Exemption from Taxation of Government Agencies and Instrumentalities

Instrumentality refers to any agency of the national Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. Continue reading Exemption from Taxation of Government Agencies and Instrumentalities

Requirements to establish a representative office in the Philippines

To establish a representative office in the Philippines, the following requirements must be met: Must secure from the Securities and Exchange Commission (SEC) approval of the License to do business in the Philippines as a representative office of a foreign … Continue reading Requirements to establish a representative office in the Philippines

Distinctions between Regional Operating Headquarters (ROHQ) and Regional Headquarters (RHQ)

The distinctions between ROHQ and RHQ are: As to purpose, R.A. No. 8756 defines Regional Operating Headquarters (ROHQ) as any foreign business entity formed, organized, and existing under any laws other than those of the Philippines whose purpose is to … Continue reading Distinctions between Regional Operating Headquarters (ROHQ) and Regional Headquarters (RHQ)

Differences in setting up a local subsidiary office and a branch office of a foreign corporation (Tax 1)

The differences in setting up a local subsidiary office and a branch office of a foreign corporation are the following: As to its creation, a local  subsidiary involves incorporation under Philippine laws. On the other hand, doing business through a … Continue reading Differences in setting up a local subsidiary office and a branch office of a foreign corporation (Tax 1)

May “the power to tax” be delegated to the local government units?

(Board of Assessment Appeals of Laguna v. CTA 8 scra 224) Yes. In the absence of constitutional provision, “the power to tax may still be delegated to local government units in accordance with the well-settled doctrine that the power to create local government units by implication confers upon it the power to tax.” So even if no constitutional provision exists, local government units still possess the power to tax. Continue reading May “the power to tax” be delegated to the local government units?

Non-delegation of the power to tax under the Philippine Taxation Law

(Abakada Guro Party List v. Ermita [469 SCRA 1,122,123-124]) The Supreme Court sustained the constitutionality of R.A. 9337 authorizing the President to increase the VAT rate from 10% to 12% effective January 1, 2006 upon recommendation of the Secretary of Finance on the existence of either of the two conditions. RATIO:AS TO DELEGATION OF POWER: No, there is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally permissible. Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must … Continue reading Non-delegation of the power to tax under the Philippine Taxation Law

“Destination Principle” and “Cross Border Doctrine’ in Taxation Law

Topic: TERRITORIALITY “Destination Principle“ According to the Destination Principle, goods and services are taxed only in the country where these are consumed. “Cross Border Doctrine” In connection with the said principle, the Cross Border Doctrine mandates that no VAT shall be imposed to form part of the cost of the goods destined for consumption outside the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT while those destined for use or consumption within the Philippines shall be imposed with 10% VAT (Now 12% under … Continue reading “Destination Principle” and “Cross Border Doctrine’ in Taxation Law

VALENTIN TIO v. VIDEOGRAM REGULATORY BOARD(1987)

The Supreme Court held the levy of 30% tax under P.D. 1987 as for a public purpose, and therefore a valid imposition. Exercise of Regulatory power: The law, according to the Court, was imposed primarily for answering the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. Hence, while the direct beneficiaries of the said decree is the movie industry, the citizens are held to be its indirect beneficiaries. Continue reading VALENTIN TIO v. VIDEOGRAM REGULATORY BOARD(1987)

Income Tax case digest 2

G.R. No. 175410               November 12, 2014 SMI-ED PHILIPPINES TECHNOLOGY, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. D E C I S I O N LEONEN, J.: In an action for the refund of taxes allegedly erroneously paid, the Court of Tax Appeals may determine whether there are taxes that should have been paid in lieu of the taxes paid. Determining the proper category of tax that should have been paid is not an assessment. It is incidental to determining whether there should be a refund. A Philippine Economic Zone Authority (PEZA)-registered corporation … Continue reading Income Tax case digest 2