Chapter 1 of income taxation for non-BSA by Ampongan

1. Tax Law in the
Philippines
Tax 111 – Income Taxation
Ferdinand C. Importado
CPA, MBA

2. Objectives
• Identify the purpose of enacting a tax law.
• Illustrate the steps in the legislative
process.
• Explain the sources of tax laws.
• Discuss the instances when taxation
favors the government and strictly against
the taxpayer.

3. Objective of enacting tax law
The primary objective of the government in
enacting a tax law is to raise revenues for
government operations.

4. Steps in the legislative process
First
reading
Second
reading
Committee on Ways and Means

5. Steps in the legislative process
Public hearing Difference Senate 2nd reading

6. Steps in the legislative process
Bicameral
Reconciliation
Senate 3rd
reading
Senate approval
Tax law

7. Sources of tax law
• Constitution
• Statutory enactments
• Administrative rulings and regulations
• Judicial decisions

8. Sources of tax law
Constitution
• The power of taxation is merely regulated by
the Constitution.
• Taxation can be exercised even without the
Constitution.
Statutory enactments
• Tax laws passed by the Congress.
• National Internal Revenue Code (NIRC).

9. Sources of tax law
Administrative rulings
• Administrative rulings refers to less
general interpretation of tax laws issued
on a timely basis by the Commissioner of
the Bureau of Internal Revenue (BIR).
• Issued by request of the taxpayer to clarify
certain provisions of a tax law.
• BIR Rulings.

10. Sources of tax law
Administrative regulations
• These are intended to clarify or explain the
law and carry into effect its general
provisions by providing details of
administration and procedure.
• Issued by the Secretary of Finance upon
the recommendation of the Commissioner
of the BIR.
• Revenue Regulations.

11. Sources of tax law
Judicial decisions
• These refers to the decisions of the Court
of Tax appeals and the Supreme Court
applying or interpreting tax laws.
• Part of the jurisprudence on taxation and
the legal system of the Philippines.
• Appealable to the Supreme Court.

12. Interpretation of tax laws
• Always in favor of the taxpayer and against
the government except:
– When the statutes granting exemptions provides
for liberal construction thereof;
– Exemptions in favor of the government, political
subdivisions or instrumentalities;
– Exemptions in favor of exemptees traditionally
exempt such as churches and educational
institution; and
– Special circumstances of persons such as the
granting of exemptions to victims of calamities.