TAXATION

Lifeblood Doctrine
• It provides that the existence of the
government is a necessity;
• That government cannot continue without
means to pay its expenses;
• And that for these means it has a right to
compel its citizens and property within its
limit to contribute.
• Then he said to them, “So
give back to Caesar what
is Caesar’s, and to God
what is God’s.
• Matthew 22:15-22
• Matthew
– An apostle and a tax-collector for the Roman
government.
– Patron saint of tax collectors and accountants
• Zacchaeus
– A chief tax collector who climbed a sycamore-
fig tree to see Jesus.
• There were only
two things certain
in life: death and
taxes.
• Benjamin Franklin
Statement of Former Presidents
of U.S.A.
• TAXES, AFTER ALL, ARE DUES THAT
WE PAY FOR THE PRIVILEGES OF
MEMBERSHIP IN AN ORGANIZED
SOCIETY.”
— FRANKLIN D. ROOSEVELT
• WHAT PEOPLE REALLY WANT IS
FAIRNESS. THEY WANT PEOPLE
PAYING THEIR FAIR SHARE OF
TAXES.”
— BARACK OBAMA
Statement of Former Presidents
of U.S.A.
• MAKE SURE YOU PAY YOUR TAXES;
OTHERWISE YOU CAN GET IN A LOT
OF TROUBLE.”
— RICHARD M. NIXON
• COLLECTING MORE TAXES THAN IS
ABSOLUTELY NECESSARY IS
LEGALIZED ROBBERY.”
— CALVIN COOLIDGE
• PAY BEFORE YOU COMPLAIN.
– Former BIR Commissioner Kim Henares
3 Branches of the Government
 Department of Finance

Secretary Carlos G. Dominguez

 Attached Agencies
• Bureau of Customs
• Bureau of Internal Revenue
• Bureau of Local Government Finance
• Bureau of the Treasury
• Central Board of Assessment Appeal
• Cooperative Development Authority
• Insurance Commission
• National Tax Research Center
• Privatization and Management Office
• Philippine Deposit Insurance Corporation
• Philippine Export-Import Credit Agency
• Securities and Exchange Commission
• Fiscal Incentives Review Board
BIR – Bureau of Internal
Revenue
 BIR CHIEF

Commissioner Caesar R. Dulay

ORGANIZATION AND FUNCTION
OF THE BUREAU OF INTERNAL
REVENUE

Republic Act No. 8424

Tax Reform Act of 1997
•Section 1. Title of the
Code. - This Code
shall be known as the
National Internal
Revenue Code of
1997.
 Section 2. Powers and duties of
the Bureau of Internal Revenue
• The Bureau of Internal Revenue shall be
under the supervision and control of the
Department of Finance and its powers and
duties shall comprehend the assessment and
collection of all national internal revenue
taxes, fees, and charges, and the
enforcement of all forfeitures, penalties, and
fines connected therewith, including the
execution of judgments in all cases decided
in its favor by the Court of Tax Appeals and
the ordinary courts.
 Section 3. Chief Officials of the
Bureau of Internal Revenue
• The Bureau of Internal Revenue
shall have a chief to be known as
Commissioner of Internal
Revenue, hereinafter referred to
as the Commissioner and four
(4) assistant chiefs to be known
as Deputy Commissioners.
Section 4. Power of the Commissioner
to Interpret Tax Laws and to Decide
Tax Cases
• The power to interpret the provisions of this
Code and other tax laws shall be under the
exclusive and original jurisdiction of the
Commissioner, subject to review by the
Secretary of Finance.
• The power to decide disputed assessments,
refunds of internal revenue taxes, fees or other
charges, penalties imposed in relation thereto, or
other matters arising under this Code or other laws
or portions thereof administered by the Bureau of
Internal Revenue is vested in the
Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.
• Section 5. Power of the Commissioner to Obtain Information,
and to Summon, Examine, and Take Testimony of Persons.,
the Commissioner is authorized:
• (A) To examine any book, paper, record, or other data which
may be relevant or material to such inquiry;

• (B) To Obtain on a regular basis from any person other than

the person whose internal revenue tax liability is subject to
audit or investigation, or from any office or officer of the
national and local governments, government agencies and
instrumentalities, including the Bangko Sentral ng Pilipinas
and government-owned or -controlled corporations, any
information such as, but not limited to, costs and volume of
production, receipts or sales and gross incomes of taxpayers,
and the names, addresses, and financial statements of
corporations, mutual fund companies, insurance companies,
regional operating headquarters of multinational companies,
joint accounts, associations, joint ventures of consortia and
registered partnerships, and their members;
• (C) To summon the person liable for tax or required to file a
return, or any officer or employee of such person, or any
person having possession, custody, or care of the books of
accounts and other accounting records containing entries
relating to the business of the person liable for tax, or any
other person, to appear before the Commissioner or his duly
authorized representative at a time and place specified in the
summons and to produce such books, papers, records, or
other data, and to give testimony;
• (D) To take such testimony of the person concerned, under
oath, as may be relevant or material to such inquiry; and
• (E) To cause revenue officers and employees to make a
canvass from time to time of any revenue district or region
and inquire after and concerning all persons therein who may
be liable to pay any internal revenue tax, and all persons
owning or having the care, management or possession of any
object with respect to which a tax is imposed.
• Section 6. Power of the Commissioner to Make assessments and Prescribe
additional Requirements for Tax Administration and Enforcement. -
• (A) Examination of Returns and Determination of Tax Due. - After a
return has been filed as required under the provisions of this Code,
the Commissioner or his duly authorized representative may
authorize the examination of any taxpayer and the assessment of
the correct amount of tax: Provided, however; That failure to file a
return shall not prevent the Commissioner from authorizing the
examination of any taxpayer.
• (B) Failure to Submit Required Returns, Statements, Reports and
other Documents. - When a report required by law as a basis for the
assessment of any national internal revenue tax shall not be
forthcoming within the time fixed by laws or rules and regulations or
when there is reason to believe that any such report is false,
incomplete or erroneous, the Commissioner shall assess the proper
tax on the best evidence obtainable.
• (C) Authority to Conduct Inventory-taking, surveillance and to Prescribe
Presumptive Gross Sales and Receipts. - The Commissioner may, at any
time during the taxable year, order inventory-taking of goods of any
taxpayer as a basis for determining his internal revenue tax liabilities, or
may place the business operations of any person, natural or juridical, under
observation or surveillance if there is reason to believe that such person is
not declaring his correct income, sales or receipts for internal revenue tax
purposes. The findings may be used as the basis for assessing the taxes for
the other months or quarters of the same or different taxable years and
such assessment shall be deemed prima facie correct.

• (D) Authority to Terminate Taxable Period. _ When it shall come to the

knowledge of the Commissioner that a taxpayer is retiring from business
subject to tax, or is intending to leave the Philippines or to remove his
property therefrom or to hide or conceal his property, or is performing any
act tending to obstruct the proceedings for the collection of the tax for the
past or current quarter or year or to render the same totally or partly
ineffective unless such proceedings are begun immediately, the
Commissioner shall declare the tax period of such taxpayer terminated at
any time and shall send the taxpayer a notice of such decision, together
with a request for the immediate payment of the tax for the period so
declared terminated and the tax for the preceding year or quarter, or such
portion thereof as may be unpaid, and said taxes shall be due and payable
immediately and shall be subject to all the penalties hereafter prescribed,
unless paid within the time fixed in the demand made by the Commissioner.
• (E) Authority of the Commissioner to Prescribe Real Property Values. - The
Commissioner is hereby authorized to divide the Philippines into different
zones or areas and shall, upon consultation with competent appraisers both
from the private and public sectors, determine the fair market value of real
properties located in each zone or area. For purposes of computing any
internal revenue tax, the value of the property shall be, whichever is the
higher of;
– (1) the fair market value as determined by the Commissioner, or
– (2) the fair market value as shown in the schedule of values of the Provincial and City
Assessors.
• (F) Authority of the Commissioner to inquire into Bank Deposit Accounts. -
Notwithstanding any contrary provision of Republic Act No. 1405 and other
general or special laws, the Commissioner is hereby authorized to inquire
into the bank deposits of:
– (1) a decedent to determine his gross estate; and
– (2) any taxpayer who has filed an application for compromise of his tax liability under Sec.
204 (A) (2) of this Code by reason of financial incapacity to pay his tax liability.
• (G) Authority to Accredit and Register Tax Agents. - The
Commissioner shall accredit and register, based on their
professional competence, integrity and moral fitness, individuals and
general professional partnerships and their representatives who
prepare and file tax returns, statements, reports, protests, and other
papers with or who appear before, the Bureau for taxpayers. Within
one hundred twenty (120) days from January 1, 1998, the
Commissioner shall create national and regional accreditation
boards, the members of which shall serve for three (3) years, and
shall designate from among the senior officials of the Bureau, one
(1) chairman and two (2) members for each board, subject to such
rules and regulations as the Secretary of Finance shall promulgate
upon the recommendation of the Commissioner.

• (H) Authority of the Commissioner to Prescribe Additional

Procedural or Documentary Requirements. - The Commissioner
may prescribe the manner of compliance with any documentary or
procedural requirement in connection with the submission or
preparation of financial statements accompanying the tax returns.
 Section 7. Authority of the
Commissioner to Delegate Power
• The Commissioner may delegate the powers vested in him under the pertinent
provisions of this Code to any or such subordinate officials with the rank equivalent to
a division chief or higher, subject to such limitations and restrictions as may be
imposed under rules and regulations to be promulgated by the Secretary of finance,
upon recommendation of the Commissioner: Provided, However, That the following
powers of the Commissioner shall not be delegated:
• (a) The power to recommend the promulgation of rules and regulations by the
Secretary of Finance;
• (b) The power to issue rulings of first impression or to reverse, revoke or modify any
existing ruling of the Bureau;
• (c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any
tax liability: Provided, however, That assessments issued by the regional offices
involving basic deficiency taxes of Five hundred thousand pesos (P500,000) or less,
and minor criminal violations, as may be determined by rules and regulations to be
promulgated by the Secretary of finance, upon recommendation of the
Commissioner, discovered by regional and district officials, may be compromised by
a regional evaluation board which shall be composed of the Regional Director as
Chairman, the Assistant Regional Director, the heads of the Legal, Assessment and
Collection Divisions and the Revenue District Officer having jurisdiction over the
taxpayer, as members; and
• (d) The power to assign or reassign internal revenue officers to establishments where
articles subject to excise tax are produced or kept.
Section 8. Duty of the Commissioner to Ensure the
Provision and Distribution of forms, Receipts, Certificates,
and Appliances, and the Acknowledgment of Payment of
Taxes
• (A) Provision and Distribution to Proper Officials. - It shall be the duty of the
Commissioner, among other things, to prescribe, provide, and distribute to
the proper officials the requisite licenses internal revenue stamps, labels all
other forms, certificates, bonds, records, invoices, books, receipts,
instruments, appliances and apparatus used in administering the laws
falling within the jurisdiction of the Bureau. For this purpose, internal
revenue stamps, strip stamps and labels shall be caused by the
Commissioner to be printed with adequate security features.
• Internal revenue stamps, whether of a bar code or fuson design, shall be
firmly and conspicuously affixed on each pack of cigars and cigarettes
subject to excise tax in the manner and form as prescribed by the
Commissioner, upon approval of the Secretary of Finance.
• (B) Receipts for Payment Made. - It shall be the duty of the Commissioner
or his duly authorized representative or an authorized agent bank to whom
any payment of any tax is made under the provision of this Code to
acknowledge the payment of such tax, expressing the amount paid and the
particular account for which such payment was made in a form and manner
prescribed therefor by the Commissioner.
 Section 9. Internal Revenue
Districts
• With the approval of the Secretary of
Finance, the Commissioner shall divide
the Philippines into such number of
revenue districts as may form time to time
be required for administrative purposes.
Each of these districts shall be under
the supervision of a Revenue District
Officer.
 Section 10. Revenue Regional
Director
• Under rules and regulations, policies and standards formulated by the Commissioner,
with the approval of the Secretary of Finance, the Revenue Regional director shall,
within the region and district offices under his jurisdiction, among others:
• (a) Implement laws, policies, plans, programs, rules and regulations of the
department or agencies in the regional area;
• (b) Administer and enforce internal revenue laws, and rules and regulations, including
the assessment and collection of all internal revenue taxes, charges and fees.
• (c) Issue Letters of authority for the examination of taxpayers within the region;
• (d) Provide economical, efficient and effective service to the people in the area;
• (e) Coordinate with regional offices or other departments, bureaus and agencies in
the area;
• (f) Coordinate with local government units in the area;
• (g) Exercise control and supervision over the officers and employees within the
region; and
• (h) Perform such other functions as may be provided by law and as may be
delegated by the Commissioner.
Section 11. Duties of Revenue District
Officers and Other Internal Revenue
Officers
• It shall be the duty of every Revenue District Officer or other
internal revenue officers and employees to ensure that all
laws, and rules and regulations affecting national internal
revenue are faithfully executed and complied with, and to aid
in the prevention, detection and punishment of frauds of
delinquencies in connection therewith.
• It shall be the duty of every Revenue District Officer to
examine the efficiency of all officers and employees of the
Bureau of Internal Revenue under his supervision, and to
report in writing to the Commissioner, through the Regional
Director, any neglect of duty, incompetency, delinquency, or
malfeasance in office of any internal revenue officer of which
he may obtain knowledge, with a statement of all the facts
and any evidence sustaining each case.
 Section 12. Agents and Deputies
for Collection of National Internal
•
Revenue Taxes
The following are hereby constituted agents of the
Commissioner:
• (a) The Commissioner of Customs and his subordinates
with respect to the collection of national internal revenue
taxes on imported goods;
• (b) The head of the appropriate government office and his
subordinates with respect to the collection of energy tax; and
• (c) Banks duly accredited by the Commissioner with respect
to receipt of payments internal revenue taxes authorized to be
made thru bank.
• Any officer or employee of an authorized agent bank assigned
to receive internal revenue tax payments and transmit tax
returns or documents to the Bureau of Internal Revenue shall
be subject to the same sanctions and penalties prescribed in
Sections 269 and 270 of this Code.
Section 13. Authority of a Revenue
Offices
• Subject to the rules and regulations to be
prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, a Revenue
Officer assigned to perform assessment functions
in any district may, pursuant to a Letter of
Authority issued by the Revenue Regional
Director, examine taxpayers within the jurisdiction
of the district in order to collect the correct amount
of tax, or to recommend the assessment of any
deficiency tax due in the same manner that the
said acts could have been performed by the
Revenue Regional Director himself.
 Section 14. Authority of Officers to
Administer Oaths and Take
Testimony
• The Commissioner, Deputy Commissioners,
Service Chiefs, Assistant Service Chiefs, Revenue
Regional Directors, Assistant Revenue Regional
Directors, Chiefs and Assistant Chiefs of Divisions,
Revenue District Officers, special deputies of the
Commissioner, internal revenue officers and any
other employee of the Bureau thereunto especially
deputized by the Commissioner shall have the
power to administer oaths and to take testimony in
any official matter or investigation conducted by
them regarding matters within the jurisdiction of
the Bureau.
Section 15. Authority of Internal
Revenue Officers to Make Arrests and
Seizures
• The Commissioner, the Deputy
Commissioners, the Revenue Regional
Directors, the Revenue District Officers and
other internal revenue officers shall have
authority to make arrests and seizures for the
violation of any penal law, rule or regulation
administered by the Bureau of Internal
Revenue. Any person so arrested shall be
forthwith brought before a court, there to be
dealt with according to law.
Section 16. Assignment of Internal Revenue
Officers Involved in Excise Tax Functions to
Establishments Where Articles subject to Excise
Tax are Produced or Kept
• The Commissioner shall employ, assign, or
reassign internal revenue officers involved in
excise tax functions, as often as the exigencies of
the revenue service may require, to
establishments or places where articles subject to
excise tax are produced or kept: Provided, That an
internal revenue officer assigned to any such
establishment shall in no case stay in his
assignment for more than two (2) years, subject to
rules and regulations to be prescribed by the
Secretary of Finance, upon recommendation of
the Commissioner.
 Section 17. Assignment of Internal
Revenue Officers and Other
Employees to Other Duties
• The Commissioner may, subject to the provisions of Section 16 and
the laws on civil service, as well as the rules and regulations to be
prescribed by the Secretary of Finance upon the recommendation of
the Commissioner, assign or reassign internal revenue officers and
employees of the Bureau of Internal Revenue, without change in
their official rank and salary, to other or special duties connected
with the enforcement or administration of the revenue laws as the
exigencies of the service may require: Provided, That internal
revenue officers assigned to perform assessment or collection
function shall not remain in the same assignment for more than
three (3) years; Provided, further, That assignment of internal
revenue officers and employees of the Bureau to special duties shall
not exceed one (1) year.
 Section 18. Reports of violation of
Laws
• When an internal revenue officer discovers evidence
of a violation of this Code or of any law, rule or
regulations administered by the Bureau of Internal
Revenue of such character as to warrant the institution
of criminal proceedings, he shall immediately report
the facts to the Commissioner through his immediate
superior, giving the name and address of the offender
and the names of the witnesses if possible: Provided,
That in urgent cases, the Revenue Regional director
or Revenue District Officer, as the case may be, may
send the report to the corresponding prosecuting
officer in the latter case, a copy of his report shall be
sent to the Commissioner.
 Section 19. Contents of
Commissioner's Annual Report.
• The annual Report of the Commissioner shall
contain detailed statements of the collections of
the Bureau with specifications of the sources of
revenue by type of tax, by manner of payment, by
revenue region and by industry group and its
disbursements by classes of expenditures.
• In case the actual collection exceeds or falls short
of target as set in the annual national budget by
fifteen percent (15%) or more, the Commissioner
shall explain the reason for such excess or
shortfall.
Section 20. Submission of Report and
Pertinent Information by the Commissioner.

• (A) Submission of Pertinent Information to Congress. - The provision of

Section 270 of this Code to the contrary notwithstanding, the Commissioner
shall, upon request of Congress and in aid of legislation, furnish its
appropriate Committee pertinent information including but not limited to:
industry audits, collection performance data, status reports in criminal
actions initiated against persons and taxpayer's returns: Provided, however,
That any return or return information which can be associated with, or
otherwise identify, directly or indirectly, a particular taxpayer shall be
furnished the appropriate Committee of Congress only when sitting in
Executive Session Unless such taxpayer otherwise consents in writing to
such disclosure.
• (B) Report to Oversight Committee. - The Commissioner shall, with
reference to Section 204 of this Code, submit to the Oversight Committee
referred to in Section 290 hereof, through the Chairmen of the Committee
on Ways and Means of the Senate and House of Representatives, a report
on the exercise of his powers pursuant to the said section, every six (6)
months of each calendar year.
 Section 21. Sources of
Revenue
• The following taxes, fees and charges are deemed
to be national internal revenue taxes:
• (a) Income tax;
• (b) Estate and donor's taxes;
• (c) Value-added tax;
• (d) Other percentage taxes;
• (e) Excise taxes;
• (f) Documentary stamp taxes; and
• (g) Such other taxes as are or hereafter may be
imposed and collected by the Bureau of Internal
Revenue.
 BIR FORMS (Income Tax)
A. 1700
For individuals earning purely compensation income
B. 1701
For self employed individuals, estates and trusts; earning Mixed Income (Compensation
+ Business)
1701A – Income from purely business/profession with Optional Standard Deduction
as mode of deduction or those who opted to avail the 8% flat income tax rate
C. 1702-RT
For Corporation, Partnership, Other Non-Individual Taxpayer Subject only to Regular
Income Tax Rate (30%) Revised by CREATE Law
D. 1702-EX
For Use Only by Corporation, Partnership, Other Non-Individual Taxpayer Exempt under
the Tax Code
E. 1702-MX
For Corporation, Partnership, Other Non-Individual Taxpayer with Mixed Income Subject
to Multiple Income Tax Rates or subject to Special/Preferential Rate
 BIR FORMS (Income Tax)
• 1704
– Improperly Accumulated Income Tax Return
• 1706
• ONETT Capital Gains Tax Return (Capital
Asset)
• 1707
• ONETT Shares of Stocks Not traded thru the
Local Stock Exchange (LSE)
 BIR FORMS (Income Tax)
Form 2316
Certificate of Compensation Payment/Tax Withheld
Prepared by employer for the employee and considered
Income Tax Return (ITR) in lieu of 1701 for those earning
purely compensation
Form 2307
Certificate of Creditable Tax Withheld at Source
Form 2306 Revised by CREATE Law
Certificate of Final Income Tax Withheld
 BIR FORMS (Transfer and
Business Tax)
• 1800
• One Time Taxpayer (ONETT) Donor’s Tax Return

• 1801
• One Time Taxpayer (ONETT) Estate Tax Return

• 2550M/2550Q
• Monthly VAT Declaration/ Quarterly VAT return

• 2551M/2551Q
• Monthly Percentage Tax Return/Quarterly Percentage Tax Return
 BIR FORMS (Transfer and
Business Tax)
• 2000
– Documentary Stamp Tax (DST) Return
• 2200
– Excise Tax Return
• Alcohol Products (2200A)
• Automobiles and Non-essential goods (2200AN)
• Mineral Products (2200M)
• Petroleum Products (2200P)
• Sweetened Beverages (2200S)
• Tobacco Products (2200T)
 OTHER BIR
(Remittance Forms)
• 0605 – Payment Form
• 0619E – Monthly remittance form for
Creditable Income Tax Withheld
(Expanded) – related to Form 2307
– 1601EQ – Quarterly Remittance Expanded
• 0619F - Monthly remittance form for Final
Income Tax Withheld – related to Form
2306 Revised by CREATE Law
– 1601FQ – Quarterly Remittance Final Tax
 OTHER BIR
(Remittance Forms)
• 1601C – Monthly remittance of income
taxes withheld on compensation
• 1604CF – Annual Information Return of
Income Tax Withheld on Compensation
• 1604E – Annual Information Return of
Creditable Income Taxes Withheld
QUESTIONS???