kpmg

Tax Supplements for

the 2019 BAR
Examination

R.G. Manabat & Co.

October 2019
kpmg ࿿࿿࿿µ⡊䛸࿿࿿࿿࿿࿿࿿࿿࿿࿿¶⟎侣࿿࿿࿿࿿࿿࿿࿿࿿࿿·頺ᡳ࿿࿿࿿࿿࿿࿿࿿࿿࿿
¸퉴㴭࿿࿿࿿࿿࿿࿿࿿࿿࿿¹⸗࿿࿿࿿࿿࿿࿿࿿࿿࿿º噎厲࿿࿿࿿࿿࿿࿿࿿࿿࿿»
鵶畐࿿࿿࿿࿿࿿࿿࿿࿿࿿¼᫷࿿࿿࿿࿿࿿࿿࿿࿿࿿½Ȿ䶣࿿࿿࿿࿿࿿࿿࿿࿿࿿
SUMMARY OF TAX TABLES ¾170Çꕦ䟊࿿࿿࿿࿿࿿࿿࿿࿿࿿È鶾䠤࿿࿿࿿࿿࿿࿿࿿࿿࿿É崌Ἆ࿿࿿࿿࿿࿿࿿࿿࿿࿿
Êꫨɫ࿿࿿࿿࿿࿿࿿࿿࿿࿿Ë‫Ⰲﺌ‬࿿࿿࿿࿿࿿࿿࿿࿿࿿Ì兾ĩ࿿࿿࿿࿿࿿࿿࿿࿿࿿Í豎瘻
AND RATES (AS AMENDED BY ࿿࿿࿿࿿࿿࿿࿿࿿࿿Î贲䳻࿿࿿࿿࿿࿿࿿࿿࿿࿿Ï햼报࿿࿿࿿࿿࿿࿿࿿࿿࿿Ð꯸熏
1 ࿿࿿࿿࿿࿿࿿࿿࿿࿿Ñ祼睵࿿࿿࿿࿿࿿࿿࿿࿿࿿Ò‫ﮌ‬ᘦ࿿࿿࿿࿿࿿࿿࿿࿿࿿Ó番㥗
R.A. No. 10963 ) ࿿࿿࿿࿿࿿࿿࿿࿿࿿Ôꇆ㹭࿿࿿࿿࿿࿿࿿࿿࿿࿿Õ⍚旊࿿࿿࿿࿿࿿࿿࿿࿿࿿Öඤ
凋࿿࿿࿿࿿࿿࿿࿿࿿࿿×琼箛࿿࿿࿿࿿࿿࿿࿿࿿࿿ØဂᏢ࿿࿿࿿࿿࿿࿿࿿࿿࿿Ù援╽
INCOME TAX ࿿࿿࿿࿿࿿࿿࿿࿿࿿Úᆲ烬࿿࿿࿿࿿࿿࿿࿿࿿࿿Ûì⻚࿿࿿࿿࿿࿿࿿࿿࿿࿿Ü遲猠
࿿࿿࿿࿿࿿࿿࿿࿿࿿Ý頖徲࿿࿿࿿࿿࿿࿿࿿࿿࿿Þ㋬㳧࿿࿿࿿࿿࿿࿿࿿࿿࿿ß㷲⋱
Individual Taxation: ࿿࿿࿿࿿࿿࿿࿿࿿࿿à萀礫࿿࿿࿿࿿࿿࿿࿿࿿࿿á彌ྨ࿿࿿࿿࿿࿿࿿࿿࿿࿿â釰滎
࿿࿿࿿࿿࿿࿿࿿࿿࿿ã혀俄࿿࿿࿿࿿࿿࿿࿿࿿࿿ä䈐寽࿿࿿࿿࿿࿿࿿࿿࿿࿿å侊癗
Effective January 1, 2018 until December 31, ࿿࿿࿿࿿࿿࿿࿿࿿࿿æ筦ត࿿࿿࿿࿿࿿࿿࿿࿿࿿ç Source: Tax Reform
for Acceleration and Inclusion Act
2022, the following schedule shall apply to
Resident Citizens, Nonresident Citizens, Resident
Aliens, and Nonresident Aliens engaged in trade or
business within the Philippines:

Not over P250,000 0%

Over P250,000 but not over 20% of the excess over
P400,000 P250,000
Over P400,000 but not over P30,000 + 25% of the
P800,000 excess over P400,000
Over P800,000 but not over P130,000 + 30% of the
P2,000,000 excess over P800,000
Over P2,000,000 but not P490,000 + 32% of the
over P8,000,000 excess over P2,000,000
Over P8,000,000 P2,410,000 + 35% of the
excess over P8,000,000

For Non-Resident Aliens not engaged in trade or

business within the Philippines, the rate of income
tax shall be twenty-five percent (25%) of Gross
Income from income sources in the Philippines.

Final Withholding Tax (FWT) on Passive Income:

Type of Income Tax Rate

(Withholding)
Dividends/Interests/Royalties 10%
Capital Gains from Sale of 15%
Shares of Stock not Traded in
the Stock Exchange
Capital Gains From Sale of 6%
Real Property
Corporate Income Tax:

Regular Corporate Income 30%

Tax (RCIT)
 Domestic Corporation 30% of taxable income
from all sources
Resident Foreign 30% of taxable income
Corporations from Philippine sources
Non-resident Foreign 30% of gross income
Corporations from Philippine sources
Minimum Corporate Income 2% of gross income
Tax (MCIT)
− Applicable beginning on
the 4th year immediately
following the year in
which the corporation
commenced its business
operations, when the
MCIT is greater than the
RCIT
− May be carried forward
and credited for the
three immediately
succeeding taxable
years
FWT for Domestic Corporations:

Type of Income Tax Rate (Withholding)

Dividends/Interests/ 20%; Provided, however,
Royalties that interest income derived
by a domestic corporation
from a depository bank under
the expanded foreign
currency deposit system
(EFCDS) shall be subject to a
final income tax at the rate
of fifteen percent (15%) of
such interest income.
Intercorporate Not subject
Dividends
Capital Gains from Sale 15%
of Shares of Stock not
Traded in the Stock
Exchange
Transfer Tax:

Type of Tax Tax Rate

Estate Tax Six percent (6%) of Net
Estate
Donors Tax Six percent (6%) of the total
gifts in excess of two
hundred fifty thousand pesos
2
kpmg

Type of Tax Tax Rate no longer be considered export sales

(P250,000) exempt gift made subject to zero percent (0%) VAT rate upon
during the calendar year satisfaction of the following conditions:

Value-Added Tax (VAT): 0 The successful establishment and implementation of an

enhanced VAT refund system that grants refunds of
Generally, any person who, in the course of trade creditable input tax within ninety (90) days from the filing of
or business, sells, barters exchanges, leases the VAT refund application with the Bureau: Provided, that,
goods or properties, renders services, and any to determine the effectivity of item no. 1, all applications filed
person who imports goods shall be subject to the from January 1, 2018 shall be processed and must be
VAT at the rate of twelve percent (12%). decided within ninety (90) days from the filing of the VAT
refund application; and
Sale of Goods subject to Zero Percent (0%) Rate
(a) Export Sales. — The term 'export sales' means: 1 All pending VAT refund claims as of December 31, 2017

shall be fully paid in cash by December 31, 2019.

0 The sale and actual shipment of goods from the
Philippines to a foreign country, irrespective of any
shipping arrangement that may be agreed upon which
Provided, that the Department of Finance shall
may influence or determine the transfer of ownership of establish a VAT refund center in the Bureau of
the goods so exported and paid for in acceptable foreign Internal Revenue (BIR) and in the Bureau of
currency or its equivalent in goods or services, and Customs (BOC) that will handle the processing and
accounted for in accordance with the rules and granting of cash refunds of creditable input tax.
regulations of the Bangko Sentral ng Pilipinas (BSP);
1 Sale and delivery of goods to: Sale of Service subject to Zero Percent (0%) Rate
0 Processing, manufacturing or repacking goods for
0 Registered enterprises within a separate customs other persons doing business outside the Philippines
territory as provided under special laws; and, which goods are subsequently exported, where the
1 Registered enterprises within tourism enterprise services are paid for in acceptable foreign currency
zones as declared by the Tourism Infrastructure and and accounted for in accordance with the rules and
Enterprise Zone Authority subject to the provisions regulations of the BSP;
under R.A. No. 9593 or The Tourism Act of 2009. 1 Services other than those mentioned in the
0 Sale of raw materials or packaging materials to a preceding paragraph, rendered to a person engaged
nonresident buyer for delivery to a resident local in business conducted outside the Philippines or to a
export-oriented enterprise to be used in nonresident person not engaged in business who is
manufacturing, processing, packing or repacking in outside the Philippines when the services are
the Philippines of the said buyer's goods and paid for performed, the consideration for which is paid for in
in acceptable foreign currency and accounted for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the BSP; accordance with the rules and regulations of the BSP;
1 Sale of raw materials or packaging materials to 2 Services rendered to persons or entities whose
export-oriented enterprise whose export sales exceed exemption under special laws or international
seventy percent (70%) of total annual production; agreements to which the Philippines is a signatory
2 Those considered export sales under Executive effectively subjects the supply of such services to
Order No. 226, otherwise known as the Omnibus zero percent (0%) rate;
Investment Code of 1987, and other special laws; 3 Services rendered to persons engaged in international
3 The sale of goods, supplies, equipment and fuel to shipping or international air transport operations,
persons engaged in international shipping or including leases of property for use thereof: Provided,
international air transport operations: Provided, that the that these services shall be exclusively for international
goods, supplies, equipment and fuel shall be used for shipping or air transport operations;
international shipping or air transport operations. 4 Services performed by subcontractors and/or
contractors in processing, converting, or manufacturing
Provided, that subparagraphs (3), (4), and (5) above goods for an enterprise whose export sales exceed
shall be subject to the twelve percent (12%) VAT and seventy percent (70%) of total annual production;
3
 undergone the simple processes of preparation or
kpmg preservation for the market, such as freezing, drying, salting,
broiling, roasting, smoking or stripping. Polished and/or
Sale of Service subject to Zero Percent (0%) Rate husked rice, corn grits, raw sugar or raw cane sugar and
0 Transport of passengers and cargo by domestic air or molasses, ordinary salt, and copra shall be considered in
sea vessels from the Philippines to a foreign country; and their original state;
1 Sale of power or fuel generated through renewable 5888 Sale or importation of fertilizers; seeds, seedlings
sources of energy such as, but not limited to, and fingerlings; fish, prawn, livestock and poultry feeds,
biomass, solar, wind, hydropower, geothermal, ocean including ingredients, whether locally produced or imported,
energy, and other emerging energy sources using used in the manufacture of finished feeds (except specialty
technologies such as fuel cells and hydrogen fuels. feeds for race horses, fighting cocks, aquarium fish, zoo
2 Services rendered to: animals and other animals generally considered as pets);
5889 Importation of personal and household effects belonging
0 Registered enterprises within a separate customs to the residents of the Philippines returning from abroad and
territory as provided under special law; and, nonresident citizens coming to resettle in the Philippines:
Provided, that such goods are exempt

1 Registered enterprises within tourism

enterprise zones as declared by the TIEZA
subject to the provisions under R.A. No.
9593 or The Tourism Act of 2009.

Provided, that subparagraphs (1) and (5)

above shall be subject to the twelve percent
(12%) VAT and no longer be subject to zero
percent (0%) VAT rate upon satisfaction of
the following conditions as stated above.

VAT Exempt Transactions

̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀Āᜀ
ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ ̀ ĀĀĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀ
ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ
㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ
ĀᜀĀᜀĀĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ
̀ ̀ ĀȀ㨀ĀᜀĀᜀĀ
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀЀĀĀĀ
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ‫؀‬ĀĀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ
ᄀ
̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀Āᜀ
ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀĀᜀ‫܀‬ĀĀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀ
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀
ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀĀȀ⸀ĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀ
ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀᄀ ̀ ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ0
Sale or importation of agricultural and marine food
products in their original state, livestock and
poultry of a kind generally used as, or yielding or
producing foods for human consumption; and
breeding stock and genetic materials therefor.

Products classified under this paragraph shall be

considered in their original state even if they have
 registered with the Cooperative Development
Authority;
10 Sales by non-agricultural, non-electric and non-credit
VAT Exempt Transactions cooperatives duly registered with the Cooperative
from customs duties under the Tariff Development Authority: Provided, that the share capital
and Customs Code of the Philippines;

4
0 Importation of professional instruments
and implements, tools of trade, occupation or
employment, wearing apparel, domestic
animals, and personal and household effects
belonging to persons coming to settle in the
Philippines or Filipinos or their families and
descendants who are now residents or citizens
of other countries, such parties hereinafter
referred to as overseas Filipinos, in quantities
and of the class suitable to the profession,
rank or position of the persons importing said
items, for their own use and not for barter or
sale, accompanying such persons, or arriving
within a reasonable time
1 Services subject to percentage tax under Title V;
2 Services by agricultural contract growers
and milling for others of palay into rice, corn
into grits and sugar cane into raw sugar;
3 Medical, dental, hospital and veterinary
services except those rendered by
professionals;
4 Educational services rendered by private
educational institutions, duly accredited by the
Department of Education (DepEd), the
Commission on Higher Education (CHED), the
Technical Education and Skills Development
Authority (TESDA) and those rendered by
government educational institutions;
5 Services rendered by individuals
pursuant to an employer-employee
relationship;
6 Services rendered by regional or area
headquarters established in the Philippines by
multinational corporations which act as
supervisory, communications and coordinating
centers for their affiliates, subsidiaries or
branches in the Asia-Pacific Region and do not
earn or derive income from the Philippines;
7 Transactions which are exempt under
international agreements to which the
Philippines is a signatory or under special
laws, except those under Presidential
Decree No. 529;
8 Sales by agricultural cooperatives duly
registered with the Cooperative Development
Authority to their members as well as sale of
their produce, whether in its original state or
processed form, to non-members; their
importation of direct farm inputs, machineries
and equipment, including spare parts thereof,
to be used directly and exclusively in the
production and/or processing of their produce;
9 Gross receipts from lending activities by
credit or multi-purpose cooperatives duly
kpmg

VAT Exempt Transactions VAT Exempt Transactions

contribution of each member does not exceed 23 Association dues, membership fees, and other
Fifteen thousand pesos (P15,000) and assessments and charges collected by homeowners
regardless of the aggregate capital and net associations and condominium corporations;
surplus ratably distributed among the members; 24 Sale of gold to the BSP;
0 Export sales by persons who are not VAT-registered; 23 Sale of drugs and medicines prescribed for
1 Sale of real properties not primarily held for sale to diabetes, high cholesterol, and hypertension
customers or held for lease in the ordinary course of beginning January 1, 2019;
trade or business, or real property utilized for low-cost 24 Sale or lease of goods or properties or the
and socialized housing as defined by R.A. No. 7279, performance of services other than the transactions
otherwise known as the Urban Development and mentioned in the preceding paragraphs, the gross
Housing Act of 1992, and other related annual sales and/or receipts do not exceed the
laws, residential lot valued at One million five hundred amount of Three million pesos (P3,000,000).
thousand pesos (P1,500,000) and below, house and
lot, and other residential dwellings valued at Two
million five hundred thousand pesos (P2,500,000) and
below: Provided, that beginning January 1, 2021, the
VAT exemption shall only apply to sale of real
properties not primarily held for sale to customers or
held for lease in the ordinary course of
trade or business, sale of real property utilized for
socialized housing as defined by R.A. No. 7279, sale
of house and lot, and other residential dwellings with
selling price of not more than Two million pesos
(P2,000,000):
2 Lease of a residential unit with a monthly rental
not exceeding Fifteen thousand pesos (P15,000);
3 Sale, importation, printing or publication of books
and any newspaper, magazine, review or bulletin
which appears at regular intervals with fixed prices for
subscription and sale and which is not devoted
principally to the publication of paid advertisements;
4 Transport of passengers by international carriers;
5 Sale, importation or lease of passenger or
cargo vessels and aircraft, including engine,
equipment and spare parts thereof for
domestic or international transport operations;
6 Importation of fuel, goods and supplies by
persons engaged in international shipping or air
transport operations: Provided, that the fuel,
goods, and supplies shall be used for
international shipping or air transport operations;
7 Services of bank, non-bank financial
intermediaries performing quasi-banking functions,
and other non-bank financial intermediaries;
8 Sale or lease of goods and services to senior
citizens and persons with disability, as provided under
R.A. Nos. 9994 (Expanded Senior Citizens Act of
2010) and 10754 (An Act Expanding the Benefits and
Privileges of Persons with Disability), respectively;
9 Transfer of property pursuant to Section 40(C)(2)
of the NIRC, as amended;
5
kpmg

GENERAL PRINCIPLES 5888 Requisites for a valid tax

23 What is Taxation and differentiate this from 23 The following are the requisites of a valid tax:
the power of Eminent Domain and Police Power 5888 A forced charge, imposition or
contribution which operates ad infinitum
23 It is the power by which the sovereign raises or independent of contractual assent;
revenue to defray the expenses of the government. 5889 Assessed in accordance with some
It is a way of apportioning the cost of the reasonable rule of apportionment which
conforms with the mandate of the constitution
government among those who in some measure
to evolve a progressive tax system which must
are privileged to enjoy its benefits and must bear
be based on the taxpayer’s ability to pay.
its burden. It is described as an inherent power of
the sovereign albeit destructive which interferes
5890 Imposed by the State within its jurisdiction
with the personal and property rights of the people
5891 Levied through the legislative body
of the state through laws
and takes from them a portion of their property for
5892 Levied for a public purpose
the support of the government2. 5893 Personal to the taxpayer
5894 Not infringe on the inherent and
On the other hand, Police Power is the power of
the State to enact laws in relation to persons constitutional limitations of the power of
and property so as to promote public health, taxation
public moral, public safety and general welfare
of the people. This is the power of the state to 0 May Congress under the 1987
regulate to promote the public’s general welfare. constitution abolish the power to tax

Lastly, the power of Eminent Domain is the power 0 No. Congress cannot abolish such power
of the State or those to whom the power has been but can only provide guidelines and limitations
delegated to take private property for public use on the local government’s power to tax.
upon paying the owner a just compensation to be
ascertained according to law. 0 Distinguish tax evasion from tax avoidance

23 What are the basic principles of a sound tax system 0 Tax evasion is a scheme used outside of lawful
means to escape from one’s tax liabilities and, when
A: resorted to, may result to civil and criminal liabilities.
23 Fiscal Adequacy – the source of Tax avoidance pertains to tax saving measures within
government funds must be sufficient to the means sanctioned by laws and regulations.
answer for the needs of the public.
0 May taxes be subject of set off or
24 Administrative Feasibility – tax laws and compensation claims that individuals may
regulations should be capable for convenient, have against the government
efficient and just execution and administration.
0 No. The government and taxpayers are not mutual
debtors and creditors of each other. Also, claim for
25 Theoretical Justice – taxpayers’ burden should
taxes is not such debt, demand, contract or judgment
be proportionate to the taxpayers’ ability to pay
as is allowed to be set off. Debts are due to the
government in its corporate capacity while taxes are
due to the government in its sovereign capacity3.

23 Source: Paseo Realty & Development

Corporation v. Court of Appeals, G.R. No. 1199286, 31 3 Source: United Airlines Inc. v. Commissioner of
October 2004 Internal Revenue, G.R. No. 178788, 29 September 2010
citing Philex v. Commissioner or Internal Revenue
6
kpmg

3 Equitable recoupment NATIONAL TAXATION (AS AMENDED

3 A common law concept wherein tax refund

BY R.A. No. 10963)
claims barred by prescription may be set off
against a current assessment. This is TAXING AUTHORITY
inapplicable in the Philippines since the tax
authorities are particular with prescriptive 3 Do the Commissioner of Internal Revenue (CIR)’s
periods in successfully obtaining a tax refund. rulings / rules have an inherent retroactive application

3 Differentiate tax amnesty, tax compromise 0 No. The NIRC, specifically Section 246 thereof,
and tax exemption prohibits retroactive rulings stating that any
revocation, modification or reversal of any of the rules
3 Tax amnesty pertains to a general portion or and regulations shall not be given retroactive
intentional overlooking by the State of its Authority application, if prejudicial to the taxpayers. This rule,
to impose penalties on persons otherwise guilty of however, is subject to three exceptions: (a) If the
evasion or violation of a tax rule or regulation. It is taxpayer deliberately misstates or omits material facts
an absolute waiver by the Government of its right from his return or any document required by the BIR;
to collect what should have been due. On the other (b) If the facts subsequently gathered by the BIR are
hand, a tax compromise is an agreement whereby materially different from the facts on which the ruling
the taxpayer offers to pay something less than
is based; or (c) If the taxpayer acted in bad faith5.
what is due and the government accepts it as a full
settlement of his tax liability. 3 Do Local Government Units have the same
taxing power as the National Government
Tax exemption is a grant of immunity to particular
persons or corporations or entities from a particular 3 No. The power to tax is inherent to the State. While
class from a tax which such persons generally municipalities, provinces, cities and barangays are
within the same state or taxing district are obliged territorial and political subdivisions of the Republic of
to pay. These exemptions should be expressly the Philippines, these jurisdictions, per se, do not
granted. These are not favored and are strictly necessarily equate to the sovereign. Th power of a
4
construed against the taxpayer . province to tax is limited to the extent such power is
delegated to it by either the Constitution or Statute6.

0 Source: Surigao Consolidated Mining v. 3 Source: Pelizloy Realty Corporation v. The

Commissioner or Internal Revenue, G.R. No. L-14878, 26 Province of Benguet, G.R. No. 183137, 10 April 2013
December 1963.
1 Source: Commissioner of Internal Revenue (CIR) vs.
COL Financing Group, Inc., CTA EB Case No. 1187, 30 June
7

2015
kpmg

INCOME TAXATION 23Criteria in imposing Philippine income tax

3 Definition of “income tax” A:

23 Citizenship Principle – A citizen of the
0 Income tax is a direct tax imposed on actual Philippines residing in the Philippines is
or presumed income – gross or net – realized by taxable on all income derived from sources
7
within and without the Philippines while a
a taxpayer during a given taxable year . nonresident citizen is taxable only on income
3 Nature of income tax derived from sources within the Philippines;

24 Residence Principle – All income derived

3 Income tax is generally regarded as an
by persons residing in the Philippines,
excise tax, levied upon the right of a person
whether citizens or aliens, whether domestic
or entity to receive income or profits.
or foreign corporations, shall be subject to
0 General principles of income taxation income tax on the income derived from
sources within the Philippines.
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀ768 Except when otherwise provided 25 Source principle – All income derived
in the NIRC: from sources within the Philippines shall
be subject to income tax.
0 A citizen of the Philippines residing therein
is taxable on all income derived from 23Types of Philippine income taxes
sources within and without the Philippines;
1 A nonresident citizen is taxable only on income A:
derived from sources within the Philippines; 23 Graduated income tax on individuals
2 An individual citizen of the Philippines who is 24 Normal corporate income tax on corporations
working and deriving income from abroad as 25 Minimum corporate income tax on corporations
an overseas contract worker is taxable only on 26 Special income tax on certain corporations
income from sources within the Philippines: 27 Capital gains tax on sale or exchange of
Provided, that a seaman who is a citizen of the unlisted shares of stock of a domestic
Philippines and who receives compensation corporation classified as a capital asset
for services rendered abroad as a member of 28 Capital gains tax on sale or exchange of
the complement of a vessel engaged real property located in the Philippines
exclusively in international trade shall be and classified as capital asset
treated as an overseas contract worker; 29 Final withholding tax on certain passive
3 An alien individual, whether a resident or not investment incomes
of the Philippines, is taxable only on income 30 Fringe benefit tax
derived from sources within the Philippines; 31 Branch profit remittance tax; and
4 A domestic corporation is taxable on all 32 Tax on improperly accumulated earnings.
income derived from sources within and
without the Philippines; and, 23Definition of “taxable period”
5 A foreign corporation, whether engaged or
not in trade or business in the Philippines, 23 “Taxable period” means the calendar year, or the fiscal

is taxable only on income derived from year ending during such calendar year, upon the basis of

sources within the Philippines. which the net income is computed under the NIRC. It
includes, in the case of a return made for a

23
8

Source: Abakada Guro Party List vs. Ermita, G.R. Nos.

168056, 168207, 168461, 168463, & 168730, 01 September 2005
kpmg

fractional part of a year, the period for which 23 Minimum Wage Earner – a worker in the
such return is made private sector paid the statutory minimum
wage, or an employee in the public sector
23Kind of taxpayers with compensation income of not more than
the statutory minimum wage in the non-
A: agricultural sector where he/she is assigned.
23 Individual Taxpayers
23 Corporations – include partnerships, no matter how

23 Resident citizens – A citizen of the created or organized, joint-stock companies, joint

Philippines residing in the Philippines. accounts, associations, or insurance companies (does

not include general professional partnerships and a

24 Nonresident citizen – means: joint venture or consortium formed for the purpose of
23 A citizen of the Philippines who establishes undertaking construction projects or engaging in
to the satisfaction of the Commissioner the petroleum, coal, geothermal and other energy
fact of his physical presence abroad with a operations pursuant to an operating or consortium
definite intention to reside therein. agreement under a service contract with the
24 A citizen of the Philippines who leaves the Government).
Philippines during the taxable year to
reside abroad, either as an immigrant or 23 Domestic corporations – those created or
for employment on a permanent basis. organized in the Philippines or under its laws.
25 A citizen of the Philippines who works
and derives income from abroad and 24 Foreign corporations – corporations
whose employment thereat requires him which are not domestic.
to be physically present abroad most of
the time during the taxable year. 23 Resident foreign corporations –
26 A citizen who has been previously considered as foreign corporations engaged in trade
nonresident citizen and who arrives in the or business within the Philippines.
Philippines at any time during the taxable year to
reside permanently in the Philippines shall likewise 24 Nonresident foreign corporations –
be treated as a nonresident citizen for the taxable foreign corporations not engaged in
year in which he arrives in the Philippines with trade or business within the Philippines
respect to his income derived from sources abroad
until the date of his arrival in the Philippines. 24 General Professional Partnerships (GPP) –
partnerships formed by persons for the sole
27 The taxpayer shall submit proof to the purpose of exercising their common profession,
Commissioner to show his intention of no part of the income of which is derived from
leaving the Philippines to reside permanently engaging in any trade or business.
abroad or to return to and reside in the
Philippines as the case may be. 25 Estates and Trusts – An estate is created by
operation of law, when an individual dies, leaving
25 Resident aliens – individuals whose properties to his compulsory or other heirs, while
residence is within the Philippines and a trust is a legal arrangement whereby the owner
who is not a citizen thereof. of property transfers ownership to a person who
is to hold and control the property belonging to
26 Nonresident aliens – individuals whose the owner’s instructions, for the benefit of a
residence is not within the Philippines designated person.
and who is not a citizen thereof.
9
kpmg

23Definition of “income” 23 Claim of Right Doctrine – a taxable gain is

conditioned upon the presence of a claim of right
23Income is the gain derived from capital, to the alleged gain and the absence of a definite
from labor, or from both combined, provided it unconditional obligation to return or repay that
be understood to include profit gained through which would otherwise constitute a gain.
8
a sale or conversion of capital assets .
23What are tax-free exchanges
23Nature of income
23 General Rule: Upon the sale or exchange
23 Income a flow of services rendered by that of property, the entire amount of the gain or
capital by the payment of money from it or any loss, as the case may be, shall be recognized.
other benefit rendered by a fund of capital in
9 Exception: No gain or loss shall be recognized if in
relation to such fund through a period of time .
pursuance of a plan of merger or consolidation –
23When is income recognized 23 A corporation, which is a party to a merger
or consolidation, exchanges property
23 Under the realization principle, revenue is solely for stock in a corporation, which is a
generally recognized when both of the following party to the merger or consolidation; or
conditions are met: (1) the earning process is 24 A shareholder exchanges stock in a corporation,
complete or virtually complete; and, (2) an exchange which is a party to the merger or consolidation,
has taken place. This principle requires that revenue solely for the stock of another corporation also a
party to the merger or consolidation; or
must be earned before it is recorded10.
25 A security holder of a corporation, which is a
23When is income taxable party to the merger or consolidation, exchanges
his securities in such corporation, solely for stock
or securities in another corporation, a party to the
23 The following requisites must be present:
merger or consolidation; or
(1) there is income, gain or profit; (2) the
26 If property is transferred to a corporation by a
income, gain or profit is received or realized
person in exchange for stock or unit of
during the taxable year; and, (3) The income,
participation in such a corporation of which as a
gain or profit is not exempt from income tax.
result of such exchange said person, alone or
23What are the tests in determining whether together with others, not exceeding four (4)
income is earned for tax purposes persons, gains control of said corporation:
Provided, that stocks issued for services shall not
A: be considered as issued in return for property.
23 Realization/Severance Test – There is no
taxable income until there is a separation from 23What is the doctrine of situs of taxation
capital of something of exchangeable value,
23 No state may tax anything not within its jurisdiction
thereby supplying the realization or transmutation
without violating the due process clause of the
which would result in the receipt of income.
constitution. The taxing power of a state does not
24 Economic Benefit Test – Any economic extend beyond its territorial limits, but within such
benefit to the employee that increases his
net worth, whatever may have been the
mode by which it is effect, is taxable.

10
23 Source: Fisher vs. Trinidad, G.R. No. 17518, 30 Source: Manila Mandarin Hotels, Inc. vs. Commissioner of Internal
Revenue, C.T.A. Case No. 5046, 24 March 1997
10

October 1922
24 Source: Madrigal vs. Rafferty, G.R. No. 12287, 07
August 1918
kpmg

limits it may tax persons, property, income, Income Situs of taxation

11 Interests Residence of the debtor or
or business .
obligor
23What are the current rules on situs of taxation Dividends If received from a domestic
corporation – income within
23 The state may impose taxes on persons subject the Philippines
If received from a foreign
to the jurisdiction of its sovereignty, and on
property located within its territory. The tax laws of corporation – income within
a state can have no extraterritorial operation. the Philippines unless less than
50% of the gross income of
Taxpayer Situs of taxation such foreign corporation for the
Resident citizens Taxable on income from sources 3-year period ending with the
both within and without the close of its taxable year
Philippines preceding the declaration of
Domestic Taxable on income from sources such dividends was derived
corporations both within and without the from sources within the
Philippines Philippines
Non-resident Taxable on income from sources Services Place of performance of the
citizens within the Philippines service
Resident/non- Taxable on income from sources Rentals and Royalties Location or use of the property
resident alien within the Philippines or interest in such property
individuals Sale of Real Property Location of real property
Foreign Taxable on income from sources Sale of Personal Place of sale
corporations within the Philippines Property
Gain on sale of shares Income within the Philippines
of stock in a domestic regardless of where the shares
corporation are sold

23Definition of gross income

23 Gross income refers to all income

derived from whatever source, including, but
not limited to, the following items:
23 Compensation for services in whatever form
paid, including, but not limited to fees, salaries,
wages, commissions, and similar items;
24 Gross income derived from the conduct of trade
or business or the exercise of a profession;
25 Gains derived from dealings in property;
26 Interests;
27 Rents;
28 Royalties;
29 Dividends;
30 Annuities;
31 Prizes and winnings;
32 Pensions; and

23 Source: Manila Gas Corporation v. Collector of Internal

Revenue, G.R. No. 42780, 17 January 1936
11
kpmg

23 Partner's distributive share from the net income 23 Household personnel, such as maid,
of the general professional partnership. driver and others;
24 Interest on loan at less than market rate
23What is the concept of “income from to the extent of the difference between
whatever source derived” the market rate and actual rate granted;
25 Membership fees, dues and other expenses
23 A legislative policy to include all income borne by the employer for the employee in social
not expressly exempted within the class of and athletic clubs or other similar organizations;
12 26 Expenses for foreign travel;
taxable income under our laws .
27 Holiday and vacation expenses;
23Distinguish gross income vis-à-vis net income 28 Educational assistance to the employee
vis-à-vis taxable income or his dependents; and
29 Life or health insurance and other non-life
23 Gross income is all income subject to tax. insurance premiums or similar amounts in
Net income refers to gross income less the excess of what the law allows.
allowable deductions and exemptions. Taxable
income is the pertinent items of gross income 23What are the non-taxable fringe benefits
specified in the NIRC, less deductions, if any,
authorized for such types of income. A:
23 Fringe benefits which are authorized and
23Definition of “compensation income” exempted from tax under special laws;
24 Contributions of the employer for the benefit
23 In general, "compensation" means all of the employee to retirement, insurance
remuneration for services performed by an employee and hospitalization benefit plans;
for his employer under an employer-employee 25 Benefits given to the rank and file
relationship, unless specifically excluded by the NIRC. employees, whether granted under a
Salaries, wages, emoluments and honoraria, collective bargaining agreement or not;
allowances (e.g., transportation, representation, 26 Fringe benefits which are required by the
entertainment and the like), commission, fees nature of or necessary to the trade, business
including director's fees, if the director is, at the same or profession of the employer, or where such
time, an employee of the employer/corporation; fringe benefit is for the convenience and
taxable bonuses and fringe benefits except those advantage of the employer; and,
which are subject to the fringe benefits tax; taxable 27 De minimis benefits.
pensions and retirement pay; and other income of a
similar nature constitute compensation income. 23What are de minimis benefits

23What are fringe benefits 23 The term "de minimis benefits" which is exempt
from the fringe benefit tax shall, in general, be limited
23 Any good, service or other benefit furnished or to facilities or privileges, furnished or offered by an
granted in cash or in kind by an employer to an employer to his employees, provided such facilities or
individual employee (except rank and file employees) privileges are of relatively small value and are offered
such as, but not limited to, the following: or furnished by the employer merely as a means of
23 Housing; promoting the health, goodwill, contentment, or
24 Expense account; efficiency of his employees.
25 Vehicle of any kind;

0 Source: Commissioner of Internal Revenue vs. British Overseas

Airways Corp, G.R. Nos. L-65773-74, 30 April 1987
12
kpmg

23 What are considered “de minimis” 23What is professional income

benefits not subject to income tax
23Professional income refers to the fees received
23 The following shall be considered as “de by a professional from the practice of his
minimis” benefits not subject to income tax as well profession, provided that there is no employer-
as withholding tax on compensation income of both employee relationship between him and his clients.
managerial, and rank and file employees:
23 Monetized unused vacation leave 23What is passive investment income
credits of private employees not
exceeding ten (10) days during the year; 5888 Income in which the taxpayer merely
24 Monetized value of vacation and sick leave credits paid waits for the amount to come in. It consists of
to government officials and employees; interest, dividends and royalties and rental
25 Medical cash allowance to dependents of income.
employees, not exceeding P1,500 per
employee per semester or P250 per month; 0 What are the exclusions from gross income
26 Rice subsidy of P2,000 or one sack of 50kg. rice
per month amounting to not more than P2,000; 0 The following items shall not be included in gross
27 Uniform and clothing allowance not income and shall be exempt from income taxation:
exceeding P6,000 per annum 3 Proceeds of life insurance policies paid to the heirs or
23 Actual medical assistance, e.g., beneficiaries upon the death of the insured;
medical allowance to cover medical
4 Amount received by the insured as
and healthcare needs, annual
return of premiums paid by him;
medical/executive check-up, maternity
5 Value of property acquired by gift,
assistance, and routine consultations,
bequest, devise, or descent;
not exceeding P10,000.00 per annum;
6 Compensation for injuries or sickness;
24 Laundry allowance not exceeding P300 per month;
7 Income exempt under treaty;
25 Employees achievement awards, e.g., for
8 Retirement benefits, pensions, gratuities, etc.;
length of service or safety achievement, which
9 Miscellaneous items –
must be in the form of a tangible personal
23 Income derived by foreign government;
property other than cash or gift certificate, with
24 Income derived by the government
an annual monetary value not exceeding
or its political subdivisions;
P10,000 received by the employee under an
25 Prizes and awards made primarily in
established written plan which does not
recognition of religious, charitable,
discriminate in favor of highly paid employees;
scientific, educational, artistic,
26 Gifts given during Christmas and major
literary, or civic achievement;
anniversary celebrations not exceeding
26 Prizes and awards in sports competition;
P5,000 per employee per annum;
27 13th month pay and other benefits;
27 Daily meal allowance for overtime work 28 GSIS, SSS, Medicare and other contributions
and night/graveyard shift not exceeding 29 Gains from the sale of bonds, debentures
twenty-five percent (25%) of the basic or other certificate of indebtedness;
minimum wage on a per region basis;
30 Gains from redemption of shares in
28 Benefits received by an employee by virtue of a
mutual fund; and
collective bargaining agreement (CBA) and
31 Income Derived from the Sale of
productivity incentive schemes provided that the
Gold Pursuant to R.A. No. 7076.
total annual monetary value received from both
CBA and productivity incentive schemes
0 What is the rationale for exclusions and exemptions
combined do not exceed ten thousand pesos
(Php10,000.00) per employee per taxable year.
13
kpmg

A: 23Treatment of return of capital

ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ
ᜀĀᜀ768 They represent return of 23Income tax is levied by law only on income,
capital or are not income, gain or profit; hence, the amount representing return of capital
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ should be deducted from proceeds from sales
ᜀĀᜀ769 They are subject to another and should not be subject to income tax.
kind of internal revenue tax;
ᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀ̀ĀȀ㨀ĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀĀᜀ 23Distinguish itemized deductions vis-à-vis
770 They are income, gain or profit expressly exempt optional standard deductions
from income tax under the Constitution, tax
23 Itemized deductions are the allowable deductions
treaty, NIRC, or a general or special law.
as enumerated under Section 34 of the NIRC.
0 Who may avail exclusions
Optional Standard Deduction is the standard
23 Generally, all taxpayers may avail of the deduction in an amount not exceeding 40% of
exclusions unless expressly excluded by the law. the gross income of individuals, other than
nonresident aliens, or corporations in lieu of the
23 Distinguish exclusions and exemptions deductions enumerated under Subsections A-J
from deductions and tax credits of Section 34 of the NIRC.

23 Exclusions are items that are not included in the 23What are the items not deductible in
determination of gross income because of the computing net income
exemption provided for by law or by tax treaties.
Deductions are the expenses and other allowable 23 In computing net income, no deduction
deductions as provided for by law which are incurred shall be allowed with respect to:
for engaging in trade or business or exercise of 23 Personal, living or family expenses;
24 Any amount paid out for new buildings or for
profession. Tax credits are amount of tax previously
permanent improvements, or betterments made
paid by the taxpayer which later on can be claimed as
to increase the value of any property or estate;
tax credit from the tax liability of the taxpayer.
25 Any amount expended in restoring property
23 What are the allowable deductions from or in making good the exhaustion thereof for
gross income under the NIRC which an allowance is or has been made;
26 Premiums paid on any life insurance policy
23 The allowable deductions from gross income are: covering the life of any officer or employee, or of
any person financially interested in any trade or
23 Expenses
business carried on by the taxpayer, individual or
23 Ordinary and necessary trade,
corporate, when the taxpayer is directly or
business or professional expenses
indirectly a beneficiary under such policy;
24 Expenses allowable to private
educational institutions 27 Losses from sales or exchanges of
24 Interests on indebtedness; property between related parties;
25 Taxes in connection with taxpayer’s 28 Losses from wash sales of stock or
business, trade or profession; securities unless the claim is made by a
26 Losses; dealer in stock or securities and with respect
27 Bad debts; to a transaction made in the ordinary course
28 Depreciation; of the business of such dealer;
29 Depletion of oil and gas wells and mines; 29 Non-deductible taxes
30 Charitable and other contributions; 30 Non-deductible losses
31 Research and development expenditures; 31 Non-deductible interest
14

32 Contribution to pension trusts.

kpmg

23What is the exemption from payment of the Philippines and stay therein for an aggregate
CGT from sale of real property period of more than one hundred eighty (180) days
during any calendar year shall be deemed a non-
23 The sale or disposition of the principal residence may not resident alien doing business in the Philippines.
be subject CGT under the following guidelines:
23 Proceeds are fully utilized in acquiring or 0 Which sources of income of a NRAETB
constructing a new principal residence; will be subject to Philippine income tax
24 Proceeds are utilized within 18 calendar
months from the date of sale or disposition; 0 A non-resident alien individual shall be
25 Historical cost or adjusted basis of the subject to an income tax on taxable income
real property sold shall be carried over received from all sources within the
to the new principal residence; Philippines at the similar rate/schedular rate
26 Commissioner shall have been notified by the as an individual citizen and/or resident alien
taxpayer within 30 days from the date of sale
of his intention to avail the tax exemption; and, 0 What is the tax rate that will be imposed
27 The tax exemption can only be availed on the income of a non-resident alien not
of once every 10 years. engaged in trade or business (NRANETB)

5888 Differentiate Capital Asset and Ordinary 0 There shall be levied, collected and paid for
Asset each taxable year upon the entire income received
from all sources within the Philippines by every
0 The term 'capital assets' means property NRANETB a tax equal to 25% of such income.
held by the taxpayer (whether or not connected
with his trade or business), but does not include: 0 Who are senior citizens

0 Stock in trade of the taxpayer or other 0 Senior Citizen refers to any Filipino citizen who
property of a kind which would properly be is a resident of the Philippines, and who is sixty
included in the inventory of the taxpayer if (60) years old or above. It may apply to senior
on hand at the close of the taxable year; citizens with "dual citizenship" status provided they
1 Property held by the taxpayer primarily prove their Filipino citizenship and have at least six
for sale to customers in the ordinary (6) months residency in the Philippines.
course of his trade or business;
2 Property used in the trade or business, 0 Instances wherein senior citizens are
of a character which is subject to the exempted from income tax
allowance for depreciation provided in
Subsection (F) of Section 34; 23 If the returnable income of a Senior
3 Real property used in trade or business Citizen is in the nature of compensation
of the taxpayer. income but he qualifies as a minimum
wage earner under RA No. 9504;
The statutory definition of capital assets is negative in 24 If the aggregate amount of gross income earned
nature. Thus, if the property or asset is not among the by the Senior Citizen during the taxable year
exceptions, it is a capital asset; conversely, assets does not exceed the amount of his personal
falling within the exceptions are ordinary assets13. exemptions (basic and additional).

0 Period required to be considered a non-resident

alien engaged in trade or business (NRAETB)

0 A non-resident alien individual who shall come to

15

0 Source: Marcario Lim Gaw, Jr. v. CIR, G.R. No. 222837, 23 July 2018
kpmg

23 Instances where the income of minimum 5888 What is the tax on Branch Profit
wage earners are exempted from income tax Remittances imposed on a RFC

A: 23 Any profit remitted by a branch to its head office shall be

23 Payment of income tax on their taxable income; subject to a tax of 15% which shall be based on the total
24 Holiday pay; profits applied or earmarked for remittance without any
25 Overtime pay; deduction for the tax component thereof.
26 Night shift differential pay; and,
27 Hazard pay. 0 Tax Arbitrage Rule

23 Exemptions granted under international agreements 0 Taxpayer’s otherwise allowable deduction for
interest expense shall be reduced by 33% of the
23 Resident citizens are taxed on worldwide income, interest income that was subjected to final tax for as
while resident aliens are taxed only on their long as the interest is not expressly disallowed by law
Philippine-source income. As an exception to the to be deducted from the taxpayer’s gross income.
general rule, most international agreements which
grant withholding tax immunity to foreign governments 0 Tax Benefit Rule
/ embassies / diplomatic missions and international
organizations also provide exemption to their officials 0 Recovery of bad debts previously allowed as
and employees who are foreign nationals and/or non- deduction in the preceding years shall be included as
Philippine residents from paying income taxes on their part of the gross income in the year of recovery to the
salaries and emoluments. extent of the income tax benefit of said deduction.

23 Income tax rate imposed on the income 0 Optional Standard Deduction (OSD)
of a domestic corporation (DC)
0 Unless the taxpayer signifies in his return his
23 An income tax of 30% is imposed intention to elect the optional standard deduction,
upon the taxable income from all sources he shall be considered as having availed himself of
within and without the Philippines. the itemized deductions. Such election when made
in the return shall be irrevocable for the taxable
23 Income tax rate imposed on the income year for which the return is made:
of a resident foreign corporation (RFC)
That a general professional partnership and the
23A corporation organized or existing under the partners comprising such partnership may avail
laws of any foreign country, engaged in trade or of the optional standard deduction only once,
business within the Philippines, shall be subject either by the general professional partnership or
to an income tax of 30% of the taxable income the partners comprising the partnership.
derived from all sources within the Philippines.
0 Proprietary Education Institution and
23What is the Minimum Corporate Income Non-Profit Hospital
Tax on DC and RFC
0 Proprietary educational institutions and hospitals which are

23 A minimum corporate income tax of nonprofit shall pay a tax of ten percent (10%) on their
2% of the gross income is imposed beginning taxable income except certain passive income.
on the fourth taxable year immediately
following the year in which such corporation However, if the gross income from unrelated trade,
commence its business operations, when the business or other activity exceeds fifty percent (50%)
minimum income tax is greater than the of the total gross income derived by such educational
Income Tax.
16
kpmg

institutions or hospitals from all sources, it of the cost of the ticket corresponding to the
shall be subject to 30% income tax imposed leg flown from the Philippines to the point of
on the entire taxable income. transshipment shall form part of GPB.

The term unrelated trade, business or other On the other hand, for purposes of International
activity means any trade, business or other Shipping, GPB means gross revenue whether
activity, the conduct of which is not for passenger, cargo or mail originating from the
substantially related to the exercise or Philippines up to final destination, regardless of
performance by such educational institution or the place of sale or payments of the passage or
hospital of its primary purpose or function. freight documents.

0 Income of Government-owned or 0 Tax on International Carriers

Controlled Corporations (GOCCs), Agencies
or Instrumentalities subject to Income Tax 3 General Rule: International carriers doing
business in the Philippines shall pay a tax of
0 Existing special or general laws to the contrary two and one-half percent (2 ½%) on its GBP.
notwithstanding, all corporations, agencies, or
instrumentalities owned or controlled by the Exemption: International carriers doing business in
Government shall pay such rate of tax upon their the Philippines may avail of a preferential rate or
taxable income as are imposed upon corporations exemption from the tax herein imposed on their
or associations engaged in a similar business, gross revenue derived from the carriage of persons
industry, or activity. and their excess baggage on the basis of an
applicable tax treaty or international agreement to
0 What are the exempt GOCCs, Agencies which the Philippines is a signatory or on the basis
and Instrumentalities of reciprocity such that an international carrier,
whose home country grants income tax exemption
3 (1) Government Service Insurance System to Philippine carriers, shall likewise be exempt from
(GSIS); (2) Social Security System (SSS); (3) the tax imposed under this provision.
Philippine Health Insurance Corporation
(PHIC); and, (4) Local water districts. 3 Tax on Offshore Banking Units (OBUs)

3 Define Gross Philippine Billings (GPB) 3 General Rule: No. Income derived by OBUs
regarding International Carriers authorized by the BSP, from foreign currency
transactions with non-residents, other OBUs and
A:, GPB refers to the amount of gross revenue local commercial banks (including branches of
derived from carriage of persons, excess baggage, foreign banks that may be authorized by the
cargo and mail originating from the Philippines in a BSP to transact business with offshore banking
continuous and uninterrupted flight, irrespective of units) shall be exempt from all taxes.
the place of sale or issue and the place of payment
of the ticket or passage document. Exemption: Net income from such transactions as may be
specified by the Secretary of Finance, upon recommendation
Tickets revalidated, exchanged and/or indorsed to of the Monetary Board which shall be subject to the regular
another international airline form part of the GBP if the income tax payable by banks.
passenger boards a plane in a port or point in the
Philippines. Further, in cases for a flight which Regional or area headquarters / Regional
originates from the Philippines, but transshipment of Operating Headquarters
passenger takes place at any port outside the
Philippines on another airline, only the aliquot portion 3 Definition
17
kpmg

Regional or area headquarters shall mean a branch Corporations exempted from income tax
established in the Philippines by multinational
companies and which headquarters do not earn or Enumeration of the exempted corporations
derive income from the Philippines and which act as
supervisory, communications and coordinating center A:
for their affiliates, subsidiaries, or branches in the Labor, agricultural or horticultural organization not
Asia-Pacific Region and other foreign markets. organized principally for profit;
Mutual savings bank not having a capital stock
Regional operating headquarters shall mean a represented by shares, and cooperative bank
branch established in the Philippines by multinational without capital stock organized and operated
companies which are engaged in any of the following for mutual purposes and without profit;
services: general administration and planning; A beneficiary society, order or association, operating for the
business planning and coordination; sourcing and exclusive benefit of the members such as a fraternal
procurement of raw materials and components; organization operating under the lodge system, or a
corporate finance advisory services; marketing control mutual aid association or a nonstock corporation
and sales promotion; training and personnel organized by employees providing for the payment of

management; logistic services; research and life, sickness, accident, or other benefits exclusively to

development services and product development; the members of such society, order, or association, or

technical support and maintenance; data processing nonstock corporation or their dependents;

and communication; and business development. Cemetery company owned and operated
exclusively for the benefit of its members;
Tax on income of Regional or area Nonstock corporation or association organized and
headquarters/Regional Operating Headquarters operated exclusively for religious, charitable,
scientific, athletic, or cultural purposes, or for
Regional or area headquarters shall not the rehabilitation of veterans, no part of its net
be subject to income tax income or asset shall belong to or inure to the
benefit of any member, organizer, officer or
Regional operating headquarters shall pay a any specific person;
tax of ten percent (10%) of their taxable income. Business league, chamber of commerce, or board
of trade, not organized for profit and no part of
Improperly Accumulated Earnings Tax (IAET) the net income of which inures to the benefit of
any private stockholder or individual;
When is IAET applicable Civic league or organization not organized for
profit but operated exclusively for the
the ten percent (10%) IAET applies to a corporation which is promotion of social welfare;
formed or availed of for the purpose of avoiding the A nonstock and nonprofit educational institution;
imposition of income tax on the income received by Government educational institution;
shareholders of the corporation, by Farmers' or other mutual typhoon or fire insurance company,
mutual ditch or irrigation company, mutual or
permitting its earnings or profits to
cooperative telephone company, or like organization of
accumulate, instead of being divided or
a purely local character, the income of which consists
distributed to the shareholders
solely of assessments, dues, and fees collected from
members for the sole purpose of meeting its expenses;
Exemptions from the coverage of IAET
and
Farmers', fruit growers', or like association organized
(1) Publicly-held corporations; (2) banks and
other nonbank financial intermediaries; and, and operated as a sales agent for the
(3) insurance companies.
18
kpmg
purpose of marketing the products of its members and shall file their returns from the sale or exchange
turning back to them the proceeds of sales, less the of shares of stock not traded thru a local stock
necessary selling expenses on the basis of the quantity exchange within thirty (30) days after each
of produce finished by them. transaction and a final consolidated return on or
before April 15 of each year covering all stock
Notwithstanding the above, the income of transactions of the preceding taxable year.
whatever kind and character of the foregoing For the sale or disposition of real property the
organizations from any of their properties, real or return must be filed within thirty (30) days
personal, or from any of their activities following each sale or other disposition.
conducted for profit regardless of the disposition
made of such income, shall be subject to tax. Filing period for corporate taxpayers

Tests used to determine the entitlement of The corporate quarterly declaration shall be filed
tax exemption within sixty (60) days following the close of each of
the first three (3) quarters of the taxable year. The
Organizational Test – the corporation or final adjustment return shall be filed on or before the
association’s constructive documents must show fifteenth (15th) day of April, or on or before the
that its primary purpose/s of incorporation fall fifteenth (15th) day of the fourth (4th) month following
under Section 30 of the NIRC the close of the fiscal year, as the case may be.

Operational Test – the regular activities of the Substituted Filing

corporation or association be exclusively devoted to
the accomplishment of the purposes specified in Substituted Filing is when the employer's annual return (BIR
Section 30 of the NIRC. A corporation fails to meet Form 1604CF) may be considered as the "substitute"
this test if the corporation has no activities conducted Income Tax Return (ITR) of employee inasmuch as the
in furtherance of the purpose for which it was information provided in his income tax return (BIR Form
organized, or if a substantial part of its operations 1700) would exactly be the same information contained in
constitutes “activities conducted for profit”. the employer's annual return. Individual taxpayers receiving
purely compensation income, regardless of amount, from
Filing of returns and payment only one employer in the Philippines for the calendar year,
the income tax of which has been withheld correctly by the
Individuals required to file an Income Tax said employer shall not be required to file an annual income
Return (ITR) tax return. The certificate of withholding filed by the
respective employers, duly stamped 'received' by the BIR,
(1) Every Filipino citizen residing in the Philippines; shall be tantamount to the substituted filing of income tax
Every Filipino citizen residing outside the returns by said employees.
Philippines, on his income from sources within the
Philippines; and, (3) Every alien residing in the
Philippines, on income derived from sources within Liability for failure to file a return
the Philippines; and profession in the Philippines.
Any person required to pay any tax, make a return,
When to file ITR keep any record, or supply correct and accurate
information, who willfully fails to pay such tax, make
A: such return, keep such record, or supply such correct
The ITR shall be filed on or before the fifteenth and accurate information, or withhold or remit taxes
(15th) day of April of each year covering withheld, or refund excess taxes withheld on
income for the preceding taxable year. compensation, at the time or times required by law or
For individuals subject to tax on capital gains, they rules and regulations shall, in addition to other
19
kpmg

penalties provided by law, upon conviction Thus, the withholding agent is constituted the agent of both
thereof, be punished by a fine of not less than the Government and the taxpayer. With respect to the
P10,000 and suffer imprisonment of not less collection and/or withholding of the tax, he is the
than 1 year but not more than 10 years. Government’s agent. Regarding the filing of the necessary
income tax return and the payment of the tax to the
Withholding Tax Government, he is the agent of the taxpayer.

Nature of withholding tax The withholding agent is no ordinary

government agent especially because he is
Withholding tax is a method of collecting income tax held personally liable for the tax he is duty
in advance from the taxable income of the recipient of bound to withhold; whereas the Commissioner
income. Thus, if the income of the recipient is exempt and his deputies are not made liable by law.
from income tax, no withholding of tax is required to
be made by the payor of such income, which is The right of a withholding agent to claim a
constituted as a withholding agent. refund of erroneously or illegally withheld
taxes comes with the responsibility to return
Final withholding tax the same to the principal taxpayer .
14

Under the final withholding tax system the amount of TRANSFER TAXES
income tax withheld by the withholding agent is
constituted as a full and final payment of the income Basic definition
tax due from the payee on the said income.
Estate tax – tax on the right to transmit property at
The finality of the withholding tax is limited only to the death and on certain transfers by the decedent
payee's income tax liability on the particular income. It during his lifetime which are made by the law the
does not extend to the payee's other tax liability on
equivalent of testamentary dispositions.
said income, such as when the said income is further
subject to a percentage tax. For example, if a bank An excise tax on the right of transmitting property at
receives income subject to final withholding tax, the the time of death and of the privilege that a person is
same shall be subject to a percentage tax. Final given in controlling to a certain extent the disposition
withholding taxes are considered as full and final of his property to take effect upon his death.
payment of the income tax due, and thus, are not
subject to any adjustments. Donor’s tax – An excise tax imposed on the
privilege to transfer property by way of gift inter
Creditable withholding tax vivos based on a pure act of liberality without
any or less than adequate consideration and
Under the creditable withholding tax system, without any legal compulsion to give.
taxes withheld on certain income payments are
intended to equal or at least approximate the tax Estate tax
due of the payee on said income.
Classification of a decedent
Duties of a withholding agent
Estate Tax applies only to individuals. The decedent may be
The responsibility for the collection of the tax as well classified into: (1) Citizen (Resident or Non-resident); (2)
as the payment thereof is concentrated upon the
Resident alien; or, (3) Non-resident alien.
person over whom the Government has jurisdiction.

Source: Commissioner of Internal Revenue vs. Smart Communication,

Inc., G.R. Nos. 179045-46, 25 August 2010
20
kpmg

Concept of residence Deductions from gross estate

For purposes of estate taxation, residence refers to Citizen or resident

domicile – the permanent home or the place to which Standard deduction equivalent to ₱5,000,000;
whenever absent, one intends to return (animus Claims against the estate;
revertendi), and depends on facts and circumstances, Claims against insolvent persons;
in the sense that they disclose intent. It is therefore, Unpaid mortgages;
not necessarily the actual place of residence. Property previously taxed;
Transfers for public use;
Rule of reciprocity Family home equivalent to ₱10,000,000;
Amount received by heirs under RA No. 4917
There is reciprocity if the foreign country of which (Retirement benefits of private firm employees).
the decedent was a citizen and resident at the time
of his death: (a) did not impose a transfer tax of Non-resident
any character, in respect of intangible personal Standard deduction equivalent to ₱500,000.00
property of citizens of the Philippines not residing Proportionate amount for claims against the
in that foreign country; or, (b) allowed a similar estate; claims against insolvent persons;
exemption from transfer tax in respect of intangible or, unpaid mortgages which the value of
personal property owned by citizens of the such part bears to the value of the entire
Philippines not residing in that country. gross estate wherever situated;
Property previously taxed; and,
If there is reciprocity, the intangible personal Transfers for public use;
property of an NRA shall not be included in his
gross estate. If there is no reciprocity, such Estate tax return
intangible personal property will be included.
The filing of estate tax returns shall be within one
Items to be included in the gross estate (1) year from the date of the decedent’s death with
the rate of six percent (6%) of the net estate. In case
A: the available cash of the estate is insufficient to pay
Property owned by the decedent actually the total estate tax due, payment by installment shall
and physically present in his estate at be allowed within two (2) years from the statutory date
the time of his death; of payment, without civil penalty and interest.
Decedent‘s interest;
Properties not physically in the estate: If a bank has knowledge of the death of a person,
Transfers in contemplation of death; who maintained a bank deposit account alone, or
Transfers with retention or reservation of jointly with another, it shall allow any withdrawal
certain rights; from the said deposit account, subject to final
Revocable transfers; withholding tax of six percent (6%).
Property passing under general power
of appointment; Estate tax returns showing a gross value exceeding
Transfers for insufficient consideration; ₱5,000,000.00 shall be supported by a statement duly
Proceeds of life insurance; certified by a certified public accountant.
Claims against insolvent persons; and,
Filing of a notice of death is no longer
Capital of the surviving spouse.
required as introduced under the TRAIN law.
21
kpmg

Donor’s tax

Taxable base

Net gifts (i.e. net economic benefit from the

transfer) that accrues to the donee at the
time of donation

If gift is real property – it shall be valued at the fair

market value (FMV) of the property at the time of
donation. The appraised FMV of the property shall be
whichever is higher between the zonal value or the
FMV in the latest schedule of values fixed by the
provincial and city assessor.

If gift is Personal Property - FMV of the property at the

time of donation.

Tax rate

Donor’s tax is fixed at six percent (6%) based on

annual total gifts in excees of ₱250,000.00, regardless
of whether the donee is a stranger or not.

Exemption from donor’s tax

A:

Gifts made to or for the use of the national

government or any entity created by any of its
agencies, which is not conducted for profit or to
any political subdivision of the said government;
Gifts in favor of an educational and/or charitable,
religious, cultural, or social welfare corporation,
institution, accredited non-government
organization or philanthropic organization, or
research institution (not more than 30% of said
gifts shall be used for administration purposes);
Athlete’s prize and awards;
Encumbrances on the property donated if assumed
by the donee in the deed of donation;
Donations made to entities exempted under
special laws

The exemption of dowries (gifts made on account of

marriage) was removed under the TRAIN law.
22
kpmg

In the case of tax-free importation of goods into the

VALUE ADDED TAX
Philippines by persons, entities or agencies exempt
from tax where such goods are subsequently sold,
Who are liable for VAT
transferred or exchanged in the Philippines to non-
Any person who, in the course of trade or business: exempt persons or entities, the purchasers,
(a) sells, barters, exchanges, or leases goods or properties; transferees or recipients shall be considered the
importers thereof, who shall be liable for any internal
(b) renders services; and, (c) imports goods.
revenue tax on such importation. The tax due on such
importation shall constitute a lien on the goods
In the course of trade or business
superior to all charges or liens on the goods,
It means the regular conduct or pursuit of a irrespective of the possessor thereof.
commercial or economic activity, including
transactions incidental thereto, by any persons
Transactions deemed sale
regardless of whether or not the person
engaged therein is a non-stock, non-profit
The following are transactions deemed sale
subject to VAT:
private organization, or government entity.
Transfer, use or consumption not in the course of business
of goods or properties originally intended for sale or for
Elements of a VAT-taxable transaction
use in the course of business;

For a transaction to be vatable: (1) there must Distribution or transfer to:

Shareholders or investors as share in the
be sale, barter, or lease in the Philippines in the
profits of the VAT-registered persons; or,
course of trade or business or in the furtherance
Creditors in payment of debt.
of profession; and, (2) the subject matter must
Consignment of goods if actual sale is not
be taxable goods, properties or services
made within sixty (60) days following the
date such goods were consigned; and,
Destination Principle
Retirement from or cessation of business, with
Under the Destination Principle, goods and services are respect to inventories of taxable goods
existing as of such retirement or cessation.
taxed only in the country where they are consumed.

Thus, exports are zero-rated, while imports are taxed15. Zero-rated and effectively zero-rated
sales of goods and/or properties
Cross-Border Doctrine
What are Zero-Rated Sales
Under the Cross-Border Doctrine, no VAT shall be
imposed to form part of the cost of goods destined
A zero-rated sale of goods or properties by a VAT-
for consumption outside of the territorial border of
registered person is a taxable transaction for VAT
the taxing authority. Hence, actual export of goods
purposes, although the VAT rate is zero percent (0%).
and services from the Philippines to a foreign
However, the input tax on purchases of goods,
country must be free of VAT; while, those destined
properties or services, related to such zero-rated sale,
for use or consumption within the Philippines shall
shall be available as tax credit or refund.
be imposed VAT16.
What are Foreign Currency Denominated Sales
How is VAT imposed on transfer of goods by
tax exempt persons to non-exempt entities Foreign Currency Denominated Sales are sales to
non-residents of goods assembled or manufactured in
the Philippines for delivery to a resident in the

16
Source: CIR v. American Express, G.R. No. 152609, 29 June 2005 Source: Toshiba v CIR, G.R. No. 157594, 02 March 2010
23
kpmg

Philippines, paid for in acceptable foreign Filing of returns and payment

currency and accounted for in accordance
with the rules and regulations of the BSP. When are VAT returns filed/paid

Input and Output Tax In General. - Every person liable to pay the VAT shall
file a quarterly return of the amount of his gross sales
Definition or receipts within twenty-five (25) days following the
close of each taxable quarter prescribed for each
Input Tax is the VAT due from or paid for by a taxpayer: Provided, however, that VAT-registered
VAT-registered person in the course of his trade or persons shall pay the VAT on a monthly basis.
business on importation of goods or local purchase
of goods or services, including lease or use of Any person, whose registration has been cancelled
property, from a VAT-registered person. in accordance with Section 236, shall file a return
and pay the tax due thereon within twenty-five (25)
Ouput Tax is the VAT due on the sale or lease of days from the date of cancellation of registration:
taxable goods or properties or services by any person Provided, that only one consolidated return shall
registered or required to register under the NIRC. be filed by the taxpayer for his principal place of
business or head office and all branches.
Tax Refund or Tax Credit
The return shall be filed with and the tax paid to an
What is the San Roque Doctrine authorized agent bank, revenue collection officer or
duly authorized city or municipal Treasurer in the
Under this Doctrine, BIR Ruling No. DA-489-03, which Philippines located within the revenue district where
states that a taxpayer-claimant need not wait for the the taxpayer is registered or required to register.
lapse of the 120-day period before it could seek
judicial relief with the CTA by way of Petition for TAX REMEDIES UNDER THE NIRC
Review, constitutes as an exception to the mandatory
and jurisdictional nature of the120+30-day period General concepts
provided in Aichi. Thus, a judicial claim for refund filed
before the lapse of the 120-day period is deemed to What is a tax assessment
have been timely filed if the filing occurred within the
window period from 10 December 2003, upon the The term assessment refers to the determination of
issuance of BIR Ruling No. DA-489-03 up to 6 amounts due from a person obligated to make
October 2010, or the date of promulgation of Aichi. payments. In the context of national internal
revenue collection, it refers to the determination of
Note: For reference purposes, amendments introduced by
the taxes due from a taxpayer.
the TRAIN law and as implemented by RMC No. 47-
2019 would make the San Roque and Aichi rulings It is an official action of an administrative officer in
inapplicable moving forward. determining the amount of tax due from a taxpayer, or it may
be a notice to the effect that the amount therein stated is due
What is the enhanced VAT refund system
from a taxpayer as a tax, with a demand for payment of the
tax or any deficiency stated therein.
This is a provision under Section 30 of the TRAIN
law which provides for the successful
What is a deficiency tax assessment
establishment and implementation of enhanced
VAT refund system that grants refunds of
It is a deficiency tax liability that is determined
creditable input tax within ninety (90) days from the
after a tax audit and examination.
filing of the VAT refund application with the Bureau.
24
kpmg

What is a jeopardy assessment or other document at the time prescribed by law;

or, (2) If taxpayer willfully or otherwise files a
A jeopardy assessment is a tax assessment made false or fraudulent return or other document.
by an authorized Revenue Officer (RO) without the
benefit of complete or partial audit. The What are the methods to constructively
assessment is done because of a belief that the determine a taxpayer’s income
determination and collection of a deficiency tax will
be jeopardized by delay caused by the taxpayer’s Some of the methods used by the BIR to
failure to: (a) comply with audit and investigation determine a taxpayer’s income constructively: (1)
requirements to present his books of accounts Net worth method; (2) Cash expenditure method;
and/or pertinent records; (b) substantiate all or any (3) Percentage method; (4) Bank deposit method;
of the deductions, exemptions or credits claimed in (5) Unit and value method; (6) Third party
his return. A jeopardy assessment is valid. information or access to records method; and, (7)
Surveillance and assessments method.
What is a protested assessment
What are the requisites for a valid tax
It is an assessment where a taxpayer questions assessment
the findings in an assessment and asks the
collector to reconsider or cancel the same because A:
he believes that he is not liable thereof. Letter of Authority issued to the Revenue
What are the powers of the Commissioner of Officers authorizing them to conduct an
Internal Revenue (CIR) in the assessment of taxes assessment and audit of taxpayer’s books
and other relevant documents;
The Commissioner or his duly authorized Conduct of Notice for Informal Conference;
representatives are authorized to use the following Issuance of the Preliminary Assessment Notice (PAN)
powers to make assessments and prescribe by the authorized Revenue District Officer;
additional requirements in tax administration: Issuance of the Formal Letter of Demand
and Final Assessment Notice
Examination of returns and determination of (FLD/FAN) by the Commissioner or his
the tax due; duly authorized representative;
Assess the proper tax based on the best The Letter of Demand calling for the payment of the
evidence obtainable; deficiency tax. The letter shall state the facts,
Conduct inventory-taking, surveillance and prescribe law, rules and regulations or jurisprudence on
presumptive gross sales and receipts; which the assessment is based.
Issue jeopardy assessments and terminate
the taxable period; Tax Assessments made by the BIR shall be prima
Prescribe real property values; facie presumed correct and made in good faith.
Inquire into bank deposit accounts; The taxpayer has the burden of proof of showing
Accredit and register tax agents;
the incorrectness of such assessment17.
Prescribe additional procedural or
documentary requirements. An assessment is deemed made and the period
to collect the assessed tax begins to run on the
What is the best evidence obtainable rule date the Final Assessment Notice and Formal
Letters of Demand (FAN/FLD) had been
The law authorizes the Commissioner to assess taxes 18
released, mailed or sent to the taxpayer .
on the basis of the best evidence obtainable in the
following cases: (1) If a person fails to file a return

Source: CIR v. Traders Royal Bank, GR No. L-167134, 18 March 2015 18

Source: CIR v. GJM Phils. MFG., Inc., GR No. 202695, 29 February 2016
25
kpmg

Tax delinquency VIS-À-VIS Tax deficiency False returns vs. fraudulent returns vs.
non-filing of returns
What is a tax deficiency
Definition
It pertains to the amount of tax short of the full
tax due that should be paid to the government. False returns implies deviation from the
19
truth, whether intentional or not .
What is a tax delinquency
Fraudulent returns mean that there is an intention or
A tax delinquency arises upon the failure of the deceitful entry with intent to evade the taxes due.
taxpayer to pay the tax due as demanded by the
CIR in a formal letter of demand issued after an Non-filing of returns pertains to situations
assessment and audit. It is only upon such failure where the taxpayer did not file a return
that a taxpayer is considered delinquent, and thus, which is required to be filed with the BIR.
should be liable for delinquency interest.
Grounds for the suspension of running of the
Prescriptive period statute of limitations in case of assessments

When shall the prescriptive period for the The running of the statute of limitations on
assessment run the making of assessment shall be
suspended in following circumstances:
Internal revenue taxes shall be assessed within three
(3) years after the last day prescribed by law for the For the period during which the Commissioner is
filing of the return, and no proceeding in court without prohibited from making the assessment or
assessment for the collection of such taxes shall be beginning distraint or levy or a proceeding in
begun after the expiration of such period: Provided, court and for sixty (60) days thereafter;
that in a case where a return is filed beyond the When the taxpayer requests for a reinvestigation
period prescribed by law, the three (3) year period which is granted by the Commissioner;
shall be counted from the day the return was filed. For When the taxpayer cannot be located in the
purposes of this Section, a return filed before the last address given by him in the return filed upon
day prescribed by law for the filing thereof shall be which a tax is being assessed or collected;
considered as filed on such last day. except if the taxpayer informs the
Commissioner of any change in address;
Are there exceptions to the 3-year When the warrant of distraint or levy is duly
prescriptive period served upon the taxpayer, his authorized
representative, or a member or his
Yes. Where a false or fraudulent return with intention household with sufficient discretion, and
to evade taxes, the prescriptive period shall be within no property could be located; and,
ten (10) years from date of discovery of the falsity of When the taxpayer is out of the Philippines.
the fraud; or, where there is a failure to file a return, at
any time within ten (10) years after the discovery of Can the taxpayer agree to extend the
the omission of the return prescriptive period of the assessment

Yes. The taxpayer may, through a Waiver of the

Statute of Limitations, filed and executed in

Source: CIR v. Philippine Daily Inquirer, Inc. GR No. 213943. 22 March

2017
26
kpmg

accordance with existing rules and regulations, starting 1 January 2018. The interest shall
extend the prescriptive period for the assessment. be imposed on any deficiency in the tax due.
Delinquency Interest – In case of failure to pay:
Requisites of a valid waiver The amount of the tax due on any return
required to be filed, or
The waiver must comply with the following The amount of the tax due for which no
conditions: return is required, or
A deficiency tax, or any surcharge or interest
The waiver shall be executed before the thereon on the due ate appearing in the
expiration of the period to assess or to notice and demand of the Commissioner.
collect taxes. The date of execution must Interest on Extended Payment – Imposed when the
be specifically indicated in the waiver; taxpayer has opted to pay by installment but fails
The waiver shall be signed by the taxpayer himself to pay the tax or any installment on the date
or his duly authorized representative. In the prescribed for payment and also in cases where
case of a corporation, the waiver must be the Commissioner has authorized the extension
signed by any of its responsible officials; of the time for the payment of the tax.
The expiry date of the period agreed upon to
assess/collect the tax after the regular three- What is surcharge
year period of prescription should be indicated.
In addition to the tax required to be paid, the
Civil Penalties, Additions to tax penalty of surcharge shall be imposed in the
following instances:
What are the increments imposed by the NIRC
Twenty-five percent (25%) of the amount due:
Interest; Surcharge; and, Compromise Penalty
Failure to file any return and pay the tax due
What are the interests allowed to be thereon as required under the provisions
imposed by law on the tax deficiencies of the NIRC or rules and regulations on
the date prescribed; or
In general, there shall be assessed and collected on Unless otherwise authorized by the
any unpaid amount of tax, interest at the rate of Commissioner, filing a return with an internal
double the legal interest rate for loans or forbearance revenue officer other than those with whom
of any money in the absence of an express stipulation the return is required to be filed; or
as set by the BSP from the date prescribed for Failure to pay the deficiency tax within the
payment until the amount is fully paid: Provided, That time prescribed for its payment in the
in no case shall the deficiency and the delinquency notice of assessment; or
interest prescribed under Subsections (B) and (C) Failure to pay the full or part of the amount of tax
hereof, be imposed simultaneously. shown on any return required to be filed under
the provisions of the NIRC or rules or
It must be noted that prior to the amendment of RA regulations, or the full amount of tax due for
No. 10963, the interest imposed is twenty percent which no return is required to be filed, on or
(20%) and may be imposed simultaneously with before the date prescribed for its payment.
the delinquency interest as penalty.
Fifty percent (50%) of the amount due:
Deficiency Interest – Any deficiency in the tax due
shall be subject to the interest prescribed in There is willful neglect to file the return within the
Subsection (A) hereof. The rate shall be double period prescribed by the NIRC; or
the legal interest rate or at twelve percent (12%) Willful filing of a false or fraudulent return.
27
kpmg

Stage Discussion
Note that substantial underdeclaration of taxable sales or
Conference the taxpayer is not amenable
income or substantial overstatement of deductions shall 22
(NIC) with the submitted report of
constitute prima facie evidence of a false or fraudulent investigation of the Revenue
return. Failure to report sales, receipts or income in an Officer concerned. The
amount exceeding thirty percent (30%) of that declared per Informal Conference shall be
return and a claim of deductions in an amount exceeding in no case extend beyond
thirty percent (30%) of the actual deductions shall render the thirty (30) days from the
taxpayer liable for substantial under declaration of sales, receipt of the notice of
receipts, or income or for overstatement of deductions. informal conference.
On the event that that the

What is a compromise penalty taxpayer is still liable for the

deficiency and the taxpayer is
These are amounts collected by the BIR in lieu of not amenable, the case will be
criminal prosecution for violations committed by endorsed within seven (7)
taxpayers, the payment of which is based on a days from the conclusion of
compromise agreement validly entered into the Informal Conference to the
between the taxpayer and the Commissioner20. Assessment Division of the
Revenue Regional Office or to
Remedy of the Government when the taxpayer fails to the Commissioner or his duly
comply with the payment of the Compromise Penalty authorized representative for
issuance of a deficiency tax
File a criminal action for the tax violation. assessment.
This is because the nature of the 3. Preliminary The PAN will be issued any
compromise penalty is neither a tax nor an Assessment time prior to expiration of
administrative penalty for tax delinquency .
21 Notice (PAN) period to assess. The taxpayer
has a non-extendable period
Assessment Process and Reglementary Period of 15 days from receipt of the
PAN.
Stage Discussion A PAN shall not be required in
1. Letter of The letter of authority refers
Authority to the letter informing a the following cases:
(LOA) taxpayer that a certain i. When the finding is the
revenue officer is authorized result of a mathematical
to examine the books of error;
accounts and other ii. When excise tax due on
accounting records. excisable articles has not
It must be served within thirty been paid;
iii. When a discrepancy has
(30) days from the date of been determined between
issuance. the tax withheld and the
2. Notice of The Notice of Informal amount actually remitted
Informal Conference will be issued if by the withholding agent;
22
Source: RR No. 07-2018, dated 31 January 2018.

Source: Classic Fine Foods Phils. v. CIR. CTA Case No. 7363, 09
June 2010
Source: CIR v. Philippine Daily Inquirer, CTA EB Case No. 905, 24
November 2013
28
kpmg

Stage Discussion Stage Discussion

iv. When an article locally for
purchased or imported by reinvestigatio
exempt person has been n)24
sold, traded, or transferred 7. Submission by Within sixty (60) days from the
to non-exempt persons; taxpayer of all date of actual filing of the
v. When a taxpayer who relevant protest against the FAN.
opted to claim for a refund supporting
25
or tax credit of excess documents The assessment shall become
creditable withholding tax final by operation of law and
for a taxable period was the taxpayer shall be barred
determined to have carried from disputing the correctness
over and automatically of the issued assessment by
applied the same amount introduction of newly
against the estimated tax discovered or additional
liabilities for the taxable evidence because the
quarter/s of the taxpayer is deemed to have
succeeding taxable year. lost the chance to present this
4. Reply / Within fifteen (15) days from evidence.
Position paper receipt by the taxpayer of the 8. Decision by Within one hundred eighty
against the PAN the BIR on the (180) days from submission of
PAN protest to the the last supporting document
5. Formal Letter If the taxpayer fails to timely FLD/FAN (reinvestigation) or from the
of Demand reply to the PAN, the FAN will (final decision filing of the protest
(FLD) and Final be issued within a short on disputed (reconsideration)
Assessment period after the end of the 15 assessment or
Notice (FAN) day period. FDDA)
If the taxpayer replies to the If the protest to the FAN is denied by the BIR
within the 180 day period, the taxpayer has
PAN (and disagrees with the the mutually exclusive option to either:
findings of the BIR), the FAN
will be issued within 15 days Appeal (Petition for Review) the denial by
after the receipt by the BIR of the BIR to the Court of Tax Appeals
the taxpayer’s reply (to the (CTA) within thirty (30) days from the
23
PAN) receipt of the denial by the taxpayer; or
6. Protest Within thirty (30) days from
against the receipt of the FLD and FAN. Appeal (request for reconsideration) the denial
FLD/FAN by the BIR to the CIR. No submission of
(includes Otherwise the deficiency tax documents is allowed in filing a request for
either a assessments become final reconsideration; only a position paper will
request for and executory (collectible) be allowed to be filed.
reconsideratio
n OR a request

23
Regardless whether or not the taxpayer replies to the PAN, the
25
BIR will issue a FAN (Section 3.1.1, RR No. 12-99, as amended). The submission of supporting documents is only allowed in cases of a
request for reinvestigation (Section 3.1.4, RR No. 12-99, as amended).
24
The taxpayer cannot exercise both options e.g., to
request for both a reconsideration and a reinvestigation
(Section 3.1.4, RR No. 12-99, as amended).
29
kpmg

Stage Discussion What is the prescriptive period for the

If the protest is not acted on (no decision) by the BIR by collection of taxes
the end of 180 day period, the taxpayer has the
mutually exclusive option to either: As a general rule, the prescriptive period to
collect the taxes due is five (5) years from
Appeal (Petition for Review) the inaction of the the date of assessment.
BIR to the CTA within 30 days from the
expiry of the 180 day period; or The exceptions are:
Wait for the decision of the BIR (allowed even
beyond the 180 day period). Where a false or fraudulent return with intent to evade
If the protest is denied by the BIR after the expiry of the taxes was filed, within ten (10) years from the
180 days, the taxpayer has the same options as discovery without need for prior assessment;
provided in numbers 7a above. Where there is failure or omission to file a
If a request for reconsideration (request) return, within ten (10) years from the
of the FDDA is filed with the CIR, the discovery without need for assessment;
When there is a valid waiver executed by and
following rules apply:
If the request of the FDDA is denied by the CIR between the taxpayer and the authorized officer.
within 180 days from the date of filing of the
request, the taxpayer should appeal the TAXPAYERS REMEDIES
denial issued by the CIR to the CTA within
30 days from the receipt of the denial. Protesting an assessment

If the request is not acted on (no decision) by the Period for the taxpayer to file protest
CIR by the end of 180 days, the taxpayer has
the mutually exclusive option to either: Within thirty (30) days from date of receipt of the
Appeal (Petition for Review) the inaction of the
Formal Letter of Demand/Final Assessment Notice
CIR to the CTA within 30 days from the
expiry of the 180 day period; or Written requests that taxpayer may file in a protest
Wait for the decision of the CIR (allowed even
beyond the 180 day period). Request for reconsideration – refers to a plea of re-
If the request is denied (final) by the CIR even evaluation of an assessment on the basis of existing records
beyond the 180 day period, the taxpayer has without need of additional evidence and it may involve both a
30 days from the receipt of the denial by the question of fact or of law or both.
CIR to appeal (Petition for Review) the final
decision of the CIR to the CTA. Request for reinvestigation – refers to a plea of re-
evaluation of an assessment on the basis of newly
Collection discovered or additional evidence that a taxpayer
intends to present in the reinvestigation and it may
How does the BIR collect the deficiency also involve a question of fact or of law or both.
and/or delinquency taxes due a taxpayer
Modes of service of an assessment
Any internal revenue tax which has been assessed
within the period of limitation as prescribed may be The assessment notice shall be served to the
collected by distraint or levy or by a proceeding in taxpayer either through: (1) personal service;
court. Deficiency taxes can be collected also through (2) either by substituted service or by mail in
administrative and/or judicial remedies. case personal service is not possible.
30
kpmg

Personal service – the assessment notice shall be Registered mail with an instruction to the
served to the taxpayer by personally delivering a Postmaster to return the mail to the sender
copy of the assessment notice at his registered or after ten (10) days, if undelivered; or
known address or wherever he may be found. A Reputable professional courier service; or
known address shall mean a place other than the Ordinary mail, if no registry or reputable courier is
registered address where business activities of the available in the locality of the taxpayer.
party are conducted or his place of residence.
What are the grounds for an assessment to
Substituted service – shall be done as follows: become final, executory and demandable

The assessment notice may be left at the An assessment shall become final,
party’s registered address, with his clerk executory and demandable due to, among
or with a person having charge thereof. others, the following grounds:
If the known address is a place where business Failure of the taxpayer to file a valid protest within
activities of the party are conducted, the thirty (30) days from receipt of the FLD/FAN;
notice may be left with his clerk or with a Failure of the taxpayer to submit all relevant
person having charge thereof. documents in support of his protest by way
If the known address is the place of residence, of request for reinvestigation within sixty (60)
substituted service can be made by leaving the days from the date of filing thereof;
copy with a person of legal age residing therein. Failure of the taxpayer to appeal to the CIR or
If no person is found in the party’s registered or the CTA within thirty (30) days from date
known address, the Revenue Officers (ROs) of receipt of the FDDA issued by the CIR's
concerned shall bring a barangay official and two duly authorized representative;
(2) disinterested witnesses to the address so that Failure of the taxpayer to appeal to the CTA
they may personally observe and attest to such within thirty (30) days from date of
absence. The assessment notice shall be given receipt of the FDDA issued by the CIR;
to said barangay official. Such facts shall be Failure of the taxpayer to timely file a motion for
contained in the bottom portion of the reconsideration or new trial before the CTA
assessment notice, as well as the names, official Division or failure to appeal to the CTA En
positions and signatures of the witnesses. Banc and Supreme Court based on existing
Should the party be found at his registered or known Rules of Procedure; or
address or any other place but refuses to receive the Failure of the taxpayer to receive any assessment notices
assessment notice, the ROs concerned shall bring a because it was served in the address indicated in the
barangay official and two (2) disinterested witnesses in BIR's registration database and the taxpayer
the presence of the party so that they may personally transferred to a new address or closed/ceased
observe and attest to such act of refusal. The operations without updating and transferring its BIR
assessment notice shall be given to said barangay registration or cancelling its BIR registration as the case
official. Such facts shall be contained in the bottom may be, through the accomplishment and filing of BIR
portion of the assessment notice, as well as the names, Form No. 1905

official positions and signatures of the witnesses. — Application for Registration Information
Update, as prescribed by pertinent
issuance and/or amendments thereto.
“Disinterested witnesses” refers to persons of
legal age other than employees of the BIR. What are the relevant supporting
documents that the taxpayer shall submit in
Service by mail – shall be done by sending case of requests for reinvestigation and the
a copy of the assessment notice through: period of submitting of the said documents
31
kpmg

The term "relevant supporting documents" refer to A written claim for refund or tax credit must be filed
those documents necessary to support the legal by the taxpayer with the Commissioner;
and factual bases in disputing a tax assessment as The claim for refund must be a categorical
determined by the taxpayer. The sixty (60)-day demand for reimbursement;
period for the submission of all relevant supporting The claim for refund or tax credit must be filed,
documents shall not apply to requests for or the suit or proceeding therefor must be
reconsideration. For requests for reinvestigation, commenced in court within two (2) years
the taxpayer shall submit all relevant supporting from date of payment of the tax or penalty
documents in support of his protest within sixty (60) regardless of any supervening cause.
days from date of filing of his letter of protest,
otherwise, the assessment shall become final. To successfully claim refund for creditable withholding
tax, a taxpayer must do two things: (a) declare the
Effect of failure to file protest income payments it received as part of its gross
income and (b) establish the fact of withholding.
If the taxpayer fails to file a valid protest against
the FLD/FAN within thirty (30) days from date of May a taxpayer seek refund after the taxpayer
receipt thereof, the assessment shall become final, opts to carry-over the excess income tax against
executory and demandable. No request for the taxes due for the succeeding taxable years
reconsideration or reinvestigation shall be granted
on tax assessments that have already become No, once the taxpayer opts to carry-over the excess income
final, executory and demandable. tax against the taxes due for the succeeding taxable years,
such option is irrevocable for the whole amount of the
Compromise and abatement of taxes excess income tax, thus, prohibiting the taxpayer from
applying for a refund for that same excess income tax in the
Compromise of taxes next succeeding taxable years. The unutilized excess tax
credits will remain in the taxpayer's account and will be
Applicable when there is: (1) a reasonable doubt as to the carried over and applied against the taxpayer's income tax
validity of the claim against the taxpayer exists; or, (2) the liabilities in the succeeding taxable years until fully utilized.
financial position of the taxpayer demonstrates a clear
inability to pay the assessed tax.

Abatement or cancellation of a tax liability

Applicable when: (1) the tax or any portion thereof

appears to be unjustly or excessively assessed; or (2)
the administration and collection costs involved do not
justify the collection of the amount due. All criminal
violations may be compromised except those already
filed in court, or those involving fraud.

Recovery of tax erroneously or

illegally collected

What the requirements for recovery of tax

erroneously or illegally collected

The requirements for refund claims are as follows:

32
kpmg

LOCAL GOVERNMENT TAXATION payment which in no case shall exceed

thirty six (36) months.
Fundamental principles which shall govern the
Adjustments to the local tax rates can be made not
exercise of the taxing and other revenue raising
oftener than every five (5) years but in no case
powers of a local government unit (LGU)26: shall adjustments exceed ten percent (10%).
A:
A LGU can only exercise the power on any
Taxation shall be uniform in each LGU;
Taxes, fees, charges and other impositions shall: base or subject not otherwise taxed under the
be equitable and based as far as practicable NIRC, as amended. Provided that such taxes
on the taxpayer's ability to pay; shall not be unjust, excessive, oppressive,
be levied and collected only for public confiscatory or contrary to national policy.
purposes;
Scope of taxing power
not be unjust, excessive, oppressive, or
confiscatory;
not be contrary to law, public policy, national A:
economic policy, or in the restraint of trade; LGU Scope
The collection of local taxes, fees, charges Provinces Limited only to: (1) Transfer of Real
and other impositions shall in no case Property Ownership; (2) Business of
be left to any private person; Printing and Publication; (3)
The revenue collected shall inure solely to the Franchise Tax; (4) Tax on Sand,
benefit of, and be subject to the disposition Gravel and Other Quarry Resources;
by, the LGU levying the tax, fee, charge or (5) Professional Tax; (6) Amusement
other imposition unless otherwise Tax; and, (7) Annual Fixed Tax for
specifically provided herein; and, every delivery truck or van
Each LGU shall, as far as practicable, Municipality May levy taxes, fees and charges not
evolve a progressive system of taxation. otherwise levied by provinces.
City May levy taxes, fees and charges
Taxing powers of a LGU which the province or municipality
may impose
Pursuant to the Local Government Code, a LGU shall Barangay Limited only to: (1) Taxes on stores
exercise the power to create its own sources of or retailers; (2) Service fees or
revenue and to levy taxes, fees and charges charges; (3) Barangay clearance;
consistent with the basic policy of local autonomy. and, (4) Other fees and charges
Necessarily, this includes the authority to issue local
tax ordinances, prescribe exemptions and penalties. Specific taxing power of LGUs

A LGU may exercise this power to tax A:

through a local sanggunian and an Power Specific LGU
appropriate and duly approved ordinance. Tax on transfer of real property Province, City
ownership
For penalties, surcharge may not exceed twenty five percent Tax on business of printing Province, City
(25%) of the amount of taxes, fees and charges due and and publication
unpaid, Interest may not exceed two percent (2%) per month Franchise tax Province, City
of the above unpaid items until full Tax on sand, gravel and other Province, City
quarry services

Source: Section 130, Local Government Code

33
kpmg

Power Specific LGU within thirty (30) days from effectivity of

Professional tax Province, City the tax ordinance
Amusement tax Province, City Any question must be resolved by the Secretary
Tax for every delivery truck or Province, City of Justice within sixty (60) days from receipt
van of the appeal. The appeal will not suspend
Tax on businesses City, Municipality the effectivity of the ordinance pending
Fees and charges for City, Municipality decision of the Secretary of Justice
regulation and licensing of The question may be raised to a court of
business and occupation competent jurisdiction within thirty (30)
Fees and charges for sealing City, Municipality days after receipt of the decision or after
and licensing of weights and the lapse of the 60-day period without
measures any action from the Secretary of Justice
Fishery rentals, fees and City, Municipality
charges Common limitations on the taxing power of LGUs
Community tax City, Municipality
Unless otherwise provided, taxing power of LGUs
Tax on gross sales or receipts Barangay
of small-scale stores shall not extend to the levy of the following:
Service fees on the use of Barangay
barangay-owned properties Income tax, except when levied on banks
and other financial institutions;
Barangay clearance Barangay
Documentary stamp tax;
Other fees and charges Barangay
Taxes on estates, inheritance, gifts, legacies
Service fees and charges Province, City,
and other acquisitions mortis causa, except
Municipality,
as otherwise provided herein;
Barangay Customs duties, registration fees of vessel and wharfage on
Public utility charges Province, City, wharves, tonnage dues, and all other kinds of customs
Municipality, fees, charges and dues except wharfage on wharves
Barangay constructed and maintained by the local government
Toll fees or charges Province, City, unit concerned;
Municipality, Taxes, fees, and charges and other impositions upon
Barangay goods carried into or out of, or passing through,
Real Property Tax Province, City, the territorial jurisdictions of local government
Municipality units in the guise of charges for wharfage, tolls
for bridges or otherwise, or other taxes, fees, or
Procedure for approval and effectivity of tax charges in any form whatsoever upon such
ordinances goods or merchandise;
Taxes, fees or charges on agricultural and
A: aquatic products when sold by marginal
Prior conducted public hearings farmers or fishermen;
Enactment of ordinance and revenue measures Taxes on business enterprises certified to by the
Publication in newspaper of local circulation in full for three
Board of Investments as pioneer or non-pioneer
(3) consecutive days within ten (10) days from approval for a period of six (6) and four (4) years,
/ enactment of all tax ordinances. Provided, that if there respectively from the date of registration;
are no newspapers of local circulation, the same may Excise taxes on articles enumerated under the national
be posted in at least two
Internal Revenue Code, as amended, and taxes, fees
(2) conspicuous and publicly available space or charges on petroleum products;
Any question on constitutionality or legality may be
raised on appeal to the Secretary of Justice
34
kpmg

Percentage or VAT on sales, barters or exchanges Penalties – surcharge not exceeding twenty-five
or similar transactions on goods or services (25%) of the amount of taxes, fees or charges not
except as otherwise provided herein; paid on time and an interest at the rate not
Taxes on the gross receipts of transportation exceeding two percent (2%) per month of the
contractors and persons engaged in the unpaid taxes, fees or charges including
transportation of passengers or freight by surcharges, until such amount is fully paid but in
hire and common carriers by air, land or no case shall the total thirty-six (36%) months.
water, except as provided in this Code; Authority of treasurer in collection and
Taxes on premiums paid by way or inspection of books – all local taxes, fees,
reinsurance or retrocession; and charges shall be collected by the
Taxes, fees or charges for the registration of provincial, city, municipal, or barangay
motor vehicles and for the issuance of all treasurer, or their duly authorized deputies.
kinds of licenses or permits for the driving The provincial, city or municipal treasurer may
thereof, except tricycles; designate the barangay treasurer as his
Taxes, fees, or other charges on Philippine deputy to collect local taxes, fees, or charges.
products actually exported, except as
otherwise provided herein; The provincial, city, municipal or barangay
Taxes, fees, or charges, on Countryside and treasurer may, by himself or through any of his
Barangay Business Enterprises and cooperatives deputies duly authorized in writing, examine the
duly registered under R.A. No. 6810 and R.A. books, accounts, and other pertinent records of
Numbered Sixty-nine hundred thirty-eight (R.A. any person, partnership, corporation, or
No. 6938) otherwise known as the "Cooperative association subject to local taxes, fees and
Code of the Philippines" respectively; and, charges in order to ascertain. assess, and collect
Taxes, fees or charges of any kind on the National the correct amount of the tax, fee, or charge.
Government, its agencies and Such examination shall be made during regular
instrumentalities, and local government units. business hours, only once for every tax period,
and shall be certified to by the examining official.
Periods of assessment and collection of taxes Such certificate shall be made of record in the
books of accounts of the taxpayer examined.
A:
Period and manner of payment – unless In case the examination herein authorized is
otherwise provided, the tax period of all local made by a duly authorized deputy, the written
taxes shall be the calendar year. Such taxes authority of the deputy concerned shall
may be paid in quarterly installments. specifically state the name, address, and
Accrual of tax – unless otherwise provided, business of the taxpayer whose books, accounts,
accrual shall be on the first day of January of and pertinent records are to be examined, the
each year. However, new taxes, fees or date and place of such examination and the
charges, or any changes in the rates thereof, procedure to be followed in conducting the same.
shall accrue on the first (1st) day of the quarter
next following the effectivity of the ordinance Taxpayer’s Remedies
imposing such new levies or rates.
Time of payment – Unless otherwise provided, all local A:
taxes, fees, and charges shall be paid within the first 1. Period to Assess and Collect local taxes
twenty (20) days of January or of each subsequent
quarter, as the case may be. For a justifiable reason or Local taxes, fees, or charges shall be assessed within five
cause, time of payment may be extended without (5) years from the date they became due. No action for the
surcharges or penalties for a period up to but not collection, whether administrative or judicial, shall be
exceeding six (6) months. instituted after the expiration of such period.
35
kpmg

If the local treasurer finds the assessment to be

In case of fraud or intent to evade the payment wholly or partly correct, he shall deny the protest
of taxes, fees or charges, the same may be wholly or partly with notice to the taxpayer.
assessed within ten (10) years from discovery of
the fraud or intent to evade payment. Appeal – taxpayer has thirty (30) days from the
receipt of the denial of the protest or from the
Local, taxes, fees or charges may be collected within lapse of the sixty (60) day period to appeal
five (5) years from the date of assessment by with the court of competent jurisdiction.
administrative or judicial action. No such action shall
be instituted after the expiration of said period. Payment under protest is not necessary.

The running of the periods of prescription provided in the Claim for Refund of Tax Credit for
preceding paragraphs shall be suspended for the time during erroneously or illegally collected tax,
which: (1) the treasurer is legally prevented from making the fee or charge
assessment of collection; (2) the taxpayer requests for a
reinvestigation and executes a waiver in writing before In order to be entitled to a refund or credit, the
expiration of the period within which to assess or collect; following procedural requirements must concur:
and, (3) the taxpayer is out of the country or otherwise
cannot be located. Must file a written claim for refund or credit with the
local treasurer – no case or proceeding shall be
No assessment, no collection – no action maintained in any court for the recovery of any
for collection of the tax shall be instituted tax, fee or charge erroneously or illegally
after the expiration of five (5) years without collected until a written claim for refund or credit
such assessment having been made. has been filed with the local treasurer.

2. Protest of Assessment The case or proceeding for refund has to be filed

within two (2) years from the date of payment of
Notice of Assessment – issued when the local the tax, fee or charge or from the date the
treasurer or his duly authorized representative taxpayer is entitled to a refund or credit. No case
finds that correct taxes, fees, or charges have not or proceeding shall be entertained in any court
been paid. It will state the nature of the tax, fee or after the expiration of two (2) years
charge; the amount of deficiency; and, the
surcharges, interests and other penalties. Remedies available to the LGUs for
collection of revenues
Written Protest – filed within sixty (60) days from the
receipt of the notice of assessment and filed with A:
the local treasurer. Without a protest, the 1. Lien
assessment shall become final and executory. Local taxes, fees, charges and other revenues
constitute a lien, superior to all liens, charges or
Evaluation and decision – the local treasurer encumbrances in favor of any person, enforceable by
shall decide the protest within sixty (60) days appropriate administrative or judicial action, not only
from the time of its filing. If the local treasurer upon any property or rights therein which may be
finds the protest to be wholly or partly subject to the lien but also upon property used in
meritorious, he shall issue a notice cancelling business, occupation, practice of profession or calling,
wholly or partially the assessment. or exercise of privilege with respect to which the lien
is imposed. The lien may only be extinguished upon
full payment of the delinquent local taxes fees and
charges including related surcharges and interest.
36
kpmg

statement of the sum demanded and a

2. Civil remedies note of the time and place of sale.

By administrative action thru distraint of goods, Publication - The officer shall cause a notification to
chattels, or effects, and other personal property be exhibited in not less than three
of whatever character, including stocks and other public and conspicuous places in the territory of
securities, debts, credits, bank accounts, and the LGU where the distraint is made, specifying
interest in and rights to personal property, and by the time and place of sale, and the articles
levy upon real property and interest in or rights to distrained. The time of sale shall not be less than
real property twenty (20) days after the notice and the
publication or posting of the notice. One place for
By judicial action the posting of the notice shall be at the office of
the chief executive of the local government unit in
Either of these remedies or all may be pursued which the property is distrained.
concurrently or simultaneously at the discretion
of the local government unit concerned. Release of distrained property upon
payment prior to sale - If at any time
Process for the distraint of personal property prior to the consummation of the sale, all
the proper charges are paid to the officer
A: conducting the sale, the goods or effects
Seizure - Upon failure of the person owing any distrained shall be restored to the owner.
local tax, fee, or charge to pay the same at
the time required, the local treasurer or his Procedure of sale - At the time and place fixed in
deputy may, upon written notice, seize or the notice, the officer conducting the sale shall
confiscate any personal property belonging sell the goods or effects at public auction to
to that person or any personal property the highest bidder for cash. Within five (5)
subject to the lien in sufficient quantity to days after the sale, the local treasurer shall
satisfy the outstanding tax, fee, or charge, make a report of the proceedings in writing to
together with any increment thereto incident the local chief executive concerned.
to delinquency and the expenses of seizure.
Should the property distrained be not disposed
In such case, a duly authenticated certificate of within one hundred and twenty (120) days
showing the fact of delinquency and the amounts from the date of distraint, the same shall be
of the tax, fee, or charge and penalty due shall be considered as sold to the LGU. Based on the
issued and will serve as sufficient warrant for the amount made thereon, the tax delinquencies
distraint of personal property, subject to the shall either be cancelled or reduced.
taxpayer's right to claim exemption under the
Disposition of proceeds - The proceeds of the sale shall
provisions of existing laws.
be applied to satisfy the tax, including the surcharges,
Accounting of distrained goods – The officer interest, and other penalties incident to delinquency,
executing the distraint shall make or cause to be and the expenses of the distraint and sale. The balance
made an account of the goods, chattels or effects over and above what is required to pay the entire claim
distrained, a copy of which signed by himself shall be returned to the owner of the property sold. The
shall be left either with the owner or person from expenses chargeable upon the seizure and sale shall
whose possession the goods, chattels or effects embrace only the actual expenses of seizure and
are taken, or at the dwelling or place or business preservation of the property pending the sale, and no
of that person and with someone of suitable age charge shall be imposed for the services of
37

and discretion, to which list shall be added a

kpmg

the local officer or his deputy. Where the

proceeds of the sale are insufficient to Within one (1) year from the date of such forfeiture,
satisfy the claim, other property may, in like the taxpayer or any of his representative, may redeem
manner, be distrained until the full amount the property by paying to the local treasurer the full
due, including all expenses, is collected. amount of the taxes, fees, charges, and related
surcharges, interests, or penalties, and the costs of
Process for the levy of real property sale. If the property is not redeemed as provided
herein, the ownership thereof shall be fully vested to
After expiration of the time required to pay the the LGU after the lapse of one (1) year.
delinquent tax, fee, or charge, real property may
be levied on before, simultaneously, or after the Process of administrative action
distraint of personal property belonging to the
delinquent taxpayer. by filing either a distraint on the personal property or
levy of real property belonging to the taxpayer.
To this end, a duly authenticated certificate
showing the name of the taxpayer, the The remedies of distraint and levy may be
amount of the delinquency due and the repeated, if necessary, until the full amount
property upon which levy is being made shall due including all expenses is collected.
be prepared.
Process of judicial action
At the same time, written notice of the levy shall be mailed to
or served upon: (1) the assessor and the local Register of The LGU concerned may enforce the collection of
Deeds where the property is located who shall annotate the delinquent taxes, fees, charges or other revenues
levy on the tax declaration and certificate of title of the by civil action in any court of competent jurisdiction
property, respectively; and, (2) the delinquent taxpayer or to within five (5) years from the date taxes, fees,
his agent or the manager of the business in respect to which charges or charges become due. The local
the liability arose (if taxpayer absent from the Philippines), or government files an ordinary suit for the collection
if there be none, to the occupant of the property in question. of sum of money before the MTC, RTC or CA
Division depending upon the jurisdictional amount.

In case the levy on real property is not issued before or Personal Property exempt from Distraint or Levy
simultaneously with the warrant of distraint on personal
property, and the personal property of the taxpayer is not A:
sufficient to satisfy the delinquency, proceedings for the levy Tools and implements necessarily used by the
on real property shall be made within thirty (30) days after delinquent taxpayer in his trade or employment;
execution of the distraint. One (1) horse, cow, carabao, or other beast
of burden, such as the delinquent
A report on any levy shall, within ten (10) taxpayer may select, and necessarily
days after receipt of the warrant, be used by him in his ordinary occupation;
submitted by the levying officer. His necessary clothing, and that of all his family;
Household furniture and utensils necessary for
During the public sale and if there is no bidder or if the housekeeping and used for that purpose by
highest bid is for an amount insufficient to pay the the delinquent taxpayer, such as he may
taxes, fees, charges, surcharges, interests or select, of a value not exceeding Ten
penalties, the LGU may purchase the real property for thousand pesos (P10,000.00);
itself. The local treasurer who conducted the sale and Provisions, including crops, actually
purchased the property on behalf of the LGU provided for individual or family use
concerned to satisfy the claim shall within two (2) sufficient for four (4) months;
days thereafter make a report of his proceedings.
38
kpmg

The professional libraries of doctors, Exemption is limited only to the following:

engineers, lawyers and judges;
One fishing boat and net, not exceeding the Real property owned by the government
total value of Ten thousand pesos except when the beneficial use thereof
(P10,000.00), by the lawful use of which has been granted to a taxable person;
a fisherman earns his livelihood; and Charitable institutions, churches, personages or
Any material or article forming part of a house or convents appurtenant thereto, mosques, non-
improvement of any real property. profit or religious cemeteries and all lands,
buildings and improvements actually, directly
and exclusively used for religious, charitable or
REAL PROPERTY TAXATION
educational purposes;
Machineries and equipment that are actually,
Fundamental principles
directly and exclusively used by local water
utilities and GOCC„s engaged in the supply
The appraisal, assessment, levy and
and distribution of water and/or electric power;
collection of real property tax shall be guided Real property owned by duly registered
by the following fundamental principles: cooperatives as provided for in RA 6938; and,
Machinery and equipment used for pollution
Real property shall be appraised at its
control and environmental protection.
current and fair market value;
Real property shall be classified for assessment
Collection of real property tax
purposes on the basis of its actual use;
Real property shall be assessed on the A:
basis of a uniform classification within
each local government unit; Accrual – real property tax for any year shall
The appraisal, assessment, levy and accrue on the first day of January and from
collection of real property tax shall not that date shall constitute as lien on the
be let to any private person; and, property which shall be superior to any other
The appraisal and assessment of real lien, mortgage, or encumbrance of any kind
property shall be equitable. whatsoever, and shall be extinguished only
upon the payment of the delinquent tax.
Nature of real property tax
Collecting authority -- collection of real
Real property tax is a property tax and enforcement of the
direct tax remedies shall be the responsibility of the
indivisible single obligation city or municipal treasurer concerned.
ad valorem tax based on the assessed
value of the property The city or municipal treasurer may deputize
local tax the barangay treasurer to collect all taxes on
imposed on the actual use of property, real property located in the barangay provided:
regardless of where located, whoever
owns, and whoever uses it. the barangay treasurer is properly
progressive or proportionate in character bonded for the purpose
depending, to a certain extent, on the the premium on the bond shall be paid by the city
use and value of the property or municipal government concerned

Exemption from real property tax Duty of assessor to furnish local treasurer with
assessment rolls – the provincial, city or
39
kpmg

municipal assessor shall prepare and submit municipal treasurer, in the case of a municipality
to the treasurer of the local government unit, within Metropolitan Manila Area, who shall decide
on or before the thirty-first (31st) day of the protest within sixty (60) days from receipt.
December each year, an assessment roll
containing a list of all persons whose real The tax or a portion thereof paid under protest,
properties have been newly assessed or shall be held in trust by the treasurer concerned.
reassessed and the values of such properties
In the event that the protest is finally decided in favor of the

Period to collect – collection may be made taxpayer, the amount or portion of the tax protested shall be
within five (5) years from the date the refunded to the protestant or applied as tax credit against his
taxes become due. existing or future tax liability.

Except in case of fraud or intent to evade payment of In the event that the protest is denied or upon the lapse of
the tax, action for collection of the same may be made the sixty (60) day period prescribed in subparagraph, the
within ten (10) years from the discovery of such fraud or taxpayer may avail of other remedies – appeal to the Local
intent to evade payment. Board of Assessment Appeals (LBAA).

The period of prescription within which to collect shall Payment under process is necessary – the protest
be suspended for the time during which: (1) the local may only be filed within thirty (30) days from the
treasurer is legally prevented from collecting the tax; (2) payment of the tax. Thereafter, the words “paid under
the owner of the property or the person having legal protest” shall be annotated on the tax receipt.
interest therein requests for reinvestigation and
executes a waiver in writing before the expiration of the Protest is not a requirement in order that a
period within which to collect; and, (3) the owner of the taxpayer, who paid under a mistaken belief
property or the person having legal interest therein is that it is required by law, may claim for refund.
out of the country or otherwise cannot be located.
Contesting an assessment of value of real
property by an appeal to the LBAA
Remedies of LGUs for collection of real
property tax Any owner or person having legal interest in the
property who is not satisfied with the action of the
Issuance of Notice of Delinquency provincial, city or municipal assessor in the
Local Government’s Lien assessment of his property may, within sixty (60)
Levy and resale of real property. Levy may be days from the date of receipt of the written notice
repeated if necessary until the full amount of assessment, appeal to the provincial or city
due, including all expenses, is collected LBAA by filing a petition under oath in the form
prescribed for the purpose, together with copies of
Taxpayer’s remedies to contest real property tax the tax declarations and such affidavits or
documents submitted in support of the appeal.
A:
The Board shall decide the appeal within one hundred

1. Filing of protest with the local treasurer twenty (120) days from the date of receipt of such
appeal. The Board, after hearing, shall render its
No protest shall be entertained unless the taxpayer decision based on substantial evidence or such
first pays the tax. There shall be annotated on the tax relevant evidence on record as a reasonable mind
receipts the words "paid under protest". The protest in might accept as adequate to support the conclusion.
writing must be filed within thirty (30) days from
payment of the tax to the provincial, city treasurer or
40
kpmg
The secretary of the Board shall furnish the owner of the receipt thereof. In case the claim for tax
property or the person having legal interest therein and the refund or credit is denied, the taxpayer may
provincial or city assessor with a copy of the decision of the avail of the remedies as provided.
Board. In case the provincial or city assessor concurs in the
revision or the assessment, it shall be his duty to notify the JUDICIAL REMEDIES
owner of the property or the person having legal interest
therein of such fact using the form prescribed for the Court of Tax Appeals
purpose.
27
Jurisdiction of the Court of Tax Appeals
Appeal to the Central Board of
Assessment Appeals (CBAA) Exclusive Appellate Jurisdiction over civil tax cases
The owner of the property or the person having legal
Court Instance/s Nature of tax case
interest therein or the assessor who is not satisfied
Local tax cases
with the decision of the Board, may, within thirty (30) Collection cases
days after receipt of the decision of said Board,
appeal to the CBAA, as herein provided. The decision involving claims with a
of the CBAA shall be final and executory. principal amount of
less than Php1
4. Appeal to the CTA Million for taxes and
fees, exclusive of
Appeal to CTA En Banc must be made within Decisions of the charges and other
applicable penalties
thirty (30) days from receipt of decision of the
RTC in the
CBAA through a special civil action for certiorari. exercise of their Criminal offenses
appellate arising from violations
For acts of administrative agencies exercising quasi- jurisdiction of the NIRC or CMTA or
judicial functions, courts have the underlying power to any other laws
scrutinize questions of law and jurisdiction. administered by the BIR
or the BOC where the
5. Appeal to the SC CTA En principal amount of
Banc taxes and fees,
Appeal to the SC shall be taken within fifteen exclusive of charges
and other applicable
(15) days from notice of the decision of the penalties is less than
CTA En Banc through a petition for review. Php1 Million.
Collection cases
Process for repayment of excessive tax collection
Decisions of the involving claims with a
principal amount of
When an assessment of real property tax is found CTA division in
Php1 Million or more
the exercise of its
to be illegal or erroneous and the tax is accordingly for taxes and fees,
original
reduced or adjusted, the taxpayer may file a written exclusive of charges
jurisdiction
claim for refund or credit for taxes and interests and other applicable
with the provincial or city treasurer within two (2) penalties
years from the date the taxpayer is entitled to such Decisions of the Assessment and
Central Board of taxation of real property
reduction or adjustment.
Assessment as decided by the
Appeals in the Provincial or City Board
The provincial or city treasurer shall decide the claim
exercise of its of Assessment Appeals
for tax refund or credit within sixty (60) days from

Source: Revised Rules of the Court of Tax Appeals

41
kpmg

Court Instance/s Nature of tax case Court Instance/s Nature of tax case
appellate Decisions, resolutions or
jurisdiction orders on motions for
Disputed assessments, reconsideration or new trial
refunds of internal of the CTA division in the
revenue taxes and Exclusive exercise of its exclusive
penalties in relation original and appellate
appellate
Decisions of or thereto. jurisdiction
jurisdiction
Inaction by the Also includes other Decisions, resolutions or
Commissioner of
matters arising out of orders of the RTC in the
Internal Revenue
the NIRC and other exercise of their appellate
laws administered by jurisdiction
the BIR. These Criminal offenses for
necessarily include RRs, violations of the NIRC or
RMOs and RMCs. CMTA and other laws as
In cases involving Exclusive administered by the BIR or
liability for customs original BOC where the principal
duties, fees and other jurisdiction amount of taxes and fees,
charges (seizures, exclusive of charges and
Decisions of the detention) and penalties penalties claimed is PHP1
in relation thereto Million or more
Commissioner of
CTA Customs Other matters arising Appeals from judgments,
resolutions or orders of the
Division out of the CMTA and RTC in the exercise of their
other laws that are original jurisdiction for
administered by the violations of the NIRC or
BOC CTA CMTA and other laws as
On customs cases administered by the BIR or
Decisions of the elevated for automatic Division
BOC where the principal
Secretary of review when position of amount of taxes and fees,
Finance the COC is adverse to Exclusive exclusive of charges and
the Government penalties claimed is less
Decisions of the On cases involving non- appellate
than PHP1 Million or when
Secretary of jurisdiction
agricultural products or there is no specific
Trade and
articles amount claimed
Industry Criminal offenses over
Decisions of the On cases involving
Secretary of agricultural products or petitions for review of
Agriculture articles decisions by the RTC in the
Decision of the
exercise of their appellate
RTC in the
jurisdiction over tax cases
exercise of On local tax cases originally decided by MTCs
original or MCTCs.
jurisdiction
Criminal offenses for
Jurisdiction over criminal tax cases violations of the NIRC or
CMTA and other laws as
Exclusive administered by the BIR or
Court Instance/s Nature of tax case RTC original BOC where the principal
CTA En Exclusive jurisdiction amount of taxes and fees,
original NONE exclusive of charges and
Banc penalties claimed is less
jurisdiction
than PHP1 Million or when
2
4
kpmg

Court Instance/s Nature of tax case

there is no specific Remedies to enforce collection of delinquent
amount claimed taxes, fees, charges and other revenues

Procedures (1) Filing of appropriate court action (MTC,

RTC, CTA); (2) Filing of action for declaratory
Filing of Action for collection of taxes relief; (3) Filing for injunction with the CTA

How does the Government enforce the Civil cases

collection of internal revenue taxes
Who may appeal, mode of appeal and effect
By initiating either a civil action or a criminal action. of appeal with the CTA division
For a civil action, suit for collection of a sum of
money is filed with the proper court. For a criminal A party adversely affected by a decision, ruling or the
action, suit for collection can be made in cases of: inaction of any of the following may file an appeal:
(1) attempt to evade or defeat tax; (2) failure to file (1) CIR on disputed assessments or claims for
return, supply correct and accurate information, refund of internal revenue taxes; (2) COC; (3)
pay tax, withhold and remit tax and refund excess Secretary of Finance; (4) Secretary of Trade and
taxes withheld on compensation. Industry; (5) Secretary of Agriculture; and, (6)
RTC in the exercise of its original jurisdiction
For criminal tax cases, judgment not only imposes
penalty but shall also order the payment of taxes Appeal may be made by filing a petition for review
subject of the criminal case as finally decided by (Rule 42) within thirty (30) days after receipt of the
28 decision/ruling or from expiration of the period fixed
the Commissioner of Internal Revenue
by law for the CIR to act on the disputed
How does the Government enforce the assessment. In the case of inaction, filing must be
collection of local taxes made within the two (2) year prescriptive period for
payment or collection of taxes.
By initiating a civil action with a court of
competent jurisdiction No appeal shall suspend the payment, levy, distraint,
or sale of any property. However, motion to suspend
Prescriptive period to enforce collection of collection of tax may be filed either together with the
local taxes petition for review or in a separate motion.

Collection shall prescribe within five (5) years from the Is the remedy of injunction available to
date of assessment. Assessment of local tax shall restrain collection.
prescribe within five (5) years from the taxes
becoming due or ten (10) years from the date of No. Except in the following situations when: (1)
discovery in case of fraud or intent to evade payment collection of tax may prejudice the interest of the
government or the taxpayer; (2) taxpayer is
Grounds for the suspension of the running willing to deposit the amount claimed or to file a
of the prescriptive period surety bond for no more than double the amount
to be fixed by the court.
(1) the local treasurer is legally prevented from the
assessment or collection of tax; (2) taxpayer requests for
reinvestigation and executes a waiver of the statute of
limitations; and, (3) taxpayer is out of the country

Source: Section 205, of the NIRC, as amended

43
kpmg

Requisites for collection of tax Criminal cases

When collection may prejudice / jeopardize the Institution of criminal action

interests of the government and the taxpayer or when
taxpayer is willing to deposit the amount claimed or to The criminal action and the corresponding civil
file a surety bond for no more than double the amount action is deemed as jointly instituted. The filing of a
to be fixed by the court – taxpayer’s motion for criminal action will necessarily carry the filing of the
suspension must be verified and must state clearly civil action. The filing of a criminal action shall
and distinctly the facts and the grounds relied upon interrupt the running of the prescriptive period.

When there is an appeal to the CTA division of a CIR No right to reserve the filing of a separate
decision – appeal must not be frivolous or dilatory civil action is allowed or recognized.

Prescriptive period for appeal Appeal and period to appeal

Thirty (30) days. Non-extendible. Office of the Solicitor General (OSG) shall represent
the government in all criminal cases. Legal officers of
Prescriptive period for appeal to the CTA En the BIR or BOC may be deputized to appear on
Banc of the decision of the CTA division behalf of the OSG. Provided, however, that said legal
officers shall remain under the direct control and
Fifteen (15) days from receipt of the CTA supervision of the OSG at all times.
decision / ruling on the MR or MNT.
Prescriptive period for appeal to the SC
Appeal is to be made by filing a petition for review
(Rule 43). in the case of an appeal of a CTA Fifteen (15) days from receipt of the
decision, it must be showin that the taxpayer decision or ruling of the CTA En Banc
sought prior reconsideration or new trial of the
decision with the concerned CTA division. Appeal is to be made by filing a petition for
review on certiorari (Rule 45). If there is a
Prescriptive period for appeal to the CTA En pending motion for reconsideration or new trial,
Banc of the decision of the CBAA or RTC the period shall run from the receipt of the denial
exercising its appellate jurisdiction of the motion. However, appeal may be made
pending the decision on the MR/MNT. Such
Thirty (30) days from receipt of the decision or appeal will effectively abandon the MR/MNT.
ruling of the CBAA or RTC
Run After Tax Evaders
Prescriptive period for appeal to the SC
What are the conditions to qualify under the
Fifteen (15) days from receipt of the Run After Tax Evaders (RATE) Program
decision or ruling of the CTA En Banc
To qualify under the RATE Program, a case
Appeal is to be made by filing a petition for must conform to the following conditions:
review on certiorari (Rule 45). If there is a • Cases representing violations under any of the
pending motion for reconsideration or new trial, following: Sec. 254 (Attempt to evade or defeat
the period shall run from the receipt of the denial tax); or, Sec. 255 (Failure to file return, supply
of the motion. However, appeal may be made correct and accurate information, pay tax,
pending the decision on the MR/MNT. Such withhold and remit tax and refund excess taxes
appeal will effectively abandon the MR/MNT. withheld on compensation); or Sec. 257 (Making
44
kpmg

false entries, records report or using falsified or

fake accountable forms); or, Sec. 258 (Unlawful
pursuit of business); or any including One-Time
Transactions, etc.
High-profile Taxpayers or taxpayers well-
known within the community, industry or
sector to which the taxpayers belong; and
Estimated basic tax deficiency is at least One
Million Pesos (P1,000,000.00) per year and
tax type, but priority should be given to tax
cases where the aggregate basic tax
deficiencies for all tax types per year is Fifty
Million Pesos (P50,000,000.00) or more.

45
kpmg

CONTRIBUTORS

Lysa Mae D. Atian, CPA

Atty. Karen S. Baquiran, CPA
Dexsie J. De Casco, CPA
Atty. Gina Mae C. Dulnuan
Atty. Andrea Mae D. Gatchalian
Atty. John Martin M. Mendoza
Atty. Jose Gabriel B. Pachoro, CPA
Atty. Kathleen Teresa M. Ramos

REFERENCES / SOURCE MATERIALS

Annotations, Reviewer on Taxation

Atty. Victorino Mamalateo

National Internal Revenue Code (Annotated)

Atty. Eufrocina M. Sacdalan-Casasola

Law on Basic Taxation

Atty. Benjamin B. Aban

Tax Principles and Remedies

Justice Japar B. Dimaampao

© 2019 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG
network of independent firms affiliated with KPMG International Cooperative ("KPMG
International"), a Swiss entity. All rights reserved.

This “Tax Supplements” is a personal undertaking and product of the collaborative

efforts of the lawyers/supervisors of KPMG R.G. Manabat & Co. as an aid in preparing
for the 2019 Philippine Bar Examinations. This is not an official publication of KPMG
R.G. Manabat & Co. While this material may contain some highlights of the general
principles of Philippine taxation, it is not meant to be an exhaustive discussion on the
subject.
46