  TAXES  TAXES - en,or en,or#e #e+ + propo proport rtona ona)) #ontr #ontrb( b(to ton$ n$ ,ro* per$on per$on$ $ an+ propert" )e%e+ b" the )a! *akn& bo+" o, the State b" %rt(e o, t$ $o%ere&nt" ,or the $(pport o, &o%ern*ent an+ ,or p(b)# nee+$ Chara#ter$t#$ o, taxe$ 0 19 A tax $ a ,or#e+ ,or#e+ #har&e' #har&e' *po$t *po$ton on or #ontrb(t #ontrb(ton on an+ a$ $(#h $(#h t opera operate te$ $ n n% n%t( t(* * – t $ n no !a" +epen+ent on the !)) or #ontra#t(a) a$$ent' expre$$ or *p)e+' o, the per$on taxe+ a9 Not #ontra# #ontra#t$' t$' ether ether expr expre$$ e$$e+ e+ or *p)e+ *p)e+ b(t po$t%e a#t$ o, &o%ern*ent :9 Pe#(na Pe#(nar" r" b(r+en b(r+en pa"ab) pa"ab)e e n *one" *one" a9 Not Not ne#e ne#e$$ $$ar ar) )" " #on/ #on/ne ne+ + to tho$ tho$e e pa"a pa"ab) b)e e n *one"' a$ n the #a$e' ,or n$tan#e' o, ba#kpa" #ert/#ate$ !h#h (n+er RA ;<= #o()+ be ($+ a$ pa"*ent o, taxe$ b9 SC 0 Ba#kpa Ba#kpa" " #ert/#a #ert/#ate$ te$ *a" *a" be ($e+ ($e+ to pa" rea) e$tate taxe$ ;9 It $ )e%e+ )e%e+ b" the )e&$)a )e&$)at%e t%e bo+" bo+" o, the State State be#a($e be#a($e the the taxn taxn& & po!e po!err $ pe#( pe#() )ar ar)" )" an+ an+ ex#) ex#)($ ($% %e) e)" " )e&$)at%e n #hara#ter a9 Taxe$ are ob)&aton$ ob)&aton$ #reate+ b" )a! =9 It $ a$$e$$e+ a$$e$$e+ n a##or+an a##or+an#e #e !th $o*e $o*e rea$onab)e rea$onab)e r()e r()e o, apporton*ent' !h#h *ean$ that #on,or*ab)" !th th #on$tt(tona) *an+ate on pro&re$$%t" o, a taxn& $"$te* a9 Taxe$ axe$ *($t be ba$e+ ba$e+ on ab)t" ab)t" to pa" 7o re&re$$%e taxe$ &o a&an$t the #on$tt(tona) *an+ate n Se#ton :> ?1@ Art#)e VI o, Con$tt(ton Con$tt(ton  PAL %$ Se# o, 8nan#e - Con$t Con$tt(t t(ton on +oe$ +oe$ not rea))" rea))" proh prohbt bt the the *po$t *po$ton on o,  n+re#t taxe$ !h#h' )ke VAT are re&re$$%e9 : - Con&re$$ Con&re$$ $ha)) $ha)) e%o)%e e%o)%e a pro&re pro&re$$%e $$%e $"$te* $"$te* o, taxaton taxaton Re$ort e$ort to n+r n+re#t e#t taxe taxe$ $ $ho()+ $ho()+ be *n* *n*2e+ 2e+ b(t b(t not a%o a%o+e +e+ + ent entrre)" e)" be#a be#a($ ($e e t $ +# +#() ()t' t' , not not *po$$b)e' to a%o+ the* b" $(#h taxe$ a##or+n& to the taxpa"er$ ab)t" to pa" 9 It $ *po$ *po$e+ e+ b" the State State on per$on$' per$on$' proper propert"' t"' or $er%#e$ D9 A Tax Tax $ )e%e+ ,or p(b)# p(b)# p(rpo$e p(rpo$e a$ taxaton taxaton n t$e),  t$e),  n%o n%o)% )%e$ e$ a b(r+ b(r+en en to pro% pro%+ +e e re%e re%en( n(e e ,or ,or p(b) p(b)# # p(rpo$e$ o, a &enera) nat(re TAXES, PERSONAL TO TAXPAYER TAXPAYER - - - - A tax #re #reate$ ate$ a #% %) )ab) b)tt" on the the par part o, the the +e)n(ent taxpa"er' a)tho(&h NON PA56ENT T4EREO8 ?hether t be on a##o(nt o, the taxpa"er3$ ,a)(re or re,($a) to pa" t@ #reate$ #r*na) )ab)t"' !h#h #o()+ be the $(b.e#t o, a #r*na) pro$e#(ton (n+er ex$tn& )a!$ In taxat taxaton on ' t $ one3 one3$ $ #%) #%) )ab )ab) )t" t" to pa" pa" taxe$ taxe$ that that &%e$ r$e to #r*na) )ab)t" NOT T4E T4E other other !a" !a" aro(n aro(n+ + a$ n #r* #r*na na)) #a$e$ #a$e$ !her !here e #r*na) )ab)t" &%e$ r$e to a #%) )ab)t" - - IMPORTANCE IMPORTANCE OF TAXES - : ),eb)oo+ o, the Go%ern*ent an+ $o $ho()+ be #a)#()ate+ !tho(t (nne#e$$ar" hn+ran#e PRI6 PRI6AR AR5 5 PURPOS PURPOSE E 0 &ene &enera rate te ,(n+$ ,(n+$ ,or the the State State to /nan#e the nee+$ o, the #t2enr" an+ to a+%an#e the #o**on !ea) 7UE PROC PROCESS ESS o, o, )a! (n+er (n+er the the Con$t Con$tt( t(to ton n +oe$ +oe$ not re(re .(+#a) pro#ee+n&$ n tax #a$e$ o Be#a($e t $ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ (t*o$t *portan#e that the *o+e$ *o+e$ a+opte a+opte+ + to en,or en,or#e #e the #o))e# #o))e#to ton n o,  taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+ !th a$ )tt)e a$ po$$b)e - A #orpora #orporato ton3$ n3$ tax +e)n +e)n(e (en#" n#" #anno #annot' t' ,or n$tan n$tan#e' #e' be en,or#e+ a&an$t t$ $to#kho)+er$ be#a($e not on)" !o()+ th$ r(n #o(nter to the prn#p)e that taxe$ are per$ona) b(t t t !o()+ !o()+ a)$o a)$o not not be n a##o a##or+ r+ !th !th the the r()e r()e that that a #orporaton $ %e$te+ b" )a! !th !th a per$ per$on ona) a)t t" " that that $ $epa $epara rate te an+ +$t +$tn# n#tt ,ro* ,ro* tho$e o the per$on$ #o*po$n& t' a$ !e)) !e)) a$ ,ro* ,ro* that that o, an" an" other other )e&a) )e&a) entt entt" " to !h#h !h#h t *a" be re)ate+ STOC STOCK4 K4OL OL7E 7ERS RS 6A5 6A5 BE 4EL7 4EL7 LIABL LIABLE E 8OR 8OR UNP UNPAI7 AI7  TAXES  TAXES O8 A 7ISSOLVE7 7ISSOLVE7 CORPORAT CORPORATION ION I8 IT APPEARS  T4AT  T4AT T4E CORPORATE CORPORATE ASSETS 4AVE PASSE7 PASSE7 INTO  T4EIR 4AN7S 4AN7S OR 4EN STOCK4OL7ERS 4AVE UNPAI7 SUBSCRIPTIONS TO T4E CAPITAL O8 CORPORATION E$ta E$tatte taxe$ a##r( ##r(n n& & (po (pon tran tran$* $*$ $$ $o on o, the the +e#e+ent3$ e$tate to h$ her$ are not )ab)te$ !h#h #an be en,or#e+ a&an$t h$ her$' ,or e$tate taxe$ are $(ppo$e+ to be ob)&aton$ that *($t be pa+ b" the exe#(to exe#(tora+ ra+*n *n$trat $trator or o(t o, the net e$tate' e$tate' be,ore be,ore +e)%er" to an" bene/#ar" o, h$ +$trb(t%e $hare 4OE 4OEVE VER' R' , pro prorr to the pa"* pa"*en entt o, the e$ta e$tate te tax tax +(e on the tran$,er o, +e#e+ent$ e$tate' the properte$ o, the +e#ea$e+ are +$trb( +$trb(te+ te+ to an" bene/#a bene/#ar"' r"' then $(#h bene/#ar" $ha)) be $(b$+ar)" )ab)e ,or the pa"* pa"*en entt o, $(#h $(#h port porto on n o, the the e$ta e$tate te tax tax a$ h$ h$ +$trb(t%e $hare bear$ to the tota) %a)(e o, the net e$tate NATURE OF THE TAXING POWER - po!er po!er o, o, tax $ $ an attr attrb( b(te te o, o, $o%er $o%ere& e&nt" nt" - t $ nhe nhere rent nt n the the Sta State te - (n)*te (n)*te+ + n t$ ran&e ran&e'' a#kno! a#kno!)e+& )e+&n& n& n t$ t$ %er" %er" nat(re nat(re no )*t$' $o that $e#(rt" a&an$t t$ ab($e $ to be : - Con&re$$ Con&re$$ $ha)) $ha)) e%o)%e e%o)%e a pro&re pro&re$$%e $$%e $"$te* $"$te* o, taxaton taxaton Re$ort e$ort to n+r n+re#t e#t taxe taxe$ $ $ho()+ $ho()+ be *n* *n*2e+ 2e+ b(t b(t not a%o a%o+e +e+ + ent entrre)" e)" be#a be#a($ ($e e t $ +# +#() ()t' t' , not not *po$$b)e' to a%o+ the* b" $(#h taxe$ a##or+n& to the taxpa"er$ ab)t" to pa" 9 It $ *po$ *po$e+ e+ b" the State State on per$on$' per$on$' proper propert"' t"' or $er%#e$ D9 A Tax Tax $ )e%e+ ,or p(b)# p(b)# p(rpo$e p(rpo$e a$ taxaton taxaton n t$e),  t$e),  n%o n%o)% )%e$ e$ a b(r+ b(r+en en to pro% pro%+ +e e re%e re%en( n(e e ,or ,or p(b) p(b)# # p(rpo$e$ o, a &enera) nat(re TAXES, PERSONAL TO TAXPAYER TAXPAYER - - - - A tax #re #reate$ ate$ a #% %) )ab) b)tt" on the the par part o, the the +e)n(ent taxpa"er' a)tho(&h NON PA56ENT T4EREO8 ?hether t be on a##o(nt o, the taxpa"er3$ ,a)(re or re,($a) to pa" t@ #reate$ #r*na) )ab)t"' !h#h #o()+ be the $(b.e#t o, a #r*na) pro$e#(ton (n+er ex$tn& )a!$ In taxat taxaton on ' t $ one3 one3$ $ #%) #%) )ab )ab) )t" t" to pa" pa" taxe$ taxe$ that that &%e$ r$e to #r*na) )ab)t" NOT T4E T4E other other !a" !a" aro(n aro(n+ + a$ n #r* #r*na na)) #a$e$ #a$e$ !her !here e #r*na) )ab)t" &%e$ r$e to a #%) )ab)t" - - IMPORTANCE IMPORTANCE OF TAXES - : ),eb)oo+ o, the Go%ern*ent an+ $o $ho()+ be #a)#()ate+ !tho(t (nne#e$$ar" hn+ran#e PRI6 PRI6AR AR5 5 PURPOS PURPOSE E 0 &ene &enera rate te ,(n+$ ,(n+$ ,or the the State State to /nan#e the nee+$ o, the #t2enr" an+ to a+%an#e the #o**on !ea) 7UE PROC PROCESS ESS o, o, )a! (n+er (n+er the the Con$t Con$tt( t(to ton n +oe$ +oe$ not re(re .(+#a) pro#ee+n&$ n tax #a$e$ o Be#a($e t $ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ (t*o$t *portan#e that the *o+e$ *o+e$ a+opte a+opte+ + to en,or en,or#e #e the #o))e# #o))e#to ton n o,  taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+ !th a$ )tt)e a$ po$$b)e - A #orpora #orporato ton3$ n3$ tax +e)n +e)n(e (en#" n#" #anno #annot' t' ,or n$tan n$tan#e' #e' be en,or#e+ a&an$t t$ $to#kho)+er$ be#a($e not on)" !o()+ th$ r(n #o(nter to the prn#p)e that taxe$ are per$ona) b(t t t !o()+ !o()+ a)$o a)$o not not be n a##o a##or+ r+ !th !th the the r()e r()e that that a #orporaton $ %e$te+ b" )a! !th !th a per$ per$on ona) a)t t" " that that $ $epa $epara rate te an+ +$t +$tn# n#tt ,ro* ,ro* tho$e o the per$on$ #o*po$n& t' a$ !e)) !e)) a$ ,ro* ,ro* that that o, an" an" other other )e&a) )e&a) entt entt" " to !h#h !h#h t *a" be re)ate+ STOC STOCK4 K4OL OL7E 7ERS RS 6A5 6A5 BE 4EL7 4EL7 LIABL LIABLE E 8OR 8OR UNP UNPAI7 AI7  TAXES  TAXES O8 A 7ISSOLVE7 7ISSOLVE7 CORPORAT CORPORATION ION I8 IT APPEARS  T4AT  T4AT T4E CORPORATE CORPORATE ASSETS 4AVE PASSE7 PASSE7 INTO  T4EIR 4AN7S 4AN7S OR 4EN STOCK4OL7ERS 4AVE UNPAI7 SUBSCRIPTIONS TO T4E CAPITAL O8 CORPORATION E$ta E$tatte taxe$ a##r( ##r(n n& & (po (pon tran tran$* $*$ $$ $o on o, the the +e#e+ent3$ e$tate to h$ her$ are not )ab)te$ !h#h #an be en,or#e+ a&an$t h$ her$' ,or e$tate taxe$ are $(ppo$e+ to be ob)&aton$ that *($t be pa+ b" the exe#(to exe#(tora+ ra+*n *n$trat $trator or o(t o, the net e$tate' e$tate' be,ore be,ore +e)%er" to an" bene/#ar" o, h$ +$trb(t%e $hare 4OE 4OEVE VER' R' , pro prorr to the pa"* pa"*en entt o, the e$ta e$tate te tax tax +(e on the tran$,er o, +e#e+ent$ e$tate' the properte$ o, the +e#ea$e+ are +$trb( +$trb(te+ te+ to an" bene/#a bene/#ar"' r"' then $(#h bene/#ar" $ha)) be $(b$+ar)" )ab)e ,or the pa"* pa"*en entt o, $(#h $(#h port porto on n o, the the e$ta e$tate te tax tax a$ h$ h$ +$trb(t%e $hare bear$ to the tota) %a)(e o, the net e$tate NATURE OF THE TAXING POWER - po!er po!er o, o, tax $ $ an attr attrb( b(te te o, o, $o%er $o%ere& e&nt" nt" - t $ nhe nhere rent nt n the the Sta State te - (n)*te (n)*te+ + n t$ ran&e ran&e'' a#kno! a#kno!)e+& )e+&n& n& n t$ t$ %er" %er" nat(re nat(re no )*t$' $o that $e#(rt" a&an$t t$ ab($e $ to be  TAXA  TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book - - ,o(n+ on)" n the re$pon$b)t" o, the )e&$)at(re !h#h *po$e$ the tax on #on$tt(en#" !ho are to pa" t A!e$o*e po!er – 4o!e%er' NO 6ATTER 4O AESO ESO6E 6E IT 6A5B 6A5BE' E' IT 6UST 6UST NOT NOT BE EXR EXRCISE CISE7 7 ARBITRARIL5 Taxaton axaton $ $ a po!er po!er e*anatn e*anatn& & ,ro* ,ro* ne#e$$ ne#e$$t" t" A ne#e$$ar" b(r+en to pre$er%e the State3$ $o%ere&nt" 6ean$ 6ean$ to &%e &%e #t2e #t2enr" nr" an ar*" ar*" to re$$ re$$tt an a&&re a&&re$$on $$on A na#" na#" to +e,e +e,en+ n+ t$ t$ $hor $hore$ e$ ,ro* ,ro* n%a n%a$o $on n Corp$ Corp$ o, #%) #%) $er%an $er%ant$ t$ to $er%e $er%e P(b)# b)# *pr *pro o%e* %e*ent ent +e$ +e$&ne &ne+ ,or ,or en.o n.o"*e "*ent o,  #t2e #t2enr" nr" an+ tho$e tho$e !h#h !h#h #o*e #o*e !th !thn n the State3 State3$ $ terrtor" an+ ,a#)te$ Prote#t Prote#ton on !h#h !h#h a &o%ern &o%ern*ent *ent $ $(ppo $(ppo$e+ $e+ to to pro%+ pro%+e e TAXATION IS A HIGH PREROGATIVE OF SOVEEREINGTY THE RELINQUISHMENT OF WHICH IS NEVER PRESUMED, AND ANY REDUCTION OR DIMUTION THEREOF WITH RESPECT TO ITS MODE OR RATE RATE MUST BE STRICTL STRICTLY CONTRUE CONTRUED D AND THE SAME MUST BE COUCHED INC LEAR TERMS GENE GENERA RAL L RU RULE LE : ANY ANY CLAI CLAIM M FO FOR R EXEM EXEMPT PTIO ION N FROM TAX STA FROM STATUE TUES S SHOU SHOULD LD BE CONSTR CONSTRUED UED STRICTLY AGAINST TAXPAYER PURPOSES AND OBJECTIVES OF TAXATION 19 Re%en(e Re%en(e – to pro%+e pro%+e ,(n+$ ,(n+$ or propert" propert" !th !h#h !h#h the State pro*ote$ the &enera) !e),are an+ prote#ton o,  t$ #t2en$ :9 Re&() e&()at ato on n – *po *po$e $e+ + on toba toba## ##o o an+ an+ a)#o a)#oho ho) )# # pro+( pro+(#t$ #t$'' or a*($e a*($e*e *ent nt p)a#e p)a#e$ $ )ke )ke n&ht n&ht #)(b$' #)(b$' #abaret$ an+ #o#kpt$  Taxaton  Taxaton – not *ere)" *ere)" po!er that that $ exer#$e+ exer#$e+ n or+er to to ra$e re%en(e ,or the $(pport o, Go%ern*ent ; 6ran+a' C)ar$$e Ann  Taxe$  Taxe$ *a" a)$o be *po$e+ ,or re&()ator" p(rpo$e a$ n the rehab)taton rehab)taton an+ $tab)2aton o, a threatene+ n+($tr" !h#h $ aHe#te+ !th p(b)# ntere$t )ke o) n+($tr" ;9 Pro* Pro*ot oton on o, Genera Genera)) e),ar e),are e – *p)e* *p)e*ent ent o, po)#e po)#e po!er n or+er to pro*ote &enera) !e),are o, peop)e L(t2 %$ Araneta – *po$e+ tax on a *))e+ $(&ar $n#e the p(rp p(rpo$ o$e e o, )a! )a! !a$ !a$ to $tre $tren& n&th then en an n+( n+($t $tr" r" that that $ (n+enab)" %ta) to e#ono*" – the $(&ar n+($tr" O) Pr#e Stab)2aton 8(n+ – A +e%#e +e$+n&e+ to prote#t the p(b)# ,ro* a+%er$e eHe#t$ o, F(#t(aton$ n pr#e$ o,  *porte #r(+e o) O$*ena %$ Orbo$ - !h)e !h)e ,(n+$ ,(n+$ #o)) #o))e#t e#te+ e+ (n+er (n+er OPS8 OPS8 *a" *a" be re,e re,err rre+ e+ to a$ taxe$' the" are exa#te+ n the exer#$e exer#$e o, the po)#e po!er o, State - A*o(nt A*o(nt$ $ are +ra! +ra!n n to re*b( re*b(r$e r$e o) o) #o*pa #o*pane ne$ $ !hen !hen approprate $t(aton$ ar$e ,or n#rea$e$ n' a$ !e)) a$ (n+er – re#o%er" o,' the #o$t o, #r(+e o) *portaton =9 Re+(#t Re+(#ton on o, So#a So#a)) ne(a) ne(a)t" t" a9 6a+e 6a+e po$$b po$$b)e )e thro(& thro(&h h pro&r pro&re$$ e$$%e %e $"$te* $"$te* o,  taxaton b9 Ob.e#t% Ob.e#t%e e  to pre%ent pre%ent the (n+(e #on#ent #on#entrato raton n o, !ea)th n the han+$ o, a ,e! n+%+(a)$ #9 Pro&r Pro&re$$ e$$% %t" t" – be$to be$to!e+ !e+ on the prn# prn#p)e p)e that tho$e !ho are ab)e to pa" $ho()+ $ho()+er the b&&er porton o tax b(r+en +9 Pre$e Pre$ent nt rate$ rate$ o, n#o*e' n#o*e' e$tate e$tate an+ &,t &,t taxe$ taxe$ pre$ent a &oo+ exa*p)e o, pro&re$$%t" 9 En#o(ra& En#o(ra&e e E#ono* E#ono*# # Gro! Gro!th th a9 P(rpo$e P(rpo$e 0 to &rant n#ent n#ent%e$ %e$ an+ exe* exe*pto pton$ n$ n or+er or+er to en#o(r en#o(ra&e a&e n%e$t n%e$t*e *ent nt an+ an+ there thereb" b" pro*ote the #o(ntr"3$ e#ono*# &ro!th b9 The The po!e po!err to exe* exe*pt pt ,ro* ,ro* tax tax $ nher nheren entt n $tate a)$o #9 LOCAL LOCAL GOVERN6 GOVERN6ENT ENT CO7E CO7E 0 )o#a) &o%ern &o%ern*ent *ent$ $ *a" &rant tax exe*pton$ = +9 Rea) propert" taxe$ – no $(#h po!er ex$t$ $a%e n the #a$e o, #on+onaton o, taxe$ !h#h #an be &rante+ on)" ,or #ertan .($t/ab)e rea$on$ !h#h are expre$$)" $tate+ n the )a! D9 Prote#ton$* – pro%+e prote#ton to )o#a) n+($tre$ )ke prote#t%e tarH$ an+ #($to*$ +(te$ Theory a! "a#$# o% &a'a&$o 19 Ne#e$$t" Theor" – ex$ten#e o, &o%ern*ent $ a ne#e$$t" a9 It #annot #ontn(e !tho(t the *ean$ to pa" t$ expen$e$ b9 8or tho$e *ean$ – t ha$ the r&ht to #o*pe) a)) #t2en$ an+ propert" !thn t$ )*t$ to #ontrb(te #9 Taxaton $ a po!er e*anatn& ,ro* ne#e$$t" +9 Ne#e$$ar" b(r+en to pre$er%e State3$ $o%ere&nt" an+ a *ean$ to &%e #t2enr" an ar*" to re$$t a&&re$$on e9 A na%" to +e,en+ ,9 Corp$ o, #%) $er%ant$ to $er%e &9 P(b)# *pro%e*ent +e$&ne+ ,or the en.o"*ent o, #t2enr" an+ tho$e !h#h !thn State3$ terrtor" an+ ,a#)te$' an+ prote#ton !h#h a &o%ern*ent $ $(ppo$e+ to pro%+e :9 Bene/t Prote#ton Theor" a9 State +e*an+$ an+ re#e%e$ taxe$ ,ro* $(b.e#t$ o, taxaton !thn t$ .(r$+#ton $o that t *a" be enab)e+ to #arr" t$ *an+ate nto eHe#t an+ per,or* the ,(n#ton$ o, &o%ern*ent' b9 an+ the #t2en pa"$ ,ro* h$ propert" the porton +e*an+e+ n or+er that he *a"' or&an2e+ $o#et" #9 4OEVER' the ,o(n+aton o, the ob)&aton to pa" taxe$ IS NOT the pr%)e&e$ en.o"e+ or the prote#ton &%en to a #t2en b" the Go%ern*ent' = a)tho(&h the pa"*ent o, taxe$ &%e$ a r&ht to prote#ton +9 Both are en.o"e+ a$ !e)) b" tho$e *e*ber$ o, a State !ho +o not pa" taxe$ be#a($e the" are not ab)e to +o $o9 e9 Spe#a) bene/t$ are not re(re+ ,9 8ro* #ontrb(ton re#e%e+' &o%ern*ent ren+er$ NO SPECIAL or CO66ENSURATE bene/t to an" part#()ar per$on or propert" &9 A tax $ not *po$e+ on the ba$$ o, a $pe#a) or part#()ar bene/t a##r(n& to ea#h #t2en n proporton to the tax pa+ h9 A PERSON CANNOT OBJECT TO OR RESIST T4E PA56ENT O8 TAXES SOLEL5 BECAUSE NO PERSONAL BENE8IT TO 4I6 AN BE POINTE7 OUT AS RISING 8RO6 TAX GO6 VS PALO6AR - S# (phe)+ %a)+t" o, ant tb $ta*p )a! - h#h re(re+ the axt(re o, a $e* po$ta) $ta*p on *a) *atter - A)tho(&h no $pe#a) bene/t a##r(e$ to *a) ($er$ b" $(#h $ta*p' t $ not ne#e$$ar"' to #on$tt(te p(b)# p(rpo$e' that $pe#a) bene/t$ a##r(e to a taxpa"er - Eno(&h that he en.o"$ bene/t$ o, )%n& n an or&an2e+ $o#et SCOPE OF LEGISLATIVE TAXING POWER Le&$)at%e taxn& po!er or +$#reton ,o))o!n& 0 exten+$ to the 19 the per$on' propert"' or o##(paton to be taxe+ a9 ex#$e$ or pr%)e&e$ pro%+e+ the" are !thn taxn& .(r$+#ton are a)$o n#)(+e+ b9 taxn& a(thort" #an $e)#t $(b.e#t o, taxaton :9 a*o(nt or rate o, tax ;9 p(rpo$e$ ,or !h#h taxe$ $ha)) be )e%e+ pro%+e+ the" are p(b)# p(rpo$e$  TAXA  TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book =9 kn+ o, tax tax to be #o))e #o))e#te+ #te+ 9 apporto apporton*en n*entt o, tax !hether !hether tax $ha)) $ha)) be &enera) &enera) or )*te+ to a part#()ar )o#a)t" or part)" &enera) an+ part)" )o#a) D9 $t($ $t($ o, o, taxat taxato on n 9 *etho+ *etho+ o, o, #o))e# #o))e#to ton n PURPOS PURPOSE E O8 LEV5 LEV5 0 ex#) ex#)($ ($%e) %e)" " !th !thn n the +$#r +$#ret eton on o,  )e&$)at(re' b(t #o(rt$ *a" +eter*ne !hther the p(rpo$e $ a p(b)# or not $tate or naton *a" o(tr(n an" h(*an #a)#()aton' $o the po!er to *eet tho$ nee+$ b" taxaton *($t not be )*te+ )*te+ e%en tho(&h tho(&h taxe$ taxe$ be#o*e be#o*e b(r+en$o b(r+en$o*e *e or #on/$#ator" CONSTITU CONSTITUTION TIONAL AL RESTRAIN RESTRAINTS TS RE ) Ta'a&$o a'a&$o $# &he Po*er &o !e#&roy - Le& Le&$) $)at at(r (re e ha$ ha$ a)$o a)$o ,()) ,()) +$# +$#re ret ton on a$ to the the per$ per$on on$' $' propert"' o##(paton or b($ne$$ to be taxe+ pro%+e+ the$e are a)) !thn the $tate3$ terrtora) .(r$+#ton IS THE POWER TO TAX POWER TO DESTROY ( - - po!er po!er to *po$ *po$e e taxe$ taxe$ $ one one $o (n) (n)* *te+ te+ n n ,or#e ,or#e an+ an+ $o $ear#hn& n extent $o that #o(rt$ $#ar#e)" %ent(re to +e#) +e#)ar are e that that t $ $(b. $(b.e# e#tt to an" an" re$t re$tr r#t #to on$ n$ !hate%er' ex#ept $(#h a$ re$t n +$#reton o, a(thort" !h#h exer#$e$ t no attr attrb(t b(te e $o%ere $o%ere&n &nt" t" $ *ore *ore per%a per%a+n +n& & no pon pontt +oe$ the the po!er po!er o, &o%er &o%ern* n*en entt aHe#t aHe#t *ore *ore #on$ta #on$tant) nt)" " an+ nt*a nt*ate) te)" " a)) a)) re)at re)aton on$ $ o, ),e ),e than than thro(&h the exa#ton$ *a+e (n+er t In the )&ht o, the ,ore&on& +e$#rpton o, the taxn& po!er $ taxaton there,ore po!er to +e$tro" 6# C())o#h %$ 6ar")an+ - - po!e po!err to tax tax n%o n%o)%e )%e$ $ po!er po!er to +e$t +e$tro ro" " - pert pertnent ent on)" !hen !hen ther there e $ no po! po!er to tax a part#()ar $(b.e#t an+ ha$ no re)aton to a #a$e !here $(#h r&ht to tax ex$t$ - o,t o,t (ot (ote+ e+ *ax *ax* * n$t n$tea ea+ + *ax *ax* * n$t n$tea ea+ + o, ben ben& & re&ar+e+ a$ a b)anket a(thor2aton o, the (nre$trane+ ($ o, tax taxn& n& po! po!er ,or ,or an" an+ a)) p(rp p(rpo o$e$' e$' rre$pe#t%e o, re%en(e' $ *ore rea$onab)" #on$tr(e+ a$ an ep&ra ep&ra**a **at# t# $tate* $tate*ent ent o, the po)t po)t#a #a)) an+ e#ono*# e#ono*# axo* that $n#e the /nan#a) /nan#a) nee+$ o, a  6ran+a' C)ar$$e Ann - - Not (n (n)*te+ hen hen a )e& )e&$) $)at at% %e e bo+" bo+" ha% ha%n& n& the the po!e po!err to tax tax a #ert #erta an n $(b. $(b.e# e#tt *att *atter er a#t( a#t(a) a))" )" *po *po$e $e$ $ $(#h $(#h a b(r+en$o*e tax a$ eHe#t(a))" to +e$tro" the r&ht to per,or* the a#t or to ($e the propert" $(b.e#t to the tax Va)+ a)+t t" " o, ena#t ena#t*e *ent nt +epen +epen+$ +$ (pon (pon the the nat( nat(rre an+ an+ #hara#ter o, the r&ht to +e$tro" I, $o &reat &reat an ab($e ab($e $ *an,e$t *an,e$te+ e+ a$ to +e$tro +e$tro" " nat(ra) nat(ra) an+ ,(n+a* ,(n+a*ent enta) a) r&ht$ r&ht$ !h#h !h#h no ,ree ,ree &o%ern &o%ern*en *entt #o()+ #on$$tent)" %o)ate' %o)ate' t $ the +(t" o, the .(+#ar" to ho)+ $(#h an a#t (n#on$tt(tona) Po!er Po!er to to tax $ $ not the the po!er po!er to to +e$tr +e$tro" o" – be#a( be#a($e $e o,  #on$tt(tona) re$trant$ p)a#e+ on a taxn& po!er that %o)ate$ ,(n+a*enta) r&ht$  Taxpa"er  Taxpa"er o!e$ hone$t" to the Go%ern*ent Go%ern*ent o!e$ ,arne$$ to taxpa"er$ .($t a$  To  To *antan &enera) p(b)#3$ tr($t an+ #on/+en#e n the &o%e &o%ern rn*e *ent nt th$ th$ po!e po!err *($t *($t b ($e+ ($e+ .($t .($t)" )" an+ an+ not not trea#hero($)" It $ho()+ be exer#$e+ !th #a(ton to a *n*2e n.(r" to the propretar" propretar" r&ht$ o, a taxpa"er POWER OF JUDICIAL REVIEW IN TAXATION D CIR %$ Ln&a"en - #o(rt$ #o(rt$ #annot #annot n(re n(re nto the !$+o !$+o* * o, a taxn& taxn& a#t - #o(r #o(rt$ t$ #anno #annott re% re%e! e! the !$+o !$+o* * or a+%$ a+%$ab ab) )t t" " or expe+en#" o, a tax - .(+# .(+#a) a) trb( trb(na) na)$ $ o, $tate $tate ha%e no #on#e #on#ern rn !th !th po)#" po)#" o, )e&$)aton - .(+#a) .(+#a) po!er po!er #annot #annot )e&t )e&t*a *ate)" te)" (e$t (e$ton on or re,($e re,($e to $an#ton $an#ton pro%$on$ pro%$on$ o, an" )a! not n#on$$t n#on$$tent ent !th !th ,(n+a*enta) )a! o, $tate - nor #an #an *ot% *ot%e$ e$ !h#h !h#h ha%e ha%e nF(en#e+ nF(en#e+ the $e)e# $e)e#ton ton o,  ob.e#t$ ,or taxaton or +eter*ne+ the rate' be n(re+ nto A$ )on& a$ )e&$)at(re' n *po$n& a tax' +oe$ not %o)ate app)#ab)e #on$tt(tona) #on$tt(tona) )*taton$ or re$tr#ton$' re$tr#ton$' the #o(rt$ ha%e ha%e no #on#er #on#ern n !th !th !$+o* !$+o* or po)#" po)#" o, exa#t exa#to on' n' the po)t#a) or other #o))atera) *ot%e$ behn+ t' the a*o(nt to be ra$e+ or the per$on$ propert" or other pr%)e&e$ to be taxe+ COUR COURT3S POER POER IN TAXATI AXATION ON $ LI6IT LI6ITE7 E7 ONL5 TO T4E T4E APPLICATION AN7 INTERPRETATION O8 LA - pet pett ton oner er3$ 3$ ar&( ar&(*e *ent nt that that axt axt(r (re e o, +o#( +o#(*e *ent ntar ar" " $ta*p on ,re&ht re#ept$ $ *pra#t#ab)e $ho()+ not be entertane+ - be#a be#a($ ($e e a##o a##or+ r+n n& & to #o(r #o(rt' t' *pr *pra# a#t t#a #ab b) )t" t" an+ an+ ab$(r+ #on$e(en#e$ o, )a! $ho()+ be a++re$$e+ to the )e&$)at(re an+ a+*n$trat%e a(thorte$ - It $ not not !thn !thn t$ t$ pro% pro%n#e n#e to to n(r n(re e nto the the !$+o !$+o* * o, )a! ,or n+ee+ #o(rt$ are bo(n+ b" !or+$ n *o(th o, )a!*aker - Verbo erbo )e& )e&$ $ e$t e$t re# re#e+ e+n+ n+(* (* Prn#p) Prn#p)e e o, .(+#a) .(+#a) non nter,er nter,eren#e en#e nto (e$ton (e$ton$ $ o, tax po)#" po)#" #o()+ #o()+ probab) probab)" " exten+ exten+ a)$o nto the a+*n$t a+*n$trat% rat%e e rea)* D Non – ,oo+ a&r#()t(ra) pro+(#t' the $a)e o, !h#h b" pr*ar" pro+(#er$ are exe*pt (n+er VAT )a!  The (e$ton a$ to !hether or not BIR3$ re#)a$$/#aton re#)a$$/#aton $ #o(n #o(nte terp rprro+(# o+(#t t%e %e #o() #o()+ + be prop proper er)" )" a++r a++re$ e$$e $e+ + to re$pon+ent$ Se# o, 8nan#e an+ CIR or Con&re$$ A#+e&# o% Ta'a&$o 19 Le%" Le%" or *po *po$ $t ton on o, tax tax on per$ per$on on$' $' prop proper ert" t" or ex#$e$ :9 Co))e#t Co))e#ton on o, taxe$ taxe$ a)rea+" a)rea+" )e%e+ )e%e+ Le%" – )e&$)at%e po!er - n#)(+e$ n#)(+e$ +eter +eter*na *naton ton o, per$on per$on$' $' proper propert" t" or ex#$e$ ex#$e$ to be taxe$ ' the $(* or $(*$ to be ra$e+' the +(e +ate thereo, an+ the t*e an+ *anner o, )e%"n& an+ #o))e#tn& taxe$ Co))e#ton ?n#)(+n& a$$e$$*ent @ – #on$$t$ o, *anner o,  en,or#e*ent o, ob)&aton on the part o, tho$e !ho are taxe+ Ba#$ +r$$+-e# o% #o.! &a' #y#&e/ 19 /$#a /$#a)) a+e a+e(a (a#" #" – $o(r $o(r#e #e$ $ o, &o%e &o%ern rn*e *ent nt *($t *($t eb $(#ent to *eet &o%ern*ent expen+t(re$ an+ other p(b)# nee+$ a9 e$$ent e$$enta) a) n or+er or+er to a%o+ a%o+ b(+&eta b(+&etar" r" +e/# +e/#t$ t$ an+ to *n*2e ,ore&n an+ )o#a) borro!n&$ :9 Theor Theoret et#a) #a) J($t# J($t#e e a9 ba$e+ ba$e+ on taxpa taxpa"er3$ "er3$ ab)t" ab)t" to to pa" b9 taxaton taxaton *($t *($t be pro&re$$% pro&re$$%e e #on,or*ab #on,or*ab)" )" !th #on$t #on$tt(t t(ton ona) a) *an+at *an+ate e that that #on&r #on&re$$ e$$ $ha)) $ha)) e%o)%e a pro&re$$%e $"$te* o, taxaton ;9 A+*n$ A+*n$trat trat%e %e 8ea$b 8ea$b)t" )t" – taxe$ $ho()+ $ho()+ be #apab)e #apab)e o,  ben& eHe#t%e)" en,or#e+ a9 VAT VAT – exa*p)e exa*p)e o, a+*n$tra a+*n$trat%e t%e po)#" po)#"  TAXA  TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book b9 VAT VAT – prn#pa))" prn#pa))" a*e+ a*e+ to ratona)2e the $"$te* o, taxe$ taxe$ on &oo+$ &oo+$ an+ $er%# $er%#e$' e$' $*p) $*p)," ," tax tax a+*n$traton a+*n$traton an+ *ake $"$te* *ore e(tab)e to enab enab)e )e the the #o(n #o(ntr tr" " to atta attan n e#on e#ono* o*# # re#o%er" #9 Taxaton #o()+ #o()+ be enhan#e b" po)#e po!er9 po!er9 +9 I, (n+er Lo#a) Lo#a) &o%ern &o%ern*ent *ent #an #an #)a$$," #)a$$," )an+$ )an+$ a$ re$+ e$+en ent ta) a) an+ an+ #o** #o**er er# #a) a)'' then then $n# $n#e e #on% #on%er er$ $on on o, n+( n+($t $tr ra) a) )an+ )an+$ $ $ ($(a ($(a)) ))" " a$$e$$ a$$e$$e+ e+ on a h&he h&herr a$$e$ a$$e$$*e $*ent nt )e%e)' )e%e)' tax #o))e#ton are n#rea$e+ AS TO PERSONS AFFECTED AS TO AUTHORITY  WHICH EXERCISES THE POWER Ta'a&$o 0# Po-$e Po*er 0# E/$e& Do/a$ TAXATION DISTINGUISHED FROM POLICE POWER AND EMINENT DOMAIN TAXATION POLICE EMINENT POWER DOMAIN the  To  To pro*ote 8or p(b)# AS TO 8or p(rpo$e &enera) ($e PURPOSE ra$n& !e),are re%en(e thro(&h re&()aton$  The  J($t AS TO Prote#ton an+ bene/t$ bene/t$ *antenan#e #o*pen$ato COMPENSATI re#e%e+ o, a hea)th hea)th" " n' not to ON ,ro* the e#ono*# ex#ee+ the the &o%ern*ent9 $tan+a $tan+ar+ r+ o,  *arket %a)(e $o#et" b" the o!ner (damnum or absque a+*n$trator injuria) or an"one ha%n& ha%n& )e&a) )e&a) ntere$t n the propert"' or a$ +eter*ne+ b" the a$$e$$or'  6ran+a' C)ar$$e Ann AS TO AMOU AMOUNT NT OF EXACTION AS TO THE RELATIONSHI P TO THE CONSTITUTIO N AS TO TRANSFER OF PROPERTY  RIGHTS !h#h !h#he%e e%err $ )o!er9 Operat Operate e (pon (pon #o** #o**(n (nt" t" Operat Operate$ e$ on or a #)a$$ o, n+%+(a)$ the n+%+(a) propert" o!ner Exer#$e+ on)" b" the 6a" be &o%ern*en &o%ern*entt or t$ po)t#a po)t#a)) exer# exer#$e+ $e+ b" $(b+%$on$9 p(b)# $er%#e$ #orp or p(b)# (t)te$ ,   &ran &rante te+ + b" )a! Genera))" no L*t *te+ e+ to  There $ no )* )*tt to the the the the #o$t #o$t o,  *po$tonM a*o(nt o,  re&()aton rath rather er'' t $ tax that *a" the o!ner o,  be *po$e+ I$$( I$$(an an#e #e o,  the proper propert" t" )#en$e or taken taken !ho $ $(r%e))an#e pa+ .($t #o*pen$ato n9 S(b.e#t to Re)at%e)" S(b.e#t to #ertan ,ree ,ro* #ertan #on$tt(tona #on$tt(tona #on$tt(tona) ) )*tat )*taton$ on$'' ) )*tat )*taton$ on$ )*taton$' n#)(+n& the an+ $(peror NOT prohbton to the the nonnon- n#)(+n n#)(+n& & the a&an$t *par*ent prohbton *par*ent pro%$on$ a&an$t o, the *par*ent ob)&aton o,  o, the #ontra#t$ ob)&at ob)&aton on o,  #ontra#t$  Taxe$  Taxe$ pa+ No tran$, tran$,er' er' be#o*e part b(t on)" o, the p(b)# re$tr re$tran antt on ,(n+$ the exer#$e' > o, propert" r&ht ex$t$ +re#t AS TO No $pe#a) or No +re#t bene/t$ BENEFITS bene/t re#e%e+9 A RECEIVED re#e%e+ b" hea)th" taxpa"er e#ono*# other than $tan+ar+ o,  the ,a#t that $o#et" Go%ern*ent kno!n a$ on)" 7A6NU6 SECURES to ABSUE the #t2en INJURIA that &enera) bene/t re$()tn& ,ro* prote#ton o,  h$ per$on' an+ propert" an+ !e),are o, a)) r()e Not app)e+ AS TO NON 1  Th$ $(b$t$ here IMPAIRMENT OF  Taxn& a#t CONTRACTS #annot *par ob)&aton o,  #ontra#t$ TAXES DISTINGUISHED FROM OTHER IMPOSITIONS 1@ &o-- – a*o(nt #har&e+ ,or the #o$t an+ *antenan#e o,  propert" ($e+M a2 REASON 0 Tax $ a +e*an+ o, $o%ere&nt" %or &he +.r+o#e o% ra$#$3 +."-$ re0e.e > "2 Sho()+ be note+ that LOCAL GOVERN6ENT CO7E a(thor2e$ the #o))e#ton o, to))$ b" )o#a) &o%ern*ent (nt$ ,or the ($e o, an" p(b)# roa+' per or !har,' !ater!a"' br+&e' ,err" or te)e#o**(n#aton $"$te* ,(n+e+ an+ #on$tr(#te+ b" the* :@ +ea-&y – p(n$h*ent ,or the #o**$$on o, a #r*e a9 #%) )ab)t" b9 A per$on $ on)" be#a($e he ,a)$ to $at$," h$ #%) ob)&aton to pa" taxe$ Natona) 7e%e)op*ent Co*pan" %$ CIR - , a !thho)+n& a&ent )ke N7C ,a)$ to !thho)+ the re($te !thho)+n& tax on the n#o*e re#e%e+ ,ro* P4 $o(r#e$ b" a  Japane$e non re$+ent ,ore&n #orporaton' $(#h !thho)+n& a&ent $ LIABLE TO PA5 TAX that t ++ not !thho)+ a$ a pena)t" ,or t$ ,a)(re to !thho)+ the tax o, ,ore&n #orporaton ;@ o/+ro/$#e +ea-&y  – a*o(nt #o))e#te+ n )e( o,  #r*na) pro$e#(ton n #a$e$ o, tax %o)aton$M a9 nether *po$ton nor a pena)t" b9 #annot be *po$e+ b" the Co**$$oner #9 , taxpa"er re,($e$ to pa" the #o*pro*$e' #r*na) a#ton $ the re*e+" +9 a)tho(&h #annot be )e&a))" *po$e+' the" *a" be #o))e#te+ , taxpa"er ha$ expre$$e+ h$ !))n&ne$$ to pa" the $a*e =@ #+e$a- a##e##/e& – )e%e+ on)" on )an+ ba$e+ !ho))" on the bene/t a##r(n& thereon a$ a re$()t o,  *pro%e*ent$ o, p(b)# !ork$ (n+ertaken b" &o%ern*ent !thn the %#nt"9 a9 Ex#eptona) both a$ to t*e an+ )o#a)t" b9 Not taxe$ !thn the #on$tt(tona) or $tat(tor" pro%$on$ on tax exe*pton$ #9 Exe*pton (n+er Se#ton :>???;@ NOT APPL5 TO SPECIAL ASSESS6ENTS  TAXATION SURVIVAL KIT – Aban Book +9 Con$tt(tona) exe*pton GRANTE7 (n+er a,ore#te+ pro%$on o, Con$tt(ton #o%er$ 0 9 C4ARITABLE INSTITUTIONS 9 C4URC4ES 9 PARSONAGES %9 CONVENTS APPURTENANTS T4ERETO' %9 6OSUES %9 NON PRO8IT CE6ETARIES %9 AN7 ALL LAN7S BUIL7INGS AN7 I6PROVE6ENTS ACTUALL5 7IRECTL5 AN7 EXCLUSIVEL5 USE7 8OR RELIGIOUS C4ARITABLE OR E7UCATIONAL PRUPOSES e9 SECTION :=< O8 LGC – NATURE O8 SPECIAL ASSESE6ENTS @ -$e#e %ee – re&()ator" *po$ton n the exer#$e o,  the po)#e po!er o, the StateM a9 e*anate$ ,ro* po)#e po!er b9 per*t #o))e#te+ ,ro* a)en .ob app)#ant$ $ n ex#e$$ o, the #o$t o, re&()aton' the exa#ton $ a tax #9 exe*pton ,or* tax +oe$ not n#)(+e b()+n& per*t ,ee an+ $pe#a) a$$e$$*ent$ a$ he$e are not taxe$ b(t re&()ator" ,ee$ n the #a$e o,  )#en$e ,ee an+ )e%" on a##o(nt o, bene/t$ to )an+ ,or $pe#a) a$$e$$*ent $ +9 6otor %eh#)e re&$traton ,ee$ are taxe$ be#a($e o, the )e&$)at%e ntent $ *an)" to ra$e ,(n+$ ,or #on$tr(#ton an+ *antenan#e o,  h&h!a"$ an+ to a *(#h )e$$er +e&ree to pa" ,or the expen$e$ o, LTO a re&()ator" a&en#" o,  Go%ern*ent e9 NON- USE8UL OCCUPATIONS – be#a($e (n+er &enera) !e),are #)a($e' *(n#pa) #orporaton$ are a(thor2e+ to ena#t or+nan#e$ to pro%+e ,or hea)th an+ $a,et" an+ to pro*ote the *ora)t"' pea#e' an+ &enera) !e),are o, t$ nhabtant$ THREE LICENSES IN THE LAW )  6ran+a' C)ar$$e Ann 19 )#en$e$ ,or re&()aton o, ($e,() o##(paton$ :9 )#en$e$ ,or re&()aton or re$tr#ton o, non-($e,() o##(paton$ or enterpr$e$ ;9 )#en$e$ ,or re%en(e on)" Non – pa"*ent o, a )#en$e ,ee ,or a b($ne$$ *ake$ that b($ne$$ ILLEGAL Non – pa"*ent o, a tax ,or a b($ne$$ +oe$ not ne#e$$ar)" *ake that b($ne$$ ))e&a) a)tho(&h th$ *&ht be a &ro(n+ ,or #r*na) pro$e#(ton a&an$t the per$on or per$on$ %o)atn& the )a! NOT ONL5 BUSINESSSES 4IC4 ARE L A8ULL5 CON7UCTE7 ARE TAXABLE EVEN T4OSE 4IC4 ARE CARRIE7 ON ILLEGALL5 ARE SUBJECT TO TAX EXA6PLE 0 VAT 6A5 BE ASSESE7 ON T4E ILLICIT PRO7UCTION AN7 SALE O8 CASETTE TAPES9 TAX ASSESS6ENTS 6A5 EVEN EXTEN7 TO INCO6E T4AT IS REALIE7 8RO6 SALE O8 T4ESE TAPES BECAUSE INCO6E 8RO6 ILLEGAL SOURCES IS ALSO TAXABLE LGC 0 a(thor2e+ to *po$e re&()ator" ,ee$' $e#ton 1= ex#ept n #a$e o, pro,e$$ona) tax on pra#t#e o, pro,e$$on S(b$tant%e Re(re*ent$ ,or an or+nan#e to be %a)+ 0 19 :9 ;9 =9 6($t not #ontra%ene Con$tt(ton 6($t not be parta) or +$#r*nator" 6($t not prohbt b(t *a" re&()ate tra+e 6($t be &enera) an+ #on$$tent !th p(b)# po)#" 9 6($t not be (nrea$onab)e D@ /ar3$ %ee – exa#ton +e$&ne+ to $tab)2e the #(rren#" a9 not tax b(t a #(rren#" *ea$(re +e$&ne+ to $tab)2e #(rren#" $(#h a$ exa#ton o, #ertan ,ee 1< (n+er RA on re*ttan#e o, pro/t$ earne+ n th$ #o(ntr" @ !e"& 1 a tax $ not a +ebt b(t $ an ob)&aton *po$e+ b" )a!9 a9 Expre$$ or *p)e+ b9 Taxe$ are not +ebt9 T!o ob)&aton$ are NOT SUSCEPTIBLE TO SET O88 OR CO6PENSATION UN7ER art 1: o, CC #9 Ca)tex %$ COA – Taxe$ an+ +ebt$ #annot be the $(b.e#t o, #o*pen$aton be#a($e the Go%ern*ent an+ taxpa"er are not *(t(a))" #re+tor$ an+ +ebtor o, ea#h other an+ a #)a* ,or taxe$ $ not a +ebt' +e*an+ #ontra#t or  .(+&e*ent a$ $ a))o!ab)e to be $et oH Intere$t on taxe$ #an be +e+(#te+ - S4OUL7 BE UALI8IE79 A$ re&ar+$ ntere$t on taxe$ that are not #onne#te+ !th taxpa"er3$ pro,e$$on' tra+e or b($ne$$e$' t $ee*$ that +e+(#ton $ NOT ALLOE7 - REASON 0 Se#ton :?b@?1@ – $peak$ on)" on the a*o(nt o, ntere$t pa+ or n#(rre+ !thn taxab)e "ear on n+ebte+ne$$ n#(rre+ n #onne#ton !th taxpa"er3$ pro,e$$on' tra+e or b($ne$$ - Ex#epton 0 In #a$e o, #t2en$' or re$+ent a)en$ !o are $e), e*p)o"e+ ?per$on$ !ho are en&a&e+ n b($ne$$ an+ tho$e !ho pra#t#e ther pro,e$$on n Ph)ppne$@ the +e+(#tab)t" o, ntere$t on n+ebte+ne$$ $ )*te+ on)" to ntere$t pa+ or n#(rre+ !thn a taxab)e "ear on )oan$ #ontra#te+ ,ro* a##re+te+ /nan#a) n$tt(ton$ !h#h *($t be pro%en to ha%e been n#(rre+ n #onne#ton !th #on+(#t o, a taxpa"erM$ pro,e$$on tra+e or b($ne$$ - In+%+(a)$' +e+(#tb)t" o, ntere$t on taxe$ $ NO LONGER AUT4ORIE7 , tho$e taxe$ are not n an"!a" #onne#te+ !th pro,e$$on ra+e or b($ne$$ Corporaton$ an+ taxab)e partner$hp$ 1< - Se#ton ;= B 1 NRC – t !o()+ $ee* that +e+(#ton o,  ntere$t on taxe$ $ LEGALL5 .($t/e+ pro%+e+ that taxe$ pa+ or n#(rre+ are n #onne#ton !th taxpa"er3$ tra+e or b($ne$$9 A pen+n& #)a* ,or re,(n+ *a" be $et oH a&an$t an ex$tn& tax )ab)t" e%en tho(&h the re,(n+ ha$ not "et been appro%e+ b" Co**$$oner 6a" an ex#e$$ pa"*ent o, (arter)" #orporate n#o*e tax ,or the pre#e+n& taxab)e "ear be a(to*at#a))" #re+te+ or app)e+ a&an$t the #orporaton3$ e$t*ate+ (arter)" n#o*e tax )ab)te$ ,or taxab)e (arter$ o, the $(##ee+n& taxab)e "ear  NO9 on#e a taxpa"er opt$ ,or ether a re,(n+ or the a(to*at# tax #re+t $#he*e an+ $&n/e+ h$ poton n a##or+an#e !th the re&()aton' th$ +oe$ not IPSO 8ACTO #on,er on h* the r&ht to a%a) o, $a*e **e+ate)" Pror appro%a) b" the CIR o, tax #re+t (n+er Se#ton >D !o()+ appear to be the *ore rea$onab)e nterpretaton to be &%en $a+ $e#ton An opport(nt" *($t be &%en to Interna) Re%en(e bran#h o,  the &o%ern*ent to n%e$t&ate an+ #on/r* the %era#t" o,  #)a*$ o, taxpa"er R&ht $ho()+ be #on$tr(e+ a$ an ABSOLUTE RIG4T !h#h $ a%a)ab)e to the axpa"er at h$ $o)e opton A(to*at# #re+t IS NOT AVAILABLE' BUT T4IS 7OES NOT 6EAN T4AT PETITIONER CANNOT GET A RE8UN7 OR CRE7IT O8 EXCESS UARTERL5 PA56ENT )) the non a(to*at# #re+tn& r()n& n the San Car)$ 6))n& #a$e' ho!e%er' app)" to n+%+(a)$ !ho' (n+er  TAXATION SURVIVAL KIT – Aban Book Se#ton D are re(re+ to /)e (arter)" ret(rn$ o, n#o*e tax on a #(*()at%e ba$$  NO9 Re%en(e Re&()aton$ -; 0 An" ex#e$$ o, the tota) (arter)" pa"*ent$ an+ taxe$ !thhe)+ o%er the n#o*e tax #o*p(te+ n the /na) n#o*e tax ret(rn *a" be app)e+ a$ a #re+t a&an$t the (arter)" n#o*e tax )ab)te$ ,or the taxab)e (arter$ o, the **e+ate)" $(##ee+n& "ear9 A%a)ab)e 0 In+%+(a)$ ho +e$re not to a!at an"*ore the pro#e$$n& o, an" tax re,(n+ to !h#h the" are entt)e+ In #a$e pa"*ent #re+te+ are not #o*p)ete)" (t)2e+ or app)e+ n the axab)e (arter$ o, the **e+ate)" $(##ee+n& "ear 0 T4E RE6AINING A6OUNT S4ALL BE CLAI6E7 AS RE8UN7 OR CRE7IT B5 T4E TAXPA5ER PURSUANT TO $e# :< o, Tax Co+e Se#ton D 0 In #a$e #orporaton $ entt)e+ to a tax #re+r or re,(n+ o, the ex#e$$ e$t*ate+ (arter)" n#o*e taxe$ pa+' the EXCESS A6OUNT S4ON ON ITS 8INAL A7JUST6ENT RETURN 6A5 BE CARRIE7 OVER AN7 CRE7ITE7 AGAINST T4E ESTI6ATE7 UARTERL5 TAX LIABILITIES 8OR T4E TAXABLE UARTERS O8 SUCCEE7ING TAXABLE 5EAR On#e the opton to #arr" o%er an+ app)" the ex#e$$ (arter)" n#o*e tax a&an$t n#o*e teax +(e +or taxab)e (arter$ o,  the $(##ee+n& taxab)e "ear$ ha$ been *a+e --- SUC4 OPTION S4ALL BE CONSI7ERE7 IRREVOCABLE 8OR T4AT  TAXABLE PERIO7 AN7 NO APPLIATION 8OR CAS4 RE8UN7 OR ISSUANCE O8 A TAX CRE7IT CERTI8ICATE S4ALL BE ALLOE7 T4ERE8OR >@ re3.-a&ory %ee# 1 exa#ton +e$&ne+ to re&()ate n+($tre$ a9 6a" an exa#ton be both a tax a$ !e)) a$ a re&()ator" ,ee b9 Po$$b)e 11 6ran+a' C)ar$$e Ann #9 P7 1> – re&()ate$ the #+eo&ra* n+($tr" *a" %a)+)" *po$e tax o, ;9 Spe#/# Tax – tax !h#h *po$e$ a $pe#/# $(* b" the hea+ or n(*ber or b" $o*e $tan+ar+ o, !e&ht or *ea$(re*ent an+ !h#h re(re$ no a$$e$$*ent be"on+ a )$tn& an+ #)a$$/#aton o, $(b.e#t to be taxe+ a9 A)#oho)' toba##o 9 A+ Va)ore* Tax – a tax (pon the %a)(e o, the art#)e or thn& $(b.e#t to taxaton a9 Rea) propert" tax 1<9C($to* 7(te$ - +(te$ #har&e+ (pon #o**o+te$ on ther ben& *porte+ nto or exporte+ ,ro* a #o(ntr" 119Natona) Tax – )e%e+ b" natona) &o%ern*ent a9 Lo#a) a(tono*" po)#" 1:9Pro&re$$%e Tax – taxe$ po$e+ !hereb" rate or a*o(nt o,  tax n#rea$e$ a$ the a*o(nt o, n#o*e or earnn& to be taxe+ n#rea$e$ a9 Exa*p)e 0 Pre$ent n#o*e tax – Tab)e on Tax rate$ ,or n+%+(a) #t2en$ 1;9Re&re$$%e Tax – taxe$ !hereb" tax rate +e#rea$e$ a$ a*o(nt o, n#o*e or earnn& to be taxe+ n#rea$e$ 1=9Proportonate Tax – ba$e+ on a /xe+ proporton o, the %a)(e o, the $(b.e#t ben& taxe+ a9 Rea) e$tate tax !h#h $ a /xe+ proporton o, %a)(e o,  propert" a$$e$$e+ Ta'+ayer8# S.$& - taxpa"er ha$ r&ht to /)e an a#ton (e$tonn& the %a)+t" or #on$tt(tona)t" o, a $tat(te or )a! on the theor" that the expen+t(re o, p(b)# ,(n+$ b" an o#er o, Go%ern*ent ,or p(rpo$e o, a+*n$tern& or *p)e*entn& n (n#on$tt(tona) or n%a)+ )a! #on$tt(te$ *$app)#aton o, $(#h ,(n+$ 6a#e+a %$ 6a#ara& 1= - a +()" e)e#te+ Senator o, the Ph)ppne$ an+ a taxpa"er thereo,  ha$ the )e&a) #apa#t" to /)e an a#ton ,or #ertorar' prohbton an+ *an+a*($ to (e$ton )e&a)t" o, a #)a*e+ re,(n+ o, n+re#t taxe$ )ke tax on o) pro+(#t$ $n#e the re,(n+ t$e),' , ,o(n+ to be !tho(t )e&a) ba$$' #on$tt(te$ an ))e&a) expen+t(re o, p(b)# ,(n+$ PUBLIC 8UN7S S4OUL7 BE INVOLVE7 RE9UISITES FOR A TAXPAYERS PETITION 1@ That *one" $ ben& extra#te+ an+ $pent n %o)aton o, $pe#/# #on$tt(tona) prote#ton$ a&an$t ab($e$ o,  )e&$)at%e po!er :@ That p(b)# *one" $ ben& +eFe#te+ to an" *proper p(rpo$e ;@ That the pettoner $eek$ to re$tran re$pon+ent$ ,ro* !a$tn& p(b)# ,(n+$ thro(&h the en,or#e*ent o, an n%a)+ or (n#on$tt(tona) )a!9 -  TEST IN 7ETER6INING PUBLIC PURPOSE IN A TAX  19 hether the thn& to be ,(rthere+ b" the appropraton o, p(b)# re%en(e $ $o*ethn& !h#h $ the +(t" o,  State' a$ a &o%ern*ent to pro%+e :9 hether pro#ee+$ o, tax !)) +re#t)" pro*ote the !e),are o, #o**(nt" I e(a) *ea$(re a9 R&ht to tax +epen+$ on the ()t*ate ($e' p(rpo$e an+ ob.e#t ,or !h#h the ,(n+ $ ra$e+ b9 No po!er to tax an ob.e#t !h#h $ not !hthn t$ p(rpo$e$ ,or !h#h &o%ern*ent are e$tab)$he+ #9 PUBLIC PURPOSE IS PRESU6E7 Non – +e)e&ab)t" o, Taxn& Po!er - Chapter : L*taton$ on the taxn& po!er 19 :9 ;9 =9 9 P(b)# p(rpo$e o, taxe$ Non – +e)e&ab)t" o, taxn& po!er Terrtora)t" or $t($ o, taxaton Tax exe*pton o, Go%ern*ent Internatona) Co*t" A p(b)# p(rpo$e o, taxe$ 0 - 1= a)) po!er$ o, &o%ern*ent' that o, taxaton $ $a+ to be the $tron&e$t a$ t #an be rea+)" e*p)o"e+ a&an$t one #)a$$ o,  n+%+(a)$ n ,a%or o, another $o a$ to r(n one #)a$$ an+ &%e (n)*te+ !ea)th an+ propert" to another , no *p)e+ )*taton on the ($e$ ,or !h#h $(#h taxn& po!er *a" be exer#$e+ - 7$trb(ton o, the po!er$ o, &o%ern*ent nto three +epart*ent$' na*e)"' )e&$)at%e' exe#(t%e' .(+#a)' the po!er o, taxaton $ ex#)($%e)" )e&$)at%e Axn& po!er a$ a GENERAL RULE 6A5 NOT BE 7ELEGATE7 Ex#epton$ to non – +e)e&ab)t" 19 8)exb)e TarH C)a($e a9 Se#ton :>?:@ Art#)e VI 1> Con$tt(ton b9 CONGRESS 6A5 EXPRESSL5 AUT4ORIE T4E PRESI7ENT TO 8IX I4TIN SPECI8IE7 LI6ITS' AN7 SUBJECT TO SUC4 LI6ITATIONS AN7 RESTRICTIONS AS IT 6A5 I6POSE TARI88 RATES  TAXATION SURVIVAL KIT – Aban Book #9 I6PORT AN7 EXPORT UOTAS' TONNAGE AN7 4AR8AGE 7UES AN7 OT4ER 7UTIES OR I6POSTS IT4IN 8RA6EORK O8 T4E NATIONAL 7EVELOP6ENT PRORA6 O8 GOVERN6ENT +9 In#)(+e$ tarH rate$ e%en ,or re%en(e p(rpo$e$ on)" e9 C($to* +(te$ !h#h are a$$$e+ at the pre$#rbe+ tarH rate$ are %er" *(#h )ke taxe$ !h#h are ,re(ent)" *po$e+ ,or both re%en(e ra$n& an+ re&()ator" p(rpo$e$ :9 Lo#a) taxn& po!er a9 Se#ton  Art#)e 1< 1> Co$ntt(ton b9 EAC4 LOCAL GOVERN6ENT UNIT S4ALL 4AVE  T4E POER TO CREATE ITS ON SOURCES O8 REVENUES AN7 TO LEV5 TAXES #9 8EES' AN7 C4ARGES SUBJECT TO SUC4 GUI7ELINES AN7 LI6IATIONS AS T4E CONGRESS 6A5 PROVI7E' CONSISTENT IT4 BASIC POLIC5 O8 LOCAL AUTONO65 +9 SUC4 TAXES AN7 C4ARGES S4ALL ACCRUE EXCLUSIVEL5 TO T4E LOCAL GOVERN6ENTS e9 Theor" o, non +e)e&aton o, )e&$)at%e po!er 7OES NOT APPL5 n *atter$ o, )o#a) #on#ern ,9 The po!er o, the #t" to *po$e a &ro$$ $a)e$ tax o, one ha)+ per#ent o, &ro$$ ,re&ht an+ ,are$ o, #ar&o an+ pa$$en&er$ $hppe+ or tran$porte+ o(t ,ro* O2a*$ #t" b" %e$$e)$ p)"n& bet!een #t" an+ other port$ AS SUSTAINE7 &9 J($t/#aton o, +e)e&aton o, )e&$)at%e taxn& po!er to )o#a) &o%ern*ent$ 0 Ne#e$$ar" *p)#aton that po!er to #reate po)t#a) #orporaton$ ,or p(rpo$e$ o, )o#a) $e),  &o%ern*ent #arre$ !th t po!er to #on,er on $(#h )o#a) &o%ern*ent a&en#e$ the a(thort" to tax h9 A(thort" to )e%" taxe$' the $tate $ NOT LI6ITE7 to exa#t *ea$(re o, that !h#h $ exer#$e+ b" t$e), 1 6ran+a' C)ar$$e Ann 9 There *a" be +e)e&ate+ $(#h *ea$(re o, po!er to *po$e an+ #o))e#t taxe$ a$ the )e&$)at(re *a" +ee* expe+ent  .9 6(n#pa)te$ *a" be per*tte+ to tax $(b.e#t$ !h#h' ,or rea$on$ o, p(b)# po)#"' the State ha$ not +ee*e+ !$e to tax ,or *ore &enera) p(rpo$e$ k9 Tax )e&$)aton %$ tax a+*n$traton – !h" nee+ to kno! the +Heren#e Be#a($e !hat $ +e)e&ate+ $ tax tax )e&$)aton' the +e)e&aton $ INVALI79 B(t , !hat n%o)%e+ $ on)" tax a+*n$traton 0 Non +e)e&ab)t" $ NOT VIOLATE7  T!o part$ o, $"$te* o, Taxaton 19 E)e*ent$ that enter nto *po$ton o, the tax :9 Step$ taken ,or t$ a$$e$$*ent an+ #o))e#ton One $ )e&$)aton' one $ tax a+*n$traton Po!er$ that #annot be +e)e&ate+ to a+*n$trat%e a&en#e$ 0 19 $e)e#ton o, propert" to be taxe+ :9 +eter*naton o, p(rpo$e$ ,or !h#h taxe$ $ha)) be )e%e+ ;9 /xn& o, the rate o, taxaton =9 r()e$ o, taxaton n &enera) 7e)e&ab)e po!er$ !h#h are not )e&$)at%e 19 po!er to %a)(e propert" ,or taxaon n p(r$(an#e o,  /xe+ r()e$ :9 e(a)2aton o, a$$e$$*ent$ b" a #entra) bo+" ?a+*n *atter$@ ;9 #o))e#ton o, taxe$ ?a+*n *atter$@ Terr$&or$a-$&y or S$&.# o% Ta'a&$o - p)a#e o, taxaton )*taton on taxn& po!er 1D - REASON 0 prn#p)e $ !e)) re#o&n2e+ that ho!e%er broa+ the po!er o, taxaton *a" be a$ to t$ #hara#ter an+ no *atter ho! $ear#hn& t $ n t$ extent' $(#h po!er $ ne#e$$ar)" )*te+ on)" to per$on$' propert" or b($ne$$e$ !thn t$ .(r$+#ton - ALL SUBJECTS OVER 4IC4 T4E SOVEREIGN POER O8 A STATE EXTEN7S ARE OBJECTS O8 TAXATION - BUT T4OSE OVER 4IC4 IT 7OES NOT EXTEN7 ARE' UPON T4E SOUN7EST PRINCIPLES EXE6PT 8RO6  TAXATION So/e Ba#$ Co#$!era&$o# A:e&$3 S$&.# o% Ta'a&$o 19 Prote#ton – ba$# #on$+eraton that .($t/e$ the $t($ o, taxaton a9 Ct2en$hp an+ re$+en#e are ,a#tor$ that .($t," the taxn& $(t$ e%en a$$(*n& that the propert" $ $t(ate+ o(t$+e the taxn&  .(r$+#ton )ke the Ph)ppne$ b9 In #a$e o, /re n$(ran#e #o%ern& propert" $t(ate+ n Ph)ppne$' are the n$(ran#e pre*(*$ pa+ thereon taxab)e a$ a&an$t the n$(rer e%en tho(&h the /re n$(ran#e #ontra#t !a$ exe#(te+ o(t$+e the Ph)ppne$ an+ the n$(ran#e po)#" $ +e)%ere+ to be n$(re+ theren 9 Pre*(*$ are taxab)e n the Ph)ppne$ be#a($e Ph)ppne Go%ern*ent *($t &et $o*ethn& n ret(rn ,or prote#ton t &%e$ to the n$(re+ propert" n the Ph)ppne$' an+ b" rea$on o, $(#h prote#ton' the n$(rer $ bene/te+ thereb" :9 7o(b)e Taxaton an+ St($ L*taton – NEVER INVALI7 !here t $ *po$e+ b" +Herent $tate$ a9 1>> Tax Co+e 0 NON RESI7ENT CITIENS' LIKE 8ILIPINO I66IGRANTS ABROA7 ' AN7 NON RESI7ENT ALIENS ARE SUBJECT TO TAX ON INCO6E 7ERIVE7 8RO6 P4ILIPPINE SOURCES 1D ;9 6ax* 6ob)a Se((nt(r Per$ona* an+ St($ o,   Taxaton a9 6o%ab)e$ ,o))o! the per$on b9 7o*#)e o, the o!ner #9 Not a))o!e+ to $tan+ n the !a" o, taxaton o,  per$ona)t" n the p)a#e !here t ha$ t$ a#t(a) $t($ an+ the re($te )e&$)at%e .(r$+#ton ex$t$ +9 App)e$ to taxaton o, per$ona) propert" e9 Share$ o, $to#k *a" ha%e a $t($ ,or p(rpo$e$ o,  taxaton n a $tate n !h#h the" are per*anent)" kept re&ar+)e$$ o, the +o*#)e o,  the o!ner' or the $tate n !h#h the #orporaton !a$ or&an2e+ ,9 Share$ o, $to#k *a" ha%e $t($ ,or p(rpo$e$ o,  taxaton n a $tate n !h#h the" are per*anent)" kept re&ar+)e$$ o, +o*#)e o,  o!ner' or $tate n !h#h the #orporaton !a$ or&an2e+ &9 Share$ o, $to#k )e,t behn+ b" non re$+ent a)en +e#e+ent n an anon"*o($ partner$hp ?,orer(nner o, #orporaton$@ n the Ph)ppne$ are $(b.e#t to Ph)ppne nhertan#e tax noth!th$tan+n& the *ob)a r()e =9 Le&$)at%e Po!er to 8x St($ – , no #on$tt(tona) pro%$on$ are %o)ate+' the po!er o, )e&$)at(re to /x $t($ $ (n+o(bte+ Se#ton > 0 the ,o))o!n& ntan&b)e properte$ are #on$+ere+ a$ properte$ !th a $t($ n Ph)ppne$ 0 9 8ran#h$e !h#h *($t be exer#$e+ n Ph)ppne$ 9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" #orporaton or $o#e+a+ anon*a or&an2e+ or #on$tt(te+ n the Ph)ppne$ n a##or+an#e !th t$ )a!$ 9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" ,ore&n #orporaton e&ht" /%e per#ent(* o, b($ne$$ o,  !h#h $ )o#ate+ n the Ph)ppne$  TAXATION SURVIVAL KIT – Aban Book %9 Share$' ob)&aton$ or bon+$ $$(e+ b" an" ,ore&n #orporaton , $(#h $hare$' ob)&aton ha%e a#(re+ a b($ne$$ $t($ n Ph)ppne$ %9 Share$ or r&ht$ n an" partner$hp' b($ne$$ or n+($tr" e$tab)$he+ n Ph)pne$ NO TAX S4ALL BE COLLECTE7 UN7ER TITLE ; O8 CO7E IN RESPECT O8 INTANGIBLE PERSONAL PROPERT5 0 19 I8 T4E 7ECE7ENT AT T4E TI6E O8 4IS 7EAT4 OR T4E 7ONOR AT T4E TI6E O8 7ONATION – !a$ a #t2en an+ re$+ent o, a ,ore&n #o(ntr" !h#h at the t*e o, h$ +eath or +onaton 7I7 NOT *po$e a tran$,er tax o, an" #hara#ter ' n re$pe#t o, ntan&b)e per$ona) propert" o,  #t2en$ n Ph)ppne$ NOT RESI7ING n that ,ore&n #o(ntr" :9 I8 LAS O8 T4E O8 T4E 8OREIGN COUNTR5 O8 4IC4 7ECE7ENT OR 7ONOR AS A CITIEN AN7 RESI7ENT AT T4E TI6E O8 4IS 7EAT4 OR ONATION – a))o!$ a $*)ar exe*pton ,ro* tran$,er or +eath taxe$ o, e%er" #hara#ter or +e$#rpton n re$pe#t o, ntan&b)e per$ona) propert" o!ne+ b" #t2en$ o, Ph)ppne$ not re$+n& that ,ore&n #o(ntr" Intan&b)e a$$et$ are +ee*e+ a$$et$ o, Ph)ppne $t($ a$ +eter*ne+ b" +o*e$t# S(ppo$e there $ an ntan&b)e a$$et o, a +e#e+ent !h#h $ not a*on& tho$e en(*erate+ n the )a!' !o()+ t be .($t/e+ to *antan that t $ an a$$et !th a Ph)ppne $t($ be#a($e the *ob)a r()e$ +oe$ not app)" Or $ho()+ $(#h a$$et be #on$+ere+ a$ ben& #o*prehen+e+ !thn *ob)a prn#p)e A' a non re$+ent a)en +e#e+ent )ea%e$ behn+ a,ter h$ +eath an a##o(nt or note pa"ab)e o, $1<<'<<< pe$o$ #o))e#tb)e ,ro* B' an n+%+(a) !ho re$+e$ n Ph)ppne$9 here $ the $t($ o, the ob)&aton I$ t not a##(rate to $a" 1 6ran+a' C)ar$$e Ann that (n+er the abo%e en(*eraton' r ha$ a Ph)ppne $t($ be#a($e the abo%e#te+ )a! $peak$ on)" o, #orporate ob)&aton$ - Expre$$o (n($ e$t ex#)($on a)ter($ It *a" be $a+ that the +ebt ha$ no Ph)ppne $t($ 6a" $(#h ob)&aton ho!e%er' be +ee*e+ #o%ere+ b" *ob)a r()e - n tho$e #a$e$ !here the $t($ ,or #ertan n ntan&b)e$ are not #ate&or#a))" $pe))e+ o(t a$ n the abo%e $t(aton' there $ roo* ,or app)"n& *ob)a r()e The SI&.# or Terr$&or$a-$&y Pr$$+-e a# a++-$e! $ Ph$-$++$e Se&&$3 The %o--o*$3 /ay "e &he %a&or# &ha& o.-! $&er+-ay $ a 3$0e -e3a- #$&.a&$o *here #$&.# or &err$&or$a-$&y $# &he %oa- ;.e#&$o) 19 :9 ;9 =9 9 D9 Kn+ or #)a$$/#aton o, tax ben& )e%e+ St($ o, the thn& or propert" taxe+ 7o*#)e or re$+en#e o, the per$on taxe+ Ct2en$hp or natona)t" o, per$on taxe+ So(r#e o, n#o*e taxe+ St($ o, ex#$e' pr%)e&e' b($ne$$ or o##(paton ben& taxe+ S$&.a&$oa- I$!e&# ) 42 Propert" Tax – n #on$+ern& the p)a#e at !h#h propert" $ taxab)e an+ the &o%ern*enta) (nt !h#h *a" r&ht,())" )e%" an+ #o))e#t the propert" tax' the ba$# ,a#tor $ the $t($ o, propert" n (e$ton a9 App)e$ both !th re$pe#t to rea) propert" an+ per$ona) propert" 1> b9 The a(thotr" o, e%er" $tate to tax a)) propert"' rea) an+ per$ona) !thn t$ )*t$ $ (n(e$tonab)e #9 Rea) e$tate $ taxab)e n the $tate !here t $ )o#ate+ re&ar+)e$$ o, the o!ner3$ re$+en#e +9 A $tate ha$ no po!er to tax rea) propert" )o#ate+ o(t$+e t$ )*t$ 62  Tax on per$on$ –a $tate *a" )e%" a per$ona) tax (pon per$on$ $(b.e#t to .(r$+#ton o, t$ $o%ere&nt" a9 Exa*p)e 0 Co**(nt" tax 72 In#o*e Tax – #r(#a) ,a#tor$0 a9 Natona)t" or #t2en$hp o, taxpa"er b9 4$ re$+en#e or +o*#)e #9 So(r#e o, n#o*e - SEC2 672 Geera- Pr$$+-e# o% Io/e Ta'a&$o $ &he Ph$-$++$e#2  - Ex#ept !hen other!$e pro%+e+ n th$ Co+e0 - ?A@ A #t2en o, the Ph)ppne$ re$+n& theren $ taxab)e on a)) n#o*e +er%e+ ,ro* $o(r#e$ !thn an+ !tho(t the Ph)ppne$M - - - 1> ?B@ A nonre$+ent #t2en $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$M ?C@ An n+%+(a) #t2en o, the Ph)ppne$ !ho $ !orkn& an+ +er%n& n#o*e ,ro* abroa+ a$ an o%er$ea$ #ontra#t !orker $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$0 Pro%+e+'  That a $ea*an !ho $ a #t2en o, the Ph)ppne$ an+ !ho re#e%e$ #o*pen$aton ,or $er%#e$ ren+ere+ abroa+ a$ a *e*ber o, the #o*p)e*ent o, a %e$$e) en&a&e+ ex#)($%e)" n nternatona) tra+e $ha)) be treate+ a$ an o%er$ea$ #ontra#t !orkerM ?7@ An a)en n+%+(a)' !hether a re$+ent or not o,  the Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$M - ?E@ A +o*e$t# #orporaton $ taxab)e on a)) n#o*e +er%e+ ,ro* $o(r#e$ !thn an+ !tho(t the Ph)ppne$M an+ - ?8@ A ,ore&n #orporaton' !hether en&a&e+ or not n tra+e or b($ne$$ n the Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn the Ph)ppne$9 Sa+ ar)ne $ taxab)e on the n#o*e rea)2e+ ,ro* the $a)e o,  t$ t#ket$ n Ph)ppne$ thro(&h a $a)e$ o#eM b(t at the $a*e t*e' the Co(rt ob$er%e+ that the ar)ne !o()+ not be $(b.e#t to an" b($ne$$$ tax na$*(#h a$ the ab$en#e o, an" )an+n& r&ht$ !o()+ *ean that t $ not en&a&e+ n the exer#$e o, an" pr%)e&e !h#h #o()+ be $(b.e#t to the b($ne$$ or pr%)e&e tax An nternatona) #arrer +on& b($ne$$ n Ph)ppne$ $ taxab)e at t!o an+ one ha), per#ent on &ro$$$ Ph)ppne b))n&$ +er%e+ ,ro* #arra&e o, per$on$' ex#e$$ ba&&a&e' #ar&o an+ *a) or&natn& ,ro* Ph)ppne$ n a #ontno($ an+ (nnterr(pte+ F&ht' rre$pe#t%e o, p)a#e o, $a)e or $$(e an+ p)a#e o, pa"*ent o, t#ket or pa$$a&e +o#(*ent9 Pro%+e+ 0 19 t#ket$ re%a)+ate+ :9 e#han&e+ an+ or n+r$e+ to another nternatona) ar)ne ;9 Ex#$e or Pr%)e&e Taxe$ – !here the tax that $ ben& *po$e+ $ a tax (pon the per,or*an#e o, an a#t' en.o"*ent o, a pr%)e&e or en&a&n& n an o##(paton' or !hat $ $o*et*e$ kno!n a$ ex#$e r pr%)e&e tax  TAXATION SURVIVAL KIT – Aban Book =9 Exe*pton o, Go%ern*ent ,ro* Taxe$ – 6atter o,  p(b)# po)#" a9 St($ o, taxaton $ the p)a#e n !h#h the a#t $ per,or*e+ or !here the o##(paton $ en&a&e+ n 4ERE T4E SALE IS EPR8ECTE7 AN7 CONSU66ATE7 – 7ETER6INES T4E SITUS O8 TAXATION Le&$)at%e po!er to /2 the $t($ o, taxaton n#)(+e$ the po!er to /x the p)a#e o, taxaton bet!een +Herent p)a#e$ n $a*e $tate  The $t($ o, $a)e ,or tax p(rpo$e$ $ NOT T4E PLACE !here the #ontra#t o, $a)e $ per,e#te+ b(t the p)a#e o, t$ #on$(**aton Sa)e$ tax on the $a)e o, ,(e)$ an+ o)$' $a+ tax *a" no be app)e+ to +e)%ere$ o(t$+e the *(n#pa)t" $n#e the #on$(**aton o, $a)e $ +eter*ne+ b" +e)%er" o, the thn&$ !h#h are the $(b.e#t *atter o, #ontra#t  The #t" #an tax the $a)e o, *at#he$ !here $hp*ent$ or +e)%ere$ are *a+e +re#t)" to #($to*er$ o(t$+e the #t" pro%+e+ the $a)e$ are booke+ an+ pa+ ,or n the #t" to a #arrer ,or $hp*ent to the b("er9 GENERALL5 7ELIVER5 TO  T4E CARRIER IS 7ELIVER5 TO BU5ER9 A )o#a) broker $ taxab)e n th$ #o(ntr" !th re$pe#t to the #o**$$on$ re#e%e+ b" t ,or ne&otatn& an+ #on$(**atn& the $a)e n Japan o, pro+(#t$ BELONGING to Ph)ppne Corporaton9 hat $ *portant $ that broker3$ tax $ NOT BEING LEVIE7 on $a)e o, &oo+$ n Japan b(t on the taxpa"er3$ brokera&e $er%#e$ n Ph)ppne$ 1 6ran+a' C)ar$$e Ann a9 Propert" o, the State an+ o, t$ *(n#pa) $(b+%$on$ +e%ote+ to &o%ern*ent ($e$ an+ p(ro$e $ &enera))" +ee*e+ to be exe*pt ,ro* taxaton a)tho(&h no expre$$ pro%$on n )a! $ *a+e there,or b9 Con$tt(ton +oe$ not #ontan an" pro%$on &rantn& tax exe*pton to Go%ern*ent #9 REASON 0 Go%ern*ent3$ xe*pton ,ro* taxe$ $ IN4ERENT LI6ITATION on the $tate3$ taxn& po!er +9 NO CONSTITUTIONAL LI6ITATION on the po!er o, Con&re$$ to Tax Ar*e+ 8or#e$ o, Ph)ppne$ ,  t !$he$ to +o $o e9 A #ontra#tor !ho (n+ertake$ a .ob #ontra#t ,or the Go%ern*ent $ not .($t/e+ n #)a*n& that $ $ho()+ be exe*pt ,ro* pa"*ent o,  #ontra#tor3$ tax $*p)" b" ar&(n& that ,  pa"*ent thereo, !ere n$$te+ (pon' he !o()+  .($t $h,t the tax o%er to the Go%ern*entM an+ that a$ a #on$e(en#e' the Go%ern*ent pa"n& tax a$ part o, p(r#ha$e pr#e o, #ontra#t(a) $er%#e$ ren+ere+ !o()+ be taxn& t$e), 9 Internatona) Co*t" a9 Re#pro#t" )e$ at the root o, th$ )*taton ,or t #annot be +ene+ that !th re#pro#t" )o#ate+ at the botto* )ne' har*on($ an+ pro+(#t%e re)aton$hp$ a*on& the %aro($ $tate$ #an be *antane+ :< b9 Internatona) ob)&aton$ #on#o*nant !th o(t a##eptan#e o, the prn#p)e$ o, nternatona) a)! a$ part o, o(r )a! +e*an+ that #ertan repre$entat%e$ o, ,ore&n $tate$ $tatone+ an+ propert" o, $(#h ,ore&n $tate$ ,o(n+ !thn o(r terrtor" be exe*pte+ ,ro* taxaton =9 Non – n,rn&e*ent o, re)&o($ ,ree+o* an+ !or$hp ?Se#ton ' Art#)e III@ 9 Non – *par*ent o, #ontra#t$ ?Se#ton 1< Art#)e III@ D9 Non – *pr$on*ent ,or +ebt or non pa"*ent o, po)) tax ?Se#ton :<' Art#)e III@ #9 SECTION 1: ' Art#)e II' 1> Con$$tt(ton 9 P4ILIPPINES A7OPTS GENERALL5 ACCEPTE7 PRINCIPLES ON INTERNATIONAL AL AS PART O8 T4E LA O8 T4E LAN7 AN7 A744ERES TO POLIC5 O8 PEACE'EUALIT5' JUSTICE' 8REE7O6' COOPERATION AN7 A6IT5 IT4 ALL NATIONS +9 SECTION 1 – 7IPLO6ATIC AN7 CONSULAR REPRESENTATIVES ARE EXE6PT 8RO6 CO66UNIT5 TAX 9 R()e re(rn& that appropraton$' re%en(e an+ tarH  b))$ $ha)) or&nate ex#)($%e)" ,ro* 4o($e o,  Repre$entat%e$ ?Se#ton :=' Art#)e VI@ >9 Un,or*t"' e(tab)t" an+ pro&re$$%t" o, taxaton ?Se#ton :>' Art#)e VI @ 9 L*taton$ on the #on&re$$ona) po!er to +e)e&ate to the Pre$+ent the a(thort" to /x tarH rate$' *port an+ export (ota$' et# 1<9Tax exe*pton o, properte$ a#t(a))"' +re#t)" an+ ex#)($%e)" ($e+ ,or re)&o($' #hartab)e an+ e+(#atona) p(rpo$e$ ?Se#ton :>'?;@ Art#)e VI@ 119Votn& re(re*ent n n #onne#ton !th )e&$)at%e &rant o, tax exe*pton ?Se#ton :>?=@' Art#)e VI@ CONSTITUTIONAL LIMITATIONS ON TAXING POWER 19 7(e pro#e$$ #)a($e' !hether t be $(b$tant%e or pro#e+(ra) ?Se#ton 1' Art#)e III@ 1:9Non – *par*ent o, .(r$+#ton o, S(pre*e Co(rt n tax #a$e$ ?Se#ton : an+  Art#)e VIII@ 1;9Exe*pton ,ro* taxe$ o, the re%en(e$ an+ a$$et$ o,  e+(#atona) n$tt(ton$' n#)(+n& &rant$' en+o!*ent$' +onaton$ an+ #ontrb(ton$ :9 E(a) Prote#ton o, the )a!$ ?Se#ton 1' Art#)e III@ ;9 8ree+o* o, $pee#h an+ o, the pre$$ ?Se#ton =' Art#)e III@ :< No& a&.a--y -$/$&a&$o# o &a'$3 +o*er BUT *h$h ha0e "ear$3 o &a'a&$o  TAXATION SURVIVAL KIT – Aban Book 19 Con$tt(tona) re(re*ent on $(b.e#t an+ tt)e o, b))$ ?Se#ton :D' Art#)e VI@ 9 Pettoner$ ,a)e+ to $ho! that the VAT )a! !a$ $$(e+ #apr#o($)" an+ !h*$#a))" or n an arbtrar" or +e$pot# *anner b" pa$$on or per$ona) ho$t)t" $n#e t appear$ that a #o*prehen$%e $t(+" o,  VAT !a$ *a+e be,ore VAT )a! !a$ $$(e+ :9 Po!er o, Pre$+ent to %eto an" part#()ar te* or te*$ n an appropraton' re%en(e or tarH b) ?Se#ton :?:@' Art#)e VI@ 9 hen the #on$tt(tona)t" o, the )e&$)at%e taxn& a#t $ (e$tone+ on the &ro(n+ that there $ +ena) o, +(e pro#e$$' an a#t(a) #a$e or #ontro%er$" *($t /r$t ex$t be,ore #o(rt$ #an be #a))e+ (pon to r()e on $a+ $$(e ;9 Pro%$on !h#h re(re$ that no *one" $ha)) be pa+ o(t o, trea$(r" ex#ept n p(r$(an#e o, an appropraton *a+e b" )a! ?Se#ton :?1@ Art#)e VI@ =9 Pro%$on a&an$t the appropraton o, p(b)# *one" or propert" ,or bene/t o, an" #h(r#h' $e#t or $"$te* o,  re)&on et# ?Se#ton :??:@ Art#)e VI@ 9 Pro%$on !h#h *an+ate$ that *one" #o))e#te+ on a tax )e%e+ ,or a p(b)# p(rpo$e $ha)) be pa+ o(t ,or $(#h p(rpo$e on)" ?Se#ton :?;@ Art#)e VI@ D9 Pro%$on re&ar+n& a))ot*ent$ to )o#a) &o%ern*ent$ ?Se#ton D' Art#)e X@ Co#&$&.&$oa- L$/$&a&$o# E'+-a$e! A9 7(e Pro#e$$ o, La! – Se#ton 1' Art#)e ; o,  Con$tt(ton 0 No per$on $ha)) be +epr%e+ o, ),e' )bert"' or propert" !tho(t +(e pro#e$$ o, )a!9 a9 There ha%e been o##a$on$ !hen S(pre*e Co(rt r()e+ on the #on$tt(tona)t" o, #ertan taxn& *ea$(re$ !here +(e pro#e$$ o, )a! !a$ the ,o#a) (e$ton$9 b9 Kapatran %$ Tan 0 7(e pro#e$$ !a$ NOT VIOLATE7 !hen the VAT )a! !a$ pro*()&ate+ be#a($e there !a$ no &ra%e ab($e o, +$#reton n#+ent to t$ pro*()&aton :1 6ran+a' C)ar$$e Ann #9 The ab$en#e o, threat o, **e+ate har* *ake$ the nee+ ,or .(+#a) nter%nton$ )e$$ e%+ent an+ (n+er$#ore$ the e$$enta) nat(re o,  pettoner3$ atta#k on )a! on &ro(n+ o, +ena) o,  +(e pro#e$$ a$ a *ere a#a+e*# +$#($$on o,  *ert$ o, )a! +9 There ha%e been no not#e$ o, a$$e$$e*ent $$(e+ to pettoner$ an+ no +eter*naton$ at the a+*n$trat%e )e%e)$ o, ther #)a*$ $o a$ to ))(*nate the a#t(a) operaton o, the )a! an+ enab)e ($ to rea#h $o(n+ .(+&e*ent re&ar+n& $o ,(n+a*enta) (e$ton$ a$ tho$e ra$e+ n the$e $(t$ e9 hen tax t(rn$ o(t to be o, a #on/$#ator" nat(re' $(#h an *po$ton #o()+ %er" !e)) be #on$+ere+ a$ ben& %o)at%e o, the +(e pro#e$$ prn#p)e ,9 7(e pro#e$$ #)a($e n #on$tt(ton *a" be n%oke+ !here a tax $tat(te $ $o arbtrar" that t /n+$ no $(pport n Con$tt(ton :: &9 Exa*p)e 0 !here the $a*e #an be $ho!n to a*o(nt to #on/$#aton o, propert"9 h9 C)a$$/#aton ,or taxaton *($t not be pro*pte+ b" a $prt o, ho$t)t" or +$#r*naton that /n+$ no $(pport n rea$on 9  .9 6o+/e+ $#he+()er n#o*e tax !hereb" n+%+(a) n#o*e !a$ #)a$$/e+ nto three +Herent #)a$$e$ (n+er +Herent tax rate$ ??#o*pen$aton' b($ne$$other n#o*e an+ pa$$%e n%e$t*ent n#o*e@ $ NOT A 7ENIAL o,  7UE PROCESS be#a($e there $ no proo, o,  arbtrarne$$ n *po$ton o, tax rate$ 7UE PROCESS IS NOT VIOLATE7 I8 A GOVERN6ENTAL BI75 LIKE 8ISCAL INCENTIVES REVIE BOAR7 4IC4 AS TASKE7 IT4 7UT5 O8 RECO66EN7ING RESOTRIATION O8 TAX EXE6PTIONS PREVIOUSL5 ABOLIS4E7 UN7ER PRESI7ENTIAL 7ECREES ' IS 4EA7E7 B5 T4E 6INISTER O8 8INANCE' 4O AT T4E SA6E TI6E IS VER5 SA6E PERSON 4O APPROVES OR 7ISAPPROVES T4E 8IRB3S RECO66EN7ATION PROVI7E7 NO TO OPPOSING OR CON8LICTING INTERESTS ARE INVOLVE7 LIKE T4E CASE O8 RESTORE7 TAX EXE6PTION O8 A PARTICULAR  TAXPA5ER 4ERE IT APPEARS T4AT T4ERE IS NO INTEREST T4AT IS EXISTING 4IC4 IS IN CON8LICT IT4 INTERESTS O8 SUC4 TAXPA5ER k9 There $ +ena) o, +(e pro#e$$ on a##o(nt o,  pa$$a,e o, an or+nan#e n #t" o, *an)a !h#h *po$e$ a per*t ,ee on a)en$ a$ a #on+ton to e*p)o"*ent or en&a&n& n an" b($ne$$ or o##(paton' !here t appear$ that (n+er $a+ or+na#ne' the #t" o, *an)a #o()+ !thho)+ or re,($e $$(an#e o, $(#h per*t at !))9 :: )9 The #o(rt ponte+ o(t that a)en$' on#e a+*tte+ n the Ph)ppne$' #anot be +epr%e+ o, ),e !tho(t +(e pro#e$$ o, )a! an+ th$ &(arantee n#)(+e$ the *ean$ o, )%e)hoo+ *9 7(e pro#e$$ !a$ not ob$er%e+ !hen tra) #o(rt' n an a#ton ,or +e#)arator" re)e,' +e#)are+ that #ertan propert" o!ne+ b" Ro*an Catho)# Ch(r#h $ Ban&(e+ Abra !a$ tax exe*pt (n+er 1; Con$tt(ton' t appearn& that not #o(rt hearn& !a$ #on+(#te+ thereon n9 I*porter o, &oo+$ $ +epr%e+ o, pro#e+(ra) +(e pro#e$$ !hen $o #a))e+ a)ert not#e$ ?%a)(aton o, &oo+$ *a+e b" 8nan#e Atta#he$ abroa+@ !ere not pre$ente+ n the C($to*$ prote$t pro#ee+n&$ n the B(rea( o, C($to*$ a$ !e)) a$ n the CTA !hen the #a$e !a$ on appea) theren9 o9 The a)ert not#e$ #ontane+ a h&her %a)(aton o,  *porte+ &oo+$ than %a)(aton n+#ate+ n I*port Entre$ #o%ern& &oo+$ n (e$ton B9 The E(a) Prote#ton o, La! – +oe$ not on)" $peak o,  NON 7EPRIVATION o, 7UE PROCESS b(t n Se#ton 1' Art#)e III thereo,' t a)$o e*phat#a))" or+an$ that NOR S4ALL AN5 PERSON BE 7ENIE7 EUAL PROTECTION O8 LAS a9 The po!er o, the $atte to *ae rea$onab)e an+ nat(ra) #)a$$/#aton$ ,or the p(rpo$e$ o,  taxaton $ (n(e$tone+ an+ $(#h #)a$$/#aton *a" re)ate to the $(b.e#t taxaton' the kn+ o,  propert" the rate$ to be )e%e+ or a*o(nt$ to be ra$e+' an+ the *etho+$ o, a$$e$$*ent' %a)(aton an+ #o))e#ton9  TAXATION SURVIVAL KIT – Aban Book b9 S(#h po!er to #)a$$," n *atter$ o, taxaton $ $a+ to be broa+er than $o*e other exer#$e$ o,  )e&$)at%e po!er' entt)e+ to pre$(*pton o,  %a)+t" an+ !)) not' a$ a r()e be nter,ere+ !th b" the .(+#ar" !th .(+#ar" n the ab$en#e o,  a #)ear $ho!n& o, (nrea$onab)ene$$' +$#r*naton or arbtrarne$$ #9 C)a$$/#aton *($t be ba$e+ (pon rea) an+ $(b$tanta) +Heren#e$ bet!een per$on$' propert" or pr%)e&e$ an+ tho$e not taxe+ *($t bear $o*e rea$onab)e re)aton to the ob.e#t or p(rpo$e o, )e&$)aton or to $o*e per*$$b)e &o%ern*enta) po)#" or )e&t*ate an+ o,  &o%ern*enta) a#ton +9 Con&re$$ #an *ake +$tn#ton$ an+ #)a$$/#aton$9 Th($ t #an #)a$$," taxpa"er$ nto #a)en+ar "ear an+ /$#a) "ear taxpa"er$ ,or n#o*e tax p(rpo$e$ e9 The e(a)t" o, taxaton r()e' $ NOT VIOLATE7 ,  #)a$$/#aton$ r +$tn#ton$ are *a+e a$ )on& a$ the $a*e are ba$e+ on rea$onab)e an+ $(b$tanta) +Heren#e$9 ,9 There $ a rea$onab)e ba$$ ,or *po$n& )o!er rate$ on ,ore&n $o(r#e+ n#o*e o, non – re$+ent #t2en$ a$ e%+en#e+ b" pre,erenta) or )o!er rate$ o, 1Q :Q ;Q be#a($e the$e are the peop)e !ho earn ,ore&n #(rren#" abora+ !h#h are re*tte+ here' a$ #o*pare+ to the re$+ent #t2en$ !ho ha%e to pa" the or+nar" &ra+(ate+ rate$ &9 The pre,erenta) tax rate$ are NO LONGER APPLICABLE ON INCO6E O8 NON RESI7ENT CITIENS ABROA79 Un+er the tax re,or* a#t o,  1' NON RESI7ENT #t2en$ are taxab)e on)" :; 6ran+a' C)ar$$e Ann on n#o*e Ph)ppne$ +er%e+ ,ro* $o(r#e$ !thn h9 In#o*e o, non re$+ent #t2en$ ,ro* ,ore&n $o(r#e$ are NOT SUBJECT to P4ILIPPINE TAX The Fo--o*$3 a#e# he-! &ha& +r$$+-e WAS NOT VIOLATED ) e;.a- +ro&e&$o 19 %at )a! +oe$ not +$#r*nate (n+()" a&an$t #($to*$ broker$ !ho are $(b.e#t to $a+ tax :9 the ex#)($on o, $a+ broker$ ,ro* exe*pton &rante+ to pro,e$$ona)$ (n+er Tax Co+e $ .($t/e+ b" the ,a#t that #($to*$ broker$ +Her ,ro* tax exe*pt pro,e$$ona)$ #on$+ern& that the a#t%te$ o, #($to*$ broker$ partake o, the nat(re o, a b($ne$$ rather than a pro,e$$on ;9 the $tate ha$ the nherent po!er to $e)e#t the $(b.e#t$ o, taxaton an+ ne(a)te$ !h#h re$()t ,ro* $n&)n& (t o, one part#()ar #)a$$ ,or taxaton or tax exe*pton$ n,rn&e+ no #on$tt(tona) )*taton =9 the $#he+()er n#o*e tax !h#h *po$e$ &ra+(ate+ rate$ ,ro* 9 A )a! !h#h *po$e$ a pre,erenta) ,ran#h$e tax rate o, :Q on a part#()ar ,ran#h$e &rantee !h)e other ,ran#h$e &rantee$ are $(b.e#t to Q $ NOT VIOLATIVE o, the e(a) prote#ton or e(a)t" o, taxaton r()e n Co$ntt(ton 9 T4E LEGISLATURE 4AS T4E IN4ERENT POER NOT ONL5 TO SELCT T4E SUBJECTS O8 TAXATION BUT ALSO GRANT TAXX EXE6PTIONS 1<9The ,a#t that the taxpa"er $ on)" $(&ar #entra) or re/ner" n the *(n#pa)t" !here the tax or+nan#e $ ena#te+ +oe$ not *ake $a+ or+nan#e +$#r*nator"9 REASON 0 $n#e other re/nere$ to be e$tab)$he+ n the ,(t(re !o()+ a)$o be taxab)e' no $n&)n& o(t o,  taxpa"er to t$ +$a+%anta&e ha$ e%er taken p)a#e 119There $ no +$#r*naton or #)a$$ )e&$)aton , a $tat(te a(thor2e$ the Ct" o, 6an)a to )e%" o##(paton taxe$ !herea$ that $a*e a(thort" $ !thhe)+ ,ro* other #te$ an+ *(n#pa)te$ $ho()+ be $o a(thor2e+ ,or that $ a *atter ,or )e&$)at(re to +e#+e 1:9A tax )e%e+ on boar+n& $tab)e$ ,or ra#e hor$e$ $ not +$#r*nator" !here t appear$ that NO SUC4 TAX $ *po$e+ on boar+n& $tab)e$ ,or other t"pe$ o, hor$e$ := Ca#e# *here VIOLATED ) E;.a- +ro&e&$o r.-e# HAS BEEN 19 a tax or+nan#e )e%e+ an export tax on #entr,(&a) $(&ar*))e+ b" Or*o# S(&ar Co' *entonn& on)" th$ #o*pan" b" na*e9 The or+nan#e +oe$ not $at$," the re($te$ o, rea$onab)e #)a$$/#aton9 :9 There $ +$#r*naton !here )o#a) tax !a$ *po$e+ on a&ent$ or #o$&nee$ o, o(t$+e +ea)er$ n $o,t+rnk$ !tho(t $a+ tax ben& )e%e+ a)$o on )o#a) +ea)er9 T4E CLASSI8ICATION O8 SUC4 AGENTS AN7 COSIGNEES 4O ARE TAXABLE AN7 LOCAL 7ELAERS 4O ARE EXE6PT IS NOT BASE7 ON SUBSTANTIAL 7ISTINCTION ;9 An e*p)o"*ent per*t ,ee *po$e+ on a)en .ob app)#ant$ re&ar+)e$$ o, the nat(re o, e*p)o"*ent ?!hether #a$(a)' per*anent' part t*e or ,()) t*e or )o!)" pa+ e*)oo"ee or h&h)(&" pa+ exe#(t%e $ #on$tt(tona))" n%a)+ be#a($e t 8AILS TO CONSI7ER VVALI7 SUBSTANTIAL 7I88ERENCES IN SITUATION A6ONG T4E ALIENS REUIRE7 TO PA5 IT9 =9 A CLASSI8ICATION S4OUL7 BE BASE7 ON REAL AN7 SUBSTANTIAL 7I88ERENCES 4AVING A REASOABLE RELATION TO T4E SUBJECT O8 LEGISLATION 9 Lo#a or+nan#e !h#h )e%e$ an a+ %a)ore* tax on *otor %eh#)e$ re&$tere+ n 6an)a !tho(t a)$o taxn& tho$ !h#h are re&$tere+ o(t$+e #t" b(t !h#h enter #t" ($e t$ $treet$ o##a$ona))" %o)ate$ on e(a)t" o,  taxaton D9 here t appear$ that Se#ton 1< tax #o+e' !h#h re(re+ $k**e+ *)k *an(,a#t(rer$ to p)a#e a  TAXATION SURVIVAL KIT – Aban Book !arnn& $&n on ther pro+(#t$ $tatn& that $k**e+ *)k $ NOT SUITABLE 8OR 8EE7ING IN8ANTS' $ en,or#e+ on)" a&an$t *an(,a#t(rer$ o, e%aporate+ /))e+ *)k $(#h a#ton $ 7ISCRI6INATOR5 an+ $ a +ena) o, e(a) prote#ton o, )a! 6a" a b($ne$$ )#en$e be re(re+ ,or the $a)e or +$trb(ton o, prnte+ *atera)$ )ke ne!$paper$ NO -  J(+#a) nter%enton $ ALSO (nne#e$$ar" n the ab$en#e o,  ,a#t(a) $ettn& or an a#t(a) #ontro%er$" !h#h $ en&en+ere+ b" the $$(an#e o, an a$$e$$*ent a&an$t taxpa"er to app)" an or+nan#e re(rn& a b($ne$$ )#en$e to be obtane+ be,ore a per$on #o()+ $e)) ne!$paper$ n $treet$ !o()+ be to *po$e a pror re$trant on pre$$ ,ree+o* be#a($e a ne!$paper $ NOT n the $a*e #ate&or" a$ a pneapp)e or a $oap po!+er' or a par o,  $hoe$ !ho$e $a)e *a" be #on+tone+ on o$$e$$on o,  a b($ne$$$ )#en$e C2 Free!o/ o% S+eeh a! o% &he Pre## Se#ton =' Art#)e III o, Con$tt(ton NO LA S4ALL BE PASSE7 ABRI7GING T4E 8REE7O6 O8 SPEEC4' O8 EXPRESSION' OR O8 PRESS' OR RIG4T O8 PEOPLE PEACEABL5 ASSE6BLE AN7 PETITION T4E GOVERN6ENT 8OR RE7RESS O8 GRIEVANCES )) th$ ,ee NOT CONSTITUTE A RESTRAINT ON PRESS 8REE7O6 OR 8OR T4AT 6ATTER' T4E 8REE7O6 O8 ORS4IP - NO9 Th$ ,ee $ NOT *po$e+ ,or the exer#$e o, a pr%)e&e b(t on)" ,or the p(rpo$e o, +e,ra"n& part o,  the #o$t o, re&$traton - 6ere a+*n ,ee one not *po$e+ on exer#$e o, a pr%)e&e' *(#h )e$$ a #on$tt(tona) r&ht hen $ tax $a+ to be %o)at%e o, pre$$ ,ree+o* or ,ree+o* o, tho(&ht an+ expre$$on - There $ #(rta)e*ent o, pre$$ ,ree+o* an+ ,ree+o* o,  tho(&ht an+ expre$$on , a tax $ e)%e+ n or+er to $(ppre$$ th$ ba$# r&ht o, peop)e (n+er Con$t(ton A ne!$paper p(b)$her *($t pa" e(tab)e an+ non +$#r*antor" taxe$ on h$ b($ne$$' the #o(rt ponte+ o(t that n Gro$.ean #a$e' the )a! *po$e+ a )#en$e e(%a)ent to :Q o, &ro$$ re#ept$ +er%e+ ,ro* a+%ert$e*ent$ on)" on ne!$paper$ !th a #r#()aton o, *ore than : Art#)e VI o, Co$ntt(ton 0 Pro%+e$ the r()e o, a taxaton $ha)) be (n,or* an+ e(tab)e9 The Con&re$$ $ha)) e%o)%e a pro&re$$%e $"$te* o, taxaton Un,or*t" 00 a)) taxab)e art#)e$ or kn+$ o, propert" o, $a*e #)a$$ $ha)) be taxe+ at $a*e rate9 7oe$ not *ean that )an+$' #hatte)$' $e#(rte$' n#o*e' o##(paton$' ,ran#h$e$' pr%)e&e$' ne#e$$te$' an+ )(x(re$' $ha)) be a$$e$$e+ at $a*e rate9 7Herent art#)e$ *a" be taxe+ at +Herent a*o(nt$ pro%+e+ that the rate $ (n,or* on $a*e #)a$$ e%er"!here !th a)) peop)e at a)) t*e$ o, po!er o, $tate to  The #ontro) o, #re+tor o%er the per$on o, h$ +ebtor ha$ been abo)$he+ on h(*antaran #on$+eraton$ Go%ern*ent $ NOT a proper part" to pr%ate +$p(te$ : 6ran+a' C)ar$$e Ann G2 Or$3$ o% A++ro+r$a&$o, Re0e.e a! Tar$: B$--# A tax $ (n,or* !hen t operate$ !th $a*e ,or#e an+ eHe#t n e%er" p)a#e !here the $(b.e#t o, t $ ,o(n+ :> A tax o, :pe$o$ per $(are *eter on a)) e)e#tr# $&nboar+$ a)) thro(&ho(t the Ph)ppne$ $at$/e$ the re(re*ent o,  (n,or*t"  The pettoner0 (n,or*t" !a$ %o)ate+ be#a($e (n+er SNITS the )a!' ,or tax p(rpo$e$ $n&e)+ o(t b($ne$$ propretor$ an+ rpo,e$$ona)$ +Herent)" ,ro* #orporaton$ an+ partner$hp$9  The #on$tt(tona) *an+ate ha$ not been +$re&ar+e+9 Un,or*t" o, taxaton' )ke the kn+re+ #on#ept o, e(a) prote#ton' *ere)" re(re$ that a)) $(b.e#t$ or ob.e#t$ o,  taxaton' $*)ar)" $t(ate+ are to be treate+ a)ke both n pr%)e&e$ an+ )ab)te$9 Lo#a) tax on tene*ent ho($e$ +oe$ not %o)ate the r()e o,  (n,or*t" an+ e(a)t" o, taxaton e%en , the tax n (e$ton $ NOT a)$o )e%e+ on other #)a$$e$ o, b()+n&$ n the )o#a)t" !here $(#h tax $ *po$e+9 Un,or*t" $ a)$o not +$re&ar+e+ , a tax $ )e%e+ on a+*$$on$ to #ne*a' theater$' %a(+e%))e #o*pane$' theatr#a) $ho!$ an+ boxn& exhbton$ b(t +oe$ not tax other p)a#e$ o, a*($e*ent$ $(#h a$ a ra#e tra#k$' #o#kpt$' #arabet$' an+ other p)a#e$ o, a*($e*ent Un,or*t" n taxaton' !h#h *ean$ &eo&raph#a) (n,or*t" on)"' $ a)$o (n+er$#ore+ n rea)* o, )o#a) taxaton9 Pro&re$$%t" o, taxaton $ a)$o *an+ate+ n the Con$tt(ton9 O(r n#o*e tax $"$te* $ one &oo+ exa*p)e o, $(#h pro&re$$%t" be#a($e t $ b()t on prn#p)e o, taxpa"er$ ab)t" to pa"  Taxaton $ pro&re$$%e !hen t$ rate &oe$ (p +epen+n& on re$o(r#e$ o, per$on aHe#te+ :> I2 De-e3a&$o o% Le3$#-a&$0e A.&hor$&y &o F$' Tar$:  Ra&e#, I/+or& a! E'+or& 9.o&a# Se#ton :> ?:@ Art#)e VI Co$ntt(ton 0 Con&re$$ *a"' b" )a!' a(thor2e the Pre$+ent to /x !thn $pe#/e+ )*t$' an+ $(b.e#t to $(#h )*taton$ an+ re$tr#ton$ a$ t a*" *po$e' tarH rate$' *port an+ export (ota$' tonna&e an+ !har,a&e +(e$' an+ other +(te$ or *po$t$' !thn ,ra*e!ork o,  natona) +e%e)op*ent pro&ra* o, Go%ern*ent  The pre$+ent *a" n#rea$e tarH rate$ a$ a(thor2e+ b" )a! e%en ,or re%en(e p(rpor$e$ on)"  J2 Ta' E'e/+&$o o% Pro+er&$e# A&.a--y, D$re&-y, a! E'-#.$0e-y .#e! %or re-$3$o.#, Char$&a"-e a! e!.a&$oa- +.r+o#e# Se#ton :>?;@ Art#)e VI 0 Chartab)e n$tt(ton$' #h(r#he$' an+ par$ona&e$ or #on%ent$ app(rten*ent thereto' *o$(e$' non pro/t #e*etere$ an+ a)) )an+$' b()+n&$ an+ *pro%e*ent$ a#t(a))"' +re#t)"' an+ ex#)($%e)" ($e+ ,or re)&o($' #hartab)e or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* taxaton  To !hat kn+ o, tax +oe$ th$ exe*pton app)" - heren pettoner a$$a)e+ the +onor3$ an+ +onee3$ &,t taxe$ on the #a$h +onaton ,or the #h(r#h b()+n&' SC r()e+ that the abo%e*entone+ #on$tt(tona) rpo% !h#h &rant$ tax exe*pton app)e$ on)" to propert" or rea)t" taxe$ a$$e$$e+ on $(#h properte$ ($e+ +re#t)"' a#t(a))" an+ ex#)($%e)" ,or re)&o($' #hartab)e an+ e+(#atona) p(rpo$e$  TAXATION SURVIVAL KIT – Aban Book Un+er ex$tn& )a!' &,t$ *a+e n ,a%or o, re)&o($' #hartab)e or e+(#atona) or&an2aton$' !o()+ ne%erthe)e$$ (a)," ,or +onor3$ &,t tax exe*pton n )&ht o, pro%$on$ 1> #on$tt(ton a)$o e*p)o"$ the ter*$ a#t(a))"' +re#t)"' an+ ex#)($%e)" to e*pha$2e the *portan#e o, ($e o,  propert" ,or tax exe*pton EXEMPTION OF CERTAIN GIFT ) the te$t o, exe*pton ,ro* taxaton $ the ($e o, propert" ,or the p(rpo$e$ *entone+ n Con$tt(ton9 19 Ca$e o, &,t$ *a+e b" a re$+ent :9 G,t$ n ,a%or o, e+(#atona) or #hartab)e re)&o($' #()t(ra) or $o#a) !e),are ' n$tt(ton' a##re+te+ non&o%ern*ent or& a9 Pro%+e+ 0 not *ore than ;?=@ – No )a! &rantn& an" tax exe*pton $ha)) be pa$$e+ !tho(t the #on#(rren#e o, a *a.ort" o, a)) *e*ber$ o, Con&re$$ Re,(n+$ partake o, the nat(re o, exe*pton$ Con+onaton$ o, taxe$ a)rea+" pa+ or "et (npa+ are a)$o n the nat(re o, tax exe*pton$ L2 No 1 I/+a$r/e& o% SC8# J.r$#!$&$o $ Ta' a#e# ;< ?;@ A)) re%en(e$ an+ a$$et$ o, non-$to#k' non-pro/t e+(#atona) n$tt(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* taxe$ an+ +(te$9 Upon the +$$o)(ton or #e$$aton o, the #orporate ex$ten#e o, $(#h n$tt(ton$' ther a$$et$ $ha)) be +$po$e+ o, n the *anner pro%+e+ b" )a!9 Propretar" e+(#atona) n$tt(ton$' n#)(+n& tho$e #ooperat%e)" o!ne+' *a" )ke!$e be entt)e+ to $(#h exe*pton$' $(b.e#t to the )*taton$ pro%+e+ b" )a!' n#)(+n& re$tr#ton$ on +%+en+$ an+ pro%$on$ ,or ren%e$t*ent9 ?=@ S(b.e#t to #on+ton$ pre$#rbe+ b" )a!' a)) &rant$' en+o!*ent$' +onaton$' or #ontrb(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ $ha)) be exe*pt ,ro* tax9  TAXATION SURVIVAL KIT – Aban Book Chapter ; 7o(b)e Taxaton an+ Tax Exe*pton$ Sere&ary o% J.#&$e, &he %o--o*$3 -e3a- +o$&# o &he a%ore;.o&e! o#&$&.&$oa+ro0$#$o# /ay "e o#$!ere! $/+or&a& ) 19 the exe*pton ,ro* taxe$ an+ +(te$ &rante+ to non $to#k' non pro/t e+(#atona) n$tt(ton$ !th re$pe#t to ther re%en(e$ an+ a$$et$ took eHe#t (pon the rat/#aton o, Co$ntt(ton be#a($e the r()e that a #on$tt(tona) pro%$on +e#)arn& #ertan proeprte$ a$ exe*pt ,ro* taxaton $ $e), exe#(tn& an+ propro %&ore exe*pt$ the propert" $pe#/e+ an+ +oe$ not' there,ore nee+ )e&$)at%e ena#t*ent to p(t nto eHe#t :9 )e&$)aton $ NOT e$$enta) n or+er to pre$#rbe the re(re*ent$ ,ro* exe*pton $(#h a$ !ho !o()+ (a)," a$ non $to#k' non pro/t9 In$tt(ton$ an+ *eann& o, a#t(a))"' +re#t)"' an+ ex#)($%e)" ($e+9 ;9 Tax exe*pton$' ho!e%er o, propretar" e+(#atona) n$tt(ton$ re(re pror )e&$)at%e *p)e*entaton $n#e the ($e o, the per*$$%e ter* *a" n the pro%$ &o%e$ #on&re$$ +$#reton to +etere*ne !hether or not a$$et$ an+ re%en(e$ o, propereta"r e+(#atona) $ntt(ton$ $ho()+ )ke!$e en.o" exe*pton$ ,ro* taxe$ =9 A)) &rant$' en+o!*ent$' +onaton$ or #ontrb(ton$ ($e+ a#t(a))"' +re#t)"' an+ ex#)($%e)" ,or e+(#atona) p(rpo$e$ are tax exe*pt !here the +one- $#hoo) $ non $to#k or non pro/t  T4IS PARTICULAR EXE6PTION TO PROPRIETAR5 E7UCATIONAL INSTITUTIONS ILL APL5 ONL5 A8TER CONGRES 4AS LAI7 7ON T4E CON7ITIONS 8OR ITS ENJO56ENT  TAX EXE6PTION 4ERE IS NOT SEL8 EXECUTOR5 ;1 6ran+a' C)ar$$e Ann 7o(b)e Taxaton – taxn& the $a*e propert" t!#e !hen t $ho()+ be taxe+ b(t on#e9 - taxn& $a*e per$on t!#e b" the $a*e .(r$+#ton o%er $a*e thn& - $a*e per$on t!#e b" the $a*e .(r$+#ton ,or $a*e thn& or p(rpo$e NO PRHOHIBITION AGAINST DOUBLE TAXATION - no #on$tt(tona) prohbton a&an$t +o(b)e taxaton n Ph)ppne$ - $o*ethn& not ,a%ore+' b(t $ ne%erthe)e$$ per*$$b)e - NOT ,orb++en b" o(r ,(n+a*enta) )a! - Ph)ppne$ 4AS NOT A7OPTE7 the n.(n#ton a&an$t +o(b)e taxaton ,o(n+ n Con$tt(ton o, US an+ n $o*e $tate$ o, A*er#an Unon - There,ore' NO PRO4IBITION a&an$t +o(b)e or *()tp)e taxaton <$!# o% Do."-e Ta'a&$o - +(p)#ate taxaton - *a" be +re#t or n+re#t - 7IRECT 7UPLICATE TAXATION  7o(b)e taxaton n the ob.e#tonab)e or prohbte+ $en$e ?a)$o kno!n a$ obnoxo($@ ;: o o o - Sa*e propert" $ taxe+ t!#e !hen t $ho()+ be taxe+ on)" on#e Both taxe$ are *po$e+ on $a*e propert" or $(b.e#t *atter ,or $a*e p(rpo$e' $a*e $tat' &o%ern*ent' or taxn& a(thort" !thn $a*e  .(r$+#ton or taxn& +$tr#t +(rn& $a*e taxn& pero+' an+ #o%ern& $a*e kn+ or #hara#ter o,  tax NO OBJECTIONABLE 7OUBLE TAXATION I8 A REAL ESTATE TAX AS ELL AS A TENE6ENT TAX ARE I6POSE7 ON SA6E PROEPRT5 BECAUSE  T4E TO I6POSITIONS ARE NOT O8 SA6E KIN7 OR C4ARACTER IN7IRECT 7UPLICATE TAXATION - oppo$te o, +re#t +o(b)e taxaton $ NOT LEGALL5 OBJECTIONABLE9 ILLUSTRATION &he +o$& &ha& $ &he a"#ee o%  e-e/e&# o% !$re& !.+-$a&e &a'a&$o, !o."-e $/+o#$&$o# -e0$e! o a +ar&$.-ar #."=e& o% &a'a&$o /ay "e =.#&$>e! 19 The taxpa"er3$ !areho($n& b($ne$$' a)tho(&h #arre+ on n re)aton to the operaton o, t$ $(&ar #entra)' $ a +$tn#t an+ $eparate taxab)e b($ne$$9 a9 There #an be no +o(b)e taxaton !here $tate *ere)" *po$e$ a tax on e%er" $eparate +$ntn#t b($ne$$ n !h#h a per$on $ en&a&e+9 b9 No prohbton a&an$t +o(b)e taxaton n th$ .(r$+#ton ;: or *()tp)e :9 A )#en$e tax *a" be )e%e+ (pon a b($ne$$ or o##(paton a)tho(&h )an+ or propert" ($e+ n #onne#ton there!th $ $(b.e#t to propert" tax a9 The $tate *a" #o))e#t an a+%a)ore* tax on propert" ($e+ n a #a))n& an+ at the $a*e t*e *po$e a )#en$e tax on that #a))n& b9 The *po$tton o, the )atter kn+ o, tax ben& no $en$e a +o(b)e tax #9 NO OBJECTIONABLE 7OUBLE ?OR 6ULTIPLE@  TAXATION I8 TENE6ENTS IN A CIT5 ARE SUBJECT  TO REAL ESTATE TAX 4ILE BUSINESS O8 LEASING SAI7 PROPERT5 ARE ALSO SUBJECT TO REAL ESTATE 7EALER3S TAX UN7ER T4E ANTIONAL INTERNAL REVENUE CO7E AS ELL AS TENE6ENT TAX LEVIE7 B5 CIT5 +9 T4ERE IS NOT4ING IN4ERENTL5 OBNOXIOUS IN EXACTION O8 LICENSE 8EES OR TAXES IT4 RESPECT TO SA6E OCCUPATION' CALLING OR ACTIVIT5 B5 BOT4 STATE AN7 A POLITICAL SUB7IVISION T4EREO8 ;9 Both a )#en$e ,ee an+ a tax *a" be *po$e+ on $a*e b($ne$$ or o##(paton ,or $e))n& $a*e art#)e an+ th$ $ not n %o)aton o, r()e$ a&an$t +o(b)e taxaton =9 here a )o#a) tax $ )e%e+ on $a)e or +$po$a) o, e%er" bott)e or #ontaner o, )(or or ntox#atn& be%era&e$ an+ at the $a*e t*e the b($ne$$$ o, $e))n& $(#h pro+(#t $ a)$o $(b.e#t to )(or )#en$e ann(a))" o, D<< pe$o$ ' there $ NO 7OUBLE TAXATION SINCE T4E LIUOR LICENSE CONSTITUTES A REGUALTOR5 6EASURE 4IC4 IS I6POSE7 IN T4E EXERCISE O8 STATE3S POLICE POER  TAXATION SURVIVAL KIT – Aban Book 9 A tax *po$e+ both on o##(paton o, /$hn& an+ on /$hpon+ t$e), +oe$ not #on$tt(te +o(b)e taxaton9 S(b.e#t o, taxaton are 7I88ERENT 8RO6 EAC4 OT4ER D9 NO 7OUBLE TAXATION , a )o#a) or+nan#e *po$e$ a tax on $tora&e o, #opra !here t appear$ that the /n$he+ pro+(#t$ *an(,a#t(re+ o(t o, #opra are $(b.e#t to $a)e$ tax ?NO VAT@ (n+er tax #o+e 9 NO 7OUBLE TAXATION n%o)%e+ n a #a$e !here a tax o, 1Q $ *po$e+ (n+er Se#ton := tax #o+e ,or bank re$er%e +e/#en#" !h)e a pena)t" o, 11< o, 1Q a +a" $ a)$o *po$e+ a$ a pena)t" a$ #on$e(en#e o, $(#h re$er%e +e/#en#" (n+er Centra) bank A#t >9 7o(b)e taxaton *ean$ taxn& $a*e propert" t!#e !hen t $ho()+ be taxe+ on)" on#e9 a9 Poo) *a#hner" n$(rer !a$ he)+ to be a taxab)e entt" +$nt#t ,ro* the n+%+(a) #orporate entte$ o, #e+n& #o*pane$ b9 The tax on t$ n#o*e $ +Herent ,ro* tax on +%+en+$ re#e%e+ b" $a+ #o*pane$' an+ #)ear)" NO 7OUBLE TAXATION IS INVOVLE7 MEANS EMPLOYED TO AVOID DOUBLE TAXATION ? o(r tax $"$te* pro%+e$ ,or #ertan $#he*e$ n or+er to a%o+ or *n*2e the har$h or b(r+en$o*e eHe#t$ o, +o(b)e taxaton ? The$e tax re)e,$ or $#he*e$ are $o*et*e$ e*bo+e+ n tax treate$ or a&ree*ent$ !th ,ore&n #o(ntre$ ;; 6ran+a' C)ar$$e Ann !h)e other$ are *be++e+ n $tat(tor" pro%$on$ ,o(n+ (n+er ex$tn& )a!$ ?  The b(r+en o, +o()e taxaton on $a*e +%+en+ n#o*e earne+ n Ph)ppne$ b" a non re$+ent ,ore&n #orporaton @@@?one tax n Ph)ppne$ an+ another tax n +o*#))ar" #o(ntr" $ RE7UCE7 B5 I6POSITION O8 LOER RATE O8 1Q SUBJECT TO CON7ITION T4AT COUNTR5 IN 4IC4 NON RESI7ENT 8OREIGN CORPORATION IS 7O6ICILE7 S4ALL ALLO A CRE7IT AGAINST TAX 7UE 8RO6 NON RESI7ENT 8OREIGN CORPORATION ?  Taxe$ +ee*e+ ha%e been pa+ n Ph)ppne$ e(%a)ent :'<<< pe$o$9 The ,ore&n n#o*e tax a#t(a))" pa+ $ ><< pe$o$9 8ore&n tax #re+t $ #o*p(te+ a$ ,o))o!$0 SEE BOOK9 4A4A ?pa&e 11D@ A)en n+%+(a) !hether a re$+ent or not o, Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn Ph)ppne$9 A ,ore&n #orporaton !hether en&a&e+ or not n tra+e or b($ne$$ n Ph)ppne$' $ taxab)e on)" on n#o*e +er%e+ ,ro* $o(r#e$ !thn Ph)ppne$  The bene/t o, #re+t a&an$t n#o*e tax ,or taxe$ o, ,ore&n #o(tnre$' S4ALL BE ALLOE7 TO A CITIEN O8 P4ILIPPINES AN7 A 7O6ESTIC CORPORATION I8 TAXPA5ER SO SIGNI8IES IN 4IS RETURN BUT SUC4 BENE8IT S4ALL NOT BE ALLOE7 TO AN ALIEN IN7IVI7UAL AN7 A 8OREIGN CORPORATION A*on& the exa*p)e$ o, tax treate$ ,or re)e, ,ro* or a%o+an#e o, +o(b)e taxaton are the RP – US Tax treat" an+ RP-!e$t Ger*an" Tax treat" !h#h !ere $(b.e#t o,  #o*parat%e re%e! TAX EXEMPTIONS  The ,ore&n tax #re+t *etho+' a$ 6EANS O8 6INI6IING 7OUBLE TAXATION APPLIES TO RESI7ENT ALIENS PROVI7E7  T4AT0 19 T4E RECIPROCIT5 REUIRE6ENT IN LA IS SATIS8IE7 :9 SUBJECT TO ALLOCATION RULE AS ESTABLIS4E7 IN  TAX CO7E Non re$+ent 8)pno$' $n#e ther ,ore&n $o(r#e+ n#o*e $ $(b.e#t tot !o taxe$ )e%e+ (n+er t!o +Herent .(r$+#ton$'  TAX RELIE8 CO6ES IN 8OR6 O8 A 7E7UCTION O8 8OREIGN NATIONAL INCO6E TAX 8RO6 8OREIGN SOURCE7 INCO6E ITSEL89 Tax #re+t $#he*e n th$ n$tan#e $ NOT AVAILABLE ;= - &rant o, **(nt"' expre$$ or *p)e+ to part#()ar per$on$ or #orporaton$ ,ro* ob)&aton to pa" taxe$ 9 Con$tt(ton are &enera))" $e), exe#(tn& PRINCIPLES GOVERNING TAX EXEMPTION 19 Exe*pton$ ,ro* taxaton are h&h)" +$,a%ore+ n )a!' an+ he !ho #)a*$ an exe*pton *($t be ab)e to  .($t," h$ #)a* b" the #)eare$t &rant o, or&an2e or $tat(te )a! a9 Exe*pton ,or* #o**on b(r+en #annot be per*tte+ to ex$t (pon %a&(e *p)#aton$ b9 To epto*2e the prn#p)e' t $ !e)) $ett)e+ that  TAXATION IS T4E RULE' TAX EXE6PTION IS T4E EXCEPTION 9 Other!$e' t !)) be !thn the po!er o, )e&$)at(re to &nore or pra#t#a))" n())," the +re#ton$ o,  ,(n+a*enta) )a! 1<9Tax exe*pton$ – PERSONAL 119Non tran$,errab)e 1:97e+(#ton$ ,or n#o*e tax p(rpo$e$ partake o, nat(re o, tax exe*pton$ hen#e , tax exe*pton$ are to be $tr#t)" #on$tr(e+ 1;9It ,o))o!$ #on$tr(e+ that +e+(#ton *($t a)$o be $tr#t)" :9 4e !ho #)a*$ an exe*pton ,ro* h$ $hare o,  #o**on b(r+en n taxaton *($t .($t," h$ #)a* b" $ho!n& that the )e&$)at(re nten+e+ to exe*pt h* b" !or+$ too p)an to be *$taken9 1=9R()e o, $tr#t #on$tr(#ton o, tax exe*pton$ $ho()+ not ,or ob%o($ rea$on$' be app)e+ to or&an2aton$ per,or*n& $tr#t)" re)&o($' #hartab)e an+ e+(#atona) ,(n#ton$ ;9 4e !ho #)a*$ exepton $ho()+ pro%e b" #on%n#n& proo, that he $ exe*pte+ 19T4IS RULE ON STRICT INTERPRETATION ALSO 7OES NOT APPL5 IN CASES O8 EXE6PTIONS GRANTE7 IN ; 6ran+a' C)ar$$e Ann ;D 8AVOR O8 GOVERN6ENT POLITICAL SUB7IVISION OR INSTRU6ENTALIT5 1D9A #)a* o, exe*pton ,ro* tax pa"*ent$ *($t be #)ear)" $ho!n an+ ba$e+ on )an&(a&e n )a! too p)an to be *$taken9 19Sn#e a parta) re,(n+ $ n nat(re o, tax exe*ptont *($t be #on$tr(e+ STRICTISSI6I JURIS a&an$t &rantee 1>9NO TAX EXE6PTION $o)e)" on &ro(n+ o, e(t" 19Tax a*ne$t" $ ne%er ,a%ore+ or pre$(*e+ n )a!9 I,  &rante+ b" a $tat(te' the ter*$ o, a*ne$t" )ke that o,  a tax exe*pton *($t be #on$tr(e+ $tr#t)" a&an$t taxpa"er an+ )bera))" n ,a%or o, taxn& a(thort" a9 Re$o)%e+ n ,a%or o, taxn& a(thort" :<98n+n& pettoner3$ #)a* o, **(nt" ,ro* pro$e#(ton (n+er the $hIe)+ (ntenab)e9 4E 7I7 NOT 6EET TIN REUIRE6ENT :196ERE 8ILING O8 TAX A6NEST5 RETURN 7OES NOT IPSO 8ACTO S4IEL7 4I6 8RO6 I66UNIT5 AGAINST PROSECUTION9 ::9Tax a*ne$t" $ a &enera) par+on to taxpa"er$ !tho(t ha%n& to &o thro(&h te+o($ pro#e$$ o, a tax #a$e :;9To a%a) o, a tax a*ne$t)" &rante+ b" Go%ern*ent an+ to be **(ne ,ro* $(t on t$ +e)n(en#e$' the taxpa"er *($t ha%e %o)(ntar)" +$#)o$e+ h$ pre%o($)" (ntaxe+ n#o*e an+ *($t ha%e pa+ #orre$pon+n& tax on $(#h pre%o($)" (ntaxe+ n#o*e ILLUSTRATIVE SITUATIONS ON TAX EXEMPTIONS ;D 19 TAX ON PERSON - the re$+en#e ?#o**(nt" tax@ !h#h $ a per$ona) tax $ not *po$e+ on 7IPLO6ATIC an+ CONSULAR repre$entat%e$ a$ !e)) a$ tran$ent %$tor$ !hen ther $ta" n Ph)ppne$ 7OES NOT EXCEE7 T4REE 6ONT4S :9 TAX ON PROPERT5 – Rea) propert" o!ne+ b" Rep(b)# o, Ph)ppne$ or an" o, t$ po)t#a) $(b+%$on$ pro%+e+ the bene/#a) ($e thereo, $ NOT  TRANS8ERRE7 to a taxab)e per$onM #hartab)e n$tt(ton$' #h(r#he$' par$ona&e$' or #on%ent$9 ;9 TAX IN EXCISES AN7 PRIVILEGES – $a)e or *portaton o, a&r#()t(ra) an+ *arne ,oo+ pro+(#t$ n ther or&na) $tate are exe*pt ,ro* %a)(e a++e+ tax A9 Con+onaton o, (npa+ tax )ab)te$ $ n the nat(re o, a tax exe*pton a9 I, there $ NO CLEAR CUT pro%$on n )a! #on+onn& $(#h )ab)te$ that taxe$ a)rea+" pa+ are a)$o #on+one+ then no re,(n+ o, pa+ taxe$ $ a(thor2e+ be#a($e exe*pton$ *($t be $($tane+ on)" !hen expre$$e+ n exp)#t ter*$ B9 here a #orporaton en&a&e+ n a #ertan n+($tr" obtane+ exe*pton ,ro* a)) taxe$' the ,o))o!n& taxe$ *a" be !thn the #ope o, the tax exe*pton' tax on pro+(#t$ *an(,a#t(re+ ,or n+($tr"' o##(paton or b($ne$$ tax thereon' *port or #o*pen$atn& tax on *a#hnere$ ($e+ theren' the tax on &a$o)ne an+ o)$ ne#e$$ar" to *o%e or operate t$ *a#hner" a$ !e)) a$ p(r#ha$e o, or&na) $te ,or t$ p)ant a9 BUT T4E ACUISITION b" +onaton o, )ot$'' #ont&(o($ to the or&na) )ot$' a,ter operaton ha$ )a$te+ a ,e! "ear$' $ NO LONGER exe*pt' $n#e $a+ a#($ton $ not +re#t)" re)ate+ to n+($tr"  TAXATION SURVIVAL KIT – Aban Book C9 In the #a$e o, a #orporaton that $ en&a&e+ n *an(,a#t(re o, p)"!oo+' t$ tax exe*pton exten+$ on)" to *a#hner" an+ e(p*ent to be ($e+ ex#)($%e)" n the ne! an+ ne#e$$ar" n+($tr" a9 th or !tho(t the taxpa"er$ o!nn& an" tran$portaton ,a#)t"' the tax exe*pt n+($tr" #o()+ be operate+ 79 here taxpa"er re#e%e$ a$ part o, p(r#ha$e pr#e o, the )an+ exproprate+ b" Go%ern*ent' tax exe*pt bon+$ $$(e+ $(#h tax exe*pt bon+$ $ho()+ be n#)(+e+ n tota) p(r#ha$e pr#e n or+er to +eter*ne the #orre#t taxab)e pro/t there,ro* G9 A tax exe*pton n the*an(,a#t(re an+ $a)e o,  *a#hnere$ ,or *akn& #&arette paper +oe$ not n#)(+e the *an(,a#t(re an+ $a)e o, pro+(#t$ pro+(#e+ b" the *a#hne 49 In the #ontra#t #o%ern& the #on$tr(#ton o, 6a#tan Arport' t !a$ pro%+e+ that no tax o, an" kn+ or +e$#rpton !)) be )e%e+ on an" *atera)' e(p*ent or $(pp)e$ !h#h *a" be p(r#ha$e+ or other!$e a#(re+ n #onne#ton !th pro.e#t (n+er the #ontra#t a9 7oe$ th$ exe*pton n#)(+e the tax on petro)e(* pro+(#t$ ($e+ n pro.e#t b9 NO9 the #o(rt $a+ that the on)" te*$ exe*pt are tho$e a*tera)$ or $(pp)e$ !h#h are n#orporate+ n the #on$tr(#ton o, the ar/e)+ $(#h a$ *ortar' #e*ent' $an+ br#k$ BUT NOR petro)e(* pro+(#t$ !h#h are not *atera)$ or $(pp)e$ $n#e the" +o not &o nto or are #on$(*e+ n the #on$tr(#ton o, pro.e#t b(t are ($e+ n the *a#hnere$ an+ e(p*ent a9 Pro/t ar$n& ,ro* expropraton $a)e b9 Tax exe*pton$ are $tr#t)" #on$tr(e+ E9 The $)aare$ o, .(+#a) o#er$ are NOT tax exe*pt an+ ther taxab)t" $ NOT CONTRAR5 to the pro%$on$ a9 The #)ear ntent o, #on$tt(tona) #o**$$on that ,ra*e+ the #on$tt(ton $ to $(b.e#t ther $a)are$ to tax a$ n the #a$e o, a)) taxpa"er$ 89 The exe*pton o, #ontra#tee ?4O@ ,ro* a)) n+re#t taxe$ a$ pro%+e+ n the ho$t a&ree*ent bet!een REPUBLIC O8 P4 an+ 4O $ho()+ be *p)e*ente+ to *ean that the entt" or per$on EXE6PT $ the #ontra#tor t$e), !ho #on$tr(#te+ the b()+n& o!ne+ b" #ontra#tee a9 Th$ +oe$ not %o)ate r()e that tax exe*pton$ are per$ona) be#a($e the *an,e$t ntenton o, the a&ree*ent' a$ $tate+ ear)er' $ to exe*pt the #ontra#tor $o that no #ontra#tor3$ tax *a" be $h,te+ to the #ontra#tee 4O ; 6ran+a' C)ar$$e Ann I9 The exe*pton ,ro* n#o*e tax on Ba$e #onne#te+ n#o*e o, NON RESI7ENT A6ERICAN BASE PEROSNNEL UN7ER US ABSES TREAT5 +oe$ not exten+ to the n#o*e rea)2e+ ,ro* $a)e b" an A*er#an #%)an ba$e e*p)o"ee o, h$ #ar n$+e ba$e to another A*er#an natona)  J9 Art#)e XVIII o, the ba$e$ treat" exe*pt ,ro* tax &ro$$ re#ept$ o, a ba$e #on#e$$onare ,ro* b($ne$$ o, ha()n& an+ tran$portn& o, #ar&oe$ n$+e the ba$e be)on&n& to the US AR65 K9 here an e)e#tr# )&ht an+ po!er ,ran#h$e ho)+er $ exe*pt (n+er t$ ,ran#h$e ,ro* propert" tax on t$ po)e$' !re$' tran$,or*er$ an+ n$()ator$' t$ exe*pton +oe$ not exten+ to the #o*pen$atn& tax on t$ *poraton o, $a+ art#)e$9 ;> a9 Sa+ #o*pen$atn& tax $ not a propert" tax b(t an ex#$e tax b9 Exe*pton$' ben& h&h)" +$,a%ore+ n )a!' *($t be $tr#t)" #on$tr(e+ a9 On)" $a)e to US (arter*a$ter are exe*pt t ,o))o!$ that the $a)e o, ox"&en an+ a#et")ene &a$e$ to the VOA $ taxab)e P9 Tax exe*pton$ are $tr#t)" #on$tr(e+ L9 here t appear$ that (n+er a #ertan )a!' a ra#n& #)(b $ EXE6PT ,ro* pa"*ent o, an" *(n#pa) or natona) tax9 SUC4 exe*pton +oe$ not n#)(+e exe*pton ,or* n#o*e tax on renta)$ re#e%e+ ,ro* the )ea$e o, t$ ra#e tra#k$ to Ph)ppne #hart" $!eep$take$9 9 I, !hat the )a! exe*pt$ ,ro* #o*pen$atn& (n+er then are pa$$en&er an+ or #ar&o %e$$e)$ the t(&boat$ are NOT I4TIN $#ope o, exe*pton be#a($e t(&boat$ are NOT USE7 ,or #arr"n& pa$$en&er$ or #ar&o b(t on)" ,or t!o&n other %e$$e)$9 a9 The $tat(tor" exe*pton #o%er$ on)" taxe$ n #onne#ton !th ra#e$ )ke the *(n#pa) )#en$e ,ee o,  D<< pe$o$ per +a" o, ra#n& an+ << pe$o$ /xe+ tax ,or ea#h +a" ra#n& (n+er NIRC TAX EXEMPT PERSONS RE9UIRED TO  TAXA  TAXATION TION SURVIVAL SURVIVAL KIT – Aban Book Book  Tax  Tax e%a$on – !hen the *ean$ ($e+ to *n*2e taxe$ are ))e&a) a##o* a##o*p) p)$h* $h*ent ent an+ an+ pro* pro*ot oton on o, p(rpo$ p(rpo$e$ e$ en(*erate+ n art#)e o, n#poraton o  TAX  TAX AVOI7ANCE AVOI7ANCE ILLUSTRA ILLUSTRATION TION 0 Not *ore than ;' n+e#)are+ net n#o* n#o*e e !a$ :D9 NOTE7 NOTE7 0 the abo%e*e abo%e*ent ntone one+ + #a$e' #a$e' the taxpa"e taxpa"er3$ r3$ +e/#en# +e/#en#" " n#o*e n#o*e tax !a$ a$$e$$+ a$$e$$+ an+ +eter* +eter*ne+ ne+ thro(&h the ($e o, the $o #a))e+ net !orth *etho+ ot !hat $ other!$e kno!n a$ n%entor" *etho+ n#o*e tax %er/#aton 9 In #ertan #ertan #a$e #a$e +e#+e+ +e#+e+ b" tax #o(rt' #o(rt' r()n& r()n& !a$ to eHe#t eHe#t that !here !here a #o(p) #o(p)e e n P4 re#e re#e%e+ %e+ a +o))a +o))arr re*ttan#e #he#k ,ro* abroa+' $a+ a*o(n+ ben& the re$()t o, an error o, re*ttn& bank a$ $(* that !a$ a#t(a))" $(ppo$e+ to be re*tte+ !a$ on)" 1) +o))ar$ 1<9NO 8RAU7 !a$ *p(te+ a&an$t the* $n#e n#o*e tax ret(rn ' the *ao(nt n (e$ton !a$ 7ECLARE7 IT4 NOTATION 0 TAX PA5ER AS T4E RECEPEITN 8O SO6E 6ONE5 8OR6 ABROA7 4IC4 4E PRESU6E7 TO BE A GI8T BUT TURNE7 OUT TO BE AN ERROR AN7 IS NO  T4E SUBJECT O8 O8 LITIGATION LITIGATION 119No ,ra(+ ex$te+ ex$te+ be#a($e be#a($e taxpa"er taxpa"er ha+ )tera))" )tera))" )a+ h$ #ar+$ on the tab)e Chapter =  TAX  TAX LAS AN7 REGULAT REGULATIONS IONS NATURE OF TAX LAWS - CIVI CIVIL L IN IN NA NATURE URE - Not po po)t#a) - E%en E%en +(rn& +(rn& pero+ pero+ o, o, ene*" ene*" o##(p o##(pat aton on ?$(# ?$(#h h a$ ,or n$tan#e' +(rn& Japane$e o##(paton o, Ph)ppne$ n or)+ ar II' !h#h )a$te+ ,ro* 1=: – 1= ' tax )a!$ are #ontn(a)) #ontn(a))" " en,or#e+ en,or#e+ a$ the" are +ee*e+ to be )a!$ o, oo##(pe+ terrtor" an+ not tho$e o, o##(p"n& po!er 4ILA7O %$ CIR =1 6ran+a' C)ar$$e Ann - #o(r #o(rtt ++ not a)) a))o! o! the the taxpa taxpa"e "err to +e+(#t +e+(#t ,ro* ,ro* h$ h$ 11 tax ret(rn a #a$(a)t" )o$$ n#(rre+ +(rn& the !a$ - )o$$ )o$$ ,ro* ,ro* /re' /re' $tor* $tor*$' $' $hp! $hp!re re#k #k et# n#)( n#)(+ +n& n& !ar )o$$e$ - a)tho( a)tho(&h &h $(#h $(#h )o$$ )o$$ !a$ !a$ n#(rr n#(rre+ e+ +(rn +(rn& & $a+ $a+ !ar t !a$ !a$ not po$$b)e ,or h* to *ake the +e+(#ton be#a($e' a##or+n& to h*' nterna) re%en(e )a!$ !ere at the t*e (nen,or#eab)e (nen,or#eab)e or n a $tate o, $($pen$on9 - COURT COURT 0 o%err( o%err()e+ )e+ th$ th$ #onte #ontento nton n an+ he)+ that +(rn& +(rn&  Japane$e o##(paton' nterna) re%en(e )a!$ o,  Ph)ppne$ #ontn(e+ to be n ,or#e NEIT4ER ARE TAX LAS PENAL IN NATURE - the the r()e r()e on retr etroa#t oa#t% %e e eHe# eHe#tt o, pena) pena) a)!$ a)!$ (n+e (n+err art#)e ::: o, RPC !h#h rea+$ 0 pena) )a! $ha)) ha%e retr retroa# oa#t% t%e e eHe#t eHe#t n$o,a n$o,arr a$ the" the" ,a%or ,a%or the per$on per$on &()t" o, a ,e)on"' !ho $ NOT a habt(a) #r*na) a$ +e/ne+ n r()e  art#)e D: o, th$ #o+e9 - A)tho( A)tho(&h &h at the the t*e t*e o, p(b)# p(b)#at aton on o, $(#h $(#h )a! )a!$ $ a /na) /na) $enten#e ha$ been prono(n#e+ an+ #on%#t $ $er%n& the $a*e - 8n+$ n+$ no app)# app)#at aton on n tax #a$e$ #a$e$ - Re%en(e e%en(e )a!$ )a!$ !h#h !h#h *po$ *po$e e taxe$ taxe$ #o))e# #o))e#te+ te+ b" *ean$ *ean$ !h#h are or+nar)" re$orte+ to ,or the #o))e#ton o,  taxe$ are NOT CLASSES a$ pena) )a!$ an+ there,ore CANNOT BE GIVEN retroa#t%e eHe#t  TAX  TAX LAS NOT BEING PENAL IN C4ARACTER' C4ARACTER' T4E RULE IN  T4E CONSTITUTION CONSTITUTION AGAINST T4E PASSAGE PASSAGE O8 EX PSOT 8ACTO LAS CANNOT BE INVOKE7 - the #on$t #on$tt(t t(tona ona)) prohb prohbton ton a&an$t a&an$t the the pa$$a& pa$$a&e e o, ex ex po$t ,a#to )e&$)aton' a##+& to SC - app) app)e e$ $ on)" on)" to #r*n #r*na) a) or pena pena)) *atte *atter$ r$ an+ an+ not to )a!$ )a!$ !h# !h#h h #one #onern rn #% #%)) *att *atte$ e$ or pro# pro#ee ee+ +n& n&$ $ &enera))"' or !h#h aHe#t or re&()ate #%) or pr%ate r&ht$ - #on$t #on$tt(t t(ton ona) a) prohb prohbt ton on a&an$ a&an$tt ex po$t ,a#to ,a#to a)!$ a)!$ $ NOT APPLICABLE to the #o))e#ton o, ntere$t on ba#k taxe taxe$' $' nor nor to )a!$ )a!$ !h# !h#h h a$ $tat $tate+ e+ #on# #on#er ern n #% #%)) *atter$ &enera))" or re&()ate #%) or pr%ate r&ht$ =: - Co))e#ton o, ntere$t n tax #a$e$ $ NOT PENAL IN NATURE INCREASE TAX RATES 6A5 ALSO BE GIVEN RETROACTIVE E88ECT SO AS TO APPL5 INCO6E EARNE7 BE8ORE T4E PASSAGE O8 T4E LA AUT4ORIING SUC4 INCREASE - n #a$e o, ntere$t' no #on$tt(tona) n,rn&e*ent !o()+ ex$t anent the ex po$t ,a#to prohbton INTERPRETATION OF TAX LAWS - a $tat(te !)) not be #on$tr(e+ a$ *po$n& a tax (n)e$$ t +oe$ $o #)ear)"' expre$$)"' an+ (na*b&(o($)" - a tax #annot be *po$e+ !tho(t #)ear an+ expre$$ !or+$ ,or that p(rpo$e - pro%$on$ o, a taxn& a#t are not to be exten+e+ b" *p)#aton -  TAX STATUTES ARE COSNTURE7 STRONGL5 AGAINST GOVERN6ENT AN7 LIBERALL5 IN 8ACOR O8 CITIEN SINCE OUR INCO6E TAX LAS ARE O8 A6ERICAN ORIGIN' INTERPETATION B5 A6ERICAN COURTS ON OUR PARALLEL  TAX LAS 4AVE PERSUASIVE E88ECT SOURCES OF TAX LAWS 19 Con$tt(ton :9 Tax #o+e$ $(#h a$ NIRC' TarH an+ C($to* Co+e' an+ porton$ o, Lo#a) Go%ern*ent Co+e ;9 Stat(te$ )ke RA 11: an+ RA >=:= – Tax Re,or* A#t M An A#t Creatn& the Co(rt o, Tax Appea)$ =9 Pre$+enta) +e#ree$ 9 Exe#(t%e or+er$ D9 Co(rt 7e#$on$ be#a($e b(r+en$ are not to be *po$e+ be"on+ !hat the $tat(te$ expre$$)" an+ #)ear)" *port 9 Re%en(e re&()aton$ pro*()&ate$ b" 7epart*ent o,  8nan#e A)tho(&h tax b(r+en$ are not pre$(*e+' t $ *portant to #on$+er' ho!e%er tat tax )a!$ are NOT PRO6ULGATE7 n or+er to en#o(ra&e tax e%a$on or tax a%o+an#e - SC $a+ that propo$e o, Tax Co+e $ to *po$e taxe$' not to enhan#e tax a%o+an#e >9 A+*n$trat%e $$(an#e$ o, BIR )ke Re%en(! 6e*oran+(* Cr#()ar$' an+ tho$e o, B(rea( o,  C($to*$ )ke C($to*$ 6e*roan+(* Or+er$ LIKE OT4ER STATUTES' TAX LAS OPERATE PROSPECTVEL5 !hether the" ENACT' A6EN7 OR REPEAL - UNLESS the p(rpo$e o, )e&$)atre to &%e retroa#t%e eHe#t $ expre$$)" +e#)are+ OR - 6a" be *p)e+ ,ro* )an&(a&e ($e+ 1<9Lo#a) Tax Or+nan#e$ - 9 BIR R()n&$ 119Tax Treate$ an+ Con%enton$ !th ,ore&n #o(ntre$ Ma!a&ory a! D$re&ory Pro0$#$o# =:  TAXATION SURVIVAL KIT – Aban Book - there are pro%$on$ n ex$tn& tax )a!$ !h#h )a" +o!n *an+ator" re(re*ent$ ,or p(rpo$e$ o, %a)+t" o, #ertan a#t$ per,or*e+ b" tho$e !ho are entr($te+ !th en,or#e*ent o, re%en(e )a!$ Exa*p)e$ 0 Tax Co+e 1 Se#ton :< 0 7$trant propert" rea) propert" o, the +e)n(ent taxpa"er n $(#ent (antt" to $at$," the tax #har&e toðer !th an" n#re*ent thereto n#+ent to +e)n(en#" Another exa*p)e o, a +re#tor" pro%$on $ Se#ton 1: ' RA 11: - the )a! then re(re+ that $a*e $ho()+ be e*p)o"e+ not ear)er than three *onth$ nor )ater than $x *onth$ ,ro* re#ept o, +e*an+9 xxx - pro%+e$ that #a$e$ bro(&ht be,ore the #o(rt $ha)) be +e#+e+ !thn thrt" +a"$ a,ter $(b$*$$on thereo, ,or +e#$on - $(#h a#ton !)) not ne#e$$ar)" re$()t n n())t" o,  #o))e#ton - The CTA $ NOT a *ere $(perror a+*n$trat%e a&en#" or trb(na) rather t $ a part o, .(+#a) $"$te* o,  Ph)ppne$ - No nee+ ,or b(rea( o, Interna) Re%en(e to a))o! three *onth$ ,ro* +ate o, re#ept o, a$$e$$*ent to e)ap$e be,ore $(**ar" re*e+e$ ,or #o))e#ton are re$orte+ to – , tax ben& #o))e#te+ $ $e), a$$e$$e+ tax' a$ n the #a$e o, n#o*e tax' !h#h the taxpa"er reFe#t$ n h$ tax ret(rn' - It !a$ #reate+ b" Con&re$$ a$ a #entra)2e+ #o(rt $pe#a)2n& n tax #a$e$ - It $ a re&()ar #o(rt %e$te+ !th ex#)($%e appe))ate  .(r$+#ton o%er #a$e$ ar$n& (n+er the NIRC' TarH' an+ C($to*$ Co+e an+ A$$e$$*ent La! - A$ a *atter o, pra#t#e an+ prn#p)e' SC !)) not $et a$+e the #on#)($on rea#he+ b" CTA !h#h $ b" the %er" nat(re o, t$ ,(n#ton' +e+#ate+ ex#)($%e)" to the $t(+" an+ #on$+eraton o, tax prob)e*$ an+ ha$ ne#e$$ar)" +e%e)ope+ an expert$e n $(b.e#t' UNLESS  T4ERE 4AS BEEN AN ABUSE7 AN7 I6PROVI7E7NT EXERCISES O8 AU4TORIT5 ON ITS PART5 - - BUT 4IC4 he ,a)e+ to pa" on the +ate ,or pa"*ent pre$#rbe+ b" )a! Three *onth pero+ app)e+ on)" !hen there !a$ a pre%o($ +e*an+ or a$$e$$*ent ,ro* BIR Se#ton :< 1 NIRC PUBLICATION REUIRE6ENT - - no )on&er pro%+e$ ,or *an+ator" pero+ o, NOT ERALIER T4AN T4REE 6ONT4S be,ore the BIR #o()+ ($e the $(**ar" re*e+" o, #o))e#ton o, an" +e)n(ent tax b" +$rant o, per$ona) propert" an+or )e%" on rea) propert" Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $e2e an+ +$tran per$ona) propert" an+or )e%" =; 6ran+a' C)ar$$e Ann - not a)) $o(r#e$ o, tax )a!$ a$ en(*erate+ abo%e re(re p(b)#aton n O#a) 8axette a$ pro%+e+ n Art#)e : o, CC' !h#h $tate$ that LAS S4ALL TAKE E88ECT A8TER 8I8TEEN 7A5S 8OLLOING T4E CO6PLETION O8 T4EIR PUBLICATION IN O88ICIAL GAETTE UNLESS IT IS OT4ERISE PROVI7E7 == - - - - nterpretat%e re&()aton$ an+ tho$e !h#h are *ere)" nterna) n nat(re9 EXA6PLE 0 tho$e !h#h re&()ate on)" the per$onne) o, a+*n$trat%e a&en#" an+ not p(b)# ' nee+ not be p(b)$he+ In BIR n$tan#e' the ,o))o!n& +o not re(re p(b)#aton ,or p(rpo$e$ o, eHet%t"0 REVENUE 6E6ORAN7U6 OR7ERS' REVENUE 6E6ORAN7U6 CIRCULARS' REVENUE A76INISTRATIVE OR7ERS' BIR RULINGS BIR *e*oran+(* Cr#()ar – $ on)" ,or nterna) a+*n$traton o, BIR an+ not a re&()aton !thn the #onte*p)aton o, Se#ton := o, Tax Co+e - There,ore 0 nee+$ no p(b)#aton n O#a) Ga2ette - 4EN AN7 A76INISTRATIVE REN7ERS AN OPINION B5 6EANS O8 A CIRCULAR OR 6E6ORAN7U6 IT E6REL5 INTERPRETS A PRE EXISTING LA AN7 NO PUBLICATION IS REUIRE7 8OR ITS VALI7IT5 - - == p(b)#aton a$ a #on+ton ,or ther eHe#t%t"M $tat(te$' n#)(+n& tho$e o, )o#a) app)#aton an+ pr%ate )a!$' pre$+enta) +e#ree$ an+ exe#(t%e or+er$ pro*()&ate+ b" Pre$+ent' an+ a+*n$trat%e r)e$ an+ re&()aton$ ,  ther p(rpo$e $ to en,or#e or *p)e*ent ex$tn& )a!' p(r$(ant to a %a)+ +e)e&aton C($to*$ 6e*oran+(* Or+er$ $$(e+ b" Co**$$oner o, C($to*$ NEE7 NOT BE PUBLIS4E7 IN O88ICIAL GAETTE Con$tr(#ton b" an exe#(t%e bran#h o, Go%ern*ent o,  a part#()ar )a!' a)tho(&h not bn+n& on the #o(rt$' *($t be &%en !e&ht a$ the #on$tr(#ton #o*e$ ,ro* the bran#h o, Go%ern*ent #a))e+ (pon to *p)e*ent the )a! ARE TAX LAWS SPECIAL LAWS( - Tax )a!$ are $pe#a) )a!$ - Tax #o+e $ an exa*p)e o, a tax )a! - Tax #o+e $ a $pe#a) )a! an+ pre%a)$ o%er a &enera) )a! $(#h a$ C%) Co+e ? REPUBLIC VS GANA5CO@ - In #a$e the pro%$on$ o, a $pe#a) )a! are ,o(n+ to be +e/#ent n a part#()ar $t(aton' the #%) #o+e $ha)) app)" - RULING 0 to eHe#t that a)tho(&h the Re%$e+ Charter 6an)a $peak$ o, or+nan#e$ n &enera)' rre$pe#t%e o,  nat(re an+ $#ope thereo, - Se#ton =; ' Lo#a) Tax Co+e 0 on p(b)#aton o, tax or+nan#e$ $ho()+ app)" be#a($e the )o#a) tax #o+e re)ate$ to or+nan#e$ )e%"n& or *po$n& taxe$' ,eee$' or #har&e$ n part#()ar In a#ton n$tt(te+ b" the Go%ern*ent ,or the re#o%er" o, an erroneo($)" re,(n+e+ tax' !h#h pre$#rpt%e pero+ !)) app)" – the $x "ear pre$#rpt%e ,or a (a$ #ontra#t$ (n+er Art#)e 11= o, CC or three "ear pre$#rpt%e pero+ ,or a$$e$$*ent (n+er Se# :;; o, Tax Co+e !h#h $ a $pe#a) )a! - $n#e an a#ton to re#o%er an erroneo($)" re,(n+e+ tax $ n eHe#t an a$$e$$*ent o, $(#h tax an+ #on$+ern& that a $pe#a) )a! )ke tax #o+e pre%a)$ o%er CC' a &enera) )a!' then t $ the three "ear pero+ (n+er the  Tax Co+e that $ho()+ app)"  TAXATION SURVIVAL KIT – Aban Book TAX REGULATIONS - pro*()&ate$ b" Se#retar" o, 8nan#e n or+er the *p)e*ent the pro%$on$ o, Tax Co+e - the Se#retar" o, 8nan#e' (pon re#o**en+aton o,  Co**$$oner' $ha)) pro*()&ate a)) nee+,() r()e$ an+ re&()aton$ ,or the eHe#t%e en,or#e*ent o, pro%$on$ o, th$ Co+e - Re&()aton$ *($t not be #ontrar" to )a! ,or a re&()aton pro*()&ate+ on a !ron& nterpretaton o,  the )a! or n #ontra%enton thereo, #annot &%e r$e to a %e$te+ r&ht that #an be n%oke+ ether b" taxpa"er or &o%ern*ent - Ga2ette or n a ne!$paper o, &enera) #r#()aton - The" *($t be rea$onab)e an+ *($t be !thn the a(thort" #on,erre+ $n#e the po!er to *ake re&()aton $ NOT T4E po!er to )e&$)ate - SC 0 r()e+ a&an$t the re)axaton o, #ertan re%en(e re&()aton$ b" Re%en(e 6e*oran+(* Cr#()ar No -> a$ t +$re&ar+e+ the : "ear pre$#rpt%e pero+ $et b" )a! - BIR ++ not $*p)" nterpret the )a!' t )e&$)ate+ &(+e)ne$ #ontrar" to the $tat(te pa$$e+ b" #on&re$$ - COURT UP4EL T4E NULLI8ICATION O8 R6C – -> AS AN A76INISTRTIVE INTERPRETATION 4IC4 IS NOT IN 4AR6ON5 IT4 SECTION :;< O8 1>> NIRC' 8OR BEING CONTRAR5 TO T4E EXPRESS PROVISION O8 A STATUTE' AN7 CONCLU7E7 T4AT T4E SA6E COUL7 NOT BE GIVEN EIG4T 8OR TO 7O SO OUL7 IN E88ECT A6EN7 T4E STATUTE - 6OREOVER' the nterna) re%en(e #o**$$oner #annot' b" a+*n$trat%e /at' a*en+ the )a! b" *akn& #o*p)an#e there!th *ore b(r+en$o*e TAX RULINGS - Un+er &($e o, re&()aton' )e&$)aton *a" not be ena#te+ - be$t &(e$$ o, *o*ent an+ n#+enta))" o,ten #ontan $(#h !e)) #on$+ere+ an+ $o(n+ )a! - A+*n$trat%e ha%e the ,or#e an+ eHe#t o, )a! - COURTS 0 the" +o not pre%ent an entre #han&e o, ,ront at an" t*e an+ are *ere)" a+%$or" $ort o, an n,or*aton $er%#e to taxpa"er A+*n$trat%e re&()aton$ pro%$on$ o, the )a! - *($t be n har*on" !th n #a$e o, +$#repan#" bet!een ba$# )a! an+ *p)e*entn& r()e or re&()aton the ,or*er pre%a)$ POWER OF COMMISSIONER TO INTERPRET TAX LAWS AND TO DECIDE TAX CASES - R()e$ an+ re&()aton$ *($t not o%err+e b(t *($t re*an #on$tant an+ n har*on" !th the )a! the" $eek to app)" - The" *($t nether $(pp)an nor *o+," the )a! = 6ran+a' C)ar$$e Ann Se#ton =' NIRC – $pe#/#a))" pro%+e$ that the po!er to nterpret the pro%$on$ o, Tax Co+e an+ other tax )a!$ $ha)) be (n+er the ex#)($%e an+ or&na)  .(r$+#ton o, the Co**$$oner' $(b.e#t to re%e! b" the Se#retar" 8nan#e =D - - - The po!er to +e#+e +$p(te+ a$$e$$*ent$' re,(n+$ o,  nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto or other *atter$ ar$n& (n+er th$ Co+e or other )a!$ or porton$ there,  a+*n$tere+ b" BIR $ %e$te+ n Co**$$oner $(b.e#t to the ex#)($%e appe))ate .(r$+#ton o, CTA RULING O8 CIR 0 a&en#" ta$ke+ !th en,or#e*ent o,  tax )a!$' $ a##or+e+ *(#h !e&ht an+ e%en /na)t" !here there $ NO S4OING T4AT IT IS PATENTL5 !ron&' part#()ar)" n a #a$e !here the /n+n&$ an+ #on#)($on$ o, nterna) re%en(e #o**$$oner !ere $(b$e(ent)" ar*e+ b" the CTA ' a $pe#a)2e+ bo+" #reate+ ,or the ex#)($%e p(rpo$e o, re%e!n& tax #a$e$ an+ CA RULING 4IC4 6EREL5 E6BO7IE7 A76INISTRATIVE OPINIONS ON UERIES SUB6ITTE7 7O NOT 4AVE T4E 8ORCE AN7 E88ECT O8 LAS NON RETORACTIVITY OF RULINGS =D - r()n&$ are not retroa#t%e , the" are pre.(+#a) to taxpa"er - Se#ton :=D o, 1 NIRC an" re%o#aton' *o+/#aton or re%er$a) o, an" o, r()e$ an+ re&()aton$ pro*()&ate+ n a##or+an#e !th pre#e+n& Se#ton$ or an" o, r()n&$ or #r#()ar$ pro*()&ate+ b" Co**$$oner - #ha-- o& "e 3$0e re&roa&$0e a++-$a&$o $% &he re0oa&$o, /o!$>a&$o or re0er#a- *$-- "e +re=.!$$a&o &he &a'+ayer#, EXCEPT IN FOLLOWING CASES0 19 !here taxpa"er +e)berate)" *$$tate$ or o*t$ *atera) ,a#t$ ,ro* h$ ret(rn or an" +o#(*ent re(re+ o, h* b" the BIR :9 !here the ,a#t$ $(b$e(ent)" &athere+ b" BIR are *atera))" +Herent ,ro* ,a#t$ on !h#h the r()n& $ ba$e+ ;9 here taxpa"er a#te+ n ba+,ath COURT0 retroa#t%e eHe#t o, VAT RULING >-: ILL NOT BE PREJU7ICIAL TO T4E TAXPA5ER (n+er the a,ore(ote+ ex#epton to the &enera) r()e CASE 1 19 there !a$ a BIR r()n& $$(e+ on Jan(ar" :1' 1>< !heren t !a$ r()e+ that the 1Q bran#h pro/t re*ttan#e tax (n+er Se#ton : ?a@ ?@ o, Tax Co+e $ho()+ be ba$e+ on a*o(nt o, pro/t a#t(a))" re*tte+ b" a ph)ppne bran#h to t$ parent #o*pan" abroa+ :9 4OEVER' n 1>: (n+er Re%en(e 6e*oran+(* Cr#()ar No9 >->:' BIR re%r$e+ the pror r()n& an+ he)+ that the 1Q bran#h pro/t re*ttan#e tax S4OUL7 BE BASE7 NOT ON T4E A6OUNT O8 PRO8ITS ACTUALL5 RE6ITTE7 BUT ON T4E A6OUNT APPLIE7 8OR RE6ITTANCE T4EREB5 6AKING T4E BASIS O8 1Q tax )ar&er than that on !h#h $a+ tax !a$ #o*p(te+ (n+er or&na) 1>< r()n&9 ;9 BIR n t$ $(b$e(ent r()n& n 1>: rea$one+ that the a*o(nt app)e+ ,or re*ttan#e $ho()+ be the tax ba$e' th($ &%n& r$e to a b&&er a*o(nt to tax  TAXATION SURVIVAL KIT – Aban Book SO6E EXTENT CON8IR6ATOR5 T4AT T4E RULING CARRIES OUT T4E LEGISLATIVE PURPOSE ILL T4E REVERSAL RULING IN 1>: RETROACT TO T4E BRANC4 PRO8IT RE6ITTANCES 6A7E BE8ORE T4AT 5EAR OR AS IN T4E CASE O8 BURROUG4S 4EREIN' ILL SAI7 RULING APPL5 TO RE6IRRANCES 6A7E B5 IT IN 1 - pa"*ent o, bran#h pro/t re*ttan#e ha%n& been *a+e on 1' t ,o))o!$ that BIR *e*oran+(* #r#()ar no >->: $$(e+ on 6ar#h 1' 1>: CANNOT BE GIVEN RETROACTIVE E88ECT o, a $tat(te $(b$tanta))" ?  T4E REENACT6ENT (n#han&e+ $ per$(a$%e n+#aton o, the a+opton b" Con&re$$ o, pror exe#(t%e #on$tr(#ton DOCTRINE OF IMPLICATIONS - the +o#trne o, *p)#aton$ *ean$ that !h#h $ p)an)" *p)e+ n the )an&(a&e o, a $tat(e $ a$ *(#h a part o,  t a$ that !h#h $ expre$$e+ - RA = – !h#h *po$e$ a 1Q a++tona) tax on Rea) propert"' the tota) rea) propert" tax S4OUL7 NOT EXCEE7 A 6AXI6U6 O8 T4REE PER CENTU6' T4E CIT5 O8 6ANILA UN7ER ITS C4ARTER' CAN INCREASE  T4E EXISTING REGULAR RATE O8 ONE AN7 ONE 4AL8 PERCENT TO TO PERCENT - SO T4AT :Q A77E7 TO T4E 1Q EUALS ;Q OR 6AXI6U6 RATE ALLOE7 UN7ER RA = CASE : - the a+*n$trat%e r()n&$ o, pre%o($ #o**$$oner$ are not #on#)($%e an+ bn+n& (pon ther $(##e$$or$ - an n#(*bent #o**$$oner *a" REVOKE' REVERSE' OR ABROGATE T4E ACTS OR RULING O8 4IS PRE7ECESSORS IN O88ICE I8 4E BECO6ES CONVICE7  T4AT A STATUTE ARRANTS A 7I88ERENT CONSTRUCTION ?4ILA7O VS CIIR@ - the prn#p)e $' $(b.e#t to the non retroat%t" r()e $ho()+ t appear that the r()n re%er$n& a pre%o($ r()n& o, ,or*er #o**$$oner $ pre.(+#a) to the taxpa"er p(r$(ant to $e# :=D o, Tax Co+e TAX TREATIES AND ITNERNATIONAL AGREEMENTS - a)$o #on$tt(te an *portant $o(r#e o, tax )a! - tax teate$ or+nar)" #o*prehen+ t!o ob.e#t%e$ 0 LEGISLATIVE ADOPTION OF TAX RULINGS Prn#p)e o, )e&$)at%e appro%a) nterpretaton thro(&h ena#t*ent - o, an a+*n$trat%e 4ERE A STATUTE IS SUSCEPTIBLE O8 T4E 6EANING PLACE7 UPON IT B5 A RULING O8 A GOVERN6ENT AGENC5 C4ARGE7 IT4 ITS EN8ORCE6ENT AN7 T4E LEGISLATURE T4EREA8TER REENACTS T4E PROVS I4TOUT SUBSANTIAL C4ANGE' SUC4 ACTION IS TO = 6ran+a' C)ar$$e Ann o to a%o+ +o(b)e taxaton ?ESPECIALL5 IN CASES 4ERE T4E ICO6E IS TAXE7 TICE@ one b" #o(ntr" !here the n#o*e $ earne+ an+ another b" #o(ntr" !here $(b.e#t o, taxaton $ ether a #t2en or re$+ent ?#o(ntr" o, re$+en#e@ => o - to e)*nate or *n*2e tax e%a$on thro(&h a+opton o, the ex#han&e o, n,or*aton $#he*e !hereb" the $&nator" #o(ntre$ to the treat" (n+ertake to ,(rn$h ea#h other on a *(t(a) ba$$ n,or*aton on taxab)e n#o*e an+or a#t%te$ o, an" o, ther natona)$ or re$+ent$ T4E P4ILIPPINES 4AS ENTERE7 INTO A NU6BER O8  TAX TREATIES' NTOABLE O8 4IC4 ARE T4OSE IT4 EUROPEAN COUNTRIES' the US' ASEAN' or So(thea$t A$an naton$ )ke IN7ONESIA SINGapore' 6AKA5SIA an+ other$ CIR %$ John$on an+ Son - - - => the p(rpo$e o, the$e nternatona) a&ree*ent$ $ to re#on#)e the natona) /$#a) )e&$)aton$ o, the #ontra#tn& parte$ n or+er to he)p the taxpa"er a%o+ $*()taneo($ taxaton n t!o +Herent .(r$+#ton$ Tax #on%enton$ are +ra,te+ !th a %e! to!ar+$ the e)*naton o, $&era&$oa- =.r$!$a- !o."-e &a'a&$o INTERNATIONAL JURIDICAL DOUBLE TAXATION 1 *po$ton o, #o*parab)e taxe$ n t!o or *ore $tate$ on $a*e taxpa"er n re$pe#t o, the $a*e $(b.e#t *atter an+ ,or +ent#a) pero+$ - RATIONALE ) eo.ra3e %ree o* o% 3oo!# a! #er0$e# a! &he /o0e/e& o% a+$&a-, &eho-o3y a! +er#o# "e&*ee o.&r$e#, o!$&$o# !ee/e! 0$&a- $ rea&$3 ro".#& a! !ya/$ eoo/$e# - 8ore&n n%e$t*ent$ ILL ONL T4RIVE n a ,ar)" pre+#tab)e an+ rea$onab)e nternatona) n%e$t*ent #)*ate an+ prote#ton a&an$t +o(b)e taxaton $ #r(#a) n #reatn& $(#h a #)*ate - Con$tt(ton re(re$ the #on#(rrn& %ote o, at )ea$t :; o, a)) *e*ber$ o, Senate ,or %a)+t" an+ eHe#t%t" - SC 0 )e$$ ,or*a) t"pe$ o, nternatona) a&ree*ent$ *a" eb entere+ nto b" the Che, exe#(t%e an+ b#o*e bn+n& !tho(t the #on#(rre#n#e o, )e&$)at%e bo+" CASE 0 4o$t a&ree*ent o, J()" :: 11' bet!een the Ph)ppne$ an+ the 4O (n+er !h#h 4O $ exe*pt ,ro* n+re#t taxe$ re)at%e to the on$tr(#ton o, t$ re&ona) hea+(arter$ b()+n& n the Ph)ppne$ #o*e$ !thn the )atter #ate&or"9 COURT 0 $a+ a&ree*ent $ VALI7 an+ IN7ING a&ree*ent e%en !tho(t the #on#(rren#e o, $enate Chapter   TAX A76INISTRATION AN7 EN8ORCE6ENT A3e$e# I0o-0e! $ Ta' A!/$$#&ra&$o - a&en#e$ o, Go%ern*ent !h#h are n%o)%+ n tax )a! en,or#e*ent or tax a+*n$traton are the B(rea( o,  Interna Re%en(e an+ B(rea( o, C($to*$ ,or nterna) re%en(e an+ #($to*$ )a! en,or#e*ent - Pro%n#a)' #t" an+ *(n#pa) a$$e$$or$ an+ trea$(rer$ ,or )o#a) an+ rea) propert" taxe$  TAXATION SURVIVAL KIT – Aban Book - COURTS are not part o, a+*n$trat%e pro#e$$ b(t n the tax *)e( the" +o p)a" an *portant ro)e $n#e $o(n+ tax a+*n$traton *($t *o%e a)on& the #orre#t nterpretaton o, tax )a!$ o B.rea. o% I&era- Re0e.e - - - - - o##(p"n& ,ore,ront tax )a! en,or#e*ent $ the BIR' !h#h $ ta$ke+ !th #o))e#ton o, $(b$tanta) a*o(nt o,  re%en(e ,ro #o(ntr" an+ $ (n+er $(per%$on an+ #ontro) o, 7epart*ent o, 8nan#e BIR $ha)) ha%e a #he, to be kno!n a$ Co**$$oner o,  Interna) Re%en(e' re,erre+ to a$ Co**$$oner an+ ,o(r a$$$tant #he,$ to be kno!n a$ 7ep(t" Co**$$oner$ Ea#h 7ep(t" Co**$$oner$ re$pe#t%e)" hea+$ o, 0 1; A$$$tant Co**$$oner$ o, +Herent $er%#e$  po)#" an+ p)annn& $er%#e  en,or#e*ent $er%#e  )ar&e taxpa"er$ $er%#e  n,or*aton $"$te*$ operaton$ $er%#e  n,or*aton p)annn& an+ (a)t" $er%#e  n,or*aton $"$te*$ +e%e)op*ent $er%#e  taxpa"er$ a$$$tan#e $er%#e  a$$e$$*ent $er%#e  #o))e#ton $er%#e  )e&a) $er%#e  n$pe#ton $er%#e h(*an re$o(r#e$ +e%e)op*ent $er%#e o In,or*aton S"$te*$ Gro(p  o Operaton$ Gro(p  o Le&a) an+ In$pe#ton Gro(p o Re$o(r#e *ana&e*ent Gro(p !h)e Re%e! an+ E%a)(aton Gro(p $ p)a#e+ +re#t)" (n+er O#e o, Co**$$oner - /nan#a) an+ a+*n$trat%e $er%#e Con$tt(te the /r$t$enor )e%e) o,  a+*n$trat%e a(thort" Se#on+*++)e *ana&e*ent )e%e) o, a+*n$trat%e o#er$ $ #o*po$e+ o, 0 o 7%$on #he,$ hea+n& ea#h o, %aro($ +%$on ,a))n& (n+er *a.or $er%#e to !t0 Toðer !th 0  = 6ran+a' C)ar$$e Ann P)annn& <  6ana&e*ent  S"$te*$ +e%e)op*ent  Stat$t#$  S"$te*$ *antenan#e an+ $(pport  Corporate Co**(n#aton$   Taxpa"er n,or*aton an+ e+(#aton   Taxpa"er $er%#e pro&ra* an+ *ontorn&   Po)#" Ca$e$  A$$e$$*ent pro&ra*  Lar&e Taxpa"er$ A(+t an+ In%e$t&aton  A(+r n,or*aton an+ tax exe*pton  Lar&e taxpa"er$ A(+t an+ In%e$t&aton  A$$et %a)(aton  thho)+n& tax  Re%en(e an+ a##o(ntn&  Co))e#ton en,ore#e*ent  Appe))ate    Lar&e – Taxpa"er$ +o#(*entar" pro#e$$n& an+ (a)t" a$$(ran#e Lar&e taxpa"er$ /e)+ operaton$ Lar&e taxpa"er$ en,or#e*ent #o))e#ton an+  Lar&e taxpa"er$ a$$$tan#e  Lt&aton  Lar&e taxpa"er$ pro&ra*$  Pro$e#(ton  S"$te*$ operaton$  Internatona) tax aHar$  S"$te*$ $(pport  Interna) $e#(rt"  Se#(rt" *ana&e*ent  Interna) a(+t  (a)t" a$$(ran#e  Per$onne) n(r"  Per$onne) trann& *ana&e*ent  <  Tax 8ra(+ S"$te*$ $tan+ar+ *ana&e*ent an+ te#hno)o&"  TAXATION SURVIVAL KIT – Aban Book  - -  Trann& +e)%er" AGENTS AND DEPUTIES FOR COLLECTION OF NATIONAL INTERNAL REVENUE TAXES  6e+#a)+enta)  8nan#a) an+ a+*n$trat%e  B(+&et  Genera) $er%#e$  A##o(ntn&  Pro#(re*ent  A##o(ntab)e ,or*$  Per$onne) *ana&e*ent $er%#e$ 19 Co**$$oner o, C($to*$ an+ h$ $(bor+nate$ !th re$pe#t to the #o))e#ton o, natona) nterna) re%en(e taxe$ on *porte+ &oo+$ :9 The hea+ o, approprate &o%ern*ent o#e an+ h$ $(bor+nate$ !th re$pe#t to the #o))e#ton o, ener&" tax BIR $ )ar&e)" +e#entra)2e+ n that &reat extent o, tax en,or#e*ent +(te$ are +e)e&ate+ to the Te&ona) 7re#tor$ an+ Re%en(e 7$tr#t O#er$ At PRESENT 0 o Se#ton 1: o, 1 NIRC' the ,o))o!n& are #on$tt(te+ a$ a&ent$ o, Co**$$oner 0 ;9 Bank$ +()" a##re+te+ b" Co**$oner !th re$pe#t to re#ept o, pa"*ent$ o, nterna) re%en(e taxe$ a(thor2e+ to be *a+e thro(&h bank$ An" o#er or e*p)o"ee o, an a(thor2e+ a&ent bank a$$&ne+ to re#e%e nterna) re%en(e tax pa"*ent an+ tran$*t tax ret(rn or +o#(*ent$ to BIR $ha)) be $(b.e#t to $a*e $an#ton$ an+ pena)te$ pre$#rbe+ n Se#ton$ :D – :< o, Tax Co+e 1 re%en(e re&on$ a)) o%er #o(ntr" Po*er# a! D.&$e# o% B.rea. o% I&era- Re0e.e o o o ea#h re%en(e re&on ben& hea+e+ b" re&ona) +re#tor 11 re%en(e +$tr#t o#e$ re%en(e +$tr#t o#er ea#h (n+er a 8RONT LINERS O8 BIR 0 rank an+ /)e re%en(e en,or#e*ent o#er$' *ore #o**on)" kno!n a$ exa*ner$' n%e$t&ator$ an+ a&ent$ an+ o,  #o(r$e the n(*ero($ #)erk$ an+ other $(pport per$onne) 1 6ran+a' C)ar$$e Ann  The po!er$ an+ +(te$ o, BIR #o*prehen+ the ,o))o!n& 0 19 A$$e$$*ent an+ #o))e#ton o, a)) natona) nterna) re%en(e taxe$' ,ee$ an+ #har&e$ :9 En,or#e*ent o, a)) ,or,et(re$' pena)te$ an+ /ne$ #onne#te+ there!th ;9 Exe#(ton o, .(+&e*ent n a)) #a$e$ +e#+e+ n t$ ,a%or b" CTA an+ or+nar" #o(rt$ : =9 EHe#tn& an+ a+*n$tern& the $(per%$or" an+ po)#e po!er$ #on,erre+ to t b" tax #o+e or other )a!$ - POWER AND DUTY OF COMMISSIONER TO INTERPRET TAX LAWS AND TO DECIDE TAX CASES SEC2 @2 Po*er o% &he Co//$##$oer &o I&er+re& Ta' La*# a! &o De$!e Ta' Ca#e#2  - The po!er to nterpret the pro%$on$ o, th$ Co+e an+ other tax )a!$ $ha)) be (n+er the ex#)($%e an+ or&na) .(r$+#ton o, the Co**$$oner' $(b.e#t to re%e! b" the Se#retar" o, 8nan#e9  The po!er to +e#+e +$p(te+ a$$e$$*ent$' re,(n+$ o,  nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto' or other *atter$ ar$n& (n+er th$ Co+e or other )a!$ or porton$ thereo, a+*n$tere+ b" the B(rea( o, Interna) Re%en(e $ %e$te+ n the Co**$$oner' $(b.e#t to the ex#)($%e appe))ate .(r$+#ton o, the Co(rt o, Tax Appea)$9 7$p(te+ a$$e$$*ent – a tax a$$e$$*ent that $ a+*n$trat%e)" prote$te+ !thn ;< +a"$ ,ro* +ate the taxpa"er re#e%e+ the a$$e$$*ent - - n#)(+e$ prote$te+ a$$e$$*ent$ !heren the a+*n$trat%e prote$t $ +ene+ n !ho)e or n part or $ NOT ACTE7 (pon b" BIR !thn one h(n+re+ e&ht" +a"$ ,ro* $(b*$$on o, a)) re(re+ +o#(*entar" e%+en#e taxpa"er a+%er$e)" aHe#te+ b" +e#$on or na#ton appea)e+ the $a*e to CTA !thn ;< +a"$ ,ro* re#ept o, +e#$on' or ,ro* )ap$e o, 1>< +a" pero+ Pen+n& appea)' $(#h a$$e$$*ent$ $ha) #ontn(e to be #on$+ere+ a$ a +$p(te+ a$$e$$*ent APELLATE JURISDICTION OF COURT OF TAX APPEALS : - - CTA $ha)) ha%e ex#)($%e appe))ate .(r$+#ton o%er appea)$ *a+e b" taxpa"er$ a+%er$e)" aHe#te+ b" the +e#$on or na#ton o, Co**$$oner on a+*n$trat%e prote$t$ a&an$t a$$e$$*ent$' #)a*$ ,or re,(n+ or tax #re+t o, nterna) re%en(e taxe$' ,ee$ or other #har&e$' pena)te$ *po$e+ n re)aton thereto' or other *atter$ ar$n& (n+er tax #o+e or other )a!$ or porton$ thereo,  a+*n$tere+ b" BIR The +e#$on$ o, Co**$$oner on prote$t$ /)e+ a&an$t a$$e$$*ent$ $$(e+ to +epart*ent$' b(rea($' o#e$ ' a&en#e$ an+ n$tr(*enta)te$ o, Natona) Go%ern*ent' n#)(+n& &o%ern*ent o!ne+ or #ontro))e+ #orporaton$' the appea)$' p(r$(ant to Se#$ DDD'D'D>'D'< o, RAC o, 1>9 Sha)) be $(b*tte+ to an+ $ett)e+ or a+.(+#ate+ b" So)#tor Genera) or Se# o, J($t#e a$ #a$e *a" be 7e#$on o, Se#retar" o, J($t#e a$ !e)) a$ that o,  So)#ot Genera)' !hen appro%e+ b" Se# o, J($t#e ' $ha)) be /na) an+ bn+n& (pon parte$ APPEALS' *a" ho!e%er be taken to the Pre$+ent !hen a*o(nt n%o)%e+ EXCEE7S ONE 6ILLION PESOS9 7e#$on o, pre$+ent S4ALL BE 8INAL9 RULES OF NO ESTOPPEL AGAINST THE GOVERNMENT - - n per,or*an#e o, t$ &o%ern*enta) ,(n#ton$' the $tate #annot be e$toppe+ b" ne&)e#t o, t$ a&ent$ an+ o#er$ no!here $ th$ *ore tr(e than n /e)+ o, taxaton SC n CIR %$ ABA7 0 !here a BIR +enat(raton #o**ttee *ake$ a ,a%orab)e /n+n& that a)#oho) ha$ been $(tab)" +enat(re+ an+' there,ore $ exe*pt ,ro* $pe#/# tax' $a+ /n+n& *a" be +$re&ar+e+ b" a $(b$e(ent BIR n$pe#ton tea* I, t appear$ that $#h a)#oho) !a$ *proper)" +enat(re+ an+' hen#e $(b.e#t to tax E$toppe) +oe$ not app)" to pre#)(+e the $(b$e(ent /n+n&$ on taxab)t"  TAXATION SURVIVAL KIT – Aban Book - RULE O8 ESTOPPEL CANNOT BE INVOKE7 B5 A  TAXPA5ER IN OR7ER TO PRECLU7E COLLECTION O8  TAXES T4AT ARE RIG48ULL5 UNAUT4ROIE7 PRONOUNCE6ENTS ON A TAXPA5ER3S TAX LIABILITIES9 - COURT 0 e%en , $a+ a&ent$ !ere $o a(thor2e+' ther reo**en+aton$ are a)!a"$ $(b.e#t to the re%e! o,  ther $(peror$ !ho *a" be #o(nter*an+ or ar* the* - GOVERN6ENT IS NEVER STOPPE7 TO COLLECT LEGITI6ATE TAXES BECAUSE O8 ERROR CO66ITTE7 B5 ITS AGENTS A 8AVORABLE 8INI7NG OR POSITION TAKEN B5 BIR IN AN INVESTIGATION INVOLVING A PARTICULAR TAXPA5ER S4OUL7 NOT BE A GROUN7 8OR ACCOR7ING T4E SA6E TREAT6ENT  TO A 7I88ERENT TAXPA5ER IN ANOT4ER INVESTIGATION I8 IN  T4AT PREVIOUS INVESTIGATION ERROR AS CO66ITTE79 - Go%ern*ent $ NOT BOUN7 b" error$ #o**tte+ b" t$ a&ent$ n pre%o($ n%e$t&aton$ an+ a$$e$$*ent$ - SC 0 BIR $ho()+ not be a))o!e+ to +e,eat an other!$e %a)+ #)a* ,or re,(n+ b" ra$n& (e$ton o, !thho)+n& a&ent3$ a))e&e+ n#apa#t" to /)e #)a* ,or re,(n+ ,or /r$t t*e on appea)9 COURT 0 Go%ern*ent *($t ,o))o! $a*e r()e$ o, pro#e+(re !h#h bn+ pr%ate parte$ In #a$e n%o)%n& a #)a* ,o re,(n+ o, a))e&e+)" o%erpa+ taxe$' the Go%ern*ent !a$ bere,t o, an" ,at(a) ba$$ to oppo$e $(#h #)a* an+ pre$ent e%+en#e t +$p(te the $a*e - PRINCIPLE IN TAX LA EN8ORCE6ENT IS 0 Go%ern*ent $ not e$toppe+ b" *$take$ or error$ o, t$ a&ent$ - erroneo($ app)#aton an+ en,or#e*ent o, )a! b" p(b)# o#er$ +o not b)o#k $(b$e(ent #orre#t app)#aton o, $tat(te$ ESTOPPEL 7OES NOT APPL5 TO 7EPRIVE GOVERN6ENT O8 ITS RIG4T TO RAISE 7E8ENSES - e%en , tho$e +e,en$e$ are ben& ra$e+ on)" ,or /r$t t*e on appea) Pro#ter an+ Ga*b)e #a$e 0 n%o)%n& re,(n+ o, a))e&e+ o%er !thhe)+ /na) !hto)+n& tax on +%+en+$ pa+ o(t to a non re$+ent ,ore&n #ororaton ; 6ran+a' C)ar$$e Ann the +e,en$e o, Go%ern*ent a&an$t the #)a* ,or re,(n+ to eHe#t a *ere !thho)+n& a&ent $ NOT proper part" that $ho()+ #)a* $(#h re,(n+ AS NOT NTERPOSE7 b" &o%ern*ent n )o!er #o(rt b(t !a$ ra$e+ on)" ,or /r$t t*e on appea) BECAUSE o, +e)a" an+ na#ton o, a +%$on n BIR to $(b*t the #orre$pon+n& report on n%e$t&aton Go%ern*ent $ NOT +epr%e+ o, t$ r&ht to /)e *oton ,or re#on$+eraton a&an$t a +e#$on o, CTA a))o!n& re,(n+ n (e$ton GOVERN6ENT IS NOT ESTOPPE7 B5 T4E 6ISTAKES OR NEGLIGENCE O8 ITS O88ICIALS AN7 E6PLO5EEES COURT 0 CIR VS CA - Go%ern*ent $ NOT ESTOPPE7 ,ro* #o))e#tn& taxe$ )e&a))" +(e be#a($e o, *$take$ or error$ o, t$ a&ent$ - T4IS A76ITS EXCEPTIONS IN INTEREST O8 JUSTICE AN7 8AIR PLA5 ' AS 4ERE INJUSTCIE ILL RESULT TO  TAXPA5ER - T4IS COURT IS 6IN78UL O8 T4E ELL ENTRENC4E7 PRINCIPLE T4AT T4E GOVERN6ENT IS NEVER ESTOPPE7 8RO6 COLLECTING TAXES BECAUSE O8 6SITAKES OR ERRORS ON PART O8 ITS AGENTS BUT  T4IS RULE A76ITS O8 EXCEPTIONS IN INTEREST O8  JSUTICE AN7 8AIR PLA59 = IS THERE ESTOPPEL AGAINST TAXPAYER( - not ne#e$$ar)" tr(e n #a$e o, taxpa"er taxpa"er *a+e $e%era) re(e$t$ ,or ren%e$t&aton o,  t$ tax )ab)te$ $(#h that the &o%ern*ent' a##e+n& to taxpa"er3$ re(e$t' po$tpone+ the #o))e#ton o, t$ )ab)t" - TAXPA5ER CANNOT LATER ON BE PER6ITTE7 TO RAISE  T4E 7E8ENSE O8 PRESCRIPTION INAS6UC4 AS 4IS PREVIOUS REUESTS 8OR REINVESTIGATION 4AVE T4E E88ECT O8 PLACING 4I6 IN ESTOPPEL NATURE AND 19 INA7EUATE RECOR7S AS A PREREUISITE a9 hene%er no *etho+ o, a##o(ntn& $ e*p)o"e+ b" taxpa"er or b9 !hen the *etho+ +oe$ not #)ear)" reFe#t tr(e n#o*e #9 the Co**$$oner $ a(thor2e+ to re$ort to an" *etho+ !h#h n h$ opnon +oe$ reFe#t the #orre#t n#o*e9 9 Th$ *etho+ o, n#o*e +eter*naton *a" be ($e+ !hen taxpa"er ha$ 0 9 no book$ o, a##o(nt$' or 9 !hen $(#h book$ an+ re#or+ are not a%a)ab)e ,or exa*naton' or !here the book$ are n#o*p)ete an+ na+e(ate %9 GOVERNE6ENT *a" be ,or#e+ to re$ort to the net !orth *etho+ o, proo, !here the ,e! re#or+$ o, taxpa"er !ere +e$tro"e+9 %9 To re(re *ore #o()+ be tanta*o(nt to ho)+n& that $k)),() #on#ea)*ent $ an ne%tab)e barrer to proo,9 :9 NEE7 8OR EVI7ENCE O8 T4E SOURCE O8 INCO6E a9 In a)) )ea+n& #a$e$ on th$ *atter' #o(rt$ are (nan*o($ n ho)+n& that !hen tax #a$e$ n #%) n nat(re' +re#t proo, o, $o(r#e$ o, n#o*e $ NOT ESSENTIAL b9 Go%ern*ent $ NOT REUIRE7 TO ENGATE a)) po$$b)e non taxab)e $o(r#e$ o, he a))e&e+ net !orth n#rea$e$ #9 Proo,$ o, )oan$' &,t$' be(e$t' nhertan#e an+ the )ke nee+ not be a++(#e+ n e%+en#e b" the Go%ern*ent +9 B(r+en o, proo, $ (pon the taxpa"er to $ho! that h$ net !orth n#rea$e !a$ +er%e+ ,ro* non – taxab)e $o(r#e$9 e9 SC 0 n #%) #a$e$ ' the a$$e$$or nee+ not pro%e $pe#/# $o(r#e o, n#o*e ,9 BASIC ASSU6PTION 0 *o$t a$$et$ are +er%e+ ,ro* a taxab)e $o(r#e an+ that !hen th$ $ not > tr(e' the taxpa"er $ n a po$ton to exp)an the +$#repan#" &9 4OEVER' !hen a taxpa"er $ #r*na))" pro$e#(te+ ,or tax e%a$on' the nee+ ,or e%+en#e o, a )ke)" $o(r#e o, n#o*e be#o*e$ a prere($te ,or a $(##e$$,() pro$e#(ton h9 BUR7EN O8 PROO8 n #r*na) #a$e 0 a)!a"$ !th Go%ern*ent 9 In#(*bent (pon re%en(e a&ent$ to ne&ate a)) po$$b)e $o(r#e$ o, non-taxab)e re#ept$ n a++ton to a++(#n& e%+en#e$ to $at$," a)) other three #on+ton$  .9 Con%#ton n $(#h #a$e$' a$ n an" #r*na) #a$e' re$t$ on proo, be"on+ rea$onab)e +o(bt9 ;9 A 7E8INITE STARTING POINT OR OPENING NET ORT4 a9 Th$ $ an e$$enta) #on+ton' #on$+ere+ to eb the #orner$tone o, a net !orth #a$e b9 I8 $tartn& pont or openn& net !orth 0 PROVEN  TO BE RONG' the !ho)e $(per$tr(#t(re ($(a))" ,a)$ #9 The #o(rt$ ha%e (n,or*)" $tre$$e+ 0 %a)+t" o,  re$()t o, an" n%e$t&aton (n+er th$ *etho+ !)) +epen+ entre)" (pon a #orre#t openn& net !orth d. Where the CIR used as part of the opening net  worth the small bank deposit of taxpayer at the beginning of year !"#$ e. and taxpayer presents in %ourt the in%ome tax  return for !#" of his wife to show that his wife made a gain prior to that period$ f. and that therefore he had opening net worth bigger than that used by the Commissioner$ g. &ut said return does not %ontain any detail to indi%ate how alleged gain was used$ in'ested or  deposited$ h2 HELD ) -o*er o.r& *a# orre& $ o#$!er$3 #a$! re&.r a# #e-% #er0$3 #&a&e/e& a! $ 3$0$3 o re!ee &o &he  TAXATION SURVIVAL KIT – Aban Book a--e3e! e'$#&ee o% a "$33er o+e$3 e& *or&h orre#+o!$3 &o #a$! #.++o#e! 3a$ o% &he *$%e $2 4ERE A TAXPA5ER CLAI6S A BIG OPENING NET ORT4' T4E EVI7ENCE SUPPORTING IT 6UST BOT4 BE CO6PETENT AN7 TRUSTORT45 @2 PROPERA7JUST6ENTS TO CON8OR6 IT4 INCO6E  TAX LAS a2 Proper a+.($t*ent$ ,or non-+e+(##tb)e te*$ *($t be *a+e "2 Un+er th$ #ate&or" are0 $2 Per$ona) $$2 L%n& or ,a*)" expen$e$ $$$2 Pre*(*$ pa+ on an" ),e n$(ran#e po)#" $02 Lo$$e$ ,ro* $a)e$ or ex#han&e$ o,  propert" bet!een *e*ber$ o, ,a*)" 02 In#o*e taxe$ pa+ 0$2 E$tate 0$$2 Inhertan#e 0$$$2 G,t taxe$ $'2 Other non +(#tb)e tax$ '2 E)e#ton expen$e$ an+ other expen$e$ a&an$t p(b)# po)#" '$2 Non +e+(#tb)e #ontrb(ton$ '$$2 G,t$ to other$ '$$$2 Net #apta) )o$$ '$02 An+ the )ke 2  T4ERE 6UST BE A77E7 TO T4E INCREASE OR 7ECREASE IN NET ORT4 a$ #a$e *a" be !2 Non taxab)e te*$ $ho()+ be +e+(#te+ there,ro*9 e2  The$e te*$ are ne#e$$ar" a+.($t*ent$ to a%o+ the n#)($on o, !hat other!$e are non- taxab)e re#ept$ %2  The" are 0 $2 Inhertan#e $$2 G,t$ $$$2 Be(e$t$ re#e%e+ $02 Non taxab)e #apta) &an$  6ran+a' C)ar$$e Ann 02 0$2 0$$2 0$$$2 32 h2 $2  =2 2 -2 Co*pen$aton ,or n.(re$ or $#kne$$ Pro#ee+$ o, ),e n$(ran#e po)#e$ S!eep$take$ !nnn&$ Intere$t o &o%ern*ent $e#(rte$ an+ the )ke CASE 0 ONE 4AL8 O8 T4E LONG TER6 CAPITAL GAINS 8RO6 T4E SALE O8 CAPITAL ASSETS AN7 7EPRECIATION O8 RENTAL PROEPRTIES ERE 7E7UCTE7 B5 COURT 8RO6 INCREASE IN NET ORT4 A$ to )oan$' *portant to #on$+er that ora) te$t*on" o, #re+tor to pro%e a +ebt' a$ a r()e $ INSU88ICIENT 8OR PURPOSES O8 INCO6E TAX LA COURT0 a )oan !a$ not pro%en to ex$t !here the book$ o, taxpa"er ,a)e+ to $ho! $(#h )oan an+ !here no re#ept$ or other e%+en#e !ere a+%an#e+ to pro%e the )oan In#rea$e$ n net !orth are not taxab)e , the" are $ho!n not to be the re$()t o, (nreporte+ n#o*e b(t to be *ere)" the re$()t o, #orre#ton o,  error$ n taxpa"er3$ entre$ n book$ re)atn& to t$ n+ebte+ne$$ to #ertan #re+tor$' erroneo($)" )$te+ a)tho(&h a)rea+" pa+ COURT 0 the %er" nat(re o, )oan tran$a#ton$ bet!een n+%+(a)$ $(#h tran$a#ton$ are ea$)" #on#ote+ e$pe#a))" bet!een ,ren+$ an+ re)at%e$' $o that pro*$$or" note$ %a)e$ #he#k$ an+ other $*)ar +o#(*ent' n the ab$en#e o,  other re)e%ant e%+en#e +e$er%e $#ant #on$+eraton In or+er 0 $(#h tran$a#ton$ *a" be #on$+ere+' ther ex$ten#e *($t be pro%e+ b" #)ear an+ #on%n#n& e%+en#e n+epen+ent o, pro*$$or" note$' %a)e$ #he#k$ or $*)ar +o#(*ent$ ENFORCEMENT OF FORFEITURES AND PENALTIES D<  The #o**$$oner3$ po!er$ are not on)" )*te+ to a$$e$$*ent an+ #o))e#ton o, taxe$ b(t the" a)$o exten+ to en,or#e*ent o, ,or,et(re$' pena)te$ an+ /ne$9 In #a$e o, %o)aton$ #o**tte+ a&an$t the pro%$on$ o, Tt)e VI o, tax #o+e on ex#$e taxe$' - a$ n #a$e$ !here pro+(#t$ $(b.e#t to ex#$e taxe$ )ke #&arette$ an+ a)#oho)# pro+(#t$ - are re*o%e+ ,ro* p)a#e o, pro+(#ton - !tho(t pa"*ent o, $(#h taxe$' or - !here $(#h art#)e$ are *porte+ BUT ARE RE6OVE7 8RO6 CUSTO6S CUSTO75 IT4OUT T4E PA6ENT O8 SUC4 TAXES - CO66ISIONER IS AU4TORIE7 TO INSTITUTE T4E NECESSAR5 ACTION 8OR T4E CON8ISCATION AN7 8OR8EITURE O8 PROCEE7S O8 CRI6E OR VALUE O8 GOO7S' AN7 T4E INSTRU6ENTS OR TOOLS IT4 4IC4 T4E CRI6E AS CO66ITTE7 NO A$ to en,or#e*ent o, /ne$ an+ pena)te$' Se#ton :; 0 - a(thor2e$ Co**$$oner to re#o**en+ the /)n& o, a #r*na) a#ton ,or the #o))e#ton o, nterna) re%en(e taxe$' ,ee$ an+ #har&e$ Se#ton ::10 - *ore pena)te$ an+ ,or,et(re$ !)) be +$#($$e+ n a )ater porton o, th$ #hapter ACTUAL PRACTICE 0 CO66ISSIONER RECO66EN7S TO T4E STATE' CIT5 OR PROVINCIAL PROSECUTOR T4E 8ILING O8 CRI6INAL ACTION AGIANST TAXPA5ER SUPERVISORY AND POLICE POWERS OF THE BIR - D< po!er o, $(per%$on to n$(re eHe#t%e #o*p)an#e !th $tat(tor" re(re*ent$ Se#ton 1: 0 IR ha$ a(thort" to $(per%$e e$tab)$h*ent$ !here art#)e$ $(b.e#t to ex#$e tax )ke a)#oho) an+ toba##o pro+(#t$ are $tore+ - POLICE POER 0 Tax Co+e e*po!er$ the Co**$$oner' h$ +ep(te$' re&ona) +re#tor$' re%en(e +$tr#t o#er$ an+ other nterna) re%en(e o#er$ to *ake arre$t$ an+ $e2(re$ ,or the %o)aton o, an" pena) )a! or re&()aton a+*n$tere+ b" BIR AUTHORITY OF COMMISSIONER TO DELEGATE POWER Se&$o , 4 NIRC SEC2 2A.&hor$&y o% &he Co//$##$oer &o De-e3a&e Po*er2  - The Co**$$oner *a" +e)e&ate the po!er$ %e$te+ n h* (n+er the pertnent pro%$on$ o, th$ Co+e to an" or $(#h $(bor+nate o#a)$ !th the rank e(%a)ent to a +%$on #he, or h&her' $(b.e#t to $(#h )*taton$ an+ re$tr#ton$ a$ *a" be *po$e+ (n+er r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner0 Pro%+e+' ho!e%er'  That the ,o))o!n& po!er$ o, the Co**$$oner $ha)) not be +e)e&ate+0 ?a@ The po!er to re#o**en+ the pro*()&aton o, r()e$ an+ re&()aton$ b" the Se#retar" o, 8nan#eM ?b@ The po!er to $$(e r()n&$ o, /r$t *pre$$on or to re%er$e' re%oke or *o+," an" ex$tn& r()n& o, the B(rea(M ?#@ The po!er to #o*pro*$e or abate' (n+er Se#9 :<= ?A@ an+ ?B@ o, th$ Co+e' an" tax )ab)t"0 Pro%+e+' ho!e%er' That a$$e$$*ent$ $$(e+ b" the re&ona) o#e$ n%o)%n& ba$# +e/#en#" taxe$ o, 8%e h(n+re+ tho($an+ pe$o$ ?P<<'<<<@ or )e$$' an+ *nor #r*na) %o)aton$' a$ *a" be +eter*ne+ b" r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, /nan#e' (pon re#o**en+aton o, the Co**$$oner' +$#o%ere+ b" re&ona) an+ +$tr#t o#a)$' *a" be #o*pro*$e+ b" a re&ona) e%a)(aton boar+ !h#h $ha)) be #o*po$e+ o, the Re&ona) 7re#tor a$ Char*an' the  TAXATION SURVIVAL KIT – Aban Book A$$$tant Re&ona) 7re#tor' the hea+$ o, the Le&a)' A$$e$$*ent an+ Co))e#ton 7%$on$ an+ the Re%en(e 7$tr#t O#er ha%n& .(r$+#ton o%er the taxpa"er' a$ *e*ber$M an+ ?+@ The po!er to a$$&n or rea$$&n nterna) re%en(e o#er$ to e$tab)$h*ent$ !here art#)e$ $(b.e#t to ex#$e tax are pro+(#e+ or kept9 REPUBLIC 0# HION ) - $(b.e#t #o*p)ant ,or #o))e#ton o, a tax +e/#en#" !a$ +()" /)e+ (pon a(thort" o, Co**$$oner b" the then BIR Co**$$oner - +e$pte the ,a#t that t !a$ not $&ne+ b" the then BIR #o**$$oner' n #o*p)an#e !th Se#ton :1' !h#h !a$ *p)e*ente+ b" RAO ->; POWERS AND DUTIES OF THE REGIONAL DIRECTOR 19 I*p)e*ent )a!$' po)#e$' p)an$' pro&ra*$' r()e$ an+ re&()aton$ o, the +epart*ent n re&ona) area :9 A+*n$ter an+ en,or#e nterna) re%en(e )a!$ an+ r()e$ an+ re&()aton$' n#)(+n& the a$$e$$*ent an+ #o))e#ton o, a)) nterna) re%en(e taxe$' #har&e$ an+ ,ee$ ;9 I$$(e )etter$ o, a(thort" ,or exa*naton o, taxpa"er$ !thn the re&on =9 Pro%+e e#ono*#a)' e#ent an+ eHe#t%e $er%#e to the peop)e n the area 9 Coor+nate !th re&ona) o#e$ or other +epart*ent$' b(rear($ an+ a&en#e$ n area D9 Coor+nate !th )o#a) &o%ern*ent (nt$ n area 9 Exer#$e #ontro) an+ $(per%$on o%er the o#er$ an+ e*p)o"ee$ !thn the re&on >9 Per,or* $(#h other ,(n#ton$ a$ *a" be pro%+e+ b" )a! an+ a$ *a" be +e)e&ate+ b" Co**$$oner D1 6ran+a' C)ar$$e Ann DUTIES OF REVENUE DISTRICT OFFICERS AND OTHER INTERNAL REVENUE OFFICERS SEC2 442 D.&$e# o% Re0e.e D$#&r$& Oer# a! O&her I&era- Re0e.e Oer#2 - It $ha)) be the +(t" o, e%er" Re%en(e 7$tr#t O#er or other nterna) re%en(e o#er$ an+ e*p)o"ee$ to en$(re that a)) )a!$' an+ r()e$ an+ re&()aton$ aHe#tn& natona) nterna) re%en(e are ,ath,())" exe#(te+ an+ #o*p)e+ !th' an+ to a+ n the pre%enton' +ete#ton an+ p(n$h*ent o, ,ra(+$ o, +e)n(en#e$ n #onne#ton there!th9 It $ha)) be the +(t" o, e%er" Re%en(e 7$tr#t O#er to exa*ne the e#en#" o, a)) o#er$ an+ e*p)o"ee$ o, the B(rea( o, Interna) Re%en(e (n+er h$ $(per%$on' an+ to report n !rtn& to the Co**$$oner' thro(&h the Re&ona) 7re#tor' an" ne&)e#t o, +(t"' n#o*peten#"' +e)n(en#"' or *a),ea$an#e n o#e o, an" nterna) re%en(e o#er o, !h#h he *a" obtan kno!)e+&e' !th a $tate*ent o, a)) the ,a#t$ an+ an" e%+en#e $($tann& ea#h #a$e9 AUTHORITY OF A REVENUE OFFICER SEC2 472 A.&hor$&y o% a Re0e.e Oer2 - S(b.e#t to the r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o,  8nan#e' (pon re#o**en+aton o, the Co**$$oner' a Re%en(e O#er a$$&ne+ to per,or* a$$e$$*ent ,(n#ton$ n an" +$tr#t *a"' p(r$(ant to a Letter o, A(thort" $$(e+ b" the Re%en(e Re&ona) 7re#tor0 19 exa*ne taxpa"er$ !thn the .(r$+#ton o, the +$tr#t n or+er to #o))e#t the #orre#t a*o(nt o, tax' :9 to re#o**en+ the a$$e$$*ent o, an" +e/#en#" tax +(e n the $a*e *anner that the $a+ a#t$ #o()+ ha%e been per,or*e+ b" the Re%en(e Re&ona) 7re#tor h*$e),9 D: Le&&er o% A.&hor$&y - re,er$ to the )etter n,or*n& a taxpa"er - that a #ertan re%en(e o#er $ a(thorte$ to exa*ne the book$ o, a##o(nt$ an+ other a##o(ntn& re#or+$ o,  - $a+ taxpa"er ,or p(rpo$e o, %er,"n& h$ tax )ab)te$ +(rn& taxab)e "ear 9 nterna) re%en(e o#er$ an+ 1<9an" other e*p)o"ee o, the B(rea( there(nto 119e$pe#a))" +ep(t2e+ b" the Co**$$oner 0 ? #ha-- ha0e &he +o*er &o a!/$$#&er oa&h# a! &o &ae &e#&$/oy $ ay o$a- /a&&er or $0e#&$3a&$o o!.&e! "y &he/ re3ar!$3 /a&&er# *$&h$ &he =.r$#!$&$o o% &he B.rea.2 Ser0$e o% &he Le&&er o% A.&hor$&y - the LA *($t be $er%e+ to the taxpa"er !thn ;< +a"$ ,ro* t$ +ate o, $$(e - other!$e' t be#o*e$ NULL AN7 VOI7 - an+ taxpa"er ha$ a)) the r&ht to re,($e t$ $er%#e SEC2 42 A.&hor$&y o% I&era- Re0e.e Oer# &o Mae Arre#&# a! Se$.re#2 – Re%en(e o#er $ha))' !thn 1:< +a"$ ,ro* +ate o, $$(an#e an+ $er%#e o, LA' #on+(#t h$ a(+t an+ $(b*t h$ report o,  n%e$t&aton9 - /na) report $ NOT CO6PELETE7 !thn 1:< +a" pero+' A PROGRESS REPORT 6UST BE SUB6ITTE7 TO T4E 4EA7 O8 AU7IT O88ICE - T4E REVALI7ATION S4ALL BE LI6ITE7 TO ONE ISSUANCE ONL5 AN7 IS ONE B5 ISSUING A NE LA SECTION 4@ ) A.&hor$&y o% Oer# &o A!/$$#&er Oa&h# a! Tae Te#&$/oy 19 :9 ;9 =9 9 The Co**$$oner' the 7ep(t" Co**$$oner$' the Re%en(e Re&ona) 7re#tor$' the Re%en(e 7$tr#t O#er$ other nterna) re%en(e o#er$ $0 a9 Sha)) ha%e a(thort" to *ake arre$t$ an+ $e2(re$ ,or the %o)aton o, an" pena) )a!' r()e or re&()aton a+*n$tere+ b" the B(rea( o, Interna) Re%en(e9 An" per$on $o arre$te+ $ha)) be ,orth!th bro(&ht be,ore a #o(rt' there to be +ea)t !th a##or+n& to )a!9 A##$3/e& o% I&era- Re0e.e Oer I0o-0e! $ E'$#e Ta' F.&$o# Se&$o 4 o% 4 NIRC )  The Co**$$oner $ha)) 0  The 0 19 :9 ;9 =9 9 D9 9 >9 D: Co**$$oner 7ep(t" Co**$$oner$ Ser%#e Che,$ A$$$tant Ser%#e Che,$ Re%en(e Re&ona) 7re#tor$ A$$$tant Re%en(e Re&ona) 7re#tor$ Che,$ an+ A$$$tant Che,$ o, 7%$on$ Re%en(e 7$tr#t O#er$ Spe#a) +ep(te$ o, the Co**$$oner 19 e*p)o"' :9 a$$&n' ;9 or rea$$&n nterna) re%en(e o#er$ a9 n%o)%e+ n ex#$e tax ,(n#ton$' a$ o,ten a$ the ex&en#e$ o, the re%en(e $er%#e *a" re(re' to e$tab)$h*ent$ or p)a#e$ !here art#)e$ $(b.e#t to ex#$e tax are pro+(#e+ or kept0 b9 7URATION O8 ASSIGN6ENT 0 That an nterna) re%en(e o#er a$$&ne+ to an" $(#h  TAXATION SURVIVAL KIT – Aban Book e$tab)$h*ent $ha)) n no #a$e $ta" n h$ a$$&n*ent ,or *ore than t!o ?:@ "ear$' $(b.e#t to r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o, 8nan#e' (pon re#o**en+aton o, the Co**$$oner9 SEC2 42 A##$3/e& o% I&era- Re0e.e Oer# a! O&her E/+-oyee# &o O&her D.&$e#2 - The Co**$$oner *a"' $(b.e#t to the pro%$on$ o, Se#ton 1D an+ the )a!$ on #%) $er%#e' a$ !e)) a$ the r()e$ an+ re&()aton$ to be pre$#rbe+ b" the Se#retar" o, 8nan#e (pon the re#o**en+aton o, the Co**$$oner' a$$&n or rea$$&n nterna) re%en(e o#er$ an+ e*p)o"ee$ o, the B(rea( to other or $pe#a) +(te$ pro%+e+ the ,o))o!n& re($te$ are #o*p)e+ !th 0 19 That the a$$&n*ent !o()+ not #han&e the o#a) rank an+ $a)ar" o, per$onne) a$$&ne+ :9 That the a$$&n*ent n%o)%e$ +(te$ #onne#te+ !th en,or#e*ent an+ a+*n$traton o, the re%en(e )a! a$ the ex&en#e$ o, $er%#e *a" re(re ;9 That the a$$&n*ent $ha)) NOT EXCEE7 ONE 5EAR Other or $pe#a) +(te$ – re,er not to a $pe#a) or extraor+nar" (n+ertakn&' b(t to ,(n#ton$ or !ork other than or not re)ate+ to tho$e re&()ar)" +$#har&e+ b" the e*p)o"ee #on#erne+ **e+ate $(peror' &%n& the na*e an+ a++re$$ o, the oHen+er an+ the na*e$ o, the !tne$$e$ , po$$b)e0 Pro%+e+' That n (r&ent #a$e$' the Re%en(e Re&ona) +re#tor or Re%en(e 7$tr#t O#er' a$ the #a$e *a" be' *a" $en+ the report to the #orre$pon+n& pro$e#(tn& o#er n the )atter #a$e' a #op" o, h$ report $ha)) be $ent to the Co**$$oner9 URGENT CASES ) #o%er$ a $t(aton !here the %o)ator $ an a)en or a #t2en - !ho $ atte*ptn& to e$#ape ,ro* #o(ntr" or - one !ho nten+$ to re*o%e' h+e or #on#ea) h$ propert" ,ro* the Ph)ppne$ - ,or the p(rpo$e o, +e,eatn& taxaton SEC2 642 So.re# o% Re0e.e2 - The ,o))o!n& taxe$' ,ee$ an+ #har&e$ are +ee*e+ to be natona) nterna) re%en(e taxe$0 ?a@ In#o*e taxM ?b@ E$tate an+ +onorW$ taxe$M ?#@ Va)(e-a++e+ taxM ?+@ Other per#enta&e taxe$M ?e@ Ex#$e taxe$M ?,@ 7o#(*entar" $ta*p taxe$M an+ ?&@ S(#h other taxe$ a$ are or herea,ter *a" be *po$e+ an+ #o))e#te+ b" the B(rea( o, Interna) Re%en(e9 An nterna) re%en(e o#er a$$&ne+ to per,or* a$$e$$*ent or #o))e#ton ,(n#ton$ $ha)) not re*an n the $a*e a$$&n*ent ,or *ore than three "ear$ S&a&.&ory O:e#e# a! Pea-&$e# SEC2 4K2 Re+or&# o% V$o-a&$o o% La*#2 - hen an nterna) re%en(e o#er +$#o%er$ e%+en#e o, a %o)aton o,  th$ Co+e or o, an" )a!' r()e or re&()aton$ a+*n$tere+ b" the B(rea( o, Interna) Re%en(e o, $(#h #hara#ter a$ to !arrant the n$tt(ton o, #r*na) pro#ee+n&$' he $ha)) **e+ate)" report the ,a#t$ to the Co**$$oner thro(&h h$ 42 Mea$3 o% a!!$&$o# &o &he &a' a2 A++ton$ to the tax are n#re*ent$ to the ba$# tax n#+ent +(e to the taxpa"er3$ non – #o*p)an#e !th #ertan e)&a) re(re*ent$' )ke taxpa"er3$ D; 6ran+a' C)ar$$e Ann A!!$&$o &o &he Ta' D= re,($a) or ,a)(re to pa" taxe$ on t*e an+ or other %o)aton$ o, taxn& pro%$on$ n the )a! "2 A++ton$ to the tax #on$$t$ o, the 0 $2 C%) pena)t" #.rhar3e5 6 or  o%  &a' !e+e!$3 .+o a&.re o% 0$o-a&$o $$2 Intere$t ether ,or a +e/#en#" tax or +e)n(en#" a$ to pa"*ent $$$2 Other #%) pena)te$ or a+*n$trat%e /ne$ $(#h a$ ,or ,a)(re to /)e #ertan n,or*aton ret(rn$ an+ %o)aton$ #o**tte+ b" !thho)+n& a&ent$ 62 Geera- Co#$!era&$o# o A!!$&$o# &o Ta' Chapter VI  Tax Re*e+e$ – Re*e+e$ o, Go%ern*ent I*portan#e o, Tax Re*e+e$ 19 $a,e&(ar+$ a&an$t arbtraton :9 h)e taxe$ are ),eb)oo+ o, &o%ern*ent an+ $ho()+ be #o))e#te+ !tho(t (nn#e#e$$ar" hn+ran#e' $(#h #o))e#ton *($t ne%erthe)e$$ be *a+e n a##or+an#e !th )a! ;9 An" arbtrarne$$ !)) ne&ate the %er" rea$on ,or the Go%ern*ent t$e), CASE 0 19 The Go%ern*ent' n or+er to en$(re tax #o))e#ton' *a" a+opt or pre$#rbe #oer#%e *ea$(re a$ n a #a$e !here the pa"*ent o, a )o#a) tax $ *a+e a$ a #on+ton to the re&$traton an+ tran$,er o, *otor %eh#)e$ D= :9 Capta) &an tax on $a)e ' ex#han&e' or other +$po$ton b" n+%+(a)$ o, rea) propert" !h#h are #apta) a$$et$ ;9 th re$pe#t to the DQ #apta) &an$ tax' Se#ton D pro%+e$ that 0 a9 SEC2 2 Pay/e& a! A##e##/e& o%  Io/e Ta' %or I!$0$!.a-# a! Cor+ora&$o#2  - A5 Pay/e& o% Ta'2 b9 NO re&$traton o, an" +o#(*ent tran$,errn& rea) propert" $ha)) be eHe#te+ b" the Re&$ter o,  7ee+$' UNLESS the Co**$$oner o, Interna) Re%en(e or h$ +()" a(thor2e+ repre$entat%e ha$ #ert/e+ that $(#h tran$,er ha$ been reporte+ an+ tat the #apta) &an$ or #re+tab)e !thho)+n& tax' , an"' ha$ been pa+ RULE ON NO INJUNCTION TO RESTRAIN TAX COLLECTION SEC2 64K2 I=.&$o o& A0a$-a"-e &o Re#&ra$ Co--e&$o o% Ta'2  - No #o(rt $ha)) ha%e the a(thort" to &rant an n.(n#ton to re$tran the #o))e#ton o, an" natona) nterna) re%en(e tax' ,ee or #har&e *po$e+ b" th$ Co+e9 Wha& $# &he =.#&$>a&$o %or &h$# r.-e( - COURT 0 a pro%$on n an nterna) re%en(e )a! prohbtn& the #o(rt$ ,ro* en.onn& the #o))e#ton o,  an nterna) re%en(e tax $ NOT INVALI7 a$ oppo$e+ to the +(e pro#e$$ an+ e(a) prote#ton #)a($e$ o, the Con$tt(ton - COURT 0 t$ (pon taxaton that the Go%ern*ent #heF" re)e$ to obtan the *ean$ to #arr" on t$ operaton$ an+ t $ the (t*o$t *portan#e that the *ean$ a+opte+ to en,or#e the #o))e#ton o, taxe$ )e%e+ $ho()+ be $(**ar" an+ nter,ere+ !th a$ )tt)e a$ po$$b)e EXCEPTION TO NO INJUNCTION TO RESTRAIN TAX COLLECTION )  TAXATION SURVIVAL KIT – Aban Book 19 !hen a +e#$on o, the #o**$$oner on a tax prote$t $ APPEALE7 to CTA p(r$(ant to :9 Se#ton 11 RA 11: ? )a! #reatn& the CTA@ ;9 In re)aton to Se#ton ::> o, 1 NIRC =9 S(#h appea) +oe$ not $($pen+ the pa"*ent' )e%"' +$trant an+or $a)e o, an" o, the taxpa"er3$ propert" ,or the $at$/#aton o, h$ tax )ab)t" 4OEVER' !hen n the opnon o, the CTA the #o))e#ton o,  tax *a" .eopar+2e the ntere$t o, the Go%ern*ent an+or taxpa"er' T4E COURT AT AN5 STAGE O8 PROCEE7INGS 6A5 SUSPEN7 OR RESTRAIN T4E COLLECTION AN7 REUIRE  TAXPA5ER EIT4ER TO 7EPOSIT T4E A6OUNT CLAI6E7 OR T 8ILE A SURET5 BON7 8OR NOT 6ORE T4AN 7OUBLE T4E A6OUNT IT4 COURT S(ppo$e the BIR' +(rn& pen+en#" o, appea) n Co(rt o, Tax Appea)$' /)e$ a #%) a#ton n RTC ,or the #o))e#ton o, tax )ab)t"' !hat $ the re*e+" o, the taxpa"er - TAXPA5ER 6A5 8ILE A 6OTION IN RTC 8OR T4E 7IS6ISSAL O8 CASE ON GROUN7 T4AT T4ERE IS NO BASIS 8OR COLLECTING T4E TAX 4ERE T4E ASSESS6ENT T4EREO8 IS STILL UN7ER 7ISPUTE IN CTA COLLECTIBILITY OF TAX AS A BASIS FOR COLLECTION ENFORCEMENT - !here the (npa+ tax $ a tax +(e per ret(rn a$ n the #a$e o, a $e), a$$e$$e+ n#o*e (n+er the pa" – a$ – "o( - /)e $"$te*' #o))e#ton *a" be n$tt(te+ !tho(t nee+ o, an" a$$e$$*ent SEC2 66K2 Pro&e#&$3 o% A##e##/e&2 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that proper taxe$ $ho()+ be a$$e$$e+' he $ha)) /r$t not," the taxpa"er o, h$ /n+n&$0 Pro%+e+' ho!e%er' That a pre- D 6ran+a' C)ar$$e Ann a$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0 ?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o,  *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or ?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or ?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o, the $(##ee+n& taxab)e "earM or ?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or ?e@ hen the art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to non-exe*pt per$on$9  The taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 thn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 S(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n& a re(e$t ,or re#on$+eraton or ren%e$t&aton !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the a$$e$$*ent n $(#h ,or* an+ DD *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$9 thn $xt" ?D<@ +a"$ ,ro* /)n& o, the prote$t' a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 I, the prote$t $ +ene+ n !ho)e or n part' or $ not a#te+ (pon !thn one h(n+re+ e&ht" ?1><@ +a"$ ,ro* $(b*$$on o, +o#(*ent$' the taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9 Ba#$ o#$!era&$o ) !hether the a$$e$$*ent $ /na) an+ (nappea)ab)e' or +e#$on o, the Co**$$oner $ /na)' exe#(tor' an+ +e*an+ab)e' $ 4ET4ER T4E BIR 4AS LEGAL BASIS TO COLLECT T4E TAX LIABILIT5 EIT4ER B5 7ISTRAINT AN7 LEV5 OR B5 CIVIL ACTION REMEDIES OF GOVERNMENT 19 :9 ;9 =9 9 D9 9 >9 DD Tax Len Co*pro*$e 7$trant an+ Le%" C%) A#ton Cr*na) A#ton 8or,et(re S($pen$on o, b($ne$$ operaton$ ,or %o)aton$ o, VAT En,or#e*ent o, a+*n$trat%e /ne$ NOTE 0 re*e+e$ o, +$trant an+ )e%" a$ !e)) a$ #o))e#ton b" #%) an+ #r*na) a#ton$' *a" n the +$#reton o,  Co**$$oner' be p(r$(e+ - SINGL5 AN7 IN7EPEN7ENTL5 O8 EAC4 OT4ER - Or a)) o, the* $*()taneo($)"  The re*e+e$ an+ )e%" S4ALL NOT BE AVAILE7 O8 4ERE  T4E A6OUNT O8 TAX INVOLVE7 IS NOT 6ORE T4AN 1<< pe$o$9 - The .(+&*ent n #r*na) #a$e $ha)) not on)" *po$e the pena)t" - BUT S4ALL ALSO OR7ER PA56ENT O8 TAXES - SUBJECT TO CRI6INAL CASE - AS 8INALL5 7ECI7E7 B5 CO66ISSIONER TAX LIENS - hen a taxpa"er ne&)e#t$ or re,($e$ to pa" h$ nterna) re%en(e tax )ab)t" a,ter +e*an' the A6OUNT $o +e*an+e+ S4ALL BE A LIEN - In ,a%or o, the Go%ern*ent ,ro* the t*e a$$e$$*ent !a$ *a+e b" Co**$$oner UNTIL PAI7 !th ntere$t' pena)te$' an+ #o$t$ that *a" a##r(e n a++ton thereto (pon a)) propert" an+ r&ht$ to propert" be)on&n& to taxpa"er 4EN 7OES T4E LIEN O8 T4E GOVERN6ENT 8OR UNPAI7 INTERNAL REVENUE TAXES ARISE - COURT 0 TAX LIEN ATTAC4E7 NOT ONL5 8RO6 SERVICE O8 ARRANT O8 7ISTRATINT O8 PERSONAL PROPERT5 - BUT 8RO6 T4E TI6E TAX BECA6E 7UE AN7 PA5ABLE Se#ton :1' 4OEVER  That th$ )en $ha)) not be %a)+ a&an$t an" *ort&a&ee' p(r#ha$er or .(+&*ent #re+tor (nt) not#e o, $(#h )en $ha)) be /)e+ b" the Co**$$oner n the o#e o, the Re&$ter o,  7ee+$ o, the pro%n#e or #t" !here the propert" o, the taxpa"er $ $t(ate+ or )o#ate+9  TAXATION SURVIVAL KIT – Aban Book ?1@ A rea$onab)e +o(bt a$ to the %a)+t" o, the #)a* a&an$t the taxpa"er ex$t$M or Other t"pe$ o, )en$ )ke 0 LIEN UN7ER VAT LA ? Se#ton 1<B' 1 NIRC@ CASE 0 19 , &oo+$ are *porte+ b" epr$on$' enttte$ or a&en#e$ !h#h are EXE6PT ,ro* tax b(t $(#h &oo+$ are $(b$e(ent)" $o)+' tran$,erre+ or ex#han&e+ n Ph)ppne$ to non – exe*pt per$on$ or entte$' the pr(#ha$er$' tran$,eree$ or re#pent$ :9 S4ALL BE CONSI7ERE7 T4E I6PORTERS T4EREO8 4O S4ALL BE LIABLE 8OR AN5 INTERNAL REVENUE  TAX ON SUC4 I6PORTATION ;9 TAX 7UE ON SUC4 I6PORTATION S4ALL CONSITUTE A LIEN ON T4E GOO7S' SUPERIOR TO ALL C4ARGES OR LIENS ON GOO7S' IRRESPECTIVE O8 POSSESSOR  T4EREO8 =9 T4IS IS CONSTRUCTIVE I6PORTATION – TAX EXE6PT CASE 0 19 #a$e o, art#)e$ *porte+ nto #o(ntr" ,ree ,ro* ex#$e tax ? tax on toba##o an+ a)#oho)# pro+(#t$' petro)e(*@ :9 B" tax exe*pt per$on$ an+ entte$ an+ $(b$e(ent)" $o)+' ex#han&e+' or tran$,erre+ to non – exe*pt per$on$ !hereb" a $*)ar tax )en on art#)e$ ex$t$ (nt) tax thereon $ pa+ COMPROMISES SEC2 6@2 A.&hor$&y o% &he Co//$##$oer Co/+ro/$#e, A"a&e a! Re%.! or Cre!$& Ta'e#2  - &o  The Co**$$oner *a" ?A@ Co*pro*$e the pa"*ent o, an" nterna) re%en(e tax' !hen0 D 6ran+a' C)ar$$e Ann ?:@ The /nan#a) po$ton o, the taxpa"er +e*on$trate$ a #)ear nab)t" to pa" the a$$e$$e+ tax9  T4E CO6PRO6ISE SETTLE6ENT O8 AN5 TAX LIABILIT5 BASE7 ON 8INANCIAL INCAPACIT5 TO PA5 S4ALL BE SUBJECT TO T4E 6INI6U6 CO6PRO6ISE RATE EUIVALENT TO 1 A)) #r*na) %o)aton$ *a" be #o*pro*$e+ ex#ept0 ?a@ tho$e a)rea+" /)e+ n #o(rt' or ?b@ tho$e n%o)%n& ,ra(+ In general$$ the taxpayers %riminal liability arising from his 'iolatiof pertinent pro'ision of %ode may be settled extra  judi%ially instead of &IR instituting against taxpayer a %riminal a%tion in Court  * %ompromise in extrajudi%ial settlement of taxpayers %riminal liability for his 'iolation is C+,-,-/*0 in %hara%ter - 6A5 NOT BE I6POSE7 ON TAXPA5ER IT4OUT 4IS CONSENT - BIR 6A5 ONL5 SUGGEST SETTLE6ENT O8 TAXPA5ER3S LIABILIT5 T4ROUG4 A CO6PRO6ISE Extra.(+#a) $ett)e*ent o, taxpa"er3$ #r*na) )ab)t" an+ a*o(nt o, $(&&e$te+ #o*pro*$e pena)t" $ha)) #on,or* !th $#he+()e o, #o*pro*$e pena)te$ pro%+e+ (n+er re)e%ant BIR re&()aton$ or or+er$ DELEGATION OF POWER TO COMPROMISE #@ The po!er to #o*pro*$e or abate' (n+er Se#9 :<= ?A@ an+ ?B@ o, th$ Co+e' an" tax )ab)t"0 Pro%+e+' ho!e%er'  That a$$e$$*ent$ $$(e+ b" the re&ona) o#e$ n%o)%n& ba$# +e/#en#" taxe$ o, 8%e h(n+re+ tho($an+ pe$o$ ?P<<'<<<@ or )e$$' an+ *nor #r*na) %o)aton$' a$ *a" be +eter*ne+ b" r()e$ an+ re&()aton$ to be pro*()&ate+ b" the Se#retar" o, /nan#e' (pon re#o**en+aton o, the Co**$$oner' +$#o%ere+ b" re&ona) an+ +$tr#t o#a)$' *a" be #o*pro*$e+ b" a re&ona) e%a)(aton boar+ !h#h $ha)) be #o*po$e+ o, the Re&ona) 7re#tor a$ Char*an' the D> A$$$tant Re&ona) 7re#tor' the hea+$ o, the Le&a)' A$$e$$*ent an+ Co))e#ton 7%$on$ an+ the Re%en(e 7$tr#t O#er ha%n& .(r$+#ton o%er the taxpa"er' a$ *e*ber$ I, taxpa"er ,a)$ to ab+e b" #o*pro*$e arran&e*ent' the Go%ern*ent #o()+ ether INSIST ON COLLECTION O8 CO6PRO6ISE7 SU6' or 7ISREGAR7 T4E CO6PRO6ISE AN7 COLLECT T4E ORIGINAL TAX 7UE POWER TO COMPROMISE NOT ABSOLUTE 6a" a #a$e $t)) be #o*pro*$e+ e%en a,ter /na) .(+&e*ent - NO CASE0 - the &o%ern*ent !on an+ a /ne !a$ *po$e+ ba$e+ on or&na) appra$e*ent o, #ertan .e!e)r" - ho!e%er' )ater on' Co**$$oner o, C($to*$' !th appro%a) o, 7epart*ent o, 8nan#e' or+ere+ a reappra$a) o, art#)e n (e$ton an+ entere+ nto a #o*pro*$e - SC0 CO6PRO6ISE AS I6PROPER o AS A 6ERE AGENT O8 GOVERN6ENT' o  T4E CO66ISSIONER O8 CUSTO6S IS NOT AUT4ORIE7 TO ACCEPT AN5T4ING o LESS T4AN 4AT IT IS A7JU7ICATE7 o IN 8AVOR O8 GOVERN6ENT o B5 VIRTUE O8 8INAL JU7GE6ENT 0 GOVERN6ENT 4A7 ALREA75 ACUIRE7 A VESTE7 RIG4T NATURE OF COMPROMISE PENALTY - a #ertan a*o(nt o, *one" !h#h the taxpa"er pa"$ to #o*pro*$e a tax %o)aton - pa+ n )e( o, a #r*na) pro$e#(ton A o/+ro/$#e $/+-$e# /.&.a- a3ree/e& - a #o*pro*$e pena)te$ #annot be *po$e+ n ab$en#e o, a $ho!n& that the taxpa"er #on$ente+ thereto9  TAXATION SURVIVAL KIT – Aban Book - - I, #o**$$oner3$ oHer o, #o*pro*$e $ re.e#te+ b" taxpa"er' the Co**$$oner CANNOT EN8ORCE t b(t he *a" /)e a #r*na) a#ton a&an$t the taxpa"er ,or the tax %o)aton CO66ISSIONER 4AS NO POER TO I6POSE AN7 COLLECT T4E SO CALLE7 CO6PRO6ISE PENALTIES IN ABSENCE O8 A CO6PRO6ISE AGREE6ENT VALI7L5 ENTERE7 INTO BETEEN T4E TAXPA5ER AN7 CO66ISSIONER Co*pro*$e pena)te$ ben& %o)(ntar" n #hara#ter' the" *a" be #o))e#te+ on)" , taxpa"er $ !))n& to pa" the*9 - !here n an appea) to CTA' the taxpa"er ha$ expre$$e+ h$ !))n&ne$$ to pa" #o*pro*$e pena)te$' $a+ a*o(nt$ *a" be #o))e#te+ a$ part o, .(+&e*ent S(ppo$e the taxpa"er rene&e$ on h$ #on,or*t" to the pa"*ent o, the $(&&e$te+ #o*pro*$e' *a" the Co**$$oner #o))e#t the #o*pro*$e pna)t" thr( an a#ton n #o(rt b" +$rant an+ )e%" - A COLLECTION ACTION 7OES NOT LIE BECAUSE A CO6PRO6ISE PENALT5 IS NEIT4ER A TAX NOR AN A76INISTRATIVE PENALT5 8OR TAX 7ELINUENC5 COLLECTION BY DISTRAINT AND LEVY - re*e+e$ !h#h r(n para))e)' n pont o, *portan#e to re*e+e$ o, #o))e#ton b" #%) an+ #r*na) a#ton$ kno!n a$ $(**ar"' extra.(+#a)' or a+*n$trat%e en,or#e*ent re*e+e$ 7ISTRAINT %$ LEV5 7ISTRAINT LEV5 Re*e+" !hereb" #o))e#ton  The #o))e#ton en,or#e*ent $ o, taxe$ $ en,or#e+ on eHe#te+ on rea) propert" an+ nter$t n or r&ht$ to rea) - &oo+$ propert" o, +e)n(ent - #hatte)$ taxpa"er - eHe#t$ - other per$ona) - )e%" *a" be *a+e be,ore propert" o,  $*()taneo($)" !th or a,ter !hate%er #hara#ter o,  the +$trant o, per$ona) taxpa"er n#)(+n& 0 propert" be)on&n& to o $to#k$ +e)n(ent taxpa"er o  other $e#(rte$ o  +ebt$ #re+t$ o o bank a##o(nt$ o an+ ntere$t$ n an+ r&ht$ to per$ona) propert" ACTUAL %$ COSNTRUCTIVE 7ISTRAINT ACTUAL CONSTUCTIVE A$ a #o))e#ton re*e+" $ One !here no a#t(a) re$orte+ to !hen +e)n(en#" +e)n(en#" $ ne#e$$ar" n pa"*ent $et$ n be,ore the $a*e $ re$orte+ to EXA6PLE 0 !hen at a t*e In ,o))o!n& $ntan#e$ ?!here D 6ran+a' C)ar$$e Ann < re(re+ ,or pa"*ent' a per$on ,a)$ to pa" h$ tax ob)&aton a#t(a) +e)n(en#" *a" not be ne#e$$ar)" pre$ent@ the re*e+" o, #o$nt(#t%e +$trant *a" be a%a)e+ o,0 19 The taxpa"er $ retrn& ,ro* an" b($ne$$ $(b.e#t to tax :9 4e nten+$ to )ea%e Ph)ppne$ ;9 4e re*o%e$ h$ propert" there,ro* =9 4e per,or*$ an" a#t ten+n& to ob$tr(#t the pro#ee+n&$ ,or #o))e#tn& the tax +(e or !h#h *a" be +(e ,ro* h* Con$$t$ o,0 - A#t(a) $e2(re an+ +$trant o, per$ona) propert" o, taxpa"er Goo+$ Chatte)$ EHe#t$ Sto#k$ In $(#ent (antt" to $at$," the tax #har&e' toðer !th an" n#re*ent thereto n#+ent to +e)n(en#"' the expen$e$ o, +$trant an+ #o$t o, $(b$e(ent $a)e < POSSIBLE T4AT 0 #on$tr(#t%e +$trant *a" be app)e+ e%en , an a#t(a) tax +e)n(en#" on part o, taxpa"er a)rea+" ex$t$ - Con$tr(#t%e +$trant $ a pre%ent%e re*e+" the a*e o, !h#h $ to ,ore$ta)) a po$$b)e +$$paton o,  taxpa"er3$ a$$et$ !hen +e)n(en#" take$ p)a#e9 PROCE7URE – Che#k han+!rtten note$ CIVIL ACTION – re$orte+ to !hen a tax )ab)t" be#o*e$ #o))e#tb)e Co))e#tab)t" o, a tax ar$e$ n ,o))o!n& n$tan#e$ 0 19 hen a tax $ a$$e$$e+ an+ the the a$$e$$*ent be#o*e$ /na) an+ (nappea)ab)e be#a($e the taxpa"er ,a)$ to /)e an a+*n$trat%e prote$t !th BIR !thn ;< +a"$ ,ro* re#ept o, a$$e$$*ent :9 hen an a+*n$trat%e prote$t /)e+ b" taxpa"er a&an$t the a$$e$$*ent $ 7ENIE7' n !ho)e or n part a9 Or $ not a#te+ (pon !thn 1>< +a"$ ,ro* $(b*$$on o, +o#(*ent$ b9 Taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton ,a)$ to /)e an appea) #9 th CTA !thn ;<+a"$ ,ro* re#ept$ o, $a+ +e#$on +9 Or ,ro* )ap$e o, 1>< +a" pero+ A #%) a#ton *a" a)$o be /e)+ n or+er to #o))e#t the $o – #a))e+ $e), a$$e$$e+ tax - !h#h $ #o*p(te+ b" the taxpa"er h*$e), an+ reFe#te+ n h$ ret(rn (n+er the pa" – a$ – "o( – /)e $"$te*  TAXATION SURVIVAL KIT – Aban Book NO CIVIL OR CRI6INAL ACTION 8OR RECOVER5 O8 TAXES S4ALL BE 8ILE7 IN COURT I4TOUT APPROVAL O8 CO66ISSIONER NOTES 0 19 Re&ona) 7re#tor$ a*" a)$o appro%e the /)n& o, #%) a#ton ,or tax #o))e#ton , th$ po!er $ expre$$)" +e)e&ate+ to the* b" Co**$$oner (n+er approprate *e*oran+(* or+er$ on the *atter :9 C%) a#ton$ ,or #o))e#ton are /)e+ n re&()at #o(rt$' an+ NOT IN CTA Co*p)ant$ n #%) a#ton$ ,or #o))e#ton o, +e)n(ent taxe$ are re(re+ to be appro%e+ b" So)#tor Genera) be,ore the" are /)e+ 9 - 4o!e%er' BIR e)&a) o#er$ +ep(t2e+ a$ Spe#a) Attorner"$ an+ - $tatone+ o(t$+e 6etro 6an) - *a" /)e %er/e+ #o*p)ant$ !tho(t the appro%a) o,  So)#tor Genera) $(b.e#t to ,o))o!n& re(re*ent$0 o So)#tor Genera) $ho()+ be ,(rn$he+ a #op" o,  #o*p)ant o So)#tor &enera) /)e$ a not#e o, appearan#e n #o(rt !here a#ton $ /)e+99 o I, #o*p)ant $ 8OUN7 TO BE I6PROPERL5 8ILE7 0 6oton to +$*$$ $ )ke!$e /)e+ !th the #o(rt o SEC2 662 For/ a! Mo!e o% Proee!$3 $ A&$o# Ar$#$3 .!er &h$# Co!e2  - C%) an+ #r*na) a#ton$ an+ pro#ee+n&$ n$tt(te+ n beha), o, the Go%ern*ent (n+er the a(thort" o,  th$ Co+e or other )a! en,or#e+ b" the B(rea( o,  Interna) Re%en(e $ha)) be bro(&ht n the na*e o, the Go%ern*ent o, the Ph)ppne$ an+ $ha)) be #on+(#te+ b" )e&a) o#er$ o, the B(rea( o,  Interna) Re%en(e b(t no #%) or #r*na) a#ton ,or the re#o%er" o, taxe$ or the en,or#e*ent o,  an" /ne' pena)t" or ,or,et(re (n+er th$ Co+e 1 6ran+a' C)ar$$e Ann $ha)) be /)e+ n #o(rt !tho(t the appro%a) o, the Co**$$oner9 COLLECTION IN CASES WHERE THE ASSESSMENT IS FINAL AND UNAPPEALABLE Ca$e0 COLLECTIBILIT5 O8 A TAX 7UE TO TAXPA5ER3S INABILIT5 OR 8AILURE TO 7ISPUTE T4E ASSESS6ENT IT4IN ;< 7A5 REGLE6ENTAR5 PERIO7 19 19D6 :9 196 ;9 196 =9 196 9 !ere a$$$e+ a&an$ the e$tate o, )ate $po($e$ Teo+oro D9 her$ then /)e+ a re(e$t o, re#on$+eraton o, the a$$e$$*ent$ an+ at the $a*e t*e a$ke+ that the" be &%en ;< +a"$ !thn !h#h to $(b*t ther po$ton paper n $(pport o, ther #)a* - hen Go%ern*ent $o(&ht to #o))e#t the tax )ab)te$ n the $ett)e*ent pro#ee+n&$ on the e$tate' the her$ nterpo$e+ the +e,en$e that the a$$e$$e*ent$ ha%e not be#o*e /na) an+ exe#(tor - SC 0 the re(e$t ,or re#on #annot be #on$+ere+ a$ a prote$t a&an$t the a$$e$$*ent9  The ,a)(re o, her$ to $(b$tantate thr #)a* o a&an$t the a$$e$$*ent +(e to the non$(b*$$on o, ther po$ton paper .($t/e+ the Co**$$oner3$ a#ton n #o))e#tnt tax n $ett)e*ent pro#ee+n&$ CASE 0 19 COURT 0 taxpa"er3$ ,a)(re to +$p(te the a$$e$$*ent eHe#t%e)" b" #o*p)"n& !th the #on+ton$ )a+ +o!n b" BIR' $(#h a$ $pe#,"n& (ner oath the &ro(n+$ o, h$ prote$t' pa"n& one-ha), o, a*o(nt a$$e$$e+ an+ p(ttn& (p a bon+ ,or ba)an#e' pro%+e+ a )e&a) ba$$ ,or &o%ern*ent to #o))e#t the taxpa"er3$ )ab)t" b" or+nar" #%) a#ton : :9 COURT 0 apart ,ro* ,a)n& to $ea$onab)" /)e the re(re+ e$tate tax ret(rn' pettoner an+ the other *ar#o$ her$ 8AILE7 to (e$ton the a$$e$$*ent$ $er%e+ on the* a$ her+ o, )ate pre$+ent' thereb" a))o!n& $a+ a$$e$$*ent to )ap$e nto /na)t"9 a9 Sa+ +e/#en#" tax a$$e$$*ent$ ha%n& be#o*e /na)' exe#(tor an+ +e*an+ab)e $a*e *a" be a)rea+" be #o))e#te+ b" $(**ar" re*e+" o,  +$trant or )e%" COLLECTION CASES WHERE THE BIR8S DECISION IS FINAL, EXECUTORY, AND DEMANDABLE 19 taxpa"er /)e+ !th BIR a re(e$t ,or ren%e$t&aton a,ter he !a$ a$$e$$e+ the $(* o, 1Dk a$ +e/#en#" n#o*e tax ,or 1 – 1D<9 S(b$e(ent)"' a )etter +e#$on +e*an+n& pa"*nt !a$ $$(e+9 4OEVER SINCE TAXPA5ER 7I7 NOT APPEA' A CIVIL ACTION 8OR COLLECTION AS 8ILE7 B5 GOVERN6ENT a9 SC 0 taxpa"er3$ ,a)(re to appea) the Co**$$oner3$ e#$on to CTA +epr%e+ h* o, r&ht to (e$ton the Co**$$oner3$ a(thort" to #o))e#t the tax !thn the pre$#rpt%e pero+ pro%+e+ b" )a! :9 SC 0 !here taxpa"er ,a)e+ to #o*p)" !th a #on++ton )a+ +o!n b" Co**$$oner ,or ren%e$t&aton o, #a$e an+ t$ ,a)(re to appea) to CTA *a+e the a$$e$$*ent /na) an+ exe#(tor' $o that , an a#ton to #o))e#t tax a$$e$$e+ + /)e+ b" Go%ern*ent n #o(rt' th$ $ akn to an a#ton to en,or#e a .(+&e*ent $(#h that NO INUIR5 CAN BE 6A7E T4REON AS TO 6ERITS O8 T4E ORGINAL CASE OR T4E JUSTNESS O8 JU7GE6ENT RELIE7 UPON S(ppo$e there $ a pen+n& prote$t or a re(e$t ,or ren%e$t&aton n BIR' $ the Co**$$oner re(re+ to r()e : /r$t on $(#h pen+n& re(e$t be,ore he #an &o to #o(rt ,or p(rpo$e o, #o))e#tn& tax a$$e$$e+ - NOT NECESSAR5 SC 0 no!here n tax #o+e $ the #o**$$oner re(re+ to r()e /r$t on taxpa"er3$ r($t ,or rn%$t&aton be,or he #an &o to #o(rt ,or the p(rpo$e o, #o))e#tn& tax a$$e$$e+9 - T4E LEGISLATIV POLIC5 IS TO GIVE CO66ISSIONR 6UC4 LATITU7E IN T4E SPEE75 AN7 PRO6PT COLLECTION O8 TAXS BECAUSE IT IS ON TAXATION  T4AT T4E GOVERN6ENT 7EPEN7S TO OBTAIN T4E 6EANS TO CARR5 ITS OPERATIONS 4EN CO66ISSIONER 7I7 NOT REPL5 TO TAXPA5ER3S REUEST 8OR RECONSI7ERATION AN7 ISNTEA7 RE88ERE7  T4E CASE TO SG 8OR JU7ICIAL COLLECTION' T4IS AS IN7ICATIVE O8 4IS 7ECISION AGAINST REINVESTIGATION - S4OUL7 T4E CO66ISIONER 7ECI7E TO COLLECT TAX ASSESSE7 !tho(t /r$t +e#+n& the taxpa"er3$ prote$t or re(e$t ,or ren%e$t&aton an+or re#on$+eraton'   T4E E88ECT IS T4AT T4E CO66ISSIONER3S ACTION IS A 7ECISION O8 7ENIAL IN 4IC4 EVENT T4E  TAXPA5ER 6A5 8ILE AN APPEAL IT4 CTA PRUSUANT  TO T4E PROVS O8 SECTION 11 RA 11: 8)n& o, ##) a#ton n #o(rt to #o))e#t a tax !h#h !a$ the $(b.e#t *atter o, a pen+n& prote$t n BIR !a$ a .($t/ab)e ba$$ ,or taxpa"er to appea) to CTA - An+ to *o%e ,or +$*$$a) n C o, Go%ern*ent3$ a#ton to #o))e#t the tax )ab)t" (n+er +$p(te DEFENSES PRECLUDED BY FINAL AND EECUTORY  ASSESSMENTS 19 VALI7IT5 OR LEGALIT5 O8 ASSESS6ENT – a +$p(te+ a$$e$$*ent ,or nterna) re%en(e taxe$ ,a))$ !thn the ex#)($%e .(r$+#ton o, CTA  TAXATION SURVIVAL KIT – Aban Book a9 here a taxpa"er #an %ent)ate the +e,en$e$ a$ a&an$t the a$$e$$*ent b9 ONCE A 7ECISION O8 BIR ON A 7ISPUTE7 ASSESS6ENT BECO6ES 8INAL' EXECUTOR5 AN7 7E6AN7ABLE 8OR LACK O8 AN A76INISTRATIVE PROTEST AGAINST T4E ASSESS6ENT O8 4IS 8AILURE TO APPEAL TO T4E CTA IT4IN T4E REGLE6ENTAR5 ;< 7A5 PERIO7' 7E8ENSE BEARING ON T4E LEGALIT5 OR VALI7IT5 O8 ASSESS6ENT OUL7 NECESSARIL5 8ALL OTUSI7E T4E JURIS7ICTION O8 REGULAR COURTS :9 PRESCRIPTION O8 GOVERN6ENT3S RIG4T TO ASSESS a9 Not a%a)eb) $n#e $a*e $ho()+ be $(b.e#t o,  taxapa"er3$ appea) to the CTA b9 The r&ht o, &o%ern*ent to ob.e#t to the +e,en$e o, pre$#rpton o, &o%ern*ent3$ r&ht to a$$e$$ 6A5 BE AIVE7 #9 I8 IN ANCTION to #o))e#t a /na) an+ exe#(tor a$$e$$*ent' the &o%ern*ent )t&ate+ on the $$(e o, pre$#rpton an+ $(b*tte+ ,or the re$o)(ton o, #o(rt +9 B5 ACTUATION 0&o%ern*ent !a%e+ t$ r&ht to ob.e#t to the $ettn& (p o, $(#h +e,en$e COLLECTION THRU FILING OF BIR8S ANSWER IN CTA - - #an be #o))e#te+ b" &o%ern*ent thr( /)n& an an$!er to taxpa"er3$ petton ,or re%e! n #a$e$ !here the taxpa"er appea)$ to CTA SC0 the ,a#t tha no #%) a#ton to #o))#t the taxpa"er3$ tax )ab)t" !a$ /)e+ b" the Go%ern*ent $ NO GROUN7 ,or #)a*n& that the r&ht o, Go%ern*ent to #o))e#t $a+ )ab)t" ha+ a)rea+" pre$#rbe+ COURT 0 PRESCRIPTION ha+ not $et n a$*(#h a$ &o%ern*ent3$ an$!er n the CTA !a$ /)e+ !e)) !thn the pre$#rpt%e pero+ pre$#rbe+ b" )a! An$!er /)e+ n tax #o(rt !a$ tanta*o(nt to the /)n& o, a #%) a#ton ,or #o))e#ton n re&()ar #o(rt9 ; 6ran+a' C)ar$$e Ann - hen an a#ton ,or #o))e#ton $ /)e+ n re&()ar #o(rt$' pre$#rpton $ to))e+ LIABILITY OF STOC **e+ate)" a,ter $a)e o,  $a+ $(rp)($ &oo+$ COURT 0 Sto#kho)+er$ !ere the bene/#are$ o, the +e,(n#t #orporaton an+ a$ $(#h $ho()+ be he)+ )ab)e to pa" taxe$ o,  #orporaton n proporton to ther $hare$ I +$trb(ton o,  a$$et$ o, +e,(n#t #orporaton COURT 0 A $to#kho)+er !ho ha$ (npa+ $(b$#rpton$ $ )ab)e ,or +ebt$ o, #orporaton  JUSTI8ICATION0 (npa+ +ebt o, $to#kho)+er ,or the p(r#ha$e pr#e o, $(b$#rbe+ $hare$ repre$ent$ an a$$et o, the #orporaton n han+$ o, $to#kho)+er$ COLLECTION THRU APPLICATION OF A DISPUTED TAX AGAINST A REFUNDABLE TAX - = e%en , a tax ben& #o))e#te+ b" the #o**$$oner $ ben& #onte$te+ b" the taxpa"er' the $a*e #an be - en,or#e+ b" a $et oH or b" app)"n& t a&an$t the re,(n+ab)e tax that *a" be +(e the taxpa"er9 ASSU6E7 0 both #o))e#ton an+ r&ht to the re,(n+ o,  taxe$ ha$ not "et pre$#rbe+ an+ that re,(n+ #)a* ha$ a)rea+" been appro%e+ CASE 0 19 T4E SET O88 IS JUSTI8IE7 BECAUSE TAXES 6UST BE COLLECE7 IN AS 6UC4 AS T4E5 ARE LI8EBLOO7 O8 GOVERN6ENT AN7 T4AT IT IS A SETTLE7 PRINCIPLE  T4AT T4E GOVT IS NOT 7UT5 BOUN7 TO RESOLVE7 A PEN7ING TAX PROTEST BE8ORE IT CAN COLLECT T4E UNPAI7 TAX LIABILIT5 a9 I, pa"*ent o, taxe$ #o()+ be po$tpone+ b" $*p)" (e$tonn& ther %a)+t"' &o%ern*ent ,(n#ton$ !o()+ be para)"2e+ :9 E%en on e(tab)e &ro(n+$' the Go%ern*ent $ho()+ not app)" a tax that ha$ pre$#rbe+ a&an$t a re,(n+ab)e $(* a9 EUITABLE RECOUP6ENT IS NOT RECOGNIE7 In the e%ent o, a $etoH +(rn& the pen+en#" o, a tax prote$t n BIR' !hat $ the re*e+" o, taxpa"er a$$(*n& h$ re,(n+ #)a* $ a)rea+" a $ett)e+ *atter - - the taxpa"er #o()+ probab)" treat the $et oH a$ a +e#$on o, Co**$$oner +en"n& h$ prote$t n !h#h #a$e he #o()+ /)e an appea) !th CTA !thn the re&)e*entar" pero+ o, ;< +a"$ p(r$(ant to Se#ton ::> n re)aton to $e# 11 SEC2 66K2 Pro&e#&$3 o% A##e##/e&2 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that proper taxe$ $ho()+ be a$$e$$e+' he $ha)) /r$t not," the taxpa"er o, h$ /n+n&$0 Pro%+e+' ho!e%er' That a pre-a$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0  TAXATION SURVIVAL KIT – Aban Book - - - - - ?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o, *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or ?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or ?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o, the $(##ee+n& taxab)e "earM or ?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or ?e@ hen the art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to nonexe*pt per$on$9 The taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 thn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 S(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n& a re(e$t ,or re#on$+eraton or ren%e$t&aton !thn thrt" ?;<@ +a"$ ,ro* re#ept o,  the a$$e$$*ent n $(#h ,or* an+ *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$9 thn $xt" ?D<@ +a"$ ,ro* /)n& o, the prote$t' a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 I, the prote$t $ +ene+ n !ho)e or n part' or $ not a#te+ (pon !thn one h(n+re+ e&ht" ?1><@ +a"$ ,ro* $(b*$$on o, +o#(*ent$' the taxpa"er a+%er$e)"  6ran+a' C)ar$$e Ann aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9 Se&$o 44 o% RA 446 2 Who ma a!!"a#$ "%"&'  o( a!!"a# 2 - An" per$on a$$o#aton or #orporaton a+%er$e)" aHe#te+ b" a +e#$on or r()n& o, the Co))e#tor o, Interna) Re%en(e' the Co))e#tor o, C($to*$ or an" pro%n#a) or #t" Boar+ o, A$$e$$*ent Appea)$ *a" /)e an appea) n the Co(rt o, Tax Appea)$ !thn thrt" +a"$ a,ter the re#ept o, $(#h +e#$on or r()n&9 - No appea) taken b" the Co(rt o, Appea)$ ,ro* the +e#$on o, the Co))e#tor o, Interna) Re%en(e or the Co))e#tor o, C($to*$ $ha)) $($pen+ the pa"*ent' )e%"' +$trant' an+ or $a)e o, an" propert" o, the taxpa"er ,or the $at$,a#ton o, h$ tax )ab)t" a$ pro%+e+ b" ex$tn& )a!M Pro%+e+' ho!e%er' That !hen n the opnon o, the Co(rt the #o))e#ton b" the B(rea( o,  Interna) Re%en(e or the Co**$$oner o, C($to*$ *a"  .eopar+2e the ntere$t o, the Go%ern*ent an+or the taxpa"er the Co(rt at an" $ta&e o, the pro#ee+n& *a" $($pen+ the $a+ #o))e#ton an+ re(re the taxpa"er ether to +epo$t the a*o(nt #)a*e+ or to /)e a $(ret" bon+ ,or not *ore than +o(b)e the a*o(nt !th the Co(rtM - CRIMINAL ACTION 19 GENERAL – #r*na) a#ton a$ a #o))e#ton re*e+"' $ a(thor2e+ (n+er Se#ton :< a9  The .(+&*ent n the #r*na) #a$e $ha)) not on)" *po$e the pena)t" b(t $ha)) a)$o or+er pa"*ent D o, the taxe$ $(b.e#t o, the #r*na) #a$e a$ /na))" +e#+e+ b" the Co**$$oner9 Art#)e 1<< RPC pro%+e$ that e%er" per$on #r*na))" )ab)e ,or a ,e)on" $ a)$o #%))" )ab)e Cr*na) a#ton $ NOT RESORTE7 TO AS A COLLECTION RE6E75 ONL5  Taxaton – #%) )ab)t" to pa" taxe$ ar$e$ NOT BECAUSE O8 AN5 8ELON5 b(t (pon taxpa"er3$ ,a)(re to pa" taxe$ Ca$e$ not n%o)%n& non – pa"*ent o, taxe$ !here #r*na) a#ton $ (t)2e+ - Se#ton ::1 o, 1 NIRC a9 The re*e+" ,or en,or#e*ent o, $tat(tor" pena)te$ o, a)) $ort$ $ha)) be b" #r*na) or #%) a#ton' a$ the part#()ar $t(aton *a" re(re' $(b.e#t to the appro%a) o, the Co**$$oner9 - Per$on !ho' ben& re(re+ to $$(e re#ept$ or $a)e$ or #o**er#a) n%o#e$' ,a)$ or re,($e$ to $$(e $(#h re#ept$ or n%o#e$ b9 Upon #on%#ton ,or ea#h a#t or o*$$on' a /ne o, not )e$$ than 1k pe$o$ BUT NOT 6ORE T4AN < 00 SUBSI7IAR5 I6PRISON6ENT ONL5 IN CASES O8 8AILURE TO PA5 8INE I6POSE7 AN7 IS SILENT ABOUT TAXPA5ER3S 8AILURE TO PA5  T4E TAXES ASSESSE7 S(ppo$e a taxpa"er $ a$$e$$e+ ,or taxe$ an+ a$$(*n& that a&an$t that a$$e$$*ent' he /)e$ an a+*n$trat%e prote$t n BIR9 a9 6a" the Go%ern*ent' +(rn& pen+en#" o, that prote$t' /)e a #r*na) a#ton a&an$t the taxpa"er ,or /)n& a ,a)$e a+ ,ra(+()ent ret(rn b9 I$ not the /)n& o, #r* a#ton pre*at(re an+ pre#ptate  6ran+a' C)ar$$e Ann SC0 Cr* a#ton $ )e&a))" proper9 - hat $ n%o)%e+ here n #r* a#ton $ )e&a))" not the #o))e#ton o, taxe$ !here the a$$e$$*ent o, CIR *a" be re%e!e+ b" Co(rt o, Tax Appea)$ - - b(t a #r*na) pro$e#(ton ,or %o)aton$ o, Natona) Interna) Re%en(e Co+e !h#h $ !thn the #o&n2an#e o, Co(rt o, 8r$t In$tan#e ?RTC@ - there #an be no #%) a#ton to en,or#e #o))e#ton be,ore the a$$e$$*ent pro#e+(re$ n #o+e ha%e been ,o))o!e+There $ no re(re*ent ,or the pre#$e #o*p(taton an+ a$$e$$*ent o, tax be,ore there #an be a #r*na) pro$e#(ton - Prote$t o, pettoner a&an$t a$$e$$*ent #annot $top h$ pro$e#(ton ,or %o)aton o, Natona) nterna) Re%en(e Co+e CIR %$ pa$#or Rea)t" SC0 reterate+ the &enera) r()e that an a$$e$$*ent $ not nexe$$ar" be,ore a #r*na) #har&e #an be /)e+9 - the #r*na) #har&e nee+ on)" be pro%e+ b" a pr*a ,a#e $ho!n& o, ,a)(re to /)e a re(re+ tax ret(rn an+ $(#h ,a#t nee+ not be pro%e+ b" an a$$e$$*ent - Se#ton ::: 0 n #a$e$ !here a ,a)$e or ,ra(+()ent ret(rn $ $(b*tte+ or n #a$e$ o, ,a)(re to /)e a ret(rn $(#h a$ th$ #a$e' pro#ee+n&$ n #o(rt *a" be #o**en#e+ !tho(t an a$$e$$*ent - Se#ton :< 0 #%) an+ #r* a$pe#t$ o, #a$e *a" be p(r$(e+ $*()taneo($)" - UNGAB #a$e 0 pettoner theren $o(&ht the +$*$$a) o, #r* #o*p)ant$ ,or ben& a pre*at(re' $n#e h$ prote$t to CTA ha+ not "et been re$o)%e+9 - COURT 0 $(#h prote$t #o()+ not $top or $($pen+ the #r* a#ton !h#h !a$ n+epen+ent o, the re$o)(ton o,  prote$t n CTA - REASON 0 #r ha+' n $(#h ta# e%a$on #a$e$ +$#reton on !hether to $$(e an a$$e$$*ent or to /)e a #r* #a$e a&an$t taxpa"er or to +o both > ,9 In #a$e o, %)aton$ o*tte+ b" a$$o#aton$' partner$hp$ or #orporaton$' the pena)t" $ha)) be *po$e+ on parner' pre$+ent' &enera) *ana&er' bran#h *ana&er' trea$(rer ' o#er n #har&e an+ e*p)o"ee$ re$pon$b)e ,or %o)aton 9 The re$pon$b)e #orporate o#er$' partner$ or e*p)o"ee$ o, an" #orporaton' a$$o#aton or &enra) #o-partner$hp )ab)e ,or an" o, the a#t$ or o**$$on$ pena)2e+ there(n+er $ha)) (pon #on%#ton' be /ne+ not )e$$ than  SEC2 672 Per$o! o% L$/$&a&$o U+o A##e##/e& a! Co--e&$o2  - Ex#ept a$ pro%+e+ n Se#ton :::' nterna) re%en(e taxe$ $ha)) be a$$e$$e+ !thn three ?;@ "ear$ a,ter the )a$t +a" pre$#rbe+ b" )a! ,or the /)n& o, the ret(rn' an+ no pro#ee+n& n #o(rt !tho(t a$$e$$*ent ,or the #o))e#ton o, $(#h taxe$ $ha)) be be&(n a,ter the expraton o, $(#h pero+0 Pro%+e+' That n a #a$e !here a ret(rn $ /)e+ be"on+ the pero+ pre$#rbe+ b" )a!' the three ?;@-"ear pero+ $ha)) be #o(nte+ ,ro* the +a" the ret(rn !a$ /)e+9 8or p(rpo$e$ o, th$ Se#ton' a ret(rn /)e+ be,ore the )a$t +a" pre$#rbe+ b" )a! ,or the /)n& thereo, $ha)) be #on$+ere+ a$ /)e+ on $(#h )a$t +a"9 IMPORTANT BECAUSE ) , $(#h tax $ a$$e$$e+ be"on+ the three "ear pre$#prt%e pero+ a$ $tate+ abo%e' the taxpa"er $ &%en the 0 19 RIG4T TO PROTEST AGAINST T4E ASSESS6ENT AN7 :9 TO APPEAL TO T4E CTA ;9 $ho()+ the &o%t3$ +e#$on on (e$ton o, pre$#rpton be a+%r$e to h$ po$ton hen an a$$e$$*ent $ n%a)+ be#a($e t !a$ *a+e a,ter )ap$e o, the pre$#rpt%e pero+ – then the #o))e#ton o, tax' !h#h $ #o%ere+ b" pre$#rbe+ a$$e$$*ent' be#o*e$ INE88CTUAL 6a+ate+ b" )a! 0 Go%ern*nt *($t a$$e$$ ON TI6E - not )ater than three "ear$ #o(nte+ ,ro* an+ a,ter the pero+ /xe+ b" )a! ,or /)n& o, the tax ret(rn or a#t(a) +ate o, /)n& - 4IC4EVER IS T4E LATER 7ATE  T4US I8 TAXPA5ER ,or exa*p)e /)e+ h$ n#o*e tax ret(rn ,or 1D on 6ar  1' or one *onth be,ore the )a$t +a" /xe+ b" )a! ,or /)n& o, n#o*e tax ret(rn$ ,or 1D on apr) 1' 1' then three "ear pero+ $ #o(nte+ ,ro* apr) 1D' 1  TAXATION SURVIVAL KIT – Aban Book I, the ret(rn $ /)e+ )ate' or on 6a" 1' 1' then the three "ear pero+ $ COUNTE7 ,ro* +ate o, a#t(a) /)n& or on 6a" 1' 1 a)$o9 In #a$e o, $e), a$$e$$e+ taxe$ )ke n#o*e tax that the taxpa"er h*$e), a$$e$$ an+ reFe#t$ on h$ ret(rn0 - the #o))e#ton thereo, a" pro#ee+ !tho(t an" ,(rther a$$e$$*ent - the pre$#rpt%e pero+ o, #o))e#ton app)e$ - BIR *($t #o))e#t $(#h tax - Ether b" SU66AR5 OR JU7ICIAL re*e+e+ - thn ; "ear$ ,ro* +ate o, /)&n o, tax ret(rn - REASON 0 +ate o, a$$e$$*ent n #a$e o, $e), a$$e$$e+ taxe$ !o()+ be the +ate o, a#t(a) /)n& o, ret(rn a$ t $ on $(#h +ate !hen the tax $ $a+ to ha%e been a$$e$$e+ SUBJECT ASSSES6SENTS ERE 6A7E BE5ON7 T4E PRESCRIPTIVE PERIO7 UN7ER T4E TAX CO7E - - SC 0 ,or the p(rpo$e o, $a,e&(ar+n& taxpa"er$ ,ro* (nrea$onab)e exa*naton' n%e$t&aton or a$$e$$*ent' o(r tax )a! pro%+e$ a $tat(te o, )*taton$ n #o))e#ton o, taxe$ The )a! on pre$#rpton' ben& a re*e+a) *ea$(re' $ho()+ be )bera))" #on$tr(e+ n or+er to aHor+ $(#h prote#ton EXCEPTIONS 0 $ho()+ per,or#e be $tr#t)" #on$tr(e+ Ne&)&en#e or o%er$&ht on part o, the BIR #annot pre.(+#e taxpa"er$' #on$+ern& that the pre$#rpt%e pero+ !a$ pre#e$e)" nten+e+ to &%e the* pea#e o, *n+ WHEN IS A TAX ASSESSMENT DEEMED MADE( - BIR3$ a$$e$$*ent $ ($(a))" e*bo+e+ n a +e*an+ )etter or n a BIR ,or* kno!n a$ an a$$e$$*ent not#e - Soe*t*e$' BIR3$ pra#t#e $ to SEN7 OUT to taxpa"er both 7E6AN7 LETTER an+ ASSESS6ENT NOTICE - The$e #o**(n#aton$ n%arab)" bear SPECI8IC 7ATES !hen the" are PREPARE7 OR ISSUE79  6ran+a' C)ar$$e Ann - ISSUE +ate$ are ne#e$$e$ar)" anteror to the +ate o, a#t(a) re)ea$e or *)n& o, the +e*an+ )etter ACTUAL RELEASE IS 7ONE B5 6AILING T4ESE 7OCU6ENTS' BUT SO6ETI6ES PERSONAL 7ELIVER5 OR SERVICE IS 7ONE Ca$e 0 19 t $ not the $$(e +ate o, +e*an+ )etter an+or not#e o, a$$e$$*ent that $ the RECKONING POINT IN PRESCRIPTION a9 BUT the +ate !hen $a+ +e*an+ )etter or not#e $ re)ea$e+ ' *a)e+ or $ent to taxpa"er that #on$tt(te$ ACTUAL ASSESS6ENT :9 An a$$e$$*ent #ontan$ NOT ONL5 CO6PUTATION O8  TAX LIABILITIES' BUT ALSO A 7E6AN7 8OR PA56ENT I4TIN PRESCRIBE7 PERIO7 ;9 It $&na)$ t*e !hen pena)te$ an+ ntere$t$ be&n to a##r(e a&an$t the taxpa"er =9 To enab)e the taxpa"er to +eter*ne the re*e+e$ thereon' +(e pro#e$$ re(re$ that t *($t be $er%e+ an+ re#e%e+ b" taxpa"er 9 An a+a%t !h#h !a$ exe#(te+ b" re%en(e o#er$ $tatn& the tax )ab)te$ o, a taxpa"er an+ atta#he+ to a #r*na) #o*p)ant ,or tax e%a$on' CANNOT BE 7EE6E7 AN ASSESS6ENT T4AT CAN BE UESTIONE7 BE8ORE CTA  T(pa2 %$ U)ep - nterna) re%en(e taxe$ are $e), a$$e$$n& - no ,(rther a$$e$$*ent b" the &o%ern*ent $ re(re+ to #reate tax )ab)t" - a$$e$$e*ent $ NOT ALTOGET4ER INCONSEUENTIAL - t $ re)e%ant n proper p(r$(t o, .(+#a) an+ extra.(+#a) re*e+e$ - to en,or#e taxpa"er )ab)te$ an+ #ertan *atter$ that re)ate to t - $(#h a$ 0 o *po$ton o, $(r#har&e$ an+ o ntere$t >< o o n app)#aton o, $tat(te$ o, )*taton$ an+ e$tab)$he*ent o, tax )en$ - ULTI6ATE PURPOSE O8 ASSESS6ENT 0 TO ASCERTAIN T4E A6OUNT T4AT EAC4 TAXPA5ER IS TO PA5 AN ASSESS6ENT IS A NOTICE TO T4E E88ECT T4AT T4E A6OUNT T4EREIN STATE7 IS 7UE AS TAX AN7 A 7E6AN7 8OR PA56ENT T4EREO89 ASSESS6ENTS 6A7E BE5N7 T4E PRESCRIBE7 PERIO7 OUL7 NOT BE BIN7ING ON TAXPA5ER UNLESS REBUTTE7 0 ALL PRESU6PTIONS GENERALL5 ARE IN7ULGE7 IN 8AVOR O8 CORRECTNESS O8 ASSESS6ENT B5  T4E CO66ISSIONER O8 INTERNAL REVENUE AGAINST  TAXPA5ER NOTE 0 19 !here the taxpa"er-a+re$$ee *ake$ a +re#t +ena) o, re#ept o, *a)e+ e*an+ )etter' $#h +ena) $h,t$ the b(r+en to the &o%ern*ent to pro%e that $(#h )etter !a$ n+ee+ re#e%e+ b" the taxpa"er9 :9 The part" ,a%ore+ b" pre$(*pton o, re#ept o, +e*an+ )etter $ the &o%ern*ent R()e 1;1 Se#ton ; ROC 0 - RELEASE OF ASSESSMENT NOTICE OR DEMAND BEFORE THE LAPSE OF PRESCRIPTIVE PERIOD COURT ) a$ )on& a$ the re)ea$e thereo, $ eHe#te+ be,ore pre$#rpton $et$ n' the a$$e$$*ent $ +ee*e+ *a+e on t*e e%en tho(&h the $a*e $ a#t(a))" re#e%e+ b" taxpa"er a,ter expraton o, pre$#rpt%e pero+ - There $ +$p(tab)e pre$(*pton that a )etter +()" +re#te+ an+ *a)e+ !a$ re#e%e+ n re&()ar #o(r$e o, *a) The #orre#t a++re$$ o, taxpa"er $ n+#ate+ n +e*an+ )etter or not#e o, a$$e$$*ent I, the +ate on !h#h the a$$e$$*ent $ +(e to pre$#rbe ,a))$ on a Sat(r+a"' the ,o))o!n& +a" ben& S(n+a"' t $ (n+er$too+ that the Go%ern*ent ha$ (nt) the next $(##ee+n& b($ne$$ +a" or 6on+a" !thn !h#h to a$$e$$ the tax )a! +oe$ not re(re that the +e*an+ or not#e be re#e%e+ !thn pre$#rpt%e pero+ hen an a$$e$$*ent not#e $ $ent b" *a) ?or+nar" *a) exa*p)e@0 - RULE 0 t $ pre$(*e+ that the taxpa"er re#e%e+ *a)e+ not#e !thn the pero+ o, t*e - !hen *a) o, $(#h kn+ are or+nar)" re#e%e+ >< $o that , $(#h pre$(*e+ re#ept $ $t)) !thn the pre$#rpt%e pero+' the taxpa"er3$ #ontenton that the Go%ern*ent3$ r&ht to a$$e$$ the tax ha$ a)rea+" pre$#rbe+ #annot be &%en #re+t IMPORTANT CONSIDERATIONS RE PRESCRIPTION OF GOVERNMENT8S RIGHT TO ASSESS TAXES  TAXATION SURVIVAL KIT – Aban Book A9 7ate o, 8)n& o, Tax Ret(rn$ – A 6atera) 8a#tor n Re$o)%n& (e$ton$ on Pre$#rpton a9 I*portant ,or p($rpo$e$ o, +eter*nn& !hether or not the tax !a$ a$$e$$e+ !thn the pre$#rpt%e pero+9 b9 COURT 0 !here t appear$ that the taxpa"er ha$ /)e+ t$ n#o*e tax ret(rn$ ,or 1< on 6ar D 11' !h)e the a$$e$$*ent !a$ *a+e on No% : 1= or three "ear$ an+ e&ht *onth$ a,ter the /)n& o, ret(rn ,or $a+ " ear' t ,o))o!$ that +e/#en#" a$$e$$*ent *a+e b" #o**$$oner !a$ VALI7 #9 COURT 0 t $ n#(*bent on the taxpa"er to pro%e that a ret(rn ha+ been /)e+ b" h* n or+er that  "ear pre$#rpt%e pero+ *a" app)" OT4ERISE ' there $ a ba$$ ,or BIR to a$$e$$ the tax !thn the ten "ear pero+ on &ro(n+ that NO RETURN AS 8ILE7 B5 TAXPA5ER ARE TRANSCRIPT S4EETS OR CO6PAN5 RECOR7S S4OING  T4E RA 6ATERIALS ENTERING T4E TAXPA5ER3S 8ACTOR5 OR 7ISTILLER5 AN7 T4E 8INIS4E7 GOO7S PRO7UCE7 AN7 RE6OVE7 T4ERE8RO6 EVER57A5 7EE6E7 TAX RETURNS 8OR PURPOSES O8 PRESCRIPTVE PERIO7 8OR ASSESS6ENT COURT 0 the$e tran$#rpt $heet$ are not ret(rn$ - the" #annot be treate+ a$ ret(rn$ be#a($e the" +o not #ontan n,or*aton ne#e$$ar" an+ re(re+ to per*t the #o*p(taton an+ a$$e$$*ent o, taxe$ )ke $pe#/# tax B9 EHe#t o, 8)n& an A*en+e+ Ret(rn In #a$e the taxpa"er /)e$ an a*en+e+ ret(rn' $ho()+ the pre$#rpt%e pero+ be #o(nte+ ,ro* /)n& o, $(#h a*en+e+ ret(rn - I6PORTANT UESTION BECAUSE I8 POINT O8 RECKNONING T4REE 5EAR PRESCRIPTIVE PERIO7 IS ORIGINAL OR EARLIER CONTAINE7 I A6ENE7 RETURN >1 6ran+a' C)ar$$e Ann IS LIKEL5 TO PRESCRIBE OR 6IG4T 4AVE ALREA75 PRESCRIBE7 COURT0 , a$$e$$*ent $ #o(nte+ ,ro* /)n& o, or&na) ret(rn' th$ !o()+ per*t taxpa"er$ to e%a+e taxe$ b" $*p)" reportn& n ther or&na) ret(rn' hea%" )o$$e$ an+ a*en+n& the $a*e a,ter the )ap$e o, pre$#rpt%e pero+ !hen the Co**$$oner ha$ a)rea+" )o$t h$ a(thort" to a$$e$$ the tax COURT 0 ob.e#t%e o, Tax Co+e $ to *po$e taxe$' not to en#ha#e tax a%o+an#e to pre.(+#e Go%ern*ent Pre$#rpt%e pero+ ,or a$$e$$*ent $tart$ to r(n ,ro* /)n& o, or&na) ret(rn , the $a*e $ $(#ent)" #o*p)ete to enab)e the Co**$$oner to nte))&ent)" +eter*ne the porper a*o(nt o, tax to be a$$e$$e+ A*ene+e ret(rn$ !ere /)e+ )ater nether $tart$ a ne! the r(nnn& o, $tat(te o, )*taton$ nor exten+$ the pre$#rpt%e pero+ 8)n& o, an a*en+e+ ret(rn an+ #)a* ,or re,(n+ o, o%erpa"*ent +oe$ not #on$tt(te an" !a%er o, +e,en$e o, pre$#rpton C9 EHe#t o, 8)n& a ron& Ret(rn hat happen$ !hen the taxpa"er /)e$ a !ron& ret(rn I$ the BIR .($t/e+ n app)"n& the ten "ear pre$#rpt%e pero+ ,or #a$e$ !here no ret(rn $ /)e+ b" the taxpa"er' a$$(*n& that the n,or*aton e*bo+e+ n !ron& ret(rn #o()+ enab)e the BIR to a$$e$$ the tax #o()+ ha%e been a$#ertane+ ha+ the taxpa"er /)e+ a #orre#t ret(rn  COURT0 $n#e no per#enta&e tax ret(rn !a$ a#t(a))" /)e+ b" the taxpa"er to reFe#t the $a)e$ o, t$ )o&$ to Japan' the ten "ear pre$#rpt%e pero+ ,or #a$e$ !here ret(rn$ are not /)e+ app)e$ >: - e%en , an n#o*e tax ret(rn !h#h happen$ to be the !ron& ret(rn ha+ been /)e+ an+ e%en #on$+ern& that the n#o*e ,ro* $a+ $a)e$ !ere a)) reFe#te+ theren' $t))' th$ !o()+ not take the p)a#e o, #orre#t ret(rn !h#h ,or p(rpo$e$ o, tax n (e$ton $ho()+ a#t(a))" be the per#enta&e tax ret(rn Per#enta&e tax on $a)e$ ha$ NO BEEN rep)a#e+ b" 1: 4e +oe$ not /)e a ret(rn at a))' then an a$$e$$*ent *a" be *a+e at an" t*e !thn the ten "ear pre$#rpt%e pero+ E9 App)#ab)e Pre$#rpt%e Pero+ , Taxpa"er 8a)e$ to 8)e a retr(n I, no ret(rn $ /)e+ b" taxpa"er' the #o**$$oner *a" a$$e$$ the tax an"t*e !thn ten "ear$ a,ter +$#o%er" o, o*$$on SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o%  A##e##/e& a! Co--e&$o o% Ta'e#2 - ?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o, $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on  The +e#$on$ are (nan*o($ n ho)+n& that 0 !here taxpa"er ,a)e+ to /)e an" ret(rn' ten "ear pre$#rpt%e pero+ app)e$ Sn#e pre$#rpton o, Go%ern*ent3$ r&ht to a$$e$$ taxe$ $ an ar*at%e +e,en$e 0 t $ n#(*bent on taxpa"er to pro%e that tax ret(rn !ere a#t(a))" /)e+ $o that the bene/t o, three "ear pre$#rpt%e pero+ *a" be a%a)e+ o, S(ppo$e a #orporate taxpa"er /)e$ a ret(rn b(t t ,a)e+ to n#)(+e #ertan te*$ n t$ ret(rn an+ non n#)($on o, tho$e te*$ $ not +(e to an" !)),() o*$$on or ,ra(+' +oe$ th$ #r#(*$tan#e #on$tt(te a ,a)(re to /)e a ret(rn !th re$pe#t to the o*tte+ te*$ !thn the *eann& o, Se# ::: o, tax #o+e - NO  TAXATION SURVIVAL KIT – Aban Book - Co(rt 0 no o*$$on to /)e a tax ret(rn on part o, taxpa"er $ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9 4o! abo(t the tran$#rpt $heet$ !h#h a taxpa"er $(b*tte+ to the *(n#pa) trea$(rer ,or $pe#/# tax p(rpo$e$' are the" #on$+ere+ ret(rn$ $o a$ to .($t," the app)#aton o, three "ear pre$#rpt%e pero+ - CTA 0 the$e tran$#rpt $heet$ +o not (a)," a$ ret(rn$ a$ ponte o(t ea)er - /)n& thereo, +o not' (a)," a$ re(trn$ - $a+ /)n& +oe$ not pre#)(+e a$$e$$*ent on ba$$ o, 1<"ear pero+ )*taton - 89 Pre$#rpt%e pero+ o, a$$e$$*ent !hen there $ ,ra(+ 19 8ra(+ n Genera) a9 NECESSIT5 o, proo, o, ,ra(+ 0 !hen there $ ,ra(+()ent /)n& o, tax ret(rn$' the ten "ear pero+ app)e$ n )e( o, three "ear pre$#rpt%e )*t b9 Pre$#rpt%e pero+ n th$ n$tan#e $ #o(nte+ ,ro* +$#o%er" o, ,ra(+' not ,ro* /)n& o, ,ra(+()ent ret(rn #9 NO PERIO7 ,or +$#o%er" o, ,ra(+ $ /xe+ n the )a! - Cr#(*$tan#e$ that *ht ne&ate ,ra(+ an+ th($ pre#)(+e the app)#aton o, ten "ear pre$#rpt%e pero+ I9 II9 III9 SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o%  A##e##/e& a! Co--e&$o o% Ta'e#2 - IV9 ?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o,  $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on0 Pro%+e+' That n a ,ra(+ a$$e$$*ent !h#h ha$ be#o*e /na) an+ exe#(tor"' the ,a#t o, ,ra(+ >; 6ran+a' C)ar$$e Ann 8RAU7 6UST BE PROVE7 AS A 8ACT So that ten "ear pre$#rpt%e pero+ *a" app)" SC 0 8RAU7 IS A UESTION O8 8ACT AN7 CIRCU6STANCES COSNTITUTING 8RAU7 6UST BE ALLEGE7 AN7 PROVE7 IN COURT BELO 8n+n& o, tra) #o(rt a$ to t$ non ex$ten#e $ /na) an+ #annot be re%e!e+ (n)e$$ #)ear)" $ho!n to be erroneo($ 8RAU7 IS NEVER LIG4TL5 TO BE PRESU6E7 BECAUSE IT IS A SERIOUS C4ARGE V9 !hen #o**$$oner ,a)$ to *p(te ,ra(+ n a$$e$$*ent not#e or +e*an+ ,or pa"*ent' or ,a)(re to a))e&e t n h$ an$!er to the taxpa"er3$ petton ,or re%e! !hen #a$e $ appea)e+ to CTA non ex$ten#e o, ,ra(+ $ ,(rther (n+er$#ore+ b" ,a#t the #o**$$oner ra$e+ the (e$ton o, ,ra(+ ONL5 8OR T4E 8IRST TI6E IN 4IS 6E6ORAN7U6 !h#h !a$ /)e+ !th CTA a,ter he ha+ re$te+ h$ #a$e #o**$$oner3$ ,a)(re to rpo%e ,ra(+ #an' be ,ata) to the a$$e$$*ent a$ !hen tax )ab)t" $ a$$e$$e+ be"on+ the ($(a) three "ear pre$#rpt%e pero+ Tax COURT 0 the ,a#t that the #o**$$oner ++ not n#)(+e the ,ra(+ pena)t" n h$ +e/#en#" a$$e$$*ent !h#h !a$ $$(e+ a,ter /)n& o, taxpa"er3$ ret(rn $ an n+#aton that the Co**$$oner h*$e), +oe$ not be)e%e hat there !a$ ,ra(+ here BIR appeare+ NOT TOO SURE a$ to the rea) a*o(nt o, taxpa"erM$ net n#o*e' a$ !here the BIR ha+ on three +Herent o##a$on$ arr%e+ at three h&h)" +Herent #o*p(taton >= VI9 VII9 VIII9 IX9 X9 XI9 XII9 XIII9 XIV9 There !a$ NO 8RAU7 I8 CO66ISSIONER 6EREL5 RELIE7 UPON AN ALLEGE7 SUBSTANTIAL UN7ER 7ECLARATION O8 INCO6E TAX RESULTING 8RO6 4IS ON CO6PUTATION O8 COST BASIS O8 LAN7S AN7 I6PROVE6ENTS SOL7 B5 TAXPA5ER TO GOVERN6ENT 6ere (n+er$tate*ent o, n#o*e n t$e), +oe$ not pro%e ,ra(+ 6ere (n+er$tate*ent o, &ro$$ earnn& +oe$ not t$e), pro%e ,ra(+ A))e&aton$ o, ,ra(+ !th ntenton to e%a+e the ,ran#h$e tax ha$ not been pro%e+ $at$,a#tor)" Re#or+$ $ho!e+ 0 ,ro* /r$t (arter o, 1D<' &ro$$ re#ept$ o, pettoner taxpa"er a$ a ,ran#h$e &rantee a*o(nte+ to 16 pe$o$ O(t o, $a+ a*o(nt' on)" 1Dk repre$ente+ the a))e&e+ (nre#or+e+ an+ (n+erreporte+ re#ept$ o, pettoner COURT00 a b& porton o, (n+ere#or+e+ re#ept$ o, 1Dk !a$ not reFe#te+ n book$ o, a##o(nt$ o, taxpa"er be#a($e t repre$ente+ the #o$t o, e)e#tr# #(rrent ($e+ ,ree o, #har&e b" t$ o#er$ an+ e*p)o"ee$ COURT0 t #annot #har&e+ that pettoner nten+e+ to +e,ra(+ the &o%ern*ent o, ,ran#h$e tax GRAU7 BEING ABSENT I N T4IS CASE' RIG4T O8 GOVERN6ENT TO ASSESS T4E 8RANC4ISE TAX 4A7 ALREA75 PRESCRIBE7 :9 )) Un+er+e#)araton o, propert" ne#e$$ar)" #on$tt(te ,ra(+ a9 8RAU7 n or+er to .($t," a a$$e$$*ent ba$e+ on ten "ear pre$#rpt%e pero+' *($t be the pro+(#t o, a +e)berate ntent to e%a$+e taxe$ b9 6ere (n+er+e)#araton n tax ret(rn$ o, propert" $(b.e#t to e$tate tax !)) not ne#e$$ar)" *p)" ,ra(+ #9 Ja)an+on #a$e 0 there !a$ an a))e&aton on part o, BIR to eHe#t a*on& other$' there !a$ an o*$$on o,  )ot$ o, +e#e+ent ,ro* e$tate tax ret(rn /)e+ +9 COURT 0 $e%en )to$ !h#h !ere a))e&e+)" ex#)(+e+' three !ere a#t(a))" n#)(+e+ !th part#()art" n that the" !ere the *o$t %a)(ab)e to !th 0 Lot =; !th *arket %a)(e o, :1k e9 Ben& #on.(&a)' one ha), thereo, $ho()+ be +e+(#te+ th($ )ea%n& a re)at%e)" $*a)) ba)an#e o, 19k ,9 COURT L I8 E A77 T4REE LOTS !ere a)rea+" +e#)are+ b" .a)an+on a$ part o, h$ propert" an+ h$ !,e ,or pr(po$e$ o, n#o*e tax' there $ rea$on to be)e%e that ther o*$$on ,ro* e$tate an+ nhertan#e tax ret(rn $ +(e to an hone$t *$take or na+%erten#e &9 On)" e$tate taxe$ are #o))e#te+ on 6ORTIS CAUSE tran$,er$ (n+er pre$ent )a! a$ nhertan#e tax ha$ a)rea+" been abo)$he+ CIR %$ Goo+r#h - SC +$re&ar+e+ pettoner3$ #)a* o, ,a)$t" n an atte*pt to take the (e$tone+ a$$e$$*ent o(t o, a*bt o, $tat(te o, )*taton$ - Ca$e 0 PR propert" !a$ $o)+ ,or a pr#e )e$$ than t$ +e#)are+ ,ar *arket %a)(e an+ ,o(n+ that $(#h ,a#t a)one ++ not #on$tt(te a ,a)$e ret(rn !h#h #ontan$ !ron& n,or*aton +(e to *$take' #are)e$$ne$$ or &noran#e - COURT 0 t $ po$$b)e that rea) propert" *a" be $o)+ ,or )e$$ than a+e(ate #on$+eraton ,or a bona /+e b($ne$$ p(rpo$e n $(#h e%ent' the $a)e re*an$ an ar*$ )en&th tran$a#ton ;9 Spe#/# In$tan#e$ 6an,e$tn& 8ra(+ >=  TAXATION SURVIVAL KIT – Aban Book a9 I, there are #r#(*$tan#e$ that neate ,ra(+' $t(aton$ a)$o ex$t !here the e%+en#e o, ,ra(+ $ *an,e$t b9 Un+er+e#)araton o, n#o*e !th e%+en#e o, ,ra(+()ent ntent $ one n$tan#e o, ,ra(+ #9 CASE0 n#o*e !h#h !a$ reporte+ b" taxpa"er n h$ ret(rn !a$ the n#o*e ,ro* rent$ +9 Sb$tanta) n#o*e +er%e+ ,ro* other $o(r#e$ !ere not n#)(+e+ e9 COUR0 $*p)e $tate*ent that the ret(rn$ !ere not ,ra(+()ent $ not $(#ent to o%erthro! the /n+n&$ o, #o**$$oner a$ to the rea$on ,or o*$$on ,9 Tax *a" be a$$e$$e+ !thn ten "ear$ ,ro* +$#o%er" o, ,ra(+ Co**$$oner3$ +eter*naton ba$e+ on #r#(*$tan#e$ o, the #a$e that ,ra(+ $ pre$ent $tan+$ , no e%+en#e $ pre$ente+ b" taxpa"er to $ho! that the ret(rn /)e+ b" h* !a$ not ,ra(+()ent SC 0 #o**$$oner3$ /n+n&$ o, ra(+ bro(&ht abo(t b" the pre$en#e o, /#tto($ expen$e$' !h#h !ere #)a*e+ b" taxpa"er a$ +e+(#ton$ ,ro* &ro$$ n#o*e - Co**$$oner3$ /n+n&$ on ,a#t$ #on$tt(tn& ,ra(+ !h#h !ere pro%e+ n an+ ,o(n+ e$tab)$he+ b" CTA !a$ not reb(tte+ b" taxpa"er SC 0 /n+n& o, ,a)$t" or ,ra(+ n taxpa"er3$ ret(rn $ho()+ not be +$t(rbe+ =9 EHe#t o, 8ra(+ A$$e$$*ent$ !h#h are /na) an+ exe#(tor Se#ton ::: n a ,ra(+ a$$e$$*ent !h#h ha$ be#o*e /na) an+ exe#(tor"' the ,a#t o, ,ra(+ $ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9 E88ECT O8 T4IS PROVISION 0 to p)a#e !thn $#ope o, .(+#a) not#e (n+er $e#ton 1 r()e 1: o, ROC th($ +$pen$e !th > 6ran+a' C)ar$$e Ann the nee+ ,or proo, there,or' tho$e ,ra(+ a$$e$$*ent$ !h#h ha%e be#o*e /na) an+ exe#(tor (n+er the )a! Se#ton ::> 0 a$$e$$*ent$ be#o*e /na) , taxpa"er +oe$ not /)e an a+*n$trat%e prote$t a&an$t an a$$e$$*ent !thn ;< +a"$ ,ro* re#ept thereo, - !hen an a+%er$e +e#$on o, Co**$$oner on an a+*n$trat%e prote$t $ NOT appea)e+ to Co(rt o, tax appea)$ !thn ;< +a"$ ,ro* re#ept thereo,' or ,ro* )ap$e o, 1>< +a"$ ,ro* $(b*$$on o, re)e%ant $(pportn& +o#$ !tho(t $a+ prote$t ben& a#te+ (pon' +e#$on $ha)) be#o*e /na)' exe#(tor an+ +e*an+ab)e here' ho!e%er' the #a($e o, a#ton n #r*na) #a$e $ !)),() atte*pt n an" *anner to e%a+e or +e,eat an" tax )e%e+ (n+er $a+ #o+e' $ proo, o, ,ra(+ a)$o not ne#e$$ar"  - proo, o, ,ra(+ #annot be +$pen$e+ !th9 A po$$b)e $t(aton $ !hen a per$on' ,or n$tan#e !th #)ear ntent to +e,ra(+ the &o%ern*ent o, re%en(e$' $(b*t$ a ,a)$e an+ ,ra(+()ent n#o*e tax ret(rn INTENTION O8 T4E LA 0 to )*t app)#ab)t" o, r()e on)" to #a$e$ n%o)%n& non pa"*ent #an be #)ear)" $een n the phra$e  T4E 8ACT O8 8RAU7 S4ALL BE JU7ICIALL5 TAKEN COGNIANCE O8 IN CIVIL OR CRI6INAL ACTION 8OR COLLECTION T4EREO8 9 Are the Tax Ret(rn$ that are 8a)$e b(t Not 8ra(+()ent A2nar #a$e 0 >D - A2nar +e+ on 6ar" 1' 1>9 4 n#o*e tax ret(rn$ ,ro* 1= – 11 !ere exa*ne+ b" BIR 7o(btn& tr(th o, n#o*e that he ha+ reporte+' #o**$$oner or+ere+ n%e$t&aton o, #a$e on ba$$ o,  NET ORT4 6ET4O7 S(b$tanta) (n+er +e#)araton$ o, n#o*e !ere +$#o%ere+ No% :> 1:BIR not/e+ A2nar o, tax +e)n(en#" o,  :;k pe$o$ !h#h !a$ )ater re+(#e+ to ;> ha+ a)rea+" been pre$#rbe+ at t*e o, a$$e$$*ent !a$ *a+e on o% :> 1: !n < $(r#har&e ,or ,ra(+ #an be *po$e+ - COURT 0 app)e+ 1< "ear pre$#rpt%e pero+ an+ r()e$ that pre$#rpton ha+ not $et n9 - >D a2nar3$ retr(rn$ !ere ,a)$e be#a($e the (n+er +e#)araton o, n#o*e #on$tt(te+ a +e%aton ,ro* tr(th or+nar" pre$#rpt%e pero+ o,  "ear$ no! three "ear$ !o()+ app)" (n+er nor*a) #r#(*$tn#e$' b(t !hene%er the &o%ern*ent $ p)a#e+ at a +$a+%anta&e $o a$ to pre%ent t$ )a!,() a&ent ,ro* *akn& a proper a$$e$$*ent o, tax )ab)te$ +(e to ,a)$e or ,ra(+()ent ret(rn$ nten+e+ to e%a+e pa"*ent o, taxe$ or ,a)(re to /)e ret(rn$ - here n a &%en $t(aton ?$(#h a$ the a$$e$$*ent o,  :Q $(rtax on *proper)" a##(*()ate+ $(rp)($ o,  #orporaton (n+er Se# : o, tax #o+e be,ore t$ e)*naton n 1>D b" eo ;@ The )a! 7OES NOT PROVI7E 8OR AN5 PARTICULAR PRESCRIPTIVE PERIO7 O8 ASSESS6ENT T4R RULE IS T4AT T4E TAX SOUG4T TO BE ASSESSSE7 BECO6ES I6PRESCRIPTIBLE Se#ton : Tax Co+e - *po$e+ :Q $(rtax or a++tona) tax on #orporaton !a$ $t)) n ,or#e the r()e0 $(rtax !a$ not $(b.e#t to an" pre$#rpt%e pero+ RULES 0 no +e/nte pro% on pre$#rpton o, a$$e$$*ent o, $(#h tax ex$te+  TAXATION SURVIVAL KIT – Aban Book PRESCRIPTION OF GOVERNMENT RIGHT TO COLLECT TAXES 42 La! &o%ernn& Pre$#rpton o, Co))e#ton SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o%  A##e##/e& a! Co--e&$o o% Ta'e#2 – – 1: *onth$ (n+er Stat(te o, #)a*$ or $ho()+ t be the three "ear pre$#rpt%e pero+ ,or a$$e$e*ent (n+er :<; tax #o+e SC0 Vera %$ 8ernan+e2 #a$e - #@ An" nterna) re%en(e tax !h#h ha$ been a$$e$$e+ !thn the pero+ o, )*taton a$ pre$#rbe+ n para&raph ?a@ hereo,  *a" be #o))e#te+ b" +$trant or )e%" or b" a pro#ee+n& n #o(rt !thn /%e ?@ "ear$ ,o))o!n& the a$$e$$*ent o, the tax9 - SC 0 n #o))e#ton o, +e/#en#" ,ran#h$e taxe$' the pro%$on$ o, Tax Co+e' an+ not tho$e o, CC $ho()+ app)" NOTE 0 ,ran#h$e tax' a)tho(&h or&na))" #o))e#te+ b" *(n#pa) &o%ern*ente$ )ke Ct" o, Ceb(' the #o))e#ton o, $(#h tax ha$ a)rea+" been tran$,erre+ to BIR - here the Go%ern*ent3$ a#ton $ on a bon+ !h#h the ta2pa"er exe#(te$ n or+er to $e#(re the pa"*ent o,  h$ tax ob)&aton' the app)#ab)e pre$#rpt%e pero+ $ NO LONGER T4REE 5EARS BUT TEN 5EARS UN7ER ARITCLE 11=1 o, CC hen &o%ern*ent pro#ee+$ b" #o(rt a#ton to ,or,et a bon+' the a#ton $ ,or en,or#e*ent o, a #ontra#t(a) ob)&aton' the pre$#rpt%e pero+ ,or !h#h $ ten "ear$ th re,eren#e to the #)a* o, #o**$$oner a&an$t the +e#e+ent3$ e$tate ,or (npa+ taxe$ o, +e#+ent' !h#h pero+ ,or the pre$ent*ent o, #)a*$ !)) app)"' the pero+ o, ,ro* D > 6ran+a' C)ar$$e Ann - pre$#rpt%e pero+ ,or /)n& #)a*$ a&an$t e$tate (n+er a,or#te+ pro%$ o, ROC +oe$ not app)" a per($a) o, the ROC $ho!$ that t *ake$ no *enton o, #)a*$ ,or *oentar" ob)&aton ,o +e#e+ent #reate+ b" )a! $(#h taxe$' !h#h $ entre)" o, a +Herent #hara#ter ,ro* the #)a*$ expre$$)" en(*erate+ n R()e$ o, Co(rt app)"n& r()e o, $tat(tor" #on$tr(#ton o, expre$$on (non e$t ex#)($on a)ter($ PINE7A CASE 0 propert" o, e$tate a)rea+" n han+$ o,  an her *a" be $(b.e#t to pa"*ent o, tax +(e ,ro* e$tate A ,ortor ' be,ore nhertan#e ha$ pa$$e+ to the her$' the (npa+ taxe$ +(e ,ro* the +e#+ent3$ e$tate *a" be #o))e#te+ e%en !tho(t pre$ent*ent (n+er ROC hen +oe$ the  "ear pre$#rpt%e pero+ ,or #o))e#ton $tart to r(n - ,ro* the a$$e$$*ent o, tax hen $ a part#()ar tax #on$+ere+ to ha%e been a$$e$$e+ - at the t*e the )etter o, +e*an+ or a$$e$$*ent noet# ha$ been $ent' re)ea$e+ or *a)e+ to taxpa"er CASE0 /)e+ ,or #o))e#ton o, a tax )ab)t" !h#h !a$ #o%ere+ b" a r(bber #he#k' SC0 the r&ht to #o))e#t tax be&n$ a,ter the +e*an+ ha$ been $ent to taxpa"er A#t(a) $en+n& or re)ea$e tot axpa"er o, a$$e$$*ent not#e or +e*an+ )etter $ ne#e$$ar" n or+er to +eter*ne the a#t(a) +ate !hen tax ben& #o))e#te+ !a$ a$$e$$e+ >> GOVERN6ENT 8AILE7 TO PROVE T4AT ASSESS6ENT NOTEICE COVERING TAX LIABILIT5 ASSESSE7 AS ELL AS T4E OT4ER SUPPOSE7L5 RITTEN 7E6AN7 LETTERS SUBSEUENT  T4ERETO ERE IN 8ACT ISSUE7 OR SENT TO TAXPA5ER'  T4ERE AS 0 - no %a)+ an+ eHe#t%e $$(an#e or re)ea$e o, $a+ a$$e$$*ent not#e an+ other +e*an+ )etter$ or not#e$ $(b$e(ent threto the +ate$ on !h#h the a$$e$$*ent not#e an+ $(b$e(ent +e*an+ )etter$ !ere $(ppo$e+)" $ent or re)ea$e+ to taxpa"er #annot be re#knone+ !th n #o*p(tn& the pero+ o, pre$#rpton !thn !h#h a #o(rt a#ton to #o))e#t the tax )ab)t" *a" be bro(&ht hen tax $ +ee*e+ #o))e#te+ ,or p(rpo$e$ o, pre$#rpt%e pero+ - #o))e#ton thr( $(**ar" re*e+e$ $ eHe#t(ate+ b" $(**ar" *etho+$ !hen the Go%ern*ent a%a)$ o, a +$trant an+ )e%" pro#e+(re pre$#rbe+ n Tax #o+e , #o))e#ton $ to be eHe#te+ thr( .(+#a) re*e+e$' the #o))e#ton o, ta2 $ be&(* b" /)n& the o#*p)ant !th proper #o(rt I, +e#$on o, #o**$$oner on a prote$te+ a$$e$$*ent $ appea)e+ to CTA' #o))e#ton o, tax $ #on$+ere+ be&(n !hen &o%ern*ent /)e$ t$ an$!er to taxpa"er3$ petton ,or re%e! 6a" there be a .(+#a) a#ton to #o))e#t a tax )ab)t" e%en ,  there $ NO PREVIOUS ASSESS6ENT >> - po$$b)e to #o))e#t tax )ab)t" n #o(rt !tho(t an" pre%o($ a$$e$$*ent SEC2 6662 E'e+&$o# a# &o Per$o! o% L$/$&a&$o o% A##e##/e& a! Co--e&$o o% Ta'e#2 - ?a@ In the #a$e o, a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e tax or o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+' or a pro#ee+n& n #o(rt ,or the #o))e#ton o,  $(#h tax *a" be /)e+ !tho(t a$$e$$*ent' at an" t*e !thn ten ?1<@ "ear$ a,ter the +$#o%er" o, the ,a)$t"' ,ra(+ or o*$$on0 Pro%+e+' That n a ,ra(+ a$$e$$*ent !h#h ha$ be#o*e /na) an+ exe#(tor"' the ,a#t o, ,ra(+ $ha)) be .(+#a))" taken #o&n2an#e o, n the #%) or #r*na) a#ton ,or the #o))e#ton thereo,9 Ana)"2n& the abo%e pro%$on' there are TO POSSIBILITIES that #o()+ ar$e n part#()ar )e&a) $t(aton$0 19 taxpa"er /)e$ a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e taxe$ :9 taxpa"er +oe$ not /)e an" ret(rn a a)) A9 taxpa"er /)e$ a ,a)$e or ,ra(+()ent ret(rn !th ntent to e%a+e taxe$ 19 S(ppo$e taxpa"aer /)e$ a ,a)$e or ,ra(+)ent ret(rn an+ &o%ern*ent' a,ter +$#o%ern& the ,a)$t" or ,ra(+' +oe$ not a$$e$$ tax' #an t then pro#ee+ to #o))e#t tax )ab)t" b" #o(rt a#ton a9 5ES b9 Rep(b)# %$ Patanao #9 A))o!n& .(+#a) #o))e#ton o, a tax !tho(t an" pre%o($ a$$e$$*ent $ho()+ app)" +9 It appearn& that ,ra(+ n /)n& o,   taxpa"er$11 n#o*e tax ret(rn !a$ +$#o%ere+ b" BIR on ,eb 1= 1>  TAXATION SURVIVAL KIT – Aban Book e9 Taxpa"er3$ )ab)t" !a$ a$$e$$e+ on 8eb 1=' 1> or be"on+ the  "ear pre$#rpt%e pero+ /xe+ b" )a! ,9 TEN 5EAR PRESCRIPTIVE PERIO7 8OR COLLECTION T4ROUG4 COURT ACTION 7OES NOT APL5 I8 IT APPEARS T4AT T4ERE AS AN ASSESS6ENT &9 T4E ORI7NAR5  5EAR PERIO7 NO ;  5EAR PERIO7 OUL7 STILL APPL5 :9 Taxpa"er +oe$ not /)e an" ret(rn at a)) a9 Ja A)a Corporaton b9 In %e! o, $(#h ,a)(re to /)e a !thho)+n& tax ret(rn on part o, !thho)+n& a&ent' the &o%ern*ent ha+ r&ht to #o))e#t the !thho)+n& tax !thn ten "ear$ #o(te+ ,ro* +$#o%er" o, o*$$on to /)e the re($te ret(rn #9 )) th$ pro#e+(re not be n #onF#t !th Se# ::>' 1 NIRC ' !h#h enab)e$ the taxpa"er to +$(te a tax a$$e$$*ent be,ore #o))e#ton re*e+e$ are re$orte+ to +9 A))o!$ taxpa"er to a+*n$trat%e)" prote$t the a$$e$$*ent e9 I$$(an#e o, an a$$e$$*ent not#e $ee*$ to be *an+ator" (n+er the ex$tn& pro#e+(re on tax prote$t Pre$#rpton o, Go%ern*ent3$ r&ht to re#o%er an erroneo($)" re,(n+e+ tax - three "ear pre$#rpt%e pero+ ,or *akn& a$$e$$*ent$ (n+er Se#ton :<; SC0 #a$e n%o)%e+ re#o%er" o, erroneo($)" re,(n+e+ ,ran#h$e tax' pre$#rpt%e pero+ ,or tax a$$e$$*ent$ $ho()+ app)" be#a($e the +e*an+ o, &o%ern*ent on taxpa"er to ap" erroneo($)" re,(n+e+ tax $ n eHe#t an a$$e$$*ent ,or +e/#en#" ,ran#h$e tax > 6ran+a' C)ar$$e Ann a%er o, $tat(te o, )*taton$ – Exten$on o, pre$#rpt%e pro+ - ne#e$$ar" that !a%er be exe#(te+ b" the parte$ be,ore the )ap$e o,  "ear pre$#rpt%e pero+ !a%er $ neHe#t%e , t $ exe#(te+ be"on+ the or&na) three "ear no!  "ear pero+ the )a! +oe$ not a(thor2e the exten$on o,   pre$#rpt%e pero+ one pre$#rpton ha$ $et n here taxpa"er3$ !a%er !a$ not .($t an exten$on o,  pre$#rpt%e pero+ b(t a ren(n#aton o, her r&ht to n%oke +e,en$e o, pre$#rpton !h#h !a$ then a%a)ab)e to her' the !a%er *a+e be"on+ $(#h pre$#rpt%e pero+ – BIN7ING ON  TAXPA5ER - notn& (n)a!,() or **ora) abo(t th$ kn+ o, !a%er r&ht to a%a) o, +e,en$e o, pre$#rpton $ !a%ab)e CIR %$ CA - SC r()e+ a&an$t %a)+t" an+ bn+n& eHe#t o, !a%er$ $&ne+ b" pro%ate re$pon+ent #arnaton Ph)ppne$ h#h !ere not $&ne+ b" BIR #o**$$oner or an" o,  h$ a&ent$ a%er n (e$ton$ re%ea) that the" are IN NO ISE UNEUIVOCAL NECESSITATE 8OR ITS BIN7ING E88ECT T4E CONCURRENCE O8 CIR  Tax !a%er$ are $(ppo$e+ to exten+' NOT RE7UCE the pre$#rpt%e pero+$ pro%+e+ b" )a! Co**$$oner #annot %a)+)" a&ree to re+(#e the pre$#rpt%e pero+ to )e$$ than that &rante+ b" )a! to the +etr*ent o,  Sate $n#e t +*n$he$ the Go%ern*ent3$ opport(nte$ to #o))e#t taxe$ +(e the Rep(b)# < =9 hen the !arrant o, +$trant or )e%" $ +()" $er%e+ (pon the taxpa"er' h$ a(thor2e+ repre$entat%e' or a *e*ber o, h$ ho($eho)+ !th $(#ent +$#reton' an+ no propert" #o()+ be )o#ate+M an+ 9 hen the taxpa"er $ o(t o, the Ph)ppne$9 E9UITABLE RECOUPMENT AND PRESCRIPTION In the e%ent that #o))e#ton o, tax ha$ a)rea+" )ap$e+ +(e to pre$#rpton' an the Go%ern*ent n%oke prn#p)e o, e(tab)e re#o(p*ent b" $ettn& oH the pre$#rbe+ tax a&an$t a tax re,(n+ to !h#h taxpa"er *a" be entt)e+ - NOT TO ALLO T4E SET OO7 8or , that !ere $o' th$ !o()+ ONL5 ENCOURAGE NEGLIGENCE ON PART O8 OUR COLLECTING O88ICERS ho !o()+ ,ee) $e#(re +e$pte pre$#rpton n tho(&h that the" #o()+ a)!a"$ #o))e#t pre$#rbe+ tax Thro(&h the expe+ent o, $et oH INTERRUPTION OF THE PRESCRIPTIVE PERIOD  The r(nnn& o, the Stat(te o, L*taton$ pro%+e+ n Se#9 :<; an+ ::: on the *akn& o, a$$e$$*ent an+ the be&nnn& o,  +$trant or )e%" or a pro#ee+n& n #o(rt ,or #o))e#ton' n re$pe#t o, an" +e/#en#"' $ha)) be $($pen+e+ (n+er an" o,  the ,o))o!n& #r#(*$tan#e$0 19 hen the ,ro* *akn& the a$$e$$*ent or be&nnn& the +$trant' )e%"' or pro#ee+n& n #o(rt an+ ,or $xt" +a"$ therea,terM :9 hen the taxpa"er re(e$t$ ,or a ren%e$t&aton !h#h $ &rante+ b" the Co**$$onerM ;9 hen the taxpa"er #annot be )o#ate+ n the a++re$$ &%en b" h* n the ret(rn /)e+ (pon !h#h tax $ ben& a$$e$$e+ or #o))e#te+' (n)e$$ the taxpa"er ha$ n,or*e+ the Co**$$oner o,  an" #han&e n a++re$$M < Whe &he Co//$##$oer $# +roh$"$&e! %ro/ a##e##$3 or o--e&$3 &he &a' 1 $ *ha& +o##$"-e $#&ae# /ay &here "e a +roh$"$&$o o Co//$##$oer &o a##e## or o--e& &he &a'( SC 0 /)n& o, a petton ,or re%e! n CTA ,ro* +e#$on o,  Co**$$oner on a prote$te+ a$$e$$*ent nterr(pt$ r(nnn& o, pre$#rpt%e pero+ ,or #o))e#ton Interr(pton $ ,ro* the t*e the appea) $ /)e+ n CTA (nt) t$ ter*naton n SC $ho()+ there be $(b$e(ent)" be an appea) to a h&her #o(rt REASON 0 !hen a #a$e $ on appea) to CTA' the #o**$$oner $ pre%ente+ ,ro* /)n& an or+nar" a#ton to #o))e#t tax n re&()ar #o(rt$ I, th$ !ere not $o' #o))e#ton n re&()ar #o(rt$ !o()+ r(n #o(nter to the .(+#a) po)#" o, a%o+n& *()tp)#t" o, $(t$ an+ ther()e o, )$ pen+en$ - .(+#a) #o))e#ton !a$ bro(&h n #o(rt a,ter  "ear$ ,ro* a$$e$$*ent' !h)e appea) n CTA an+ e%ent(a))" SC )a$te+ ,or  "ear$ !h#h $ pero+ o, t*e +(rn&  TAXATION SURVIVAL KIT – Aban Book !h#h #o**$$oner !a$ prohbte+ ,ro* #o))e#tn& the tax b" .(+#a) a#ton (pon proo, that t$ #o))e#ton +(rn& the pen+en#" o, appea) *a" .eopar+2e the ntere$t o, &o%ern*ent an+ or the taxpa"er9 S($pen$on o, #o))e#ton *a" be &rante+ b" CTA (pon th$ &ro(n+ b(t taxpa"er *($t ether +epo$t the a*o(nt o, taxe$ a$$e$$e+ or /)e a bon+ a*o(ntn& to not *ore than t!#e the %a)(e o, tax ben& a$$e$$e+9 No appea) taken to the CTA ,ro* the +e#$on o, CIR $ha)) $($pen+ the pa"*ent' )e%"' +$trant an+or $a)e o, an" propert" o, taxpa"er ,or the $at$,a#ton o, h$ tax )ab)t" a$ pro%+e+ b" ex$tn& )a! a)tho(&h' a$ a)rea+" *entone+ ' #o))e#ton *a" be $($pen+e+ ,or the rea$on$ a)rea+" $tate+ abo%e S(ppo$e a #r*na) #a$e $ /)e+ a&an$t a taxpa"er9 The oHen$e #har&e+ #on$$t$ o, /)n& a ,a)$e or ,ra(+)ent ret(rn n %)aton o, $e#ton := o, tax #o+e !h#h $ pena)2e+ (n+er tt)e X thereo,9 ILL PEN7ENC5 O8 CRI6INAL CASE SUSPEN7  T4E RUNNING O8 PRESCRIPTIVE PERIO7 8OR COLLECTION O8  TAX LIABILIT5 4IC4 4AS BEEN ASSESSE7 - - NO CASE 0 Repb)# %$ Ret Ret /)e+ t!o ,a)$e an+ ,ra(+()ent ret(rn$ ,or 1=> an+ 1= ,o !h#h he !a$ a$$e$$e+ b" BIR the $(*$ o, ;=) an+ D>k n#)(+n&   TAXPA5ER3S RE6E7IES A76INISTRATIVE PROTESTS - *portant re*e+" !h#h #an be a%a)e+ b" taxpa"er #o**on)" re,erre+ to n BIR a$ a PROTEST AGAINST ASSESS6ENT a re*e+" be,ore pa"*ent' !h)e a tax re,(n+ or tax #re+t $ a re*e+" o, taxpa"er a,ter he ha$ pa+ the tax Se#ton ::> o, 1 Tax Co+e  6ran+a' C)ar$$e Ann YSECTION ::>9 Prote$tn& o, A$$e$$*ent9 - hen the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e /n+$ that proper taxe$ $ho()+ be a$$e$$e+' he $ha)) /r$t not," the taxpa"er o, h$ /n+n&$0 Pro%+e+' ho!e%er' That a prea$$e$$*ent not#e $ha)) not be re(re+ n the ,o))o!n& #a$e$0 Y?a@ hen the /n+n& ,or an" +e/#en#" tax $ the re$()t o,  *athe*at#a) error n the #o*p(taton o, the tax a$ appearn& on the ,a#e o, the ret(rnM or Y?b@ hen a +$#repan#" ha$ been +eter*ne+ bet!een the tax !thhe)+ an+ the a*o(nt a#t(a))" re*tte+ b" the !thho)+n& a&entM or Y?#@ hen a taxpa"er !ho opte+ to #)a* a re,(n+ or tax #re+t o, ex#e$$ #re+tab)e !thho)+n& tax ,or a taxab)e pero+ !a$ +eter*ne+ to ha%e #arre+ o%er an+ a(to*at#a))" app)e+ the $a*e a*o(nt #)a*e+ a&an$t the e$t*ate+ tax )ab)te$ ,or the taxab)e (arter or (arter$ o,  the $(##ee+n& taxab)e "earM or Y?+@ hen the ex#$e tax +(e on ex#$ab)e art#)e$ ha$ not been pa+M or Y?e@ hen an art#)e )o#a))" p(r#ha$e+ or *porte+ b" an exe*pt per$on' $(#h a$' b(t not )*te+ to' %eh#)e$' #apta) e(p*ent' *a#hnere$ an+ $pare part$' ha$ been $o)+' tra+e+ or tran$,erre+ to non-exe*pt per$on$9 YThe taxpa"er$ $ha)) be n,or*e+ n !rtn& o, the )a! an+ the ,a#t$ on !h#h the a$$e$$*ent $ *a+eM other!$e' the a$$e$$*ent $ha)) be %o+9 Ythn a pero+ to be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$' the taxpa"er $ha)) be re(re+ to re$pon+ to $a+ not#e9 I, the taxpa"er ,a)$ to re$pon+' the Co**$$oner or h$ +()" a(thor2e+ repre$entat%e $ha)) $$(e an a$$e$$*ent ba$e+ on h$ /n+n&$9 YS(#h a$$e$$*ent *a" be prote$te+ a+*n$trat%e)" b" /)n& a re(e$t ,or re#on$+eraton or ren%e$t&aton !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the a$$e$$*ent n $(#h ,or* an+ *anner a$ *a" be pre$#rbe+ b" *p)e*entn& r()e$ an+ re&()aton$9 thn $xt" ?D<@ +a"$ ,ro* /)n& o, the prote$t' D a)) re)e%ant $(pportn& +o#(*ent$ $ha)) ha%e been $(b*tte+M other!$e' the a$$e$$*ent $ha)) be#o*e /na)9 YI, the prote$t $ +ene+ n !ho)e or n part' or $ not a#te+ (pon !thn one h(n+re+ e&ht" ?1><@ +a"$ ,ro* $(b*$$on o, +o#(*ent$' the taxpa"er a+%er$e)" aHe#te+ b" the +e#$on or na#ton *a" appea) to the Co(rt o, Tax Appea)$ !thn thrt" ?;<@ +a"$ ,ro* re#ept o, the $a+ +e#$on' or ,ro* the )ap$e o, the one h(n+re+ e&ht" ?1><@-+a" pero+M other!$e' the +e#$on $ha)) be#o*e /na)' exe#(tor" an+ +e*an+ab)e9 Re%en(e Re&()aton No 1: –  Septe*ber D 1 7e#$on$ ren+ere+ b" Re&ona) 7re#tor $ha)) be appea)ab)e to O#e o, Co**$$oner thro(&h the Appe))ate 7%$on o,  B(rea(3$ Le&a) Ser%#e !thn ;< +a"$ ,ro* re#ept o,  +e#$on9 OT4ERISE $a+ +e#$on $ha)) be#o*e /na)' exe#(tor' an+ +e*an+ab)e In /)n& a re(e$t ,or re#on$+eraton o, +e#$on ren+ere+ b" Re&ona) 7re#tor to the O#e o, Co**$$oner' the  TAXPA5ER 6UST BE ABLE TO S4O T4AT 4IS REUEST 8OR RECONSI7ERATION RAISES NE ISSUES OR ARGU6ENTS OR NE 8ACTUAL SITUATIONS OT4ER T4AN T4OSE COVERE7 B5 4IS PREVIOUS PROTEST SEE NOTES hen prote$tn& an a$$e$$*ent' the taxpa"er *($t $ee to t that the prote$t $ ATTAC4E7 to or n#orporate+ !th the BIR3$ +o#ket o, the a$$e$$*ent Note 0 h)e the re&ona) +re#tor *a" ren+er +e#$on$ on prote$t$ a&an$t a$$e$$*ent$' a taxpa"er a+%er$e)" aHe#te+ b" the +e#$on to the Co**$$oner' thro(&h Appe))ate 7%$on' !thn re&)e*entar" pero+ an+ t $ the /na) +e#$on o, Co**$$oner o, Interna) Re%en(e on prote$t that $ APPEALABLE TO CTA p(r$(ant to RA 11: Se#ton 9  The taxpa"er prote$tn& an a$$e$$*ent *a" /)e a !rtten re(e$t ,or re#on$+eraton or ren%e$t&aton !th the re%en(e re&ona) o#e ha%n& .(r$+#ton o%er the #a$e In #a$e o, re&ona) o#e #a$e$' or !th O#e o, the Co**$$oner' ,or re,erra) to an+ approprate a#ton b" +%$on o, BIR Natona) O#e #on#erne+ I, prote$t ra$e$ (e$ton$ o, ,a#t' the #a$e *a" be a$$&ne+ ,or ren%e$t&aton I, prote$t ra$e$ p(re (e$ton$ o, )a!' t !)) be en+or$e+ ,or $t(+" b" )e&a) +%$on o, Re%en(e Re&ona) O#e$ or b" Le&a) Ser%#e n BIR Natona) O#e D Re(e$t ,or re#on$+eraton Re(e$t ,or ren%e$t&aton A p)ea ,or re- e%a)(atoon o,  an a$$e$$*ent on the ba$$ o, ex$tn& re#or+$ !tho(t nee+ o, a++tona) e%+en#e P)ea ,or ren%e$t&aton o, an a$$e$$*ent on ba$$ o, ne!)" +$#o%ere+ or a++tona) e%+en#e that a taxpa"er nten+$ to pre$ent n the ren%e$t&aton  TAXATION SURVIVAL KIT – Aban Book 6a" n%o)%e (e$ton o, ,a#t or )a! or BOT4 6a" n%o)%e a (e$ton o,  ,a#t or )a! or both One #a$e that ))($trate$ the eHe#t o, taxpa"er3$ ,a)(re to /)e a prote$t $ the #a$e o, 7A5RIT - EFFECTS OF TAXPAYER8S ADMINISTRATIVE PROTEST DECISION TO THE CTA FAILURE TO FILE AN OR TO APPEAL BIR8S Se#ton ::>' Tax Co+e 0 I, taxpa"er ,a)$ to /)e an a+*n$trat%e prote$t !thn the re&)e*entar" ;< +a" pero+ ,ro* re#ept o, a$$e$$*ent not#e' the a$$e$$*ent BECO6ES 8INAL 6EANING 0 a,ter the )ap$e o, $a+ pero+' the a$$e$$*ent #an no )on&er be +$p(te+ ether a+*n$trat%e)" or .(+#a))" thro(&h an appea) n CTA E88ECT 0 *akn& the a$$e$$e+ tax #o))e#tb)e NO APPEAL to CTA #an be po$$b)" taken a$ there $ NO BIR +e#$on that *a" be appea)e+ p(r$(ant to Se#ton  n re)aton to Se#ton 11 o, RA 11: On)" /na) +e#$on$ ?NOT 6ERE ASSESS6ENTS@ Co**$$oner are appea)ab)e to the CTA o,  I, a taxpa"er or the Go%ern*ent $ NOT SATIS8IE7 !th CTA3$ +e#$on' he t *a" /)e a petton ,or re%e! !th CTA !thn 1 +a"$ ,ro* re#ept o, CTA3$ +e#$on I, $t)) +$$at$/e+ !th CA3$ +e#$on' het *a" /)e a petton ,or re%e! on #ertorar !th the SC !thn 1 +a"$ ,ro* re#ept o, appe))ate #o(rt3$ +e#$on  6ran+a' C)ar$$e Ann an a$pe#t o, !h#h ha$ been +$#($$e+ n a pre%o($ #hapter the e$tate o, the )ate 7on Torbo Teo+or' a,ter ben& a$$e$$e+' /)e+ a *oton ,or re#on$+eraton !th a pro*$e to /)e a po$ton paper or !hat a#t(a))" $ho()+ ha%e been the taxpa"er3$ prote$t #ontann& the e$tate3$ ar&(*ent a&an$t the a$$e$$*ent  The e$tate ho!e%er' 7I7 NOT 8ILE the po$ton paper a$ pro*$e+9 Go%ern*ent /)e+ t$ #orre$pon+n& proo, o, #)a* a&an$t the e$tate hen th$ #)a* ,or tax xo))e#ton !a$ #onte$te+ b" e$tate' the $ett)e*ent #o(rt $($tane+ the a#ton taken b" BIR SC on appea) that t $ NOT n#(*bent on part o, Go%ern*ent that t *($t /r$t r()e on pen+n& prote$t a&an$t an a$$e$$*ent be,ore t #o()+ #o))e#t the taxe$ that are +(e on t 6ARCOS %$ CA - o*$$on to /)e an e$tate tax ret(rn' an+ the $(b$e(ent ,a)(re to #onte$t or appea) the a$$e$$*ent *a+e b" BIR $ ,ata) to pettoner3$ #a($e' a$ (n+er the abo%e#te+ pro%$on In #a$e o, ,a)(re to /)e a ret(rn' the tax *a" be a$$e$$e+ at an" t*e !hn 1< "ear$ ,o))o!n& the a$$e$$*ent tax Sn#e e$tate tax ha+ been /na) an+ (nappea)ab)e b" pettoner3$ o!n +e,a()t a$ re&ar+$ prote$tn& the %a)+t" o,  $a+ a$$e$$*ent' there $ no! no rea$on !h" the BIR #annot #ontn(e !th #o))e#ton o, $a+ tax > E%en , taxpa"er /)e$ an a+*n$trat%e prote$t' on#e an a+%er$e +e#$on thereon $ ren+ere+ b" Co**$$oner' the $a*e *($t be appea)e+ to CTA !thn re&)e*entar" pero+ o,  ;< +a"$ ,ro* re#ept o, Co**$$oner3$ +e#$on OT4ERISE $a*e be#o*e$ /na) an+ exe#(tor REFUND OR RECOVERY OF ERRONEOUSLY OR ILLEGALY  COLLECTED TAXES ;9 An" $(* a))e&e+ to ha%e been ex#e$$%e or n an" *anner !ron&,())" #o))e#te+ Re#o%er" *a" a)$o be he)+ !th re$pe#t to the %a)(e o,  nterna) re%en(e $ta*p$ !hen the" are ret(rne+ n a &oo+ #on+ton b" the p(r#ha$er9 In h$ +$#reton' Co**$$oner *a" re+ee* or #han&e (n($e+ $ta*p$ that ha%e been ren+ere+ (n/t ,or ($e an+ re,(n+ ther %a)(e (pon proo, o, +e$tr(#ton Nee##$&y o% Proo% %or Re%.! C-a$/# 19 Le&a) Ba$$ o, Tax Re,(n+$ – tax re,(n+$ are ba$e+ on )e&a) prn#p)e o, (a$- #ontra#t or $o)(ton n+ebt a9 Art#)e :1=: an+ :1= C%) Co+e b9 - I*portant 0 Go%ern*ent #o*e$ !thn the $#opr o, the $o)(ton n+ebt prn#p)e No per$on $ha)) (n.($t)" enr#h h*$e), at the expen$e o,  another9 It &oe$ !tho(t $a"n& that the Go%enr*ent $ not exe*pte+ ,ro* app)#aton o, th$ +o#trne R()e$ n Tax re#o%er" or re,(n+$ @Se#ton :<= an+ :: E**an(e) ena+a A&()ar Ca$e - SEE NOTES So+e o% C-a$/# %or Re%.! - Tax re#o%er" or re,(n+$ *a" en#o*pa$$ the ,o))o!n& pa"*ent$ 0 19 Erroneo($)" or ))e&a))" a$$e$$e+ or #o))e#te+ nterna) re%en(e taxe$ :9 Pena)te$ *po$e+ !tho(t a(thort" > A #)a* ,or re,(n+ partake$ o, nat(re o, an exe*pton !h#h #annot be a))o!e+ UNLESS &rante+ n the *o$t exp)#t an+ #ate&or#a) )an&(a&e Ben& n the nat(re o, an exe*pton ,ro* taxaton' a #)a* ,or re,(n+ $ $tr#t)" #on$tr(e+ a&an$t the #)a*ant an+ ,a)(re to +$#har&e $tr#t)" #on$tr(e+ a&an$t the #)a*ant an+ ,a)(re to +$#har&e $a+ b(r+en $ 8ATAL to the #)a* - pettoner3$ #)a* ,or re,(n+ o, !thho)+n& taxe$ AS 7ENIE7 ,or ,a)(re o, #)a*ant to pro%e the ,a#t o,  a#t(a) !thho)+n& o, taxe$ n (e$ton9 COURT 0 took note o, taxpa"er3$ nab)t" to pro+(#e the re#ept$ ,or n#o*e tax pa"*ent$ an+ the %aro($ !thho)+n& tax #ert/#ate$$$(e+ to pettoner$ Nether re#ept$ nor #ert/#ate$ !ere ntro+(#e+ n e%+en#e +(rn& tra) CIR %$ L 5ao