A is a contractor, building roads for the government which has not paid him ₱100M. Before he filed his income tax returns, he wrote a letter to the BIR Commissioner proposing a set-off between the State and A considering that his tax liability amounts to ₱10M and the State has not paid him despite demand. Is A correct?

Question

Quizplus · Accepted Answer

A tax is not considered an ordinary debt, and the principle of compensation or set-off does not apply to tax liabilities. Taxes are the government's main source of revenue, essential for public expenditure, and cannot be offset against amounts the government owes to individuals or entities.

A Is a Contractor, Building Roads for the Government Which