Situs of Taxation
1. Income Tax –paid either in the place where the income is earned or the place of
residence of the taxpayer
2. Real Property Tax – paid where the property is situated
3. Personal Property Tax – similar to real property tax, taxes on intangible properties are
paid where it is situated. Situs is at the place of the owner’s permanent residence
4. Business and Occupation Tax – paid in the place where the business or occupation is
located
Inherent Limitations of Taxation
1. Tax revenues must be used for public purpose
2. There should be proper delegation of legislative power to tax
3. Government entities are exempted
4. There are territorial jurisdictions
5. Observance of International Law
Constitutional Limitations
1. Observance of due process of law
2. Equal protection of law
3. Uniformity and Equity rule
4. Non-imprisonment for non-payment of poll tax
5. No appropriation for religious purposes
Attributed of Tax Exemption
1. Contract – the grant of tax exemption is usually contained in the charter of the
corporation to which the exemption is granted.
2. Public policy - to encourage new and necessary industries, or to foster charitable
institutions.
3. Reciprocity – to reduce the rigors of international double or multiple taxation, tax
exemptions maybe granted in treaties. A tax exemption is a personal privilege of the
grantee and therefore not assignable; it is generally revocable by the government,
unless founded on contract and must not be discriminatory.
Classification of Tax Exemption
As to Form:
1. Express - Expressly granted by the Constitution, statutes, treaties, franchises or similar
legislative acts.
2. Implied - When particular persons, properties, or exercise are deemed exempt as they
fall outside the scope of the taxing provision itself.
3. Contractual - Are those agreed to by the taxing authority in contract lawfully entered
into by them under enabling laws.
As to Basis:
1. Constitutional Exemptions – Immunities from taxation which originate from the
Constitution.
2. Statutory Exemptions – those which emanate from legislation.
As to Extent:
1. Total Exemption – connotes absolute immunity.
2. Partial Exemption – one where a collection of a part of the tax is dispensed with.
Characteristics of Taxes
1. Forced Contribution
2. Exacted Pursuant to legislative authority in the exercise of the taxing power
3. Proportionate in character
4. Payable in money
5. Imposed for the purpose of raising revenue
6. Used for public purpose
Canons of Taxation
1. Fiscal Adequacy – revenue raised must be sufficient to meet government/public
expenditures and other public needs.
2. Administrative Feasibility – tax laws must be clear and concise; capable of effective and
efficient enforcement; convenient as to time and manner of payment, must not obstruct
business growth and economic development.
3. Theoretical Justice – must take into consideration the taxpayer’s ability to pay
Tax VS Toll
TAX TOLL
Definition Demand of Sovereignty for Amount charged for the cost
raising revenue and maintenance of property
use
Purpose For support of the As compensation for use of
government another's property
Determination of mount Determined by the sovereign Determined by the cost of
the property or improvement
Who may impose Imposed by the State Imposed by the government
or private individual
Tax VS Penalty
TAX PENALTY
Definition Enforced proportional Sanction imposed for
contributions from persons violation of laws
and property
Purpose For revenue To regulate conduct
Authority Imposed only by the Imposed either by the
government government or by private
individuals or entities
Tax VS Special Assessment
Tax Special Assessment
Definition Demand of Sovereignty for Special levy on lands
raising revenue comprised within the
territorial jurisdiction of a
Province, City or Municipality
specially benefitted by public
works, projects,
improvements funded by the
LGU concerned
Subject Imposed on lands, persons, Imposed on land only
property, income, business,
etc.
Liability Personal Non-personal
Basis Based on necessity (and Based solely on benefits
partially on benefits)
Application General Special to a particular time
and place
Tax VS Custom Duties
Tax Custom Duties
Purpose Raising revenue Controlling the flow of the
goods of the country
Broadness Broader term Tariff or tax on the
importation (usually) or
exportation (unusually) of
goods
Tax VS Debt
Tax Debt
Basis Law Contract/ judgment
Effect of failure to pay Civil and criminal liability Civil liability only (No
imprisonment)
Mode of payment Money Money, property or service
Assignability No Yes
Subjectivity to No Yes
Compensation/ Set-off
Interest Yes, if deficient or General Rule: no interest,
delinquent. unless expressly stipulated or
after demand is made
Authority Public authority Private individuals
Prescription Determined by the Tax Code Determined by the Civil Code
