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Exemption From Taxation

Exemption from taxation refers to an immunity or privilege from financial charges that others are subject to. Exemptions are strictly construed against the taxpayer as they are disfavored. Exemptions cannot be transferred without state consent and cannot exist under two laws simultaneously. Exemptions are granted under the presumption that they benefit the public interest by offsetting monetary losses. Examples of exemptions include non-stock organizations operating for charitable purposes being exempt from income tax and transfers of inheritance by fiduciaries being exempt from estate tax. Taxes generally cannot be subject to compensation or set-off as the government and taxpayers are not mutual creditors, except in cases where both claims are due, demandable and liquidated or in cases of tax over

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86 views1 page

Exemption From Taxation

Exemption from taxation refers to an immunity or privilege from financial charges that others are subject to. Exemptions are strictly construed against the taxpayer as they are disfavored. Exemptions cannot be transferred without state consent and cannot exist under two laws simultaneously. Exemptions are granted under the presumption that they benefit the public interest by offsetting monetary losses. Examples of exemptions include non-stock organizations operating for charitable purposes being exempt from income tax and transfers of inheritance by fiduciaries being exempt from estate tax. Taxes generally cannot be subject to compensation or set-off as the government and taxpayers are not mutual creditors, except in cases where both claims are due, demandable and liquidated or in cases of tax over

Uploaded by

aica1234
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Exemption from taxation

Meaning:

It is an immunity or privilege; it is freedom from a


financial charge or burden to which others are
subjected. Greenfield v. Meer, [77 Phil 394]

Without the States consent, the Doctrine of Exemption from taxation by its personal nature is
non-transferable and could not be reassigned by the person to whom the aforementioned
privilege is given. Tax exemptions are strictly constructed against the taxpayer for they are highly
disfavored and scrutinized. Such exemptions could not be simultaneous under 2 laws, one partial
and the other total.
An exemption is made under the presumption that it would be for the publics greater interest or
benefit. The gravity of the publics greater interest or benefit must be ample enough to offset the
monetary loss involved in allowing the exemption. Lessening the rigors of the international
double or multiple taxations are included in grounds of accepting an exemption.
Example of Exemption from taxation:

Non-stock corporation and organization operated exclusively for religious, charitable,


scientific, athletic or cultural purposes are exempted from paying Income Tax.
Transfer or deliveries of inheritance by the fiduciary heir to the fideicommissary are
instances where there is an exemption from paying Estate Tax.

Compensation and set-of


Taxes could not be subject to compensation and set-off for the government and taxpayers are not
mutual creditor and debtor to each other. The impositions of taxes are far too distinct to be
classified in the same category as ordinary obligations. Though an exception to the rule takes
place when both the government and the taxpayers claims are considered due, demandable and
fully liquidated; this setup entails that compensation takes place by operation of law and both
obligations are ended to their concurrent values. Another set-up wherein Compensation or set-off
is possible happens when there is a tax overpayment. For example, If a taxpayer pays his/her
taxes in excess of what he/she actually needs pays it would now be under the BIRs responsibility
to set-off or refund from the time the tax was paid.

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