TAX - Memory Aid

General Principles

Tax inherent and legislative power Enforced contributions from persons and property, levied by government through legislature by virtue of sovereignty for support and sustenance. Diff from PP, ED authority exercising, purpose, persons affected, effect, benefits received, amount, relationship to consti

Revenue raising or sumptuary (purpose, amount, designation)

Tax may be BOTH revenue and regulatory. It may be implement of eminent domain. Tax credit for senior citizen discounts may be just compensation for taking of property.

Fact that revenue is incidentally raised does NOT make it a tax. Look at purpose, relation to activity, and amount.

Tax increases MAY convert regulatory fees to tax.

Basic Principles of sound tax system fiscal adequacy, theoretical justice, administrative feasibility (for puspoes of determining constitutionality, not basis, although with exceptions)

Theory (necessity) and Basis (why it may)1. Lifeblood lifeblood of government (must be balanced with arbitrariness; mut be collected despite contest; CTA may issue injuction in appellate jurisdiction) 2. Necessity3. Benefits protection (what we pay for support and protection of Gvot; based on symbiosis)4. Jurisdiction state that gives protection is one entitled to tax5. Power to tax is power to destroy interference with rights so due care must be taken to kill the hen that lays the golden egg

Doctrines1. Prospectivity2. Imprescriptability3. Double taxationa. Strict direct, same property, purpose, authority, jurisdiction, period, kind of tax (OPPRESSIVE)b. Broad some elements are missing (VALID)

Tax on quarry resources: NG already imposes tax on resources on both public and private, so LGU may not impose the same. Pursuant to LGU though, it can still tax those from public lands.

How to eliminate: reciprocity, tax credit, deduction for those paid abroad, reduce rates

4. Escape (avoidance and evasion) Shifting (transfer of burden from statutory taxpayer to final taxpayer), impact (original point), incidence (final resting place of tax haha) Impact & incidence = direct. Otherwise, indirect. shifting burden to someone else in context of direct and indirect taxation mabigat, pero pwede mo bawiin pag pinasa mo sa iba (indirect). Sa yo lang yan (direct). Only impact can refund. He shifts burden, not liability.

THE PROPER PARTY TO CLAIM THE REFUND OF AN INDIRECT TAX IS THE STATUTORY TAXPAYER.

The statutory tax payer cannot claim an exemption on indirect taxes when it sells its products to tax exempt entities. They must bear the burden of tax.

Indirect vs. withholding: In withholding, incidence and burden = one person WHA is merely collector but no burden. significant in claim for tax amnesty (WHA cannot claim amnesty; VAT deficiency assessments) In Indirect, incidence and burden = diff persons (refund: when buyer is exempt, ST cannot claim exemption. Claim of refund is with ST. )

Avoidance (lawful method, GF, arms length, totality, step transaction, business purpose); Evasion (end = evil+n unlawful method, bad faith, piercing veil) In case spouses incorporate to mitigate taxes: lawful. Effect is that no transfer and estate taxes TODA: corporate to natural to corporate what were they trying to avoid? (ABC A XYZ = transfer from A to XYZ only 6% CGT and not corporate income tax)

5. Exemptiona. Congress except: flexible tariff clause, tax amnesty, locgovb. No exemption based on equity. c. Revocable at will EXCEPT when granted to private party for consideration.

6. Compensation and set offNo compensation and set off beca no debtor creditor relationship. : both claims DUE, LIQUIDATED and DEMANDABLE; or: local government taxes : solution indebiti equitable recoupment erroneously/illegally paid taxes which have prescribed may be set off against a refund. NOT APLICABLE TO PHIL COURTS. LIFEBLOOD THEORY

7. Compromise (doubtful validity of assessment or financial incapacity)

8. Amnesty Vs exemption: immunity from ALL civ, crim, admin liabilityes from non-payment and only past tax periods; tax exemptions prospective and civil only

9. Construction force and effect of law, must be within statue

a. Laws according to meaning. When vague, taxpayer. Predecessor construction not binding on successor if convinced diff should be given

b. Exemptions strcit against TP; includes amnesty and condonationi. Legislative grace tax relief granted by congress should be strictly construed ii. Determine first who are covered before who are exempted. iii. : statue provides liberal, public property, charitable and educational, special classes political subdivisions

c. Rules and regulations

d. Penal provisions

e. Nonretroactivity May be retroactive if not prejudicial to TP i. Exceptions;1. (may mali sa material facts: Taxpayer materially misrepresents, acted in bad faith, ruling on based on facts materially different from that collected by BIR 2. Rule is issued by courts not bir3. Ruling is patent nullity for being contrary to law

Scope and limitations:Generally: does not violate EPC, due process and religious freedom, uniform (GEES), equitable, for public purpose, within jurisdiction, constitutional, non-delegable

Constitutional Uniform (GEES, reasonable classification), equitable, progressive Police power, EPC, religious freedom, nonimpairment Public purpose, uniformity, within jurisdiction, notice and hearing for assessment and collection Territorial uniformity not necessary. SEZ can have diff taxes, gross income vs net income system for salaried and professionals, not point to singular person, cannot tax bibles May be unilaterally withdrawn (grant, not contractual), except in CONTRACTUAL TAX EXEMPTIONS (debentures bonds) private capacity, shed cloak of governmental immunity Majority vote before exemption from congress, prohibition of use of tax for special purpose, presidents veto power , SC power to review legality of tax, grant of power to LGU to create sources of revenue subject to limitations as Congress may provide, no appropriation for religious purposes

RPT, revenues and assets RPT ADE applied to purpose (necessary or incidental) for which the charitable/ educational institution is organized does not matter if there are paying patients, provided that the money collected is applied for the purpose of hospital as charity. Those used ADE for charitable, religious, educational are EXEMPT from RPT Those premises not ADE are subject to tax. Revenues and assets If operated exclusively for educational or charitable, then exempt from income tax. Non-stock, organized AND operated exclusively for charity, no part of income or asset inures to any member If it conducts profit making (like admission of paying patients) activities Up to 50% 10% PRT on taxable income Exceeding 50% 30% regular tax rate on taxable income

Inherent Public purpose, legislative (loc gov not inherent, but granted by consti), territorial, comity, govt exemptions Non delegable except to Pres re: tariff, emergency, treaty || locgov (limited to statute. Municipalities cannot impose transfer taxes per LGC) Territorial (must operate only within its jurisdiction; except: law operate outside or do not operate within treaties or tax of RC from abroad) Situs place/ authority with right to impose tax Income property: real (situs), personal tangible (where found), personal intangible (domicile of owner) sale RP- where located sale personal - consummated excise: transaction estate: anywhere if citizens and resident, if NRA only on those in phils VAT: transaction Comity exchange of benefits so if no benefit, no comity. Govt may tax itself. LGU may not tax national

Stages of TaxationLevy (legislature), assessment and collection (administration and enforcement), payment (compliance)

Tax vs:DefinitionAmountAuthorityEffect of Non-paymentScope

TaxEnforced contributionDemand of sovereigntyFor revenue purposes

No limitSovereignImprisonment if poll taxGeneral

Tarriff Tax on internationally traded articles

CustomsTax on imported or exported commodities

TollMoney for use of property; demand of proprietorshipCostProprietor

License Regulatory purpose (PP not Tax)CostSovereignNon-allowance or illegality General

Special Assessment Amount for the benefits received from some public improvement Benefits receivedSovereignLand only

DebtContractual, assignable, Contractual amount Private No imprisonment Debt , specific

PenaltySanction Usually proportionate to damage Public or private Imprisonment for crime General

Other kinds of classifications Personal no regard to property or occupation vs property property of a certain class vs privilege excise, manufacture, sale, consumption, occupation privileges BURDEN : Direct, indirect | RATES: Specific, ad valorem, mixed | PURPOSE: general, special | SCOPE: national, local | graduation: progressive, regressive, proportionate

Income Tax Flow of wealth other than return of capital

Kinds Global, schedular, semi schedular, semi global (lump or differentiate kinds of income)

Tax payers

IndividualsCorporations

RCDC

NRC (permanent stay or 183 days if working only)

RA (length of stay and definitive period)RFC (ETB/with office)

NRA-ETB (180days aggregate)

NRA-NETBNRFC (NETB/ no office/isolated)

A. Individuals Residents 1. RC (Filipino residing) w/in and w/out 2. NRC within (NO PARTICULAR NUMBER OF DAYS with intent to permanently reside or work requires him to be there) a. (nandun na) establish to satisfaction of CIR the fact of his physical presence abroad with intent of permanently residingb. (paalis pa lang) leaving the Philippines with intention of permanently residing in foreign country or permanently working there c. (kailangan magtrabaho doon) work requires them to be physically present abroad most of the time (183 days)d. (bumalik na) previously NRC, with respect to income from abroad

Determining residency of alien (to know rates, deductions, exemptions):Physical presence and length of stay (not intent) definite NOT extended NRA, definite EXTENDED RA, indefinite RA

Determining ETB of NRA: 180days

3. RA (definite and extended; indefinite) within

NON-Resident Aliens4. NRAETB within a. Stay in Philippines is at least 180 days (aggregate)5. NRANETB within BUT GROSS income @ 25% final tax ON EVERY TRANSACTIONa. Stay for less than 180days (foreign artist, tourists)b. Final tax: Payor of income is required to hold the tax. Payor withholds it to remit to government (WHA)

Special Category6. Minimum wage earners special concessions such as NOT subject to income tax

B. Corporations (citizenship depends on incorporation) Any aggregation of persons combining capital and industry to a common fund with intent to divide profit among themselves. Therefore, for purposes of the Corporation Code, partnership are also corporations, except joint venture and general professional partnerships

1. Domestic within and without2. Foreign within a. RFC licensed or has place of businessi. Casual transactions not indicative of being ETBb. NRFC GROSS income at 30%, withheld by payor

C. Special Groups Partnerships: taxable as corp. Coownership: common fund does not by and in itself make for a corporation. Intent to divide profits is necessary. GPP not income tax payer. Partners will pay individual income tax rates. Joint ventures (partnerships of corporations) GR: subject to tax as if corporation. There will be three taxpayers: Corp 1, Corp 2, and JV. Construction, infrastructure, service contracts with government JV will NOT be subject to income tax except if JV is a separately registered entity. AVIDA: When the agreement is to contribute property and industry and divide the houses constructed, the allocation of said housing units is not a taxable event as no income is realized. Requirements for construction to be exempt: Licensed contractors and both engaged in construction JV itself is licensed by PCAB, Foreign contractors allowed as long as they get license from PCAB and construction is certified.

D. Estate GR: Heirs will be liable for income in individual capacities upon distribution. Prior to division: Estate is taxpayer in its own right, though there may have been profits from preservation. Taxed as individual. No corporate income tax. After partition: When heirs decide to pursue partnership from their inheritance, then co-ownership is corporation liable for corporate income tax. Otherwise, they will just be liable individually.

E. Trusts Person imposes personal obligation upon his personal properties Revocable (Trustor maintains control over income): trustor liable Irrevocable (Trustor relinquishes control to fiduciary) fiduciary THERE IS A SEPARATE TAXPAYER KNOWN AS TRUST (who will pay).

Taxable income GR: Gain + Realized + NOT excluded by law Realized gain: actual or constructive (income is already subject to control and disposition) or presumptive realization (law will presume existence of income) You can declare income on one time basis or you can declare on instalment basis. 1. Initial payment does NOT EXCEED 25% of contract price (received during year of transaction) 2. Initial payment does NOT include evidence of indebtedness (checks, notes etc.)3. A deferred payment scheme will be considered as cash based transaction. Long term construction projects Declaration must be based on percentage of completion Realization Test income is recognized as soon as realized or received. Claim of right doctrine --> within his disposal + no other claim Attacked in concept of control, and must thus declare income for tax purposes (control test). Compare advance vs. deposit: when another person has claim over deposit, then TP may not declare income yet because someone has a claim over it. Economic benefit test he gains something which is of value, there is income. Severance test TP must be able to sever himself with that of his property before he can recognize income All events test reasonable certainty of realizing income or expense by applying all relevant circumstance

Not Income: 1. Stock dividends unless redeemed for distribution2. Compensatory for physical injuries not income. If emotional and mental anguish or exemplary income

Determining IncomeIndividual (estate, trust)Corporate (partnership)

GrossIncome EXCLUSIONSIncome - EXCLUSIONS

NetGross DEDUCTIONS*deductions are not allowed in compensation ER-EE incomeGross DEDUCTIONS

Taxable NetNet Exemptions Net = Gross (no exemptions)

Tax DueTaxable Net x Tax RateTaxable Net x Tax Rate

Not included: Those against which FINAL TAX is imposed/ GROSS INCOME compensation system applies

Sources activity, property or service giving rise to the income

InterestResidence of payor

DividendsResidence of corporation RFC

ServicesPerformanceIt is enough that the activity which generates the income takes place in philippines

Rents and Royalties Where used or located

Sale of RPLocation

Sale of PP

** constructive trading is considered activity from within philippines

GROSS - Trade, business or practice of profession + compensation + income from dealings with properties + income from passive sources + all other sources of income[COMP, Prof, Biz, Prop + AP3IR2D]

1. COMPENSATION based on ER-EE; if services basis is where rendered EG: A works for FilCorp who sends him abroad for 9months to work on a project with MotherForeignCorp. A is NRC, deriving income from abroad because services were rendered abroad. Fringe Benefits Tax (32% of GUMV) HEV HIM FHEL Para hindi magulo, basta isipin mo na bigtim benefit ito. Benefit ito, hindi dapat para sa employer pero para sa employee. The moment the mnager actually receives the FB, it will already be considered as taxed (final tax kasi ang fbt, so payor withholds). Thats why the base amount is GUMV. Housing if mainly for EE Excluded: for ER, AFP, temporary 3 months lang Expense if not for ER, vehicle (purchased, leased, maintained, partially paid for EE by ER), Househild help provided to EE, Interest less than market rate is the rate of interest below legal interest (12% lumang rate pero finix ng DOF to) Educational benefits granted to dependents of employee E: competition, will directly benefit ER, condition imposed upon benefit Membership in clubs, Foreign travel (if for work, nope!), Vacation, Life insurance GSIS, SSS, Medicare, Pagibis Excluded: Employers benefit rule Maybe claimed partially if partially for EE, partially for ER Rank and file By law (exces of 82K) De minimis De minimis maliit lang kaya hindi na pinatulan. New threshold: 82K. If govt EE, 13th month pay and other benefits upt o 82K. If private, 13th month and other months and other benefis up to 82 K. Includes living allowances except: Agri labor paid for in farm products Casual labor (unless casual labor in the usual trade or business) Household help (if bed and breakfast, regular) Foreign government

2. Income from profession - NO ER-EE. But essentially the same. Subject to deductions 3. Income from Business (same as profession). 4. Dealings in propertya. Capital vs Ordinaryi. Ordinary asset enumeration exclusive: stock in trade, held for sale in OCTB, used in TB subject to Dep, RP used in TB. Everything else is capital. ii. RULE: ordinary may be capital EXCEPT if REAL estate (2 year non-use in TB). Capital may always be ordinary. iii. Notable differences:1. NELCO, deductible from ordinary gain, final tax or rit, deductions b. Real, Stock, Personal REAL location; Personal transaction. If manufactured and sold in two different places partially within, partially without.i. Ordinary assets will generate regular income tax. ii. Capital RP tax base is entire SP1. 6% CGT: GSP or FMV (zonal/ assessed) 2. Situated here CGT. What about if abroad?3. Loss limitation rules (ind/corp) NCL may be deducted from NCGa. NCL may not be deducted from NOG. b. OCL may be deducted from NCG. (so hindi sla fair kay NCL)c. OCL may be deducted from NOG. 4. Holding period (ind only):a. STCG/ STHP: 100% G/L recognized (up to 12mos)b. LTCG/LTHP: 50% G/L recognized (more than 12 mos)5. NELCO (ind only):a. Carry over NELCO to next year, up to exetent of gain in the year in which it was incurred ( remember not to offset with OL/G)6. Foreclosure: not taxable if redeemed. Taxable otherwise, from final certifical of sale. 7. If transfer to wife due to separation: not taxable 8. BTO taxable iii. Capital Stocks (tax base is gain) 1. Traded in SE of 1 of sale price2. Not traded in SE (listed or otherwise) = CGT 5% up to 100K, 10% above 100K 3. Non-payment is non-registration of change in STB4. Not subject to CGTa. Dealers, investors in mutual fund stocks, law iv. Not subject to CGT:1. Principal residence rule (18 months, apply within 30days, once every 10 years)2. Government sale: 6% CGT or Regular income tax3. Tax-free exchanges: a. Property for stock, stock for stock, security for stock, controlb. In the control test, what must first be established is that the persons claiming control are the same persons (5 below) are the same people as are in the transaction alleged to be taxfree. c. Bonafide business purpose, step transaction testd. Effect if not solely in kind:

5. Passive Income (consider SOURCE) RWIP (20% FT) D vs rentals, annuities Royalties , unless LW, B, MC = 10% If sold abroad, income will be GI. If sold here, income will be FT. Prizes (as a result of effort or talent) 10K below like barangay singing contest = part of GI 10K above like national singing contest = 20% FT Winnings (luck which I will have now) Always FT except PCSO winnings (EXEMPT completely) and corporations (gross income) Interest (bank deposit or deposit substitutes) Consider residence of debtor who will pay interest (source/situs) Generally subject to tax as income, unless exempt or subject to FT. Deposit substitutes alternative form of borrowing from the public, which should be from 20 or more persons at any given point in time Debtor must withhold 20% FT on interest payments on BD/DS Compare with bond exemption EXEMPTIONS FCDU 7.5% imposed only on RESIDENTS LT investments (5 years) Pretermination: 5,4,3 4, 12 20 (dapat 5years term yung agreement talaga) Dividends Cash/property Determining situs

Look at income within past three years immediately preceding dividend declaration. if Philippine income is at least 50% of total income, then entire income is considered Philippine sourced income If less than 50% treated as partially sourced form within but only to extent of Phil income versus worldwide income.

DC declares dividendsRCNRCRANRA-ETBNRA-NETB

DCRFCNRFC10% FTSameSame20% FT25% RIT (gross system)

Exempt, intracorp. Div.Exempt, intracorp. Div. 30% RCIT (gross) TAX SPARING: As a way to mitigate the tax liability, the Philippines is willing to waive the 15% provided the other country allows the same amount as tax credit.

RFC declared dividends RC NRCRANRA-ETBNRANETB

DCRFCNRFCGIDetermine nationality of income source (50% in the past three years vs global income)

GIDetermine nationality30% Gross income

NRFC declared dividends RCNRCRANRAETBNRANETB

DCRFCNRFCGIExempt (source is abroad)ExemptExemptExempt

GIExemptExempt

Stock not normally subject to tax because no income. EXCEPT Declaration affects proportional ownership Cancellation of previously declared stock dividends amounts to declaration of cash dividends Recipient is NOT SH Distribution of T/S Liquidating dividends Different stocks were issued Rentals If rental for use of property, then considered TB and subject tor egular income tax Leasehold improvements Maybe declared outright or spread over Annuities paid instalments during thelife of a person for a fixed period of time in consideration of capital If dies before period, return premium is not taxable. If able to collect and finish period, income and mustbe declared Pensions & separation pay Separation pay is NOT taxable is INVOLUNTARY cause. Other causes Forgiveness of debts yes if not purely gratuitous. If pure liberality, not income tax BUT DONORs tax Recovery of previously written off accounts (tax benefit rule) written off amounts not declared or written off shall beincluded as income in the year of recovery. Tax refunds or credit Income from whatever source Exclusions, Deductions, Credits Differences: exclusion to determine gross, deduction to determine net, credit to determine payable

Exclusions to determine GROSS income, not considered part of income because either indemnity, Consti dictates, or taxed somewhere else What are excluded PAGALiT PA (premiums, accident, gifts, awards, life insurance, Treaty, pensions) Revenue of NSNP educational institutions (consti) Income of governments, from exercise of govt functions Return of premiums paid return of capital When beneficiary receives it, excluded. If principal receives it, excess is income. Gifts bequests and devises taxed under donor or estate tax Amount through accident or health insurance AHI/WCA/PERA + unearned income + suit or voluntary settlement Life insurance proceeds - not income. Indemnity for purposes of tax. Not interests, used merely to compensat for losses of partnership/corporation If there is profit realized, the profit is taxable as income Income exempt under treaty (TTRA does not defeat your right to exemption) Pension (reasonable private benefit plan) 10 year service, 50 years old, availed of only once Benefits from employees trust are non-taxable Involuntary separation pay (like terminal leave pay) NON TAXABLE Awards and winnings Awards in sports competitong must be recognized by national sports associations No positive past, present of future act on the part of winner/awardee PERA accounts will be free from income, redemption taxes

Deductions BITE DeDe Loss CPR to determine NET income Mostly for businesses and professions, EXCEPT for premiums on health and insurance) Congress may remove deductions and it will be valid. Deductions are in the nature of exemptions, and are such products of legislative grace. General Rules: Personal expenses are NEVER deductible. They are most likely subject to EXEMPTIONS. There must be substantiation Deductions not waived Show withholding (like engagement of professionals) withholding must be done at time of transacting Choose one between ISD/OSD: cannot be quarterly itemized then OSD sa yearly OSD RC, NRC, RA, DC, RFC

RC, NRC, RANRAETBNRA-NETBDC, RFCNRFC

Compensation

Non-compensation

PHIExemptions ISD/OSDPHIExemptionsISD onlyPHIExemptions GROSSISD/ OSD

GROSS

Itemized SD substantiation Expenses ordinary and necessary during taxable year RULE: match income and expense. If the gastos will pertain to capital, then capitalize, not expense. COSTS are NOT EXPENSES (costs are deducted to determine gross because return of capital. Deductions are expenses). Therefore, if the benefit will last for more than 1 year, then it is capital expenditure (like for litigation/ advertising). Samples:1. Salaries, reasonable and not excessive, not bonuses (except remuneratory bonuses)2. Travel, cost, rentals (no title or equity), necessary repairs, leases, entertainment and representation (reasonable, not illegal or immoral. Now at 5% if goods and 10% for services)3. Raw materials are COSTS-ASSETS, not expenses. 4. Political contributions must be fully utilized COHAN principle when it is shown that expenses are incurred, but the amount cannot be ascertained due to absence of evidence, taxpayer will bear cost of in exactitude and the BIR is allowed to make an estimate. Interests The proceeds of the loan must be used in furtherance of business. 1. Proceeds of loan used to capitalize shall be taken as part of cost. Actual interest expense shall still be subject to 33% of the interest income that is subject to final tax. BABABAAN MO YUGN TAX BASE NG TAXABLE INTEREST MO. (plugging th tax arbitrage scheme. Effectively lowers taxable base so as to lower the tax saving from deduction of interest expense) 1. Tax arbitrage is when tax payers take advantage of a favourable interest to save on taxes. Taxes they must be in accordance to TB. EXCEPT: Income tax, estate tax, donors tax, special assessments, 1. foreign taxes (may either be taken as credit here. Or if credit not exercised, then payable here as income tax). Foreign tax credit limit: (tax from foreign/ tax worldwide x phil tax rate) Tax as a deduction vs credit1. Credit is a peso for peso deduction where as a deduction pertains only to percentage of amount granted as discount. Bad debts those that arise from worthlessness of debts. It is distinguishable from loss through the element of worthlessness. must be WORTHLESS (remember tax benefit rule which applies if there is a corresponding tax benefit) Must be worthless, connected with business, must not be between related parties, uncollectible despite diligent efforts Tax benefit rule: Written off debts recognized as losses and which resulted to tax benefits must be considered as income in the year collected to the extent of the gain therefrom. Depreciation and Depletion Depreciation estimated value of normal wear and tear of asset. (straight line, declining balance, sum of the years) Depletion businesses involved in extraction of wasting assets Amortization refers to depreciation of intangibles LOSSES Ordinary asset gross income and deduction (ordinary loss)1. Ordinary, theft, embezzlement, casualty, NOLCO File declaration of loss and proof with BIR Capital asset capital gain (CGT, CGT-stocks, loss limitation, holding period, NELCO) and capital loss. Other losses1. Operating loss (when allowable deductions exceed gross income) NOLCO (3 years carry over) deduction may be carried over for next three succeeding taxable years ; 75% SUBSTANTIAL CHANGE IN OWNERSHIP OF BUSINESS RULE (MERGERS)1. Individual business, professional practitioners, and corps (DC, RFC)2. Losses from tax exempt lines cannot be deducted from non-exempt lines. (as when there are two lines of businesses) 3. NOLCO vs. mergers/consolidation: not allowed. Gaining corporations must not take advantage of net operating loss of losing corporations. Losing corp should not be allowed to peddle its losses. a. Except: compliance with 75% interest retention rule NOLCO of losing corp may be carried over PROVIDED owners of corp 2 maintain 75% interest/ownership in corp 1b. NOLCO vs MCIT: NOLCO is taken into consideration in computing for the RCIT. As such it excludes the application of the MCIT. i. Perios will continue to run regardless. 4. Foreign exchange losses are not taxable until realized5. Wagering losses deductible up to gains. It has to be legal form of gambling muna ah. Hindi pwedeng yugn sa katabi mo lang. 6. Non-deductible: illegal activities, losses between related taxpayers (nagbenta ka sa kapatid mo tapos nalugi ka. Wala kang mababawi don kasi related kayo). 2. Wash sales (Does not apply to dealers) : 30 SUBSTANTIALLY SAME KIND OF SHARES 30 GAINS ARE TAXABLE BUT LOSSES ARE NON DEDUCTIBLE. (sequence: purchase, sale, purchase: must be completed) Charitable contributions (5-10% limits) Limit: 10%/ 5% of taxable income prior to charitable contribution to accredited institutions EXCEPT1. Government2. International Orgs organized under phil law. 3. Accredited NGOzs Notice of donation should be made to the BIR. Pension trusts

OSD (Ind/Corp) see effect on partnerships Ind: 40% of GS Corp: 40% of GI

EXEMPTIONS Individual: BPATE (ONLY FOR RC, NRC AND RA. If NRA-ETB, reciprocity) Uniform exemption: P50,000 (single, married or head of family) Married spouses: maybe claimed by both if BOTH are earning. If only, then yun lang kumikita. If legally separated, then yung kumikita lang. Dependents do not include parents, senior citizes, siblings. ANAK lang. Additional: Qualified dependent children: P25K/child, maximum of 5 (P100K) GENERAL: Living with him + dependent upon him for chief support Up to 21: Not married, not gainfully employed, If over 21: but mental and physical condition makes him unable to support Favourable change: consider them na lang the year after. As if the change happened at the end of the year. However, if change is in LW or Chief support immediately consider. Whatever status at end of the year, that will prevail. Disallowed: personal expenses. New buildings or permanent improvements, restoration expenses, related parties, beneficiary is boss wash sales, lugio sa gambling etc TRANSFER PRICING situation whereby a corporation utilizes the tax exemption of another corporation by allocating incomeor expenses away from its income declaration with the purpose of mitigating tax liabilities. In such cases, the BIR is allowed to allocate such portion of income as to prevent tax evasion. arms length comparison of standards adopted by certain parties to standards adopted bys miliarly situated independent parties to determine if there is an intent to reallocate income or expenses for purposes of mitigating tax liabilities. However, BIR maynot unilaterally impose tax rates.

Minimum wage earners are EXEMPT from income tax. Senior citizen. Comity.

Corporations Apply individual computations here too: GI-AD=NI x 30 = NITP. BUT. There are others. MCIT (2% of GI, 3 years, DC and RFC only) compare with RCIT. Pay whichever is higher. Do NOT ever compare with PREFERENTIAL TAX RATE. MCIT is only for those with RCIT. Carry forward of excess MCIT excess of MCIT over RCIT maybe carried forward as credit for the next three succeeding taxable years. Pwede mo iaccumulate yugn MCIT mo basta nasa applicable period. Suspend: Prolinged labor dispute, legit business reverses, FM IAET (10% of Improperly accumulated earnings) Reasonableness and immediacy Accumulating profits beyond the reasonable needs of the business Reasonableness: URE exceed 100% of PIC = prima facie evidence of accumulation. REBUT: Debt payments, reasonable needs of expansion, contingencies board resolution to this effect may help. RESERVE THEM for what you need. Immediate, not merely imagined. Intent to use must be at the TIME OF ACCUMULATION, and not an afterthought. Exempt: publicly held, SEZ, GPPP, insurance, banks Preferential tax rates Proprietary (private) educational institutions and NP hospitals = 10% after compliance with predominance test Predominance test: Is the school related income greater? PTR. St lukes case: St Lukes was NP, but some of its income from pay patients were channelled to charity. None inured to the benefit of persons such as stockholder. Considering that no benefit inured, then it is non-profit. However, since it is NOT operating exclusively for charitable purposes, then it is NOT a charitable hospital and may only avail of PTR. Private schools exempt from VAT In re: bak deposits and deposit substitutes: interest income therefomr may be exempt from income tax if utilized ADE for educ/charity. SSS, GSIS, Philhealth, PCSO, LWD income tax exempt, BUT Notwithstanding their tax exempt character, they shall be subject to every income earned from profit related activities, regardless of the disposition of such income.

Partnerships CONTROL TEST KAYA MAY CONSTRUCTIVE RECEIPT Business partnerships The partnership entity shall be taxed like a corporation. Its net income after taax shall be distributed to partners, which will then be further subject to income tax AS IF THEY WERE DIVIDENDS (dividends tax of 10%). As such, FINAL TAX of 10% of the share received per partner. The income of the partnership shall be deemed to be constructively received, regardless of agreement between and among partners. After that, do not include in GI income anymore. GPP GPP itself NOT subject to corporate income tax. Then each partner shall be liable for the income. Constructive recognition rule again. In re: OSD If GPP avails of OSD, then partner can no longer use ISD. If GPP avails of ISD, partner can avail of ISD.

Credit To determine income tax PAYABLE

Withholding Tax Final Tax full settlementRoyalties, prize,s winnings, dividends (AT SOURCE. Payor must withhold taxes na) Creditable withholding tax partial settlement/ advance payment

TRANSFER TAXATION

1. Estate Tax (200K, 20% 10Mio) is more expensive than Donors Tax (100K, 15% 10mio)2. Tax liability accrues @moment of death so valuation also at that time, although payment will be when return is filed 3. Theories: Benefits Received, distribution of wealth, ability to pay, state partnership 4. Only applies to NATURAL PERSONS. Differentiate between residents and non-residents. 5. How to classify: Nationality of decedent, nature and location or property, valuation and rates applied. a. Rule on intangibles: follows domicile except franchises in Phils, shares of DC or RFC. Does NOT apply to NRA whose country of domicile manifests TOTAL reciprocity with Phil transfer taxation. 6. GROSS ESTATE: TRIGLiCa. Transfers in contemplation of death indicator: family member, timing b. Recovable transfersc. Interest (like in a partnership)d. GPOAe. Life insurance proceeds with estate as beneficiary and must have been irrevocable f. Insufficient consideration7. NET ESTATE: a. Ordinary [CELIT TV]i. Funeral expenses: 5% of GE, or AV or P200Kii. Judicial expenses: those necessary for settlement of estate. No ceiling. iii. Unpaid mortgage indebtedness. when the property is burdened with mortgage idebtdness, it may be deducted. If property of guarantor, pwede basta receivable. iv. Claims against the estate: forever barred, except if TAXES. Proven by notarized documents. If obtained 3 years before, there must be accounting of three years of loan. v. Taxes: post-death development cannot be burdened by taxes. vi. Losses (not compensable, necessary for settlement, due to casualties , not claimed as deductions)vii. Transfer for EXCLUSIVELY PUBLIC USEviii. Vanishing deductions (5 years, 100-20%,)1. Property was already subject of previous transfer tax. There was prior payment. Kahit zero yung transfer Tax, may payment yon.2. Identifiable. 3. Death/Donation 1 and Death 2 should take place within 5 years or less. 4. Prior decedent should not have claimed VD.b. Special [FSMA]i. Family home up to 1MIO or interest in property ii. Standard P1,000,000iii. Medical P500K incurred within 1 year prior from death iv. Amounts received by heir8. File notice of death within 60 days from death. Then file the estate tax return within 6 months from death. Payment of tax extendible to 2years or 5 years. Ground: payment of tax will cause undue hardship on part of the estate.

9. DONORS TAX gratuitous transfers, there has to be DONATIVE INTENT a. Direct or indirect gifts b. 2-15% for relatives (ascendants/ descendants, siblings, spouse, collateral within 4th consanguinity), 30% for strangers i. Aggregate gift made during a calendar year so pag nagdonate ka last month, yung next base mo will take that into consideration. Credit na lang yung nabayad mo na. c. Sale for insufficient consideration may give rise to donors tax, but consider the donative intent. EXCEPT for sales of capital assets, because you will be liable for CGT then based on fair market value or gross selling price,, whichever is higher.

VAT

VAT is tax assessed on every sale barter or exchange of goods and services in the course of trade or business in the Philippines, or on every importation of goods though not in the course of trade or business Includes sales of real estate by those engaged in the sale of the same: cap 1,919,500 or 3,199,200 and Lease of 12,800 DESTINATION PRINCIPLE: ergo, exports are zero-rated. Isolated transactions are not subject to VAT except when they are imports Output vat versus input vat and tax credit method. Remedy of those without output vat: refund or credit (please confirm if meron pang tax credit ngayon) Zero rated vs effectively zero rated Exports (IF GONE) international shipping, foreign country, gold,oic, non resident buyer, export oriented enterprise Effectively Zero rated zero rated because of treaties and international agreements Rule on PEZA registered enterprises VAT-registered: 0% Non-VAT registered: exempt EZ exports: 0% EZ sells to customs territory: 12 % Sale or lease of service in customs: 12% (same) but inside customer: 0% Consider sale, barter or exchange. But there are transactions where there is no actual sale but deemed sale by law such as: Sale of goods and services originally intended for TB (inallocate mo for yourself) Property dividends property of corporation distributed to SH Consignee does not sell goods consigned within 6 months Retirement from business as to inventoriable goods ** electricity can be sale. Change from VAT registered to non-VAT VAT-able? VAT-taxable to VAT exempt Cancellation for registration approved die to reversion to VAT-exempt VAT exempt person registers anyway but after three years decides na VAT-exempt pala NON-VAT-able Mergers (input tax may be utilized) Change in trade name Change in control but no exchange in properties etc Presumptive input VAT = 4% (sardines, mackerel, noodles, cooking oil, refined sugar) Transitional Input VAT = 2% of beginning inventory (when suddenly nagging VAT taxpayer na) Ordinary Refunds: Grounds: erroneously paid (overpays, erroneously pays, illegally pays a penalty) without authority of law Timing: file with CIR 2 years from payment(kasabay ng filing) regardless of supervening event. File a written claim within 2 years. Make sure that you assert this right by filing with CTA before the 2-year period lapses. 180 days, inaction? NOPE. This is for protesting assessments, not refunds. So wait. 2 years. Naissue before 2 years lapse. Appeal to CTA-DIV PETREV42. When denied, MR within 15D. Then Go to CTA-EB Petrev 43 within 15D Either MR, or SC PetRev under 45. When no action, appeal with the INACTION before the 2 year period lapses. VAT REFUNDS (SEC 112) File a refund within 2 years from the close of the taxable quarter from which relevant sales were made. 120D period MANDATORY. Relevant sale is that sale which gives rise to the claim (zero rated sale). Moreover, upon fling of written claim, the BIR has 120 days to act on the claim. Inaction is DENIAL WITH FINALITY. (walang 120D sa ordinary refund, basta within2year period) If denial or inaction within 120D: Appeal to CTA div, 30D rule 42. What if the decision/inaction will lampas the 2year period? You WAIT. Hinga lang teh, may time pa si BIR. The BIR is given 120D to act or not to act on your claim. (versus the mandate to file the refund within two years in ordinary refund cases).

Tax Remedies

Generally.1. Remedies by the Government Assessment and Collection2. Remedies by the Taxpayers DEARa. Before payment andb. After payment of tax

GOVERNMENT REMEDIESAdministrative Remedies Before Payment1. Assessment process or document (notice and demand + process) manner of determining the liability of a taxpayer a. PRINCIPLES:i. Prescriptive period: 3 years from last day of filing. If out of time, then from day of filing of return. 1. What if amendment? Determine if substantial or formal. If it will affect the tax liability, it is substantial. 2. Exceptions to 3 years:a. False/fraudulent: 10 years from discovery (assess or collect without assessment) b. Omission to file a return: from time of discovery c. Agreement in writing: waiver of right to be assessed i. Waiver must contain definite period within which govt should assess. Hindi pwede blank. ii. The one who signs waiver for corporation must be duly authorized. iii. Must be in WRITING and must contain AN AGREEMENT. Not merely acquiescence. There is NO IMPLIED ACCEPTANCE. iv. Who can sign for govt? CIR. But the function can be delegated to RDOs if the period of assessment is about to expire. v. Must be accomplished within the original period. ii. An affidavit complaint is merely a unilateral statement of facts, but absent a demand to pay, it is NOT an assessment. 1. Must contain facts and law upon which the assessment is based. It must be the ASSESSMENT which contains it, otherwise any document containing it is VOID. iii. Jeopardy assessment one made without the benefit of complete or partial assessment iv. Best evidence obtainable rule there must be basis and basis should be best evidence obtainable by BIR.1. Not the same as best evidence rule. It DOES dictate however that when origs are available then the origs are the BEST evidence obtainable.. v. Due information about the subject of examinationvi. Effects of delay: Basic Tax and additions1. Deficiency vs. Delinquency a. Def: notice and demandb. Del: liability begins at moment tax becomes due 2. Surchargea. Ordinary 25% basic tax assessed : failure to pay on time 25% of basic tax assessed (either by law or notice) + filing return with wrong BIR officei. One time imposition, peor pwede patong patongb. Fraud penalty 50% of basic tax assessed 3. Interest 20% PA tumatakbo from due date or date prescribed for payment4. Penalties - Compromise a. Bar to future criminal or civil prosecution concerning a particular tax liability b. AUDIT LOA: i. unverified number of years The purpose of the LOA is to inform the taxpayer about the subject of investigation. It will defeat the purpose of LOA and will violate right of taxpayer to due process. ii. third party verification rule information can come from third parties with or to whom party transacts or reports.iii. Bank deposits exceptions: waiver (compromise based on financial inability to pay taxes), subject matter is estate tax liability of a depositor; pwede rin kahit joint account; Exchange of Tax Information Act (ETIA) BIR can examine pursuant to request of foreign tax agency (reciprocity)c. Notice of Informal Conference d. Pre-assessment notice (PAN)i. Failure to issue PAN is denial to due process because PAN is required by the NIRC. The only ecxceptions to PAN are: (MAWEE)1. Mathematical error on face of return 2. Actual discrepancy between tax withheld and amount actually remitted 3. When a claimant of refund or credit is deemed to have applied the same against previous taxable quarters 4. Excise tax due on excisable articles not paid5. Locally purchased article by exempt person sold to non-exempt personse. FINAL ASSESSMENT NOTICE (ASSESSMENT) i. FAN PROTEST (w/in 30D) non protest will make amount in FAN conclusive. (pero issues concerning the amount lang)1. Protest formsa. Reconsideraton (wala reconsider mo lang) will not suspend period to collect b. Reinvestigation (additional docs for new investigation) + GRANT then suspended yung period to collect taxii. Submission of supporting documents (60D)f. WAIT. (180Days)i. Decision 1. DENIED: Remedy Appeal to CTA Div PetRev42 30D2. BIR must indicate that it is final decision on disputed assessment (FDDA)3. Then file MR with CTA Div (15D)4. Then to CTA EB (43 15d)5. Either MR or appeal to SC (PetRev 45 15D)ii. Inaction MUTUALLY EXCLUSIVE. 1. Appeala. Within 30D from lapse of 180D period (implied denial) Otherwise the DECISION becomes F&E. b. What about inaction? Failure to appeal after 180D means.2. WAIT.a. Then after receiving the decision, go sa appeal through a decision. 3. Bir Collects while there is appending protest . It doesnt matter what form it takes. But the BIR must have FDDA and that taxpayer can treat that as an implied denial.

Collection of Taxes 3 years from the ISSUANCE of the assessment. Except 10 years (with or without assessment) false fraudulent/ omission (FFO) 5 YEARS Collection of taxes assessed pursuant to FFO or period agreed upon in writing IAET imprescriptible Yung mangyayari here is, the period to collect is not tolled by a reconsideration protest (a reinvestigation does). So when the BIR does not act, the period consitnues to run. By the time the BIR acts on the case, the taxpayer maybe held liable, but the period to collect has lapsed. However, when the matter finally reaches the court before lapse of 3/5/10 years, then the period is tolled. Only two instances when you can collect without assessment: fraud/ omission NO INJUNCTION: Courts (E: CTA/SC) cannot issue injunctions against BIR in collection. Pending case before CTA Post a bond not less than tax to be collected Prove that collection is prejudicial ADMINISTRATIVE COLLECTION Distraint actual or constructive Constructive does not take property but notifies taxpayer that he cannot dispose of the same without authority of government (concealment with intention of evading taxes, leaving with intent to evade, obstructing proceedings, removing properties with intent ot evade,r etiring from business) Levy remedy: redemption 1 year from moment of sale Garnishment Tax lien taxpayer refuses to pay tax obligation Abate forego some or all collection of taxes Cost of collection will exceed tax to be collected Tax appears to have been unjustly/excessively assessed If notpower of compromise, no need to refer to NEBoard. SO abatements do not need etc. Compromise of tax liabilities SOLE PREROGATIVE OF CIR Non-delegable power of CIR1. Power to recommend to SOF issuance of RR2. Issue rulings of first impression or to modify existing ones 3. Station of tax officials4. Abate or enter into compromise National evaluation board acting together if more than 1million pesos Financial inability or reasonable doubt on validity lower than minimum Regional evaluation Board if basic tax does not exceed 500K. + discovered by bureau All EXCEPT: fraud (WHT liabilities), criminal violations of NIRC already filed with courts Grounds:1. Financial inability on part of taxpayer act of asking for extansion of time ot pay after decision has been rendered is an admission of capacity to pay 10% of basic taxes minimum Waiver of bank secrecy laws 2. Reasonable doubt regarding liability of taxpayer cannot be invoked when SC issues decision 40% of basic taxes JUDICIAL COLLECTION Civil CTA div - exceeding 1million RTC - 300-400K MTC - less than 300/400K Criminal (5 year period from discovery AND institution of proceedings. Period seems to be imprescriptible. And it is. It should be interpreted to mean that when the case is dismissed, it may be refilled within the specified period as long as there is no double jeopardy). Courts1. CTA amount is more than 1mio2. RTC 6 years and above3. MTC below 6 years No need to issue assessment. Criminal prosecution may arise because taxpayers knows already.

Administrative Remedies After Payment (Refunds) File WRITTEN claim of refund unless on its face, clear overpayment, then that return is equivalent to written claim. 2 years from payment, regardless of any supervening event. (pay as you file, so date of filing). Final Adjustment return ang reckoning sa period, not quarterly returns. What if amended? Count from filig of original. Then the period for the amended one starts from the time you file that. So ihiwalay mo yung orig sa amended.

COMPARE WITH: VAT REFUNDS (SEC 112) File a refund within 2 years from the close of the taxable quarter from which relevant sales were made. 120D period MANDATORY. Relevant sale is that sale which gives rise to the claim (zero rated sale). Moreover, upon fling of written claim, the BIR has 120 days to act on the claim. Inaction is DENIAL WITH FINALITY. (walang 120D sa ordinary refund, basta within2year period) If denial or inaction within 120D: Appeal to CTA div, 30D rule 42. What if the decision/inaction will lampas the 2year period? You WAIT. Hinga lang teh, may time pa si BIR. The BIR is given 120D to act or not to act on your claim. (versus the mandate to file the refund within two years in ordinary refund cases).

Other principles Standing to sue - Withholding agent, regardless of interest, can file claim for refund, and he will be holding the amount in trust for the statutory taxpayer. Protest (prepayment) and Refund (postpayment) are mutually exclusive remedies. The moment the amount subject of assessment becomes final, you cannot use refund as a remedy. Even if you failed to file a protest. However, when the assesment lapsed without finality then refund should be allowed.

BIR functions and organizationNon-delegable powers (recommend, rule, abate and compromise, station) Power to recommend to SOF issuance of RR. Issue rulings of first impression or to modify existing ones. All rulings must be retroactive except: Fraud, Material difference of basis, bad faith. Station of tax officials Abate or enter into compromise National evaluation board acting together if more than 1million pesos Financial inability or reasonable doubt on validity lower than minimum Regional evaluation Board if basic tax does not exceed 500K. + discovered by bureau

Tax periods Significance of period: individual may not avail of fiscal period. Always calendar except if BIR grants fiscal. When no books or records, GPP, trust = calendar. Short period happens (5 situations) when: 1. TP dies. 2. TP changes accounting period.3. Corp dies4. Corp new5. When BIR cancels period due to: intent to evade, removal/concealment with intent to evade, leaves to evade, obstruction of proceedings for collection

One time transactions: sale of real property etc

Local Taxation

Local Taxing power merely statutory, but not delegated. Congress may not remove it, but may limit and provide guidelines by law. Local governments will determine who, what and how much should be taxed. NGs role is to guide and limit, not dictate. The guide is LGC, Book 2. Local Sanggunian exercises that power. The LGC do not justify collection of taxes. The only way to enact it is through an ordinance issued by the LGU. Fundamental principles: Uniform , equitable, not contrary to law etc not unjust, progressive, for public purpose Requirements for enacting TAX ordinance: Prior public consultations and hearings are NECESSARY. What may or may not be taxed: Residual power to tax when the LGC does not contain a prohibition against taxing an activity or object, then it may do so. LGC can adjust rates but once every 5 years and amount not exceeding 10% under LGC. Blanket revocation of prior tax exemptions by any provision of law. There is no prohibitin against indirect double btaxation. BUT. Congress imposed that limitation the rule on pre-emption: if imposed by national govt, cannto be imposed by LGC UNLESS it is authorized to do so. NIRC income, estate, donor, VAT, % excise, DST T& C import taxes (mere entry of goods cannot be taxed by locgov) National Taxes: road users tax, MV registration fee, alcohol, petrol Businesses enjoying exemptions due to economic and public policies National Govt, agents and instrumentalities

Provinces: Transfer of real property ownership Printing and publication Franchise Tax (public utilities) in lieu of all taxes means in lieu of all NATIONAL taxes Sand and gravel taxes cannot be imposed on private properties Professional Tax where you have your principal office Amusement Tax Cities may impose taxes 50% higher than that of provinces Municipalities Business tax = GS/GR previous fiscal year Sales outlets pay tax in all units. If none, register sales in principal office situs. Principal office and plant + factory are in diff location: Prorated: 30% - 70% of GS All three are in different locations: 30% - 60 of 70% for factory 40% of 70 plant Barangay Less than 50K, Secure barangay clearance Fighting cocks, signages etc

Collecting Taxes: When - 5 years from the date tax becomes due Administrative Judicial Means Taxpayer remedies DOJ: Appeal to the DOJ regarding newly enacted tax ordinance constitutionality or legality 30D from effectivity of ordinance DOJ 60D to act/not act Court (RTC with LGU)

PROTEST AN ASSESSMENT: 5 years 60-60 30 etc Local Treasurer (5years from due, then 5 years from assessment then collect) File protest (60D) incorporate all docs Treasurer will decide/ not act in 60D Appeal to Court (RTC) CTA Div (42 30D) MR CTA EB SC

REFUND: (basta within 2 years. Cosider jrusidiction of RTC & MTC) Local treasurer (2 years from date of payment or entitlement thereto, supervening events considered) DECIDE or WAIT but make sure to appeal within 2 year period Consider amount involved (because now the amount is being recovered) MTC/RTC Then CTA EB (when RTC acting appellate 30D) OR CTA Div (when RTC acting original 30D)

Real Property Tax

RP anything with character of permanence will be considered as real property in RPT Real property local tax, so local government (local sanggunian province or city) needs to enact its own ordinance ADE for C,E,R purposes ADE by national government ADE by GOCC are exempt from RPT. The benefit granted to GOCC cannot be expaned to include those with whom it contracts. Environmental protection

Principles:

VALUED AT Current FMV TAXED AT ACTUAL USE

Process:

Ordinance 1: Assessor is obliged to revalue properties (Preparation of values of FMV). Ordinance 2: Levy of RPT FMV * Assessment level (taxable percentage based on use: res, agri, com, industrial, min, tim, spl) We get Assessed value/ Taxable value * RPT (P 1%, C 2%) = RPT may be paid even on instalment

Remedies Government Admin by Levy Collect 5 years from tax becomes due (E: FFO 10 years) Judicial Action

Remedies Taxpayer Appeal to DOJ Protest against action by assessor: Assessor Appeal to LBAA CBAA CTA EB (local/CENTRAL board of assessment appeals): Appeals from actions taken by the assessor and treasurer Members of LBAA: Register of Deeds + Prosecutor +City Engineer Protest against assessment by treasurer File protest before treasurer LBAA CBAA CTA EB PAYMENT UNDER PROTEST

Refund (2 years from payment or entitlement thereto) File claim LBAA CBAA CTA EB

Tariff and Customs

Importation from the moment from the moment craft enters Phil jurisdiction with intent to unload. Intent is sufficient, actual unloading not necessary Every import must pass through customs houses because all are subject to duties. Otherwise smuggled Obligations: Cargo manifest stating contents of vessel upon time of entry Importer must declare through import entry declaration.

Kinds of importation Dutiable taxable Importation ends after: Pays to get permit for release + bring out goods from customs jurisdiction BOC cannot seize goods from you after the importation process ends. The only remedy is judicial. What if there is misdeclaration and fraud? Permit was not lawfully obtained. So BOC can still seize articles. Persons who settled duties is required to keep record for 3 years. Prohibited not allowed, will be destroyed Conditionally Free personal effects of returning residents; goods donated to DSWD for charity etc

Duties Regular ad valorem (transaction value) or specific Transaction value of identical goods. Then similar. Or deductive value. Computed value. Soecific duty Special Dumping LESS THAN FAIR MARKET VALUE: sold here for price less than fair market value (tinatapon dito) Countervailing SUBSIDY counteracting the effect of subsidies being enjoyed by imported articles from their country of origin Marking MARKING incorrectly marked or declared Discriminatory LINTIK LANG ANG WALANG GANTI DUTY: goods which discriminate on our goods

Remedies1. Customs protest cases lawful forms of importation

Protest with collector of customs (pay under protest) Grant automatic review by CoCProtest with collector of customs (pay under protest) Deny appeal to CoC

From Coc Grant auto review by DOF Grant (DONE!) ||| but if deny CTA Div.From Coc Deny CTA Div

2. Seizure and forfeiture cases

Collector of customs has primary jurisdiction (courts should NOT interfere) over Seizure and forfeiture cases Search warrants are not necessary in seizure and forfeiture proceedings. if residential dwelling.

Judicial Remedies

Regular Court equivalent to CA. Decisions of the CTA are now appealable to the SC. Division CIR: D/ R/P/O (disputed assessments, refunds, payment of penalties/ other matters by CIR) Inactions of the BIR: D/R/P/O TCC: SOF DTI or DOA: dumping or countervailing duties RTc decisions (original jurisdiction)

General:PetRev:42 (30D) MR 15D (mandatory) PatRev43 CTA EB either MR or SC (PetRev45 15D)

Criminal Cases RTCgreater 6 CTA div MTC up to 6 IRT or TCC exceeds 1Mio (CTA EB, exclusive orig criminal)

Civil for collection (300/400K) 300/400 = MTC/RTC 1Mio (NIRC/TCC) CTA Div En Banc CTA division RTC appellate CBAA

Taxpayer suit identify yourself as someone injured or adversely affected by public funds disbursements Ripeness, Exhaustion, Lis Mota of case (if constitutionality)