Classifications of

Taxes
 As to subject matter or object
Personal, Poll or Capitation
Tax of a fixed amount (ex. Community tax, formerly residence tax)
Property
Tax imposed on property, whether real or personal (ex. Real estate tax)
Excise
Any tax which does not fall within the classification of a poll tax or
property tax (ex. Estate, donor’s and income taxes; value-added tax and
practically all business taxes)
 As to purpose
General, Fiscal or Revenue
 Tax imposed for the general purposes of the government (ex. Income
tax and almost all taxes)
Special or Regulatory
 Tax imposed for a special purpose (ex. Protective tariffs or customs
duties on imports, to protect local industries against foreign
competition.
 As to scope ( or authority imposing the tax)
National
 Tax imposed by the national government. (ex National internal
revenue taxes, customs duties, and national taxes imposed by special
laws)
Municipal or Local
 Tax imposed by municipal or public corporations (local government)
(ex. Real estate taxes a.k.a amilyar)
 As to determination of account
Specific
 Tax of a fixed amount imposed by the head or number, or by some
standard or weight or measurement (ex. Excise taxes on distilled wines,
cigars and cigarettes, gasoline and others)
Ad valorem
 Tax of a fixed proportion of the value of the property with respect to
which the tax is assessed (ex. Real estate tax; percentage taxes, excise
taxes on automobiles, nonessential goods – jewelry, and other)
 As to who bears the burden
Direct
• Tax which is determined from the person who also shoulders the
burden of the tax (ex. Community tax; corporate and individual
income tax)
Indirect
• Tax imposed on goods before they reach the customer (ex. All
business taxes, such as value-added tax, percentage taxes and others;
customs duties)
 As to graduation or rate
Proportional
• Tax based on a fixed percentage of the amount of the property, income or other
basis to be taxed (ex. Real property tax; all percentage taxes)
Progressive or Graduated
• Tax based on the rate of which increases as the tax on the rate of which increases
as the tax base or bracket increases (ex. Income tax; estate tax; donor’s tax)
Regressive
• Tax based on the rate of which decreases as the tax base or bracket increases
Taxes Distinguished from Other Terms
Revenue
• Funds or income derived by the government, whether from tax or any
other source
Internal Revenue
• Taxes imposed by the legislature other than duties on imports and exports
Customs Duties (or simply duties)
• Taxes imposed on goods exported from or imported into a country
Taxes Distinguished from Other Terms
Debt
A tax is not a debt and the 2 are distinguished as follows:
• A debt is generally based on contract, a tax is based on law.
• A debt is assignable while a tax cannot ne assigned
• A debt may be paid in kind, while a tax is generally payable in money
Taxes Distinguished from Other Terms
Penalty
• It is any sanction imposed as a punishment for violation of law or acts
deemed injurious.
Special Assessment
• Is an enforced proportional contribution from owners of lands
especially or peculiarly benefited by public improvements.
 License or Regulatory Fee vs. Tax
License Fee Tax
 Legal compensation or reward of an  An enforced contribution from
officer for specific services persons or property by the law-
making body by virtue of its
sovereignty and for the support of the
government and all public needs

 Imposed for regulation  Levied for revenue

 Involves the exercise of police power  Exercise of the taxing power
 License or Regulatory Fee vs. Tax
License Fee Tax
 Amount should be limited to the  There is no limit on the amount of the
necessary expenses of inspection and tax to be imposed
regulation
 Imposed only on the right to exercise  Imposed also on persons and property
a privilege
 Failure to pay makes the act or  Failure to pay does not necessarily
business illegal make the act or business illegal
 Toll vs. Tax

Toll Tax
 Sum of money for the use of  Enforced proportional contributions
something; consideration paid for the from persons and property for the
use of a road, bridge or the like of a support of the government and all
public nature public needs
 Paid for the use of another’s property  Paid for the support of government
 Amount paid depends upon the cost  Imposed by the government only
of construction or maintenance of the
public improvement used
 A demand of proprietorship  A demand of sovereignty
 May be imposed by the government  A demand of sovereignty
or private individuals
 Collection of Taxes / Payment of Taxes
The filing of returns from compensation income should be on or
before April 15th of every year for all residents of the Philippines,
whether citizen or aliens.
Income tax that exceeds ₱2, 000, may be paid in 2 equal
installments:
 At the time the return is filed; and
 On or before the 15th day of July following the close of the taxable year
 Modes of Payment of AABs
 Over – the – counter cash payment
 Bank debit system
 Check
 Payment of checks
 Basic Forms of Escape from Taxation
Shifting
• The transfer of the burden of a tax by the original payer to another or someone else,
who bears it

 Capitalization
• Occurs in cases where the good is a durable good and thus is subject to
a series of successive annual taxes during its lifetime
 Basic Forms of Escape from Taxation
Kinds of Shifting
Forward
• Involves the transfer of the tax from a factor of production through the factors of distribution
until the burden finally rests on the consumers.
Backward
• Involves the transfer of the tax from the point of consumption through the factors of production
Onward
• When a tax is transferred 2 or more times through the factors of distribution, either forward or
backward
 Basic Forms of Escape from Taxation
Transformation
• Producer may pay the tax himself and recover the additional expense
by improving his process of production
Evasion
• Defined as illegal efforts to avoid payment of a tax
 Basic Forms of Escape from Taxation
Avoidance
• Defined as the exploitation by the taxpayer of legally permissible
alternative tax rates in order to reduce tax liability
Exemption
• An immunity or privilege; a freedom from a financial charge or
burden to which others are subjected
 Basic Forms of Escape from Taxation
Kinds of Exemptions
Express Exemption
• Present when certain property are exempted from all or certain taxes either entirely
or in part
Exemption by Omission
• May be accidental or intentional
Grounds for Granting Tax Exemptions
May be based on contract
May be based on some ground of public policy
May based on grounds of reciprocity or to lessen the rigors of
international double or multiple taxation.
 Nature of Tax Exemptions
It is a mere personal privilege of the grantee
It is generally revocable by the government
It implies a waiver on the part of the government of its right to
collect what otherwise would be due to it , and so is prejudicial
thereto
It is not necessarily discriminatory
 Sources of Exemptions
Constitution
Statutes or laws
 Treaties
 Ordinances
 Franchises
 Contract
 Tax Amnesty
A general pardon or intentional overlooking of the State of its
authority to impose penalties on persons otherwise guilty of
evasion or violation of a revenue or tax law
SEE YOU NEXT MEETING!