(Mindanao) Cagayan De Oro City (088) 3093073 * Davao City (082) 225008 «= (Mindanao) Cagayan De Oro City (088) 3093073 * Davao City (082) 250049 TAXATION TAX-2101. BASIC PRINCIPLES OF TAXATION CPAREVIEW s reves ome” MAY 2016 LECTURE NOTES A. Define Taxation As a state power: Taxation refers to the inherent Power of a sovereign state acting through its legistature to impose a proportionate burden 1 upon Persons, property, rights or transaction to raise revenue to support government expenditure and as a tool for general and economic welfare (PUBLIC PURPOSE), AS a process: Taxation refers to the act of imposing a tax by a sovereign state to raise revenue for the se and support of the government. What are the PURPOSES of taxation? A. Primary Purpose-raise revenue B. Secondary Purposes Where does the power of taxation proceed from (THEORY)? What is the BASIS of taxation? Give the steps/stages involved under taxation system, (LAC) What |s SCOPE of the power of taxation? (CUPS) What are limitations on the power of taxation? Inherent limitations - those that restrict the power of ‘taxation even though not provided in the Constitution. (PENIS-D) Constitutional Limitations ~ Those that limit power of taxation as embodied in the constitution... .< Due Process of Law (Equality) Uniformity and equity rule ‘No person shali be imprisoned for debt or lon-payment of a poll tax Charitable institutions, churches, and personages, or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt’ from taxation (real Property tax) No law granting any tax exemption shall be passed without the concurrence of @ majority of all the members of Congress 'No law impairing the obligation of contracts * shall be’ passed (Bilateral, Unilateral, Franchise) No law ‘shall be passed abridging the freedom of speech, of expression, or of ‘the press No law shall be made respecting an establishment of religion or prohibiting the free exercise thereof All appropriation, revenue or tariff bills shall originate exclusively in the House ofRepresentatives, but the Senate may ropose or concur with amendments ‘The Congress, may, by law, authorize the President to fix within specified limits, and Subject to such limitations and restrictions as it may Impose, tariff rates, Import and export quotas, tonnage and whartage dues, and other dutles or Imposts within the framework of the national development program of the Government ‘The Supreme Court shall have the power to review, revise, reverse, modify, or affirm on ‘appeal or certiorari as the law or the Rules of id Of Court may provide, final judgments and orders of lower courts in all cases involving the legality of any tax, impost, assessment, fr toll, or any penalty imposéd in relation thereto + All revenues and assets of non-stock, Non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties + The President shall have the power to veto any particular item or items in an appropriation, revenue or tariff bill, but the veto shall not affect the item or ‘items to which he does not object, + No public money or property shall be appropriated, applied, paid, or employed, Girectly or indirectly for the ‘use, benefit, of Support of any sect, church, denomination, Sectarian institution, or system of religion, or of nay priest, preacher, minister, or other feligious teacher or dignitary is assigned to the armed forces or to any penal institution, of government orphanage or leprosarium (Separation of Church and the State) ‘+All money collected or any tax levied for a Special purpose shali be treated as a ..Special fund and paid out for such purpose only. If the purpose for which a special fund Was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the government HH. What are the three inherent powers of the state? Give the similarities and distinctions of Taxation, Police Power and Power of Eminent Domain. ‘Three inherent powers of a state: 1. Power of taxation ~ refer to letter A 2. Power of Eminent Domain - it refers to the Inherent power of a sovereign state to take private property for public use upon payment of a just compensation. 3. Police Power ~ It refers to the inherent power of @ sovereign state to enact laws to promote Public health, public safety, public morals and the commen good. SIMILARITIES: (GIME) 1. They are indispensable to government existence. ‘They can exist independent of the constitution. They are means by which the state interferes with private rights and properties. ‘They are generally exercised by the legisiature. ‘They contemplate an equivalent compensation or benefit.———E—E—————————————E—————&E-_ (Poe of oinaton Taxation Police Power Bee [Berea Aton Government Spartan overntnant oF BrNEKE : ; ormses parses Taverns and auppart oF Bropary i taken for | Bopery stake Tor PUBTE reese ihe governmant poole use vse Persans affected ‘Community or class of | Community or class of ‘Owner of the property individuals. | individuals. ‘aunt OF postion Tata Satie Gover the] No mnpostion, the owner | osts of regulation | paid the far market value of L a omer RGlaTGRSHTG Wi the) Inferior We Won | “Superior tothe WNon- | Superior and may overide Constitution Impairment Clause” of | Impairment Clause” of | the "Non-Impairment _ the Constitution 1e Constitution, Clause” of the Constitution Constitution and | ‘Public purpose Public purpose and just | Cito |__Inherent Limitations _ SOURCES of Tax Laws (STEAL~JORC) compensation —_| Ghar collateral motives behind ft, the amount to be raised, or the persons, property or other privileges. 1. 1987 Constitution to be taxed, 2. Tax Statutes N. Define TAXES 3. Executive Orders ‘Taxes are enforced proportional contributions levied 4. Local Tax Ordinances by the state for the support of the government. 5. Tax Treaties (©. What are the essential characteristics, requisites or 6. Judicial Decisions elements of a tax? (LEGS + PP) 7. Rules and Regulations (BIR, BOC, DOF) a. Atax is an enforced contribution. 8, Administrative Interpretations and b. It is proportionate in character. 9. Opinions of tax officials ©. It iS imposed pursuant to a legislative K, Nature and Characteristics offax Laws authority. 1. Tax Laws are prospective, in general G.I is imposed for public purpose. 2. Revenue laws are not political in nature fe, It is generally payable in money. 3. Legislative intent f. It is levied within the territorial and legal 4. Tax Laws are special laws, and prevail over jurisdiction of a state (SITUS). ensistens general laws P. CLASSIFICATION of taxes (PISAR-I.A.) 5. Tax Laws are not penal in character 1. What are the kinds of taxes as to subject matter? L. Construction of tax laws 2. What are the kinds of taxes as to who bears the 1. Doubtful tax statutes are to be construed in burden (INCIDENCE)? favor of the taxpayer 3. What are the kinds of taxes as to determination of 2. Tax exemptions to be construed strictiy. amount? M. Power of judicial REVIEW 4, What are the kinds of taxes as to purpose? Courts cannot Inquire into the wisdom of a taxing 5. What are the kinds of taxes as to Imposing act. As long as the legislature, in imposing @ tax, authority? does not violate applicable constitutional limitations 6. What are the kinds of taxes as to graduation or Or restrictions, the courts have no concer with the rate? wisdom or policy of the exaction, the political or Q. Tax distinguished from OTHER CHARGES and FEES DISTINCTION OF TAX WITH SIMILAR ITEMS, 0 aendhuve pst 7 7 TAKVS, REVENUE 7 Tax Revenue ——— Refers to tha amount imposed Refers to the amount collected Gry one of the sources of government The product of taxation. Tt refers to aT the revenues funds derived by the government whether from tax or from other sourees. Revenue Is broader 7 7 than Tax [Point of distinction Tax Tieense (Purpose. Forrevenve For regulation f= aie Amount No limit Limited to cost of regulation Required for the commencement of @ business profession Wakes the business illegal Berson, properties, business rights, | interests, privilege, acts and transactions | _ ‘Does not necessarily make the act, business or profession illegal 11 «men ‘Subject of Imposition Effect of non-compliance [Revocebility — : Has a nature of permanence: ‘Always revocable [Scope The power to tax includes the power to | Power to license does not include the a license ‘power to tax d “When Imposed Post-activity t Pre-activity a Basis of imposition Current data Preceding year or quarter date. fnew business, based on capitalization Police power of the government. ((Saurees of Power “Taning poner ofthe government Page 2 of 14 TAX.2101asaya Tax ean aq oS Ton —“Demand of sovereignty Demand of ownership ‘One’S support for the government Imposed only by the government ‘Compensation for the use of somebody else's May be imposed by the government or by private Fo Individuals. Based on government needs ‘Determined by improvements thereon the cost of the property or TAXVS. DEBT Tax, T Debt (Basis Law. Contract | | Effect of non-compliance | May involved imprisonment, except No imprisonment | _ for poll tax W | artege ent 2s¥gye | Assignable? No Yes. Mode of settlement Generally mone} Cash or In-kind [Coverage of application | Sibject ofthe imposition | owning the subject [Set-off? Generally not subject to set-off ‘Subject to set-off Interest Does not earn interest except when | Draws interest when stipulated or | L delinquent, when in PQSTault ae, Spee Bae —__Tax business, interests, transactions, rights, persons, properties or privileges Land. May be made a personal liability of the person assessed Effect on the person Cannot be made the personal liability of the person assessed, because itis the land that answers for the liability immediate benefit to the taxpayer Entirely on benefits received General application Exeeptional in application ‘TAX VS, TARIFF Tariff refers to a book of rates containing names of merchandises with corresponding duties to be paid for the same. Tariff refers to the duties payable on goods Imported or exported. It is a system or principle of imposing duties on the importation or exportation of goods esate Sena a raves | torame | teehee | seome | Temeactey | an sarang | ae Ry | authority | government. private individuals [see SSS [with aR Sg R. Tax Administration It_is a system involving assessment, collection and enforcement of taxes, Including the execution of judgement in all taxes cases decided in favor of the BIR by the courts. S. Powers and duties of the BIR ‘Ascesement and calection of all notional Internal ravenues taxes, fees ard charges Brforcament ef ai forfeitures, wensities end fines ‘connected therewith Execution of judgement in all cases decided in its favor by CTA and ordinary courts Give effects to and administer the supervisory and police power conferred to it by the NIRC or other laws. ‘Page 3 of 14 t Powers and Duties of the Commissioner of Internal Revenue (CIR) To interpret tax laws and to decide tax cases To obtain information, and to summon, examine, and take testimony of persons To make assessments and prescribe additional requirements for tax administration and enforcement Power to Compromise Taxes ‘+ Reasonable doubt as to validity of claim against taxpayer + _ Financial incapacity of taxpayer Power to Abate or Cancel Tax Liabilities + Excessive assessment + Cost exceeds benefit U. Power to Make Assessments To examine returns and determine tax due ‘To conduct Inventory-taking, surveillance and to prescribe presumptive gross sales and receipts To terminate taxable period ‘To prescribe real property values To inquire Into bank deposit accounts +» For determination of gross estate Compromise by reason of financiat incapacity To accredit and register tax agents To prescribe additional procedural documentary requirements V. Non-delegable powars of the Commissioner ‘the power @ recommend the promulgation of rules” and regulations by the Secretary of Finance ‘The power to Issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau ‘The power to compromise or abate any tax liability Ey a 5. 6. 7. or TAX.21014. The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept Multiple Choices Taxation 1. In this power of the state, the person who is parting with his money, property is presumed to receive @ benefit: © Taxation; b. Police power c. Eminent domain 4. None of the above. Purposes of Taxation 2. Not one of the purposes or objectives of taxation 2. Reduction of social inequity b. Protectionism c._ Promotion of general welfare 6. Expropriation Theory of Taxation 3. Without revenue raised from taxation, the government will not survive resulting in detriment to society. ac” Theory of taxation b. Basis of taxation ©. Symbiotic relationship . Fiscal adequacy ‘Scope of Power of Taxation 4. Which is the correct and best statement? A tax reform at any given time underscores the fact that: ‘2. Taxation is an inherent power of the state; b. Taxation is essentially a legislative power; ¢. Taxation is a power that is very broad; . The state can and should adopt progressive taxation. Scope of Taxation 5. That the legislative body can impose a tax at any amount underscores the legal truism that: a. Taxation is an inherent power of the state; by Taxation is a very broad power of the state; ‘c. Taxation is essentially a legislative power; . None of the above. Stages of Taxation 6. Which statement is wrong? A revenue bill: a. Must originate from. the House of. Representatives and on which same bill the Senate may propose amendments; Jb May originate from the Senate and on which same bill the House of Representatives may propose amendments; c. May have 2 House version and a Senate version approved separately, and then consolidated, with both houses approving the consolidated version; 4. May be recommended by the President to Congress. Limitations in General 7. Which of the following statements Is not correct? a. Taxes may be Imposed to raise revenues or to provide disincentives to certain activities within the state; b. The state can have the power of taxation even If the Constitution does not expressly give it the power to tax; . For the exercise of the power of taxation, the state can tax anything at any time; 10. 2, 32. 13 14. ‘The provisions of taxation in the Philippine Constitution are grants of power and not limitations on taxing powers. Constitutional Limitations ‘Which of the following statements is not correct? a. An inherent limitation of taxation may be disregarded by the application of constitutional limitation; b. The property of an educational institution operated by a religious order is exempt from property tax, but its income is subject to income tax; 5 The prohibition of delegation by the state of the power of taxation will still allow the Bureau of Internal Revenue to modify the rules on time by filing of returns or payment of taxes; 4d. The power of taxation Is shared by legislative and executive departments of government, Limitations Which of the following has no power of taxation? a. Provinces; b. Cities c. Barangays; > Barrios. Inherent Limitations ‘A tax must be imposed for 2 public purpose. Which Of the following is not a public purpose? 3. National POGIense; r=72"ce b. Public education; c._Improvement of sugar industry; d--Nomte of the above. Inherent Limitations ‘A fundamental rule in taxation is that the property of fone country may not be taxed by another country. This is known as: a. International law; br International courtesy; / . Reciprocity; d. International inhibition. Inherent Limitations There can be no tax unless there Is a law imposing the tax is consistent with the doctrine or principle of: Uniformity in taxation; Due process of law; Non-delegation of the power to tax; ‘The power of taxation is very broad and the only limitation Is the sense of responsibility of the members of the legislature to thelr constituents. aove Inherent Limitations Which of the following is not an element of direct ouble taxation? 2. Two taxes; b. Same subject matter; Same year; _d. Same amount. Limitations Statement 1: Because the power of taxation Is Inherent in state, the inherent limitation on the power of taxation always applies. Statement 2: Inherent limitations on the power of taxation must give way to constitutional limitations. a. The first statement is true while the second statement Is false; [Link] first statement is false while the second statement is true; . Both statements are true; ._Both statements are false. Page 4 of 14 TAX.210120. Statement 1: Direct double taxation is prot Constitutional Limitations 45. Which statement is wrong? "The tax should be based on the tax payer’s ability to pay” a. As a basic principle of taxation, this is called “theoretical justice”; b. Asa theory of taxation, this is called “ability-to- pay-theory”; se No person shall be imprisoned for non-payment. of a tax; 4, A graduated tax table rule, in consonance with this Inherent Limitations 416. Statement 1: The power to tax can be delegated to Statement 2: The power to tax cannct be delegated to the executive department of the National Government. LB Tha first etatamant ig true while. the sacaad b. The first statement is false while the second statement is true; c. Both statements are true; Limitations 17. The City of Manila, claiming that it can impose taxes under the Local Government Code, imposed a tax on banks (in addition to the percentage tax on banks Imposed in the National Internal Revenue Code). ‘The banks within the City of Manila objected for the various reasons written below. Which would satisfy the objection of the banks? ‘a. The power of taxation cannot be delegated; b. The rule on double taxation; Uniformity in taxation; _A® None of the above. Constitutional Limitations 18. No person shall be Imprisoned for the non-payment. of this: 2. Property tax; b. Excise tax; 2 Poll tax; d, None of the above. Inherent Limitations 19, Statement 4! Direct double taxation involves two taxes By the same taxing authority (e.g. National Government) Statement 2: Indirect double taxation involves two taxes by different taxing authority (e.g. national Government and a unit of local government) a, The first statement is true while the second statement Is fais b. The first statement is false whille the second statement is true; LS Both statements are true; dd. Both statements are false. Inherent Limitations the Philippine Constitution. Statement 2: Indirect double taxation is allowed by the Philippine Constitution. a, The first statement is true while the second statement is false; bc The first statement is false while the second statement is true; c. Both statements are true; ‘Page 5 of 14 A 4. Both statements are false. Constitutional Limitations 21. Which statement is true? ‘The prohibition in the Philippine Constitution on taxation of religious corporation is: a. A prohibition on imposition of excise on the corporation; _D= A prohibition on imposition of property taxes on the corporation; cA prohibition on imposition of any and all local taxes on the corporation; d. A prohibition on imposition of any all national taxes on the corporation Constitutional Limitations >> Rich statement fe falna? a that imposes. 2 f Centrals where the revenue collected will be Used to improve the sugar industry is a tax for a public purpose, and the law is constitutional; Baw Phat imnnsas » tay qn mavie nnars im the re the revn flood control infrastructures in the low areas in the city is constitutional; c. A law that gives tax privileges to manufacturers in PQGIingd industrial areas, which are not riot discriminatory and is constitutional; dé None of the above, Constitutional Limitations 23. POGI School of Accountancy, a private educational Institution which is offering primary, secondary and tertiary education is registered with and accredited by DepEd and CHED. Which ef the following is exempt from tax? What kind of tax? a. The importation of laboratory equipments ~ from customs duties 2 The school building being rented by the school ~ from real property tax . A portion of the schoo! building being leased to a fastfood chain ~ from real property tax d._The income from operation ~ from income tax 24, Assuming that the school is a non-stock non-profit ‘educational institution. Which of the following is ‘subject to tax? What kind of tax? 2. The school bullding owned by the school ~ from real estate tax b. The schoo! building being rented by the school ~ from real property tax ec A portion of the schoo! bullding being leased to a fastfood chain = from real property tax d. The income from operation ~ from income tax Constitutional Limitations 25. Congressman Manny Pacquiao and Senator Grace Poe sponsored a bill in the House of Representatives and the Senate, respectively, subjecting to a zero Fate (0%) of value-added tax the sale of mineral resources. Which of the following Is correct? a, The senate bill should be discussed ahead of the house bill ‘The senate and house bills should be discussed at the same time [2 The house bill should be discussed ahead of the ‘sanete bill d. Any of them can be discussed ahead of the other Limitations 26. Which of the following questions is answerable by "YES"? TAX.210130. POT a May Congress, under the 1987 Constitution, abolish the power to tax of local government units? _A© May a tax be validly imposed In the exercise of the potce power and nat ofthe power to tax? © Is indirect duplicate taxation a valid POGiense against legality ofa tax measure? @. When. an item of income. Is. taxed inthe Philippines and’ the some income’ is taxed In another country, is there a case of direct double taxation? Inherent Limitations 27. Not @ usual method of avoiding the occurrence of double taxation a. Allowance of tax credit for foreign taxes paid b. Allowance of deduction for foreign taxes paid -& Reporting an income which is lower than the correct amount d. Reduction of the Philippine tax rate Constitutional Limitations 28. Fr. Reyes had the following activities during the week. Which of the following activities is subject to income tax? 2. Celebrates mass and collect the alms from the faithful Solicit funds for the construction of the church c-~“Teaches religion in one university and collects his salary 4. Sells bible to the public Constitutional Limitations 29. The City of Batangas passed Odinance No. 69 ‘making it unlawful for any person not a citizen of the Philippines to be employed within the city without first securing an employment permit, What constitutional limitation is violated by this, ordinance? 2. Non-impairment of obligations of contracts be. Uniformity -€° Due process of law d. Equality Constitutional Limitations University is a non-stock, non-profit educational institution run by Lipa Cathedral. It is ‘occupying the following buildings: Bidg.1 being used by students for classroom purposes Bidg.2 being used as dormitory of students- scholar but open to non-students who want to stay therein. Bldg. 3. owned by Mr. Jonas being leased to POGI University and used as administration building Which houses the offices of the school president, registrar, principal, deans and other schoo! officials, Which of the following buildings is exempt from real estate tax? ulldings 1 and 3 b. Buildings 1 and 2 c. Allof them . Building 1 only Constitutional Limitations 34. The Congress may, by law, delegate the legislative Power to the President to fix within specified limits the following, except: 3. Tani rates b. Tonnage and wharfage dues c._Import and export quotas ‘Arrastre charges 32 33, Constitutional Limitations The Municipality of Malvar has a ten hectare cemetery consisting of four different cemeteries which are differently owned. Which of the following is subject to real estate tax? a. Cementerio Municipal de! Malvar ~ a government cemetery owned by the municipal government which was established for the purpose of using it as burial ground of those living in the squatter area b. Malvar Catholic Cemetery - owned by Catholic Church; profits are remitted to the church for betterment of cemetery c. Malvar Memorials - owned by a corporation where dividends are distributed to the shareholders at the end of the year d. Malvar Gardens ~ owned by an association Consisting of 1,000 families; each family owns 50 square meters of lot; not a single portion is held for sale to either member or non-member of the association Inherent Limitations A tax upon @ corporation for its property and upon its shareholders for their shares is an example of: a. Direct double taxation _2©" Indirect duplicate taxation 34, ©. Uniformity in taxation d. Due process Constitutional Limitations ‘No law granting any tax exemption shall be passed without the concurrence of a. Majority of all the members of the House of Representatives b. Majority of all the members of the Senate ‘Majority of all the members present in Congress, _B® Majority of all members of Congress 35. 36. 7. Limitations Which of the following is not correct? 2. An inherent limitation of taxation may be disregarded by the application of a constitutional limitation bd The property of an educational institution operated by a religious order Is exempt from property tax and income tax . The prohibition of delegation by the state of the ower of taxation will still allow the Bureau of Internal Revenue to modify rules in time for filing of returns and payment of taxes d. The power of taxation is shared by the legislative and executive departments of the government Constitutional Limitation-Uniformity and Equity Which statement gives the correct answer? That 2 study needs or need not look into the ‘of different political subdivisions of government which may be alternative sites of the Business is because: 2. Provinces, cities and municipalities must have Uniform taxes between and among themselves, b._The local taxes of one political subdivision need ot be uniform with the local taxes of another political subdivision; . Businesses that are subject to national business taxes are exempt from local business taxes; 4. Local business taxes maybe cradited against business national taxes. Principles of a Sound Tax System Under this basic principle of a sound tax system, the Government should not incur a POGTicit: Page 6 of 14 “TWAX.2104a. Theoretical justice; b. Administrative feasibility; s~ Fiscal adequacy; “a. None of the above, Principles of a Sound Tax System 38. As a basic principle of taxation, that “Taxes must be based on the taxpayer's ability to pay” is called: a. Equality in taxation; bi Ablity-to-pay theory; Ze Theoretical justice; 4. Equity in taxation. Principles of a Sound Tax System 39. A canon of taxation which means that tax laws must be clear and concise, capable of proper enforcement, and not burdensome, convenient as to tome and manner of payment. a. Fiscal adequacy _2= Administrative feasibility Consistency with economic goals d. Theoretical justice Principles of a Sound Tax System 40. The following, except one, are basic principles of a sound tax system: a. It should be capable of being effectively enforced b. Tt must be progressive c. Sources of revenue must be sufficient to meet ‘government expenditures and other public needs de Tt should be consistent with economic goals ‘Three Inherent Powers 41. The following are similarities of the Inherent power of taxation, eminent domain and police power except one: a. Are necessary attributes of sovereignty; b._ Interfere with private rights property; _S— Affect all the persons or the public; d. Are legislative in implementation. Police Power vs. Taxation 42. Which statement refers to police power as distinguished from taxation? a. It-can only be imposed to specific property or properties; The amount Imposed depends on whether the activity is useful or not; c. It Involves the taking pf property by the government; 4. The amount imposed has no limit. Inherent Powers 43. Which statement is false? a, Atax is a demand of sovereignty while a toll Is a demand of property ownership; b. Non-payment of a tex does not make the ctivity taxed unlawful; ‘A grant of police power to @ unit of local government carries with it a grant of the power fo tax; , Customs duty is a tax. ‘Three Inherent Powers 44, Whieh of the following may not raise money for the government? 2. Power of taxation; bL_ Police power; 2° Eminent domain; d. None of the above. ‘Three Inherent Powers 45. The following are similarities of the inherent power of taxation, eminent domain, and police power, except one a. Are necessary attributes of sovereignty b._ Interfere with private rights and property Affect all persons or the public d. Are legislative in their implementation ‘Three Inherent Powers 46. One of the following is not a characteristic of police ower in distinguishing it with the other powers a. It regulates both liberty and property b. The property taken is destroyed for the purpose of promoting the general welfare c. The amount imposed should only be sufficient to cover the necessary expenses of police surveillance and regulation 3 The authority to exercise the power may be granted to public service companies Sources of Tax Laws 47. Statement 1: A revenue regulation must not be contrary to the provision of the law that implements, Statement 2: A revenue regulation cannot expand the provision of the law that implements Dy imposing a penalty when the law that authorizes the revenue regulation does not impose a penalty. 2. The firststatement is true while. the second statement Is fase; b, The first statement Is false while the second statement Is true; ef Both statements are true; G. Both statements are false. Nature and Characteristics of Tax Laws 48. One of the characteristics of internal revenue laws is that they are: 2. Criminal in nature; b. Penal in nature; Political in nature & Generally prospective in application. Nature and Characteristics of Tax Laws 49. In case of conflict between tax laws and generally ‘accepted accounting principles (GAAP): a. Both tax laws and GAAP shall be enforced; b. GAAP shall prevail over tax laws; £0 Tax laws shall prevail over GAAP; d. The issue shall be resolved by the courts. POGrinition of Taxes 50. The proportional contribution by persons _and property levied by the law-making body of the State by virtue of its sovereignty for the support of the , Sovginment and all pubic needs i refered to as: Taxes; b. Special assessment; License fees; d. Answer not given. Essential Characteristics of Tax 51. One of the characteristics of a tax is that: a,_Jt is generally based on contract; It is generally payable in money; Ils generally assignable; d. Answer not given. Essential Characteristics of Tax 52. Which is not an essential characteristic of tax? a. ItIs unlimited as to amount; b. It is payable in money; c._It is proportionate in character; 2-67 Its a regular payment. Page 7 of 14 TAX.2101Essential Characteristics of Taxes 53. Which of the following is erroneous? a. Taxes are pecuniary in nature b._‘Taxes are enforced charges and contributions “Taxes are levied by the executive branch of the government Aeptl vee d. Taxes are imposed on persons and property within the territorial jurisdiction of a state Kinds of Taxes-Subject Matter 54, Which of the following is not an example of excise tax? 2. Trensfer tax; b._ Value added tax; ZO Real property t&X; propel, @. Income tax. Geter Kinds of Taxes-Rate 55, Value-added tax is an example of: a. Graduated tax} pete poowents SF b. Progressive tax; c._ Regressive tax; _# Proportional tax. pave Kinds of Taxes-Amount ‘56. Tax of a fixed proportion of the value of the property with respect to which the tax is assessed. and requires the intervention of assessors or appraisers to estimate the value of such property before the amount due from each taxpayer can be determined is known ast a. Specific; Ad valorem; 6. Special or regulator 4. Answer not given. Kinds of Taxes-Incidence

Revenue regulation ‘c. Opinions of the Secretary of Finance d. Revenue Memorandum Circular 63. Which of the following powers of the CIR can be delegated? a. The power to recommend the promulgation of rules and regulation to the Secretary of Finance b. The power to issue rulings of first impression or to reverse, revoke or modify any existing rulings of the Bureau, . The power to compromise or abate any tax liability, _J% ine power to alvie the Philppines into zones for purposes of enforcement of national internal revenue taxes. 64. Which agency, office or bureau issues revenue regulations? a, Congress 2% Department of Finance ([Link] of the Commissioner of Internal Revenue d. Revenue District Office -done- TAX.2101