ASIA PACIFIC COLLEGE OF ADVANCED STUDIES

COLLEGE DEPARTMENT

Taxation may be defined as a State power, a legislative process, and a mode of

government cost distribution
1. As a state power
Taxation is an inherent power of the State to enforce a proportional contribution
from its subjects for public purpose
2. As a process
Taxation is a process of levying taxes by the legislature of the State to enforce
proportional contributions from its subjects for public purpose
3. As a mode of cost distribution
Taxation is a mode by which the State allocates its costs or burden to its subjects
who are benefited by its spending

The Theory of Taxation

Every government provides a vast array of public services including defense, public
order and safety, health, education, social protection among others.
A system of government is indispensable to every society. Without it, the people will not
relish the benefits of a civilized and orderly society. However, government cannot exist
without a system of funding. The government’s necessity for funding is the theory of
taxation.

The Basis of Taxation

The government provides benefits to people in the form of public services, and the
people provide the funds that finance the government. This mutuality of support between
the people and the government is referred to as the basis of taxation.

Receipt of benefits is conclusively presumed

Every citizen and resident of the State directly or indirectly benefits from the public
services rendered by the government. While most public services are received indirectly,
their realization by every citizen and resident is undeniable. In taxation, the receipt of
these benefits by the people is conclusively presumed. Thus, taxpayers cannot avoid
payment of tax under the defense of absence of benefit received. The direct receipt or
actual availment of government services is not a precondition to taxation.
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COLLEGE DEPARTMENT

Theories of cost allocation

The government regards the following general considerations in the exercise of its
taxation power:
1. Benefit received theory
2. Ability to pay theory

Benefit Received Theory

This presupposes that the more benefit one receives from the government, the
more taxes he should pay.

Ability to pay theory

This presupposes that taxation should also consider the taxpayer’s ability to pay.
Taxpayers should be required to contribute based on their relative capacity to sacrifice
for the support of the government.
In short, those who have more should be taxed more even if they benefit less from the
government. Those who have less should be taxed less even if they receive more of the
benefits from the government.
Aspects of Ability to Pay Theory
1. Vertical Equity
Vertical Equity proposes that the extent of one’s ability to pay is directly
proportional to the level of his tax base

2. Horizontal equity
Horizontal equity requires consideration of the particular circumstance of the
taxpayer

Vertical equity is a gross concept while horizontal equity is a net concept.

 ASIA PACIFIC COLLEGE OF ADVANCED STUDIES
COLLEGE DEPARTMENT

The Lifeblood Doctrine

Taxes are the lifeblood of the government, and their prompt and certain availability are
an imperious need. Upon taxation depends the government’s ability to serve the people
for whose benefit taxes are collected.
Implications of the lifeblood doctrine in taxation:
1. Tax is imposed even in the absence of a Constitutional grant
2. Claims for tax exemption are construed against taxpayer
3. The government reserves the right to choose the objects of taxation
4. The courts are not allowed to interfere with the collection of taxes
5. In income taxation:
a. Income received in advance is taxable upon receipt
b. Deduction for capital expenditure and prepayments is not allowed as it effectively
defers the collection of income tax
c. A lower amount of deduction is preferred when a claimable expense is subject to limit
d. A higher tax base is preferred when the tax object has multiple tax bases

Inherent powers of the state

A government has its basic needs and rights which co-exist with its creation. It has rights
to sustenance, protection, and properties. The government sustains itself by the power of
taxation, secures itself and the well-being of its people by police power, and secures its
own properties to carry out its public services by power of eminent domain.
These rights are dubbed as “powers” are natural, inseparable, and inherent to every
government. Therefore, the exercise of these powers by the government is presumably
understood and acknowledged by the people from the very moment they establish their
government. These powers are naturally exercisable by the government even in the
absence of an express grant of power in the Constitution.

The Inherent Powers of the State

1. Taxation power is the power of the State to enforce proportional contribution from its
subjects to sustain itself
2. Police power is the general power of the State to enact laws to protect the well-being
of the people
 ASIA PACIFIC COLLEGE OF ADVANCED STUDIES
COLLEGE DEPARTMENT

3. Eminent domain is the power of the State to take private property for public use after
paying just compensation
Comparison of three powers of the State
Point of Difference Taxation Police Power Eminent
Domain
Exercising Authority Government Government Government and
private utilities
Purpose For the support of To protect the For public use
the government general welfare of
the people
Persons affected Community or class Community or Owner of the
of individuals class of individuals property
Amount of Unlimited Limited No amount
Imposition (Tax based on (Imposition is imposed (The
government needs) limited to cover government pays
cost of regulation) just
compensation)
Importance Most important Most superior Important
Relationship with the Inferior to “non- Superior to the Superior to the
constitution impairment clause” “non-impairment “Non-impairment
of the Constitution clause” of the clause” of the
Constitution Constitution
Limitation Constitutional and Public interest and Public purpose
Inherent limitations due process and just
compensation

Similarities of the three powers of the State:

1. They are all necessary attributes of sovereignty
2. They are all inherent to the State
3. They are all legislative in nature
4. They are all ways in which the State interferes with private rights and properties
5. They all exist independently of the Constitution and are exercisable by the government
even without Constitutional grant. However, the Constitution may impose conditions or
limits for their exercise.
6. They all presuppose an equivalent form of compensation received by the persons
affected by the exercise of the power
7. The exercise of these powers by the local government units may be limited by the
national legislature.
 ASIA PACIFIC COLLEGE OF ADVANCED STUDIES
COLLEGE DEPARTMENT

Scope of the taxation Power

The scope of taxation is widely regarded as comprehensive, plenary, unlimited, and
supreme.
However, despite the seemingly unlimited nature of taxation, it is not absolutely
unlimited. Taxation has its own inherent limitations and limitations imposed by the
Constitution.
The limitations of Taxation Power
A. Inherent limitation
1. Territoriality of taxation
2. International comity
3. Public purpose
4. Exemption of the government
5. Non-delegation of taxing power
B. Constitutional limitations
1. Due process of law
2. Equal protection of law
3. Uniformity rule in taxation
4. Progressive system of taxation
5. Non-imprisonment for non-payment of debt or poll tax
6. Non-impairment of obligation and contract
7. Free worship rule
8. Exemption of religious or charitable entities, non-profit cemeteries, churches
and mosque from property taxes
9. Non-appropriation of public funds or property for the benefit of church, sect, or
system of religion
10. Exemption from taxes of the revenues and assets of non-profit, non-stock
educational institutions
11. Concurrence of majority of all members of Congress for the passage of law
granting tax exemption
12. Non-diversification of tax collections
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COLLEGE DEPARTMENT

13. Non-delegation of power of taxation

14. Non-impairment of the jurisdiction of the Supreme Court to review tax cases
15. The requirement that appropriations, revenue, or tariff bills shall originate
exclusively in the House of Representatives
16. The delegation of taxing power to local government units

INHERIT LIMITATION OF TAXATION

Territoriality of taxation
Public services are normally provided within the boundaries of the State. Thus,
government can only demand tax obligations upon its subjects or residents within its
territorial jurisdiction.

Two-fold obligations of taxpayers:

1. Filing of returns and payment of taxes
2. Withholding of taxes on expenses and its remittance to the government

These obligations can only be demanded and enforced by the Philippine government
upon its citizens and residents. It cannot enforce these upon subjects outside its territorial
jurisdiction as this would result in encroachment of foreign sovereignty.

Exception to territoriality principle

1. In income taxation, resident citizens and domestic corporations are taxable on income
derived within and outside the Philippines
2. In transfer taxation, residents or citizens such as resident citizens, non-resident citizens
and resident aliens are taxable on transfers of properties located within or outside the
Philippines.
International comity
No country is more powerful than the other. It is by this principle that each country
observes international comity or mutual courtesy or reciprocity between them.
Hence,
1. Governments do not tax the income and properties of other governments
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COLLEGE DEPARTMENT

2. Governments give primacy to their treaty obligations over their own domestic tax laws
Embassies or consular offices of foreign governments in the Philippines including
international organizations and their non-Filipino staff are not subject to income taxes or
property taxes. Under the National Internal Revenue Code (NIRC), the income of foreign
government and foreign government-owned and controlled corporations are not subject
to income tax.
When a state enters into treaties with other states, it is bound to honor of the agreements
as a matter of mutual courtesy with the treaty partners even if the same conflicts with its
local tax laws.

Public purpose
Tax is intended for the common good. Taxation must be exercised absolutely for public
purpose. It cannot be exercised to further any private interest.

Exemption of the government

Under the NIRC, government properties and income from essential public functions are
not subject to taxation. However, income of the government from its properties and
activities conducted for profit including income from government-owned and controlled
corporation is subject to tax.
Non-delegation of taxing power
The legislative taxing power is vested exclusively in Congress and is non-delegable
pursuant to the doctrine of separation of the branches of the government to ensure a
system of checks and balances.
Exceptions to the rule of non-delegation
1. Under the Constitutional, local government units are allowed to exercise the power of
tax to enable them to exercise their fiscal autonomy
2. Under the Tariff and Customs Code, the President is empowered to fix the amount of
tariffs to be flexible to trade conditions.
3. Other cases that require expedient and effective administration and implementation of
assessment and collection of taxes.
 ASIA PACIFIC COLLEGE OF ADVANCED STUDIES
COLLEGE DEPARTMENT

CONSTITUTIONAL LIMITATION OF TAXATION

Observance of due process of law
No one should be deprived of his life, liberty, or property without due process of law.
Tax laws should neither be harsh nor oppressive.
Aspects of Due process
1. Substantive due process
Tax must be imposed only for public purpose, collected only under authority of a valid
law and only by the taxing power having jurisdiction. An assessment without legal basis
violates the requirement of due process
2. Procedural due process
There should be no arbitrariness in assessment and collection of taxes, and the
government shall observe the taxpayer’s right to notice and hearing. The law established
procedures which must be adhered to in making assessments and in enforcing
collections.
Under NIRC, assessments shall be made within three years from the due date of filing of
the return or from the date of actual filing, whichever is later. Collection shall be made
within five years from the date of assessment. The failure of the government to observe
these rules violates the requirement of due process
Equal Protection of the law
No person shall be denied the equal protection of law. This rule applies where the
taxpayers are under the same circumstances and conditions.
Uniformity rule in taxation
The rule of taxation shall be uniform and equitable. Taxpayers under dissimilar
circumstances should not be taxed the same. Each class is taxed differently, but
taxpayers falling under the same class are taxed the same. Hence, uniformity is relative
equality.
Progressive system of Taxation
Congress shall evolve a progressive system of taxation. Under progressive system of
taxation, tax rate increases as the tax base increases The Constitution favors progressive
tax as it is consistent with the taxpayer’s ability to pay.

Non-imprisonment for non-payment of poll tax

As a policy, no one shall be imprisoned because of his poverty, and no one shall be
imprisoned for mere inability to pay debt.
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COLLEGE DEPARTMENT

However, the Constitutional guarantee applies only when the debt is acquired by the
debtor in good faith. Debt acquired in bad faith constitutes estafa, a criminal offense
punishable by imprisonment.

Is non-payment of tax equivalent to non-payment of debt?

Tax arises from law and is a demand of sovereignty. It is distinguished from debt which
arises from private contracts. Non-payment of tax compromises public interest while the
non-payment of debt compromises private interest. The non-payment of tax is similar to
a crime. The Constitutional guarantee on non-imprisonment for non-payment of debt
does not extend to non-payment of tax except poll tax.

POLL, PERSONAL, COMMUNITY OR RESIDENCY TAX:

Poll tax has two components:
A. Basic community tax
B. Additional community tax
The Constitutional guarantee on non-imprisonment for non-payment of poll tax applies
only to the basic community tax.

Non-impairment of obligation and contracts

The State should set an example of good faith among its constituents. It should not set
aside its obligations from contracts by the exercise of its taxation power.
Free worship rule
The Philippine government adopts free exercise of religion and does not subject its
exercise to taxation. Consequently, the properties and revenues of religious institutions
such as tithes or offerings are not subject to tax. However, this does not extend to income
from properties or activities of religious institutions that are proprietary or commercial in
nature.
Exemption of religious, charitable or educational entities, non-profit cemeteries,
churches and mosques, lands, buildings, and improvement from property tax
The Constitutional exemption from property tax applies for properties actually, directly,
and exclusively used for charitable, religious, and educational purposes.
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COLLEGE DEPARTMENT

Non-appropriation of public funds

This constitutional limitation is intended to highlight the separation of religion and the
state.
Exemption from taxes of the revenues and assets of non-profit, non-stock educational
institutions including grants, endowments, donations, or contributions for educational
purposes
This exemption applies only on revenues and assets that are actually, directly, and
exclusively devoted for educational purposes.
Consistent with this constitutional recognition of education as a necessity, the NIRC also
exempts government educational institutions from income tax and subjects private
educational institutions to a minimal 10% income tax
Concurrence of a majority of all members of Congress for the passage of a law granting
tax exemption
The Constitution requires the vote of the majority of all members of Congress in the
grant of tax exemption.
In the approval of an exemption law, an absolute majority or the majority of all members
of Congress, not a relative majority or quorum majority, is required. However, in the
withdrawal of tax exemption, only a relative majority is required.

Non-diversification of tax collections

Tax collections should be used only for public purpose.
Non-delegation of the power of taxation
The principle of checks and balances in a republican state requires that taxation power as
part of lawmaking be vested exclusively in Congress.
However, delegation may be made on matters involving the expedient and effective
administration and implementation of assessment and collection of taxes. Also, some
aspects of the taxing process that are non-legislative in character are delegated.
Non-impairment of jurisdiction of the Supreme Court to review tax cases
Notwithstanding the existence of Court of Tax Appeals, which is a special court, all
cases involving taxes can be raised to and finally decided by the Supreme Court of the
Philippines.
Appropriations, revenue, or tariff bills shall originate exclusively in the House of
Representatives, but the Senate may propose, or concur with amendments
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COLLEGE DEPARTMENT

Laws that add income to the National Treasury and those that allows spending therein
must originate from the House of Representatives while Senate may concur with
amendments.
Each local government unit shall exercise the power to create its own sources of revenue
and shall have a just share in the national taxes
This is a constitutional recognition of the local autonomy of local governments and an
express delegation of the taxing power.
Stages of the exercise of Taxation Power
1. Levy or imposition
2. Assessment and collection
Levy or imposition
This involves enactment of a tax law by Congress and is called impact of taxation. It is
also referred to as the legislative act in taxation.
Congress is composed of two bodies:
1. The House of Representatives, and
2. The Senate
As mandated by the Constitution, tax bills must originate from the House of
Representatives. Each may, however, have their own versions of a proposed law which is
approved by both bodies, but tax bills cannot originate exclusively from the Senate.
Matters of legislative discretion in the exercise of taxation
1. Determine the object of taxation
2. Setting the tax rate or amount to be collected
3. Determine the purpose for the levy which must be public use
4. Kind of tax imposed
5. Apportionment of the between the national and local government
6. Situs of taxation
7. Method of collected
Assessment and Collection
The tax law is implemented by the administrative branch of the government.
Implementation involves assessment or the determination of the tax liabilities of
taxpayers and collection. This stage is referred to as incidence of taxation or the
administrative act of taxation.
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COLLEGE DEPARTMENT

SITUS OF TAXATION
Situs is the place of taxation. It is the tax jurisdiction that has the power to levy taxes
upon the tax object. Situs rules serve as frames of reference in gauging whether the tax
object is within or outside the tax jurisdiction of the taxing authotity.
Examples of Situs Rules:
1. Business tax situs: Businesses are the subject to the tax in the place when the
business is conducted
2. Income tax situs on service: Service fees are subjected to tax where they are
rendered.
3. Income tax situs on sale of goods: The gain on sale is subjected to tax in the place
of sale.
4. Property tax situs: Properties are taxable in their location.
5. Personal tax situs: Persons are taxable in their place of residence
OTHER FUNDAMENTAL DOCTRINES IN TAXATION
1. Marshall Doctrine – “The power to tax involves the power to destroy”. Taxation
power can be used as an instrument of police power. It can be used to discourage
or prohibit undesirable activities or occupation. As such, taxation power carries
with it the power to destroy.

However, the taxation power does not include the power to destroy if it used
solely for the purpose of raising revenue.

2. Holme`s`Doctrine - “Taxation power is not power to destroy while the court

sits”. Taxation power may be used to build or encourage beneficial activities or
industries by the grant tax incentives

While the Marshall Doctrine and the Holme`s Doctrine appear to contradict each
other, both are actually employed in practice in practice. A good manifestation of
the Matrshal Doctrine is the imposition of excessive tax on cigarettes

3. Prospective of tax laws – Tax laws are generally prospective in operation. An ex

post facto or a law that retroacts is prohibited by the Constitution.

Exceptional, income tax laws may operate retrospectively. If so intended by

Congress under certain justifiable conditions. For example, Congress can levy tax
on income earned during periods of foreign occupation even after the war.

4. Non-Compensation or set-off - Taxes are not subject to automatic set-off

compensation. The taxpayer cannot delay payment of tax to wait for the
resolution of a lawsuit involving his pending claim against the government. Tax
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COLLEGE DEPARTMENT

is not a debt; hence, it is not sunject to set-off. This rule is important to allow the
government sufficient period to evaluate the validity of the claim.

Exeptions:

a) Where the taxpayer`s claim has an already become due and demandable
such as when the government already recognize the same and an
appropriation for refund was made
b) Cases of obvious overpayment of taxes
c) Local taxes

5. Non-assignment of taxes – Tax obligation cannot be assigned or transferred to

another entity by contract. Contracts executed by taxpayers to such effect shall
not prejudice the right of the government to collect.

6. Imprescriptibillity in taxation – Prescription is the lapsing of a right due to the

passage of time. When one sleep on his right over an unreasonable of time, he is
presumed to be waiving his right. The government`s right to collect taxes does
not prescribe unless the law itself provides for such prescription.

Under the NIRC, tax prescribes if not collected within 5 years from the date of its
assessment. In the absence of an assessment, tax prescribes if not collected by
judicial action within 3 years from the sate the return is required to be filed.
However, taxes due from taxpayers who did not file return or those who filed
fraudulent returns do not prescribe.

7. Doctrine of estopel – Under the doctrine of estopel, any misrepresentation made

by one part toward another who relied therein in good faith will be held true and
binding against that person who made the misrepresentation.

The government is not subject to estopel. The error of any government employee
does not bind the government. It is held that the neglect or omission of
government officials entrusted with the collection of taxes should not be allowed
to bring harm or detriment to the interest of the people. Also subsequent correct
application of the same.

8. Judicial Non-interference – Generally, courts are not allowed to issue injunction

against the government pursuit to collect tax as this would unnecessarily defer tax
collection. This rule is anchored on the Lifeblood Doctrine.

9. Strict Construction of Taxes Laws – When the law provides for taxation,
taxation is the general rule unless there is a clear exemption. Hence the maxim,
“Taxation is the rule, exemption the exception.’’
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COLLEGE DEPARTMENT

When the language of the law is clear and categorical, there is no room from
interpretation. There is only room for application. However, when taxation laws
are vague, the doctrine of strict legal construction is observed.

Vague tax laws

Vague tax laws are constructed against the government and in favour of the
taxpayers. A vague tax law means no tax law. Obligation arising from law not
presumed. The Constitutional requirement of the due process requires laws to be
sufficiently clear and expressed in their provisions.

Vague exemption laws

Vague tax exemption laws are construed against the taxpayer in the favour of the
government. A vague tax exemption law means no exemption law. The claim for
exemption is construed strictly against the taxpayer in accordance with the
lifeblood doctrine.

The right of taxation is inherit to the State. It is a prerogative essential the

perpetuity of the government. He who claims exemption from the common
burden must justify his claims by the clearest grant of organic or the statue law.

When exemption is claimed, it must be shown indubitably to exist. At the outset,

every presumption is against it. A well-founded doubt is a fatal to the claim; it is
only when the terms of the concession are too explicit to admit fairly of any other
construction that the proposition can be supported.

Tax exemption cannot arise from vague inference. Tax exemption must be clear
and unequivocal. A taxpayer claiming a tax exemption must point to a specific
provision of law conferring on the taxpayer, in clear and plain terms, exemption
from common burden. Any doubt whether a tax exemption exists is resolved
against the taxpayer.

DOUBLE TAXATION
Double taxation occurs when the same taxpayer is twice by the same tax jurisdiction for
the same thing.

Element of double taxation

1. Primary Element: Same object
2. Secondary Elements:
a. Same type of tax
b. same purpose of tax
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COLLEGE DEPARTMENT

c. Same jurisdiction
d. Same tax period
Types of Double Taxation
1. Direct double taxation - This occurs when all element of double taxation
exists for both impositions.
Example:
a. An income tax 10% on monthly sales and a 2% income tax on the
annual sales (total of monthly sales)
b. A 5% tax on bank reserve deficiency and another 1% penalty per day
as a consequence of such reserve defieciency

2. Indirect double taxation – This occurs when at least one of the secondary
elements of double taxation is not common for both impositions.
Examples:
a. The national government levels business tax on the sales gross
receipts of business while the government levels business tax upon the
same sales or receipt.
b. The national government collects income tax from a taxpayer on his
income while the local government collects community tax upon the
same income.
c. The Philippine government taxes foreign incomes of domestic
corporations and resident citizens while a foreign government also
taxes the same income (international double taxation).
Nothing in our law expressly prohibits double taxation. In fact, indirect double taxation
is prevalent in practice. However, direct double taxation is discouraged because it is
oppressive and burdensome to taxpayers. It is also believed to counter the rule of equal
protection and uniformity in the Constitution.

How can double taxation minimized?

The impact of double taxation can be minimized by any one or combination of the
following:
a. Provision of tax exemption – only one tax law is allowed to apply to a tax
object while the other law exempts the same tax object
b. Allowing foreign tax credit - both tax laws of the domestic made country and
a foreign country tax object but the tax payments made in the foreign tax law
is deductible against the tax due the domestic tax law
c. Allowing reciprocal tax treatment – provisions in tax laws imposing a
reduced tax rate or even exemption if the country of the foreign taxpayer also
give the same treatment to Filipino non-residential therein.
 ASIA PACIFIC COLLEGE OF ADVANCED STUDIES
COLLEGE DEPARTMENT

d. Entering into treaties or bilateral agreements – countries may stipulate for a

lower tax rates for their resident if they engage in transaction that are taxable
by both of them.
ESCAPES FROM TAXATION
Escapes from taxation are the means available to the taxpayer to the limit or even avoid
the impact of taxation
Categories of Escapes from Taxation
A. Those that result to loss of government revenue
1. Tax evasion, also known as tax dodging, refers to any act or trick that trend to
illegally reduce or avoid the payment of tax
Example:
a. This can be achieved by gross understatement of income, non-declaration of
income, overstatement of expense or tax credit.
b. Misrepresenting the nature or amount of transaction to take advantage of
lower taxes.

2. Tax avoidance, also known as tax minimization, refers to any act or trick that
reduces or totally escapes taxes by any legally permissible means.
Example:
a. Selection and execution of transaction that would expose taxpayers to lower
taxes.
b. Maximizing tax options, tax carry-overs or tax credits
c. Careful tax planning

3. Tax exemption, also known as tax holiday, refers to the immunity, privilege or
freedom from being subject to a tax which other are subject to. Tax
exemptions may be granted by the Constitution, law, or contract.

All forms of tax exemptions can be revoked by Congress except those granted
by Constitution and those granted under contracts.
Those that do not result to loss of government revenue
1. Shifting – this is process of transferring tax burden to other taxpayers.
Forms of Shifting
a. Forward shifting – this is the shifting of tax which follows the noemal flow of
distribution (i.e. from manufacturer to wholesalers, retailers to consumers).
Forward shifting is common with essential commodities and service such as
food and fuel.
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COLLEGE DEPARTMENT

b. Backward shifting – This is the reverse of forward shifting. Backward shifting

is common with non-essential commodities where buyer have considerable
market power and commodities with numerous substitute products.
c. Onward shifting – this refers to any tax shifting in the distribution channel
that exhibits forward shifting or backward shifting.
Shifting is common with business taxes where taxes imposed on business revenue
can be shifted or passed-on to customer.
2. Capitalization – This pertains to the adjustment of the value of an asset caused by
changes in tax rates.

For instance, the value of a mining property will correspondingly decrease when
mining output is subjected to higher taxes. This is form of backward shifting tax.

3. Transformation – This pertains to the elimination of wastes or losses by the

taxpayers to form savings to compensate for the tax imposition or increase in
taxes.

Tax Amnesty
Amnesty is general pardon granted by the government for erring taxpayers to give them a
chance to reform and enable them to have fresh start to be a part of a society with a clean
state. It is an absolute forgiveness or waiver by the government on its right to collect and
is retrospective in application
Tax Condonation
Tax condonation is forgiveness of the tax obligation of a certain taxpayer under certain
justifiable grounds. This is also referred to as tax remission.
Because they deprive the government of revenues, tax exemption, tax refund, tax
amnesty and tax condonation are construed against the taxpayers and in favour of the
government.
Tax Amnesty vs. Tax Condonation
Amnesty covers both civil and criminal liabilities, but condonation covers only civil
liabilities of taxpayers.
Amnesty operators retrospectively by forgiving past violations. Condonation applies
prospectively to any unpaid balance of the tax, hence, the portion already paid by the
taxpayer will not be refunded.
Amnesty is also conditional upon the taxpayer paying the government a portion of the
tax whereas condition requires no payment.
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COLLEGE DEPARTMENT