lesson 4. tax administration

8/9/2019 Lesson 4. Tax Administration.

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Tax Administration


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Tax Administration

It is the system involving enforcement of taxesthrough the assessment and collection of taxes.

It includes the execution of judgement and capacity

to act in all tax cases decided by the court in favor ofBIR

It refers to the manner and procedure ofcollecting taxes in accordance with the taxpolicy.


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Stages of Taxation


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evy

!assage of tax laws"ordinances through thelegislature

Imposition of taxes

Tax laws shall determine #ind $nature of taxes%

Subject of taxation $those to be taxed%

&bjective $purpose of tax%

Tax Rate and Base $how much tax to be collected%

'anner of imposing and collecting tax $implementation%


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Assessment

Implementation of tax laws by the executive branch

(one by its administrative agencies (ept. of )inance

Bureau of Internal Revenue Bureau of *ustoms

Taxes are self+assessing Taxpayer can compute his own taxes

This step determines the specific sum of tax chargedon a person or property in accordance to tax law


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!ayment of Tax

Act of compliance by the taxpayer in contributing hisshare to defray the government expenses

Also called Tax *ollection

!rocess of obtaining payment of taxIncludes options schemes or remedies legally

available to the taxpayer


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Aspects of Taxation

LegislativeFunction$*ongress%

Executive

Function $thruBIR%

Passage of Tax Laws(efine object of tax)ix tax rates!rescribe payment date

!enalty for violationsTax exemptions

Tax Assessment

*omputationTax base x rate , TA-

*ollection of Taxes

TaxAdministration

Tax Policy


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!rinciples of a Sound Tax System


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Tax Administrative Agencies


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Bureau of *ustoms $B*% and Tariff *ommission $T*% Tased to enforce the Tariff and *ustoms *ode $T**%

B* also collects the taxes on imports embodied in the /IR*

and Transportation &ffice Responsible for collecting registration fees and motor vehicle

tax

(uly and lawfully authori0ed collectors

!ersons1 agencies or duly accredited bans authori0ed by BIR1B*1 T* and T& to collect taxes


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ocal offices in charge to enforce localtaxation1 such as2!rovincial1 *ity1 'unicipal and Barangay

Treasurers

!rovincial and *ity Assessors

!rovincial and *ity Board of Assessment Appeals*entral Board of Assessment Appeals


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The Bureau of Internal Revenue

The BIR isprincipallytased with the

enforcement ofthe /IR*

ist of BIR

&fficers2


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!owers and (uties of the BIR

3. To assess and collect all national internal revenuetaxes1 fees and charges

4. To enforce all forfeitures1 penalties and fines connectedwith the above

5. To execute judgements in all cases decided in its favorby the *ourt of Tax Appeals and the ordinary court

6. To administer1 supervise and effect police powersauthori0ed by the /IR* and other laws

Assign Internal Revenue &fficers to establishments !roviding and distributing BIR forms1 receipts and

certificates

Submitting annual report and pertinent information to

*ongress


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!owers of the Internal Revenue *ommissioner

3. Interpret tax laws The BIR *ommissioner has the exclusive and original

power to interpret provisions of the /IR* and the otherlaws1 subject to review by the Secretary of )inance

4. !ower to decide tax cases (ecide disputed assessments1 refunds of internal taxes1

fees or other charges1 penalties imposed arsing under

the Tax *ode or other tax laws1 subject to the exclusiveappellate jurisdiction of the *ourt of Appeals


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5. !ower to summon Ascertain the correctness of tax return1 and to

determine the taxpayer7s liability andcompliance. In the exercise of this power1 he isauthori0ed to2

a% 8xamine tax payer7s recordsb% &btain taxpayer7s financial information

c% Summon the person liable for tax

d%

Tae testimony of the person concernedunder oath

e% *onduct regular canvas concerning allpersons liable to pay any internal revenue tax


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5. !ower to mae assessment

o

To mae assessment and prescribe additionalre9uirements for tax administration andenforcement are as follows

3. 8xaminations of

a. Returns and determination of tax due

b. Statements1 reports and other documentssubmitted


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4. Authority to2

a. *onduct inventory surveillance1 and

prescribe presumptive gross salesand receipts

b. Terminate taxable period

c. !rescribe real property values

d. In9uire into ban deposit accounts

e. Accredit and register tax agents

f. !rescribe additional procedural ordocumentary re9uirements


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!: !rimary Tax Incentives

A. Tax holiday The Omnibus Investment Code grants to

entities that registered w/ the Board of Investments and that qualify under the annual Investment Priority Plan, entitlements

to ta holidays of either ! to " years# They are also granted ta

$redits for %ur$hase of Phili%%ine&made $a%ital equi%ment and

raw materials#

B# '%e$ial ($onomi$ )ones There are over *+ s%e$ial e$o&

nomi$ ones where e%ort manufa$turing firms are given

a ta holiday for the first ! years or " years of its o%erations,

followed by a -. ta thereafter# This $overs eem%tion from all

internal revenue taes, in$luding 0T#


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Treaty with the ;.S.A.

The Phili%%ines has ta treaties with many$ountries in$luding the 1#'# in order to minimie the

effe$ts of double taation# The business %rofits of a

resident of another $ountry with whom our $ountry

has a ta treaty are taable in the Phili%%ines only

if the resident has a %ermanent establishment in the

P2 to whi$h the %rofits are fully gained from#


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!rimary types of !: taxation

0# Individual In$ome Ta for both resident $itiens and

resident aliens with $orres%onding allowable %ersonaleem%tions3 P-+4 for ', 5 and 267 additional eem%tion

of P8-4 for ea$h of the four de%endents#

B# Passive in$ome ta on interests, dividends, $a%ital gains,

fringe benefits#C# Cor%oration Ta 9in$luding %artnershi%s: of *+. of ;I


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Administrative !rovision


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Administrative !rovisions

)or purposes of effective and efficient collection1 the Tax*ode provides the following re9uirements for compliance

by the taxpayer

3. Registration

4. Issuance of receipts or sales or commercial invoices

5. !rinting of receipts or sales or commercial invoices

6. 8xhibition of certificate of payment at place of business


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Registration Re9uirements

!rimary Registration > 4 stages

3. Secure your TI/

4. Registration of business1 profession and"or undertaing which theperson1 natural or juridical1 intends to pursue on account of which she"it

is expected to regularly file tax returns1 pay taxes and fees prescribed byThe *ode.

3. ?ithin 3@ days from date of employment

4. &n or before the commencement of business or within

thirty $5@% woring days upon receipt of 'ayor7s

!ermit"!TR.


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BIR )orms

The following forms are needed for registration

1. BIR Form 1!1" for registration of self+employed1 mixedincome individuals1 estates and trusts

#. BIR Form 1!#+ for individuals earning purely

compensation income

$. BIR Form 1!$+ )or registration of corporations andpartnerships

%. BIR Form 1!%+ )or registration of one+time taxpayer and

persons registration under 8.&. /o. &. BIR Form 1!%+ )or updating"cancellation of registration1

cancellation of TI/1 new copy of certificate of registration


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*ontents of Registration )orms

The business registration $*&R% shall contain thefollowing2

3. Taxpayer7s name and style of business

4. !lace of residence and business5. &ther information as re9uired by the *ommissioner in

the form

Any person maintaining a head office branch or facilityshall register with the R(& having jurisdiction over thehead office1 branch or facility.


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BIR )orm =@

lesson 4. tax administration

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