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    Escape From Taxation A) Shifting of Tax Burden (I) Ways of Shifting The Tax Burden (Ii) Taxes That Can Be Shifted (Iii) Meaning of Impact and Incidence of Taxation B) Tax Avoidance

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    Escape From Taxation A) Shifting of Tax Burden (I) Ways of Shifting The Tax Burden (Ii) Taxes That Can Be Shifted (Iii) Meaning of Impact and Incidence of Taxation B) Tax Avoidance

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    James Barzo
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    Escape From Taxation A) Shifting of Tax Burden (I) Ways of Shifting The Tax Burden (Ii) Taxes That Can Be Shifted (Iii) Meaning of Impact and Incidence of Taxation B) Tax Avoidance

    Uploaded by

    James Barzo

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    Escape from taxation


    a) Shifting of tax burden
    (i) Ways of shifting the tax burden
    (ii) Taxes that can be shifted
    (iii) Meaning of impact and incidence of taxation
    b) Tax avoidance

    Choose the correct answer. Tax Avoidance -


    (A) is a scheme used outside of those lawful means and, when availed of, it usually
    subjects the taxpayer to further or additional civil or criminal liabilities.
    (B) is a tax saving device within the means sanctioned by law.
    (C) is employed by a corporation, the organization of which is prompted more on the
    mitigation of tax liabilities than for legitimate business purpose.
    (D) is any form of tax deduction scheme, regardless if the same is legal or not. (2014 Bar
    Question)

    SUGGESTED ANSWER :

    A. Tax avoidance is a tax-saving device within the means sanctioned by law.

    c) Tax evasion

    You are the retained tax counsel of ABC Corp. Your client informed you that they have been
    directly approached with a proposal by a BIR insider (i.e., a middle rank BIR official) on the
    tax matter they have referred to you for handling. The BIR insider's proposal is to settle the
    matter by significantly reducing the assessment, but he will get 50% of the savings arising from
    the reduced assessment.
    What tax, criminal and ethical considerations will you take into account in giving your advice?
    Explain the relevance of each of these considerations. (2013 Bar Question)

    SUGGESTED ANSWER:

    As a lawyer, I have the responsibility to give only a lawful advice. Canon I of the Code of
    Professional Responsibility mandates me to “uphold the Constitution, obey the laws of the land and
    promote respect for law and legal processes. Rule 1.01 states that “a lawyer shall not engage in
    unlawful, dishonest, immoral or deceitful conduct.” Rule 1.02 provides that “a lawyer shall not
    counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system.”

    Therefore, I will advise my client not to agree with the proposal of the BIR officer. Agreeing
    with the proposal will result in criminal prosecution under the following laws:

    Under the NIRC, the officers of the board who authorized the tax evasion will be liable under
    Section 253(C), while the corporation shall be liable under Section 256.

    The BIR official is liable under Section 269 which provides for the violations committed by
    government enforcement officers. Paragraph (d) of Section 269 provides that one of these violations
    is “offering or undertaking to accomplish, file or submit a report or assessment on a taxpayer without
    the appropriate examination of the books of accounts or tax liability, or offering or undertaking to
    submit a report or assessment less than the amount due the Government for any consideration or
    compensation, or conspiring or colluding with another or others to defraud the revenues or otherwise
    violate the provisions of this Code.”

    Under the Revised Penal Code, the officers of the corporation shall be liable under Article
    212 for corruption of public officials while the BIR official is liable for direct bribery.

    Both my client and the BIR official will also be liable under Republic Act No. 3019 or the
    Anti- Graft and Corrupt Practices Act.

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