Law Summary
Powers and Duties of the Bureau
- Collect all national internal-revenue taxes, fees, and charges.
- Enforce forfeitures, penalties, and fines.
- Administer supervisory and police powers under the Code and other laws.
Regulations of the Bureau
- Must specify time and manner for provincial treasurers to canvass taxable persons and property.
- Prescribe labeling and marking on goods subject to specific tax.
- Define conditions for tax-exempt goods, export goods, and prohibited drugs.
- Provide rules for legal actions by revenue officers.
- Set requirements for recordkeeping by authorized persons and alcohol denaturing.
- Specify procedures for income tax returns, payment, and evidence of payment.
Forms and Certificates
- Collector must prescribe and distribute licenses, stamps, labels, bonds, records, and apparatus for tax administration.
Agents and Deputies
- Insular Collector of Customs and subordinates act as agents for collecting national internal revenue on imports.
- Provincial and City treasurers and deputies act as deputies for collection and law enforcement.
Expenses and Districts
- Provinces and cities bear expenses for tax collection and enforcement.
- The Philippines is divided into inspection districts supervised by provincial revenue agents.
Duties of Revenue Agents
- Enforcement of revenue laws and prevention of fraud.
- Examine efficiency and report misconduct of Bureau employees.
- Suspend employees for cause pending report to Collector.
Taxpayer Assessments
- Collector can assess taxes on best evidence if returns are false, incomplete, or late.
- Immediate payment demanded if taxpayer is retiring, leaving the Philippines, or obstructing tax collection.
Income Tax Overview
- Taxes on individuals, corporations, estates, trusts, personal holding companies with graduated rates.
- Personal exemptions and additional exemptions for dependents provided.
- Non-resident aliens taxed differently, with conditions for filing returns.
- Corporations taxed at 8% of net income, with additional tax on accumulated profits to prevent tax avoidance.
- Tax on members of general co-partnerships based on individual income.
Income and Deduction Computation
- Gross income includes all income sources except specified exemptions (life insurance proceeds, gifts, government securities interest, etc.).
- Allowable deductions include business expenses, interest, taxes, losses, bad debts, depreciation, depletion, and contributions.
- Limitations on deductibility of personal expenses, certain losses, and wash sales.
Returns and Payment of Income Tax
- Individuals and corporations must file tax returns annually, verified by oath.
- Returns filed with Collector or local revenue agents.
- Payments are due annually with options for installment payments.
- Penalties for failure to file, fraudulent returns, and late payment include fines and surcharges.
- Withholding taxes at source on interest and income for non-resident aliens.
Estates, Inheritance, and Gift Taxes
- Graduated rates imposed on net estates and individual shares of heirs.
- Detailed definition of gross and net estate, including transfers in contemplation of death.
- Exemptions, valuation rules, and duty to file notice of death and returns.
- Payment terms and penalties specified.
- Gift tax imposed on transfers by gift, including graduated rates and exemptions.
Specific Taxes on Articles
- Specific taxes imposed on distilled spirits, wines, tobacco products, matches, mechanical lighters, firecrackers, skimmed milk, fuels, cinematographic films, playing cards, saccharine.
- Conditions for withdrawal under bond, storage, removal, denaturing, and recovery of alcohol.
- Requirements for labeling, packaging, and premises approval.
- Penalties for unlawful manufacture, use, or removal of taxable goods.
Privilege Taxes on Business and Occupation
- Fixed and percentage taxes imposed on businesses and occupations, payable before commencing business.
- Particular rates for various types of businesses and occupations.
- Exemptions for small merchants, market vendors, producers working at home, and owners of animal-drawn vehicles.
- Penalties for unlawful pursuit of business or failure to report payments.
Documentary Stamp Taxes
- Imposed on a wide range of documents including bonds, stocks, sales agreements, bank checks, insurance policies, leases, mortgages, deeds, charter parties, proxies, powers of attorney, etc.
- Rates vary depending on the document type and amount.
- Procedures for affixing and canceling stamps.
- Penalties for failure to stamp, falsification, and counterfeiting.
Mining Taxes
- Annual occupation fees on mining claims.
- Rentals and royalties based on type of mineral and output value.
- Ad valorem taxes on output of non-leased mineral lands.
- Deductions allowed for certain types of mines.
- Payment procedures and penalties for non-compliance.
Miscellaneous Taxes
- Taxes on banks based on capital, deposits, and circulation.
- Taxes on insurance premiums with exemptions for cooperative companies.
- Franchise taxes based on special charters.
- Amusement taxes based on admission fees and gross receipts.
- Charges on forest products measured and collected by the Bureau of Internal Revenue under Forestry regulations.
- Fees for sealing weights and measures, licensing, and regulation of their use.
- Firearms taxes including dealer and license fees, and hunting permits.
- Radio registration fees based on type, use, and location.
- Tobacco inspection fees.
- Water rentals for power use with rates and payment schedules.
General Administration
- Tax collection cannot be enjoined by courts.
- Procedures for recovery of erroneously collected taxes and suits on forfeiture.
- Collector's power to compromise, refund, or credit taxes.
- Remedies including distraint, levy, and judicial action for delinquent taxes.
- Tax liens on property with priority and limitation periods.
- Record keeping and language requirements for accounting books.
- Rules and regulation promulgation by Secretary of Finance.
Penalties and Offenses
- Penalties for officers and employees guilty of extortion, neglect, conspiracy, or failure to report violations.
- Penalties for divulgence of trade secrets and fraudulent use of official seals and stamps.
- Penalties on taxpayers for unlawful disposition of distrained property or refusal to surrender property.
- General fines and imprisonment for violation of provisions without specified penalties.
Allotments and Disposition of Revenue
- Specific allotments of internal revenue for provinces, municipalities, roads, and bridges.
- Proceeds of various taxes apportioned and distributed based on population and other criteria.
- Status of local government units defined for allotment purposes.
- Quarterly payment of allotments from the National Treasury.
Repealing Provisions and Effective Date
- Various prior Acts repealed in whole or parts upon this Code's approval.
- Code effective upon proclamation except specific provisions requiring US approval.
This comprehensive legislation governs the organization, powers, procedures, tax impositions, enforcement, penalties, and fiscal allotments of internal revenues in the Philippines, ensuring a detailed legal framework for national revenue collection and administration.