TAXATION
UNIT CLASSIFICATION OF TAXES
4
Taxes can be classified based on various criteria:
1. Scope:
• National Taxes: Imposed by the national government. Examples include income tax, estate tax,
donor's tax, value-added tax (VAT), excise tax, customs duties, and documentary stamp tax.
• Local Taxes: Imposed by local government units. Examples include community tax, municipal license
taxes, professional tax, and real estate tax.
2. Subject Matter or Object:
• Personal, Poll, or Capitation Taxes: Imposed on individuals based on their residence, regardless of
property or occupation. Example: Community tax.
• Property Taxes: Imposed on real or personal property, often based on value. Example: Real estate
tax.
• Excise Taxes: Taxes on the exercise of certain rights or privileges, such as professional tax, income
tax, estate tax, donor's tax, and VAT.
3. Burden of Taxation:
• Direct Taxes: Demanded from the person who also bears the burden. Examples include community
tax, income tax, transfer taxes, traveler's tax, and corporate income tax.
• Indirect Taxes: The burden can be shifted to another person. Examples include VAT, customs duties,
amusement tax, excise tax, and percentage taxes.
4. Determination of Amount:
• Specific Taxes: Fixed amount based on head, number, weight, or measurement. Example: Excise
tax on cigarettes.
• Ad Valorem Taxes: Based on a fixed proportion of the value of the property. Examples: Customs
duties, real estate tax, and excise tax on luxury goods.
5. Purpose:
• General, Fiscal, or Revenue Taxes: Imposed for the general purpose of raising revenue for
government expenditures. Examples: Income tax, VAT, transfer taxes.
• Special, Sumptuary, or Regulatory Taxes: Imposed for specific purposes, such as regulating
economic behavior or promoting social objectives. Examples: Customs duties, tariffs, excise taxes.
• Compensatory Taxes: Imposed to equitably distribute wealth and income.
6. Graduation or Rate:
• Proportional or Flat Rate: A fixed percentage of the tax base. Examples: VAT, real estate tax.
• Progressive or Graduated: Tax rate increases as the tax base increases. Examples: Income tax,
estate tax, donor's tax.
• Regressive: Tax rate decreases as the tax base increases (not practiced in the Philippines).
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TAXATION
• Digressive: Tax rate decreases on amounts below a certain threshold.
• Mixed: A combination of different tax rates.
II. Other Charges and Fees
• Penalty: A sanction imposed for violating tax laws.
• Revenue: All funds or income derived by the government, including taxes and other sources.
• Debt: An obligation to pay or render service.
• Toll: A charge for using someone else's property.
• Licensed Fee: A contribution imposed by the government to regulate businesses or occupations.
• Special Assessment: A charge collected by the government for specific public works benefits.
• Custom Duties: Taxes imposed on imported goods.
• Subsidy: Financial aid granted by the government to individuals or businesses.
• Tariff: A schedule of rates, duties, or taxes imposed on imported goods.
• Margin Fee: A tax on foreign exchange to curb excessive demand for foreign currency.
III. Tax Law
• Body of Laws: The Tax Code (Republic Act 8424) codifies Philippine national tax laws, including
income tax, estate tax, donor's tax, excise tax, stamp tax, and other taxes.
• Internal Revenue Law: Encompasses laws related to national government taxes administered by the
Bureau of Internal Revenue (BIR).
• Internal Revenue Taxes: Taxes imposed by the legislative body other than customs duties.
• Nature of Tax Laws: Generally civil in nature, not political or penal.
• Rules for Interpretation and Application:
o Tax statutes must be enforced as written.
o Imposition of tax burdens is not presumed.
o Doubts are resolved in favor of the taxpayer.
o Tax exemptions are strictly construed against the taxpayer.
o Tax laws are applied prospectively.
o Tax laws prevail over civil laws.
IV. Sources of Tax Laws
• Constitution of the Philippines: Provides limitations and regulations on taxation power.
• National Internal Revenue Code (NIRC): The primary source of Philippine tax laws.
• Judicial Decisions: Supreme Court and Court of Tax Appeals rulings on tax matters.
• Executive Orders: Regulations issued by the President to interpret or implement tax laws.
• Tax Treaties and Conventions: Agreements with foreign countries regarding tax enforcement and
exemptions.
• Revenue Regulations: Rules issued by the Department of Finance to implement tax laws.
• BIR Revenue Memorandum Circulars and Bureau of Customs Memorandum Orders:
Administrative rulings on tax interpretation.
• BIR Rulings: Official interpretations of tax laws applied to specific transactions.
• Local Tax Ordinances: Tax ordinances issued by local government units.
Note: These are general outlines. Specific tax laws, rates, and regulations may vary. Refer to the latest
updates and consult with tax professionals for accurate and up-to-date information.
References:
Books:
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TAXATION
• Fundamentals of Taxation by Jose Maria R. Cruz and Ma. Lourdes A. Cruz
• Philippine Taxation: Principles and Applications by Emmanuel B. Reyes
• Taxation: Principles and Practice by Vicente G. Rufino
Websites:
• Bureau of Internal Revenue (BIR): [Link]
• Department of Finance (DOF): [Link]
• Supreme Court of the Philippines: [Link]
• Court of Tax Appeals (CTA):
[Link]
• Tax Law Center: [Link]
PHILIPPINE WOMEN’S UNIVERSITY CDCEC - BATAAN
