4 stages of taxation

The exercise of taxation involves three stages. They are the following:

[1] Levy or imposition. This process involves the passage of tax laws or ordinances through the legislature or through a local lawmaking body (e.g. sanggunian). The tax laws to be passed shall determine those to be taxed (person, property or rights), how much is to collect (the rate and the base of tax), and how taxes are to be implemented (the manner of imposing and collecting tax; i.e. tax remedies). It may also include the grant of tax exemptions, tax amnesties or tax condonation.

[2] Assessment and Collection. This process involves the act of administration and implementation of tax laws by the executive through its administrative agencies such as the Bureau of Internal Revenue (BIR) or Bureau of Customs (BOC).

[3] Payment. This process involves the act of compliance by the taxpayer in contributing his share to pay the expenses of the Government. Payment of tax also includes the options, schemes or remedies as may be legally open or available to the taxpayer.

[4] Refund. This is a process of claiming for tax illegally collected or mistakenly paid. For a refund request to prosper, it must first be filed with the Commissioner of Internal Revenue (CIR). A suit or proceeding may be filed within the period provided by law from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment. The Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return, such payment appears clearly to have been erroneously paid.

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