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    1.7 Doctrines of Taxation

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    Luis Guerrero
    1. Tax laws operate prospectively and only apply to present and future transactions, unless a legislature expressly declares retrospective effect. 2. Tax statutes are strictly construed in favor of taxpayers and the government bears the burden of clearly expressing how taxes are imposed. 3. Tax evasion uses illegal means like fraud to substantially underpay taxes due, while tax avoidance uses legal tax planning to minimize liability.

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    1.7 Doctrines of Taxation

    Uploaded by

    Luis Guerrero
    19 views2 pages
    1. Tax laws operate prospectively and only apply to present and future transactions, unless a legislature expressly declares retrospective effect. 2. Tax statutes are strictly construed in favor of taxpayers and the government bears the burden of clearly expressing how taxes are imposed. 3. Tax evasion uses illegal means like fraud to substantially underpay taxes due, while tax avoidance uses legal tax planning to minimize liability.

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    Doctrines Of Taxation

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    1.7 Doctrines of Taxation (1)

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    1. Tax laws operate prospectively and only apply to present and future transactions, unless a legislature expressly declares retrospective effect. 2. Tax statutes are strictly construed in favor of taxpayers and the government bears the burden of clearly expressing how taxes are imposed. 3. Tax evasion uses illegal means like fraud to substantially underpay taxes due, while tax avoidance uses legal tax planning to minimize liability.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    19 views2 pages

    1.7 Doctrines of Taxation

    Uploaded by

    Luis Guerrero
    1. Tax laws operate prospectively and only apply to present and future transactions, unless a legislature expressly declares retrospective effect. 2. Tax statutes are strictly construed in favor of taxpayers and the government bears the burden of clearly expressing how taxes are imposed. 3. Tax evasion uses illegal means like fraud to substantially underpay taxes due, while tax avoidance uses legal tax planning to minimize liability.

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    DOCTRINES OF TAXATION Misdelcaration as to quantity, quality, weight, or

    measurement of the goods, or misclassification through


    Doctrines are the set of principles that must be followed insufficient or wrong description of the goods or use of
    and remembered in Taxation. wrong tariff heading resulting to a discrepancy in duty
    1. Prospective Application of Tax Laws and tax to be paid between what is legally determined
    upon assessment and what is declared.
    Like other statues, tax laws operate prospectively,
    whether they enact, amend, or repeal, unless the Tax Evasion connotes the integration of three factors:
    purpose of the legislature to give retrospective effect is 1. The end to be achieved, the payment of less
    expressly declared or may be implied from the language than that known by taxpayer to be legally due,
    used. or the non-payment of tax when it is shown
    A tax bill must be only applicable and operative after that a tax is due.
    becoming a law. Thus, the effectivity of the tax law 2. An accompanying state of mind which is
    commences upon its approval and its scope would only described as being a “evil”, in “bad faith”,
    cover the present and future transactions. “Willful”, or “deliberate and not accidental”
    3. A course of action or failure of action which is
    2. Strict Construction of Tax Laws unlawful

    Statutes levying taxes or duties are to be construed Tax Avoidance


    strongly against the government and in favor of the
    object or citizens, because burdens are not to be Tax avoidance on the other hand is a tax saving device
    imposed or presumed to be imposed beyond what within the means sanctioned by law. This method
    statutes expressly and clearly declare. No person or should be used by the taxpayer in good faith and at
    property is subject to taxation unless they fall within the arm’s length.
    terms of plain import of a taxing statute. Also called tax minimization, the exploitation by the
    Tax laws should be clear, concise and specific. taxpayer to legally permissible alternative tax rates or
    methods of assessing taxable property or income, in
    order to avoid or reduce tax liability.

    Tax Evasion A tax payer has legal right to decrease the amount of
    what would otherwise be his taxes or altogether avoid
    Under this method, the taxpayer uses illegal or unlawful
    them by means which the law permits.
    means to defeat, evade, or lessen the payment of tax. It
    presupposes malice, fraud, bad faith or willful intent on TAX AVOIDANCE TAX EVASION
    the part of the taxpayer to substantially under-declare VALIDITY
    income. Legal and not subject to Illegal and subject to
    criminal penalty criminal penalty
    An illegal means of escaping taxation. It connotes fraud MANNER OF COMMISSION
    through the use of pretenses and forbidden devices to Accomplished by legal Accomplished by breaking
    lessen or defeat taxes. It subjects the taxpayer to procedures or means the letter of the law
    further or additional civil or criminal liability. which may be contrary to
    the intent of the law yet
    Example: do not violate the letter of
    the law
    Misdelcaration, misclassification, undervaluation in EFFECTS
    Goods Declaration (Sec. 1400, CMTA) Minimization of Taxes Almost always results in
    the absence of tax
    payments

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