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BA223: TAXATION (INCOME TAXATION)  Donor’s tax – a type of tax that is imposed upon any person,
natural or juridical, resident or nonresident, who transfers or
MODULE 2: OVERVIEW OF THE POWERS AND AUTHORITY causes to transfer by gift or donation, whether direct or indirect,
OF THE COMMISSIONER OF INTERNAL REVENUE – PART 2 real, personal, tangible or intangible property
 Value-added tax (VAT) - is a form of sales tax. It is a tax on
consumption levied on the sale, barter, exchange or lease of
Learning Objectives
goods or properties and services in the Philippines and on
At the end of this module you are expected to:
importation of goods into the Philippines. Percentage taxes
1. Identify the different government officers handling the tax
 Excises Taxes – these are type of taxes paid when purchases
administrative functions;
are made on a specific good, such as gasoline. Excise taxes
2. Discuss the powers and duties of the Bureau of Internal
are often included in the price of the product
Revenue;
 Documentary stamp tax – is an excise tax levied on documents,
3. Enumerate the officials of the Bureau of Internal Revenue
instruments, loan agreements and papers evidencing the
4. Enumerate the power and extent of authority of the
acceptance, assignment, sale or transfer on an obligation,
Commissioner od Bureau of Internal Revenue
rights, or property incident thereto.
The National Internal Revenue Code (NIRC) of 1992 was enacted from
Government Offices that handle Tax Administrative Functions
Republic Act (RA) No. 8424 otherwise known as the Tax Reform Act of
The Department of Finance (DOF) is the principal government office
1997, which was enacted on December 11, 1997 and became effective
that handles the administration and supervision of tax related matters.
on January 1, 1998. Since then, this law has been amended numerous
Under the DOF are the following administrative offices:
times and few of the significant amendments of are the RA 9337
1. Bureau of Internal Revenue (BIR)
(Reformed VAT law), Ra 9243 (Revised Documentary Stamp Tax Law),
- an agency of Department of Finance that collects more than
RA 9334 (Amended Excise Tax Law), and RA 9504 dated June 17,
half of the total revenues of the government
2008 (amending Title II – Income Tax).
2. Bureau of Customs (BOC)
- is a Philippine government agency under the Department of
The NIRC or the “Tax Code” collates the internal revenue laws. It
Finance which is responsible for regulation and facilitating
governs the imposition and collection of the following national internal
trade, assessment and collecting import duties and taxes,
revenue taxes:
combating illegal trade and other forms of customs fraud,
 Income tax – a type of tax that is levied by a government directly
and devising and managing customs management systems
on income earn by the taxpayers
for trade facilitation
 Estate tax – a type of tax that is levied on the net value of the
3. Land Transportation Commission
estate of a deceased person before distribution to the heirs
- is an agency of the Philippine government under the
Department of Transportation and is responsible for all land
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transportation in the Philippines, especially implementing Powers and Duties of the Bureau of Internal Revenue
transportation laws, rules and regulations 1. To assess and collect all national internal revenue taxes, fees
and charges.
Government Officials that Administer and Enforce Tax 2. To enforce al forfeitures, penalties, and fines connected with the
Administrative Functions assessment and collection functions.
1. Secretary of Finance 3. To execute judgement in all cases decided in its favor by the
- is a Cabinet Member who is in charge of the Department od Court of Tax Appeals and the ordinary courts.
Finance 4. To give effect and administer the supervisory of police powers
2. Commissioner of Internal Revenue conferred to it by the Tax Code or other laws.
- is the head of the Bureau of Internal Revenue
3. Commissioner of Customs Officials of the Bureau of Internal Revenue
- is the head of the Bureau of Customs Chief Officials
4. Presiding Justice and Associate Justices of the Court of Tax 1. Commissioner of Internal Revenue – known as the
Appeals BIR Commissioner
- expedite the disposition of tax-evasion cases and decides 2. Four (4) Deputy Commissioners
other tax cases BIR Officers
5. Deputy Commissioner of the BIR - They are tasked to administer and enforce the Tax
- Assists the Commissioner of Internal Revenue in carrying Code
the powers and duties of BIR 1. Revenue Regional Director
6. Regional Directors and Regional District Officers of the BIR 2. Revenue District Officer
- Administers and enforces internal revenue laws including 3. Revenue Examiners
the assessment and collection of all internal revenue taxes 4. Division Chiefs
7. Provincial, City, and Municipal Treasurers 5. BIR Collection Agents
- Responsible for managing the revenue and cash flow of the
local government unit, as well as banking, collection, Powers and Authorities of the Commissioner of Internal Revenue
receipt, reporting, custody, investment or disbursement of 1. Power to interpret tax laws and decide tax cases (Section 4,
municipal funds NIRC)
8. Examiners and Collection Agents of the BIR and BOC  power to interpret the provisions of this Code and other
- Conducts the tax assessment as well as collection of tax laws
assessed tax deficiencies  power to decide on
 disputed assessments,

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 refunds of internal revenue taxes, fees or other  joint ventures of consortia and
charges, penalties imposed in relation thereto, or  registered partnerships, and their
other matters arising under this Code members;
 subject to the exclusive affiliate jurisdiction of the Court  To summon the person liable for tax or required to file a
of Tax Appeals. return, or any officer or employee of such person, or any
2. Power to obtain information, and to summon, examine and take person having possession, custody, or care of the books
testimony of persons (Section 5, NIRC) of accounts and other accounting records containing
In ascertaining the correctness of any return, or in making a entries relating to the business of the person liable for
return when none has been made, or in determining the liability tax, or any other person, to appear before the
of any person for any internal revenue tax, or in collecting any Commissioner or his duty authorized representative at a
such liability, or in evaluating tax compliance, the Commissioner time and place specified in the summons and to produce
is authorized: such books, papers, records, or other data, and to give
 To examine any book, paper, record, or other data which testimony:
may be relevant or material to such inquiry  To take such testimony of the person concerned, under
 To obtain on a regular basis from any person other than oath, as may be relevant or material to such inquiry; and
the person whose internal revenue tax liability is subject  To cause revenue officers and employees to make a
to audit or investigation, or form any office or officer of canvas from time to time of any revenue district or region
the national and local governments, government and inquire after and concerning all persons therein who
agencies and instrumentalities, including the Bangko maybe liable to pay any internal revenue tax, and all
Sentral ng Pilipinas and government-owned or - persons owning or having the care management or
controlled corporations, any information such as, but not possession of any object with respect to which a tax is
limited to, impose.
 costs and volume of reduction, 3. Power to make assessments and prescribe additional
 receipts or sales and gross incomes of requirements for tax administration and enforcement (Section
taxpayers, and the names, addresses, and 6, NIRC)
 financial statements of  Examination of Returns and Determination of Tax Due
 corporations, (Section 6A, NIRC)
 mutual fund companies,  After a return has been filed as required by under
 insurance companies, the provisions of this Code, the Commissioner or
 regional operating headquarters of his duly authorized representative may authorize
multinational companies, the examination of any taxpayer and the
 joint accounts, assessment of the correct amount of tax:
 associations, Provided, however, that failure to file a return
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shall not prevent the Commissioner from any taxpayer as a basis for determining his
authorizing the examination of any tax payer. internal revenue tax liabilities, or may place the
business operations of any person, natural or
The tax or any deficiency tax so assessed shall juridical, under observation or surveillance if
be paid upon notice and demand from the there is treason to believe that such person is not
Commissioner or from his duly authorized declaring his correct income, sales or receipts for
representative. internal revenue tax purposes. The findings may
be used as the basis for assessing the taxes for
Any return, statement of declaration filed in any the other months or quarters of the same or
office authorized to receive the same shall not be different taxable years and such assessment
withdrawn: Provided, that within three (3) years shall be deemed prima facie correct.
from the date of such filing, the same may be  Authority to terminate taxable period (Section 6D, NIRC)
modified, changed, or amended: Provided,  When it shall come to the knowledge of the
further, that no notice for audit or investigation of Commissioner that the taxpayer is retiring from
such return, statement of declaration has in the business subject to tax, or is intending to leave
meantime been actually served upon the the Philippines or to remove his property
taxpayer. therefrom or to hide or conceal his property, or is
 Failure to Submit Required Returns, Statements, performing any act tending to obstruct the
Reports, and other Documents (Section 6B, NIRC) proceedings for the collection of the tax for the
 In case a person fails to file a required return or past or current quarter or year or to render the
other document at the time prescribed by law, or same totally or partly ineffective unless such
willfully or otherwise files a false or fraudulent proceedings are began immediately, the
return or other document, the Commissioner Commissioner shall declare the tax period of
shall make or amend the return from his own such taxpayer terminated at any time and shall
knowledge and from such information as he can send the taxpayer a notice of such decision,
obtain through testimony or otherwise, which together with a request for the immediate
shall be prima facie correct and sufficient for all payment of the tax for the period so declared
legal purposes. terminated and the tax for the preceding year or
 Authority to conduct inventory-taking, surveillance and quarter, or such portion thereof as may be
to prescribe presumptive gross sales and receipts unpaid, and said taxes shall be due and payable
(Section 6C, NIRC) immediately and shall be subject to all the
 The Commissioner may, at any time during the penalties hereafter prescribed, unless paid
taxable year, order inventory-taking of goods of
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within the time fixed in the demand made by the liability under Section 204(A)(2) of this
Commissioner. Code by reason of financial incapacity to
 Authority to prescribe real property values (Section 6E, pay his tax liability.
NIRC)
 The Commissioner is hereby authorized to divide In case a taxpayer files an application to
the Philippines into different zones or areas and compromise the payment of his tax
shall, upon consultation with competent liabilities on his claim that his financial
appraisers both from the private and public position demonstrates a clear inability to
sectors, determine the fair market value or real pay the tax assessed, his application
properties located in each zone or area. For shall not be considered unless and until
purposes of computing any internal revenue tax, he waives in writing his privilege under
the value of the property shall be, whichever is Republic Act No. 1405, Republic Act No.
the higher of: 6426, otherwise known as the Foreign
Currency Deposit Act of the Philippines,
(1) The fair market value as determined by the or under other general or special laws,
Commissioner; or and such waiver shall constitute the
(2) The fair market value as shown in the authority of the Commissioner to inquire
schedule or values of the Provincial and City into the bank deposits of the taxpayer.
Assessors (3) A specific taxpayer or taxpayers
 Authority to inquire into bank deposit accounts (Section subject of a request for the supply of tax
6F, NIRC) information from a foreign tax authority
 Notwithstanding any contrary provision of pursuant to an international convention
Republic Act No. 1405, Republic Act No. 6426, or agreement on tax matters to which the
otherwise known as the Foreign Currency Philippines is a signatory or a party of:
Deposit Act of the Philippines, and other general Provided, that the information obtained
or special laws, the Commissioner is hereby from the banks and other financial
authorized to inquire into the bank deposits and institutions may be used by the Bureau of
other related information held by financial Internal Revenue for tax assessment,
institutions of: verification, audit and enforcement
(1) A decedent to determine his gross purposes.
estate; and
(2) Any taxpayer who has file an In case of a request from a foreign tax authority
application for compromise of his tax for tax information held by banks and financial
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institutions, the exchange of information shall be information was within the jurisdiction of the said
done in a secure manner to ensure foreign tax authority then it would be able to
confidentiality thereof under such rules and obtain the information under its laws or in the
regulations as may be promulgated by the normal course of administrative practice and that
Secretary of Finance, upon recommendation of it is in conformity with a convention or
the Commissioner. international agreement; and
(g) A statement that the requesting foreign tax
The Commissioner shall provide the tax authority has exhausted all means available in its
information obtained from banks and financial own territory to obtain the information, except
institutions pursuant to a convention or those that would give rise to disproportionate
agreement upon request of the foreign tax difficulties.
authority when such requesting foreign tax The Commissioner shall forward the information
authority has provided the following information as promptly as possible to the requesting foreign
to demonstrate the foreseeable relevance of the tax authority. To ensure a prompt response, the
information to the request: Commissioner shall confirm receipt of a request
(a) The identity of the person under examination in writing to the requesting tax authority and shall
or investigation; notify the latter of deficiencies in the request, if
(b) A statement of the information being sought, any, within sixty (60) days from receipt of the
including its nature and the form in which the request.
said foreign tax authority prefers to receive the
information from the Commissioner; If the Commissioner is unable to obtain and
(c) The tax purpose for which the information is provide the information within ninety (90) days
being sought; from receipt of the request, due to obstacles
(d) Grounds for believing that the information encountered in furnishing the information or
requested is held in the Philippines or is in the when the bank or financial institution refuses to
possession or control of a person within the furnish the information, he shall immediately
jurisdiction of the Philippines; inform requesting tax authority of the same,
(e) To the extent known, the name and address explaining the nature of the obstacles
of any person believed to be in possession of the encountered or the reasons for refusal.
requested information;
(f) A statement that the request is in conformity The term “foreign tax authority,” as used herein,
with the law administrative practices of the said shall refer to the tax authority or tax
foreign tax authorities, such that if the requested administration of the requesting State under the
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tax treaty or convention to which the Philippines (b) The power to issue rulings of first impression or to
is a signatory or party of. reverse, revoke, or modify any existing ruling of the
 Authority to accredit and register tax agents (Section Bureau;
6G, NIRC) (c) The power to compromise or abate, under Sec. 204
 The Commissioner shall accredit and register, (A) and (B) of this Code, any tax liability;
based on the professional competence, integrity (d) The power to assign or reassign internal revenue
and moral fitness, individuals and general officers to establishments where articles subject to
professional partnerships and the excise tax are produce or kept.
representatives who prepare and file tax returns, 5. Authority to compromise, abate and refund or credit tax (Section
statements, reports, protests, and other papers 204, NIRC)
with or who appear before, the Bureau for The Commissioner may
taxpayers. (A) Compromise the payment of any internal revenue tax, when:
 Authority to prescribe additional procedural or (1) A reasonable doubt as to the validity of the claim
documentary requirements (Section 6H, NIRC) against the taxpayer exists, or
 The Commissioner may prescribe the manner of (2) The financial position of the taxpayer
compliance with any documentary or procedural demonstrates a clear inability to pay the assessed
requirement in connection with the submission or tax:
preparation of financial statements
accompanying the tax returns. The compromise settlement of any tax liability shall
be subject to the following minimum amounts:

For cases of financial incapacity, a minimum

4. Authority to delegate power (Section 7, NIRC) compromise rate equivalent to ten percent (10%)
The Commissioner may delegate the powers vested in him of the basic assessed tax; and
under the pertinent provisions of this Code to any or such
subordinate officials with the rank equivalent to a division chief For other cases, a minimum compromise rate
or higher, subject to such limitations and restrictions as may be equivalent to forty percent (40%) of the basic
imposed under rules and regulations to be promulgated by the assessed tax
Secretary of finance, upon recommendation of the
Commissioner: Provided, however, that the following powers When the basic tax involved exceeds One million
of the Commissioner shall not be delegated: pesos (P1,000,000) or where the settlement
(a) The power to recommend the promulgation of rules offered is less than the prescribed minimum
and regulations by the Secretary of Finance; rates, the compromise shall be subject to the
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approval of the Evaluation Board which shall be original copy of the Tax Credit Certificate showing a
composes of the Commissioner and the four (4) creditable balance is surrendered to the appropriate
Deputy Commissioners. revenue officer for verification and cancellation: Provided,
further, that in no case shall a tax refund be given resulting
(B) Abate or cancel a tax liability, when: from availment of incentives granted pursuant to special
(1) The tax or any portion thereof appears to be laws for which no actual payment was made.
unjustly or excessively assessed; or
(2) The administration and collection costs involved • End of Module 2 •
do not justify the collection of the amount due.
Links to Supplemental Readings
All criminal violations may be compromised except: 1. https://www.chanrobles.com/legal6nircmain.htm#.WW14qRUr
(a) those already filed in court, or LIU
(b) those involving fraud. 2. https://www.bir.gov.ph/index.php/tax-code.html#title1
3. https://www.bir.gov.ph/index.php/tax-code.html#title2
(C) Credit or refund taxes erroneously or illegally received, or
penalties imposed without authority, refund the value of Links to Other Video Lectures
internal revenue stamps when they are returned in good 1. https://www.youtube.com/watch?v=6FV_GQ58G1g
condition by the purchaser, and, in his discretion, redeem or 2. https://www.youtube.com/watch?v=nEkSZtKuRjQ
change unused stamps that have been rendered unfit for 3. https://www.youtube.com/watch?v=EAkl8OZzf1o
use and refund their value upon proof of destruction. No
credit or refund of taxes or penalties shall be allowed unless
the taxpayer files in writing with the Commissioner a claim
for credit or refund within two (2) years after the payment of
the ta penalty: Provided, however, that a return file showing
an overpayment shall be considered as a written claim for
credit or refund.

A Tax Credit Certificate validly issued under the provisions

of this Code may be applied against any internal revenue
tax, excluding withholding taxes, for which the taxpayer is
directly liable. Any request for conversion into refund of
unutilized tax credits may be allowed, subject to the
provision of Section 230 of this Code: Provided, that the
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