GLOSSARY OF TERMS: CHAPTER 1-GENERAL PRINCIPLES 1.

TAXATION - IS THE PROCESS OR MEANS BY WHICH THE SOVEREIGN, THROUGH ITS LAWMAKING BODY, RAISES INCOME TO DEFRAY THE NECESSARY EXPENSES OF THE GOVERNMENT. 2.NECESSITY THEORY -THE THEORY THAT THE EXISTENCE OF GOVERNMENT IS A NECESSITY. 3.BENEFIT-RECEIVED THEORY THE THEORY THAT STATES THAT THERE ARE RECIPROCAL DUTIES OF PROTECTION AND SUPPORT BETWEEN THE STATE AND ITS INHABITANTS. 4. NON-DIVERSION -TAX MONEY COLLECTED FOR SPECIAL PURPOSE MUST BE APPLIED ONLY FOR THAT PURPOSE 5. PERSONAL, POLL OR CAPITATION TAX -TAX OF A FIXED AMOUNT IMPOSED ON INDIVIDUALS RESIDING WITHIN A SPECIFIED TERRITORY WITHOUT REGARD TO THEIR PROPERTY OR THE OCCUPATION IN WHICH THEY MAY BE ENGAGED. -EXAMPLE: COMMUNITY TAX (FORMERLY RESIDENCE TAX) OR CEDULA. 6. PROPERTY TAX -TAX IMPOSED ON PROPERTY, WHETHER REAL OR PERSONAL, IN PROPORTION EITHER TO ITS VALUE OR WITH SOME OTHER REASONABLE METHOD OF APPORTIONMENT. -EXAMPLE: REAL ESTATE TAX 7. EXCISE OR PRIVILEGE TAX

-TAX IMPOSED UPON THE PERFORMANCE OF AN ACT, THE ENJOYMENT OF PRIVILEGE OR THE ENGAGING IN OCCUPATION. - EXAMPLES: INCOME TAX, VALUE -ADDED TAX , PERCENTAGE TAX 8. DIRECT TAX -TAX WHICH IS DEMANDED FROM THE PERSON WHO IS INTENDED TO PAY IT. - EXAMPLES: COMMUNITY TAX, INCOME TAX 9. INDIRECT TAX -TAX WHICH THE TAXPAYER CAN SHIFT TO ANOTHER - EXAMPLES: BUSINESS TAXES, CUSTOMS DUTIES 10. SPECIFIC TAX -TAX OF A FIXED AMOUNT IMPOSED BY HEAD OR NUMBER, OR BY SOME STANDARD OF WEIGHT OR MEASUREMENT. -EXAMPLES: EXCISE TAXES ON DISTILLED SPIRITS, CIGARS, CIGARETTES 11. AD VALOREM TAX -TAX OF A FIXED PROPORTION OF THE AMOUNT OR VALUE OF PROPERTY WITH RESPECT TO WHICH THE TAX IS ASSESSED. -EXAMPLES: REAL ESTATE TAX, CUSTOMS DUTIES, INCOME TAX 12. GENERAL, FISCAL OR REVENUE TAX -TAX IMPOSED TO RAISE REVENUE FOR THE GOVERNMENT. - EXAMPLES: INCOME TAX, BUSINESS TAXES 13. SPECIAL OR REGULATORY TAX -TAX TO ACHIEVE SOME SOCIAL OR ECONOMIC ENDS IRRESPECTIVE OF WHETHER REVENUE IS ACTUALLY RAISED OR NOT. - EXAMPLES: PROTECTIVE TARIFFS ON IMPORTED GOODS 14. NATIONAL TAX
2

-TAX IMPOSED BY NATIONAL GOVERNMENT. -EXAMPLES: NIRC-COVERED TAXES(INCOME TAX, DONORS TAX, VAT, ETC.) 15. MUNICIPAL OR LOCAL TAX -TAX IMPOSED BY MUNICIPAL CORPORATIONS OR LOCAL GOVERNMENTS. -EXAMPLES: TAX ON OCCUPATIONS, FLOOD TAX 16. PROPORTIONAL -TAX BASED ON A FIXED PERCENTAGE OF THE AMOUNT OF PROPERTY, INCOME OR OTHER BASIS TO BE TAXED. - EXAMPLES: REAL ESTATE TAX, VAT. 17. PROGRESSIVE OR GRADUATED TAX -TAX THE RATE OF WHICH INCREASES AS THE TAX BASE INCREASES. -EXAMPLES: INCOME TAX, ESTATE TAX, DONORS TAX 18. REGRESSIVE TAX -TAX THE RATE OF WHICH DECREASES AS TAX BASE INCREASES 19.INCOME TAX - A TAX ON ALL YEARLY PROFITS ARISING FROM PROPERTY, PROFESSIONS, TRADES OR OFFICES OR A TAX ON A PERSONS INCOME, EMOLUMENTS, PROFITS AND THE LIKE. 20.SITUS OF TAXATION -PLACE OF TAXATION OR THE STATE OR POLITICAL UNIT W/C HAS JURISDICTION TO IMPOSE TAX OVER ITS INHABITANTS 21. POLICE POWER -THE POWER TO PROTECT CITIZENS AND PROVIDE FOR SAFETY AND WELFARE OF SOCIETY 22. EMINENT DOMAIN POWER
3

-THE POWER TO TAKE PRIVATE PROPERTY (WITH JUST COMPENSATION) FOR PUBLIC USE 23. INTERNATIONAL COMITY -COURTEOUS RECOGNITION, FRIENDLY AGREEMENT, INTERACTION AND RESPECT ACCORDED BY ONE NATION TO THE LAWS AND INSTITUTIONS OF ANOTHER 24.INHERENT LIMITATIONS -NATURAL RESTRICTIONS TO SAFEGUARD AND ENSURE THAT THE POWER OF TAXATION SHALL BE EXERCISED BY THE GOVERNMENT ONLY FOR THE BETTERMENT OF THE PEOPLE WHOSE INTEREST S/B SERVED, ENHANCED AND PROTECTED 25. CONSTITUTIONAL LIMITATIONS -PROVISIONS OF THE CONSTITUTION THAT RESTRICT THE SUPREME, PLENARY, UNLIMITED AND COMPREHENSIVE EXERCISE BY THE STATE OF ITS INHERENT POWER TO TAX 26. EQUAL PROTECTION OF LAW -ALL PERSONS SUBJECT TO LEGISLATION SHALL BE TRETED ALIKE UNDER SIMILAR CIRCUMSTANCES AND CONDITIONS BOTH IN THE PRIVILEGES CONFEREED AND LIABILITIES IMPOSED 27. UNIFORMITY RULE OF TAXATION -TAX OPERATES WITH THE SAME FORCE AND EFFECT IN EVERY PLACE WHERE THE SUBJECT MAY BE FOUND 28. ITEM VETO -THE POWER TO VETO ITEMS IN APPROPRIATION BILLS WITHOUT AFFECTING OTHER PROVISIONS OF SUCH BILLS 29. POCKET VETO -THE POWER TO DISAPPROVE LEGISLATIVE ACT BY THE PRESIDENT WITH THE RESULT THAT BILLS SHALL FAIL TO BECOME LAWS 30. DISCRIMINATORY DUTY

-SPECIAL DUTY WHOSE PURPOSE IS TO OFFSET ANY FOREIGN DISCRIMINATION AGAINST OUT LOCAL COMMERCE 31. COUNTERVAILING DUTY -IMPOSED TO OFFSET ANY FOREIGN SUBSIDY GRANTED TO IMPORTED GOODS TO THE PREJUDICE OF OUR LOCAL INDUSTRIES 32.MARKING DUTY -ADDITIONAL DUTY TAX GENERALLY IMPOSED ON IMPORTED ARTICLES AND/OR CONTAINERS WITH IMPPROPER CLASSIFICATION 33. DUMPING DUTY -ADDITIONAL DUTY TAXES IMPOSED ON IMPORTED GOODS WITH PRICES LESSER THAN THEIR FMV TO PROTECT LOCAL INDUSTRIES 34. PROSPECTIBILITY OF TAX LAWS -A TAX BILL MUST ONLY BE APPLICABLE AND OPERATIVE AFTER BECOMING A LAW 35. TAX IMPRESCRIPTIBILITY -UNLESS OTHERWISE PROVIDED BY THE TAX LAW ITSELF, TAXES IN GENERAL ARE NOT CANCELLABLE 36. DOUBLE TAXATION -ACT OF THE SOVEREIGN BY TAXING TWICE FOR THE SAME PURPOSE IN THE SAME YEAR UPON THE SAME PROPERTY OR ACTIVITY OF THE SAME PERSON 37. TAX EVASION -UNLAWFUL MEANS TO LESSEN THE PAYMENT OF TAX 38. TAX AVOIDANCE/TAX MINIMIZATION -REDUCING OR TOTALLY ESCAPING PAYMENT OF TAXES THROUGH LEGALLY PERMISSIBLE MEANS 39. TAX OPTION -CHOICE TO PAY LOWER TAX RATES IN SOME TRANSACTIONS AS PERMITTED BY TAX LAWS
5

40. SHIFTING -TRANSFER OF TAX BURDEN TO ANOTHER 41. TRANSFORMATION -THE PRODUCER ABSORBS THE PAYMENT OF TAX TO REDUCE PRICES AND TO MAINTAIN MARKET SHARE 42. EXEMPTION FROM TAXATION -GRANT OF IMMUNITY, EXPRESSED OR IMPLIED, TO A PARTICULAR PERSON, CORPORATION, OR TO PERSONS OR CORPORATIONS OF A PARTICULAR CLASS, FROM A TAX UPON PROPERTY OR AN EXCISE W/C PERSONS AND CORPORATIONS GENERALLY W/IN THE SAME TAXING DISTRICT ARE OBLIGED TO PAY 43. EXPRESSED EXEMPTION -EXEMPTIONS THAT ARE STATUTORY LAWS IN NATURE AS PROVIDED BY CONSTITUTION, STATUTE, TREATIES, ORDINANCES, FRANCHISES OR SIMILAR LEGISLATIVE ACTS 44. IMPLIED EXEMPTION OR BY OMISSION -WHEN TAX IS IMPOSED ON A CERTAIN CLASS OF PERSONS, PROPERTIES OR TRANSACTIONS W/O MENTIONING OTHER CLASSES, THOSE NOT MENTIONED ARE DEEMED EXEMPTED 45. CONTRACTUAL EXEMPTION -THOSE LAWFULLY ENTERED INTO BY THE GOVT IN CONTRACTS UNDER EXISTING LAWS 46. EQUITABLE RECOUPMENT -A LAW DOCTRINE W/C STATES THAT A TAX CLAIM FOR REFUND, W/C IS PREVENTED BY PRESCRIPTION, MAY BE ALLOWED AS PAYMENT FOR UNSETTLED TAX LIABILITIES IF BOTH TAXES ARISE FROM THE SAME TRANSACTION IN W/C OVERPAYMENT IS MADE AND UNDERPAYMENT IS DUE 47. DOCTRINE OF SET-OFF TAXES

-TAXES ARE NOT SUBJECT TO SET-OFF OR LEGAL COMPENSATION BECAUSE THE GOVT AND THE TAXPAYER ARE NOT MUTUAL CREDITOR AND DEBTOR OF EACH OTHER 48. PENALTY -ANY SANCTION IMPOSED, AS A PUNISHMENT FOR VIOLATIONS OF LAW OR ACTS DEEMED INJURIOUS 49. REVENUE -ALL FUNDS OR INCOME DERIVED BY THE GOVT 50. DEBT -AN OBLIGATION TO PAY OR RENDER SERVICE FOR A DEFINITE FUTURE PERIOD OF TIME BASED ON CONTRACT 51. TOLL -COMPENSATION FOR USE OF SOMEBODY ELSES PROPERTY DETERMINED BY THE COST OF THE IMPROVEMENT 52. LICENSE FEE -CONTRIBUTION BY THE GOVT PRIMARILY TO RESTRAIN BUSINESS OR OCCUPATION 53. CUSTOMS DUTIES -IMPOSITION ON IMPORTED GOODS TO PROTECT LOCAL INDUSTRY 54. TARIFF -SCHEDULE OR LIST OF RATES, DUTIES OR TAXES IMPOSED ON IMPORTED GOODS 55. SUBSIDY -MONETARY AID DIRECTLY GRANTED OR GIVEN BY THE GOVT TO AN INDIVIDUAL OR PRIVATE COMMERCIAL ENTERPRISES DEEMED BENEFICIAL TO THE PUBLIC 56. MARGIN FEE -TAX ON FOREIGN EXCHANGE DESIGNED TO CURB THE EXCESSIVE DEMANDS ON OUR INTL RESERVES
7

AND

REGULATE

57. SPECIAL ASSESSMENT -AN AMOUNT COLLECTED BY THE GOVT FOR THE PURPOSE OF REIMBURSING ITSELF FOR CERTAIN EXTENDED BENEFITS REGARDING CONSTRUCTION OF PUBLIC WORKS 58. TAX LAW -BODY OF LAWS W/C CODIFIES ALL NATIONAL TAX LAWS INCLUDING INCOME, ESTATE, GIFT, EXCISE, STAMP AND OTHER TAXES 59.INTERNAL REVENUE LAW -INCLUDES ALL LAWS LEGISLATED PERTAINING TO THE NATL GOVT TAXES, W/C IS EMBODIED IN THE NIRC 60.INTERNAL REVENUE TAXES -TAXES IMPOSED BY THE LEGISLATIVE BODY OTHER THAN CUSTOMS DUTIES ON IMPORTS 61. PRINCIPLE OF PARI MATERIA -TAX LAWS S/B INTERPRETED W/ REFERENCE TO OTHER TAX LEGISLATIONS AND THEIR EFFECT AS A WHOLE MAY BE GIVEN CONSIDERATION 62. STATUTES -LAWS ENACTED AND ESTABLISHED BY THE WILL OF THE LEGISLATIVE DEPT. OF THE GOVT 63. EXECUTIVE ORDERS -REGULATIONS ISSUED BY THE PRESIDENT OR SOME ADMINISTRATIVE AUTHORITY UNDER HIS DIRECTION FOR THE PURPOSE OF INTERPRETING, IMPLEMENTING, OR GIVING ADMINISTRATIVE EFFECT TO A PROVISION OF THE CONSTITUTION OR SOME LAW OR TREATY

64. TAX TREATIES AND CONVENTIONS -INTERNATIONAL AGREEMENTS ENFORCEMENT AND EXEMPTIONS W/ FOREIGN COUNTRIES REGARDING TAX

65.REVENUE REGULATIONS -RULES OR ORDERS HAVING FORCE OF LAW ISSUED BY EXECUTIVE AUTHORITY OF THE GOVT TO ENSURE UNIFORM APPLICATION OF THE TAX LAW 66..REVENUE MEMORANDUM CIRCULARS -ADMINISTRATIVE RULINGS AND OPINIONS W/C ARE LESS GENERAL INTERPRETATIONS OF TAX LAWS BEING ISSUED FROM TIME TO TIME BY BIR COMMISSIONER OR BOC COMMISSIONER 67.BIR RULINGS -EXPRESSED OFFICIAL INTERPRETATION OF THE TAX LAWS AS APPLIED TO SPECIFIC TRANSACTIONS 68. JUDICIAL DECISIONS -DECISIONS FOR APPLICATION MADE CONCERNING TAX ISSUES BY THE PROPER COURTS EXERCISING JUDICIAL AUTHORITY OF COMPETENT JURISDICTION 69. LOCAL TAX ORDINANCES -TAX ORDINANCES ISSUED BY THE PROVINCE, CITY, MUNICIPALITY AND BARANGAY SUBJECT TO SUCH LIMITATIONS AS PROVIDED BY THE LG CODE AND REAL PROPERTY TAX CODE