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DE LA LA SALLE UNIVERSITY MANILA

Syllabus
COLLEGE: College of Business
Commercial Law
COURSE CODE: BUSLAW3 (Law on Income, Transfer and Business Taxes)

DEPARTMENT:

CLASS DAYS AND CLASS TIME:


COURSE DESCRIPTION: The course is the introduction to taxation, income, transfer and business taxes. It deals with the
underlying principles behind the imposition of the tax in general, and income tax and transfer and business taxes in particular.
It emphasizes the social and moral responsibility of the people to pay the taxes in support of the government in order that the
government will be able to discharge its appropriate functions, i.e., to render services in favor of its citizenry. The emphasis is
on the application of the theory and principles in understanding Philippine tax system and solving income, transfer and
business tax problems.
It tests the students conceptual knowledge and proficiency in the practical application of the law as
they relate to accounting practice, and use the same knowledge to enhance human development and social transformation.
The course is divided into fourteen (14) weeks at two (2) meetings/week. Each session last for one hour and a half (1 ).

LEARNING OUTCOMES (LO):


On completion of the course, the student is expected to be able to do the following:
To assess, interpret and analyze the taxpayers obligations and responsibilities, and apply the existing tax principles and
encourage tax compliance in dealing with personal and business concerns.

FINAL COURSE OUTPUT:

LEARNING OUTCOME
To assess, interpret and analyze the taxpayers
obligations and responsibilities, and apply the existing
tax principles and encourage tax compliance in dealing
with personal and business concerns.

REQUIRED OUTPUT
Determination of the Proper Tax Returns to be submitted
to the Government Entity
Preparation, Filling in of Income Tax Returns
For Individual
Preparation, Filling in of Income Tax Returns
For Corporations
Preparation, Filling in of Income Tax Returns
For Estates & Trust

To assess, interpret and analyze the


taxpayers obligations and responsibilities,
and apply the existing tax principles and
encourage tax compliance in dealing with
personal and business concerns.

Determination of the Proper Tax Returns to be


submitted to the Government Entity
Determination of Proper Business Permit for
different business
Preparation and presentation of estate plans
Preparation and presentation of business tax plans
for various entities.

RUBRIC FOR ASSESSMENT:

CRITERIA

Accuracy
in Preparation of ITR & other
Returns
Consistency in Classifying
Income & Expense Accounts
Correctness in Computation of
Problems in determining Taxes due
to Government
Accuracy
in Preparation of ETR & Donors
Tax Returns
Consistency in Classifying
Gross Estate /Deductions
Donations
Business taxes
Correctness in Computation of
Problems in determining Taxes due
to Government

EXEMPLARY
4
60-100
Proper
Classification
Clean and
Orderly
presentation
Completeness
Systematic and
simplified
Computation
Proper
Classification
Clean and
Orderly
presentation
Completeness

Systematic and
simplified
Computation

SATISFACTORY
3
30 to 60
Ability to fill in
Tax Returns

Clear Distinction of
Income / Expenses
Organization of
different items
Ability to fill in
Tax Returns

Clear Distinction of
Gross
Estate/Deductions
Donations/
Exemption to
Donations
Organization of
different items

DEVELOPING
2
10 to 30

BEGINNING
1
0 to 10
points

OTHER REQUIREMENTS AND ASSESSMENTS:


Aside from the final output, the student will be assessed at other times during the term by the following:
Result of the Written Examination
Recitation
Individual & Group Exercise in preparing the Output

GRADING SYSTEM:
The student will be graded according to the following:

LEARNING PLAN:
LEARNING
OUTCOME

TOPIC
Basic Principle of Taxation
Provisions of 1987 Constitution

WEEK
NO.
1
1

LEARNING
ACTIVITIES
Research; Discussion; oral and written examination
Recitation; Discussion of the Applicable Constitutional
Provision to Taxation
Research
Computation; Exercise and Filling in of ITR for
Individual
Computation, Practice Computation in Filling Up ITR for
Corporation

Principle of Income Taxation


Income Taxation of Individual
Estate and Trust
Income Taxation of
Corporation
Remedies & Procedure on Possible
Tax Litigations

1
2-5

Principle of Transfer Taxes


Taxation
Basic Provisions on Wills &
Succession
Estate Taxation/ Different
Property Relations in Marriage
Settlement

Research

6-7
7

Donors Taxation

11

Preparation and Application of the Principles in


Filling up of ETR
Computation, Practice Computation in Filling Up
ETR
Applying the different form of marriage
settlement
Computation, Recitation

Principle of Business Taxes

12

Discussion/ Recitation

Value Added Taxes

12

Research; Classification and Practice


Identification of Transactions; Filling of ITR

Excise Taxes & Documentary


Taxes
Remedies & Procedure on
Possible Tax Litigations

13

9-10

14

REFERENCES:
PRESCRIBED TEXTBOOK : Reyes, Virgilio D., Income Tax Law and Accounting, latest edition
Reyes, Virgilio D., Philippine Transfer and Business Taxes, latest edition
SUGGESTED REFERENCES
A. Books
1. National Internal Revenue Code, as amended, latest edition
2. Llamado Jr., Crispin P and Manuel M. San Diego, Philippine Income Tax, latest edition
3. Valencia, Edwin G and Gregorio F. Roxas, Income Taxation
Principles and Laws with Accounting Applications, latest Edition
4. de Leon, Hector S. and Hector M. de Leon, Jr., The Fundamentals of Taxation, latest edition
5. de Leon, Hector S. and Hector M. de Leon, Jr., The Law on Income Taxation, latest edition
6. Dimaampao, Basic Approach to Income Taxation, latest edition
7. Mamalateo, Philippine Income Tax, latest edition
8. de Leon, Hector S. and Hector M. de Leon, Jr., Transfer and Business Taxes, latest edition
9. Tamayo, Asser S. Business and Transfer Taxes
B Revenue Regulations, Memorandum Circulars
C. Supreme Court decisions

ONLINE AND ELECTRONIC RESOURCES:


Sources

of Case-Laws / Jurisprudence:
Lex Libris, CD Technologies Asia, Inc.
Supreme Court Website www.sc.judiciary.gov.ph
BIR Website: www.bir.gov.ph
Philippine Laws and Jurisprudence Databank: www.lawphil.net

CLASS POLICIES:
Attendance. Students are expected to come to class diligently and on time. The maximum class days that a student may be
absent is 5 days. 2 occasions of tardiness constitute 1 absence from class. Absence approved and sanctioned by the
University shall not be counted against the student. However, the student is nevertheless responsible and therefore not
excused for missed class activities, tests and other class requirements.
Written Output. All exams, projects, reports, papers and other written outputs must be submitted on time or not later than
the date and the time specified by the professor. Any requirement submitted after the specified date and time shall no longer
be received and accepted, and shall get a grade of 0.0.
Respect and Decorum. The students are expected to observe proper decorum and shall give respect to both his/her professor
and classmates.
Final Grade. As a general rule, the passing grade for the class is 1.0.
Cheating, Plagiarism and Acts of Dishonesty. Any form of dishonesty is extremely prohibited and shall be severely dealt with
by the University through the Discipline Office and the Student Handbook.

Part 1 Principles of Taxation and Remedies


A.
Principles of Taxation and its Remedies
B.
Nature, scope, classification, and essential characteristics

C.
D.
E.
F.
G
H.
I.
J
K

Principles of sound tax system


Limitations of the power of taxation (inherent limitations and constitutional limitations )
Differences between taxation and police power
Differences between taxation and eminent domain
Similarities among taxation, police power and eminent domain
Tax evasion vs. tax avoidance
Situs/place of taxation
Double taxation (direct and indirect)
Taxes
a.
Essential characteristics
b.
Classification
c.
Tax vs. other charges (toll, special assessment, license fee, debt)
Powers and authority of the Commissioner of Internal Revenue under Section 4 to 7, Title 1 of the
Tax Code
Authority of the Commissioner to compromise tax payments, abate or cancel tax liability and refund
or credit taxes.
Tax Remedies
1.
Remedies of the Government (State)
1.
Definition, scope, prescriptive period
2.
Administrative remedies (tax lien, compromise, levy and distraint)
3.
Judicial actions (civil or criminal)
2. Remedies of the Taxpayer
1.
Prescriptive periods
2.
Administrative remedies
1.
Against an assessment (protest, request for reinvestigation)
2.
Request for refund or credit of taxes (recovery of
erroneously or illegally collected taxes, forfeiture of cash
refund and tax credit)
3. Expanded jurisdiction of the Court of Tax Appeals (limited to jurisdiction)

L
M.
N.

Part 2 Income tax


A.
Income tax
B. Taxpayer and tax base
1.
Individuals
a.
Classification (citizens, aliens, pure compensation income earner, pure
business or professional income earner, mixed income earner)
b.
Basic and personal exemptions
c.
Premium payments for health and/or hospitalization insurance
d.
Tax on aliens employed by regional operating headquarters of
multinationals, offshore banking units, petroleum service contractor or
subcontractor
2.
Corporations
a.
Classification (domestic and foreign)
b.
Income taxes
1.
regular corporate income tax
2.
minimum corporate income tax
3.
optional corporate income tax
4.
improperly accumulated earnings tax
c.
Special corporations
1.
Domestic (proprietary educational institution, non profit
hospitals, government owned or controlled corporation,
etc.)
2.
Resident foreign (international carriers, offshore banking
units, regional operating headquarters of multinationals,
branch profits remittances)
3.
Non-resident foreign (lessors of equipment, aircraft and
machinery; owners of vessels chartered by Philippine
nationals, lessor, distributor or owner of cinematographic
films)
3.
Partnerships (general professional partnerships and business partnerships)
4.
Joint ventures (exempt and taxable)
5.
Estate and trust (exempt and taxable)
Part3 Income
A.

Gross income
1.
2.
3.

Income
Inclusions/exclusions from the gross income
Kinds of income
a. Compensation
b. Passive income
1. Final withholding tax
c. Business
4.
Compensation income
a. Nature
b. Inclusions/exclusions
c. Withholding tax
d. Computations
e. Fringe benefits tax
5.
Capital gains tax on sale of real property classified as capital asset and the
applicable documentary stamp tax ( including exemption from the capital gains
tax)
6.
Capital gains tax on sale of shares of stock not through the local stock exchange and
the applicable documentary stamp tax
7.
Business income, income derived from business, trade, practice of profession, gains
derived from
dealings in property, interest, rents, royalties, dividends, annuities, prizes and
winnings, pensions, partners distributive share from the net income of the general professional
partnership; other income including special problems such as mergers and consolidation, transfers
to controlled corporation, wash sale)
8.
Computation of the gross income
9.
Withholding of taxes

Part 4 Deductions from gross income

A.

Deductions from
1.
2.
3.

gross income
Items not deductible
Optional Standard deduction
Itemized deductions
a. deductions in general
b. expenses
c. losses
d. interest
e. taxes
f. depreciation
g. depletion
h. contribution to pension trust
i. charitable contributions
j. research and development

Part 5 Computation of income tax liabilities


A. Computation of income tax liabilities
1.
Individual taxpayers
a. Resident citizen
b. Non resident citizen
c. Resident alien
d. Non resident alien engaged in trade or business
e. Non resident alien not engaged in trade or business
2.
Estates and trusts
a. Estate/trust subject to tax
b. Estate/trust not subject to tax
3.
Corporate taxpayers
a. Partnerships 1. Partnerships subject to tax 2. Partnerships not subject to tax
b. Corporation 1 Domestic 2 Resident foreign 3 Non resident foreign
Part 6 Tax return preparation and compliance requirements
A.
Tax return preparation and tax payments (computation, venue and due dates)
B.
Regular filing (including substituted filing of return and electronic filing )
C.
Large taxpayers and non-large taxpayers
D.
Income tax credits (local and foreign)
E.
Payment of taxes in installment
a. Capital gains tax
b. Tax due exceeds P2,000.00
F.
Accounting periods (calendar year, fiscal year, short accounting period)
G.
Accounting methods (cash, accrual, installment method, deferred payment method,
lumpsum or outright method, annual or spread out method, percentage of completion
method, networth method of determining taxable income)
H. Compliance requirements
1. Administrative requirements (registration, issuance of receipts, printing of receipts
2. Attachments to the income tax return, including CPA certificate, per NIRC requirement
3.
Keeping of books of accounts and records, including report of inventories
4. Prescriptive period of books of accounts and other accounting records.
Part 7 Transfer taxes
A. Transfer taxes B. Estate taxes C. Law on Succession
1. Kinds of succession
2. Kinds of wills
3 Kinds of Decedents
4 Kinds of Properties/Property relationships
a. Conjugal properties, b. Community properties, c. Exclusive properties
Part 8 Gross Estate
A. Gross estate
1 Inclusions/ Exclusions from the gross estate
2 Transfers of property subject to tax
a.
Decedents interest
b.
Transfers in contemplation of death
c.
Revocable transfers
d.
Property passing under the general power of appointment
e.
Proceeds of life insurance
f.
Prior interest
g.
Transfers for insufficient consideration
Part 9 Deductions from the Gross Estate
A Deductions allowed from the estate (ordinary and special deductions)
1 Ordinary deductions
a. Expenses, losses, indebtedness, taxes
1. funeral expenses
2. judicial expenses of testamentary or intestate proceedings
3 claims against the estate
4 claims against insolvent persons
5 unpaid mortgage or indebtedness on property
6 taxes
7 losses
b. Transfer for public use
c. Vanishing deduction
2.
Special deductions
a. Family home
b. Standard deduction
c. Medical expenses
d. Amounts received by heirs under RA 4917
3.
Share of the surviving spouse

Part 10 Computation of tax, tax returns and attachments


A. Tax credit for estate tax paid to a foreign country
B. Filing of estate tax returns, payment of estate tax requirements
C. Attachments to the estate tax return, including CPA certificate
Part 11 Donors Tax
A Donors tax

B. Donations, kinds and formalities


1 Gross gift
2. Exemption of certain gifts and other deductions from gross gift
3. Tax rates in general and when the donee is a stranger
4. Computation of taxable gifts, donors tax
5. Filing of donors tax returns, payment and requirements
Part 12 Business Taxes
A. Value Added Tax
1. VAT-subject transactions
a. Sale of goods or properties (actual sales, deemed sales, zero rated sales)
b. Sale of services and lease of properties (actual sales or lease, zero rated sales)
c. Importation
2. VAT exempt transactions
3. Input Value Added taxes
a. Passed-on VAT
b. Transitional VAT input
c. Presumptive VAT input
d. Withholding VAT (creditable and final)
e. Excess VAT input in previous return
4. Refund of VAT input (zero rated sales, purchase of land and capital goods)
5. Compliance requirements (invoicing, returns and payment of value added tax; power of the
Commissioner to suspend business)
Part 14 Percentage taxes
A Percentage taxes
B. Taxpayer, tax base and tax rates
1. Tax on persons exempt from value added tax
2. Tax on domestic or international carrier (including exemptions)
3. Tax on franchise
4. Overseas communications tax (including exemptions)
5. Tax on banks & non-bank financial intermediaries performing quasi-banking functions
6. Tax on other non-bank financial intermediaries
7. Tax on life insurance
8. Tax on agents of foreign insurance companies
9. Amusement taxes
10. Tax on winnings
11. Stock transaction tax
C. Returns and payment of percentage tax (regular and electronic filing)