Presentation Transcript

1. General Principles

2. Characteristics of taxation Inherent power Exclusively lodged with legislature Subject to inherent, constitutional and contractual limitations
3. Nature of taxation Plenary Comprehensive Power to destroy
4. Characteristic of tax Forced charged Generally payable in money Exclusively levied by the legislature Assessed with reasonable rule of apportionment Imposed on jurisdiction For public purpose
5. Objective of taxation Raise revenue Promotion of general welfare Regulation Reduce social inequality Encourage economic growth Protectionism
6. Bases of taxation Lifeblood – (to have a civilized society) Necessity – (Means of the state) Benefits – Protection theory – (symbiotic)
7. Court interference Constitutionality Limited to interpretation Tip: True or false Supreme court: to ask if the new tax is constitutional Function of court: to interpret tax laws
8. Principles of a sound tax system Fiscal adequacy Administrative feasibility Theoretical justice – should apply to all Consistent with economic goals
9. Class of tax Subject Personal Property Excise Custom Burden Direct (i.e. income tax) Indirect (i.e. excise tax, VAT)
10. Distinction between taxation, police power and eminent domain Purpose Taxation: for public use Police Power: Eminent Domain: for public use Amount Taxation; limited amount ED: just compensation Benefits received Nonimpairment Taxation: not superior sanonimpairment loss PP: superior to nonimpairment loss, can overrule ED: not superior to nonimpairment loss Scope Taxation: lahat Police Power: lahat Eminent Domain: property only
11. Sources of tax laws Statute Presidential decree Executive order Court decisions Revenue regulations
12. Composition of the BIR 1 commissioner 4 deputy commissioner (political appointee) Under NIRC, 4 only Currently there are 6 deputy commissioners Regional Revenue Director Revenue District Officer Revenue Officer True or False: The alter ego of the commissioner is the revenue district officer (False) Should be: deputy commissioner
13. Powers of the commissioner Power to interpret tax law/decide case Power to obtain information, summon, examine and take testimony Power to make assessments… Refer to NIRC Section 6
14. Exception on power to delegate authority Recommend promulgation of rules (commissioner recommends rules of DOF, signs the regulation) Rulings f first impression on reverse, modify, revoke existing rules (CIR should recommend for approval of revenue regulations) Power compromise or abate an tax liability Assign or reassign R.O.
15. Business taxes Subject to OPT Persons exempt from VAT Domestic carriers International carriers Franchise holders of water, gas, telephone and radio companies Overseas communications Banks and non-bank financial intermediaries Finance companies Life insurance companies Agents of foreign insurance companies (withholding – yungmagbabayadyungnagbabayad..) Amusement places (30%) Winnings from racehorse Deduct ticket costs (net of ticket costs) Sale of shares of stock traded thru local stock exchange If not traded thru local stock exchenge: subject to capital gains tax, therefore not subject to business tax
16. Excise Specific – by measurement Ad valorem – by price
17. Persons liable Domestic Manufacturer (may machine) Producer (nagtatanimng tobacco) Owner/possession First buyer Export Owner Lessee Concessionaire Operator of mining claim Imported articles Owner Importer Possession Non-exempt entity
18. Some rulings Cigar, cigarettes, distilled spirits Ungmgadadalhinsa SDMA, subject to excise tax – TRUE Customs territory transfers Free zone to free zone: not subject to excise tax Credit back of excise not applicable for mineral products Mineral product, excise tax cannot be refunded (credit back) Less than a liter, taxed as a liter 1 liter above follow rounding rule 1.5 L and above round up = 2 L 1.49 L and below round down = 1 L Net retail price/ wholesale price
19. VAT – deemed sale transaction Transfer, use, consumption not in the course of business of goods originally intended for sale Distribution to shareholders as share in the profits Distribution to creditors as payment of debt Consignment of goods if actual sale not made within 60 days Retirement or cessation of business with respect to inventories
20. Zero-rated transaction Sale of goods FCDS Export VAT exempt under special law Zero-rated transactions Services Processing, manufacturing or repacking of goods for other persons doing business outside the Philippines, paid for in foreign Services rendered to person covered by special laws Rendered to persons engaged in international shipping of air transport operation Subcontractors or contractors in processing, converting or manufacturing goods for export Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country Sale of power or fuel generated through renewable sources of energy
21. Export sale – zero rated Sale and actual shipment of gods from Philippines Sale of raw mat or packaging to export oriented enterprise Sale of gold to BSP (not precious metals) Export as defined by Omnibus Investment code Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations Notes: Applies to: 1. Export company 2. Export oriented enterprise – more than 70% actually exported (local sales subject to VAT)
22. Special Law ADB, IRRI, PEZA, CDA, SBMA – sale to them is effectively zero-rated
23. VAT refund Decision period is 120 days after submission of complete documents 30 days after 120 days to appeal Should fall within 2 years Trivia: Letters of authority – expires after 120 days
24. Review Allocation of input VAT Transitional Input VAT – 2% Whichever is higher Presumptive Input VAT – 4% Primary purchases no input tax (i.e. noodles) Creditable Input VAT Refund Carryover Tax Credit VAT Exempt Transactions Invoicing requirements
25. THINGS TO REMEMBER!!  Date: October 20, 2010 Time: 1pm Type: Multiple Choice (100 items, 1 point each) Topics: Remedies, Estate, Percentage, VAT, Donors (marami) DST, Excise, General Principles (konti) Rates (konti) - i.e. Basketball 15%, cockpits 18% 95 and above in Finals (midterms will not be considered – unonaagad!)