CONSTRUCTION OF TAX LAWS
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PUBLIC PURPOSE IS ALWAYS PRESUMED
IF THE LAW IS CLEAR, APPLY THE LAW IN ACCORDANCE TO ITS PLAIN AND SIMPLE TENOR.
A STATUTE WILL NOT BE CONSTRUED AS IMPOSING A TAX UNLESS IT DOES SO CLEARLY,
EXPRESSLY, and UNAMBIGOUSLY.
IN CASE OF DOUBT, it is construed most strongly against the Government and liberally in favor
of the taxpayer.
PROVISIONS of A TAXING AXCT ARE NOT TO BE EXTENDED BY IMPLICATION
TAX LAWS OPERATE PROSPECTIVELY UNLESS THE PURPOSE OF THE LEGISLATURE TO GIVE
RETROSPECTIVE EFFECT IS EXPRESSLY DECLARED OR MAYBE IMPLIED FROM THE LANGUAGE
USED.
TAX LAWS ARE SPECIALS LAWS AND PREVAIL OVER A GENERAL LAW
RULE WHEN THERE IS NO DOUBT IN STATUTE OR LAW
NO person or PROPERTY is subject to taxation unless within the TERMS or PLAIN import of a TAXING
STATUTE.
IN EVERY CASE OF DOUBT, TAX STATUTES ARE CONSTRUED STRICTLY AGAINST THE GOVERNMENT AND
LIBERALLY IN FAVOR OF THE TAXPAYER
PROVISIONS GRANTING TAX EXEMPTIONS
SUCH PROVISIONS ARE CONSTRUED STRICTLY AGAINST THE TAXPAYER CLAIMING TAX EXEMPTION
EXCEPTION: While it is not favored, a statute may nevertheless operate RETROACTIVELY PROVIDED
IT IS EXPRESSLY DECLARED OR IS CLEARLY THE LEGISLATIVE INTENT
EXCEPTION TO THE EXCEPTION: A TAX LAW SHOULD NOT BE GIVEN RETROACTIVE APPLICATION
WHEN IT WOULD BE HARSH AND OPPRESSIVE WHICH VIOLATE THE TAXPAYER’S CONSTITUTIONAL
RIGHTS REGARDING EQUITY AND DUE PROCESS
MODES OF ESCAPE FROM TAXATION
SHIFTING- is the transfer of the burden of a tax by the original payer or the one whom the tax was
assessed or imposed to someone else. Transferred is not the payment of the tax but the burden of the
tax. (ONLY INDIRECT TAXES MAY BE SHIFTED; DIRECT TAXES CANNOT BE SHEIFFTED)]’
CAPITALIZATION- the reduction in the price of the taxed object equal to the capitalized value of the
future taxes the purchaser is expected to be called upon to pay
TRANSFORMATION- An escape from taxation where the producer or manufacturer pays the tax and
endeavor to recoup himself by improving his process of production thereby turning out his units of
products at a lower cost.
TAX AVOIDANCE- THE EXPLOITATION by the taxpayer of legally permissible alternative tax rates or
methods of assessing taxable property or income in order to avoid or reduce tax liability. It is politely
called “tax minimization” and is not punishable by law.
TAX EVASION- is the USE by the TAXPAYER of ILLEGAL or FRAUDULENT means to DEFEAT or LESSSEN
THE PAYMENT of a tax. It is also known as “tax dodging”. It connotes fraud through the use of pretenses
or forbidden devices to lessen or defeat taxes.
TAX AMNESTY – it is the general or intentional overlooking by the STATE of its authortity to impose
penalties on persons otherwise guilty of evasion or violation of a revenue or tax law. It partakes of an
absolute forgiveness or waiver of the government of its right to collect. It is a way to give tax evaders,
who wish to relent and are willing to reform a chance to do so.
AMNESTY INVOLVES IMMUNITY FROM ALL CRIMINAL, CIVIL AND ADMINISTRATIVE LIABILITIES FROM
NON-PAYMENT OF TAXES.
TAX EVATION VS TAX AVOIDANCE
TAX EVATION CONNOTES FRAUD through the USE OF PRETENSES and FORBIDDEN DEVICES to lessen or
DEFEAT TAXES. On the other hand, TAX AVOIDANCE is a LEGAL MEANS used by the TAXPAYER to
REDUCE TAXES
TAX EVATION CONNOTES THE INTEGRATION OF THREE FACTORS
1 The end to be achieved EXAMPLE the payment of less than that known by taxpayer to be legally due,
or the non-payment of tax when it is shown that a tax is due; (2) an ACCOMPANYING state of mind
which is described as being “EVIL”, in “BAD FAITH” “WILLFUL,” or DELIBERATE and not accidental
(3) a course of action or failuire of action wich is unlawful
RA 11213 TAX AMNESTY ACT
To provide amnesty to settle the estate of deceased persons
ESTATE TAX AMNSETY
COVERAGE- estate of decedents who died on or before DFEC 31 2017 with or without assessments duly
issued terefor, whose estate taxes have remained unpaid or have accrued as of December 31 2017
EXCEPTIONS TO THE COVERAGE: The estate taxs amnesty shall not extend to :
1.
2.
3.
4.
Cases which shall have become final and executory
Properties involved in cases pending in appropriate courts
FALLING under the jurisdiction of the PCGG
INVOLVED in unexplained or unlawfully acquired wealth or anti graft and corrupt practices or
plunder act
5. AMLAC
6. Involving tax evasion and criminal offenses under the tax code
C. TAX BASE: TOT NET ESTATE at the time of death, or the gross estate less all allowable deductions
as provided in tax code
TAX DUE? 6 percent of the net estate at the time of death without penalties at every stage of
transfer of property in cognizance with the rules of succession of the civil code of the philipines.
VALUATION- shall be the fair market value at the time of death of the decedent following the rules
of valuation applicable to real properties and shares of stock for estate taxation
WHO WILL AVAIL? The executor or admin of the estate
IF NO EXECUTOR OR ADMINISTRATOR the LEGAL HEIRS transfeeres or beneficiaries
WHERE TO FILE? THE sworn estate tax amnesty return shall be filed with the RDO of the BIR which
has juridsdiction over the last residence of the decedent. For non-residents, the return shall be filed
and the tax paid
INHERENT LIMITATIONS
THESE LIMITations proceed from the very nature of the taxing power itself. These are: Public
purpose, INTERNATIONAL comity, Territoriality, nNOn delegation of the power to tax and the
various tax xemptions granted government agencies or instrumentalitiees.
1. An inherent limitation on the power of taxation is public purpose. TAXES are exacted only for a
public purpose. TAXES are exacted only for public purpose, they cannot be used for purely
private purposes or for the exclusive benefit of private persons.
The power to tax exists for the general welfare
REVENUE MEASURE must be laid for a public purpose determined by the legislature
THE PUBLIC PURPOSE MUST EXIST AT THE TIME THE LAW IS ENACTED.
WHO MAY DETERMINE PUBLIC PURPOSE? This is a legislative prerogative. The power to
determine whether the purpose of taxation is public or private resides in congress.
A question on the validitry of suct tax measure may be raised before the courts on the ground
that it is not for public purpose. However, once it is settled that it is for a public purpose, it can
no longer be a subject of inquriry.
NO DELEGATION OF THE POWER TO TAX
What cannot be delegated is the legislative “eneactment/imposition/levying” of tax measure. However,
as regards to administrative implementation of a tax law.
INHERENTLKY LEGISLATIVE
EXCEPTIONS : DELEGATION TO LOCAL GOVERNMENT: the constitution as implemented by LGC,
empowers the LGU to create its own sources of revenue and to levy taes, fees and chargers which shall
accrue eclusively to the lgU
DELEGATION TO THE PReSIDENt: the consti, as implemented by the tariff and custom code, allows the
president to fix tariff rates, import and export quotas, tonnage and wharfage dues and other duties or
imposts.
President may exercise emergency powers and enter into executive agreements or treaties which may
contain tax exemption provisions subject to the concurrence of the state
COMPLETENESS TEST- in order for the delegation to be valid, the law nust be complete in all aspect
when it leaves the legislature,
TERRITORIAL SITUS OF TAXATION
TAX LAWS CANNOT OPERATE BEYOIND A STATE’s TERRITORIAL LIMITS.
PROPERTY outside one’s jurisdiction does not receive any protection from the sate.
Tax is territorial in application in the sense that the object and/or subject of the tax must be within the
territorial jurisdiction of a state. Thje object of taxation is the income, and the subject would be the
income earner.
INTERNATIONAL COMITY
Uniformity of taxation, like the kindred concept of equal protection, merely requires that all
subjects or objects of taxation, similarly situated, are to be treated alike both in privileges
Due process of law no person shall be deprived of life liberty or property without due process of law.
The implication is that one may be deprived of property as long as the requirement of due process.
Procedural due process: requires that taxpayers must be notified of the assessment in writing and must
state the fact and law upon which it is based.
Substantive due process: requires that assesmsments must not be harsh, oppressive or confiscatory; it
must be made under authority of a valid law
Due process is usually violated where the tax imposed is for a private purpose as distinguished from a
public purpose; a tax is imposed on property outside the state EXAMPLE extra-territorial taxation
TAX STATUTE must not be arbitrary as to find no support in constitution.
(RIGHT TO NOTICE AND HEARING)
EQUAL PROTECTION OF LAWS
No person shall be deprived of life, liberty or property without due process of law, nor shall ANY
PERSON BE DENIED THE EQUAL PROTECTION OF LAWS.
OUR CONSTITUTION REQUIRES UNIFORMITY, not EQUALITY IN TAXATION
REQUIREMENT: requires that the law must apply equally to all persons within the same class
WHAT IT PROHIBITS? Is class legislation which discriminates against some and favors others
EQUALITY OF TAXATION is accomplished when the burden of the tax falls equally and impartially upon
all persons and property subject to it so that no higher rate or greater levy in proportion to value is
imposed upon one person or species or property than upon others similarly situated or of like character
UNIFORMITY REQUIRES that all taxable property subjected to the tax, shall be alike and this requirement
is violated if particular kinds, species or items of property are selected to bear the whole burden of the
tax
REQUIREMENT: laws requires that the law must apply equally to all persons within the same class.
As such, providing for a classification and applying the law only to a particular class is not violative of the
constitutional right so long as it comes from a VALID CLASSIFICATION
REQUISITES for a valid classification
1.
2.
3.
4.
Must be based upon substantial distinctions
Mut be germane to the purpose of law
Must apply to both present and future conditions
Must apply equally to all members of a class
TWO WAYS BY WHICH EQUAL PROTECTION CLAUSE IS VIOLATED
When classification is made when there should be non
When classification is not made when called for
UNIFORMITY- all taxable property shall be taxed alike
EQUALITY- when the burden of the tax falls equally and impartially upon all persons and property
subject to it