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GENERAL PRINCIPLES OF TAXATION 1. Benefit Received Theory – the higher the

benefits received the more taxes should be
paid.
TAXATION 2. Ability to Pay Theory – the higher the
capacity to pay, the more taxes should be
o Definition paid.
o a State power, a legislative process and a) Vertical Concept (Gross)
a mode of government cost distribution. b) Horizontal Concept (Net)
o it is the inherent power by which the
INHERENT POWERS OF THE STATE
sovereign through its law-making body
raises revenue to defray the necessary 1. TAXATION POWER – power of the State
expenses of government. to enforce proportional contribution from its
o Characteristics (ILS) subject to sustain itself.
1. Inherent power of the State 2. POLICE POWER – the general power of the
2. Exclusively lodged with the legislature state to make and enact laws to protect the
3. Subject to inherent, constitutional and well-being or general welfare of the people.
contractual limitations. 3. POWER OF EMINENT DOMAIN – the
o Objectives/Purpose power of the State to take private property
o Primary Objective for public use after paying just
1) Raise revenue compensation.
o Secondary Objective
Table. 1.1 Comparison of the three inherent powers
2) Promotion of general welfare
3) Regulation Point of TAXATION POLICE EMINENT
4) Reduction of social inequality Difference POWER DOMAIN
5) Encourage economic growth Exercising Government Government Government
6) Protectionism Authority & Private
o THEORIES OF TAXATION Utilities
1. Necessity (Theory of Taxation) – Purpose Raise revenue Protect Facilitate the
government’s necessity for funding. The for the support general need of
power to tax is an attribute of of government welfare of property for
sovereignty emanating from necessity. the people public use
2. Basis of Taxation (Benefits-Protection Persons Community or Community Owner of the
Theory) Affected class of or class of property
- symbiotic or reciprocal relationship individuals individuals
between the State and its inhabitants Amount of Unlimited Limited No amount
3. Lifeblood Theory (Importance of Imposition (based on (limited to imposed
Taxation) gov’ts needs) cost of (gov’t pays)
-“taxes” are essential, indispensable and regulation)
the lifeblood of the government Importance Most Most Important
Implications of Lifeblood Theory important/ superior
1) Imposition of tax without Strongest
Constitutional grant Relationshi Inferior to Superior to Superior to
2) Tax Exemptions are construed p with “Non- “Non- “Non-
against taxpayers Constitution impairment impairment impairment
3) Government has the right to Clause” Clause” Clause”
choose the objects of taxation Limitations Constitutional Public Public
4) Courts not allowed to interfere and Inherent interest and purpose and
with collection of taxes Limitations due process just
5) In Income Taxation: compensation
a) Income received in Benefits No direct No direct Direct benefit
advance is taxable benefit benefit is the just
b) Deductions for capital compensation
expenditures and
Delegation Cannot be Can be Can be
prepayments are not
delegated, expressly expressly
allowed
except to delegated delegated
c) Lower amount of
Legislature of
deduction is preferred
LGUs
d) Higher amount of tax
base is preferred
o Similarities of the Three Inherent Powers
NOTE: Receipt of benefits is CONCLUSIVELY
1. All are necessary and indispensable
PRESUMED. Defense for the absence of benefit
received for nonpayment of taxes will not prosper. attributes of the State
2. All are inherent to the State
o Taxpayer Suit 3. Legislative in nature
- Case filed by a bona fide taxpayer 4. Ways which the State interferes with private
impugning the validity, legality and rights and properties
constitutionality of a tax law. 5. All exists independently of the Constitution,
o THEORIES OF COST ALLOCATION Constitution only limits the exercise of these
powers
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6. All presuppose an equivalent form of 3. Same purpose (S)

compensation received by the persons 4. Same taxing jurisdiction (S)
affected 5. Same tax period (S)
7. Exercise of these powers by the LGUs may
be limited by the national legislature.
Direct Double Taxation- all elements are
 SCOPE AND NATURE OF TAXATION present (P&S)
- Comprehensive, plenary, unlimited,
supreme, but not absolute. An awesome Indirect Double Taxation- at least one of the
power that could destroy. secondary elements is not common
 Means to minimize Double Taxation
 LIMITATIONS OF TAXATION POWER 1. Tax exemptions/deductions
o INHERENT LIMITATIONS (TIPEND) 2. Tax credits
NOTE: An inherent limitation may be disregarded by 3. Reciprocity/Tax sparing rules
the application of a constitutional limitation. 4. Treaties

1. Territoriality- must be within the o CONSTITUTIONAL LIMITATIONS

jurisdiction of the State (DEUPNNFENECNNNTTFPN)
Two-fold Obligation of Taxpayers 1. Due Process of the Law
a) File returns & pay taxes a) Assessment – within 3 years
b) Withhold & remit taxes from due date or filing
(can only be demanded by whichever is later
the State to its citizens and b) Collection- within 5 years
residents) from date of assessment
2. Equal Protection of the Law – same
Exceptions:
means and methods must be applied
a) RC & DC are taxable on impartially to all members of the
worldwide income (Income same class.
Tax)
- State can classify taxpayers so
b) Residents & citizens are
long as it is valid and reasonable
taxable on worldwide
transfers (Transfer Tax) 3. Uniformity Rule- persons under
the same class should be taxed the
2. International Comity – same and persons under different
governments of each countries do classes should be taxed differently.
not tax each other. Treaties are (Relative Equality)
given primacy over tax laws. 4. Progressive System of Taxation –
the higher the tax base, the higher
3. Public Purpose* the tax rate. Based on Ability to Pay
Theory.
4. Exemption of the Government 5. Non-imprisonment for
Exception: If made for profit or nonpayment of debt or poll tax
commercial purpose, it is a) Basic Poll Tax –
TAXABLE. nonpayment does not
constitute a crime
5. Non-Delegation of Taxing Power- b) Additional Poll Tax-
vested exclusively in the Congress nonpayment constitutes
Exceptions: a crime
a) LGUs are allowed to 6. Non-impairment of Obligations
exercise taxation and Contracts
b) President is empowered 7. Free Worship Rule- tithes and
to fix the amount of offerings are NON-TAXABLE.
tariffs However, if used for
c) For expedient and profit/commercial purposes then it is
effective administration, TAXABLE
implementation and 8. Exemption from Property Taxes
collection of taxes. (Religious, Charitable, Nonprofit
and Educational Institutions) –
6. Direct Double Taxation based on the “doctrine of use”
where properties which are actually,
DOUBLE TAXATION – same tax, same directly and exclusively (ADE) used
jurisdiction, and same object of taxation. are EXEMPT.
-not explicitly prohibited by the Constitution 9. Non-appropriation of Public funds
in fact, Indirect Double Taxation is rampant for any church, sect or religion
in practice. Direct Double Taxation is Exception: Compensation of priests,
objectionable since it violates the imams or religious ministers
substantive due process. working with military, penal
 Elements institutions, orphanages and
1. Same Object (P) leprosariums.
2. Same type of taxes (S) 10. Exemption of Nonprofit or
Nonstock Educational institutions
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from taxes- all revenues and assets NOTE: For Income Tax situs, (1) citizenship, (2)
(ADE) including grants and residence, and (3) source of income is considered. For
endowments are EXEMPT. Transfer Taxes (1) residence or citizenship and (2)
Private Educational Institutions- location of property is considered.
subject to 10% Income Tax
11. Concurrence of majority of ALL
members of the Congress for  OTHER FUNDAMENTAL DOCTRINES OF
passing a law granting Tax TAXATION
Exemption 1. Marshall Doctrine- “The power to tax
a) Passage of Exemption – involves the power to destroy.” This is
ABSOLUTE MAJORITY however, not true if it is used solely to raise
b) Withdrawal of Exemption- revenue.
RELATIVE MAJORITY 2. Holme’s Doctrine- “Taxation is not the
12. Nondiversification of Public Funds power to destroy while the court sits.”
13. Nondelegation of Taxation Power 3. Prospectivity of Tax Laws- tax laws are
GENERALLY prospective. Retrospection is
allowed under just and reasonable grounds.
14. Non-impairment of Supreme 4. Non Compensation/Set-off of Taxes-
Court’s jurisdiction to review tax Exceptions:
cases- Court’s power is limited only a) Refunds
to the application and interpretation b) Overpayment of Taxes
of tax law. c) Local Taxes
15. The requirement that any tax bill
must originate from the House of NOTE: Doctrine of Equitable Recoupment is not
Representatives- Senate may currently applied in Taxation. Tax currently being
propose and concur with assessed may not be recouped against overpaid tax.
amendments. Revision of entire bill 5. Non-assignment of Taxes
by Senate is allowed. 6. Imprescriptibility in Taxation- government’s
16. The Delegation to LGUs to create right to collect tax does not prescribe, unless
its own sources of revenues a law so provides.
17. Freedom of Speech Rules of Prescription:
18. President’s Power to Veto any a) Collection is within 5 years from
particular item in a revenue bill. date of Assessment
19. Necessity of Appropriation before b) Assessment should be within 3
money is paid out of National years from required date to file
Treasury c) Fraudulent or non-existent returns
do not prescribe
o CONTRACTUAL LIMITATIONS 7. Doctrine of Estoppel- government is not
Rules: subject to estoppel
1. If Exemption is BILATERALLY 8. Judicial Non-interference- injunctions
agreed, then it cannot be withdrawn should not be issued to defer collection of
without violating the non- taxes.
impairment clause. 9. Construction of Tax Laws
2. If Exemption is UNILATERALLY a) Vague Tax Laws- construed against
granted by law, then it can be the government
withdrawn by another law. b) Vague Tax Exemption Laws-
3. If it is a FRANCHISE, it can be construed against taxpayers
withdrawn any time.
 STAGES/ASPECTS OF TAXATION  ESCAPES FROM TAXATION
1. Levy or Imposition – legislative act or the o Resulting to Loss of Government
impact of taxation (Congress/Tax Revenue
legislation) 1. Tax Evasion/Dodging (Illegal)
2. Assessment & Collection –administrative act 2. Tax Avoidance/Minimization
or incidence of taxation (BIR/tax (Legal)
administration) 3. Tax Exemption/Holiday
NOTE: Levy & Assessment comprise the IMPACT, a) Constitution (Irrevocable)
Collection comprises the INCIDENCE. b) Contracts (Irrevocable)
c) Law (Revocable)
 SITUS OF TAXATION o Not Resulting to Loss of Government
The place of taxation, tax jurisdiction to identify Revenue
income as within or without. 1. Shifting- transferring the burden of
1. Business Tax- place of business taxation to other taxpayer. Most
2. Income on Services- place where it is common to business taxes.
rendered a) Forward- normal flow
3. Income on Sale of Goods- place of sale (essential goods)
4. Property Tax- location of property b) Backward- reverse flow
5. Personal Tax- place of residence (non-essential goods)
6. Franchise Tax- place of State which granted c) Onward- mixed
the franchise 2. Capitalization- adjustment in the
7. Corporate Tax- law on incorporation value of asset or not selling a
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property which increased in value to 3. Excise or Privilege

avoid taxes. 4. Custom Duties
3. Transformation- elimination of o As to Incidence
wastes or losses to form savings and 1. Direct Tax
recoup taxes. 2. Indirect Tax

o As to Amount
1. Specific- by the head or number
2. Ad Valorem- based on the value of
TAXATION LAWS object
o As to Rate (PPRM)
1. Proportional/Fixed or Flat
TAX LAWS TAX EXEMPTION LAWS 2. Progressive
3. Regressive
4. Mixed
1. NIRC 1.Minimum Wage o As to Imposing Authority
2. Tariff & Law 1. National Tax
2.Omnibus Investment a) Income Tax
Customs Code
b) Transfer Tax
3. Local Tax Code Code
c) VAT
4. RPT Code 3.BMBE Law
d) OPT
4.Cooperative e) Excise Tax
Development Act f) DST
2. Local Tax
a) RPT
b) Professional Tax
c) Business Taxes, Fees and
Charges
NOTE: Passing of a tax bill: d) Community Tax
HoR →3 readings → Senate→3 readings→President e) Tax on Banks and Financial
Institutions
 SOURCES OF TAXATION LAWS
1. Constitution  SIMILAR ITEMS AS TAX
2. Statutes and Presidential Decrees 1. REVENUE- refers to amounts collected; total
3. Judicial Decisions or Case Laws collections of the State including taxes.
4. Executive Orders/Batas Pambansa
5. Administrative Issuances 2. LICENSE FEE- an exercise of Police Power.
6. Local Ordinances Imposed before the commencement of business
7. Tax Treaties and renders the business illegal if not paid.
8. Revenue Regulations- least source
3. TARIFF- imposed on imported or exported
NOTE: Tax laws should be given primacy over GAAP
goods
 NATURE OF TAX LAWS
Tax laws should be civil and not political or 4. PENALTY- imposed to discourage an act and
penal in nature. can be imposed by the government or private
individuals.
 TAX
-an enforced contribution levied by the 5. TOLL- a demand of ownership regarding a
lawmaking body of the State to raise revenue for property and is imposable by the government or
public purpose private entities. Charged for the cost and
maintenance of the property.
o ELEMENTS OF TAX
1. Exclusively levied by the taxing 6. DEBT- arises from private contracts and usually
power having the jurisdiction runs with interest.
2. Must not violate
inherent/constitutional limitation 7. MARGIN FEE- designed to stabilize currency
3. Must be uniform and equitable
4. Must be for public purpose 8. IMPOST- duty on imported goods
5. Proportional in character
6. Generally payable in money 9. SPECIAL ASSESSMENT- amount levied on
7. Forced contribution land due to an increase in value by public
improvement made near the property. It is based
 CLASSIFICATIONS OF TAXES wholly on the benefit and not a personal
o As to Purpose (FRS) obligation. It is exceptional to time and locality.
1. Fiscal/General
2. Regulatory NOTE: If a property is exempt from RPT, then it is also
3. Sumptuary exempt from Special Assessment
o As to Subject Matter (PPEC)
1. Personal, Poll or Capitation
2. Property
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 TAX ADMINISTRATION- management of

tax system
 TAX SYSTEM – National or Local
It is the process employed by the government in
imposing, assessing and collecting taxes.
R
President
Reve
o IMPACT
1. Progressive – emphasizes direct Department of
taxes Finance
Reve
2. Regressive- emphasizes indirect
taxes BIR

o COLLECTION
1. Withholding System of INCOME Comissioner
TAX
a) Creditable Withholding Deputy:
Tax (CWT) Operations

1) CWT on
Compensation Deputy: Legal
Enforcement
2) Expanded
Withholding Deputy:
Informations
Taxes (EWT) System
b) Final Withholding Tax
Deputy: Resource
Table 1.2. Comparison of CWT and FWT Management

NOTE: There are 6

FWT CWT Deputy Commissioners. Tax Reform Administration and
Full amount Partial amount Special Concerns is added.
Passive Income Passive and Active Income
Income Payor pays the Income Payor pays CWT  POWERS OF THE BIR (AEAADIS)
tax and Taxpayer for the 1. Assessment and collection
remaining balance 2. Enforcement of forfeitures, penalties, etc.
Filing for taxpayer not Filing for taxpayer still 3. Administering supervisory & police power
required required 4. Assignment of internal revenue officers and
employees
5. Distribute forms, receipts, certificates,
2. Withholding System on BUSINESS stamps and etc.
TAX 6. Issue receipts and clearances
3. Voluntary Compliance System- 7. Submit annual reports
Self-Assessment Method
4. Assessment/Enforcement Method  POWERS OF COMMISSIONER (CIR)
1. Interpret NIRC, subject to the review of
 PRINCIPLES/CANONS OF A SOUND TAX Secretary of Finance
SYSTEM (Adam Smith) 2. Decide tax cases, subject to the appellate
1. Fiscal Adequacy (Certainty) - sources of jurisdiction of Court of Tax Appeals
government funds must be sufficient to 3. Obtain information and summon, examine
cover government costs. The government and take testimony
must not incur a deficit. 4. Make assessment and prescribe additional
2. Theoretical Justice (Equality) - taxation requirements
should consider the taxpayers ability to pay. 5. Examine Tax Returns and determine the tax
Taxation should not be oppressive, unjust or thereon
confiscatory.
3. Administrative Feasibility (Convenience) - NOTE: Returns cannot be withdrawn, but can be
tax laws should be capable of efficient and amended by the taxpayer within 3 years, except when
effective administration to encourage there’s notice for audit or investigation.
compliance. 6. Conduct inventory taking or surveillance
a) E-filing and e-payment of taxes 7. Prescribe presumptive gross sales and
b) Substituted filing system receipts when:
c) FWT on nonresident aliens or a) No receipts were issued by the taxpayer
corporations b) Records are believed to be erroneous or
d) Accreditation of authorized agent banks incorrect
8. Terminate tax period- taxes are due and
demandable immediately
9. Prescribe real property values (Zonal Value)
Fair Value of Real Property is the higher
between:
a) Zonal Value (Adjustable every 3 years)
 6 of 6

b) Fair Market Value per Assessor’s 1. VAT - ≥ 200,000/quarter of preceding

Office year
2. Percentage Tax- ≥200,000/quarter of
NOTE: “Assessed Value” is only a fraction of the Fair preceding year
Market Value and is used for RPT (Local). 3. Income Tax
10. Compromise tax liabilities 4. Excise Tax ≥ 1,000,000/year
5. Withholding Tax of preceding year
11. Inquire into bank deposits to: 6. DST
a) Determine the gross estate of the
decedent taxpayer o As to Financial Condition
b) Substantiate a taxpayer’s financial 1. Gross Receipts- 1 Billion/year
incapacity when applying for tax 2. Net worth- 300 Million/year
compromise 3. Gross Purchases- 800 Million/year
c) Comply with “Exchange of 4. Top Corporate Taxpayer listed by
Information” agreement for aliens and SEC
foreign corporations
12. Accredit and register tax agents- appealable
to DoF, failure to act on appeal within 60  TAX MAPPING – a verification made by the
days is deemed approved. BIR of a taxpayer’s compliance with registration
13. Refund or credit internal revenue taxes and other requirements prior to, during and after
14. Abate or cancel tax liabilities its business operations.
15. Prescribe additional requirements a) Registration of head office and
16. Delegate powers to subordinates branches
b) Payment of annual registration fees
 NONDELEGATED POWERS OF THE CIR and posting it on place of business
(RICA) c) Authority to print receipts and
1. Recommend promulgation of rules and invoices
regulations to the Secretary of Finance d) Issuance of invoices and receipts
2. Issue rulings of first impression to reverse, and its contents
revoke or modify BIR Rulings e) Registration of cash register
3. Compromise or abate tax liabilities machines machine, POS machine
Exceptions: and computerized accounting
a) Deficiency is 500,000 or less and system
assessment is issued by the Regional f) Registration of books of accounts.
Offices
b) Minor criminal violations
4. Assign or reassign internal revenue officers
to establishments where excisable articles
are kept
Rules:
a) Revenue officers in establishment where
excisable articles are kept → term is not
more than 2 years
b) Revenue officers performing assessment
and collection functions → term is not
more than 3 years
c) Revenue officers assigned to special
duties → term is not more than 1 year

 COLLECTION AGENTS
1. Banks accredited by CIR (AGDB) – for
internal revenue taxes
2. Commissioner of Customs & Subordinates –
for taxes on imported goods
3. Head of Government Offices &
Subordinates - for energy tax

 OTHER COLLECTION AGENTS & TAX

INCENTIVE AGENTS
1. Bureau of Customs (BOC) under DoF- for
Tariffs and VAT on Importation.
2. Bureau of Investment (BOI) under DTI-
grants incentives under Omnibus of
Investment Code
3. PEZA under DTI
4. Local Government Units (LGUs)- for local
taxes

 CRITERIA FOR LARGE TAXPAYERS

o As to Payment
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Inherent limitations must give way to

constitutional limitations.
 “If the law is repealed, taxes assessed before
repel may no longer be collected.” FALSE*
 Means employed in assessing taxes:
1. Examination of tax returns
2. Inventory taking or surveillance and use of
presumptions of gross sales or receipts
QUIZNOTES: 3. Prescription of real property values.
 Is it possible for taxes to be used partly for
 Tax being unlimited is not an essential public and private purposes without violating
characteristic the limitation? YES. So long as it is only
 “A tax is generally unlimited because it is based incidental
on the needs of the state.” TRUE  If Congress grants a franchise with a condition
 The RDO is NOT the alter ego of the BIR and subsequently exempts the franchisee from
Commissioner. franchise tax with a valid consideration, it will
 Taxation without representation is tyranny. be considered as a valid contract and therefore
 Margin Fee & Special Assessment are not tax. irrevocable.
Custom’s and Tariffs are tax.  President may be authorized by Congress
 Taxes may not be used for sectarian purposes through a law to fix:
even if allowed by an ordinance (Constitutional 1. Tariff rates, import and export quotas
Limitation). 2. Tonnage and wharfage dues
 The President CANNOT refuse to implement a 3. Other duties and imposts
tax law if it appears to be unconstitutional.  The power of taxation is NOT shared by the
 A tax bill may embrace only ONE subject. legislative and executive branches of the
 Nonpayment of taxes results to both criminal government.
and civil liability.  Violation of inherent limitations can amount to
 Tax administration a.k.a. Collection of taxes* taking of property without due process.
 Excise Tax is not a major tax.  Following are National Taxes under special laws
 License Fee is imposed to regulate a conduct. (not found in Tax Code):
(De Vera) Penalty (Tamayo and Banggawan) 1. Customs Duties
 Real Estate Tax is an Ad Valorem tax. 2. Sugar Adjustment Tax
 The theory which most justifies the necessity of 3. Tax on Narcotic Drugs
taxation is the Lifeblood Theory. 4. Specific Educational Tax
 Income from bank deposits of a tax-exempt 5. Science Fund Tax
Catholic church is NOT TAXABLE. Charitable 6. Energy Taxes on aircraft, motorized
contributions to church are TAXABLE. watercraft and electric power consumption
 Tax imposed outside situs is VOID. 7. Travel Tax
International Comity is an exception to 8. Private Motor Vehicle Tax
territoriality rule.  Basic Community Tax is a direct tax.
 Taxes are personal to the taxpayer.*  If there is a reason to believe that a person is not
 “Courts can review or inquire into the wisdom declaring correct income, the Commissioner
or advisability of a tax law.” FALSE. In the may either:
selection of the object of taxation, the Courts 1. Order inventory-taking of goods of any
have no power to inquire into the wisdom, taxpayer as a basis for determining his tax
objectivity, motive, expediency, or necessity of liabilities
a tax law. 2. Place the business or person under
 Tax Code prevails over the Civil Code. observation or surveillance.
 Tax regulations promulgated by the Secretary of  Authority of CIR to terminate tax periods:
Finance must be published in a newspaper of 1. When taxpayer is retiring from business
general circulation. subject to tax
 Motor Vehicles Registration Fees are 2. When taxpayer is intending to leave the
Regulatory Tax. (De Vera) Motor Vehicles Tax country or remove his property therefrom
is a privilege tax not a property tax. 3. When taxpayer is performing any act
(Banggawan) tending to obstruct the proceedings for
 National Internal Revenue Code is R.A 8424. collection of tax.
 Taxing power of local government precedes  Taxation is the Rule, Exemption is the
from a Constitutional grant of the State. The Exception.
local governments can exercise their taxing  Double taxation violates the equal protection
power by local legislation. guarantee and uniformity rule in the
 BIR Rulings are not retroactive if they are Constitution.
prejudicial to the taxpayer.  Benefit Received Theory does NOT presuppose
 BIR Rulings to be valid: that some taxpayers will be exempted as long as
1. Must be reasonable and within the authority they don’t receive a benefit from the
conferred. government.
2. Must be germane to the purpose of the law.  If foreign government invests in PH and earns
3. Must be published. interest, the income is exempt due to
 A tax reform at any given time underscores the international comity.
fact that Taxation is a power that is very broad.  If there is a taxpayer’s “class” or “category,” it
 Taxation power is inherent in State, however its refers to UNIFORMITY.
inherent limitation does not always applies.
 8 of 6

 Only the Legislature can exercise the power of

taxation, eminent domain and police power.
 A tax law which destroys things, business, or
enterprises for the purpose of raising revenue is
an invalid tax law.
 A tax bill personally drafted by the President
shall become a law after approval of the
Congress.
 Tax Rulings- issued by CIR
Revenue Regulations- issued by DoF by SoF.
 BIR Rulings is limited in application.
 Income tax is NOT the main source of revenue
for the local government. Taxes are the main
source of revenue for the government.
 “The court should construe a law granting a
municipal corporation the power to tax most
strictly.” FALSE
 “The discretion of Congress in imposing taxes
extends to the mode, method and kind of tax,
even if the constitution provides otherwise.”
FALSE
 Stipulation that the buyer shoulders the CGT is
VALID.
 Eminent Domain requires PUBLIC
IMPROVEMENT.
 Non-stock, Non-profit Hospitals are exempt
from RPT on properties ADE used for hospital
operations. They are however subject to 10%
income tax.