M2 - Tax Laws and Tax Administration

Income Taxation: Tax Laws and Tax Administration
Module 2: Tax Laws and Tax Administration
TAXATION LAW refers to any tax laws that arises from the exercise of the taxation power
of the State.
TYPES OF TAXATION LAWS

1. Tax Laws – provide for assessment and collection of taxes (NIRC, The Tariff and
Custom Code, Local Tax Code, and Real Property Code)
2. Tax Exemption Laws – grant immunity from taxation (The Minimum Wage Law,
The Omnibus Investment Code of 1987, Barangay Micro Business Enterprise
(BMBE) Law, Cooperative Development Act)
NATURE OF TAX LAWS

 Philippine tax laws are civil and not political in nature. They are not penal in
nature because they do not define crime. Their penalty provisions are merely
intended to secure taxpayers’ compliance
SOURCES OF TAX LAWS

 The Constitution, Statutes and Presidential Decrees
 Judicial Decisions or case laws
 Executive Orders
 Administrative Issuances
 Local ordinances
 Tax Treaties and conventions with foreign countries
 Revenue Regulations.
Bureau of Internal Revenue (BIR) – agency in charge with the collection of national
taxes. It considers to following administrative issuances:
1. Revenue Regulations – issuances signed by the Secretary of Finance upon the
recommendation of the Commissioner of Internal Revenue (CIR) that specify,
prescribe, or define rules and regulations for the effective enforcement of the
provisions of NIRC and related statutes. They are issued to clarify or explain the tax
law and carry into effect its general provisions by providing details of
administration and procedures.
2. Revenue Memorandum Orders (RMOs) – provides directions or instructions on

how to carry out the plans and programs of the BIR
3. Revenue Memorandum Rulings – rulings, opinions or interpretations of the CIR

with respect to the provision of the Tax Code and other related laws to guide
taxpayers in understanding the tax consequences in specific situation
4. Revenue Memorandum Circulars (RMCs) – issuance that publish pertinent and

applicable portions as well as amplifications of laws, rules and regulations and
precedents issued by the BIR and other agencies.
5. Revenue Bulletins – periodic issuances, notices, and official announcements of the

CIR that consolidate the BIR’s position on certain specific issues of laws or
administration in relation to the provisions of the Tax Code, relevant tax laws, and
other issuance for the guidance of the public.
6. BIR Rulings – official positions of the BIR to queries raised by the taxpayers and
other stakeholders relative to the clarification and interpretation of tax laws.
TAX ADMINISTRATION refers to the management of the tax system. Bureau of Internal
Revenue, under the supervision of the Department of Finance is in charge or the
administration of the tax system in our country. It is managed by the Commissioner of
Internal Revenue together with the four Deputy Commissioners who are designated to the
following:
1. Operations group
2. Legal enforcement group
3. Information system group
4. Resource management group
POWERS OF THE BUREAU OF INTERNAL REVENUE (BIR)

1. Assessment and collection of taxes
2. Enforcement of all forfeitures, penalties, fines and judgements in all cases decided in
its favor by the courts
3. Giving effect to, and administering the supervisory and police power conferred to it
by the NIRC and other laws
4. Assignment of internal revenue officers and other employees to other duties
5. Provision and distribution of forms, receipts, certificates, stamps etc. to other
proper officials
6. Issuances of receipts and clearances
7. Submission of annual report, pertinent information to Congress and reports to the
Congressional Oversight Committee in matters of taxation
POWERS OF THE COMMISSIONER OF INTERNAL REVENUE (CIR)

1. To interpret the provisions of the NIRC, subject to review by the Secretary of
Finance
2. To decide tax cases, subject to exclusive appellate jurisdiction of the Court of Tax
Appeals, such as
a. Disputed assessments
b. Refunds of internal revenue taxes, fees or other charges
c. Penalties imposed
d. Other NIRC and special law matters administered by the BToIR
3. To obtain information and to summon, examine and take testimony of persons to
effect tax collection
4. To make assessment and prescribe additional requirement for tax administration
and enforcement
5. To examine tax returns and determine tax due thereon
6. To conduct inventory taking and surveillance
7. To prescribe presumptive gross sales and receipts for a taxpayer who failed to issue
receipts and when he believes that the books or other records of the taxpayer do not
correctly reflect the declaration in the returns
8. To terminate tax period when the taxpayer is retiring from business; intending to
leave the Philippines; intending to remove, hide or conceal his property; or
intending to perform any act tending to obstruct the proceedings for tax collection
or render the same ineffective
9. To prescribe real property values
10. To compromise tax liabilities of taxpayers
11. To inquire into bank deposits under the following circumstances:
a. determination of the gross estate of a decedent;
b. to substantiate taxpayer’s claim of financial incapacity to pay the tax in an
application to compromise.
12. To accredit and register tax agents
13. To refund or credit internal revenue taxes
14. To abate or cancel tax liabilities in certain cases
15. To prescribe additional procedures or documentary requirements
16. To delegate his powers to any subordinate officer with a rank equivalent to a
division chief of an office
NON-DELEGATED POWER OF THE COMMISSIONER

1. The power to recommend the promulgation of rules and regulations to the
Secretary of Finance
2. The power to issue rulings of first impression or to reverse, revoke or modify any
existing rulings of the Bureau
3. The power to compromise or abate any tax liabilities
4. The power to assign and re-assign internal revenue officers to establishments where
articles subject to excise tax are produced and kept.
AGENTS AND DEPUTIES FOR COLLECTION OF NATIONAL INTERNAL REVENUE TAXES

1. The Commissioner of Customs and his subordinates with respect to collection of
national revenue taxes on imported items
2. Head of appropriate government offices with respect to collection of energy tax
3. Banks duly accredited by the Commissioner with respect to receipts of payments of
internal revenue taxes authorized to be made thru banks.
OTHER AGENCIES TASKED WITH COLLECTION OR TAX INCENTIVE RELATED

FUNCTIONS
1. Bureau of Customs
2. Board of Investments
3. Philippine Economic Zone Authority
4. Local Government Tax Collecting Unit

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Income Taxation: Tax Laws and Tax Administration

Module 2: Tax Laws and Tax Administration

TYPES OF TAXATION LAWS

NATURE OF TAX LAWS

SOURCES OF TAX LAWS

2. Revenue Memorandum Orders (RMOs) – provides directions or instructions on

3. Revenue Memorandum Rulings – rulings, opinions or interpretations of the CIR

4. Revenue Memorandum Circulars (RMCs) – issuance that publish pertinent and

5. Revenue Bulletins – periodic issuances, notices, and official announcements of the

POWERS OF THE BUREAU OF INTERNAL REVENUE (BIR)

POWERS OF THE COMMISSIONER OF INTERNAL REVENUE (CIR)

NON-DELEGATED POWER OF THE COMMISSIONER

AGENTS AND DEPUTIES FOR COLLECTION OF NATIONAL INTERNAL REVENUE TAXES

OTHER AGENCIES TASKED WITH COLLECTION OR TAX INCENTIVE RELATED

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