TAX FORECAST LAST MINUTE LECTURE SAN BEDA COLLEGE 12 October 2013

GENERAL PRINCIPLES 1. Scope of Taxation (Tio vs. VRB) 2. Judicial Non-interference on taxing powers of government 3. Two-fold nature of taxation a. Inherent in nature b. Legislative in character i. Role of BIR Regulations/Rulings in interpreting and clarifying the legal provisions of a tax statute (firemans fund assurance corp case). 1. Persuasive nature of Rulings before the Courts ii. Important: FLEXIBLE TARIFF CLAUSE iii. Scope of power of legislature in imposing tax 4. Theories a. Necessity b. Benefits protection c. Reciprocity principle d. Ability to pay e. Lifeblood 5. No injunction/estoppel rule a. Judicial Review b. CIR vs. Citytrust failure on the part of the government to assess a taxpayer within the proper period c. Prohibition against offsetting taxes with other debts/obligations 6. Limitations a. Inherent Limits i. Public purpose (Planters Product vs. Fertiphil Corp public purpose may also mean social justice) ii. Non-delegability (note of the exceptions) iii. Rule on taxability of government (IMPORTANT TO REMEMBER: Mactan Cebu Airport Case; Manila International Airport Authority) 1. Real Property owned by government as exempt from tax iv. Situs of Taxation v. International Comity b. Constitutional Limitations i. Due Process; Equal Protection of Law ii. Uniformity 1. Ormoc City Case iii. Non-impairment of contracts 1. Rule on Franchises and withdrawal thereof iv. Free Exercise of Religion/Non-establishment clause v. Exemption from tax of charitable, religious, et al. 1. Lung Center Case exclusive use of property for nonprofit purposes vi. Exemption of Non-profit, non-stock educational institutions

1. CTA Case: Are cafeterias in Ateneo operated by concessionaires subject to tax? 2. Taxability of proprietary educational institutions and hospitals a. IMPORTANT: St. Lukes vs. CIR (2012) 7. Purpose a. Primary: Raise revenue b. Non-revenue purposes i. NOTE: Taxation as a means of expropriation (Central Luzon Drug Store case) ii. Regulatory power (e.g. Sin-taxes on alcohol and cigarettes) 8. Basic Principles of a Sound Tax system a. Fiscal adequacy b. Administrative feasibility c. Theoretical justice taxes should be just, uniform, fair, and reasonable i. Tolentino v. Sec. Finance on regressive taxation 9. Classification of Taxes a. Direct vs. Indirect Tax i. On impact of taxation and the incidence of taxation b. Ad Valorem Tax 10. Prescription of Taxes 11. Double Taxation a. How to avoid double taxation INCOME TAXATION 12. Semi Schedular System of taxation 13. Income a. Realization test (No. 8 daw sa bar) b. All Events Test (Filipinas Synthetic Fiber vs. CA; CIR vs. Isabela Cultural Corporation) c. Passive income i. Withholding tax on passive income 14. Exclusions from Income a. Proceeds on Life Insurance b. Compensation for injury or sickness c. Retirement benefits: Rules d. Election contributions 15. Fringe Benefits and De Minimis Benefits (Basic Rules) 16. Deductions a. Tax Benefit Rule on Bad Debts 17. Self-assessment system 18. Classification of Taxpayers a. Individuals i. Lecturer: How do you classify the NBA players who played in MOA? b. Corporations i. Is MCIT a valid law (CREBA case). 19. Important Tax credit on income taxed abroad 20. Net Capital Loss Carry Over vs. NOLCO 21. IMPORTANT: Bardahl Case on Improperly Accumulated Income Tax

a. Immediacy test 22. Rule on Disguised dividends 23. Rule on Inter-corporate dividends 24. Capital Transactions a. Stocks i. Listed in an exchange ii. Unlisted b. Real Property i. Rule on availment of exemption from payment of capital gains tax c. Other capital assets 25. Exemptions (See: RA 9504) a. Optional Standard Deductions b. 50,000 personal exemptions 26. Deductibility of premiums paid by a company in insuring the life of an employee wherein the benefits are paid: a. To the company b. To the spouse, ascendant, descendant, et al. 27. Dimaampao Potential Bar Question: Tax Situs of Interest Income (Sec. 42) 28. Non-deductible expenses/capital expenditures ESTATE and DONORS TAX 29. Important to Remember: Citizenship and Residency Principle 30. Mobilia Sequntuur Personam a. Exception: Rule on shares of a domestic corporation 31. Exempted Donations 32. Transfers in Contemplation of Death VALUE ADDED TAX 33. What do you mean by: In the ordinary course of trade or business. 34. Distinction between zero rate vs. exempt transactions 35. Automatically Zero Rated vs. Effectively Zero Rated transactions 36. Transactions deemed sales 37. Destination Principle / Cross-Border Doctrine 38. Compliance Requirements 39. Forward Shifting of tax burden 40. Renato Diaz vs. Secretary of Finance (On tollway rates) REMEDIES and CTA JURISDICTION 41. Power to examine and assess on the basis of the best evidence available 42. Motion for Reconsideration vs. Motion for reinvestigation 43. Procedure for Assessment and collection a. When is PAN not necessary? b. Options of the taxpayer in case of adverse decision or inaction of the CIR 44. Criminal Action a. Requirement of CIR approval 45. CTA Jurisdiction a. IMPORTANT: When can an injunction be issued? REQUISITES b. Can you introduce evidence for the first time on appeal?

LOCAL TAX 46. Fundamental Principles of Local Taxation a. Doctrine of Pre-emption 47. Taxes that may be imposed a. Provinces b. Municipalities c. Cities 48. Residual Proper of taxation (Sec. 186 LGC) 49. Sec. 150: Rules on Situs of Local Taxation 50. Sec. 193, LGC: Withdrawal of tax exemptions a. Smart Telecom Case 51. Remedies of Taxpayer a. Payment under protest b. Refund under the Local Government Code vs. Refund under Tax Code REAL PROPERTY TAX 52. Fundamental Principles 53. Taxability of Real Property by Destination 54. Definition: a. Fair Market Value b. Assessed Value 55. Other Levies on Real Property a. Special Education Fund b. Idle Land 56. Remedies of Taxpayer TARIFF AND CUSTOMS CODE 57. Duties imposable 58. Remedial Procedures a. Payment under protest b. Rule on Automatic Review by the Commissioner of Secretary of Finance c. Doctrine of Primary Jurisdiction d. Rules on Searches and Seizures