INCOME

TAXATION
PRINCIPLES OF INCOME TAXATION
INHERENT POWERS OF THE STATE
Power to Tax
• -The act of levying a tax.

Police Power
• -To promote public welfare

Eminent Domain
• -Taking of private property for public purpose
PURPOSE OF TAXATION
PRIMARY
◦ Provide funds or property with which to promote the general welfare of its
citizens. This is also called revenue or fiscal purpose.

SECONDARY
◦ Compensatory purposes
◦ To reduce excessive inequalities of wealth.
◦ To maintain high level of employment.
◦ To control inflation.

◦ Sumptuary or regulatory purpose

◦ To implement the police power of the State to promote the general welfare.
Nature and characteristics of Taxation

• Inherent in sovereignty

• It is legislative in character

• It is subject to constitutional and inherent limitations

THEORY OF TAXATION
◦ Necessity Theory
◦ The existence of government is a necessity.

◦ Lifeblood doctrine
◦ Taxes are the lifeblood of the Government and their prompt and certain availability
are imperious (expecting obedience) need.
◦ Manifestation of lifeblood theory:
◦ Imposition of tax even in the absence of Constitutional grant.
◦ Right to select objects of taxation.
◦ No injunction to enjoin (or stop) tax collection.
◦ Taxes could not be the subject of compensation or set-off.
◦ A valid tax may result in the destruction of the taxpayer’s property.
BASIS OF TAXATION
◦ The basis is the reciprocal duties of protection and support between
the State and its inhabitants. The State collects taxes from the
subjects of taxation in order that it may be able to perform the
functions of government. The citizens, on the other hand, pay taxes
in order that they may be secured in the enjoyment of the benefits
of organized society (benefits received theory).

◦ No obligation on the part of the state that one who pays more
taxes should be given more protection.
STAGES/ASPECT OF TAXATION

• Role of Congress – determining and

Levying stage enacting a tax law

Assessment / • Act of administration and

collection implementation

Payment • Act of compliance

PRINCIPLES OF SOUND TAX SYSTEM

Theoretical Administrative
Fiscal adequacy
justice feasibility
• Sufficient to • Power of • Tax laws must
provide taxation be capable of
government should be convenient
expenditures based on
one’s ability
to pay
EXERCISE
• Mambulao Lumber is an operator of a logging concession.  Part
of its obligation is that once they cut trees, they are required to
reforest.  Under that set-up, the reforestation expenses will be
reimbursed by the government.  There is pending claim for
reimbursement by Mambulao Lumber against the Republic.

Mambulao has unpaid forestry charges in the exercise of its

activity as a logging concession.  Mambulao asked for offset.

What is the response of the Supreme Court?

EXERCISE

• What is the response of the Supreme Court?

The SC said NO.  The taxpayer and the

government do not have a debtor and creditor
relationship.  Taxes are not debts.
EXERCISE
• Congress passed a sin tax law that increased the tax rates on cigarettes by
1,000%. The law was thought to be sufficient to drive many cigarette
companies out of business, and was questioned in court by a cigarette
company that would go out of business because it would not be able to
pay the increased tax.

The cigarette company is __________

(A) wrong because taxes are the lifeblood of the government

(B) wrong because the law recognizes that the power to tax is the power
to destroy
(C) correct because no government can deprive a person of his livelihood
(D) correct because Congress, in this case, exceeded its power to tax
EXERCISE
• Congress passed a sin tax law that increased the tax rates on cigarettes by
1,000%. The law was thought to be sufficient to drive many cigarette
companies out of business, and was questioned in court by a cigarette
company that would go out of business because it would not be able to
pay the increased tax.

The cigarette company is __________

(A) wrong because taxes are the lifeblood of the government

(B) wrong because the law recognizes that the power to tax is the
power to destroy
(C) correct because no government can deprive a person of his livelihood
(D) correct because Congress, in this case, exceeded its power to tax
EXERCISE
• XYZ Corporation manufactures glass panels and is almost at the point of
insolvency. It has no more cash and all it has are unsold glass panels. It received
an assessment from the BIR for deficiency income taxes. It wants to pay but due to
lack of cash, it seeks permission to pay in kind with glass panels.

Should the BIR grant the requested permission?

(A) It should grant permission to make payment convenient to taxpayers.

(B) It should not grant permission because a tax is generally a pecuniary burden.
(C) It should grant permission; otherwise, XYZ Corporation would not be able to
pay.
(D) It should not grant permission because the government does not have the
storage facilities for glass panels
EXERCISE
• XYZ Corporation manufactures glass panels and is almost at the point of
insolvency. It has no more cash and all it has are unsold glass panels. It received
an assessment from the BIR for deficiency income taxes. It wants to pay but due to
lack of cash, it seeks permission to pay in kind with glass panels.

Should the BIR grant the requested permission?

(A) It should grant permission to make payment convenient to taxpayers.

(B) It should not grant permission because a tax is generally a pecuniary
burden.
(C) It should grant permission; otherwise, XYZ Corporation would not be able to
pay.
(D) It should not grant permission because the government does not have the
storage facilities for glass panels
EXERCISE
• Which statement below expresses the lifeblood theory?

a) The assessed taxes must be enforced by the government.

b) The underlying basis of taxation is government necessity, for without
taxation, a government
can neither exist nor endure;
c) Taxation is an arbitrary method of exaction by those who are in the seat
of power;
d) The power of taxation is an inherent power of the sovereign to impose
burdens upon subjects
and objects within its jurisdiction for the purpose of raising revenues
EXERCISE
• Which statement below expresses the lifeblood theory?

a) The assessed taxes must be enforced by the government.

b) The underlying basis of taxation is government necessity, for
without taxation, a government can neither exist nor endure;
c) Taxation is an arbitrary method of exaction by those who are in the seat
of power;
d) The power of taxation is an inherent power of the sovereign to impose
burdens upon subjects and objects within its jurisdiction for the purpose
of raising revenues
EXERCISE
• Which theory in taxation states that without taxes, a government would
be paralyzed for lack of power to activate and operate it, resulting in its
destruction?

(A) Power to destroy theory

(B) Lifeblood theory
(C) Sumptuary theory
(D) Symbiotic doctrine
EXERCISE
• Which theory in taxation states that without taxes, a government would
be paralyzed for lack of power to activate and operate it, resulting in its
destruction?

(A) Power to destroy theory

(B) Lifeblood theory
(C) Sumptuary theory
(D) Symbiotic doctrine
EXERCISE
• Real property taxes should not disregard increases in the value of real
property occurring over a long period of time. To do otherwise would
violate the canon of a sound tax system referred to as:

(A) theoretical justice.

(B) fiscal adequacy.
(C) administrative feasibility.
(D) symbiotic relationship.
EXERCISE
• Real property taxes should not disregard increases in the value of real
property occurring over a long period of time. To do otherwise would
violate the canon of a sound tax system referred to as:

(A) theoretical justice.

(B) fiscal adequacy.
(C) administrative feasibility.
(D) symbiotic relationship.
National Internal Revenue Taxes under the
administration of BIR
Income tax
Estate tax and Donor’s Tax
Value-added tax
Other percentage taxes
Excise tax
Documentary stamp taxes
CLASSIFICATION OF TAXES
As to the subject matter:
Personal, Poll or Capitalization tax
Property tax
Excise tax

 As to who bears the burden:

Direct
Indirect:
Business tax
Percentage tax
Excise tax
CLASSIFICATION OF TAXES
As to the determination of amount:
Specific
Ad valorem

 As to purpose:
General
Specific

 As to scope or authority imposing the tax:

National
Municipal or local
CLASSIFICATION OF TAXES
As to graduation or rate:
Proportional
Progressive
Regressive

Progressive VS Regressive
• The rate increases as the tax • Regressive System of Taxation
base increases means that there are more
indirect taxes than direct taxes.
• Progressive System of Taxation
means that the state has more • Example: payment of VAT
direct taxes than indirect taxes.
 TAX VS. TOLL
TAX TOLL
~It is a demand of ~It is a demand of
sovereignty. proprietorship.

~It is one’s support for ~It is a compensation

the government. for the use of
somebody else’s
property.
 TAX VS. TOLL

TAX TOLL
~It is imposed only by ~It maybe imposed by the
the government. government or private
individuals.

~It is determined by the

~It is based on cost of property or
governmental needs. improvement thereon
 TAX VS. PENALTY
PENALTY
TAX
~It is imposed to regulate conduct
~ It is imposed to raise revenue. through punishment and
~It is imposed only by the suppression of injurious act.
government. ~may be imposed by the government
~ It arises from law. or by private individuals.
~ generally, payable in money. ~ It may arise from law or contract.
~may be paid in money or in kind.
 TAX VS. ASSESSMENT
TAX ASSESSMENT

~leviedon business, interests, ~ levied on land

transactions, rights, persons,
properties or privileges.

~ cannot be made the personal

~may be made a personal liability of the person assessed,
liability of the person because it is the land that
assessed. answers for the liability.
 TAX VS. ASSESSMENT
TAX ASSESSMENT
~ based on necessity with no hope ~based wholly on benefits
of direct or immediate benefit to received.
the taxpayer.

~is of general application. ~it is exceptional in application for

the recovery of cost and/or
maintenance of improvement.
 TAX VS. LICENSE FEE
TAX LICENSE FEE
~ tax is levied in the exercise of ~license fee emanate from the
the taxing power. police power of the state.

~the purpose of it is to generate ~the purpose of it is regulatory

revenue. ~limited to the necessary
expenses of regulation and control.
~generally amount is unlimited.
~imposed on the exercise of a right
~imposed on person, property, or privileges.
rights or transaction
~non- payment makes the business
~non-payment does not make the illegal.
business illegal.
 TAX VS. CUSTOMS DUTIES
TAX CUSTOMS DUTIES
~imposed on person, property, ~imposed on imported or exported
rights or transaction. goods.

~it comprehends more than the

term custom duties. ~it is also a tax.
 TAX VS. DEBT
TAX DEBT
~based on law ~based on contract

~not assignable ~assignable

~payable in money ~payable in kind or in money

~not subject to set-off ~subject to set-off

~no imprisonment
~non-payment may result to
imprisonment (except when debt arises from crime)

~bears interest only if delinquent. ~ interest depend upon the

stipulation of the parties.
SITUS OF TAXATION
Place of taxation

Double taxation
Taxing twice by the same taxing authority with the
same taxing jurisdiction or the same taxing district
for the same purpose, of the same year or the same
taxing period and of the same property
SITUS OF TAXATION
Place of taxation

Double taxation
Taxing twice by the SAME taxing authority with the
SAME taxing jurisdiction or the SAME taxing district
for the SAME purpose, of the SAME year or the
SAME taxing period and of the SAME property.
EXERCISE
• Choose the correct answer. Double Taxation

(A) is one of direct duplicate taxations wherein two (2) taxes must be imposed on
the same subject matter, by the same taxing authority, within the same jurisdiction,
during the same period, with the same kind or character of tax, even if the
purposes of imposing the same
are different.
(B) is forbidden by law; and therefore, it is a valid defense against the validity of a
tax measure.
(C) means taxing the same property twice when it should be taxed only once; it is
tantamount to taxing the same person twice by the same jurisdiction for the same
thing.
(D) exists when a corporation is assessed with local business tax as a
manufacturer, and at the same time, value-added tax as a person selling goods in
the course of trade or business.
EXERCISE
• Choose the correct answer. Double Taxation

(A) is one of direct duplicate taxations wherein two (2) taxes must be imposed
on the same subject matter, by the same taxing authority, within the same
jurisdiction, during the same period, with the same kind or character of tax,
even if the purposes of imposing the same
are different.
(B) is forbidden by law; and therefore, it is a valid defense against the validity of a
tax measure.
(C) means taxing the same property twice when it should be taxed only once; it is
tantamount to taxing the same person twice by the same jurisdiction for the same
thing.
(D) exists when a corporation is assessed with local business tax as a
manufacturer, and at the same time, value-added tax as a person selling goods in
the course of trade or business.
EXERCISE
• Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his gross
sales to the BIR and the municipal license tax based on the same gross sales to the
City of Makati. He comes to you for advice because he thinks he is being
subjected to double taxation.

What advice will you give him?

(A) Yes, there is double taxation and it is oppressive.

(B) The City of Makati does not have this power.
(C) Yes, there is double taxation and this is illegal m the Philippines.
(D) Double taxation is allowed where one tax is imposed by the national
government and the other by the local government.
EXERCISE
• Mr. Alas sells shoes in Makati through a retail store. He pays the VAT on his gross
sales to the BIR and the municipal license tax based on the same gross sales to the
City of Makati. He comes to you for advice because he thinks he is being
subjected to double taxation.

What advice will you give him?

(A) Yes, there is double taxation and it is oppressive.

(B) The City of Makati does not have this power.
(C) Yes, there is double taxation and this is illegal m the Philippines.
(D) Double taxation is allowed where one tax is imposed by the national
government and the other by the local government.
EXERCISE
• Bank A deposit money with Bank B which earns interest that is subjected to the 20%
final withholding tax. At the same time, Bank A is subjected to the 5% gross receipts
tax on its interest income on loan transactions to customers. Which statement below
INCORRECTLY describes the transaction?

a) There is double taxation because two taxes – income tax and gross receipts tax are
imposed on the interest incomes described above and double taxation is prohibited
under the 1987 Constitution
b) There is no double taxation because the first tax is income tax, while the second
tax is business tax;
c) There is no double taxation because the income tax is on the interest income of
Bank A on its deposits with Bank B (passive income), while the gross receipts tax is
on the interest income
received by Bank A from loans to its debtor-customers (active income);
d) Income tax on interest income of deposits of Bank A is a direct tax, while GRT on
interest income on loan transaction is and tax.
EXERCISE
• Bank A deposit money with Bank B which earns interest that is subjected to the 20%
final withholding tax. At the same time, Bank A is subjected to the 5% gross receipts
tax on its interest income on loan transactions to customers. Which statement below
INCORRECTLY describes the transaction?

a) There is double taxation because two taxes – income tax and gross receipts tax
are imposed on the interest incomes described above and double taxation is
prohibited under the 1987 Constitution
b) There is no double taxation because the first tax is income tax, while the second
tax is business tax;
c) There is no double taxation because the income tax is on the interest income of
Bank A on its deposits with Bank B (passive income), while the gross receipts tax is
on the interest income
received by Bank A from loans to its debtor-customers (active income);
d) Income tax on interest income of deposits of Bank A is a direct tax, while GRT on
interest income on loan transaction is and tax.
TAX REMEDIES

Tax exemptions
Tax deductions
Tax credits
Enter into tax treaties or agreements on the basis of
reciprocity
FORMS OF ESCAPE

Shifting – transfer of tax burden by one person

Forward shifting
Backward shifting
Onward shifting
Tax capitalizations
Transformation
Tax evasion
FORMS OF ESCAPE

Tax avoidance
Tax exemptions
Tax amnesty
TAX EXEMPTIONS

It is a grant of immunity, express or implied, to particular

persons, or corporations of a particular class, from a tax
upon property or an excise tax which persons and
corporations generally within the same taxing district, are
obliged to pay.
GROUND FOR TAX EXEMPTIONS
 Exemptions may be granted on the basis of contracts.

 The exemption may be contained in the charter or in the law creating the corporation
or entity to which the exemption is granted.

 The exemption may be based on some ground of public policy. For purposes of
encouraging and promoting industries, we grant tax benefits or tax exemptions for a
certain period of time so that they would encourage and develop their industries.

 Tax exemption may be created on the basis of tax treaties or agreements between two
states on the basis of reciprocity.
EXERCISE

• Choose the correct answer. Tax Avoidance

(A) is a scheme used outside of those lawful means and, when availed of, it usually
subjects the taxpayer to further or additional civil or criminal liabilities.
(B) is a tax saving device within the means sanctioned by law.
(C) is employed by a corporation, the organization of which is prompted more on the
mitigation of tax liabilities than for legitimate business purpose.
(D) is any form of tax deduction scheme, regardless if the same is legal or not.
EXERCISE

• Choose the correct answer. Tax Avoidance

(A) is a scheme used outside of those lawful means and, when availed of, it usually
subjects the taxpayer to further or additional civil or criminal liabilities.
(B) is a tax saving device within the means sanctioned by law.
(C) is employed by a corporation, the organization of which is prompted more on the
mitigation of tax liabilities than for legitimate business purpose.
(D) is any form of tax deduction scheme, regardless if the same is legal or not.
 INCOME
TAXATION
QUIZZES
QUIZZES

• Which statement is WRONG? (2012 Bar Question)

a) The power of taxation may be exercised by the government, its political

subdivisions, and public utilities;
b) Generally, there is no limit on the amount of tax that may be imposed;
c) The money contributed as tax becomes part of the public funds;
d) The power of tax is subject to certain constitutional limitations.
QUIZZES

• Which statement is WRONG? (2012 Bar Question)

a) The power of taxation may be exercised by the government, its political

subdivisions, and public utilities;
b) Generally, there is no limit on the amount of tax that may be imposed;
c) The money contributed as tax becomes part of the public funds;
d) The power of tax is subject to certain constitutional limitations.
QUIZZES
• The municipality of San Isidro passed an ordinance imposing a tax on installation
managers. At that time, there was only one installation manager in the municipality;
thus, only he would be liable for the tax.

Is the law constitutional?

(A) It is unconstitutional because it clearly discriminates against this person.

(B) It is unconstitutional for lack of legal basis.
(C) It is constitutional as it applies to all persons in that class.
(D) It is constitutional because the power to tax is the power to destroy
QUIZZES
• The municipality of San Isidro passed an ordinance imposing a tax on installation
managers. At that time, there was only one installation manager in the municipality;
thus, only he would be liable for the tax.

Is the law constitutional?

(A) It is unconstitutional because it clearly discriminates against this person.

(B) It is unconstitutional for lack of legal basis.
(C) It is constitutional as it applies to all persons in that class.
(D) It is constitutional because the power to tax is the power to destroy
QUIZZES

• The actual effort exerted by the government to effect the exaction of what is due from
the taxpayer is known as:

(A) assessment.
(B) levy.
(C) payment.
(D) collection
QUIZZES

• The actual effort exerted by the government to effect the exaction of what is due from
the taxpayer is known as:

(A) assessment.
(B) levy.
(C) payment.
(D) collection
QUIZZES

• Although the power of taxation is basically legislative in character, it is NOT the

function of Congress to:

(A) fix with certainty the amount of taxes.

(B) collect the tax levied under the law.
(C) identify who should collect the tax.
(D) determine who should be subject to the tax.
QUIZZES

• Although the power of taxation is basically legislative in character, it is NOT the

function of Congress to:

(A) fix with certainty the amount of taxes.

(B) collect the tax levied under the law.
(C) identify who should collect the tax.
(D) determine who should be subject to the tax.
QUIZZES

• The power to demand proportionate contribution from persons and property to defray
the necessary expenses of the government

(A) Power of taxation

(B) Police power
(C) Power of eminent domain
(D) Power of recall
QUIZZES

• The power to demand proportionate contribution from persons and property to defray
the necessary expenses of the government

(A) Power of taxation

(B) Police power
(C) Power of eminent domain
(D) Power of recall
QUIZZES
• The State, having sovereignty can enforce contributions (tax) upon its citizens even
without specific provision in the Constitution authorizing it. Which of the following
will justify the foregoing statement?

Statement 1: It is so because the State has the supreme power to command and
enforce obedience to its will from the people within its jurisdiction.

Statement 2: Any provision in the Constitution regarding taxation does not create
rights for the sovereignty to have the power to tax but it merely constitutes limitations
upon the supremacy of tax power.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES
• The State, having sovereignty can enforce contributions (tax) upon its citizens even
without specific provision in the Constitution authorizing it. Which of the following
will justify the foregoing statement?

Statement 1: It is so because the State has the supreme power to command and
enforce obedience to its will from the people within its jurisdiction.

Statement 2: Any provision in the Constitution regarding taxation does not create
rights for the sovereignty to have the power to tax but it merely constitutes limitations
upon the supremacy of tax power.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES
• Statement 1: The power to tax is supreme, plenary, comprehensive and without any
limit because the existence of the government is a necessity.

Statement 2: The discretion of Congress in imposing taxes extends to the mode,

method, and kind of tax, even if the Constitution prohibits otherwise.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES
• Statement 1: The power to tax is supreme, plenary, comprehensive and without any
limit because the existence of the government is a necessity.

Statement 2: The discretion of Congress in imposing taxes extends to the mode,

method, and kind of tax, even if the Constitution prohibits otherwise.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES
• Statement 1: The amount of money raised to the government in the exercise of the of
its power to tax and police power is based on the needs of the government.

Statement 2: The amount of money raised for the government in the exercise of its
power of eminent domain is based on the cost of processing the transfer from private
entities and/or individuals to the government.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES
• Statement 1: The amount of money raised to the government in the exercise of the of
its power to tax and police power is based on the needs of the government.

Statement 2: The amount of money raised for the government in the exercise of its
power of eminent domain is based on the cost of processing the transfer from private
entities and/or individuals to the government.

(A) 1 only is correct

(B) 2 only is correct
(C) Both statements are correct
(D) Both statements are incorrect
QUIZZES

• The reciprocal duties of support and protection between the people and the
government

(A) Basis of taxation

(B) Situs of taxation
(C) Scope of taxation
(D) Theory of taxation
QUIZZES

• The reciprocal duties of support and protection between the people and the
government

(A) Basis of taxation

(B) Situs of taxation
(C) Scope of taxation
(D) Theory of taxation
QUIZZES
• After having been informed that most of the massage parlors in the city are being
used as fronts for prostitution, the Sanguniang Panlungsod ng Maynila passed a tax
ordinance subjecting massage parlors within its jurisdiction to such ‘onerous taxes’
that leave them no other alternative but to stop operating. The passage of the
ordinance is a valid exercise of-

(A) Taxation
(B) Police power
(C) Eminent domain
(D) Police power and power of taxation
QUIZZES
• After having been informed that most of the massage parlors in the city are being
used as fronts for prostitution, the Sanguniang Panlungsod ng Maynila passed a tax
ordinance subjecting massage parlors within its jurisdiction to such ‘onerous taxes’
that leave them no other alternative but to stop operating. The passage of the
ordinance is a valid exercise of-

(A) Taxation
(B) Police power
(C) Eminent domain
(D) Police power and power of taxation
QUIZZES

• When the power to tax is delegated to the local government

(A) Only the local executives can exercise the power

(B) Only the legislative branch of the local government can exercise the power
(C) The local executive and the legislative branch of the local government can
exercise the power
(D) Neither the local executive nor the legislative branch of the LGU can exercise the
power
QUIZZES

• When the power to tax is delegated to the local government

(A) Only the local executives can exercise the power

(B) Only the legislative branch of the local government can exercise the power
(C) The local executive and the legislative branch of the local government can
exercise the power
(D) Neither the local executive nor the legislative branch of the LGU can exercise the
power
QUIZZES

• Which of the following is incorrect?

(A) Taxes may be imposed retroactively by law but, unless so expressed by such law,
these taxes must only be imposed prospectively.
(B) Tax laws are neither political nor penal in nature
(C) The ‘ex post facto’ rule is not applicable in taxation
(D) None of the above
QUIZZES

• Which of the following is incorrect?

(A) Taxes may be imposed retroactively by law but, unless so expressed by such law,
these taxes must only be imposed prospectively.
(B) Tax laws are neither political nor penal in nature
(C) The ‘ex post facto’ rule is not applicable in taxation
(D) None of the above
QUIZZES

• Which of the following statement is correct?

(A) Indirect double taxation violates the Constitutional provision of uniformity and
equal protection
(B) There is direct double taxation in taxing the income of the corporation and again
subject the portion of that income declared as dividend to final tax.
(C) Indirect double taxation is legal as long as there is no violation of equal protection
and uniformity clauses of the Constitution
(D) All of the above
QUIZZES

• Which of the following statement is correct?

(A) Indirect double taxation violates the Constitutional provision of uniformity and
equal protection
(B) There is direct double taxation in taxing the income of the corporation and again
subject the portion of that income declared as dividend to final tax.
(C) Indirect double taxation is legal as long as there is no violation of equal
protection and uniformity clauses of the Constitution
(D) All of the above
QUIZZES

• The usual mode(s) of avoiding occurrence of double taxation is/are:

(A) Reciprocal exemption, either by law or treaty

(B) Tax credit of foreign taxes paid
(C) Deduction for foreign taxes paid
(D) All of the above
QUIZZES

• The usual mode(s) of avoiding occurrence of double taxation is/are:

(A) Reciprocal exemption, either by law or treaty

(B) Tax credit of foreign taxes paid
(C) Deduction for foreign taxes paid
(D) All of the above
QUIZZES
• Which of the following is a constitutional limitation for the power of taxation?

I. Territoriality of taxes
II. Public purpose
III. Legislative in character
IV. Non-appropriation for religious purpose

(A) II only
(B) IV only
(C) II and IV only
(D) III and IV only
QUIZZES
• Which of the following is a constitutional limitation for the power of taxation?

I. Territoriality of taxes
II. Public purpose
III. Legislative in character
IV. Non-appropriation for religious purpose

(A) II only
(B) IV only
(C) II and IV only
(D) III and IV only
QUIZZES
• Equality in taxation means:

I. Progressive system of taxation shall be adopted

II. The tax laws and their application must be fair, just, reasonable and proportionate
to one’s ability to pay
III. The tax laws shall give emphasis on direct rather than indirect taxes or on the
ability-to-pay principle of taxation

(A) I only
(B) II only
(C) III only
(D) I, II, and III
QUIZZES
• Equality in taxation means:

I. Progressive system of taxation shall be adopted

II. The tax laws and their application must be fair, just, reasonable and proportionate
to one’s ability to pay
III. The tax laws shall give emphasis on direct rather than indirect taxes or on the
ability-to-pay principle of taxation

(A) I only
(B) II only
(C) III only
(D) I, II, and III
QUIZZES

• No law granting any tax exemption shall be passed without the concurrence of –

(A) Majority of all members of Congress

(B) 2/3 vote of all members of Congress
(C) ¾ vote of all members of Congress
(D) Unanimous vote of all members of Congress
QUIZZES

• No law granting any tax exemption shall be passed without the concurrence of –

(A) Majority of all members of Congress

(B) 2/3 vote of all members of Congress
(C) ¾ vote of all members of Congress
(D) Unanimous vote of all members of Congress
QUIZZES

• The use of illegal or fraudulent means to avoid or defeat the payment of tax

(A) Exemption
(B) Shifting
(C) Avoidance
(D) Evasion
QUIZZES

• The use of illegal or fraudulent means to avoid or defeat the payment of tax

(A) Exemption
(B) Shifting
(C) Avoidance
(D) Evasion
QUIZZES

• The exploitation by the taxpayer of legally permissible alternative tax rates or

methods of assessing taxable property or income, in order to reduce tax liability. It is
otherwise known as tax minimization

(A) Tax Exemption

(B) Tax Evasion
(C) Tax Avoidance
(D) Transformation
QUIZZES

• The exploitation by the taxpayer of legally permissible alternative tax rates or

methods of assessing taxable property or income, in order to reduce tax liability. It is
otherwise known as tax minimization

(A) Tax Exemption

(B) Tax Evasion
(C) Tax Avoidance
(D) Transformation
QUIZZES

• Transfer of the tax burden by one whom the tax is assessed to another

(A) Shifting
(B) Capitalization
(C) Transformation
(D) Tax exemption
QUIZZES

• Transfer of the tax burden by one whom the tax is assessed to another

(A) Shifting
(B) Capitalization
(C) Transformation
(D) Tax exemption
QUIZZES

• Pedro sold a parcel of land classified as capital asset to Juan. The parties agreed that
the capital gains tax shall be shouldered by Juan. Is this a form of shifting? Is the
stipulation valid?

Shifting Stipulation
(A) Yes Yes
(B) No No
(C) Yes No
(D) No Yes
QUIZZES

• Pedro sold a parcel of land classified as capital asset to Juan. The parties agreed that
the capital gains tax shall be shouldered by Juan. Is this a form of shifting? Is the
stipulation valid?

Shifting Stipulation
(A) Yes Yes
(B) No No
(C) Yes No
(D) No Yes
QUIZZES
• Mapagbigay School, a non-stock non-profit educational institution, bought from Pedro, a resident
citizen, his residential house and lot. Pedro would be using the proceeds of the sale to buy his new
residential house and lot. On the other hand, the school will use the parcel of land to construct a
new building for its dormitory for its medical students. Which statements below regarding
liability for payment of capital gains tax is correct?

I. Pedro is liable to capital gains tax. However if what was sold was his principal residence, he
may apply for tax exemption, provided that he complies with the requirements laid down in the
Tax Code
II. Pedro is not liable to capital gains tax because the sale was made in favor of a non-stock,
non-profit educational institution and that the property will be used for educationally-related
functions
III. Pedro is liable to capital gains tax because the tax is imposed on the seller, thus
notwithstanding any exemption enjoyed by the buyer, the tax shall be imposed

(A) I only
(B) II only
(C) I and II only
(D) I and III only
QUIZZES
• Mapagbigay School, a non-stock non-profit educational institution, bought from Pedro, a resident
citizen, his residential house and lot. Pedro would be using the proceeds of the sale to buy his new
residential house and lot. On the other hand, the school will use the parcel of land to construct a
new building for its dormitory for its medical students. Which statements below regarding
liability for payment of capital gains tax is correct?

I. Pedro is liable to capital gains tax. However if what was sold was his principal residence, he
may apply for tax exemption, provided that he complies with the requirements laid down in the
Tax Code
II. Pedro is not liable to capital gains tax because the sale was made in favor of a non-stock,
non-profit educational institution and that the property will be used for educationally-related
functions
III. Pedro is liable to capital gains tax because the tax is imposed on the seller, thus
notwithstanding any exemption enjoyed by the buyer, the tax shall be imposed

(A) I only
(B) II only
(C) I and II only
(D) I and III only