Elaboración de las Berenjenas de Almagro

1. Sec. 248 B – NIRC: A Substantial Underdeclaration of taxable income/sales/receipt

 Or a Substantial OVERDECLARATION of Deductions o Shall constitute PRIMA FACIE evidence of

false or fraudulent return

 Failure to report sales/income/ receipt in an amount exceeding 30% of that declared per return

o And a claim of deductions in an amount exceeding 30% of actual deductions o Shall render the taxpayer liable for

substantial underdeclaration of sales, receipts or income or for overstatement of deductions

2. Failure to declare for taxation purposes True and Actual income derived from business for 2 consecutive years

3. Substantial under declaration of income in the tax returns for 4 consecutive years coupled with intentional overstatements of deductions.

o Must be proven by Circumstantial evidence and reasonable inferences o It generally involves the following elements:

1. Deception

2. Misrepresentation of material facts 3. False or altered documents 4. Evasion/ diversion / omission

 Badges of Fraud 5. Improper deductions 6. Accounting irregularities

7. Inconsistent explanation/behavior 8. Attempt to conceal illegal acts 9. Inadequate records

10. Failure to file returns 11. Destruction of records (acts)

o Honest difference in opinion and inadvertence do not amount to fraud  There must be a clear and convincing evidence to prove that

some part of the underpayment of a tax was due to fraud.  Intent is different from mere inadvertence, honest difference

in opinion, reliance on an incorrect technical advice, negligence or carelessness, dumbfuckery.

Tax credit

Tax Credit vs Tax Deduction o Tax Credit

 Generally refers to an amount that is subtracted directly from one’s total tax liability

 It is an allowance against the tax itself, or a deduction from what is owed by a taxpayer to the government

 Examples

 Withheld taxes, payments of estimated tax, and investment tax credits

o Tax Deductions

 A subtraction from income for tax purposes, or an amount that is allowed by law to reduce income prior to the application of the tax rate to compute the amount of tax which is due. Tax Liability is required for tax credit

o There ought to be a tax liability before a tax credit can be applied  Since the purpose of a tax credit is to reduce the tax liability.

Without any tax liability, the tax credit is a piece of shit. It would be PREMATURE and IMPRACTICAL.

o The existence of a tax credit – is not the same as the availment (tax credit is mandatory; whereas the availment of such credit is optional)

Prior tax payment not necessary

o While tax liability is necessary for the availment of a tax credit – prior tax payments are not. Payment is not indispensible.

o Nirc is replete with provisions granting tax credits even though no taxes have been previously paid

 Examples

 Under Section 86(E) – in computing estate tax due – a tax credit is allowed subject to certain limitations. The tax credit in this instance allude to the prior payment of taxes, even if not made to out government.  Sec 110 – a VAT registered person engaging in

transactions is allowed a tax credit that includes a ratable portion of any input tax xxx which does not need to be paid etc etc.

Tax credit is not the same as a discount o Tax credit –

39

 Is a deduction before the income is computed 1. Cash discount

 One granted by business to credit customers for their prompt payment  Purchase discount – is on the part of the seller

2. Quantity discount

 Reduction in price allowed for purchase made in large quantities justified by savings in packaging, shipping and handling

- A.k.a : Volume or Bulk discount 3. Trade discount

 Percentage reduction from the list price allowed by manufacturer to wholesalers.

 Chain Discount – a series of discounts from one list price – is recorded at net

4. Functional discount

 Similar to trade discount

Double Taxation

Double Taxation o Definition

 Taxing twice – the same subject matter -done by the same taxing authority, within the same taxing district, for the same purpose, in the same taxing period.

o No constitutional prohibition

 It is not forbidden by our fundamental law  It is not favored but is still permissible  Discretion of the Legislative

 General Rule:

o Double taxation should not be permitted unless the legislature has authority to impose it.

 However

o Since the taxing power is exclusively a legislative function, and since it is absolute and unlimited: it is generally held that there is nothing to prevent the imposition of more than one tax on the same subject matter, in the absence of an express or implied constitutional prohibition xxx such shit is a matter within the discretion of the legislature.

 Kinds of double taxation

1. Direct Duplicate taxation (obnoxious double taxation)

o In order to constitute double taxation in the objectionable/prohibited sense:

 The same subject matter must e taxed twice – for the same purpose, by the same taxing authority, within the same taxing jurisdiction, during the same period, and they must be of the same kind or character.

2. Indirect duplicate taxation

o When any or some of the requisites of direct duplicate taxation are not present. This is permissible.

 Schemes to AVOID double taxation 1. Tax Credit

o A sum deducted from the total amount a taxpayer owes to the taxing authority 2. Tax Deduction

o Fixed amount or percentage write-off or permitted reduction in the gross amount on which a tax is calculated.

3. Tax Reduction

o Relinquishing or reducing the amount or rate of tax a taxpayer has to pay.

o Example

 The TAX SPARING CREDIT RULE under Section28 of the NIRC. 4. Tax Exemption

o Immunity from this shit 5. Tax Treaties

o Agreement between 2 jurisdictions that mitigates the problem of double taxation that can occur when tax laws consider a

40