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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland
TITLE V OTHER PERCENTAGE TAXES 1. On Persons Exempt from Value-added Tax (VAT)-- 3% of gross quarterly sales or receipts, except cooperatives (Sec. 116) 2. On Domestic Carriers and Keepers of Garages -- 3% of quarterly gross receipts except: owners of animal drawn 2 wheeled vehicles and bancas (Sec. 117) In computing the percentage tax, the following shall be considered the minimum quarterly gross receipts in each particular case: Jeepney for hire Manila and other cities P2,400 Provincial 1,200 Public utility bus Not exceeding 30 passengers P3,600 >30 but < 50 passengers 6,000 Exceeding 50 passengers 7,200 Taxis Manila and other cities P3,600 Provincial 2,400 Car for hire (with chauffeur) P3,000 Car for hire (without chauffeur) P1,800 3. On International Carriers a) International air carriers doing business in the Phils. -- 3% of quarterly gross receipts. b) International shipping carriers doing business in the Phils. -- 3%) of quarterly gross receipts. (Sec. 118) 4. Franchises a) on radio and/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed P10M --3% b) on electric, gas and water utilities -- 2% (Sec. 119) 5. Overseas Dispatch, Message or Conversation Originating from the Phils. a) by telephone, telegraph, telewriter, exchange-- 10% b) wireless and other communication equipment services-10% payable by the person paying for the services rendered paid to the person rendering the services who is required to collect and pay the tax within twenty (20) days after the end of each quarter Exemptions: a) Messages transmitted by the government b) Diplomatic services c) Public International Organizations c) News Services (Sec. 120)
6. Banks and Non-bank Financial Intermediaries on gross receipts derived from sources within the Phils.: (Sec. 121) on interest, commissions and discounts from lending activities as well as income from financial leasing, on the basis of remaining maturities Short-term maturity (not in excess of 2 years) 5% Medium-term maturity (over 2 years but not more than 4) 3% Long-term maturity Over 4 years but not exceeding 7 1% Over 7 years 0% On dividends 0% On royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross income 5% 7. Finance Companies (Sec. 122) a) gross receipts derived by all finance companies, as well as by other financial intermediaries not performing quasi-banking functions doing business in the Philippines, from interest, discounts and all other items treated as gross income -5% b) interests, commissions and discounts from lending activities, as well as income from financial leasing, shall be taxed on the basis of the remaining maturities Short-term maturity (not in excess of 2 years) 5% Medium-term maturity (over 2 years but not exceeding 4) 3% Long-term maturity -- Over 4 years but not exceeding 7 1% Over 7 years 0% 8. Life Insurance Premiums -- 5% of total premium collected (Sec. 123) except purely cooperative associations/ premiums refunded within 6 months 9. Agents of Foreign Insurance Companies -- 10% of total premiums (Sec. 124) 10. Amusement Taxes (% of gross receipts) (Sec.125) a) Cockpits --18% b) cabarets, night or day clubs -- 18 % c) boxing exhibitions -- 10% except boxing exhibitions wherein World or Oriental Championships in any division is at stake provided at least one of the contenders for World or Oriental Championship is a citizen of the Philippines and the exhibitions are promoted by a citizen/s of the Philippines or by a corporation or association at least sixty percent (60%) of the capital of which is owned by such citizens; d) professional basketball --15% e) Jai-Alai and racetracks irrespective of whether or not any amount is charged for admission -- 30% gross receipts-embraces all the receipts of the proprietor/operator/lessee of the amusement place
11. Tax on Winnings (Sec. 126) a) horse races -- 10% of winnings based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket b) winnings from double, forecast/quinella and trifecta bets-- 4% b owners of winning race horses -- 10%
12. Tax on Sale, Barter or Exchange of Shares of Stock A. Listed and Traded through the Local Stock Exchange -- 1/2 of 1% of the gross selling price B. Initial Public Offering of closely held corp. of the shares of stock sold, bartered, exchanged or otherwise disposed in accordance with the proportion of shares of stock sold, bartered, exchanged or otherwise disposed to the total outstanding shares of stock after the listing in the local stock exchange: (% of gross selling price/ gross value in money) Up to 25% .4% Over 25% but not over 33 1/3% 2% Over 33 1/3% 1% --- tax imposed shall be paid by the issuing corporation in primary offering or by the seller in secondary offering 'CLOSELY HELD CORPORATION' -- any corporation at least 50% in value of the outstanding capital stock or at least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by or for not more than 20 individuals Rules in determining whether a corporation is closely held: 1. Stock owned directly or indirectly by or for a corporation, partnership, estate or trust -- considered as being owned proportionately by its shareholders, partners or beneficiaries 2. Family and Partnership Ownerships -- An individual shall be considered as owning the stock owned, directly or indirectly, by or for his family, or by or for his partner (''family of an individual' only his brothers and sisters (whole or half-blood), spouse, ancestors and lineal descendants) 3. An option to acquire stock shall be considered as ownership of such stock 4. Constructive Ownership as Actual Ownership C. Return on Capital Gains Realized from Sale of Shares of Stocks. 1. Return on Capital Gains Realized from Sale of Shares of Stock Listed and Traded in the Local Stock Exchange a) duty of every stock broker who effected the sale subject to the tax imposed herein to collect the tax and remit the same to the Bureau of Internal Revenue within five (5) banking days from the date of collection and to submit to the secretary of the stock exchange, of which he is a member, a true and complete return 2. Return on Public Offerings of Shares of Stock
a) primary offering -- the corporate issuer shall file the return and pay the corresponding tax within 30 days from the date of listing of the shares of stock in the local stock exchange b) secondary offering - 5 banking days from the date of collection (Sec. 127) PROCEDURE: (Sec. 128) I. Filing of returns and payment of percentage taxes A Persons Liable to Pay Percentage Taxes shall: 1) file a quarterly return of the amount of his gross sales, receipts or earnings 2) pay the tax due within 25 days after the end of each taxable quarter
B. Person Retiring from Business subject to percentage tax shall: 1) notify the nearest internal revenue officer 2) file his return and 3) pay the tax due within 20 days after closing his business C.Exceptions -- Commissioner may prescribe: 1) time for filing the return at intervals other than the time prescribed considering: a) volume of sales b) financial condition c) adequate measures of security d) such other relevant information required 2) manner and time of payment of percentage taxes including a scheme of tax prepayment. II. Where to File -- Except as the Commissioner otherwise permits, a) with the authorized agent bank b) Revenue District Officer c) Collection Agent or d) duly authorized Treasurer of the city or municipality where said business or principal place of business is located TITLE VI EXCISE TAXES ON CERTAIN GOODS Goods subject to excise tax: (Sec. 129) 1. goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported 2. imposed in addition to the value-added tax 2 Kinds of excise tax 1. SPECIFIC TAX ( taxes imposed based on weight or volume capacity or any other physical unit of measurement 2. AD VALOREM TAX ( tax imposed based on selling price or other specified value of the good
Filing of Return and Payment of Excise Tax on DOMESTIC Products (Sec. 130) Persons Liable --file a separate return for each place of production setting forth: 1. the description of products 2. quantity or volume of products to be removed 3. tax base 4. tax due PERSONS LIABLE first buyer, purchaser or transferee for local sale/transfer/barter owner/lessee/concessionaire/ operator of the mining claim domestic products removed owner or person having possession from place of production w/o thereof payment of tax Time for Filing of Return and Payment of the Tax TAXABLE ARTICLE WHEN PAYMENT MADE locally manuf. petroleum W/in 10 days from date of removal of products and indigenous such prods. from 1/1/98 to June 30 petroleum 98 w/in 5 days from date of removal of such products for the period of July 1, 98 to Dec. 31 98 before removal from place of production from Jan 1 99 and thereafter Nonmetallic mineral, mineral upon removal of such products from products, quarry resources locality where mined or extracted locally produced or extracted file a return and pay the tax within 15 metallic mineral or mineral days after the end of the calendar products quarter when such products were removed for imported mineral or mineral paid before their removal from products, whether metallic or customs custody nonmetallic Place for Filing of the Return and Payment of the Tax a) any authorized agent bank b) Revenue Collection Officer c) duly authorized City or Municipal Treasurer in the Philippines. Determination of gross selling price for goods subject to Ad Valorem tax: the price, excluding VAT, at which goods are sold at wholesale in the place of production or through sales agents to the public TAXABLE ARTICLE indigenous petroleum, natural gas or liquefied natural gas exported products
Payment of Excise Taxes on IMPORTED Articles Persons Liable: 1) owner or importer to the Customs Officers before the release of such articles from the customs house, or 2) by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption -- tax-free articles brought or imported into the Philippines by persons, entities, or agencies exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities -- the purchasers or recipients shall be considered the importers, and shall be liable for the duty and internal revenue tax due on such importation (Sec. 131) IMPORTATION OF CIGARS, CIGARETTES, DISTILLED SPIRITS Gen. Rule: even if destined for tax and duty free shops ( shall be subject to all applicable taxes, duties, charges, including excise taxes due Except: cigars and cigarettes, distilled spirits and wines brought directly into the duly chartered or legislated freeports of the a) Subic Special Economic and Freeport Zone, created under RA No. 7227; b) Cagayan Special Economic Zone and Freeport, created under RA No. 7922; c) Zamboanga City Special Economic Zone, created under RA No. 7903, and are not transshipped to any other port in the Philippines EXEMPTION OR CONDITIONAL TAX-FREE REMOVAL OF CERTAIN ARTICLES 1) Domestic Denatured Alcohol a) not less than 180 proof b) suitably denatured and rendered unfit for oral intake exempt from excise tax on alcohol products but taxable under Section 106(A)/ VAT Except: 1. if it is to be used for motive power-taxable (excise tax on petroleum products) 2. any alcohol, previously rendered unfit for oral intake after denaturing but subsequently rendered fit for oral intake after undergoing fermentation, dilution, purification, or mixture-taxable (excise tax on alcohol products)(Sec. 134) 2) Petroleum Products sold to the following are exempt from excise tax: a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption b Entities which are by law exempt from direct and indirect taxes (Sec. 135) EXCISE TAX ON ALCOHOL PRODUCTS (*rates to be increased by 12% on Jan.1, 2000) (Sec. 141-143) TAXABLE ARTICLE TAX RATE I. (a) Distilled Spirits P8.00 per proof liter Distilled Spirits produced in a pot still or P4.00 per proof liter
other similar primary distilling apparatus by a distiller producing not more than 100 liters/day, containing not more than 50% of alcohol by volume distilled spirits produced from raw taxed in accordance with the materials other than those in (a) net retail price per bottle 750 ml. volume capacity (excluding excise tax and VAT) as follows: less than P250 -P75/proof liter P250 - P675 --P150/proof liter More than P675 -- P300/proof liter medicinal preparations, flavoring same tax as such chief extracts, and all other preparations, ingredient except toilet preparations, of which, excluding water, distilled spirits form the chief ingredient II. Wines Sparkling wines/champagnes P500 or less --P100 More than regardless of proof, if the net retail price P500-- P300 per bottle (excluding the excise tax and the value-added tax) Still wines containing 14% of alcohol by P12.00 volume or less Still wines containing more than 14% P24.00 but not more than 25% of alcohol by volume Fortified wines containing more than same as distilled spirits 25% of alcohol by volume III. Fermented Liquor on beer, lager beer, ale, porter and 1. net retail price per liter of other fermented liquors except tuba, volume capacity is less than basi, tapuy and similar domestic P14.50 -- P6.15/ liter 2. net fermented liquors retail price P14.50 - P22.00 --P9.15/liter 3. net retail price is more than P22.00 -P12.15/liter TAXABLE ARTICLE TAX RATE I. Tobacco Products: a) twisted P0.75/kilogram by hand or reduced into a condition to be consumed in any manner other than the ordinary mode of drying and curing b) prepared or partially prepared with or without the use of any
machine or instruments or without being pressed or sweetened c) fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco tobacco specially prepared for chewing so as to be unsuitable for use in any other manner II. Cigars Cigarettes Packed by Hand Cigarettes Packed by Machine (excluding the excise tax and the value-added tax)
P0.60/kilogram P1.00/cigar P0.40/pack 1. net retail price is over P10.00/pack -- P12.00/pack 2. net retail price exceeds P6.50 but does not exceed P10.00/pack -- P8.00/pack 3. net retail price P5.00 but does not exceed P6.50/pack -P5.00/pack 4. net retail price is below P5.00/pack -P1.00/pack
Inspection Fee 1 paid by the wholesaler, manufacturer, producer, owner or operator of redrying plant immediately before removal from the establishment 2 in case of imported leaf tobacco and its products, to be paid by the importer before removal from customs' custody P0.50/thousand cigars or fraction thereof P0.10/thousand cigarettes or fraction thereof P0.02/kilogram of leaf tobacco or fraction thereof P0.03/kilogram or fraction thereof, of scrap and other manufactured tobacco EXCISE TAX ON PETROLEUM PRODUCTS TAXABLE ARTICLE Lubricating oils and greases TAX RATE P4.50/liter and kg of vol capacity or wt Processed gas P0.05/ liter of volume capacity Waxes and petrolatum P3.50/kilogram Denatured alcohol to be used for P0.05/liter of volume capacity motive power
Naphtha, regular gasoline and other similar products of distillation Leaded premium gasoline Unleaded premium gasoline Aviation turbo jet fuel Kerosene Kerosene, when used as aviation fuel, Diesel fuel oil, and on similar fuel oils having more or less the same generating power Liquefied petroleum gas Liquefied petroleum gas used for motive power Asphalts Bunker fuel oil, and on similar fuel oils having more or less the same generating power P4.80/ per liter of volume capacity P5.35/liter of volume capacity P4.35/liter of volume capacity P3.67/liter of volume capacity P0.60/liter of volume capacity same tax on aviation turbo jet fuel P1.63/liter of volume capacity P0.00/liter equivalent rate as the excise tax on diesel fuel oil P0.56/kilogram P0.30/liter of volume capacity
EXCISE TAX ON MISCELLANEOUS ARTICLES 1. Automobiles Engine Displacement (in cc.) Gasoline Diesel Up to 1600 Up to 1800 1601 - 2000 1801 2300 2001 - 2700 2301 3000 2701 or over 3001 or over
Tax Rate 15% 35% 50% 100%
a) Automobiles acquired for use by persons or entities operating within the freeport zone -- exempt 1) Provided, that utility vehicles of registered zone enterprises, which are indispensable in the conduct and operations of their business, such as delivery trucks and cargo vans with gross vehicle weight above three (3) metric tons may be allowed unrestricted use outside the freeport zone 2) Provided, further, vehicles owned by tourist-oriented enterprises utilized exclusively for the purpose of transporting tourists in tourism-related activities, and service vehicles of freeport registered enterprises and executives, such as company service cars and expatriates' and investors' automobiles brought in the name of such enterprises, may be used outside the freeport zone for such periods as may be prescribed by the Departments of Finance, and Trade and Industry, the Bureau of Customs and the Freeport authorities concerned, which in no case shall exceed 14 days/ month 3) tourist buses and cars, service vehicles of registered freeport enterprises and
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company service cars used for more than an aggregate period of 14 days/month outside of the freeport zone ( the owner or importer shall pay the corresponding customs duties, taxes and charges 4) personally-owned vehicles of residents, including leaseholders of residences inside the freeport zone, ---use of such vehicles outside of the freeport zone --shall be deemed an introduction into the Philippine customs territory --such introduction shall be deemed an importation into the Philippines --shall subject such vehicles to customs duties, taxes and charges, including excise tax due on such vehicle b) Non-essential Goods -- 20% based on the wholesale price or the value of importation used by the Bureau of Customs 1) All goods commonly or commercially known as --jewelry (real or imitation) --pearls --precious and semi-precious stones and imitations --goods made of, or ornamented, mounted or fitted with, precious metals or imitations thereof --ivory (not including surgical and dental instruments, silver-plated wares, frames or mountings for spectacles or eyeglasses, and dental gold or gold alloys and other precious metals used in filling, mounting or fitting of the teeth) --opera glasses and lorgnettes 2) Perfumes and toilet waters 3) Yachts and other vessels intended for pleasure or sports EXCISE TAX ON MINERAL PRODUCTS 1. Mineral Products a) On coal and coke -- P10.00/metric ton b) On all nonmetallic minerals and quarry resources -- 2% based on the actual market value of the gross output thereof at the time of removal (if locally extracted or produced) or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax ( in the case of importation) c) c) locally extracted natural gas and liquefied natural gas 2%
d) On all metallic minerals --Copper and other metallic minerals On the 1st 3 years upon the effectivity of RA 7729 1% On the 4th and 5th years 1% On the 6th year and thereafter 2% --Gold and chromite 2% e) On indigenous petroleum -- 3% of the fair international market price TITLE VII DOCUMENTARY STAMP TAX
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A. WHAT is a DST? It is a tax on documents, instruments & paper evidencing the acceptance, assignment, sale or transfer of an obligation, right, or property incident thereto. I. NATURE of DST It is an excise tax because it is really imposed on the transaction than on the document. It is paid only once. The liability to the tax and the amount thereof are determined from the face of the document itself.
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland II. WHO are the persons liable: (M I S A T)
The ones
1) M aking 2) I ssuing 3) S igning 4) A ccepting 5) T ransfering

the document, instrument or paper III. DOCUMENTS SUBJECT TO TAX Corporate documents Insurance policies Special contracts Certificates Other assignments and renewals Commercial documents Deeds of sale Maritime documents Luxuries
A. CORPORATE DOCUMENTS 1) Original issue of shares of stock (s175) (a) Cost of imposition is borne by the corporation originally issuing the stock certificate (b) Revenue Memorandum Circular #47-97 The documentary stamp tax on original issues of certificates of stock as provided under Section 175 of the Tax Code attaches upon acceptance of the stockholders subscription in the capital stock of a corporation regardless of the physical issuance and delivery to the stockholder of the certificate of stock evidencing his stockholding. Therefor, taxes accrue at the time the shares are issued. Meaning of the term original issue is - point at which the stockholder acquires and may exercise attributes of ownership over the stocks.
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(c) Phil. Consolidated Coconut Industries v CIR, 70 SCRA 22 Certificates of stock temporarily subject to suspensive conditions shall only be liable for DST only when released from said conditions. For then and only then shall they truly acquire any practical value for their owners. (d) CIR v Heald Lumber Company, 10 SCRA 37 A mere transfer of surplus to capital and an increase in stated value of the outstanding no par value shares does not constitute and issuance of share and consequently, no additional stamp tax is due in such increase. 2) On proxies (s192) Basis: each proxy document Exemption: proxies issued at affecting the affairs of association, or corporation organized for religious, charitable or literary purposes.
B. COMMERCIAL DOCUMENTS 1) Debentures and Certificates of indebtedness (S174) Basis: face value of document 2) Bonds, debentures, certificates of stock or indebtedness issued in foreign countries (S177) Basis: fixed tax as required by law on similar instruments when issued, sold or transferred in the Philippines. Issued in any foreign country but sold or transferred in the Philippines 3) Certificates of profits or interest in property or accumulations (S178) Basis: face value 4) Bank Checks, drafts, certificates of deposit not bearing interest, and other instruments (S179) Basis: fixed on each instrument the tax applies only to inland bank checks, drafts, or certificates of deposit not drawing interest 5) All bonds, loan agreements, promissory notes, bills of exchange, drafts, instruments and securities issued by the government or any of its instrumentalities, deposit substitute debt instruments, certificates of deposits bearing interest and others not payable on sight or demand (s180) Basis: Face value Exemptions:
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a.) bank notes issued for circulation b.) loan agreements and promissory notes that aggregate of which does not exceed P250.00 executed by an individual for his purchase, on installment, of a house, lot, motor, vehicle, appliance or furniture, for his personal use or that of his family Renewal is also subject to dst renewal postponement of the maturity of the obligation dealth with; an extension of the time in which that obligation may be discharged. Tax on renewal shall be at the same rate as the tax on the original document. Upon acceptance of bills of exchange and others (s181) Document taxable: any bill or exchange or order for the payment of money purporting to be drawn in the foreign country but payable in the Philippines. Basis: Face value Foreign bills of exchange and letters of credit (s182) Document taxable: all foreign bills of exchange and letters of credit drawn in but made payable outside the Philippines. Basis: face value Warehouse Receipts (s189) Basis: each warehouse receipt Exemption: warehouse receipt issued to any one person in any one calendar month covering property the value of which does not exceed P200. Bills of lading or receipts (s191) Basis: Value of the goods Exemptions: charter party, freight tickets covering goods, merchandise or effects carried as accompanied baggage of passengers on land and water carriers primarily engaged in the transportation of passengers.
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C. INSURANCE POLICIES 1) Life insurance policies (s183) Basis: Amount insured by an such policy The tax is collectible not only on the original policy but also upon renewals No DST is due on insurance policies issued by a Phil. company to persons in other countries. (S43,RR26) The tax is imposed upon issuance of the policy even if at that time premium had not yet been paid. If the policy is cancelled, no refund of the tax shall be made.
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2) Property insurance policies (s184) Basis: Premium charged 3) Fidelity bonds and other insurance policies (s185) Basis: Premium charged 4) Policies of annuities and pre-need plans (s186) Annuity - Basis: Capital of the annuity Pre-need plans - Basis: Value or amount of the plan 5) Indemnity Bonds (s 187) Basis: Premium charged Exemption: such as may be required in legal proceedings (eg. Injunction, attachment) 6) Certificates (s188) certificate of damage or otherwise issued by any public official in public capacity for the purpose of giving info or establishing proof of fact. Basis: each document D. DEEDS OF SALES 1) Sales, agreements to sell, memoranda of sales, deliveries or transfer of due-bills, certificates of obligation, or shares or certificates of stock (s176). Basis: Par value of due-bill, certificate of obligation or stock 2) Deeds of sale and conveyances of real property (s196) Basis: Tax rate based on amount Property must be located in the Philippines Deeds of partition & deeds of redemption, taxable E. SPECIAL CONTRACTS 1) Powers of attorney (s193) Basis: Fixed tax rate Exemption: Collection of claims due from or accruing to the government of the Philippines or the government of any province, city or municipality. 2) Leases and other hiring agreement (s194)
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Basis: Fixed tax rate 3) Mortgages, pledges and deeds of trust (s195) Basis: Tax rate based on amount transactions must be effected and consummated within the Philippines tax is based on the amount secured and not on the value of property mortgaged there must be an existing debt 4) Jai-alai, horse race tickets, lotto or other authorized numbers games (s190) Basis: each ticket F. MARITIME DOCUMENTS Charter parties and similar instrument (s197) V. EXEMPTIONS: (SICFAGOW) 1. SOLE USE - Certified copies and other certificates placed upon documents, instruments, and papers by the national, provincial, city or municipal governments made in the instance and for the sole use of some other branch of the national, provincial, city or municipal governments 2. GOVERNMENT & INDIGENT DOCUMENTS FILED IN COURT - Papers and documents filed in courts by or for the national, provincial, city or municipal governments, affidavits of poor persons for the purpose of proving poverty 3. COMPULSORY INFORMATION FOR STATISTICAL PURPOSES Statements and other compulsory information required of persons or corporations by the rules and regulations of the national, provincial city or municipality government exclusively for statistical purposes and which are wholly for the use of the bureau in which they are filed, and not at the instance or for the use or benefit of the person filing them 4. FRATERNAL/BENEFICIARY ORGANIZATION INSURANCE POLICIES OF ANNUITIES - Policies of insurance of annuities made by a fraternal or beneficiary society, order, association or cooperative company, operated on the lodge system or local cooperation plan and organized and conducted solely by the members thereof for the exclusive benefit of each member and not for profit 5. CERTIFICATES OF THE ASSESSED VALUE OF LANDS NOT EXCEEDING P200 - Certificates of the assessed value of lands not exceeding P200 in value assessed, furnished by the provincial, city or municipal treasure to applicants for registration of the title to land. 6. CERTIFICATES OF OATHS ADMINISTERED TO ANY GOVERNMENT OFFICIAL IN HIS OFFICIAL CAPACITY - Certificates of oaths administered to any government official in his official capacity or of acknowledgment by any government official in the performance of his official duties, written appearance in any court by any government official in his official capacity. 7. CERTIFICATES OF THE ADMINISTRATION OF OATHS FOR PAPER AUTHENTICITY - Certificates of the administration of oaths to a person as to the authenticity of a paper required to be filed in court by any person, whether the proceedings be civil or criminal
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 8. WRITTEN APPEARANCES - Written appearances in any court by any
government official in his official capacity VI. PAYMENT OF DOCUMENTARY STAMP TAX A. WHO are required to accomplish and file a dst DECLARATION under BIR Form 2000 1) Any person liable to pay dst on a taxable document/transaction when tax due is >P200. 2) Any Revenue Collection Officer, duly authorized to sell loose dsts 3) Any person authorized to use DST Metering Machine B. WHEN to file RETURN 1) within 10 days after close of month when taxable document was (misat. see III) 2) within 5 days after close of each week for Revenue Collection Officers 3) each time ds are purchased for reloading, for dst metering machine authorized persons C. WHEN to PAY 1) general rule: simultaneous with filing of return 2) exception: purchase and actual affixture Actual Stamping System: loose documentary stamps Constructive Stamping System: constructive affixture printing through a DS metering machine D. WHERE to FILE/PAY 1) authorized agent bank within the jurisdiction of the revenue district office having jurisdiction over the residence or principal place of business of the taxpayer 2) revenue district officer, collection agent or his duly authorized treasurer of the city or municipality in which the taxpayer has his legal residence or principal place of business E. AFFIXTURE 1) In general: DS is affixed on the original copy of the document 2) Exception: duplicate copy when the same has been substituted and used in place of the original F. FAILURE TO STAMP TAXABLE DOCUMENT 1) will not render the document void 2) but document cannot be: 3) recorded in government offices 4) cannot be accepted in evidence in court G. PENALTY 25% surcharge plus 20% interest per annum H. DUTY OF NOTARY PUBLIC Not to add his jurat or acknowledgment to any document subject to documentary stamp tax unless the proper documentary stamps are affixed thereto and cancelled. LINCOLN PHILIPPINE LIFE vs CA (GR 118043, July 23, 1998)
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Facts: Lincoln is a domestic corp. engaged in life insurance business. In 1984, it issued 50,000 shares as dividends, with par value of P100 or a total of P5M. Lincoln paid DST on each certificate based on its par value. Issue: What is the proper basis of DST, par value or book value of the shares? Held: There is no basis to treat stock dividends as a distinct class from ordinary shares of stock since 224 of the NIRC merely distinguishes certificates of stock & not the shares themselves as one with par value and one without. There is therefore no reason for determining the actual value of such dividends for purposes of DST if the certificates indicate a par value. The tax is levied upon the specific transactions which gives rise to the original issuance but on the privilege of issuing certificates of stock.
PHIL. HOME ASSURANCE vs CA (GR 119446, Jan 21, 1999) Facts: Petitioners are domestic corps. engaged in the insurance business. They claim a refund on the DST they paid for insurance policies they issued. They maintain that since the premiums on the policies were not paid, they are considered as never to have taken effect pursuant to the Insurance Code & therefore, no DST were due thereon. Issue: Was DST properly levied? Held: YES. DST is levied on the exercise of the privilege executing specific instruments, and must be paid upon the issuance of the instruments, without regard to whether the contracts which gave rise to them are rescissible, void, voidable or unenforceable. TITLE VIII REMEDIES I. Civil Remedies for Collection by the Government: (Sec. 205) 1. Distraint of goods, chattels or effects 2. Levy upon real property and interest therein 3. Civil or criminal action One or all of the remedies may be pursued simultaneously in the discretion of revenue authorities Distraint or levy NOT availed of where the amount of tax involved is NOT MORE than P100
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Prescriptive Periods: 1) Assessment of Tax Liability (a) 3 years from the last day prescribed by law for filing when return is filed: 1. before the last day prescribed by law or 2. on the last day prescribed by law
(b) 3 years from filing of return when the return is filed beyond the period prescribed
by law (Sec. 203) (c) 10 years after the discovery of the falsity, fraud or omission in case of: 1. false or fraudulent return with intent to evade tax, or 2. failure to file a return (Sec. 222 a) The following are covered by the general rule (Sec. 203): false return-filed with no intent to evade tax fraudulent return-filed with intent to evade tax
(d) within the period agreed upon, when before the expiration of the period in Sec.
203 for the assessment of tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after such time. Such period agreed upon may be extended by written agreement before the expiration of the previous period. (Sec.222 b)
2) Collection of Tax Liability (a) 3 years from assessment (according to Atty. Baez) 5 years from assessment (according to Abella/Abiog/Sarmiento book) (b) 5 yrs from assessment in case of a false or fraudulent return or failure to file a return (c) in case of an agreed pd. for assessment, collection shall be within the pd. agreed upon in writing before the expiration of the 5 yr. Pd. (Sec. 222 c,d) Suspension of Prescriptive Periods: (Sec. 223) 1) Periods suspended: (a) periods for assessment in Sec. 203 and 222 (b) beginning of distraint or levy (c) proceeding in court for collection
2) Grounds for suspension of prescriptive periods [ R LOP2 ] a) Commissioner is Prohibited from making the assessment or beginning distraint or
levy or a proceeding in court and for 60 days thereafter
b) Taxpayer requests for Reinvestigation which is granted c) Taxpayer cannot be Located in the address given in the return filed, but if the
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taxpayer informs the Commissioner of a change in address the prescriptive period will not be suspended d) When the warrant is served upon the taxpayer and no Property could be located e) When the taxpayer is Out of the Phils. When may taxes be compromised? [ VIC ] 1. A reasonable doubt as to the Validity of the claim against the taxpayer exists; or 2. The financial position of the taxpayer demonstrates a clear Inability to pay the assessed tax. (Sec. 204 A) 3. Criminal violations EXCEPT: a) those already filed in court b) those involving fraud (Sec 204 B) Limitations for compromise of tax liability: (Sec. 204 A) 1. Minimum compromise rate: a) In case of financial incapacity, 10% of basic assessed tax b) In other cases, 40% of basic assessed tax 2. Subject to approval of Evaluation Board (composed of Commissioner and 4 Deputy Commissioners): a) when basic tax involved exceeds P1,000,000 or b) where the settlement offered is less than the prescribed minimum rates When may taxes be abated or cancelled? [ UJ ] 1. The tax or any portion thereof appears to be Unjustly or excessively assessed; or 2. The administration and collection costs involved do not Justify the collection of the amount due (Sec. 204 B)
Constructive Distraint (only for personal property): 1) When may this occur? (RIRHO) a) taxpayer is Retiring from any business subject to tax b) taxpayer is Intending to leave the Phil. or to Remove his property therefrom c) taxpayer Hides or conceals his property d) taxpayer performs any act tending to Obstruct the proceedings for collection of any tax due 2) Procedure (a) Require the taxpayer or any person having control of the property to 1. sign a receipt covering property distrained 2. obligate himself to preserve the same intact and unaltered 3. not to dispose of the property in any manner, without the authority of the Commissioner (b) Where taxpayer or person in possession refuses to sign: 1. distraining officer shall prepare a list of the property distrained
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2. in the presence of 2 witnesses, leave a copy in the premises where the property is located (Sec. 206) Distraint of Personal Property WHO MAY EFFECT DISTRAINT AMOUNT INVOLVED Commissioner or his duly authorized In excess of representative P1,000,000 Revenue District Officer P1,000,000 or less 1) Property Siezed or Distrained a) goods, chattels, effects and other personal property b) including stocks and other securities, debts, credits, bank accounts, interests in and rights to personal property 2) Report on the Distraint a) by the distraining officer 1. submitted within 10 days from receipt of the warrant 2. submitted to the Revenue District Officer and to the Revenue Regional Director b) by the Revenue Regional Director-consolidated report, as may be required by the Commissioner 3) The order of Distraint may be lifted by the Commissioner or his representative (Sec. 207 A) 4) Procedure (a) Goods, effects, chattels and other personal property 1. a copy of an account of the property distrained, signed by the officer, shall be left either from the owner or the person from whom the property was taken or at the dwelling or place of business of such person and with someone of suitable age and discretion 2. statement of the sum demanded 3. time and place of sale
(b) Stocks and other Securities 1. serving a copy of the warrant upon the taxpayer AND upon the president, manager, treasurer or other responsible officer of the issuing corporation, company, association (c) Debts and Credits 1. leaving a copy of the warrant with the person owing the debts or having in his possession such credits or his agent 2. warrant shall be sufficient authority to pay the Commissioner the amount of such debts or credits (d) Bank accounts (garnishment) 1. serve a warrant of garnishment upon the taxpayer AND upon the president, manger, treasurer or other responsible officer of the bank 2. bank shall turn over to the Commissioner so much of the bank accounts as
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may be sufficient (Sec. 208) Levy on Real Property 1. When exercised: before, simultaneously or after the distraint of personal property belonging to the taxpayer 2. Procedure: (a) internal revenue officer shall prepare a duly authenticated certificate showing the name of taxpayer, amounts of tax and penalty due. Enforceable throughout the Philippines (b) officer shall write upon the certificate a description of the property upon which levy is made (c) written notice of levy shall be mailed or served upon 1. the Register of Deeds where the property is located and 2. the taxpayer or agent/manager of the business in respect to the tax liability or to the occupant of the property (d) If personal property of taxpayer is not sufficient to satisfy the tax due, levy on real property shall proceed within 30 days after distraint (e) Report on levy 1. by levying officer i. submitted within 10 days from receipt of warrant ii. submitted to the Commissioner or his representative 2. by the Revenue Regional Director-- consolidated report, as may be required by the Commissioner (f) The warrant may be lifted by the Commissioner or his representative Tax Lien: superior to judgment claim of private property attaches not only from the time the warrabt was served BUT from the time tax was due and demandable 1. Nature-- a lien in favor of the Government of the Philippines when a person liable to pay a tax neglects or fails to do so upon demand 2. Duration-lien exists from the time assessment is made by the Commissioner until paid, with interests, penalties and costs that may accrue in addition thereto 3. Extent-upon all property and rights to property belonging to the taxpayer 4. Effectivity against third persons-only when notice of such lien is filed by the Commissioner in the Register of Deeds in the province/city where the property is situated (Sec. 219) Civil and Criminal Actions: 1. Brought in the name of the Government of the Philippines 2. Conducted by legal officers of the BIR 3. In case of actions for recovery of taxes or enforcement of a fine, penalty or forfeiture, must be filed with the approval of the Commissioner (Sec. 220) Forfeiture: (Sec. 224-225) How enforced Sale
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Chattels and Seizure, sale or Judgment of Removable fixtures destruction of specific condemnation and sale forfeited property in a legal action, civil or criminal Real Property In the same manner and under the same conditions as sales of personal property distrained Distilled Spirits, Upon forfeiture, may be destroyed by liquors, cigars, order of the the sale Commissioner where cigarettes manuf. may be health or injurious to public to law Products of tobacco prejudicial enforcement and apparatus used for their production Other articles Upon forfeiture may be subject to excise tax sold or destroyed at the which have been discretion of the manuf. Or removed Commissioner *forfeited in violation of this property shall not be Code; dies for destroyed until at least printing or making 20 days from seizure fake revenue stamps and labels II. Remedies of a Taxpayer 1. Administrative a) protest of assessment b) claim for refund 2. Judicial Relief Requisites of a valid assessment: 1. in writing 2. must state the facts and law upon which it is based (Sec. 228) Kinds of Assessment: 1. Post Reporting notice-Initial findings are presented and discussed with the taxpayer; informal conference can be held 2. Pre-assessment Notice
Instances where a pre-assessment notice NEED NOT be given: (MET DC) a) when the finding for deficiency tax is a result of Mathematical error in the computation of tax appearing on the face of the return; or b) Discrepancy is determined between the tax withheld and the amount actually
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remitted by the withholding agent
c) a taxpayer who opted to claim a refund or tax credit was determined to have Carried
over and applied the amount against succeeding tax liabilities d) Excise tax has not been paid e) an article locally purchased or imported by an exempt person has been sold, traded or Transferred to non-exempt persons 1. Final Assessment (Revenue Regulation No. 12-85 and Sec. 228) *pls. read Revenue Regulation No. 12-85 for the procedure of assessment Protest of Assessment: 1. File a request for reinvestigation or reconsideration within 30 days from receipt of the assessment request for reinvestigation-a plea for re-evaluation of an assessment on the basis of newly discovered or additional evidence that a taxpayer intends to present in the reinvestigation. Involves a question of fact or law or both. request for reconsideration-a plea for re-evaluation of the assessment on the basis of existing records without need of additional evidence. Involves a question of fact or law or both. (Revenue Regulation No. 12-85) 2. Within 60 days from filing of protest, all relevant supporting documents should have been submitted, otherwise, the assessment shall become FINAL (cannot be appealed). (Sec. 228) Appeal of Protest to the CTA (Judicial Relief): (Sec. 228) 1. Grounds: a) if the protest is denied in whole or in part or b) is not acted upon within 180 days from submission of documents 2. Appellate Court: Court of Tax Appeals 3. Period to appeal: a) within 30 days from receipt of decision denying the protest or b) 30 days from the lapse of 180 day period 4. Effect of failure to appeal: the decision shall be final, executory and demandable Parties Entitled to Refund General Rule: The person entitled to ask same. Exceptions: Case Who is entitled to ask for refund Where tax has The taxpayer (even if been shifted tax has been actually shifted by the taxpayer to his customers as in sales tax an even if the for a refund is the taxpayer who paid the Notes Because the sales tax is imposed directly on the seller as an occupation tax for selling Once recovered, the seller must hold the refunded taxes
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tax has been billed as a separate item in the invoice (CIR vs American Rubber) Where payer is not the taxpayer (e.g. theater owners who paid illegal municipal taxes billed to and collected from theater goers) Where payer is withholding agent Theater goers are not entitled to claim refund of such taxes (Medina vs City of Baguio) in trust for the individual purchasers who advanced payment thereof and whose name must appear on his records
Withholding agent "Taxpayer" is any person (CIR vs Procter & subject to tax imposed by this Gamble) title (income tax). The withholding agent is directly and independently liable for the correct amount of tax that should be withheld, and of deficiency assessments, surcharges and penalties Where donor's Donee is the proper tax was assumed party to claim refund of by donee the donor's tax (even if the tax was advanced by the donor) When may taxes be refunded or credited? 1. Taxes refunded or credited: (EPWroSUn) a) Taxes erroneously or illegally received b) Penalties imposed without authority c) Any sum alleged to have been excessively or in any manner wrongfully collected d) Refund the value of internal revenue stamps when returned in good condition by the purchaser e) Redeem or change unused stamps rendered unfit for use and refund their value upon proof of destruction, in the discretion of the Commissioner 2. Procedure for credit/refund a) taxpayer files in writing with the Commissioner a claim for credit or refund b) filed within 2 yrs after the payment of the tax or penalty c) a return filed showing an overpayment shall be considered a written claim for credit or refund 3. Suit or proceeding for refund a) a claim for refund or credit has been filed with the Commissioner b) the suit may be maintained whether or not such tax/penalty/sum has been paid
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under protest c) in any case, suit must be filed within 2 yrs. from date of payment of the tax/penalty regardless of any supervening cause that may arise after payment d) the Commissioner may, even without a written claim, refund or credit a tax, where on the face of the return upon which payment was made, payment appears to be erroneous. (Sec. 204 C , 229) 4. Tax Credit Certificate a) may be applied against any internal revenue tax, except withholding taxes b) original copy is surrendered to the revenue officer c) no tax refund will be given resulting from availment of incentives granted by law where no actual payment was made (Sec. 204 C) 5. Forfeiture of cash refund/tax credit a) Forfeiture of refund in favor of the government when a refund check or warrant remains unclaimed or uncashed within 5 yrs. from date of mailing or delivery b) Forfeiture of Tax Credit-a tax credit certificate which remains unutilized after 5 yrs. from date of issue, shall be invalid, UNLESS revalidated. (Sec. 230) Commencement of 2-year period under Sec . 204(3) and 229 Case 2-year period starts from Notes If the tax sought From date tax was paid to be refunded is (CIR v Victorias Milling) illegally or erroneously collected If the tax is paid From date of the last or final There is no payment in installment or installment or payment (CIR until the whole/entire only in part vs Prieto; CIR v Palanca) tax liability is fully paid If the taxpayer From conversion of the Merely making a merely made a deposit to payment (Union deposit is not deposit Garment v Coll) equivalent to payment until the amount is actually applied to the specific purpose for which it was deposited If tax has been From date it falls de at the A taxpayer who withheld from end of the taxable year contributes to the source (through (Gibbs vs CIR) He is withholding tax system the withholding deemed to have paid his tax performs and tax system) liability when the same falls extinguishes his tax due at the end of the obligation for the year taxable year (Aguilar vs concerned. In other CA) words, he is paying his tax liabilities for that year. Corporate At the earliest, on the date It is only then that the taxpayer of the filing of the adjusted corporation can
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final return (ACCPA Investment vs CA) The 2-yr period provided in Sec 229 should be computed from the time of filing of the Adjusted Return or Annual ITR and final payment of income tax (CIR vs TMX Sales) From the date the taxpayer becomes entitled to refund and not from the date of payment (CIR vs Don Pedro Central Azucarera) ascertain whether it made profits or incurred losses in its business operations
If tax was not erroneously or illegally paid but the taxpayer became entitled to refund because of supervening circumstances
Before the right to refund or credit arises, there is absolutely no basis to file a claim with the CIR or commence a suit in court
Action to Contest Forfeiture of Chattel: (Sec.231) BEFORE THE SALE AFTER THE SALE Period to file anytime before sale or Within 6 months from the destruction of property sale Party against the person seizing the the person seizing the whom the property or having property or having action is filed possession thereof possession thereof Cause of Enjoin the sale Recover net proceeds Action realized at the sale Addl. Reqt. File a bond Jurisdiction of the Court of Tax Appeals: 1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges/penalties imposed, or other matters arising under the NIRC or any law administered by the BIR 2. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention of release of property affected; fines, forfeitures or other penalties imposed in relation thereto; or other matters arising under the Customs Law or other law administered by the Bureau of Customs (RA 1125 as amended by RA 3457) Sale of Personal Property Distrained and of Real Property Levied upon (Sections 209--216) DISTRAINT OF LEVY OF PERSONAL PROPERTY PROPERTY REAL
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I. Advertisement/Notice When made Advertisement days How made
Contents
period: 20 within 20 days after the levy advertisement period shall be at least 30 days A notice shall be exhibited posting a notice at the main in not less than 2 public entrance of the places in the municipal/city building AND municipality/city where in a public/conspicuous distraint is made; one place place in the district where shall be at the office of the the property is located b) Mayor publication, once a week for 3 weeks in a newspaper of general circulation in the municipality/city where the property is located time and place of sale a)amount of tax and articles distrained penalties due b) name of taxpayer against whom taxes are levied c) short description of the property to be sold shall not be less than 20 days after notice to the owner or possessor of the property AND publication or posting of notice At the place fixed in the notice After the periods for posting and publication have been complied with at the main entrance of the municipal building or city hall or on the premises to be sold as the notice of sale shall specify
II. Sale Time of Sale
Where made
How made
a) officer shall sell the property at a public auction to the highest bidder for cash or, with the approval of the Commissioner, through duly licensed commodity or stock exchanges b) In case of stocks and other securities, the officer shall execute a bill of sale which he shall deliver to the buyer and a copy furnished to the issuing corporation. The issuing corporation shall
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make a corresponding entry in its books and if required to do so, issue new certificates of stock Excess/Residu a)Residue over and above e of property what is required to be paid sold (tax due and expenses) shall be turned over to the owner of the property sold. b)Expenses chargeable shall include actual expanses of seizure and preservation of property pending sale. Report of Sale made in writing within 2 days, by the officer making the sale, submitted to the Commissioner.
In case the proceeds of the sale exceeds the claim and cost of sale, the excess shall be turned over to the owner of the property
a) within 5 days after the sale, a return made by the officer making the sale shall be entered in the records of the Revenue Collection Officer, Revenue District Officer and Rev. Reg. Director b) Revenue Collection Officer shall deliver to the purchaser a certificate from his records showing: i. proceedings of sale ii. description of property sold iii. name of purchaser iv. amount of taxes, penalties and interest III. Release of If prior to the sale, all proper At any time before the day Property to be charges are paid to the fixed for the sale, the sold officer conducting the sale, taxpayer may discontinue the property shall be the sale by paying taxes, restored to the owner. penalties and interest due IV. Forfeiture/Purchase by government When made a)when the bid for the no bidder or highest bid is property during the sale is insufficient to pay the not equal to the amount of amount due tax or b)the bid is less than the actual market value of the goods offered for sale How made Commissioner or his a) revenue officer representative may conducting sale shall purchase the property in declare the property behalf of he National forfeited to the government
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Government for the amount due thereon in satisfaction of the claim b) within 2 days from forfeiture, officer shall make a return of the proceedings c) Register of Deeds, upon registration of declaration of forfeiture shall transfer title of the property to the government within 1 year from date of forfeiture redeemed by the taxpayer or anyone in his behalf effected by paying to the Commissioner or Revenue Collection Officer the full amount of taxes, penalties plus interest and costs of sale if no redemption made, forfeiture is absolute a)Public Auction--notice given of sale for not less than 20 days b)Private sale can be made with prior approval from the Sec. Of Finance c)In either case, proceeds of sale shall be deposited with the National Treasury One year from date of sale * owner shall not be deprived of possession of property sold and shall be entitled to income thereof until the expiration of the period for redemption Delinquent taxpayer or anyone for him a) pay to the Revenue District Officer the amount of taxes, penalties and interest thereon from date of delinquency to date of sale b) pay also interest on purchase price at the rate of
Redemption
Resale
a)May be resold by the Commissioner or his deputy and b) proceeds remitted to the National Treasury and accounted for as internal revenue
V. Redemption of Property Sold Period of redemption
Who may redeem Procedure
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15% p.a. form date of purchase to date of redemption a) delivery of the certificate issued to the purchaser b) certificate of redemption from the Revenue District Officer c) property redeemed shall be free from lien of such taxes and penalties
Rights of Person redeeming the property
CIR vs CA, CTA & BIR (GR 117254, Jan 21, 1999) Facts: On April 2, 1986, Paramount filed its Annual ITR. It previously paid an amount representing its quarterly income tax. The amount paid was greater than the income tax due on the return. Thus Paramount's return showed a refundable amount. On April 14, 1988, BPI, as Paramount's Liquidator, filed a letter claiming refund. Issue: When will be the 2-yr prescriptive period refund claims commence, from April 2, 1986 when the Annual ITR was filed or April 15, 1986, when the Adjustment Return could still be filed without incurring delay in under 70 (b) of the NIRC? Held: 230 of the NIRC provides for a 2-yr prescriptive period to be counted " from the date of payment of tax" for actions for refund of corporate income tax. Thus, the 2-yr period should be reckoned from the actual filing of the Adjustment Return or Annual ITR, because at this point, it can be determined whether there has been an overpayment of tax. Thus, the claim for refund has already prescribed. PBCom vs CIR (GR 112024, Jan 28, 1999) Facts: PBCom filed its quarterly ITR for the 1st & 2nd qtrs. of 1985. Later, it suffered losses and reported a net loss for 1985 & 1986. However, it earned rent for which taxes were previously withheld by their lessees. On Aug 1987, it requested for a tax credit representing tax overpayments in the 1st & 2nd qtrs of 1985. On July 1988, it also claimed refund of the creditable taxes withheld from the 1985 & 1986 rentals. Issue: WoN PBCom, relying on RMC #7-85 changing the prescriptive period for tax refunds from 2 to 10 yrs. is barred by prescription. Held: YES. Taxes are the lifeblood of the nation, thus the modes to enforce collection should be summary & rarely interfered with. From the same perspective, claims for refund should be exercised within the time fixed by law in order not to unduly delay the BIR in its collection functions. 229 of the NIRC provides for a 2-yr prescriptive pd. The revenue regulation on the other hand, was beyond the provisions of the law. An erroneous interpretation of the law does not vest a taxpayer with a shield against judicial action. Thus PBCom was already barred from filing its claim. CIR vs BF GOODRICH (GR 104171, Feb. 24, 1999)
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Facts: The BIR assessed a deficiency donor's tax against BF Goodrich for a sale of land it concluded more than 6 yrs. earlier. Goodrich claims that the BIR's right to collect has prescribed, having gone beyond the 5-yr period prescribed by 331 of the NIRC. Issue: WoN CIR's right to collect has prescribed? Held: It is clear that the assessments were issued beyond the 5-year prescriptive period. For the purpose of safeguarding taxpayers from any unreasonable examination, investigation or assessment, our tax laws provides a statute of limitation in the collection of taxes. Being a remedial measure, the law on prescription should be liberally construed in order to afford such protection. TITLE X STATUTORY OFFENSES AND PENALTIES Chapter I - ADDITIONS TO THE TAX Additions to the tax are: 1. Civil Penalties a) 25% of the amount due for RIDT; b) 50% of the tax or the deficiency tax for willful neglect to file or false or fraudulent return willfully made. c) Interest - 20% per annum on any unpaid amount of tax or such higher rate as may be prescribed by the rules and regulations. 2. From the date prescribed for payment until the amount is fully paid. a) Deficiency Interest b) Delinquency Interest c) Interest on Extended Payment 3. Date of notice and demand until it is paid. a) Failure to file certain Information Returns P 1,000 for each failure but not exceeding P 25,000 during a calendar yr. b) Failure of withholding agent to Collect and Remit tax. Penalty: Amt. of tax not withheld, or not accounted for and remitted plus other penalties. c) Failure of withholding agent to Refund excess withholding tax. Penalty: Amount of refund which was not refunded to the employee resulting from the any excess of the amount withheld over the tax actually due on their return. General Provisions 1) The additions to the tax or deficiency tax apply to all taxes, fees and charges imposed in this Code. 2) The amount so added to the tax shall be collected at the same time, in the same manner and as part of the tax. 3) If the withholding agent is the Government or any of its agencies, political
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subdivisions or instrumentalities, or a government-owned or -controlled corporation, the employee responsible for the withholding and remittance of the tax shall be personally liable for the additions to the tax. 4) The term person, includes an officer or employee of a corporation who as such officer, employee or member is under a duty to perform the act in respect of which the violation occurs.
1. Civil Penalties (Sec. 248) A) Penalty: 25% of the amount due, in addition to the tax required to be paid. In case of the following:
(RIDT) (lets get RID of Tax) a) Failure to file any Return and pay the tax on the date prescribed; or b) Filing a return with an Internal revenue officer other than those with whom the return is required to be filed, unless otherwise authorized by the Commissioner; or c) Failure to pay the Deficiency tax within the time prescribed for its payment in the notice of assessment; or d) Failure to pay on or before the date prescribed for its payment: 1. the full or part of the amount of Tax shown on any return required to be filed; 2. the full amount of tax due for which no return is required to be filed.
B) Penalty: 50% of the tax or of the deficiency tax, in case any payment has been made
on the basis of a return before the discovery of the falsity or fraud. In case of: (FiFa) a) Willful neglect to File the return within the period prescribed; or b) False or fraudulent return is willfully made, in case any payment has been made on the basis of such return before the discovery of the falsity or fraud. Prima facie evidence of a false or fraudulent return as determined by the Commissioner pursuant to the rules and regulations promulgated by the Sec. of Finance: 1. substantial underdeclaration of taxable sales, receipts or income - failure to report sales, receipts or income in an amount exceeding 30% of that declared per return 2. substantial overstatement of deductions - claim of deductions in an amount exceeding 30% of actual deductions 2. Interest (Sec. 249) A) There shall be assessed and collected an Interest at 20% per annum on any unpaid amount of tax B) or higher rate prescribed by rules and regulations from the date prescribed for payment until the amount is fully paid. C) from the date prescribed for its payment until the full payment.
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland (a) Deficiency Interest in the tax due (b) Delinquency Interest. - In case of failure to pay:
1. tax due on any return required to be filed, or 2. tax due for which no return is required, or 3. A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner. D) interest shall form part of the tax. Interest on Extended Payment. 1) any person who is qualified and elects to pay the tax on installment but fails to pay the tax, or any installment, or any part on or before the date prescribed; or 2) where the Commissioner has authorized an extension of time within which to pay a tax or a deficiency tax or any part thereof, 3) from the date of notice and demand until it is paid. 3. Failure to File Certain Information Returns (Sec. 250) A) Penalty: P 1,000 for each failure B) The aggregate amount for all such failure shall not exceed P 25,000 during a calendar year C) Upon notice and demand by the Commissioner D) Unless it is shown that such failure is due to reasonable cause and not to willful neglect. In the case of each failure to file: 1) information return; 2) statement or list; 3) keep any record; 4) supply any information E) required by this Code or by the Commissioner on the date prescribed thereof. 4. Failure of a Withholding Agent to Collect and Remit Tax (Sec. 251) A) Penalty: Amount of the tax not withheld, or not accounted for and remitted plus other penalties. B) Liable only upon conviction In case of the following: 1. Any person required to withhold, account for, and remit any tax; or 2. Who willfully fails to withhold such tax, or account for and remit such tax; or 3. Aids or abets in any manner to evade any such tax or the payment thereof,
5. Failure of a Withholding Agent to Refund Excess Withholding Tax. (Sec.252) A) Penalty: Amount of refund which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their return plus other penalties.
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In case: Any employer/withholding agent fails or refuses to refund excess withholding tax. CHAPTER II - CRIMES, OTHER OFFENSES AND FORFEITURES Crimes: 1. Attempt to evade or defeat tax. 2. Failure to file return, supply correct and accurate information, pay tax, withhold and remit tax and refund excess taxes withheld on compensation. 3. Penal liability of corporation. 4. Penal liability for making false entries, records, or reports, or using falsified or fake accountable forms. 5. Unlawful pursuit of business. 6. Illegal collection of foreign payments. 7. Unlawful possession of cigarette paper in bobbins or rolls, etc. 8. Unlawful use of denatured alcohol. 9. Shipment or removal of liquor or tobacco products under false name or brand or as an imitation of any existing or otherwise known product name or brand. 10. Unlawful possession or removal of articles subject to excise tax without payment of the tax. 11. Failure or refusal to issue receipts or sales or commercial invoices, violations related to the printing of such receipts or invoices and other violations. 12. Offenses relating to stamps. 13. Failure to obey summons. 14. Declarations under penalties of perjury. Other crimes and offenses: 1. Misdeclaration or misrepresentation of manufacturers subject to excise tax. 2. Forfeiture of property used in unlicensed business or dies used for printing false stamps, etc. 3. Forfeiture of goods illegally stored or removed. General Provisions (Sec. 253) 1. Any person convicted of a crime under this Code is liable for the payment of the tax and is subject to the penalties imposed herein. 2. Payment of the tax due after apprehension is not a valid defense in any prosecution for violation of any provision of this Code or in any action for the forfeiture of untaxed articles. 3. A person is liable in the same manner as the principal when he: a) willfully aids or abets in the commission of a crime penalized herein or b) causes the commission of any such offense by another. 4. If the offender is not a citizen of the Philippines: a) he shall serve the sentence; and b) deported immediately after serving the sentence without further proceedings for deportation.
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5. If he is a public officer or employee: a) the maximum penalty prescribed for the offense shall be imposed; and b) he shall be dismissed from the public service and perpetually disqualified from holding any public office, to vote to participate in any election. 6. If the offender is a Certified Public Accountant, his certificate as a Certified Public Accountant shall, upon conviction, be automatically revoked or cancelled. 7. In the case of associations, partnerships or corporations, the penalty shall be imposed on the partner, president, general manager, branch manager, treasurer, officer-in-charge, and employees responsible for the violation. 8. The fines to be imposed for any violation of the provisions of this Code shall: a) not be lower than the fines imposed herein or b) twice the amount of taxes, interests and surcharges due from the taxpayer, whichever is higher. Attempt to Evade or Defeat Tax. (Sec. 254) A. Penalty, upon conviction: Fine - P30,000 or 100,000; and Imprisonment - 2 to 4 years; Plus other penalties Who is liable: Any person who willfully attempts in any manner to evade or defeat any tax or the payment thereof. A. The conviction or aquittal obtained under this Section shall not be a bar to the filing of a civil suit for the collection of taxes. Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. (Sec. 264) A. Penalty, upon conviction: Fine - P10,000 or more; and Imprisonment - 1 to 10 years; Plus other penalties Person liable: Any person required: 1. to pay any tax, 2. make a return, 3. keep any record, or 4. supply correct and accurate information, Offense: willfully fails to 1. pay tax, 2. make a return, 3. keep the record, 4. supply such correct and accurate information, 5. withhold or remit taxes withheld, 6. refund taxes withheld on compensation, at the time or times required. B. Penalty, upon conviction: Fine - P10,000 - 20,000; and Imprisonment - 1 to 3 years; Plus other penalties Person liable: Any person who: 1. attempts to make it appear for any reason that he or another has in fact filed a return or statement, or
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2. actually files a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of receipt of an internal revenue office wherein the same was actually filed. Penal Liability of Corporations (Sec 256) A. Penalty, upon conviction: Fine - P50,000 - 100,000; In addition to the penalties imposed upon the responsible corporate officers, partners, or employees. Who is liable: 1. Any corporation, 2. association or 3. general co-partnerships liable for any of the acts or omissions penalized under this Code. Penal Liability for Making False Entries. Records or Reports, or Using Falsified or Fake Accountable Forms (Sec. 257) A. Penalty, upon conviction for each act or omission: Fine - P50,000 - 100,000; and Imprisonment - 2 to 6 years; 1) Offender is a Certified Public Accountant, his certificate shall be automatically revoked or cancelled upon conviction. 2) In the case of foreigners, conviction under this Code shall result in his immediate deportation after serving sentence, without further proceedings for deportation. Who is liable: 1) Any financial officer or 2) Independent Certified Public Accountant engaged to examine and audit books of accounts of taxpayers under Sec.232 (A)and 3) Any person under his direction. Offense: (FVC) (combine Fidel V. Ramos with Fidel Castro equals Fidel V. Castro thus FVC) 1) Willfully Falsifies any report or statement bearing on any examination or audit 2) Renders a report, including exhibits, statements, schedules or other forms of accountancy work which has not been Verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices, or 3) Certifies financial statements of a business enterprise containing an essential misstatement of facts or ommission in respect of the transactions, taxable income, deduction and exemption of his client; or B. Any person who (NOOFTANMER) rearranged to (FOOTMAN REN) 1) Not an independent Certified Public Accountant or a financial officer according to Sec. 232 (B), examines and audits books of accounts of taxpayers; or 2) Offers to sign and certify financial statements without audit; or 3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not in conformity with the requirements prescribed, or 4) Knowingly makes any False entry or enters any false or fictitious name in the books of accounts or records mentioned in the preceding paragraphs; or 5) Keeps Two (2) or more sets of such records or books of accounts; or
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 6) Commits an Act or omission, in violation of the provisions of this Section; 7) Fails to keep the books of accounts or records mentioned in Section 232 in a
Native language, English or Spanish, or to make a true and complete translation as required in Section 234 of this Code, or whose books of accounts or records kept in a native language, English or Spanish, and found to be at Material variance with books or records kept by him in another language; or 8) Willfully attempts in any manner to Evade or defeat any tax imposed under this Code, or knowingly uses fake or falsified Revenue official receipts, Letters of Authority, certificates authorizing registration, Tax Credit Certificates, Tax Credit Memoranda and other accountable form. Unlawful Pursuit of Business. (Sec. 258) Who is liable: 1. Any person who carries on any business for which in annual registration fee is imposed without paying the tax as required by law. Penalty, upon conviction for each act or omission: Fine - P5,000 - 20,000; and Imprisonment - 6 months to 2 years; 2. A person engaged in the business of distilling, rectifying, repacking, compounding or manufacturing any article subject to excise tax. Penalty, upon conviction for each act or omission: Fine - P30,000 - 50,000; and Imprisonment - 1 to 2 years; Illegal Collection of Foreign Payments (Sec. 259) Penalty, upon conviction for each act or omission: Fine - P20,000 - 50,000; and Imprisonment - 1 to 2 years; Who is liable and offense: Any person who: 1) Knowingly undertakes the collection of foreign payments under Sec. 67 without a license or 2) Without complying with the implementing rules and regulations. Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. (Sec. 260) Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and Imprisonment - 6 years 1 day to 12 years; Who is liable: 1. Any person 2. Importer 3. manufacturer of cigar or cigarettes Offense: Possession without the corresponding authority issued by the Commissioner of: 1. cigarette paper in bobbins or rolls, 2. cigarette tipping paper or cigarette filter tips,
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Unlawful Use of Denatured Alcohol. (Sec. 261) Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and Imprisonment - 6 years 1 day to 12 years; Who is liable: Any person who: 1. For the purpose of manufacturing any beverage, use denatured alcohol or alcohol specially denatured to be used for motive power or 2. Withdrawn under bond for industrial uses or alcohol knowingly misrepresented to be denatured to be unfit for oral intake or 3. who knowingly sells or offers for sale such preparations containing as an ingredient such alcohol. 4. Unlawfully recover or attempt to recover by distillation or other process any denatured alcohol or 5. Who knowingly sells or offers for sale, conceals or otherwise disposes of alcohol as recovered or redistilled. Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as an Imitation of any Existing or Otherwise Known Product Name or Brand. (Sec. 262) Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and Imprisonment - 6 years 1 day to 12 years;
Who is liable: Any person who: 1. ships 2. transports 3. removes Offense: shipment, transportation or removal of: 1. spirituous, compounded or fermented liquors, 2. wines;or 3. any manufactured products of tobacco under any other than the proper name or brand known to the trade as designating the kind and quality of the contents of the cask, bottle or package containing the same or as an imitation of any existing or otherwise known product name or brand or causes such act to be done. Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment of the Tax. (Sec. 263) Who is liable: Any person who: owns and/or found in possession. Offense: ownership and/or possession of: 1. Articles subject to excise tax that has not been paid or 2. Tax-exempt articles other than those to whom they are legally issued. A1. Imported Articles Penalty: Appraised value of the article, Fine And including duties and taxes. (determined in accordance with the
Imprisonment
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Tariff and Custom Code) P1,000 and less More than 1,000 - 50,000 More than 50,000 - 150,000 More than 150,000
P 1,000 - 2,000 P 10,000 - 20,000 P 30,000 - 60,000 P 50,000 - 100,000
60 - 100 days 2 - 4 years 4 - 6 years 10 - 12 years
A2. Locally Manufactured Articles Penalty: Fine - Not less than 10 times the amount of excise tax due but less than P500. Imprisonment - 2 to 4 years; Who is liable: 1. Any manufacturer, 2. owner or 3. person in charge of any article subject to excise tax. 4. any person who knowingly aids or abets in the removal or 5. any person who conceals the article after illegal removal Offense: 1. removes or 2. allows or 3. causes the unlawful removal of any article from the place of production or bonded warehouse, and the excise tax has not been paid at the time and in the manner required, and 1. knowingly aids or abets in the removal of such articles or 2. conceals the same after illegal removal Penalty: for the first offense, Fine - P 1,000 or more; and Imprisonment - 1to 2 years; The mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable under this Section. Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Related to the Printing of Such Receipts or Invoices and Other Violations. (Sec. 264) Penalty, upon conviction for each act or omission: Fine - P 1,000 - 50,000; and Imprisonment - 2 to 4 years; Who is liable, Offenses: A. Any person who, being required under Section 237 to issue receipts or sales or commercial invoices. Receipts (RFM) 1. Fails or refuses to issue such receipts or invoices, or 2. issue receipts or invoices that do not truly Reflect and/or contain all the information required to be shown therein, or 3. use Multiple or double receipts or invoices. 4. Any person who commits any of the acts enumerated hereunder: Printing (WUM) 1. Printing of receipts or sales commercial invoices Without authority from the Bureau of Internal Revenue; or
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 2. 3.
Printing of double or Multiple sets of invoices or receipts; or Printing of Unnumbered receipts or sales or commercial invoices, not bearing: 4. the name, 5. business style, 6. Taxpayer Identification Number, and 7. business address of the person or entity. Offenses Relating to Stamps. (Sec. 265) Penalty, upon conviction: Fine - P 20,000 - 50,000; and Imprisonment - 4 to 8 yrs; Who is liable/Offenses: Any person who commits any of the acts enumerated (BCCDF) 1. Making, importing, selling, using or possessing without express authority from the Commissioner, any Die for printing or making stamps, labels, tags or playing cards; 2. Erasing the Cancellation marks of any stamp previously used, or altering the written figures or letters or cancellation marks on internal revenue stamps; 3. Possessing False, counterfeit, restored or altered stamps, labels or tags or causing the commission of any such offense by another; 4. Selling or offering for sale any Box or package containing articles subject to excise tax with false, spurious or counterfeit stamps or labels or selling from any such fraudulent box, package or container as aforementioned; or 5. Giving away or accepting from another, or selling, buying or using Containers on which the stamps are not completely destroyed. Failure to Obey Summons. (Sec. 266) Penalty, upon conviction: Fine - P 5,000 - 10,000; and Imprisonment - 1 to 2 yrs; Who is liable: Any person who being duly summoned 1. to appear to testify, or 2. to appear and produce books of accounts, records, memoranda or other papers, or 3. to furnish info. as required under the pertinent provisions of this Code. Offense: neglects to appear or to produce such books or accounts, records, memoranda or other papers, or to furnish such information. Declaration under Penalties of Perjury. (Sec. 267) Penalty, upon conviction: Perjury under the Revised Penal Code. Any declaration, return and other statements required under this Code, shall, in lieu of an oath, contain a written statement that they are made under the penalties of perjury. Who is liable: Any person who willfully files a declaration, return or statement containing information which is not true and correct as to every material matter. Other Crimes and Offenses. (Sec. 268) A. Misdeclaration or Misrepresentation of Manufacturers Subject to Excise Tax. Who is liable: Any manufacturer Offense: Misdeclares in the sworn statement or in the sales invoice, any pertinent data
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or information. Penalty: Summary cancellation or withdrawal of the permit to engage in business as a manufacturer of articles subject to excise tax. B. Forfeiture of Property Used in Unlicensed Business or Dies Used for Printing False Stamps, Etc. Penalty: Forfeiture 1. All chattels, machinery, and removable fixtures of any sort used in the unlicensed production of articles subject to excise tax. 2. Dies and other equipment used for the printing or making of any internal revenue stamp, label or tag which is in imitation of or purports to be a lawful stamp, label or tag. C. Forfeiture of Goods Illegally Stored or Removed. Penalty: Forfeiture Offense: 1. All articles subject to excise tax should not be stored or allowed to remain in a distillery, distillery warehouse, bonded warehouse or other place where made, after the tax thereon has been paid. 2. Articles withdrawn from any such place or from customs custody or imported into the country without the payment of the required tax. CHAPTER III - PENALTIES IMPOSED ON PUBLIC OFFICERS 1. 2. 3. 4. 5. Violations committed by government enforcement officers. Unlawful divulgence of trade secrets. Unlawful interest of revenue law enforcers in business. Violation of withholding tax provisions. Penalty for failure to issue and execute warrant.
1. Violations Committed by Government Enforcement Officers. (Sec. 269) Penalty, upon conviction: Fine - P 50,000 - 100,000; and Imprisonment - 10 to 15 years; Additional penalty: Perpetual disqualification to hold public office, to vote, and to participate in any public election Any internal revenue officer for which a prima facie case of grave misconduct has been established shall, after due notice and hearing of the administrative case and subject to Civil Service Laws, be Dismissed from the revenue service.
Grave misconduct- defined in the Civil Service Law, includes the: 1) issuance of fake letters of authority and receipts, 2) forgery of signature,
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3) usurpation of authority and 4) habitual issuance of unreasonable assessments. Who is liable: 1) Every official, agent, or employees of the Bureau of Internal Revenue or 2) Any other agency of the Government charged with the enforcement of the provisions of this Code., who is guilty of any of the offenses enumerated. Offense: Memory Aid: EFRERCVFRIP or [VIP C FR FERER] (vip si father ferrer) 1) Extortion or willfull oppression through the use of his office or willful oppression and harassment of a taxpayer who refused, declined, turned down or rejected any of his offers specified in paragraph (d) thereof; 2) Knowingly demanding or receiving any Fee, other or greater sums than are authorized by law or receiving any fee, compensation or reward, except as by law prescribed, for the performance of any duty; 3) Willfully neglecting to give Receipts, as by law required, for any sum collected in the performance of duty or willfully neglecting to perform any other duties enjoined by law; 4) Offering or undertaking to accomplish, file or submit a report or assessment on a taxpayer without the appropriate Examination of the books of accounts or tax liability, or 5) Offering or undertaking to submit a Report or assessment less than the amount due the Government for any consideration or compensation, or 6) Conspiring or colluding with another or others to defraud the revenues or otherwise violate the provisions of this Code; 7) Neglecting or by design permitting the Violation of the law by any other person; 8) Making or signing any False entry or entries in any book, or making or signing any false certificate or return; 9) Allowing or conspiring or colluding with another to allow the unauthorized Retrieval, withdrawal or recall of any return, statement or declaration after the same has been officially received by the Bureau of Internal Revenue. 10) Having knowledge or Information of any violation of this Code or of any fraud committed on the revenues collectible by the Bureau of Internal Revenue, failure to report such knowledge or information to their superior officer, or failure to report as otherwise required by law; and 11) Without the authority of law, demanding or accepting or attempting to collect, directly or indirectly, as Payment or otherwise any sum of money or other thing of value for the compromise, adjustment or settlement of any charge or complaint for any violation or alleged violation of this Code. 2. Unlawful Divulgence of Trade Secrets. (Sec. 270) Penalty, upon conviction: Fine - P 50,000 - 100,000; or Imprisonment - 2 to 5 years or both; Who is liable: any officer or employee of the Bureau of Internal Revenue. Offense: Divulges to any person or makes known in any other than may be provided by law information, knowledge of which was acquired by him in the discharge of his official
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duties, regarding the: 1) business, income, or estate of any taxpayer, 2) the secrets, operation, style or work, or apparatus of any manufacturer or producer, or 3) confidential information regarding the business of any taxpayer. Except as provided in Section 71 of this Code and Section 26 of Republic Act No. 6388. 3. Unlawful Interest of Revenue Law Enforcers in Business. (Sec. 271) Penalty, upon conviction for each act or omission: Fine - P 5,000 - 10,000; or Imprisonment - 2 years 1 day to 4 years or both; Who is liable: Any internal revenue officer. Offense: who is or shall become interested, directly or indirectly: 1. In the manufacture, sale or importation of any article subject to excise tax or 2. In the manufacture or repair or sale, of any die for printing, or making stamps, or labels shall, 4. Violation of Withholding Tax Provision. (Sec. 272) Penalty, upon conviction for each act or omission: Fine - P 5,000 - 50,000; or Imprisonment - 6 months 1 day to 2 years or both; Who is liable: Every officer or employee who is charged with the duty to deduct and withhold with any internal revenue tax and remit the same, of: 1. the Government or 2. any of its agencies and instrumentalities, 3. its political subdivisions, 4. government-owned or -controlled corporations, including the BSP. Offense: Failing or causing the failure to 1. deduct and withhold any internal revenue tax; 2. remit taxes deducted and withheld within the time prescribed; and 3. file return or statement within the time prescribed, or rendering or furnishing a false fraudulent return or statement required. 5. Penalty for Failure to Issue and Execute Warrant. (Sec. 273) Penalty: Automatic dismissal from the service after due notice of hearing. Who is liable/Offense: Any official who 1. Fails to issue or execute the warrant of distraint or levy within thirty (30) days after the expiration of the time prescribed in Section 207 or 2. Is found guilty of abusing the exercise thereof by competent authority.
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CHAPTER IV - OTHER PENAL PROVISIONS 1. Penalty for second and subsequent offenses 2. Violations of other provisions of this code or rules and regulations in general. 3. Penalty for selling, transferring, encumbering or in any way disposing of property placed under constructive distraint. 4. Failure to surrender property placed under distraint and levy. 5. Procuring unlawful divulgence of trade secrets. 6. Confication and forfeiture of proceeds or instruments of crime. 7. Subsidiary penalty. 8. Prescription for violations of any provision of this code. 9. Informers reward to persons instrumental in the discovery of violations of the NIRC and in the discovery and seizure of smuggled goods.
1. Penalty for Second and Subsequent Offenses. (Sec. 274) Offense: Reincidence Penalty: Maximum of the penalty prescribed for the offense. 2. Violation of Other Provisions of this Code or Rules or Regulations in General. (Sec. 275) Penalty: upon conviction for each act or omission: Fine: not more than P 1,000 or Imprisonment: not more than 6 months, or both Who is liable/Offense: Any person who violates: 1. any provision of this Code or 2. any rule or regulation promulgated by the Department of Finance. for which no specific penalty is provided by law. 3. Penalty for Selling, Transferring, Encumbering or in any way disposing of property Placed under Constructive Distraint. (Sec. 276) Penalty: upon conviction for each act or omission: Fine: not less than twice the value of the property but not less than P 5,000 or Imprisonment: 2 yrs 1 day - 4 yrs or both Who is liable: Any taxpayer, whose property has been placed under constructive distraint. Offense: Without the consent of the Commissioner: 1. who sells, 2. transfers, 3. encumbers or 4. in any way disposes of said property, or any part thereof. 4. Failure to Surrender Property Placed under Distraint and Levy. (Sec. 277) Penalty: upon conviction for each act or omission: Fine: P 5,000 or more or Imprisonment: 6 months 1 day - 2 years, or both Also liable in his own person and estate: sum equal to the value of the property or rights not surrendered but not exceeding the amount of the taxes (including penalties and interest) together with costs and interest , from the date of such
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warrant. Who is liable: Any person having in his possession or under his control any property or rights to property, upon which a warrant of constructive distraint or actual distraint and levy has been issued. Offense: Failure or refusal to surrender any of such property or rights upon demand by the Commissioner or any of his deputies executing such warrant. Unless such property or right is, at the time of such demand, subject to an attachment or execution under any judicial process. 5. Procuring Unlawful Divulgence of Trade Secrets. (Sec. 278) Penalty: upon conviction for each act or omission: Fine: not more than P 2,000 or Imprisonment: 6 months - 5 years, or both Who is liable: 1. Any person who causes or procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the business, income or inheritance of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, and which it is unlawful for him to reveal, and 2. Any person who publishes or prints in any manner whatever, not provided by law, any income, profit, loss or expenditure appearing in any income tax return. 6. Confiscation & Forfeiture of the Proceeds or Instruments of Crime. (Sec. 279) In addition to the penalty imposed in Title X: the same shall carry with it the confiscation and forfeiture in favor of the Government of: 1. the proceeds of the crime or 2. value of the goods, and 3. the instruments or tools with which the crime was committed. Articles which are not subject of lawful commerce shall be destroyed. The following will also be confiscated and forfeited: 1. Instruments or tools used in the illicit act belong to a third person, after due notice and hearing in a separate proceeding if such third person leased, let, chartered or otherwise entrusted the same to the offender. 2. In case the lessee subleased, or the borrower, charterer, or trustee allowed to use of the instruments or tools to the offender. 3. Property of common carriers shall be subject to forfeiture when the owner or operator of said common carrier was, at the time of the illegal act, a consenting party or privy thereto. Unless such property is used in the transaction of their business as such common carrier Without prejudice to the owner's right of recovery against the offender in a civil or criminal action.
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7. Subsidiary Penalty. (Sec. 280) Penalty: subsidiary personal liability: 1 day for each established in Article 39 of the Revised Penal Code. Who is liable: 1. of this Code 2. fine imposed upon him by the court, or 3.
P 8.50 subject to the rules Person convicted for violation Has no property to meet the Is unable to pay such fine.
8. Prescription for Violations of any Provisions of this Code. (Sec. 281) Period: 5 years. Period begins to run: 1. On the day of the commission of the violation of the law and 2. If the same be not known at the time: from the discovery and the institution of judicial proceedings for its investigation and punishment. It is interrupted when proceedings are instituted against the guilty person. It shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy. The term of prescription shall not run when the offender is absent from the Philippines.
9. Informer's Reward to Persons Instrumental in the Discovery of Violations of the National Internal Revenue Code and the Discovery and Seizure of Smuggled Goods. (Sec. 282) A. For Violations of the National Internal Revenue Code. Reward: 10% of the revenues, surcharges or fees recovered and/or fine or penalty imposed and collected or P1,000,000 per case, whichever is lower. Where the offender has offered to compromise and his offer has been accepted: Same amount of reward shall be given to the informer. No revenue, surcharges or fees actually recovered or collected - No reward. Who may avail: Any person, except an internal revenue official or employee, or his relative within the sixth degree of consanguinity. Acts necessary: 1. voluntarily gives definite and sworn information, 2. not yet in the possession of the Bureau of Internal Revenue, 3. leading to the discovery of frauds upon the internal revenue laws and violations of any of the provisions
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thereof, 4. thereby resulting in the recovery of revenues, surcharges and fees and/or the conviction of the guilty party and/or the imposition of any fine or penalty. Information shall not refer to a case already pending or previously investigated or examined by the Commissioner or any of his deputies, agents or examiners or the Secretary of Finance or any of his deputies or agents. For Discovery and Seizure of Smuggled Goods. Reward: Cash reward 10% of the fair market value of the smuggled and confiscated goods or P1,000,000 per case, whichever is lower. The cash rewards of informers subject to income tax, collected as a final withholding tax, at the rate of 10%. Who may avail: Persons instrumental in the discovery and seizure of smuggled goods. Prohibited from claiming informer's reward: 1. all public officials, whether incumbent or retired, 2. who acquired the information in the course of the performance of their duties 3. during the incumbency Purpose: To encourage the public to extend full cooperation in eradicating smuggling. REVENUE MEMORANDUM ORDER NO. 57-2000 Grounds for the suspension or temporary closure of business: a) failure to issue receipt or invoices by a VAT-registered or registrable taxpayer; b) failure to file a value-added tax return; c) understatement of taxable sales or receipts by 30% or more of the correct amount in the case of a VAT-registered or registrable taxpayer; and d) failure to register. The recommendation for the suspension or temporary closure of business will have to be supported with documentary proof specified in the Order.
LOCAL GOVERNMENT TAXATION CHAPTER 1 - GENERAL PROVISIONS Power to Create Sources of Revenue Each local government unit has the power to: 1. create its own sources of revenue and 2. levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. (Sec. 129)
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Such taxes, fees, and charges shall accrue exclusively to the local government units. Fundamental Principles. The fundamental principles governing the exercise of the taxing and other revenueraising powers of LGUs are (U(EPuJul)LIP): (a) Taxation shall be Uniform in each local government unit; (b) Taxes, fees, charges and other impositions shall (EPuJuL): 1) be Equitable and based as far as practicable on the taxpayer's ability to pay; 2) be levied and collected only for Public purposes; 3) not be unJust, excessive, oppressive, or confiscatory; 4) not be contrary to Law, public policy, national economic policy, or in the restraint of trade; (c) The collection of local taxes, fees, charges and other impositions shall in no case be Let to any private person; (d) The revenue collected shall Inure solely to the benefit of the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; and, (e) Each local government unit shall, as far as practicable, evolve a Progressive system of taxation. (Sec. 130) Local Taxing Authority. The power to tax is exercised by the sanggunian of the LGU concerned through an appropriate ordinance. (Sec. 132) Common Limitations on the Taxing Powers of LGUs LGUs cannot levy: [ IDECTA_BEV_TRELEBI ] or (CADET-VIBE-LIBERTE) (a) Income tax, except on banks and other financial institutions; (b) Documentary stamp tax; (c) Estate Tax, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided; (d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues, except wharfage on wharves constructed and maintained by the local government unit concerned; (e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, (f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen; (g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of 6 and 4 years, respectively from the date of registration; (h) Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products; (i) Percentage or VAT on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided; (j) Taxes on the gross receipts of Transportation contractors and persons engaged in
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the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in the Code; (k) Taxes on premiums paid by way or Reinsurance or retrocession; (l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of Licenses or permits for the driving thereof, except tricycles; (m) Taxes, fees, or other charges on Philippine products actually Exported, except as otherwise provided; (n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. 6810 and R.A. 6938 (Cooperative Code of the Philippines); and (o) Taxes, fees or charges of any kind on the National Government, its agencies and Instrumentalities, and local government units. Provinces (see chart) Provinces (refers to Local Govt. Provisions on Tax) SPECIFIC PROVISIONS ON THE TAXING AND OTHER REVENUE-RAISING POWERS OF LOCAL GOVERNMENT UNITS Provinces Type of Tax Tax on Transfer of Real Property Ownership. The province may impose a tax on the sale , donation, barter, or on any other mode of transferring ownership or title of real property. Tax on Business of Printing and Publication. The province may impose a tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature. Franchise Tax. Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise. Tax on Sand, Gravel and Other Quarry Resources. The province may levy and collect taxes on ordinary stones, sand, gravel, earth, and other quarry resources extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction. Rate Not more than 50% of the 1% of the total consideration or of the fair market value, whichever is higher
Exceptions Sale, transfer or oth of real property pur No. 6657 (CARL).
Not exceeding 50% of 1% of Newly started busin the gross annual receipts for shall not exceed 1/2 the preceding calendar year. capital investment. S references, prescri DECS shall be exe tax. Not exceeding 50% of 1% of Newly started busin the gross annual receipts for shall not exceed 1/2 the preceding calendar year, capital investment. within its territorial jurisdiction. Not more than 10% of fair market value in the locality
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Professional Tax. The province may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination. To be paid on or before the 31st day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein.
At such amount and reasonable classification as the sangguniang panlalawigan may determine but shall in no case exceed P300.00.
Professionals employed in the gov be exempt from th this tax.
Amusement Tax. The province may levy an Not more than 30% of the gross amusement tax to be collected from the receipts from admission fees. proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement
The holding of ope dramas, recitals, pa exhibitions, flower s programs, literary a presentations, excep similar concerts shal
Annual Fixed Tax For Every Delivery Truck or Van Amount of Manufacturers or Producers, Wholesalers of, P500.00. Dealers, or Retailers in, Certain Products. The province may levy an annual fixed tax for every truck or any vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery of distilled spirits, soft drinks, cigars and cigarettes, and other products as may be determined by the sanggunian, to sales outlets, or consumers, whether directly or indirectly, within the province.
not
exceeding
Municipalities Tax on Business The municipality may impose taxes on the following: a. On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature. b. On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature. c. On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of the following essential commodities (RW CLAPS C):
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 1. Rice and corn; 2. Wheat or cassava flour, meat, dairy products, locally manufactured,
processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products, whether in their original state or not; 3. Cooking oil and cooking gas; 4. Laundry soap, detergents, and medicine; 5. Agricultural implements, equipment and post-harvest facilities, fertilizers, pesticides and other farm inputs; 6. Poultry feeds and other animal feeds; 7. School supplies; and 8. Cement. d. On retailers e. On contractors and other independent contractors f. On banks and other financial institutions, g. On peddlers engaged in the sale of any merchandise or article of commerce h. On any business, which the sanggunian concerned may deem proper to tax. For businesses subject to the excise, value-added or percentage tax, the tax rate shall not exceed 2% of gross sales of the preceding calendar year. Rates of Tax within the Metropolitan Manila Area shall not exceed by 50% the maximum rates prescribed for a-h. (Sec. 144) The tax is payable for every separate or distinct establishment or place where business is conducted. (Sec. 146) The municipality may impose and collect such reasonable fees and charges on business and occupation except professional taxes reserved for provinces. (Sec 147) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters. The sanggunian may: a. Grant fishery privileges to erect fish corrals, oysters, or other aquatic beds or bangus fry areas 1. Duly registered organizations and cooperatives of marginal fishermen shall have the preferential right; 2. The sanggunian may require a public bidding pursuant to an ordinance for the grant of such privilege; 3. Absent of such orgs. and coops or their failure to exercise their preferential right, other parties may participate in the public bidding b. Grant the privilege to gather, take or catch bangus fry, prawn fry or fry of other species and fish from the municipal waters by nets or other fishing gears to marginal fishermen free of rental or fee c. Issue licenses for the operation of fishing vessels of three (3) tons or less. (Sec. 149) Situs of the Tax. For purposes of collection of the taxes under Section 143 (tax on business), businesses maintaining or operating branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction, and the tax thereon shall accrue
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and shall be paid to the municipality where such branch or sales outlet is located. In case there is no branch or sales outlet in the city or municipality where the sale made, the sale shall be recorded in the principal office and the taxes due shall accrue and be paid to such city or municipality. The following sales allocation for sales recorded in the principal office of businesses with factories, project offices, plants, and plantations: 30% of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located; and 70% of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant, or plantation is located. Where the plantation located at a place other than the place where the factory is located, the above mentioned 70% shall be divided as follows: 60% to the city or municipality where the factory is located; and 40% to the city or municipality where the plantation is located. Where there are 2 or more factories, project offices, plants, or plantations located in different localities, the above mentioned 70% shall be shall be prorated among the localities where the factories, project offices, plants, and plantations are located in proportion to their respective volumes of production during the period for which the tax is due. (Sec. 150) Cities The city may levy the taxes, fees, and charges which the province or municipality may impose. The tax rates that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than 50% except the rates of professional and amusement taxes. (Sec. 151) Barangays Scope of Taxing Powers. - The barangays may levy the following taxes and charges, which shall exclusively accrue to them: (TOBS) (a) Taxes - On stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of P50,000.00 or less for cities and P30,000.00 or less, in the case of municipalities, rate = not exceeding 1% on gross sales or receipts. (b) Service Fees or Charges for services rendered in connection with the regulations or the use of barangay-owned properties or service facilities such as palay, copra, or tobacco dryers. (c) Barangay Clearance. - No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. (d) Other fees and Charges. - The barangay may levy reasonable fees and charges: (CRB) 1. On commercial breeding of fighting Cocks and cockpits;
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 2. On places of Recreation which charge admission fees; and 3. On Billboards, signboards, neon signs, and outdoor ads. (Sec. 152)
Common Revenue-Raising Powers of LGUs (Secs. 153-155) (SPT) a. Service Fees and Charges for services rendered b. Pubic Utility Charges for the operation of public utilities owned, operated and maintained by LGUs within their jurisdiction. c. Toll Fees or Charges for the use of any public road, pier, or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the LGU concerned. Exceptions: 1. officers and enlisted men of the AFP and PNP on mission, 2. post office personnel delivering mail, 3. physically-handicapped, and disabled citizens who are sixty-five (65) years or older. Community Tax Cities or municipalities may levy a community tax (Sec. 156) Individuals Liable to Community Tax. - [ IER ] a. Inhabitant of the Philippines b. Eighteen years of age or over c. Regularly employed on a wage or salary basis for at least 30 consecutive working days during any calendar year, or who is engaged in business or occupation, or who owns real property with an aggregate assessed value of P1,000.00 or more, or who is required by law to file an income tax return Rate = P5.00 and an annual additional tax of P1.00 for every P1,000.00 of income regardless of whether from business, exercise of profession or from property which in no case shall exceed P5,000.00. In the case of husband and wife, the tax imposed shall be based upon the total property owned by them and the total gross receipts or earnings derived by them. (Sec. 157) Juridical Personalities (Sec. 158) Corporations, no matter how created or organized, whether domestic or resident foreign, engaged in or doing business in the Philippines are also liable to pay an annual community tax. Rate = P500.00 and an annual additional tax, which shall exceed P10,000.00 in accordance with the following schedule: a. For every P5,000.00 worth of real property in the Philippines owned by it during the preceding year based on the valuation used for the payment of real property tax P2.00; and b. For every P5,000.00 of gross receipts derived by it from its business in the Philippines during the preceding year - P2.00.
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Those exempt from the community tax are: 1. Diplomatic and consular representatives; and 2. Transient visitors when their stay does not exceed 3 months. Place of Payment - place of residence of the individual, or in the place where the principal office of the juridical entity is located. (Sec. 160) Time for Payment - accrues on the 1st day of Jan. of each year which shall be paid not later than the last day of Feb. of each year Penalties for Delinquency. - An interest of 24% per annum from the due date until it is paid shall be added on the amount due. A community tax certificate may also be issued to any person or corporation not subject to the community tax upon payment of P1.00. (Sec. 162)
Sec. 163. Presentation of Community Tax Certificate On Certain Occasions. Individual a. When an individual subject to the community tax acknowledges any document before a notary public, b. takes the oath of office upon election or appointment to any position in the government service; c. receives any license, certificate or permit from any public authority; pays any tax or fee; d. receives any money from any public fund; e. transacts other official business; or f. receives any salary or wage from any person or corporation. The community tax certificate shall not be required in the registration of a voter. Corporation a. receives any license, certificate, or permit from any public authority, b. pays any tax or fee, c. receives money from public funds, or d. transacts other official business. The city or municipal treasurer deputizes the barangay treasurer to collect the community tax in their respective jurisdictions. The proceeds of the community tax actually and directly collected by the city or municipal treasurer shall accrue entirely to the general fund of the city or municipality concerned.
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Proceeds of the community tax collected through the barangay treasurers shall be apportioned as follows: (Sec. 164) 50% accrues to the general fund of the city or municipality concerned; and 50% accrues to the barangay where the tax is collected. PROVINCE OF BULACAN vs CA (299 SCRA 442) Facts: The Province passed an Ordinance imposing a 10% tax on the value of stones, sand and other quarry resources from public lands. The Provincial Treasurer levied upon Republic Cement P2.5M for its extraction of resources from private land. Issue: Does the province have authority to levy the tax? Held: NO. Although 186 of the LGC authorizes municipal corps. to levy taxes other than those specifically enumerated therein, the subject ordinance was quite specific about the fact that the taxable articles must come from public land. Moreover, a province may not levy excise taxes on articles already taxed by the NIRC. The current tax code already imposes a tax on ALL quarry resources, regardless of origin, hence, the Province may no longer impose any additional amounts from Republic Cement. REAL PROPERTY TAXATION I. CHARACTERISTIC OF REAL PROPERTY TAX: [ DAPIL ] 1. Direct tax on the ownership of real property 2. Ad Valorem tax. The value is based on the tax base 3. Proportion - the tax is calculated on the basis of a certain percentage of the assessed 4. Indivisible single obligation 5. Local Tax
value
II. PROPERTIES LIABLE UNDER REAL PROPERTY TAX According to the Local Government Code, Real Property liable for Real Prop tax are: 1. Land, 2. Buildings 3. Machinery and 4. Other improvements not otherwise exempted under said code (Sec 232, LGC) Note: Although the term real property has not been expressly defined in the LGC, early decisions of the Supreme Court in Mindanao Bus Co. v City Assessor of Cagayan de Oro, 6 SCRA `97; Board of Assessment Appeals v Meralco, 119 PHIL 328; Manila Electric Co. v Board of Assessment Appeals, 10 SCRA 68) seem to suggest that Art 415 of the Civil Code could also be controlling. III. CLASSIFICATION OF LAND for purposes of assessment Sec 218 (a) [CARMITS] 1. Commercial 2. Agricultural
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TAXATION LAW REVIEWER ATENEO CENTRAL BAR OPERATIONS 2001 Eric, Joy, Judd, Roland 3. 4. 5. 6. 7.
Residential Mineral Industrial Timberland Special
IV. SPECIAL CLASSES OF REAL PROPERTY (sec 216, LGC) [HCS LG] 1. HOSPITALS 2. CULTURAL and SCIENTIFIC purposes 3. owned and used by LOCAL WATER DISTRICTS 4. GOCCs rendering essential public services in the supply and distribution of water and/or generation or transmission of electric power. V. PROPERTIES EXEMPT from real property tax (Sec. 234) [RC WEC] 1. owned by the REPUBLIC of the PHILS or its political subdivisions except: when beneficial use has been granted to a taxable person 2. Charitable institutions, churches, parsonages, convents thereto, mosques, nonprofit or religious cemeteries, buildings and improvements actually directly and exclusively used for religious, charitable or educational purposes. 3. Machinery and Equipment actually, directly, and exclusively used by local Water districts and GOCCs engaged in the supply and distribution of water and/or generation and transmission of electric power 4. Real property owned by duly registered Cooperatives under RA 6938 5. Machinery & equipment for pollution control and Environment protection Exemptions previously granted, (not falling within the above enumeration) are withdrawn.
VI. FUNDAMENTAL PRINCIPLES IN Assessment REAL PROP TAXES (Art 198) [CUANE] 1. CURRENT and fair market value is the basis of appraisal 2. UNIFORMITY in classification in each local govt unit should be observed 3. ACTUAL USE of the property should be the basis of classification 4. appraisal, assessment, levy and collection should NOT BE LET to any private person. 5. EQUITABLE appraisal and assessment STEP 1 - DECLARATION OF REAL PROPERTY 1. Declared by Owner or Administrator (Sec 202-203) IF newly acquired property a. files with assessor within 60 DAYS from date of transfer a b. SWORN statement containing FMV and description of property IF improvement on real property a. file w/in 60 DAYS upon completion or occupation (whichever is earlier) b. SWORN statement containing FMV and description of property 2. Declared by Provincial / City / Municipal Assessor (Sec 204)
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WHEN only when the person under Sec 202 refuses or fails to make the declaration within the prescribed time No oath is required NOTE: IF FILING FOR EXEMPTION (Sec 206) WHAT person claiming exemptions must file with assessor sufficient documentary evidence to support claim WHEN within 30 days from the date of DECLARATION of property IF required evidence is not submitted within 30 days, the property will be listed as taxable in the roll IF proven to be tax-exempt, property will be dropped from the roll
NOTE: IF PROPERTY DECLARED FOR THE FIRST TIME (Sec. 222) If declared for 1st time, real property shall be assessed for back taxes a. for not more than 10 yrs prior to the date of initial assessment b. taxes shall be computed on the basis of applicable schedule of values in force during the corresponding periods
STEP 2: LISTING OF REAL PROPERTY IN THE ASSESSMENTROLLS (Sec 205, 207) STEP 3: APPRAISAL AND VALUATION OF REAL PROPERY (Sec 212-214, 224-225) How to determine Fair Market Value. FOR LAND 1. Assessor of the prov/ city /mun gives summons to owners of affected properties 2. Assessor prepares a schedule of FMV for different classes of properties 3. Sanggunian enacts an ordinance 4. the schedule of FMV is published or posted FOR MACHINERY 1. For Brand New machinery : FMV is acquisition cost 2. In all other cases: FMV = Remaining eco. life X Replacement cost Estimated eco. life STEP 4: DETERMINE ASSESSED VALUE (Sec 218) Procedure 1. take the schedule of FMV 2. Assessed value = FMV X Assessment level 3. Tax = Assessed value X Tax rate STEP 5: PAYMENT AND COLLECTION OF TAX WHEN January 1 of every year (Sec 246) tax shall constitute as superior lien (Sec 246)
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HOW a. basic real prop tax in 4 equal installments (Mar 31,Jun 30,Sep 30, Dec 31) b. special levy - governed by ordinance NOTE: INTEREST for LATE PAYMENT - two percent (2%) each month on unpaid amt. until the delinquent amt is paid. - provided in no case shall the total interest exceed thirty-six (36) months NOTE: FOR ADVANCE and PROMPT PAYMENT a) advance payment -discount not exceeding 20% of annual tax (Sec 251, LGC) b) prompt payment -discount not exceeding 10% of annual tax due(Art 342 IRR)
WHO COLLECTS The provincial, city, municipal or barangay treasurer PERIOD WITHIN WHICH TO COLLECT (Sec 270). within five (5) yrs from the date they become due within ten (10) yrs. from discovery of fraud, in case there is fraud or intent to evade Period of prescription shall be SUSPENDED when : (Sec 270, LGC) 1. local treasurer is legally prevented to collect tax 2. the owner of prop requests for reinvestigation and writes a waiver before expiration of period to collect 1. the owner of the prop is out of the country or cannot be located REMEDIES IN REAL PROPERTY TAXATION A. REMEDIES OF TAXPAYER 1. PAYMENT UNDER PROTEST (Sec 252) - file protest with prov, city, or mun. treasurer concerned - indicate amount contested - annotate on tax receipt paid under protest - Within 30 days, confirm protest in writing stating grounds therefor - treasurer shall decide protest within 60 days DONT FORGET!: No protest shall be entertained unless THE TAX IS FIRST PAID!!!! IF PROTEST DECIDED IN FAVOR of taxpayer, amount may either be a. refunded or c. applied as tax credit IF DENIED or NOT DECIDED WITHIN 60 DAYS BY TREASURER, a. taxpayer may appeal to board of assessment appeal or b. avail of remedies under Ch 3 title 2 Book II (Local Board of Assessment Appeals and Central Board of Assessment Appeals) 2. REFUND IN CASE OF EXCESSIVE COLLECTION (Sec 253) File a written claim for refund within two (2) years from date taxpayer is entitled thereto
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B. REMEDIES OF GOVERNMENT Remedies may be enforced either through administrative or judicial action or both, alternative or simultaneously. Use or non-use of one remedy shall not be a bar against the other (Sec 258) 1. ADMINISTRATIVE A. Levy on Real property (Sec 258 and 259) B. Sale of Real Property (Sec 260) C. Local Governments Lien (Sec 256) D. Further Distraint or Levy (Sec 265) 2. JUDICIAL (Sec 266)-civil action filed by the local treasurer within 5 yrs. from due date C. CONDONATION and REMISSION The PRESIDENT may remit or reduce real prop tax in any prov/ city/ mun if he deems that PUBLIC INTEREST so requires (Sec 277) THE SANGGUNIAN concerned may CONDONE or REDUCE the tax in cases where a. there is a general failure of crops b. substantial decrease in the price of products c. calamity (Sec 276) by an ordinance - passed before Jan 1 of any year and - upon recommendation of the Local Disaster Coordinating Council APPEALS IN REAL PROPERTY TAXATION OWNER OR PERSON WITH LEGAL INTEREST Files within 60 days 1. Written Petition under Oath 2. With Supporting Documents Within 60 days LOCAL BOARD OF ASSESSMENT APPEALS (LBAA Should decide win 120 DAYS from receipt of petition) Within 30 days CENTRAL BOARD OF ASSESSMENT APPEALS Within 15 days SUPREME COURT

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Tax Rate 15% 35% 50% 100%

1) M aking 2) I ssuing 3) S igning 4) A ccepting 5) T ransfering

II. Sale Time of Sale

V. Redemption of Property Sold Period of redemption

Who may redeem Procedure

Rights of Person redeeming the property

P 1,000 - 2,000 P 10,000 - 20,000 P 30,000 - 60,000 P 50,000 - 100,000

60 - 100 days 2 - 4 years 4 - 6 years 10 - 12 years

Professionals employed in the gov be exempt from th this tax.

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