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Question

F. Doctrines in Taxation: Construction and Interpretation of Tax Laws, Rules, and Regulations

A corporation engaged in the manufacturing industry received a notice of assessment from the Bureau of Internal Revenue (BIR), stating that they owe a significant amount of tax due to the disallowance of certain deductions claimed in their income tax return. The corporation believes that the disallowed deductions are valid and should be allowed based on their interpretation of the relevant tax laws and regulations. They want to dispute the assessment and seek a reconsideration from the BIR.

In line with the concepts of construction and interpretation of tax laws, rules, and regulations, discuss the following:

1. Explain the principle of strict interpretation and construction of tax laws. How does this principle affect the interpretation of tax laws and the resolution of disputes? Provide examples to illustrate your answer.
2. Discuss the role of administrative issuances, such as revenue regulations and rulings, in the interpretation of tax laws. How can these issuances affect the taxpayer's rights and obligations? Provide relevant examples.
3. Explain the concept of "in pari materia" in the construction and interpretation of tax laws. How does this concept affect the interpretation of different tax laws and their application to specific cases? Illustrate your answer with examples.

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Answer