at the bir .

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At the BIR . . . What’s new? What’s right? What’s wrong?

Dean Estelita C. Aguirre Resource Person August 19, 2016

35th ACPAMIN Conference

24th PICPA Mindanao Regional Conference

Asian Institute of Taxation Asian Institute of Taxation

Know your legal references

Not knowing what’s right and what’s wrong will cost you money.

What’s right? What’s wrong?

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Just play fair. “Wish ko lang”, says the Tax Agent

What’s just? What’s fair?

Asian Institute of Taxation

Audit Experience

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Scared


Worried

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Nervous


Sad

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Angry


Felt sick after

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Felt like crying after


Confident!!!

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The Confident Tax Agent/Practitioner

Popular Issuances of CIR Dulay Recent Issuances of CIR Dulay Suspended Issuances for review Priority Issuances for review Wish list Unpopular but good decisions

Presentation Outline

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Knowing your legal references

Ignorance of the law excuses no one. .Knowledge is the Key to Success

1. Philippine Constitution 2. Republic Act No. 8424, as amended by various Republic Acts 3. Revenue Regulations 4. Revenue Memorandum Circulars 5. Revenue Memorandum Orders 6. BIR Rulings 7. CTA Decisions 8. Supreme Court Decisions

Sources of Tax Laws

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1. Tax Treaties 2. Executive Orders 3. Joint Agreements 4. DOF Orders 5. Local Tax Code

More Sources of Tax Laws

Mother RRs, as amended

1. Income Tax RR 2-40 dated Feb10, 1940 2. Withholding Taxes RR 2-98 Apr 17,1998 3. Value Added-Tax RR 16-2005 Sept 1,2005 4. Estate and Donor’s Tax – RR 2-03 De 16, 2002 5. Bookkeeping - RR No.V-1 March 17,1947 6. Consolidated Registration – RR 7-2012 7. Preserving of Books of Accounts RR 17-2013 8. Mandatory Filing eBIR Forms RR 6-2014

9. Ordinary vs. Capital Assets RR 17-2003 10. Due Process in Assessment –RR 12-99/18-13 11. etc

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Change is here and now

Kim S. Jacinto-Henares

July 1, 2010 to Caesar R. Dulay July 1, 2016

New Issuances vs. Old Issuances

What to revoke? What to suspend? What to continue? June 2016 RMOs - 16 June 2016 RMCs - 10

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RMOs Issued by CIR Dulay July 1, 2016 to even date

RMO 38-2016 -revoked RMO 24-2016 & 25-2016 RMO 40-2016 -No gift policy for BIR RMO 41-2016 -Reiterates RMC 39-2015/RMC 80-2012 RMO 42-2016 -Prescribes guidelines on PERA RMO 43-2016 -Amends guidelines for ICSC & ICGC RMO 44-2016 -Amends RMO20-2013 on NSNP Corps

RMCs Issued by CIR Dulay July 1, 2016 to even date

RMC 69-2016 -suspends June 2016 Rev Issuances RMC 70-2016 -suspends all audit RMC 71-2016 -revokes all June 2016 RTAOs RMC 74-2016 -processing issuing Tax Clearances RMC 75-2016 -clarifies audit suspension RMC 70-2016 RMC 80-2016 -lifts certain issuances in RMC 69-2016 RMC 81-2016 - No to Delinquency verification slips

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Popular Issuances Of CIR Dulay

Revocation of RMO 24-2016 through RMO 38-2016 Revocation of RMO 25-2016 through RMO 38-2016

Issuance of No-gift policy for BIR - RMO 40-2016 CAR Issuance Process- RMO 41-2016 Reduced requirements -NSNP Corp -RMO 44-2016 On Taxpayer’s Rights & Remedies –RMO 46-2016 Suspension of all June 2016 issuances RMC 69-2016

Suspension of Audit -RMC 70-2016 Revocation of RTAOs RMC 71-2016 Tax Clearance process RMC 74-2016

Suspension of Audit with Exception RMC 75-2016

Revocation of RMO 24-2016 RMO 38-2016

REVOKED: On One-Time Transactions

a. Verification whether seller and buyer regularly files returns

and report income sufficient to establish financial capacity.

If the buyer/transferee is proven to have no financial capacity to acquire the property, the transaction is not a sale but a donation and donor's tax should be imposed and not capital gains, and a duly executed Deed of Donation shall be required.

If the seller has no capacity to acquire the property being sold the RDO may recommend for the issuance of the electronic Letter of Authority (eLA) to investigate the seller.

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REVOKED: : In tax-free exchange transactions,

a. if it shall be determined that transferor/assignor does not have the capacity to acquire the property subject of the tax-free exchange, the Law Division shall forward it to the National Investigation Division (NID) for investigation.

b. To initiate an audit/investigation, the NID shall submit a

memorandum-request directly to the Office of the Commissioner

(OCIR) indicating information as required by RMO 24-2016


REVOKED: :

if the seller is a corporation or is a stranger to the buyer of the

Subject Property, and it is proven that the buyer does not have

any financial capacity to purchase the Subject Property, it shall be presumed that the buyer has earned income that he/she/it did not declare and taxes due thereon were not paid.

In addition to any tax due on the sale of the Subject Property,

income taxes shall be assessed against the buyer on that amount of the consideration for which buyer cannot show proof that he/she/it has the financial capacity for, on the

taxable year when the sale of the Subject Property occurred."

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No Gift Policy for BIR RMO 40-2016

RMO 40-2016 -No gift policy for BIR

Legal bases:

1. Sec 27, Article II of the 1987 Constitution

2. Sec 1, Article XI of the 1987 Constitution

3. RA No.3019 (Anti-graft and Corrupt Practices Act)

4. PD No.46 s. 1972

5.RA No. 6713 Code of Conduct and Ethical

Standards for Public Officials and employees

Issuance of CAR within 5 days RMO 41-2016

RMO 41-2016 -Reiterates RMC 39-2015/RMC 80-2012

CAR covering transactions on sale of real property,

transfer or assignment of stocks not traded in the stock

exchanges, transfer subject to donor’s tax, estate tax

and other taxes including DST related to transfer of

properties are being issued beyond the prescribed

periods.

CARs should be issued within five days from the submission of complete documentary requirements.

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Simplified Process NSNP CTE RMO 44-2016

RMO 44-2016 -Amends RMO20-2013 on NSNP Corps

Simplified the requirements in the application for

CTE of NSNP Associations and Educational Institutions.

The CTE for NSNP EIs is still required but it has no expiration and shall remain valid and effective, unless recalled for valid grounds.

CTEs issued prior to June 30,2012 are required to apply

for new Tax Exemption Rulings.

Suspended All June Issuances RMC 69-2016

Suspension of the Effectivity of all Issuances Promulgated within the Period Covering June 1-30, 2016. .

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Suspended Field Audit RMC 70-2016

RMC 70-2016 -suspends all field audit except the ff:

1. Cases prescribing on or before Oct 31, 2016

2. Estate tax returns, donor’s tax returns, CGT returns,

withholding tax on sale of real properties or shares of

stocks together with DST related thereto.

3. Retiring business

4.NGAs, LGUs, GOCCs including subsidiaries and affiliates

5. All others under orders of the CIR

Revoked June RTAOs RMC 71-2016

RMC 71-2016 -revokes all June 2016 RTAOs With Some Exceptions: All RTAOs except hose covering Revenue Collection Officers and Revenue Special orders covering local and international trainings

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Tax Clearance within 2 days RMC74-2016

RMC 74-2016 -Processing Tax Clearances under EO 398

(Those entering into contract with government)

Shall be released within 2 days upon submission of complete documentary requirements.

Please refer to b.1 to b.3of RMC 74-2016 for

requirements.

Suspended Field Audit RMC 75-2016

RMC 75-2016 -clarifies audit suspension RMC 70-2016

Exceptions:

1.All LOAs for TY 2013 and prior years

2.Processing of application for Tax refund/TCC

3.Valid denunciation/complaints

4. Sending of letters for open cases

5. Issuance of Collection Letters and/or Seizure notices

Note: Mission orders issued prior to July 1, 2016 are

suspended

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International Carriers RMO 43-2016

RMO 43-2016 -Amends guidelines for ICSC & ICGC

The Office of the Commissioner shall undertake the issuance

of the International Carrier’s Special Certificate (ICSC) and

the International Carrier’s General Certificate (ICGC). After

verification of the payment of 21/2income tax on Gross Phil

Billings and 3% carrier’s tax prior to the departure of

international carriers (shipping and airlines)

Personal Equity and Retirement Account PERA Act of 1998 or Republic Act (RA) No. 9505. PERA is a voluntary personal savings and retirement program that encourages individuals to save and plan for their retirement while enjoying tax incentives based on the amount contributed. The law was enacted in August 2008 and the implementing RR 17- 2011 was issued Oct 27, 2011 but remains inoperative waiting for the issuance of an RMO.

Guidelines for PERA RMO 42-2016

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Qualified to avail are: employees, self-employed whether in the Phil or abroad, and Overseas Filipino Workers (OFWs), of legal ages, with Phil Tax Identification Number (TIN); Contributor may be allowed to maintain a maximum of five (PERA) at one time.

Guidelines for PERA RMO 42-2016

Incentives for PERA RMO 42-2016

1. Qualified employee-contributors are entitled to a 5% tax credit in the income tax liability on the aggregate contributions made in one calendar year up to Php 100,000 for Phil residents & Php 200,000 for OFWs 2. Self-employed and OFW contributors will be issued with PERA Tax Credit Certificate (TCC) which may entitle them with 5% tax credit against any national internal revenue tax liabilities such as delinquent accounts excluding withholding tax. Excess contributions may still be accepted but will no longer be entitled to the tax credit.

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More Rules on PERA

Tax credits are non-refundable, non-convertible into cash, and non-transferrable. Certification of 5% Tax Credit Entitlement (BIR Form No. 2339) for employee-contributor shall be released to the PERA administrator who will in turn transmit such Certificate to the employer for the automatic adjustment of withholding tax on compensation of employees. PERA TCC will also be issued by PERA administrator to self-employed or OFW contributor.

RMO 42-2016

Employer may be allowed to contribute to employee’s PERA but only to the extent of the maximum amount provided for by law. It is deductible for tax purposes and exempt from withholding tax on compensation & fringe benefits tax. Income earned from PERA investment upon reaching retirement or death is tax exempt. All income earned from investments & re-investments are not included in the maximum amount of allowed contributions & are tax exempt.

More Rules on PERA RMO 42-2016

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Accreditation of PERA RMO 42-2016

1. Application for accreditation/BIR Form 1941 along with the Qualification Certificate issued by BSP, SEC or IC shall be filed at the Audit Information, Tax Exemption & Incentives Division (AITEID) by the Administrator. 2. Certificate of Accreditation/BIR Form 2336 shall be issued to the PERA Administrator and BIR office having jurisdiction over PERA administrator for purposes of monitoring of compliance .

J June RMOs Suspension Lifted RMC 80-2016

RMO 22-2016 Issuance of electronic CAR RMO 28-2016 MOA between HDMF and BIR RMO 29-2016 Revenue Collection Officers codes RMO 30-2016 Replacement of spoiled IR stamps RMO 31-2016 Public Auction of forfeited properties RMO 32-2016 Clearance certificate for brokers RMO 33-2016 IR Stamp Integrated System RMO 34-2016 Denial on compromise application

RMO 35-2016 Warrant of Distraint & Levy Report

RMO 36-2016 IRTaxes Report to Region Finance and Collection Divisions

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RMCs Suspension Lifted RMC 80-2016

RMC 59-2016 – Daily Minimum Wage of ARMM RMC 60-2016 – Sumitomo Mitsui Banking Corp-RO RMC 63-2016 – Sugar Price at Millsite RMC 66-2016 - Sumitomo Mitsui RMC 67-2016 - GSIS Family Bank

Suspended RMOsfor Review

RMO 26-2016 disputed assessments RMO 27-2016 tax treaty benefits RMO 37-2016 separation benefits claims

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Due Process on Assessments

RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 1. A taxpayer must be given an opportunity to explain his objection to an assessment and present necessary documents before a FDDA is issued. 2. Protest against PAN is optional/not mandatory. 3. FLD and FAN shall be issued 15 days from date of receipt of the PAN, whether protested or not. 4. If upon receipt of PAN, he accepts and pays the assessment either partially or fully, a FLD/FAN shall be issued to formalize the assessment, and Payment Form 0605 shall be prepared to acknowledge the settlement of the assessment or portion of the assessment paid.


RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 5. Within 30 days from receipt of FLD/FAN, taxpayer shall

either: a. Accept the assessment, fully or partially, and pay the

amount due on the assessment accepted, or b. Protest the assessment fully or partially by filing

either of the ff (filing of one precludes filing of the other) i. Request for Reconsideration - merely pleas for a re-

evaluation of an assessment; no documents to submit ii. Request for Reinvestigation on the basis of newly

discovered evidence or if taxpayer intends to present or submit additional evidence or documents.

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RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 6. After the issuance of FAN/FLD, the taxpayer accepts and

settles the assessment in full, PF 0605 shall be duly prepared, filed and paid as evidenced of the settlement of the assessment.

If the taxpayer settles the assessment in part, and protests

the remaining portion, PF 0605 shall be prepared and paid for that portion of the assessment accepted, and a FDDA shall be issued for the portion of the assessment not settled. For that portion of the assessment resolved in favor of the taxpayer, an ATCA shall be prepared to evidence the cancellation of the assessment.


RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 7. If a request for Reinvestigation was made, the taxpayer

shall submit all the relevant supporting documents in support of his/her/its protest within 60 days from the date of the filing of the letter of protest.

Evaluation of the protest shall be based exclusively on the documents submitted within this period, and no further document shall be accepted after the expiration of the said period. The assessment shall become final and executory in the event the taxpayer fails to submit the supporting documents within this 60 days period, and a Collection Letter shall be issued against the taxpayer.

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RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 8. All decisions on protest to the FAN, whether the

taxpayer's protest is accepted or denied partially or wholly, shall be communicated to the taxpayer through the issuance of a FDDA.

9. All protest shall be considered a request for reconsideration, unless said protest clearly indicates that the request is for reinvestigation.

10. A request for Reinvestigation shall be available in a protest to a FAN/FLD only. After the issuance of a FDDA, a request for Reinvestigation shall no longer be available as a taxpayer remedy.


RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 11. If the protest is not acted upon by the

Commissioner's duly authorized represented within 180 days counted from the date of the filing of the protest in the case of a request for reconsideration, or from the lapse of the 60 days period to submit relevant document in the case of a request for reinvestigation, and the taxpayer appeals to the Court of Tax Appeals within 30 days after the expiration of the 180 days period, an FDDA shall be issued automatically.

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RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 12. All the periods provided for under RR No. 18-2013 is

mandatory and non-extendible. 13. After the issuance of the FDDA, the taxpayer may

accept and settle the assessment contained therein, partially or fully. PF 0605 shall be prepared and paid for the assessment accepted and settled by the taxpayer.


RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 If the FDDA were issued by the CIR’s duly authorized

representative, the taxpayer shall within 30 days from receipt of the FDDA file a motion for reconsideration with the CIR or appeal to the CTA. In appealing the protest to the CTA, the taxpayer shall manifest and state that the appeal pertains only to the portion of the FDDA not settled and paid and attached to their appeal a copy of the duly filed and paid Payment Form 0605.

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RMO 26-2016

RR No. 12-99 as amended by RR No. 18-2013 14. Appeal to the CIR or to the CTA of the FDDA, shall

not preclude the taxpayer from voluntarily settling the assessment, partially or fully. PF 0605 shall be duly prepared and paid and the taxpayer shall manifest before the CTA the fact of settlement of the assessment, partially or fully, present the duly filed and paid PF 0605, and file a motion for dismissal with prejudice as to the assessment or portions thereof that has been settled and paid on the ground that the appealed disputed assessment has become moot and academic.


RMO 26-2016

15. An assessment shall become final, executory and demandable due to, among others, the ff grounds: a. Failure of the taxpayer to file a valid protest within

thirty (30) days from receipt of the (FLD/FAN); b. Failure of the taxpayer to submit all relevant

documents in support of his protest in arequest for reinvestigation within 60 days from the date of filing;

c. Failure of the taxpayer to appeal to the CIR or the CTA within 30 days from date of receipt of the FDDA issued by the CIRs duly authorized representative;

d. Failure of the taxpayer to appeal to the CTA within 30days from date of receipt of FDDA issued by CIR.

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RMO 26-2016

e. Failure of the taxpayer to timely file a motion for

reconsideration or new trial before the CTA Division or failure to appeal to the CTA En Banc and Supreme Court based on existing Rules of Procedure; or

f. Failure of the taxpayer to receive any assessment notices because it was served in the address indicated in the BIR's registration database and the taxpayer transferred to a new address or closed/ceased operations without updating and transferring its BIR registration or cancelling its BIR registration as the case may be, through the filing of BIR Form No. 1905 — Application for Registration Information Update.

Tax Treaty Benefits

RMO 27-2016

Provides requirements for availing of Preferential Tax Treaty Rates for “DIVIDENDS, INTEREST AND ROYALTIES”. For income other than DIVIDENDS, INTEREST AND ROYALTIES”, the provisions contained in RMO 72-2010 shall continue to apply and obtaining ruling shall continue to be required.

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Tax Treaty Benefits

RMO 72-2010

Provides the guidelines on the Processing of Tax Treaty Relief Applications (TTRA) Pursuant to Existing Philippine Tax Treaties, consisting of 21 sections prescribing the requirements for each type of income. Note: Philippines has a total of forty (40) effective Tax treaties and four (4) more pending and about to be ratified.

Separation Benefits

RMO 37-2016

This contains guidelines, procedures and requirements for the processing of separation benefit claims of employees of the BIR.

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Suspended RMCsfor Review

RMC 61-2016 netting/offsetting RMC 62-2016 passed-on G RMC 64-2016 NSNP requirements RMC 65-2016 Penalties RMC 68-2016 stamp design

Netting and Offsetting

RMC 61-2016

Offsetting of assets and liabilities in the balance sheet is improper. Hence, under no circumstance is offsetting to be considered appropriate in recording transactions that are subject to a wide range of "netting" arrangements or similar practices, including those with standard commercial provisions that allow parties to "net settle", such as trade receivables and payables.

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RMC 61-2016

The practice of offsetting due to/due from and/or payable/receivable transactions of taxpayers and consequently the accounting and recording of the same and its related transactions in the books of the parties is strictly prohibited for taxation purposes. Thus, at all times, the accrued receivables or payables arising from sale or lease of goods or properties or the performance of service, shall be recognized at gross for income and value-added tax or percentage tax purposes.


RMC 61-2016

Income payments subject to creditable or final withholding taxes pursuant to the provisions of Revenue Regulations (RR) No. 2-98, as amended, shall be recorded at gross, regardless of whether the transactions are actually offset or the same provide for net settlement of cash flows. Any amount offset against the income payments by the payor not subjected to creditable or final withholding tax shall not be allowed as deductible expense of the payor pursuant to the provisions of RR No. 12-2013 which disallows claims for deduction of expenses for which the corresponding withholding tax was not remitted.

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Passed on Gross receipts

RMC 62-2016

The "passed-on" GRT should form part of the tax base upon which the GRT is based for gross receipts tax purposes, based on the definition of "gross receipts", that is based on "actual or constructive receipt" of income. Since banks, non-bank financial intermediaries, financing companies and other financial intermediaries not performing quasi-banking functions doing business in the Philippines are directly liable for GRT on gross receipts derived by them from business operations, the "passed-on" GRT shall be considered as receipt of gross income specified under Section 32(A) of the Tax Code.

Passed on Gross receipts

RMC 62-2016

Banks and non-bank financial intermediaries can claim the GRT paid as a deductible expense for income tax purposes pursuant to Section 34 (C) of the Tax Code subject to the actual remittance of the GRT as provided under Section 128 of the Tax Code. The "passed-on" GRT shall be considered as receipt of income as specified under Section 32 of the Tax Code (as Other Fees and Charges)

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NSNP Requirements RMC 64-2016

Nature, Tax Treatment, Registration and Compliance

Requirements of NSNP Corps under Section 30 of

the NIRC, emphasizing the last paragraph of said

Section 30, quoted hereunder:

“ . . . The income of whatever kind and character of the

foregoing organizations from any of their properties,

real or personal, or from any of their activities

conducted for profit regardless of the disposition made

of such income, shall be subject to tax imposed under

this code.”

Due Dates for Filing RMC 65-2016

When the exact due dates fall on a Saturday, Sunday or a holiday for both electronic and manual filers and payers of taxes, the appropriate deadline shall fall on the next business day. For EFPS For Online eBIR Form System For Manual Filers or Offline eBIR Forms

Provisions in case of disputes, when the electronic system is not available.

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Stamp Design RMC 68-2016

The circular informs the public about the new and upgraded Internal Revenue Stamp design for cigarette products.

Priority Issuances for Review Of CIR Kim Henares

RMO 24-2016 – audit of buyers/sellers in RP sales REVOKED

RMO 25-2016 – audit of buyers/sellers in RP sales REVOKED RR 6-2013 – New meaning of FMV of Shares of Stocks

RMC 16-2013 – Taxability of deposits/advances

RMC 41--2016 – Filing of Supplemental Information

RR 4-2014 - Professional’s guest book

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Sale of Shares of Stocks RR NO. 6-2013

In the case of shares of stock not listed and traded in the local stock, the value of the shares of stock at the time of sale shall be the fair market value. In determining the value of the shares, the Adjusted Net Asset Method shall be used whereby all assets and liabilities are adjusted to FMV. The net of adjusted asset minus the liability values is the indicated value of the equity.

Sale of Shares of Stocks RR NO. 6-2013

For purposes of this section, the appraised value of real property at the time of sale shall be the higher of:

the FMV as determined by the BIR (Zonal value); or

the FMV as shown in the Schedule of Values of the Provincial and City assessors (TD);or

the FMV as determined by independent appraiser

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Donor’sTax, Unintended Donation

BIR Ruling No. 194-2015

If the consideration of the sale of shares of stock,

listed or not listed and traded through the local stock exchange, is lower than the FMV/book value of the shares, the difference between the book value and the selling price of the shares is considered a gift subject to donor’s tax. under Section 100 of the NIRC. Thus, even in the absence of intention by the parties to donate, the transfer of shares is considered a gift subject to donor’s tax where the consideration of the sale is less than the FMV of the shares.


When cash deposits or advances are received by taxpayers other than GPP covered by RMC 89-2012 from the Client/Customer, a corresponding Official Receipt shall be issued.

The amount received shall be booked as Income and shall form part of the Gross Receipts and subject to VAT or % Tax (Gross Receipt Tax), if applicable, and shall in turn be deductible as expense by the Client/Customer provided that it is duly substantiated by Official Receipts pursuant to Section 34 (A) (1) of the Tax Code.

Tax on Deposits/Advances

RR 16-2013

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Asian Institute of Taxation Asian Institute of Taxation Amending 1st and 2nd pars of RMC No. 57-2011, as

amended by RMC Nos. 21-13, 9-14 and 13-15:

"The amendment consists mainly in making the disclosure of Supplemental Information under BIR Form Nos. 1700 and 1701 optional on the part of the taxpayer for income tax filing covering and starting with calendar year 2015, due for filing on or before April 15, 2016, . . . .

Supplementary Information

RMC 41-2016


Individual income tax filers using Forms 1700/1701, for income tax filing covering and starting with CY 2016, the disclosures required under the Supplemental Information portion will be mandatory. Thus, the taxpayers are advised to demand from their payors, and properly document their BIR Form No. 2307 and other pieces of evidence for FWT.

Taxpayers engage in business, should properly receipt and book all their income, whether they are subject to FWT or whether the income is tax-exempt."

Supplementary Information

RMC 41-2016

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Self-employed professionals are obligated to

register:

1. their books of accounts and

2. official appointment books of their practice

of profession /occupation/calling before using

the same. Which shall contain the names of

the client and the date/time of the meeting.

Service fees of Professionals RR No. 4-2014

Self-employed professionals shall:

1. submit an affidavit indicating the rates, manner of

billings and the factors they consider in determining

their service fees upon registration and every year

thereafter on or before January 31.

1. For pro-bono cases, issue a BIR registered receipt,

duly acknowledged by the latter, showing a discount

of 100% as substantiation of the “pro-bono’ service.

Service fees of Professionals RR No. 4-2014

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BIR requires that the amount of the regular PF be

reflected and then deducted as 100% discount

Professional Fee P 1,000.00

Less: 100% Discount 1,000.00

No charge 0

Correct Issuance of VAT/Non-VAT

Official Receipt

RR 4-2014 Stopped by Supreme Court

Through TROs

Supreme Court issued TROs for Lawyers, Doctors of Medicines and Certified Public Accountants

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Wish List

1. Circularize SC G.R. 188550 on Tax Treaty Relief; G.R.172231

on Accrued Expenses: all SC Decisions

2. RR 12-2012-Vehicles over P2.4M 3. RMC 65-2012 on Condo Corps 4. RR 18-2013 on due process in audit 5. RR 10-2012 on Exempt Joint Venture 6. RR 5-2014 Preservation of Books 7. RR 7-2015 reconcile with RMC 4-2015 8. Rulings on eBooks 9. Conflicts between Taxation and Accounting 10. Amnesty for estate and donor’s taxes.

Any availment of the tax treaty provisions be preceded by an application for treaty relief with the International Tax Affairs Division (ITAD) through the “Tax Treaty Relief Application”

Tax Treaty Relief

RMO 1-2000

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Covers exclusively applications for tax treaty relief on the following income derived or to be derived by the taxpayer under existing tax treaties, to wit: a. dividends b. interests c. royalties d. business profits e. gains from sale of shares of stocks f. salaries, compensation, etc. g. income fr services h profits from ships and air carriers operations i. all other income covered by tax treaties

Tax Treaty Relief

RMO 1-2000

Deutsche Bank Ag Manila Branch vs CIR

Petitioner withheld and remitted to BIR in Oct 2003 the amount of P67 M, representing 15% BRP remitted to DB Germany for 2002 . Believing it overpaid the BPRT, petitioner filed with LTAID in 2005 an administrative claim for refund for P22 M. applying the 10% preferential tax rate under the RP-Germany Tax Treaty.

Tax Treaty vs. RMO

G.R. 188550, Aug 19, 2013

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Tax Treaty Prevails Over RMO

G.R. 188550, Aug 19, 2013

CTA EN BANC DECISION: Claim was denied on the ground that application for treaty relief was not filed with ITAD prior to payment of its BPRT, or prior to its availment of preferential rate under the treaty. The CTA held petitioner violated the 15-day period mandated under RMO 1-2000, citing CTA Division decision in Mirant (Phil) Operations Corp v. CIR.

CTA en banc affirmed ruling of CTA Division.

SC RULING: Petitioner is entitled to REFUND Our Constitution provides for adherence to the general principles of international law as part of the law of the land. Every treaty in force is binding upon the parties, and obligations under the treaty must be performed by them in good faith. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements.

Tax Treaty Prevails Over RMO

G.R. 188550, Aug 19, 2013

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Accrued Expenses G.R.172231 Feb 12, 2007

CIR vs ISABELA CULTURAL CORP

For accrual of expenses, a deduction can be made when the liability of the expense becomes fixed, rather than contingent or estimated, and the amount of the liability can be determined with reasonable accuracy. The propriety of an accrual must be judged by the fact that a taxpayer knew, or can reasonably be expected to have known, at the closing of its books for the taxable year, the amount of expenses to be accrued. This is the All Events Test.

CIR vs ISABELA CULTURAL CORP: For TY 1986, BIR

Disallowed auditing SGV for Dec 1985

Disallowed legal service Bengzon for 1984 and 1985

Disallowed security expense for April and May 1986

Alleged understatement of interest income on 3 PNs

2003 Feb 26 – CTA set aside assessment for IT and EWT

2005 Sep 30 – CA affirmed decision of CTA

2007 Feb 17 – SC decided:

Auditing SGV for Dec 1985 - disallowed

Legal service Bengzon for 1984 and 1985 – disallowed

Security expense for 1986 – allowed

Interest income - compute simple not compounded

Accrued Expenses G.R.172231 Feb 12, 2007

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A. No deduction from gross income for depreciation shall be allowed unless the taxpayer substantiates the purchase with sufficient evidence, such as official receipts or other adequate records which contain the following, among others:

I. Specific Motor Vehicle identification Number, Chassis Number or other registrable identification numbers of the Vehicle;

II. The total price of the specific Vehicle subject to depreciation; and

Vehicles over P2.4M RR No 12-2012

II. The direct connection or relation of the Vehicle to the development, management, operations, and/or conduct of the trade or business or profession of the taxpayer;

B. Only one Vehicle for land transport is allowed for the use of an official or employee, the value of which should not exceed Two Million Four Hundred Thousand Pesos (Php 2,400,000.00);

Vehicles Over P2.4M RR No 12-2012

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All maintenance expenses on account of non-depreciable

Vehicles for taxation purposes are disallowed in its

entirety;

The input taxes on the purchase of non-depreciable

Vehicles and all input taxes on maintenance expenses

incurred thereon are likewise disallowed for taxation

purposes.

Vehicles over P2.4M RR No 12-2012

Asian Institute of Taxation Asian Institute of Taxation The gross receipts of condominium corporations

including association dues, membership fees, and other assessments/charges are subject to VAT, income tax and income payments made to it are subject to applicable withholding taxes under existing regulations.

Condo-Corps

RMC 65-2012

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Condo Corp

RTC SCA 12-1236 Sept 5, 2013

First e-Bank Tower Condo Corp

Petitioner has sent letter to BIR, requesting for

deferment of the implementation of RMC 65-2012

and another letter to RDO, South Makati, announcing

judicial consignation (custodia legis of income tax /VAT

under the RMC)

Petitioner filed petition for declaratory relief under

Special Civic Action (SCA) with RTC on Dec 26, 2013

and averred the operative mandate of RMC is

unjust, oppressive and confiscatory.

RTC DECISION

The assailed RMC not merely interpreted or clarified

the existing BIR ruling, but in fact legislated or

introduced new legislation under the mantle of its

quasi-legislative authority. The RMC failed to show

what particular law it clarified; it shows it merely

departed from the several rulings of the BIR exempting

from income such assessments/charges because these

amounts were held in trust to be used solely for

administrative purposes.

Condo Corp

SCA 12-1236 Sept 5, 2013

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Office Metro Phils vs CIR

Payment of condominum dues are not taxable

income of the condo corp and therefore not subject to

income tax and withholding .

These are funds held in trust for members and the

condo corp does not realize any gain or profit

therefrom.

Condo Corp

CTA 8383, June 3, 2014

Change in the Assessment Phase � Removed requirements for issuances of informal

conference

� Mandated issuance of FAN 15 days from receipt of reply to PAN

� If TP fails to reply to PAN within 15 days, he is in default and FAN issued right away.

RMO 26-2016 – under suspension

Due Process in Audit RR No. 18-2013

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JV or consortium shall not include mere suppliers of goods or services or capital of construction projects. Hence, the usual JVs formed with landowners (who are not licensed contractors) are considered taxable corporations. Published June1, 2012 Effectivity:June 15, 2012

No JV to Mere Supplier of Goods

RR 10-2012

Hard copies- within the 5 years reckoned from the day following the deadline in filling a return, or if filled after the deadline, from the date of the filling of the return, for the taxable year when the last entry was made in the books of accounts

Electronic copies - of the hardcopy (paper) of the books of accounts, subsidiary books and other accounting records in an electronic storage system which complies with the requirements set forth under Section 2-A hereof within the succeeding 5 years.

Preservation of Books of Accounts

RR No. 5-2014

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Marginal Sugar Planters

RR 7-2015

Sugar Planters w/Gross Sales of PHP 300K/year or less

1. Exempt from the payment of RF after submission of:

Sworn Statement of lncome for the year, and

NSC Certified Birth Certificate

2. Exempt from compliance with the issuance of invoice

3. Exempt from t books of accounts;

4. Exempt from attaching FSs of AIF to ITR

5. Exempt from filing of 2551 ( advance %Tax from

sale of their sugar is considered substantial

compliance)

6. Required to file ITR

Marginal Income Earners

RMC 4-2015

MIE with gross receipts PHP 100K/year or less

1. Exempt from the payment of RF after submission of:

Sworn Statement of lncome for the year, and

NSC Certified Birth Certificate

2. Must issue of receipts/invoices

3. Must register of books of accounts;

4. Filing of ITR (1701) and payment of income tax

5. Exempt from payment of VAT or % Tax

YES:: farmers, fishermen, one-unit tricycle owner/driver, sari-

sari stores, small carenderias-principally for subsistence

NO: professionals, consultants, agents, those subject to EWT

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eBooks

BIR Ruling No.244-2012 Apr 2012

NEW RULE: VAT exemption on sale, importation, printing and publication of books and any newspaper, magazine, review or bulletin as provided under Sec 109(R) of the NIRC does not extend to sale and publication of electronically printed materials, such as electronic books and other instructional materials. OLD RULING 002-08: e-books, e-journals and online library resources are exmept as they are equivalent to printed media



R Tax-Accounting Reconciliation

Accounting and Taxation are partners.

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Net Income per FS vs Net Income per ITR

Net profit per Financial Statement

- income subjected to final income tax

- income exempt from income tax

- allowable expenses not recognized by accounting

- income recognized by accounting not by taxation

+ expenses not allowable

+ expense recognized by accounting not by taxation

= Net taxable Income

Tax -Accounting Reconciliation

Complian

Concerned taxpayers are hereby mandated to maintain

books and records that would reflect the reconciling

items between Financial Statements figures and/or

data with those reflected/presented in the filed Income

Tax Return (ITR).

Tax-Accounting Reconciliation Book

RR 8-2007

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Issuances of CIR Kim that improved tax administration

RR 12-2013 W-Taxes on deductibility R RR 1-2012 eSLS eSLP for all VAT T Taxpayers RR 6-2014 eFiling of eBIR Forms

Requirements for Deductibility – any income payments which

is otherwise deductible under the Code shall be allowed as a

deduction from the payor’s gross income only if it is shown

that the income tax required to be withheld has been paid to

the Bureau.

No Deduction will also be allowed notwithstanding payment

of withholding tax at the time of the audit investigation or

reinvestigation/reconsideration in case where no withholding

of tax was made in accordance with Secs. 57 and 58 of the

Code.”

W-Tax Requirement for DeductibilityRR No. 12-2013

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OLD RULE:

A deduction may be allowed if : 1. the W-tax agent pays W-Tax including the interest

and penalties, if applicable at the time of audit and investigation;

2. The recipient/payee failed to report the income but the W-Tax agent pays the tax plus interest and penalties at the time of audit and investigation;

3. The W-Tax agent erroneously under withheld but pays the difference plus interest and penalties at the time of audit and investigation.


CURRENT RULE: No Deduction will also be allowed notwithstanding payment of withholding tax at the time of the audit investigation or reinvestigation/reconsideration in case where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code.” RR 12-2013 AMENDED RR 2-98


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Requiring the Mandatory Submission of Quarterly Summary List of Sales and Purchases (SLSP) by All VAT Registered Taxpayer Thereby Amending Section 4.114-3 of Revenue Regulations No. 16- 2005, as Amended.

eSLS and eSLP for VAT Taxpayers RR No. 1-2012

1. Accredited Tax Agents/Practitioners and all its client-

taxpayers;

2. Accredited Printers of Principal and Supplementary

Receipt/Invoices

3. One-Time Transaction (ONETT) taxpayers’

4. Those who shall file a “No Payment” Return;

5. Government-Owned or Controlled Corporations (GOCCs);

6. LGUs except barangays; and

7. Cooperatives registered with National Electrification

Administration (NEA) and Local Water Utilities

Administration (LWUA)

Mandatory eFiling of eBIR Forms RR 6-2014; RR No. 5-2015

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Era Gone By

discrepancy

BOC

Sales

Purchs

Regist

Enterprise

Taxpayer

Information

Data Warehouse

SAS/ Warehouse Administrator

Taxpayer

Declaration

Other gov’t

Agency

submission

Private

Sector

submission

Revenue District Offices

BIR website

Stock

Brokers

Insurance

Commission

Withholding

Agents

stock

insu

agents

Industry

Benchmark

bmark

Report Card

Taxpayer

TELCO

SMS raffle

BIR Analyst / SAS client tools

Letter Notices (LN)

Monitoring System

SAS Information Delivery Portal

(SAS/IDP)

Tax Payer Compliance Report Card

(eReport Card)

TCVD Campaign Analysis

SAS Data Mining

BIR Analytic Intelligence Framework

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U

Open forum

End of Presentation . . .

ait.ecaguirre @gmail.com

Land phone No.448-5905

Cellphone No. 0917-858-1779

Asian Institute of Taxation “Competence Builds Up Confidence”

at the bir .

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