CHAPTER 2: TAXES, TAX LAWS, AND TAX taxpayers guidance on the tax consequences in specific

TYPES OF ADMINISTRATIVE ISSUANCES situations. BIR Rulings therefore, cannot contravene duly
ADMINISTRATION
1. Revenue regulations issued RMRs; otherwise, the Rulings are null and void ab
2. Revenue memorandum orders initio
TAXATION LAW
3. Revenue memorandum rulings
- refers to any law that arises from the exercise
4. Revenue memorandum circulars Revenue Memorandum Circulars (RMC) are issuances
of the taxation power of the State.
5. Revenue bulletins that publish pertinent and applicable portions as well as
6. BIR rulings amplifications of laws, rules, regulations, and precedent
TYPES OF TAXATION LAWS
issued by the BIR and other agencies/offices.
1. Tax laws - These are laws that provide for the
Revenue Regulations are issuances signed by the
assessment and collection taxes.
Secretary of Finance upon recommendation of the Revenue Bulletins (RB) refer to periodic issuances,
Examples:
Commissioner of Internal Revenue (CIR) that specify or notices, and official announcements of the
a. The National Internal Revenue Code (NIRC)
prescribe, or define rules and regulations for the Commissioner of Internal Revenue that consolidate the
b. The Tariff and Customs Code
effective enforcement of the provisions of the National Bureau of Internal Revenue's position on certain specific
c. The Local Tax Code
Internal Revenue Code (NIRC) and related statutes. issues of law or administration in relation to the
d. The Real Property Tax Code
Revenue regulations are formal pronouncements provisions of the Tax Code, relevant tax laws, and other
intended to clarify or explain the law and carry into issuances for the guidance of the public.
2. Tax exemption laws - These are laws that grant
effect its general provisions by providing details of
certain immunity from taxation.
administration and procedure. Revenue regulation has BIR Rulings are official positions of the Bureau to queries
Examples:
the force and effect of a law, but it Intended to expand raised by taxpayers and other stakeholders relative to
a. The Minimum Wage Law
or limit the application of the law; otherwise, it is void. clarification and interpretation of tax laws.
b. The Omnibus Investment Code of 1987 (E.0.226)
c. Barangay Micro-Business Enterprise (BMBE) Law
Revenue Memorandum Orders (RMDs) are issuances Rulings are merely advisory or a sort of information
d. Cooperative Development Act
that provide directives of instructions, prescribe service to the taxpayer such that none of them is binding
guidelines; and outline processes, operations, activities, except to the addressee and may be reversed by the BIR
SOURCES OF TAXATION LAWS
workflows, methods, and procedures necessary in the at anytime.
1. Constitution
implementation of stated policies, goals, objectives,
2. Statutes and Presidential Decrees
plans, and programs of the Bureau in all areas of TYPES OF RULINGS
3. Judicial Decisions or case laws
operation except auditing. 1. Value Added Tax (VAT) rulings
4. Executive Orders and Batas Pambansa
2. International Tax Affairs Division (ITAD) rulings
5. Administrative Issuances
Revenue Memorandum Rulings (RMRs) are rulings, 3. BIR rulings
6. Local Ordinances
opinions and interpretations of CIR with respect to the 4. Delegated Authority (DA) rulings
7. Tax Treaties and Conventions with foreign countries
provisions of the Tax Code and other tax laws as applied
8. Revenue Regulations
specific set of facts, with or without established
precedents, and which the CIR may issue from time to
time for the purpose of providing
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES When both the impact and incidence of taxation
(GAAP) VS. TAX LAWS ELEMENTS OF A VALID TAX rest upon the same taxpayer, the tax is said to be direct.
1. Tax must be levied by the taxing power having The tax is collected from the person who is intended to
Generally accepted accounting principles or GAAP are jurisdiction over the object taxation. pay the same. The statutory taxpayer is also the
not laws, but are mere conventions of financial 2. Tax must not violate Constitutional and inherent economic taxpayer.
reporting. They are benchmarks for the fair and relevant limitations. - Statutory - taxpayer named by law to pay
valuation and recognition of income, expense, assets, 3. Tax must be uniform and equitable. - Economic- who actually pays the tax
liabilities, and equity of a reporting entity for general 4. Tax must Le for public purpose. Example: income tax
purpose financial reporting GAAP accounting reports are 5. Tax must be proportional in character. Hindi naipapasa na tax.
intended to meet the common needs of a vast number 6. Tax is generally payable in money.
of users in the general public. 2. Indirect tax
CLASSIFICATION OF TAXES When the tax is paid by any person other than the
Tax laws including rules, regulations, and rulings one who is intended to pay the same, the tax is said to
prescribe the criteria for tax reporting a special form of A. As to purpose be indirect. This occurs the case of business taxes where
financial reporting which is intended to meet specific 1. Fiscal or revenue tax- a tax imposed for general the statutory taxpayer is not the economy taxpayer.
needs of tax authorities. purpose - Example: VAT and other percentage tax

Taxpayers normally follow GAAP in recording 2 Regulatory - a tax imposed to regulate business, The statutory taxpayer is the person named by
transactions in their books. However, in the preparation conduct, acts or transactions law to pay the tax. An economic taxpayer is the one who
and filing of tax returns, taxpayers are mandated to actually pays the tax.
follow the tax law in cases of conflict with GAAP. 3. Sumptuary - a tax levied to achieve some social or
economic objectives D. As to amount
NATURE OF PHILIPPINE TAX LAWS 1. Specific tax - a tax of a fixed amount imposed on a per
Philippine tax laws are civil and not political in nature. B. As to subject matter unit basis such per kilo, liter or meter, etc.
They are effective even during periods of enemy 1. Personal, poll or capitation - a tax on persons who are
occupation. They are laws of the occupied territory and residents of particular territory 2. Ad valorem - a tax of a fixed proportion imposed upon
not by the occupying enemy. Tax payments made during the value of the tax object.
occupations of foreign enemies are valid. 2. Property tax - a tax on properties, real or personal
E. As to rate
Our internal revenue laws are not penal in nature 3. Excise or privilege tax- a tax imposed upon the 1. Proportional tax - This is a flat or fixed rate tax. The
because they do not define crime. Their penalty performance of an act enjoyment of a privilege or use of proportional tax emphasizes equality as it subjects
provisions are merely Intended to secure taxpayers' engagement in an occupation all taxpayers with the same rate without regard to their
compliance. -ex: state tax or donor’s tax (transfer of property to ability to pay.
donee) Example: VALUE ADDED TAX, DONOR’S TAX
TAX
Tax is an enforced proportional contribution levied by C. As to Incidence 2. Progressive or graduated tax - This is a tax which
the lawmaking body of the State to raise revenue for 1. Direct tax imposes “Increasing rates as the tax base Increase”. The
public purpose. use of progressive tax rates results in equitable taxation
because it gets more tax to those who are more capable. 2. Local tax - tax imposed by the municipal or local Toll is a charge for the use of other's property; hence, it
It aids in lessening the gap between the rich and the government is a demand of ownership.
poor. Examples: The amount of tax depends upon the needs of the
a. Real property tax government, but the amount of toll is dependent upon
3. Regressive tax - This tax imposes decreasing tax rates b. Professional tax the value of the property leased.
as the tax base Increase. This is the total reverse of c. Business taxes, fees, and charges Both the government and private entities impose toll,
progressive tax. Regressive tax is regarded as anti-poor. d. Community tax but private entities cannot impose taxes.
It directly violates the Constitutional guarantee of e. Tax on banks and other financial institutions
progressive taxation. Tax vs. Debt
- Higher tax rate as the chuchu decrease DISTINCTION OF TAXES WITH SIMILAR ITEMS Tax arises from law while debt arises from private
Tax vs. Revenue contracts. Non-payment of leads to imprisonment, but
4. Mixed tax-This tax manifest tax rates which is a Tax refers to the amount imposed by the government non-payment of debt does not lead to imprisonment.
combination of any of the above types of tax. for public purpose. Revenue refers to all income Debt can be subject to set-off but tax is not. Debt can
collections of the government which includes taxes, tart be paid in kind (dacion en pago) but tax is generally
F. As to imposing authority licenses, tall, penalties and others. The amount imposed payable in money.
1. National tax - tax imposed by the national is tax but the amount collected is revenue. [All income Tax draws interest only when the taxpayer is delinquent.
government collection by govt. Tariffs taxes fees penalties] Debt draws Interest when it is so stipulated by the
contracting parties or when the debtor incurred legal
Examples: (EDEVOID) Estate Donor Excise Value added Tax vs. License fee delay.
Other percentage Income Tax has a broader subject than license. Tax emanates
a. Income tax - tax on annual income, gains or profits from taxation power and imposed upon any object such Tax vs. Special Assessment
b. Estate tax - tax on gratuitous transfer of properties by as persons, properties, or privileges to raise revenue. Tax is an amount imposed upon persons, properties, or
a decedent upon death privileges (applies to any object including land). Special
c. Donor's tax - tax on gratuitous transfer of properties License fee emanates from police power and is imposed assessment is levied by the government on lands
by a living donor to regulate the exercise a privilege such as the adjacent to a public Improvement. It is imposed on land
d Value Added Tax- consumption tax collected by VAT commencement of a business or a profession. only and is intended to compensate the government for
business taxpayers a part of the cost of the improvement.
e. Other Percentage Tax - consumption tax collected by Taxes are imposed after the commencement of a (Tax is a civil obligation while special assessment is not a
non-VAT business taxpayers business or profession whereas license fee is imposed personal obligation)
f. Excise tax - tax on sin products and non-essential before engagement in those activities. In other words,
commodities such as alcohol, cigarettes and metallic tax is a post-activity imposition whereas license fee is a The basis of special assessment is the benefit in terms of
minerals. This should be differentiated with the privilege pre-activity imposition. the appreciation in land value caused by the public
tax which is also called excise tax. Improvement. On the other hand, tax is levied without
g. Documentary Stamp Tax - a tax on documents, expectation of a direct proximate benefit.
Instruments, loan agreements, and papers evidencing Tax vs. Toll
the acceptance, assignment, sale or transfer of an Tax is a levy of government; hence, it is a demand of Unlike taxes, special assessment attaches to the land. It
obligation, right or property incident thereto. sovereignty. (Any object) will not become a personal obligation of the land owner.
Therefore, the non-payment of special assessment will
not result to imprisonment of the owner (unlike in non- against the compensation Income to their
payment of taxes). TYPES OF TAX SYSTEM ACCORDING TO IMPACT employees
1. Progressive system b. Expanded withholding tax - an estimated tax
A progressive tax system is one that required by the government to be deducted on
emphasizes direct taxes. A direct tax cannot be shifted. certain income payments made by taxpayers
Tax vs. Tariff Hence, it encourages economic efficiency as it leaves no engaged in business
Tax is broader than tariff. Tax is an amount Imposed other resort to taxpayers than to be efficient. This type The creditable withholding tax is intended to
upon persons, privilege, transactions, or properties. of tax system impacts more upon the rich. support the self-assessment method to lessen the
Tariff is the amount imposed on imported or exported burden of lump sum tax payment of taxpayer and also
commodities 2. Regressive system provides for a possible third-party check for the BIR of
A regressive tax system is one that emphasizes non-compliance taxpayers.
Tax vs. Penalty indirect taxes. Indirect taxes are shifted by businesses to [Net income x 30% = Tax due: 90,000 less
Tax is an amount imposed for the support of the consumers; hence, the Impact of taxation rests upon the 50000 CWT = tax liablities or tax payable ]
government. Penalty is an amount imposed to bottom end of the society. In effect, a regressive tax
discourage an act or to secure compliance. system is a poor. 2. Final withholding tax - a system of tax collection
[Tax is imposed by the government. Penalty is imposed It is widely believed that despite the wherein payors are required to deduct the full tax on
by government or private entities.] Constitutional guarantee of a progress taxation, the certain income payments
Philippines has a dominantly regressive tax system due -The final withholding tax is intended for the collection
Penalty may be imposed by both the government and to the prevalence of business taxes. of taxes from income with high risk of non-compliance.
private individuals. It may arise both from law or
contract whereas tax arises from law. SIMILARITIES OF FINAL TAX AND CREDITABLE
TAX COLLECTION SYSTEMS WITHHOLDING TAX
TAX SYSTEM a. In both cases, the income payor withholds a
The tax system refers to the methods or schemes of A. Withholding system on income tax fraction of the Income and remits the same to the
Imposing, assessing and collecting taxes. It includes all (anv marereceive mong tax ay net of tax) government.
the tax laws and regulations, the means of their Under this collection system, the payor of the b. By collecting at the moment cash is available, both
enforcement, and the government offices, bureaus and income withholds or deducts the tax on the income serve to minimize cash flow problems to the
withholding agents which are part of the machineries of before releasing the same to the payee and remits the taxpayer and collection problems to the
the government in tax collection. The Philippine tax same to the government. The following are the government.
system is divided into two: the national tax system and withholding taxes collected under this system:
the local tax system. DIFFERENCES BETWEEN FWT AND CWT
1. Creditable withholding tax
TYPES OF TAX SYSTEMS ACCORDING TO IMPOSITION [pwedeng ibawas sa tax liability yung dalawang asa baba] Final Creditable
1. Progressive - employed in the taxation of income of Withholding Tax Withholding Tax
a. Withholding tax on compensation - an
Individuals, and certain local business taxes
estimated tax required by the government to
2. Proportional - employed in taxation of corporate Income tax Full Only a portion
be withheld (Le. deducted) by employers
income and business withheld
3. Regressive - not employed in the Philippines
 Coverage of Certain passive Certain passive and The taxpayer shall pay to the government any Administrative feasibility
withholding income active income tax balance after such credit or claim refund or tax credit (effective and efficient in assessment and collection of
for excessive tax withheld. taxed)
Who remits Income payor Income payor for the Administrative feasibility suggests that tax laws
the actual CWT and the D. Assessment or enforcement system - Under this should be capable of efficient are effective
tax taxpayer for the collection system, the government identifies non- administration to encourage compliance. Government
halance compliant taxpayers, assesses their tax dues including should make easy for the taxpayer to comply by avoiding
penalties, demands for taxpayer's voluntary compliance administrative bottlenecks a reducing compliance cost.
Necessity of Not Required Required or enforces collections by coercive means such as a The following are applications of the principle
Income tax summary proceeding or judicial proceedings when of administrative feasibility:
return for necessary. 1. E-filing and e-payment of taxes
taxpayer (Opposite meaning of voluntary compliance system) 2. Substituted filing system for employees
3. Final withholding tax on non-resident aliens or
corporations
PRINCIPLES OF A SOUND TAX SYSTEM 4. Accreditation of authorized agent banks for the filing
B. Withholding system on business tax According to Adam Smith, governments should adhere and payment of taxes
[Applicable only when the transaction is involved with to the following principles or canons to evolve a sound
the gov’t.] tax system: TAX ADMINISTRATION
When the national government agencies and 1. Fiscal adequacy Tax administration refers to the management
instrumentalities including government-owned and 2 Theoretical justice of the tax system. TE administration of the national tax
controlled corporations (GOCCs) purchase goods or 3. Administrative feasibility system in the Philippines is entrusted to th Bureau of
services from private suppliers, the law requires Internal Revenue which is under the supervision and
withholding of the relevant business tax (Le VAT or Fiscal adequacy administration d the Department of Finance.
percentage un). Business taxation is discussed under (gov’t revenue > expenditures]
Business and Transfer Taxation by the same author. Fiscal adequacy requires that the sources of CHIEF OFFICIALS OF THE BUREAU OF INTERNAL
government funds must be sufficient to cover REVENUE
C. Voluntary compliance system - Under this collection government costs. The government must not incur a 1. 1 Commissioner
system, the taxpayer himself determines his Income, deficit. A budget deficit paralyzes the government's 2. 4 Deputy Commissioners, each to be designated to
reports the same through income tax returns and pays ability to deliver the essential public services the people. the following:
the tax to the government. This system is also referred Hence, taxes should increase in response to increase in a. Operations group
to as the "Self-assessment method." government spending. b. Legal Enforcement group
The tax due determined under this system will c. Information Systems Group
be reduced by: Theoretical justice d. Resource Management Group
a. Withholding tax on compensation withheld by Theoretical justice or equity suggests that taxation
employers. should consider the taxpayer ability to pay. It also POWERS OF THE BUREAU OF INTERNAL REVENUE
b. Expanded withholding taxes withheld by suppliers of suggests that the exercise of taxation should not be 1. Assessment and collection of taxes
goods or services. oppressive, unjust, or confiscatory.
2. Enforcement of all forfeitures, penalties and fines, and c. Tax compliance of the taxpayer except when a notice for audit or investigation has been
judgments in all cases decided in its favor by the courts actually served upon the taxpayer.
3. Giving effect to, and administering the supervisory Authorized acts:
and police powers a. To examine any book, paper, record or other data When a return shall not be forthcoming within the
relevant to such inquiry prescribed deadline or when there is a reason to believe
conferred to it by the NIRC and other laws b. To obtain on a regular basis any information from any that the return is false, incomplete or erroneous, the CIR
4. Assignment of internal revenue officers and other person other than the person whose internal revenue shall assess the proper tax on the basis of best evidence
employees to other duties tax liability is subject to audit available.
5. Provision and distribution of forms, receipts, c. To summon the person liable for tax or required to file
certificates, stamps, etc. to proper officials a return, his employees, or any person having possession In case a person fails to file a required return or other
6. Issuance of receipts and clearances and custody of his books of accounts and accounting documents at the time prescribed by law or willfully files
7. Submission of annual report, pertinent information to records to produce such books, papers, records or other a false or fraudulent return or other documents, the CIR
Congress and reports to the Congressional Oversight data and to give testimony shall make or amend the return from his own knowledge
Committee in matters of taxation d. To take testimony of the person concerned, under and from such information obtained from testimony.
oath, as may be relevant or material to the Inquiry The return shall be presumed prima facie correct and
POWERS OF THE COMMISSIONER OF INTERNAL e. To cause revenue officers and employees to make sufficient for all legal purposes.
REVENUE canvass of any revenue district
1. To interpret the provisions of the NIRC, subject to 6. To conduct inventory taking or surveillance
review by the Secretary of Finance 4. To make an assessment and prescribe additional
requirement for t administration and enforcement 7. To prescribe presumptive gross sales and receipts for
2. To decide tax cases, subject to the exclusive appellate a taxpayer when:
jurisdiction of the Court of Tax Appeals, such as: 5. To examine tax returns and determine tax due a. The taxpayer failed to issue receipts; or
a. Disputed assessments thereon b. The CIR believes that the books or other records of
b. Refunds of internal revenue taxes, fees, or other the taxpayer do no correctly reflect the declaration in
charges The CIR or his duly authorized representatives may the return.
c. Penalties imposed authorize the examination of any taxpayer and the
d. Other NIRC and special law matters administered by assessment of the correct amount of notwithstanding The presumptive gross sales or receipt shall be derived
the BIR any law requiring the prior authorization of any from the performance of similar business under similar
government agency instrumentality. Failure to file a circumstances adjusted for other relevant Information.
3. To obtain information and to summon, examine, and return shall not prevent the C from authorizing the
take testimony of persons to effect tax collection examination. tu 8. To terminate tax period when the taxpayer is:
a. Retiring from business
Purpose: For the CIR to ascertain: Tax or deficiency assessments are due upon notice and b. Intending to leave the Philippines
a. The correctness of any tax return or in making demand by the CIR or his representatives. c. Intending to remove, hide, or conceal his property
a return when none has been made by the d. Intending to perform any act tending to obstruct the
taxpayer Returns, statements or declarations shall not be proceedings for the collection of the tax or render the
b. The tax liability of any person for any internal withdrawn but may be modified, changed and amended same ineffective
revenue tax or in correcting any such liability by the taxpayer within 3 years from the date of filing
The termination of the taxable period shall be 10. To compromise tax liabilities of taxpayers Exceptionally, the Regional Evaluation Boards may
communicated through a notice to the taxpayer compromise tax liabilities under the following:
together with a request for immediate payment. Taxes 11. To inquire into bank deposits, only under the
shall be due and payable immediately. following instances: a. Assessments are issued by the regional offices
involving basic deficiency tax of P500,000 or less, and
a. Determination of the gross estate of a decedent b. Minor criminal violations discovered by regional and
9. To prescribe real property values b. To substantiate the taxpayer's claim of financial district officials
incapacity to pay tax in an application for tax Composition of the Regional Evaluation Board:
The CIR is authorized to divide the Philippines into zones compromise a. Regional Director as chairman
and prescribe real property values after consultation b. Assistant Regional Director
with competent appraisers. The values thus prescribed In cases of financial Incapacity, inquiry can proceed only c. Heads of the Legal, Assessment and Collection
are referred to as zonal value. if the taxpayer waives his privilege under the Bank Division
Deposit Secrecy Act. d. Revenue District Officer having jurisdiction
Zonal values are subject to automatic adjustment once over the taxpayer.
every 3 years through rules and regulations issued by 12. To accredit and register tax agents
the Secretary of Finance based on the current Philippine 4. The power to assign and reassign Internal revenue
valuation standards. However, no adjustment in zonal The denial by the CIR of application for officers to establishments where articles subject to
valuation shall be valid unless published in a newspaper accreditation is appealable to Department of Finance. excise tax are produced or kept.
of general circulation in the province, city or municipality The failure of the Secretary of Finance to act on the
concerned, or in the absence thereof, shall be posted in appeal within 60 days is deemed an approval. RULES IN ASSIGNMENTS OF REVENUE OFFICERS TO
the provincial capitol, city or municipal hall and in 2 OTHER DUTIES
other conspicuous public places therein. Furthermore, 13. To refund or credit internal revenue taxes 1. Revenue officers assigned to an establishment where
the basis of any valuation, including the records of 14. To abate or cancel tax liabilities in certain cases excisable articles are kept shall in no case stay there for
consultations done, shall be public records open to the 15. To prescribe additional procedures or documentary more than 2 years.
inquiry of any taxpayer. requirements 2. Revenue officers assigned to perform assessment and
16. To delegate his powers to any subordinate officer collection function shall not remain in the same
For purposes of internal revenue taxes, fair value of real with a rank equivalent to division chief of an office assignment for more than 3 years.
property shall mean whichever is higher of: 3. Assignment of internal revenue officers and
a. Zonal value prescribed by the Commissioner NON-DELEGATED POWER OF THE CIR employees of the Bureau to special duties shall not
b. Fair market value as shown in the schedule of market The following powers of the Commissioner shall not be exceed 1 year.
values of the Provincial and City Assessor's Office delegated:
1. The power to recommend the promulgation of rules AGENTS AND DEPUTIES FOR COLLECTION OF NATIONAL
The NIRC previously used the assessed value which is and regulations to the Secretary of Finance. INTERNAL REVENUE TAXES
merely a fraction of the fair market value. Assessed 2. The power to issue rulings of first impression or to The following are constituted agents for the collection of
value is the basis of the real property tax in local reverse, revoke or modify any existing rulings of the internal revenue taxes:
taxation. The value to use now is the full fair value of the Bureau.
property. 3. The power to compromise or abate any tax liability 1. The Commissioner of Customs and his
subordinates with respect to collection of
 national internal revenue taxes on imported government instrumentalities, government
goods. The BOI is composed of five full-time commissaries, state universities colleges.
2. The head of appropriate government offices governors, excluding the DTI secretary as its chairman.
and his subordinates with respect to the The President of the Philippines shall appoint a vice
collection of energy tax. chairman of the board who shall act as the BOI's
3. Banks duly accredited by the Commissioner managing head.
with respect to receipts of payments of
internal revenue taxes authorized to be made
thru banks. These are referred to as authorized TAXPAYER CLASSIFICATION FOR PURPOSES OF TAX
government depositary banks (AGDB). Philippine Economic Zone Authority (PEZA) ADMINISTRATION
The PEZA is created to promote investments in For purposes of effective and efficient tax
OTHER AGENCIES TASKED WITH TAX COLLECTIONS OR export-oriented manufacturing Industries in the administration, taxpayers are classified into:
TAX INCENTIVES RELATED FUNCTIONS Philippines and, among other myriads of functions, 1. Large taxpayers - under the supervision of the Large
1. Bureau of Customs supervise grant of both fiscal and non-fiscal Incentives. Taxpayer Service (L of the BIR National Office.
2. Board of Investments PEZA registered enterprises enjoy tax holidays for 2. Non-large taxpayers - under the supervision of the
3. Philippine Economic Zone Authority certain years, exemption fr Import and export taxes respective Revenue District Offices (RDOs) where the
4. Local Government Tax Collecting Unit including local taxes. The PEZA is also an attached business, trade or profession of the taxpayer is situated
5. Fiscal Incentives Review Board agency of the DTI.
The PEZA is headed by a director general and is Criteria for Large Taxpayers:
Bureau of Customs (BOC) assisted by three deputy directors. A. As to payment
Aside from its regulatory functions, the Bureau 1. Value Added Tax-At least P200,000 per quarter for the
of Customs is tasked to administer collection of tariffs on Local Government Tax Collecting Units preceding year
imported articles and collection of the Value Added Tax Provinces, municipalities, cities and barangays also 2. Excise Tax-At least P1,000,000 tax paid for the
on Importation. Together with the BIR, the BOC is under imposed and collect various local taxes, fees and charges preceding year
the supervision of the Department of Finance. to rationalize their fiscal autonomy. 3. Income Tax-At least P1,000,000 annual income tax
paid for the preceding year
The Bureau of Customs is headed by the Customs The special tax treatments of B01-registered or PEZA- 4. Withholding Tax - At least P1,000,000 annual
Commissioner and is assisted by five Deputy registered enterprise including the local taxes imposed withholding tax payments or remittances from all types
Commissioners and 14 District Collectors. by local governments will be discussed und Local & of withholding taxes
Preferential Taxation by the same author. 5. Percentage tax - At least P200,000 percentage tax
Board of Investients (BOI) paid or payable per quarter for the preceding year
The BOI is tasked to lead the promotion of Fiscal Incentive Review Board (FIRB) 6. Documentary stamp tax - At least P1,000,000
Investments in the Philippines by assisting Filipinos and FIRB has oversight function on the administration and aggregate amount per year
foreign investors to venture and prosper in desirable grant of tax incentives the Investment Promotion
areas of economic activities. It supervises the grant of Agencies and other government agencies administering B. As to financial conditions and results of operations
tax incentives under the Omnibus Investment Code. The tax incentives. It approves or disapproves grant of tax 1. Gross receipts or sales - P1,000,000,000 total annual
BOI is an attached agency of the Department of Trade incentives to private entities and tax subsidies to gross sales or receipts
and Industry (DTI). government-owned and controlled corporation
2. Net worth - P300,000,000 total net worth at the close
of each calendar or fiscal year 9. Corporate taxpayers with at least P100,000,000
3. Gross purchases - P800,000,000 total annual authorized capital in banking, insurance,
purchases for the preceding year telecommunication, utilities, petroleum, tobacco, and
4. Top corporate taxpayer listed and published by the alcohol Industries
Securities and Exchange Commission
10. Corporate taxpayers engaged in the production of
metallic minerals
AUTOMATIC CLASSIFICATION OF TAXPAYERS AS LARGE
TAXPAYERS
The following taxpayers shall be automatically
classified as large taxpayers upon notice in writing by the
CIR:
1. All branches of taxpayers under the Large Taxpayer's
Service

2. Subsidiaries, affiliates, and entities of conglomerates

3. Surviving company in case of merger or consolidation

4. A corporation that absorbs the operation or business

5. Corporation with an authorized capitalization of at

6. Multinational enterprises with an authorized

7. Publicly listed corporations

8. Universal, commercial, and foreign banks (the regular