Choose the correct answer. Double Taxation – (1%)
(A) is one of direct duplicate taxations wherein two (2) taxes must be imposed on the same subject matter, by the same taxing authority, within the same jurisdiction, during the same period, with the same kind or character of tax, even if the purposes of imposing the same are different.
(B) is forbidden by law; and therefore, it is a valid defense against the validity of a tax measure.
(C) means taxing the same property twice when it should be taxed only once; it is tantamount to taxing the same person twice by the same jurisdiction for the same thing.
(D) exists when a corporation is assessed with local business tax as a manufacturer, and at the same time, value-added tax as a person selling goods in the course of trade or business.
Suggested answer only. Not an official answer and not legal advice.
(C) Double taxation means taxing the same property twice when it should be taxed only once; it is tantamount to taxing the same person twice by the same jurisdiction for the same thing. Under Victorias Milling
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Quick check
What key element distinguishes direct duplicate taxation from indirect double taxation?
Direct double taxation requires that the same taxing authority impose both taxes for the same purpose.
Is double taxation expressly prohibited under the 1987 Philippine Constitution?
The Philippine Constitution does not contain an express provision prohibiting double taxation per se.
Why does simultaneous assessment of Local Business Tax and Value-Added Tax not constitute direct double taxation?
LBT is levied by local government units while VAT is imposed by the national government, lacking identity of taxing authority.
Under the Victorias Milling ruling, what is double taxation in the strict sense?
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What occurs if a tax measure results in indirect double taxation rather than direct double taxation?
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Learn more about these topics
1. Direct Double Taxation
Direct duplicate taxation, or double taxation in the strict sense, occurs when the same subject matter or property is taxed twice by the same taxing authority, within the same jurisdiction, during the same taxable period, for the same purpose, and with the same character of tax. For direct double taxation to exist, all these element requisites must concur simultaneously. If any element is absent, such as when the taxes serve different legislative purposes or are levied by distinct taxing jurisdictions, the taxation scheme is classified as indirect double taxation, which is legally permissible under Philippine law.
2. Constitutional Permissibility
Under Philippine constitutional law, there is no specific provision that explicitly prohibits double taxation per se. Consequently, double taxation alone does not automatically invalidate a revenue measure unless it violates the equal protection clause, due process, or renders the tax unconstitutionally oppressive and confiscatory. While direct double taxation is generally disfavored by courts and avoided by legislative intent, its mere presence does not render a statute unconstitutional unless it transcends established constitutional limitations on the sovereign power of taxation.
3. Local Versus National
Indirect double taxation frequently arises when different taxing authorities impose separate taxes on the same business activity or subject matter. For instance, assessing local business tax under the Local Government Code as a manufacturer and simultaneously levying Value-Added Tax under the National Internal Revenue Code as a seller of goods does not constitute direct double taxation. Because the local business tax is collected by municipal or city governments while Value-Added Tax is imposed by the national government through the Bureau of Internal Revenue, the identity of the taxing authority is absent.