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Tax Law in the Philippines Tax 111 – Income Taxation Ferdinand C. Importado CPA, MBA
Objectives Identify the purpose of enacting a tax law. Illustrate the steps in the legislative process. Explain the sources of tax laws. Discuss the instances when taxation favors the government and strictly against the taxpayer.
Objective of enacting tax law The primary objective of the government in enacting a tax law is to raise revenues for government operations.
Steps in the legislative process First reading Committee on Ways and Means Second reading
Steps in the legislative process Public hearing Difference Senate 2nd reading
Steps in the legislative process Bicameral Reconciliation Senate 3rd reading Senate approval Tax law
Sources of tax law Constitution Statutory enactments Administrative rulings and regulations Judicial decisions
Sources of tax law Constitution The power of taxation is merely regulated by the Constitution. Taxation can be exercised even without the Constitution. Statutory enactments Tax laws passed by the Congress. National Internal Revenue Code (NIRC).
Sources of tax law Administrative rulings Administrative rulings refers to less general interpretation of tax laws issued on a timely basis by the Commissioner of the Bureau of Internal Revenue (BIR). Issued by request of the taxpayer to clarify certain provisions of a tax law. BIR Rulings.
Sources of tax law Administrative regulations These are intended to clarify or explain the law and carry into effect its general provisions by providing details of administration and procedure. Issued by the Secretary of Finance upon the recommendation of the Commissioner of the BIR. Revenue Regulations.
Sources of tax law Judicial decisions These refers to the decisions of the Court of Tax appeals and the Supreme Court applying or interpreting tax laws. Part of the jurisprudence on taxation and the legal system of the Philippines. Appealable to the Supreme Court.
Interpretation of tax laws Always in favor of the taxpayer and against the government except: When the statutes granting exemptions provides for liberal construction thereof; Exemptions in favor of the government, political subdivisions or instrumentalities; Exemptions in favor of exemptees traditionally exempt such as churches and educational institution; and Special circumstances of persons such as the granting of exemptions to victims of calamities.