a. Basic Principles and Concepts only

Basic Principles and Concepts in Taxation

Under the destination principle governing value-added tax (VAT) as a tax on consumption, goods and services are taxed only in the country where they are consumed, meaning that qualifying exports intended for consumption outside the Philippines are generally subject to 0% VAT rather than the regular Philippine VAT rate¹. In Tayam v. Recto, G.R. No. 280898, 22 April 2026, the Supreme Court ruled that a VAT refund aligns with this destination principle¹. Furthermore, procedural requirements such as locus standi may be relaxed when serious constitutional challenges to tax measures are raised and the matter is of transcendental importance, overarching significance to society, or paramount public interest¹.

With respect to tax administration and administrative issuances, Association of International Shipping Lines, Inc. v. Secretary of Finance and Commissioner of Internal Revenue, G.R. No. 222239, 15 January 2020, established that interpretative regulations merely construe, clarify, or explain existing statutory provisions². Because they create no consequences beyond what the law prescribes, their applicability requires nothing more than bare issuance, thereby exempting them from public hearing, consultation, publication, or administrative registration requirements². As to specific tax bases, Gross Philippine Billings covers only gross revenue from the carriage of persons, cargo, or mail originating from the Philippines up to the final destination, whereas any other income acquired in the normal course of trade or business, such as demurrage and detention fees, remains subject to regular corporate income tax².