The Fundamental (Inherent) Power of the State Police power No transfer of title, there is restraint on the

1. Police power – to promote the general welfare. It is the power to injurious use of property
regulate liberty, public health and morals.
Power of eminent There is transfer of the right to property, either
2. Eminent Domain – it is also called as expropriation. The power of domain ownership or a lesser right
the state to take the private property for public use upon payment
of just compensation.
3. Power of taxation – the power of the state to collect revenue for the
necessary expenses of government. e. As to Benefits Received
Taxation Equivalent of tax in the form of protection and
Similarities among the Fundamental Power of State benefit
1. They are inherent in the state.
2. They are independently exists of the constitution. Police power No direct and immediate benefit, only such as
may arise from the maintenance of a healthy
3. They are not only necessary but indispensable, as the state
economic standard of society (damnum absque
cannot continue or be effective unless it is able to exercise them. injuria or damage without injury)
4. They are methods by which the state interferes with private rights.
5. Each presupposes an equivalent compensation. Power of eminent Market value of the property taken from him
6. They are legislative in nature. domain
Differences among the Fundamental power

a. As to authority which exercises the power a. As to Amount of Imposition

Taxation Government only Taxation No limit

Police power Government only Police power Limited to the cost of the license and the
necessary expenses of police surveillance and
Power of eminent Government, public service companies and public regulation
domain utilities
Power of eminent No imposition, the owner is paid the fair market
domain value of his property

b. As to purpose
Taxation Support of government
b. As to Relationship to the Non-Impairment of Obligations Clause of
Police power Promote public welfare the Constitution
Power of eminent Public purpose Taxation Inferior to the clause
domain Police power Superior to the clause
Power of eminent Inferior to the clause
domain
c. As to Affected
Taxation Community or class of individuals
Police power Community or class of individuals
a. As to Compensation
Power of eminent Individuals as owner of a particular property Taxation For the protection and benefits received from the
domain government
Police power The maintenance of a good economic standard of
society
Power of eminent Just compensation for the property taken
d. As to Effect domain
Taxation Taxes become part of public funds
Matters within the Competence of the Legislature to Determine owner is resident or not

1. The subject matter or object to be taxed Tax on tangible State where it is physically located although the
2. The purpose of the tax so long as it is a public purpose personal properties owner resides in another jurisdiction (lexi rei sitae)
3. The amount or rate of the tax
4. The manner, means and agencies of collection of the tax. Tax on intangible Domicile of the owner (mobilia sequntur pesonam)
personal properties
Income Tax State where the taxpayer is a resident or citizen
Tax Legislative Function
1. Prescribe the general rules of taxation Business, Place where the business is done, or the
2. Selection of the object /subject to be taxed occupation and occupation is engaged in or the transaction took
3. Determination of the purpose for which taxes shall be imposed transaction tax place
4. Fixing the amount of the tax to be imposed
5. Fixing the amount of tax rate Gratuitous transfer State where the transferor is/was a citizen or
of property resident, or where the property is located

Tax Administrative Function

1. Valuation of property for taxation Factors to Consider in Determining Situs of Taxation

2. Equalization of assessment
1. Subject matter ( person, property, or activity)
3. Collection of tax
2. Nature of tax
Basic Principles of a Sound Tax System (Canons of Taxation) 3. Citizenship
4. Residence of the taxpayer
1. Fiscal adequacy – the source of revenues must be adequate to meet 5. Sources of income
government expenditures.
6. Place of exercise, business or occupation being taxed
2. Theoretical Justice/Equality on theoretical Justice – based on the
ability to pay (Equity) and proportionate character.
3. Administrative Feasibility – which means
a. The tax law must be clear and concise
b. Convenient
c. Just and effective administration

Situs of Taxation

Situs – place of taxation, the country that has the power and jurisdiction to
levy and collect the tax.

The Situs will help in determining the source of an income, whether from
within the Philippines or from abroad or sources outside the Philippines. For
taxpayers other than resident citizen and domestic corporation which are
taxable on incomes from all sources, this will serve to identify income
which are taxable in the Philippines.

Subject Situs
Poll tax on persons Residence of the person
Real property tax State where the property is located whether the
From foreign corporation (based on the ratio of the gross income of the foreign corporation for the preceding 3 years prior to
declaration of dividends derived from Philippine sources):

Philippine Gross income (3 years) x Dividend Income within =

Total Gross income (3 years)

***MANUFACTURING BUSINESS:
Computation of income within when independent factory or production price has not been established:
Taxable income X Value of property, within
2 Value of property, within and without
Add: Xxx
Taxable income X Gross sales, within
2 Gross sales, within and without Xxx
Income within Xxx

Deductions of Taxpayer Whose Taxable Income is From Philippine Sources Only

Gross income within xxx

Less: Expenses, interest, losses and other deductions properly allocated to income within Ratably portion of unallocated expenses, interest,
etc

Phil. Gross income x Unallocated expenses

Total Gross income (xxx)

Net Income xxx

Multiplicity of situs – income or intangible personal properties may be Constitutionality of double taxation. – there is no provision in the
subject to taxation in several taxing authorities constitution specifically prohibiting double taxation. It should, however,
whenever possible, be avoided.
Remedies against multiplicity of situs

1. Provisions of exemption Kinds of Double Taxation

2. Allowance of deduction or tax credit for foreign taxes 1. Direct double taxation. This is prohibited by the constitution as it
3. Treaties with other states violates the rule of uniformity
Double Taxation Uniformity - that all properties or other taxable subjects belonging to the
Definition. Taxing twice, for the 1same purpose, 2in the same year or period, same class be taxed at the same rate or measure.
2. Indirect double taxation.
3
the same subject by the same taxing jurisdiction, 4same authority.
 As to purpose License fee or permit – is a charged imposed under the police power for the
purpose of regulations
General, fiscal or revenue – tax imposed for the general purpose of the
government or to raise revenue for governmental needs Example- Sales Toll - is a sum of money collected for the use of something, generally
tax, Income tax, Donor’s tax , Estate tax applied to the consideration which is paid for the use of road, bridge or
the like, of a public nature.
Special or regulatory – tax imposed for a special purpose or to achieve
some social or economic ends. Example: Tariff or customs duties. Special assessment – is an enforced proportional contribution from owners of
land for special benefits resulting from public improvements.
As to authority imposing the tax/ As to Scope

National – tax imposed by the National Government. Example Income tax,

estate tax, donor’s tax, valued added tax, other percentage tax,
documentary stamp tax

Municipal or local – imposed by the municipal governments. Example Real

estate taxes, Municipal licenses, community tax

As to graduation or rate
Proportional – tax based on fixed percentage of the amount of property
income or other basis to be fixed. Example: VAT, Percentage Tax, and Real
Estate Tax
Progressive or Graduated Tax– the rate increase as the tax base
increases. Example: income tax, estate tax, donors tax

Regressive tax – the tax rate decreases as the tax base increases. The
Philippines is not practicing the Regressive tax.

Degressive tax – increase of rates is not proportionate to the increase of tax

base

Regressive System of Taxation

a. A regressive tax must not be confused with regressive system of
taxation. In a society where the majority of the people have low income, it
exists when there are more indirect taxes imposed that direct taxes
b. The low – income sector of the population as a whole buys more
consumption goods on which indirect taxes are collected. The burden of
indirect taxes rests more on them than on the more affluent groups.
c. Studies reveal that progressive elements of the income and other direct
taxes have not sufficiently offset the regressive effects of the indirect as a
whole.
 1. The power to compromise or abate. Except deficiency taxes 2. The power to assign or reassign internal revenue officers to
P500,000 or less and minor criminal violations (secretary of establishment where articles subject to excise tax are produced or
finance). kept.
constitutional grant.
Chief Officials of the BIR (Bureau of Internal Revenue) 2. Statutes or laws – This refers to the tax laws passed by the Congress.
Commissioner of internal The chief 3. Administrative rulings and regulation – Administrative rulings are
revenue the less general interpretation of tax laws which are issued from
Four deputy Commissioner 1. Legal and inspection group 5. time to time by the Commissioner of Internal Revenue. They are
2. Information systems group usually rendered on request of taxpayers to clarify certain
3. Operations group provisions of a tax law. They are commonly known as “ BIR
4. Resource management group Rulings”. Regulations are intended to clarify or explain the law and
carry into effect its general provisions by providing the details of
administration and procedure. However, in case of conflict between
a regulation and a statute, the latter shall prevail.
a. Revenue Regulations (RRs) are issuances signed by the
Secretary of Finance, upon recommendation of the
Characteristic of National Internal Revenue: Commissioner of Internal Revenue, that specify, prescribe
• Generally prospective in application or define rules and regulations for the effective
enforcement of the provisions of the National Internal
The following taxes, fees and charges are deemed to be National Revenue Code (NIRC) and related statutes.
Internal Revenue Taxes: b. Revenue Memorandum Orders (RMOs) are issuances
1. Income tax
that provide directives or instructions; prescribe guidelines;
2. Percentage tax
3. Value added tax and outline processes, operations, activities, workflows,
4. Estate tax methods and procedures necessary in the implementation
5. Excise tax of stated policies, goals, objectives, plans and programs of
6. Documentary stamp tax the Bureau in all areas of operations, except auditing.
7. Other taxes may be imposed and collected by the BIR c. Revenue Memorandum Rulings (RMRs) are rulings,
opinions and interpretations of the Commissioner of
National taxes imposed under Special Laws: Internal Revenue with respect to the provisions of the Tax
1. Custom duties Code and other tax laws, as applied to a specific set of
2. Sugar adjustment taxes facts, with or without established precedents, and which
3. Taxes on narcotic drugs the Commissioner may issue from time to time for the
4. Special educational fund tax purpose of providing taxpayers guidance on the tax
5. Science fund taxes consequences in specific situations. BIR Rulings, therefore,
6. Energy taxes on aircraft; motorized watercraft and electrical power cannot contravene duly issued RMRs; otherwise, the
consumption Rulings are null and void ab initio.
7. Travel tax
d. Revenue Memorandum Circular (RMCs) are issuances
8. Private motor vehicle tax
that publish pertinent and applicable portions, as well as
amplifications, of laws, rules, regulations and precedents
Sources of Tax Laws
issued by the BIR and other agencies/offices.
1. Constitution – The provisions of the constitution dealing on taxation
e. BIR Rulings are the official position of the Bureau to
merely regulate the exercise of the power of taxation. They are not
queries raised by taxpayers and other stakeholders relative
actually grants of the power, because of taxation can be exercised
to clarification and interpretation of tax laws.
by the government; the power of taxation is not a mere
 g. Congress May Authorize President to The congress may Authorize the President to Fix Tariff Rates, Import and Export Quotas, Tonnage and
Fix Certain Items Wharfage Dues and other Duties or Imposts
[Art. VI, Sec. 28 (2)];

e. Congress May Provide Incentives Congress May Provide for Incentives Including Tax Deductions to Encourage Private Participation in
Programs of Basic and Applied Scientific Research (Art. XIV, Sec. 11).

Impact of Taxes in Nation-Building

Taxes are use to support government in nation-building. It is levied for public purpose such as:
1.
2. Construction of roads and bridges 4. Assistance to victims of calamities.
3. Pensions to retired government employees and their widows and children. 5. Social welfare and health projects.

Organization of the BIR, BOC, LGU, BOI and PEZA

A. Authority to Conduct Inventory-Taking, a. That a person is retiring from business subject to tax,
Surveillance and to Prescribe Presumptive Gross or
Sales and Receipts b. Is intending to leave the Philippines or remove his
1.) The Commissioner may, at any time during the taxable property therefrom or to hide or conceal his
year, order inventory-taking of goods of any taxpayer property, or
as a basis for determining his internal revenue tax c. Is performing any act tending to obstruct the
liabilities, or may place the business operations of any proceedings for the collection of the tax for the
person, natural or juridical, under observation or past or current quarter or year or to render the
surveillance if there is reason to believe that such same totally or partly ineffective unless such
person is not declaring his correct income, sales or proceedings are begun immediately.
receipts for internal revenue tax purposes; 2.) The Commissioner shall send the taxpayer a notice of
his decision to terminate together with a request for
2.) The findings may be used as a basis for assessing the immediate payment of the tax for the period so
taxes for the other months or quarters of the same or declared terminated and the tax for the preceding
different taxable years and such assessment shall be year or quarter, or such portion thereof as may be
deemed prima facie correct; unpaid, and said taxes shall be due and payable
immediately and shall be subject to all penalties
3.) When it is found that a person has failed to issue
prescribed, unless paid within the time fixed in the
receipts and invoices in violation of the requirements of
demand made by the Commissioner.
the Tax Code, or when there is reason to believe that
the books of accounts and other records do not C. Authority to Prescribe Real Property Values
correctly reflect the declarations made or to be made in 1.) The Commissioner is hereby authorized to divide the
a return required to be filed under the provisions of the Philippines into different zones or areas and shall, upon
Tax Code, the Commissioner, after taking into account consultation with competent appraisers both from the
the sales, receipts, income or other taxable base of private and public sectors, determine the fair market
other persons engaged in similar business under similar value of real properties located in each zone or area.
situations or circumstances or after considering other
relevant information, may prescribe a minimum amount 2.) For purposes of computing any internal revenue tax,
of such gross receipts, sales and taxable base, and such the value of the property shall be, whichever is the
amount so prescribed shall be prima facie correct for higher of:
purposes of determining the internal revenue tax a. the fair market value as determined by the
liabilities of such persons. Commissioner; or
b. the fair market value as shown in the schedule of
B. Authority to Terminate Taxable Period values of the Provincial and City Assessors.
1.) The Commissioner shall declare the period of a
taxpayer terminated at any time when it shall
come to his knowledge:
Chief Officials of the The Bureau of Internal Revenue shall have a chief to be known as:
Bureau of Internal a. Commissioner of Internal Revenue, hereinafter referred to as the Commissioner, and
b. Four deputy commissioner
Revenue
1. Legal and inspection group
2. Information systems group
3. Operations group
4. Resources management group

II. Organization of the Bureau of Customs

Chief Officials of the Bureau The Bureau of Customs shall have:
of Customs
a. one chief and
b. four assistant chiefs, to be known respectively as the Commissioner of Customs.

Deputy The Bureau of Customs shall have five (5) Deputy Commissioners, each one to head:
Commissioners
a. Customs Revenue Collection Monitoring Group
b. Customs Assessment and Operations Coordinating Group
c. Intelligence and Enforcement Group
d. Internal Administration Group
e. Management System Technology Group
Appointment of the The Commissioner and the Deputy Commissioner of Customs shall be appointed by the President of the Philippines.
Commissioner and the
Deputy Commissioner

I. Local Tax Collecting Units

Scope of local taxes The provision under Local Government Taxation shall govern the exercise by provinces, cities, municipalities, and Barangays
of their taxing and other revenue-raising powers.

Local Taxing Authority The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by the Sanggunian of
the local government unit concerned through an appropriate ordinance.

Venue of Filling of Return All local taxes, fees, and charges shall be collected by the provincial, city, municipal, or Barangay treasurer, or their duly
authorized deputies.
Composition of PEZA Board PEZA was enacted under Republic Act 7916 and was passed by the House of Representatives and the Senate and
approved by former Philippine President Fidel V. Ramos on the 21 st of February, 1995.

As provided in the Special Economic Zone Act, the PEZA Board is:

a. chaired by the Secretary of the Department of Trade and Industry.

b. Vice-Chair is the Director General (Chief Executive Officer) of PEZA.
c. Members of the Board are Undersecretaries representing nine(9) key government Departments, to
ensure efficient coordination between PEZA and their respective Departments on matters pertaining to
investors’ operations inside the Special Economic Zones.

Incentives Offered by PEZA PEZA offers both fiscal and non-fiscal incentives as well as ready-to-occupy business locations in world-class
economic zones and IT parks or buildings.

Fiscal incentives include:

a. Income tax holiday for a certain number of years, which translates to 100% from corporate income tax;
b. Tax and duty-free importation of raw materials, capital equipment, machineries and spare parts;
c. exemption from wharfage dues and export tax, impost or fees;
d. VAT zero-rating of local purchases subject to compliance with BIR and PEZA requirements;
e. Exemption from payment of any and all local government imposts, fees, licenses or taxes; and
f. Exemption from expanded withholding tax.

Non-fiscal incentives, on the other hand include:

a. simplified import-export procedures, extended visa-facilitation assistance to foreign nationals
and
b. spouses and dependents; special visa multiple entry privileges;
c. and more.

END

MULTIPLE CHOICES (ADAPTED)- WITH SUGGESTED

ANSWERS

1. The process by which the sovereign raises income to defray the B. Penal in nature
expenses of the government is called (RPCPA) C. Political in nature
A. subsidy D. Generally prospective in application
B. tariff
C. taxation 3. In case of conflict between tax laws and generally accepted
D. tribute accounting principles (GAAP) (RPCPA)
A. Both tax laws and GAAP shall be enforced
2. One of the characteristics of internal revenue taxes is that they are B. GAAP shall prevail over tax laws
(RPCPA) C. Tax laws shall prevail over GAAP
A. Criminal in nature D. The issue shall be resolved by the court
 B. theoretical justice
4. Congress passed a sin tax law that increased tax rates on cigarettes C. legislative in character
by 1,000%. The law was thought to be sufficient to drive many D. administrative feasibility
cigarette companies out of business, and was questioned in court by
a cigarette company that would go online out of business because it 10. Although the power of taxation is basically legislative in character, it is not
would not be able to pay the increased tax. the function of the Congress to (BEQ)
The cigarette company is (BEQ) A. fix with certainty the amount of taxes
A. wring because taxes are the lifeblood of the government B. collect the tax levied under the law
C. identify who should collect the tax
B. wrong because the recognizes that the power to tax is the power to destroy
D. determine who should be subject to the tax
C. correct because no government can deprive a person of his livelihood
D. correct because Congress, in this case, exceeded the power to tax
11. Which statement gives the correct answer? That a feasibility
study needs or need to look into taxes of different political
5. Which statement below expresses the lifeblood theory?
subdivisions of government which may be alternative sites of the
A. The assessed taxes must be enforced by the government
business because (RPCPA)
B. The underlying basis of taxation is government necessity, for
A. Provinces, cities and municipalities must have uniform taxes between and
without taxation, a government can neither exist nor endure.
among themselves
C. The power of Taxation is an arbitrary method of exaction by those who are
B. The local taxes of a political subdivision need not be uniform with the local
in seat of power
taxes of another political subdivision.
D. The power of taxation is inherent power of the sovereign to
C. Businesses that are subject to national taxes are exempted from local
impose burdens upon subjects and objects within its jurisdiction of
business taxes.
the purpose of raising revenues.
D. Local businesses taxes may be credited against national business taxes.

6. The power to tax is the power to destroy. Is this always so?

12. The power of taxation is inherent in sovereignty being essential to
A. No. The executive branch may decide not to enforce a tax law which it
the existence of every government. Hence, even if not mentioned in
believes to be confiscatory.
the Constitution, the state can still exercise the power.
B. Yes. The tax collectors should enforce a tax law even it results to the
destruction of the property rights of taxpayer.
It is essentially a legislative function. Even in the absence of any
C. Yes. Tax laws should always be enforced because without taxes the very
constitutional provision, taxation power falls to Congress as part of the
existence of the State is endangered.
general power of lawmaking
D. No. The Supreme Court may nullify a tax law hence, property rights are not
A. False, False
affected.
B. False, True
C. True, True
7. The requirement of equality or theoretical justice is complied with if the D. True, False
tax is
A. progressive
B. regressive 13. Those restrictions on the exercise of the power of taxation
C. ad valorem that are found in the constitution or implied from its provisions
D. specific A. theoretical justice
B. legislative in character
C. inherent limitations
8. The power of taxation can only be exercised by the lawmaking body d. constitutional limitations
A. subject to constitutional and inherent limitations
B. equality or theoretical justice
14. Which of the following statements is not correct?
C. legislative in character
A. Taxes may be imposed to raise revenue or to provide disincentives to
D. inherent in sovereignty
certain activities within the state.
B. The state can have the power of taxation even if the Constitution does not
9. The President of the Philippines and the Prime Minster of Japan entered expressly give it the power to tax.
into an executive agreement in respect of a loan facility to the C. For the exercise of the power of taxation, the state can tax anything at any
Philippines from Japan whereby it was stipulated that interest on loans time.
granted by private Japanese financial institutions in the Philippines shall D. The power of taxation in the Philippine Constitution are grants of power and
not be subject to the Philippine income taxes. What basic characteristic not limitations on taxing powers.
of taxation has been violated by this agreement?
A. inherent limitation
 19. The Municipality of Monte Cristo has a ten hectare cemetery
consisting of four different cemeteries which are owned by different
entities. Which of the following is subject to real estate tax?
A. Cemetenterio Municipal del Monte Cristo – a government cemetery owned
15. Business College is a non-stock, non-profit educational institution.
by the municipality which was established for the purpose of using it as a
It owns a 5-hectare lot one-half of which is being used as its school
burial ground of the paupers in Monte Cristo.
campus while the other half is vacant. To cope with the increasing
B. Monte Cristo Catholic Cemetery – owned by the catholic church; payments
operating costs and to upgrade
are remitted to the catholic church and for the improvement of the
its facilities, BC plans to do the following effective January 1, 2016: (1)
cemetery.
rent out to a marketing firm the vacant portion of the lot; (2) increase
C. Last Trip Memorial Park – owned by a corporation where dividends are
tuition fees by 10% in accordance with government regulations; and (3)
distributed to the shareholders at the end of the year.
import 20 sets of computers for use in its computer courses. Which of the
D. Quita-Quita Memorial Park – owned by an association consisting one
following questions is answerable by “Yes”?
hundred different families; each family owns several square meters of lot;
A. Is BC subject to real estate tax on the one-half portion to be rented out to a
not a single portion is held for sale to either member or non-member of the
business establishment?
association.
B. Will it be exempt from income tax on its rental to the marketing firm?
C. Will the increase in tuition fees be subject to income tax if it results to a net 20. Lualhati Educational Inc., a stock educational institution organized
income from school operations? for profit, decided to lease for a commercial use a 1,500 sq. m. portion
D. Will it be subject to customs duties on the importation of the computers? of its school. The school actually, directly and exclusively use the rents
for the maintenance of its school’s building, including payment of
16. The Bicol School of Business and Arts, a proprietary educational janitorial services. Is the leased portion subject to real property tax?
institution which is offering primary, secondary and tertiary education, A. Yes, since Lualhati is a stock and for profit educational institution
is registered with and accredited by the Department of Education and B. No, since the school actually, directly and exclusively use the rents for
the Commission on Higher Education educational purposes
Which of the following is exempt from tax? What kind of tax? C. No, but it may be subject to income taxation on the rents it receives
A. The importation of laboratory equipment – from customs duties D. Yes, since the leased portion is not actually, directly and exclusively used
B. The school building being rented by the school – from real property tax for educational purposes
C. A portion of the school building being leased to a fast-food chain – from real
property tax 21. All appropriation, revenue or tariff bills, bills authorizing
D. The income from operation – from income tax increase of a public debt, bills of local application, and private bills
shall originate exclusively in the
17. Assuming that the school in the preceding number is a non- A. office of the president
stock non-profit educational institution. Which of the following is B. House of the representatives
subject to tax? What kind of tax? C. Senate
A. The school building owned by the school – from real estate tax D. Supreme Court
B. The school building being rented by the school – from real property tax
C. A portion of the school building being leased to fast food chain – from real 22. Which statement is wrong?
property tax A. Must originate from the House of Representatives and on which same bill
D. The income from operation – from income tax the Senate may propose amendments.
B. May originate from the senate and on which same bill the House of
18. The head priest of the religious sect Tres Personas Solo Dios, as Representatives may propose amendments.
the corporation sole, rented a 5,000 sq. m. lot registered its name for C. May have a house version and senate version approved separately
use as school site of a school organized for profit. The sect used the D. May be recommended by the president to Congress
rentals for the support and upkeep of its priests. The rented lot is
(BEQ) 23. Congressman Luis R. Villafuerte of the 3rd District of Camarines Sur and
A. not exempt from real property taxes because the user is organized for profit Senator Juan Ponce Enrile sponsored a bill
B. exempt from real property taxes since it is actually, directly and exclusively in the House of Representatives and the Senate, respectively, increasing
used for religious purposes the personal exemptions of individual taxpayers as well as granting tax
C. not exempt from real property taxes since it is the rent, not the land, that is exemptions to minimum wage earners.
used for religious purposes Which of the following is correct?
D. exempt from real property taxes since it is actually, directly and exclusively A. The Senate bill should be discussed ahead of the House bill
used for educational purposes B. The Senate and House bill may be discussed at the same time in both
 houses C. CPA’s income tax
C. The house bill should be discussed ahead of the senate bill D. Value-Added tax
D. No priority each bill can be discussed ahead of the other.

24. One of the characteristics of a tax is that

A. It is generally base on a contract 31. A tax that is imposed upon a person who is directly bound to pay it—
B. It is generally payable in money A. direct tax
C. It is generally assignable B. indirect tax
D. Optional C. excise tax
D. poll tax
25. XYZ Corporation manufactures glass panels and is almost at the point of
insolvency. It has no more cash and all it 32. One is not a direct tax
has are unsold glass panels. It received an assessment from the BIR for A. immigration tax
deficiency income taxes. It wants to pay but due to lack of cash, it seeks B. transfer tax
permission to pay in kind with glass panels. Should the BIR grant the C. income tax
permission? D. contractor’s tax
A. It should grant the permission to make payment convenient to taxpayers
B. It should not grant permission because a tax is generally a pecuniary 33. The basic community tax of P5.00 of an individual is a (an)
burden A. property tax
C. It should grant permission; otherwise, XYZ Corporation would not be able to B. direct tax
pay. C. national tax
D. It should not grant permission because the government does not have the D. ad valorem tax
storage facilities for glass panels.
34. Which of the following statements is wrong?
26. Which is not an essential characteristic of tax? A. Non-payment of additional community tax is a ground for imprisonment
A. Unlimited as to amount B. In case of conflict between a tax law and a revenue regulation, the latter
B. Payable in money shall prevail
C. Proportionate in Character C. A revenue regulation can expand the provision of law by imposing a
D. Regular in Payment penalty even if the law that it implements does not impose a penalty
D. Revenue bills shall originate exclusively from the Senate
27. No person shall be imposed for non-payment of
A. property tax
35. S
B. excise tax
tatem
C. poll tax
ent 1:
D. income tax
The
value
28. An example of a property tax is added
A. additional community tax on income of real properties tax is
B. real estate tax on real properties prope
C. estate tax on inherited personal as well as real properties rty
D. donor’s tax on donation of property tax
State
29. Which of the following is not an example of excise tax? ment
A. transfer tax 2:
B. Sales tax The
C. Real property tax estate
D. Income tax tax is
a
30. Sharon, CPA has just obtained her CPA license. Before she can lawfully direct
pursue her occupation, she should pay tax
A. Professional tax A. the two statements are correct
B. Percentage tax B. the two statements are wrong
C. statement 1 is correct; statement 2 is wrong B. Compensation for the use of another’s property
D. statement 1 is wrong; statement 2 is correct C. Maybe imposed by private individuals
D. Levied for the support of the government

43. This is A demand of ownership

A. License fee
B. Tax
C. Toll
D. Franchise
36. In this power of the State, the person who is parting with his money or
property is presumed to receive a benefit
A. Taxation 44. One of the following is not a characteristic of a special assessment/levy
B. Police power A. It has special application only to a particular time and place.
C. Eminent domain B. It is levied only on land
D. Forfeiture power C. May be levied on business
D. Based wholly on benefits
37. Which of the following inherent powers of the
government is inferior to the non-impairment clause of the 45. Which statement is wrong?
constitution? A. A tax is a demand of sovereignty
A. Taxation B. A toll is demand of ownership
B. Police power C. A special levy is a tax
C. Eminent domain D. Customs duty is a tax
D. None
46. Which of the following is not a characteristic of debt?
38. Tax as distinguished from license fee A. Generally arises from contract
A. Non-payment does not necessarily render the business illegal B. Payable only in money
B. a regulatory measure C. Assignable
C. Imposed in the exercise of police power D. Imprisonment is not a sanction for non-payment
D. Limited to cover cost of regulation
47. All funds or income derived by the government om any other source
39. The distinction of a tax from permit or license fee is that a tax is A. Tax
A. Imposed for regulation B. Customs duty
B. One which involves exercise of police power C. Revenue
C. One in which there is generally no limit on the amount that may be imposed D. Ordinary revenue
D. Answer not given
48. It comprises all kinds of funds including taxes
40. Which of the following terms describes this statement “that the
state has compensate discretion on the amount to be imposed after A. License fee
distinguishing between a useful and non-useful activity”? B. Income
A. Tax C. Customs duty
B. License fee
D. Revenue
C. Toll
D. Customs duty
49. Which of the following constitute objectionable double taxation?
A. A license fee and a tax imposed on the same business or occupation for
41. Which of the following is not a distinction or similarity of license fee from
selling the same articles.
tax?
B. A tax imposed both on the occupation of fishing and on fishpond operation
A. Imposed for regulation
C. Persons engaged in leasing or selling real property are subject to real
B. Involves exercise of police power
estate dealers’ tax and their sales are also subject to 10% VAT
C. Nonpayment makes the business illegal
D. A tax of 1% is imposed for bank reserve deficiency while a penalty of
D. Legal compensation or reward of an officer for services
1/10 of 1% is also imposed as a consequence of such reserve.

42. All of the following, except one, are characteristics of a toll

50. Which of the following is not an element of direct duplicate
A. Demand of proprietorship
 taxation which is violative of the equal protection and uniformity n
clauses in the constitution? t
A. Same property is taxed twice s
B. Same taxing authority C. Both statements
C. Same amount
D. Same purpose 52. Which of the following are not usually imposed when there is tax
amnesty?

A. Civil criminal and administrative penalties

51. Statement 1: The grant of a tax amnesty must be construed B. Civil and criminal penalties
against the taxpayer and liberally in favor of the taxing authority C. Civil and administrative penalties
Statement 2: A tax exemption is a personal privilege which can be D. Criminal and administrative penalties
assigned or transferred by the grantee unless disallowed in the law
granting tax exemption. 53. Statement 1: A BIR Ruling issued by a Commissioner of Internal
Which of the above statements is true? Revenue which grants tax exemption would create a perpetual
A. Statement 1 only exemption in favor of the taxpayer.
B. S Statement 2: A tax exemption may be withdrawn anytime at the pleasure of
t the taxing authority.
a A. Statement 1 only
t B. Statements 1 & 2
e C. Statement 2 only
m D. Neither of them
e
n
54. It is also known as tax dodging
t
A. Tax exemption
B. Tax evasion
2 C. Tax avoidance
D. Transformation
o
n 55. It is otherwise known as tax minimization
l A. Tax exemption
y B. Tax evasion
C. Tax avoidance
D. Transformation
C
,
56. Which of the following statements constitute tax avoidance?
A. Deliberate failure of a taxpayer to pay the taxes due to the government
N B. Connotes fraud through the use of pretenses and forbidden devices to
e lessen or defeat taxes
i C. Punishable by law
t D. Maybe contrary to the intent of the legislature but nevertheless do not
h violate the law.
e
r 57. Which of the following fats pertain/s to tax avoidance?
I. After studying his tax problems, Alicante decided to withdraw his bank
s deposits and to buy tax exempt securities
t II. B who wishes to avoid the payment of taxes assessable on the
a transaction made it appear on the deed of dale that the selling price was
t only P200,000 although it was actually P300,000
e III. Refraining from engaging in activities subject to tax
m IV. Clavillas Corp. sold its vacant lot to Royal Match, Inc. when the real
e intention was to donate it to the latter.
A. I only D. Vanishing deduction
B. I and II
C. I and IV
D. I, III and IV

58. In case of ambiguity, tax laws shall be interpreted

A. Strictly against the taxpayer
B. Strictly against the government
C. Liberally in favor of the taxpayer
D. Liberally against the government

134. Which of the following is not correct with respect to a taxpayer’s suit?
A. It must pertain to illegal disbursement of public funds
B. It pertains to the passage of a seemingly unconstitutional measure
C. The funds sought to be disbursed must have been raised through
D. It must not refer to an enactment of a tax law

135. Anne Lapada, a student activist, wants to impugn the validity of a

tax on text messages. Aside from claiming that the law adversely affects
her since she sends messages by text, what may she allege that would
strengthen her claim to the right to file a taxpayer’s suit?
A. That she is entitled to the return of the taxes collected from her on case the
court nullifies the tax measure
B. That the tax money is being extracted and spent in violation of
the constitutionally guaranteed right to freedom of communication
C. That she is filing the case in behalf of a substantial number of taxpayers
D. That text messages are an important part of the lives of the people she
represents.

136. A real property tax is payable

A. In the city or municipality where the owner is domiciled
B. in the place where the property is located
C. Anywhere in the Philippines
D. In the revenue office where the property is located

137. Income tax on compensation income may accrue

A. In the country of residence of the income earner
B. In the country where the service has been rendered
C. Neither in the residence of the income earner nor in the country where the
service has been rendered
D. Both in the country where the income earner is a resident and in the
country where the service has been earned.

138. Which of the following is not a remedy against indirect double taxation?
A. Reciprocity provisions
B. Tax credit
C. Tax exemptions