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HELD:
No! The point of view of the CIR is that the Income Tax
Law, as the name implies, taxes upon income and not
upon capital and property.
The essential difference between capital and income is
that capital is a fund; income is a flow. A fund of property
existing at an instant of time is called capital. A flow of
ISSUE:
Are the impositions of the MCIT on domestic
corporations and CWT on income from sales of real
properties classified as ordinary assets
unconstitutional?
HELD:
NO. MCIT does not tax capital but only taxes income as
shown by the fact that the MCIT is arrived at by
deducting the capital spent by a corporation in the sale
of its goods, i.e., the cost of goods and other direct
expenses from gross sales. Besides, there are sufficient
safeguards that exist for the MCIT: (1) it is only imposed
on the 4th year of operations; (2) the law allows the carry
forward of any excess MCIT paid over the normal
income tax; and (3) the Secretary of Finance can
suspend the imposition of MCIT in justifiable instances.
HELD/RATIO:
(b) On dividends 0%