What is exemption from Taxation?
a. Tax Holiday
b. Privilege of immunity from a tax burden of which others are subjected to.
c. The power of taxation carries with it the power not to tax or the power to exempt.
d. General rule, taxation and exemption is the exception.
e. Strictly construed against the taxpayer claiming the exemption in favor of the state.
f. The exemption must be based based on reasonable grounds.
g. It requires majority of vote of congress on tax exemption grant.
h. It is personal and cannot be assigned or transferred by the person to whom it is given without the consent of the state given in clear and unmistakable terms.
Kinds of Tax Exemption
A. Express or affirmative – clearly provided in the constitution.
- Exemption from real property tax on real properties used for religious and charitable purposes and charitable institutions per the constitution.
- Exemption from income taxation of non-profit organizations and exemption from gift tax of certain donations to the NIRC.
- Reciprocity agreements with other nations intended to minimize tax burdens of their respective subjects.
- Grounds for statutory or express exemptions.
a. Contracts – franchise grant with exemption from tax entered into between State and the grantee.
b. Public Policy – those enjoyed by religious and charitable institutions and non-profit organizations.
Tax exemption – is an immunity from civil liability only. It is prospective in application.
Tax amnesty – is an immunity from all criminal and civil obligations arising from non payment of taxes. It is a general pardon given to all taxpayers. Retroactive application.