may 2013 tax bulletin - building a better working world - … issuances • revenue regulations (rr)...
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Tax bulletin May 2013
2 Tax Bulletin
HighlightsBIR Rulings
• UndertheRP-JapanTaxTreaty,dividendspaidbyadomesticcorporationtoaJapanesecorporationaresubjecttothe10%preferentialtaxrateiftheJapanesecorporationdirectlyholdsatleast10%ofeitherthevotingsharesof,orthetotalsharesissuedby,thedomesticcorporation,duringtheperiodofsixmonthsimmediatelyprecedingthedateofpaymentofthedividends. (Page 4)
• UndertheRP-JapanTaxTreaty,interestonforeignloansextendedbyaresidentofJapantoaresidentofthePhilippinesmayqualifyforthe10%preferentialtaxrateonthegrossamountofinterestiftherecipientofsuchinterestisalsothebeneficialownerthereof.
Theloanagreementissubjecttodocumentarystamptax(DST)imposedunderSection179oftheTaxCodeattherateofPhp1.00oneachPhp200.00oftheissuepriceofsuchloanagreement. (Page 5)
• DividendspaidbyadomesticcorporationtoaresidentoftheCaymanIslandsaresubjecttothe15%finalwithholdingtax(FWT)underSection28(B)(5)(b)oftheTaxCode. (Page 5)
• Reconveyanceoflandtitlesbyvirtueoftherescissionofacontractofsaleisnotsubjecttocapitalgainstax(CGT)andDST.TheDSTpreviouslypaiduponexecutionofaDeedofAbsoluteSalecannotberefundedbyreasonoftherescissionofthecontractofsale. (Page 6)
• Foranorganizationtobeissuedacertificateoftaxexemption,ithastoprovebyactualoperationforatleastthreeyearsthatitisanorganizationexemptfromincometaxunderSection30(G)oftheTaxCode,subjecttootherrequirements. (Page 6)
BIR Issuances
• RevenueRegulations(RR)No.9-2013amendscertainprovisionsofRRNo.30-2002onthepaymentoftheamountofferedascompromisesettlementpursuanttoSection204oftheTaxCode. (Page 8)
• RRNo.10-2003amendsRRNo.2-98toincludeRealEstateServicePractitioners(i.e.,realestateconsultants,appraisersandbrokers):(1)whopassedthelicensureexaminationgivenbytheRealEstateService,pursuanttoRANo.9646“TheRealEstateServiceActofthePhilippines,”asamongthoseprofessionalsfallingunderSection2.57.2(A)(1)ofRRNo.2-98subjecttothe10%or15%creditable(expanded)withholdingtaxonprofessionals;and(2)thosewhodidnotpassordidnottakethelicensureexaminationgivenbytheRealEstateServiceamongthebrokersandagentsunderSection2.57.2(G)ofRRNo.2-98. (Page 9)
• RRNo.11-2013requiresthefiling/submissionofahardcopyoftheCertificateofCompensationPayment/TaxWithheld(BIRForm2316)coveringemployeeswhoarequalifiedforsubstitutedfiling. (Page 9)
• RevenueMemorandumCircular(RMC)No.34-2013clarifiestheproperaccomplishmentandfilingofestatetaxreturns. (Page 11)
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• RMCNo.35-2013circularizesthefulltextofDepartmentOrder(DO)No.18-2013,datedApril16,2013,oftheDepartmentofFinance(DOF)ontheamendmentofSection12ofDONo.03-08entitled“RulesandRegulationstoImplementRepublicAct9400,AnActAmendingRepublicAct7277,otherwiseknownastheBasesConversionandDevelopmentActof1992”. (Page 12)
• RMCNo.37-2013circularizesthefulltextofDOFDONo.17-2013datedApril11,2013. (Page 13)
• RMCNo.38-2013clarifiestheimplicationoflegalpetitionnotices/declarationsandsimilardocumentsontheaudit/assessmentprocess. (Page 14)
• RMCNo.39-2013prescribestheguidelinesforreceiptofprotestlettersonFinalAssessmentNoticesandothersimilarcorrespondences. (Page 14)
• RMCNo.41-2013publishesthefulltextoftheimplementingrulesandregulations(IRR)ofRepublicAct(RA)No.10165,otherwiseknownastheFosterCareActof2012. (Page 15)
• RevenueMemorandumOrder(RMO)No.12-2013prescribesadditionalpoliciesanduniformguidelinesandproceduresintheprocessingofAuthoritytoPrint(ATP)OfficialReceipts(ORs),SalesInvoices(SIs)andotherCommercialInvoices(CIs)intheinterimperioduntiltheOn-lineATPsystemisavailableforimplementation. (Page 17)
• RMONo.13-2013prescribeswork-aroundprocedurespendingtheavailabilityoftheOnlineSystemforAccreditationofPrinters(OCAP)pursuanttoRRNo.15-2012datedDecember3,2012. (Page 20)
BOC Issuance
• CustomsAdministrativeOrder(CAO)No.2-2013amendsCAONo.1-2007,whichrequiresthesubmissionofInwardForeignManifestandConsolidatedCargoManifest. (Page 21)
PEZA Issuance
• PEZAMemorandumCircular(MC)No.2013-013announcesthesecondextensionofthe50%reductioninallPEZAprocessingfeesforEcozoneImport/ExportFull-ContainerLoadShipmentsviatheBatangasInternationalPort(BIP). (Page 21)
SEC Issuances
• SECMemorandumCircular(MC)No.7prescribestheSingleBorrowerLimit(SBL)andCreditLimitonDirectors,Officers,StockholdersandRelatedInterests(DOSRI)ofalendingcompany. (Page 21)
• SECMCNo.8prescribestheguidelinesforcomplyingwiththeFilipino-foreignownershiprequirementsasprescribedintheConstitutionandexistinglawsbycorporationsengagedinnationalizedandpartlynationalizedactivities. (Page 22)
• SECMCNo.9extendsthedeadlinetosubmittheAnnualCorporateGovernanceReport(ACGR)forlistedcompaniesfromMay30,2103toJune30,2013. (Page 23)
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BSP Issuance
• CircularNo.796amendsAppendix45(NotesonMicrofinance)ofSectionX361oftheManualofRegulationsforBanks(MORB). (Page 23)
Court Decisions
• AstipulationbetweentheBIRandthetaxpayerattheCourtofTaxAppeals(CTA)proceedings,thattaxeshavebeencorrectlyremittedtothegovernmentcannotbindthecourt.Thetaxpayerisstillrequiredtopresentproofthatitcorrectlyremittedthetaxes.
A20%delinquencyinterestisdueonunpaiddeficiencytaxesassessedbytheBIR,computedfromthedateprescribedfortheirpaymentuntilfullpaymentismade. (Page 23)
• WhiletheLocalGovernmentCode(LGC)prohibitsalllocalgovernmentunits(LGUs),includingprovinces,fromlevyingpercentagetaxes,theLGCallowsprovincestolevyandcollectanamusementtax,whichisapercentagetax,fromproprietors,lessees,oroperatorsoftheaters,cinemas,concerthalls,circuses,boxingstadia,andotherplacesofamusement.
Swimmingpools,bathhouses,andhotspringscannotbeconsideredas“otherplacesofamusement”subjecttoamusementtaxesundertheLGC. (Page 25)
• Interestincomefromloansandadvancestoaffiliatesisconsideredasrevenuerealizedfromservicesrenderedinthenormalcourseoftradeorbusinessthatissubjecttovalue-addedtax(VAT). (Page 26)
BIR Rulings
BIR Ruling No. ITAD 133-13 dated May 9, 2013
Facts:
JCo.,anon-residentJapanesecorporation,hasowned60%ofthetotaloutstandingsharesofPCo.,adomesticcorporation,since2009.In2012,PCo.declaredcashdividendsinfavorofJCo.,andpaidthesaiddividendsonMay23,2012.ATaxTreatyReliefApplication(TTRA)foravailingthe10%preferentialtaxondividendsundertheRP-JapanTaxTreatywasfiledwiththeInternationalTaxAffairsDivision(ITAD)oftheBIRonApril2,2012.
Issue:
ArethedividendspaidbyPCo.toJCo.entitledtothe10%preferentialtaxrate?
Ruling:
Yes.UnderArticle10(2)(a)oftheRP-JapanTaxTreaty,dividendspaidbyadomesticcorporationtoaresidentofJapanaresubjecttothe10%preferentialtaxrateonthegrossamountofdividends,ifthebeneficialownerisacompanywhichdirectlyholdsatleast10%ofeitherthevotingsharesofthecompanypayingthedividends,orthetotalsharesissuedbythatcompany,duringtheperiodofsixmonthsimmediatelyprecedingthedateofpaymentofthedividends.
UndertheRP-JapanTaxTreaty,dividendspaidbyadomesticcorporationtoaJapanesecorporationaresubjecttothe10%preferentialtaxrateiftheJapanesecorporationdirectlyholdsatleast10%ofeitherthevotingsharesof,orthetotalsharesissuedby,thedomesticcorporation,duringtheperiodofsixmonthsimmediatelyprecedingthedateofpaymentofthedividends.
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BIR Ruling No. ITAD-136-13 dated May 16, 2013
Facts:
JCo.,anon-residentforeigncorporationcreditorbasedinJapan,extendedaloantoPCo.,adomesticcorporation.PCo.agreedtopayJCo.theprincipalplusinterestattherateof0.54%perannum.Issues:
1. Aretheinterestpaymentsontheloanentitledtothe10%preferentialtaxrateundertheRP-JapanTaxTreaty?
2. Istheloanagreementsubjecttodocumentarystamptax(DST)?
Rulings:
1. Yes.UndertheRP-JapanTaxTreaty,interestonforeignloansmayqualifyforthe10%preferentialtaxrateonthegrossamountoftheinterestiftherecipientofsuchinterestisalsothebeneficialownerthereof.
2. Yes.TheloanagreementissubjecttoDSTimposedunderSection179oftheTaxCodeattherateofPhp1.00oneachPhp200.00oftheissuepriceofsuchloanagreement.
BIR Ruling No. 168-13 dated April 30, 2013
Facts:
CCo.,anon-residentforeigncorporationbasedintheCaymanIslands,owns65%ofthesharesinPCo.,adomesticcorporation.In2009,PCo.declaredcashdividendstoCCo.ACertificateofUndertakingastotheTaxConcessionsLawoftheCaymanIslandswaspresentedtoprovethatnolawimposinganytaxonprofits,income,gainsorappreciationsshallapplytoCCo.oritsoperations.
Issue:
ArethecashdividendsdeclaredbyPCo.infavorofCCo.subjecttothe15%FWTunderSection28(B)(5)(b)oftheTaxCode?
Ruling:
Yes.The15%FWTondividendsdistributedtonon-residentforeigncorporationspursuanttoSection28(B)(5)(b)oftheTaxCodeappliesintwoinstances:(1)whenthecountryofdomicileofthenon-residentforeigncorporationreceivingthedividendsallows,asacreditagainstthetaxdueintherecipient’shomecountry,adeemedpaidtaxcreditequivalentto15%;or(2)whenthecountryofdomicileofthenon-residentforeigncorporationreceivingthedividendsdoesnotimposeanytaxondividends.SincethelawsoftheCaymanIslandsdonotimposeanytaxonprofits,income,gainsorappreciationsofitsresidentcorporations,anydividendstobepaidbyPCo.toCCo.aresubjecttothe15%FWTunderSection28(B)(5)(b)oftheTaxCode.
UndertheRP-JapanTaxTreaty,interestonforeignloansextendedbyaresidentofJapantoaresidentofthePhilippinesmayqualifyforthe10%preferentialtaxrateonthegrossamountofinterestiftherecipientofsuchinterestisalsothebeneficialownerthereof.
TheloanagreementissubjecttoDSTimposedunderSection179oftheTaxCodeattherateofPhp1.00oneachPhp200.00oftheissuepriceofsuchloanagreement.
DividendspaidbyadomesticcorporationtoaresidentoftheCaymanIslandsaresubjecttothe15%FWTunderSection28(B)(5)(b)oftheTaxCode.
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BIR Ruling No. 178-13 dated May 17, 2013
Facts:
ACo.,adomesticcorporation,soldtwoparcelsoflandtoBCo.,anotherdomesticcorporation.TheDSTontheDeedofAbsoluteSalewaspaid.TheTransferCertificatesofTitle(TCTs)inthenameofsellerACo.weresubsequentlycancelledandnewTCTswereissuedinthenameofbuyerBCo.However,forfailureofBCo.tocomplywithcertainobligations,thecontractbetweenACo.andBCo.wasrescindedbyvirtueofacourtorder.Pursuanttothecourtorder,BCo.wasorderedtoreconveytheTCTstoACo.
Issues:
1. IsthereconveyanceofTCTssubjecttocapitalgainstax(CGT)andDST?
2. IstheDSTpaidupontheexecutionofDeedofAbsoluteSalerefundable?
Ruling:
1. No.Therescissionofacontractwouldnotgiverisetoataxableeventfortworeasons:(1)Theresultofrescissionisasiftherewasnosale,transferorexchange.Hence,noincomeisrealized.(2)Thereturnoftheobjectoftherescindedcontractisnotformonetaryconsiderationandismerelyanacknowledgementorconfirmationofthetitleandownershipoftheoriginalowneroftheproperty.Hence,thereconveyanceofTCTsbyvirtueofarescissionofthecontractofsaleisnotsubjecttoCGTandDST.
2. No.IntheSupremeCourtcaseofPhilippine Home Assurance Corporation, et al. vs Court of Appeals, et al.,(G.R.No.119446datedJanuary21,1999),theCourtruledthattheDSTmustbepaidupontheissuanceofinstruments,withoutregardtowhetherthecontractswhichgaverisetothemarerescissible,void,voidable,orunenforceable.Hence,thesubsequentcancellationofthetransactiontowhichtheDSTliabilityattachesdoesnothavetheeffectofcancellingtheDSTliability.
BIR Ruling No. 184-2013 dated May 20, 2013
Facts:
ACo.isadomesticorganizationengagedintheadministrationofactivitiesforthewelfareofthephysical,mental,educationalandspiritualfacultiesofmanthroughpreaching,healthseminarsandservices,andthetrainingofmembersformissionaryactivities.ACo.requestedfortheissuanceofacertificateoftaxexemptionasacivicleagueororganizationnotorganizedforprofitbutoperatedexclusivelyforthepromotionofsocialwelfare,pursuanttoSection30(G)oftheTaxCode.
Issues:
1. CanacertificateoftaxexemptionbeissuedtoACo.?
2. IsACo.subjecttointernalrevenuetaxes?
3. IsACo.subjecttoanytaxreportingobligations?
ReconveyanceoflandtitlesbyvirtueoftherescissionofacontractofsaleisnotsubjecttoCGTandDST.TheDSTpreviouslypaiduponexecutionofaDeedofAbsoluteSalecannotberefundedbyreasonoftherescissionofthecontractofsale.
Foranorganizationtobeissuedacertificateoftaxexemption,ithastoprovebyactualoperationforatleastthreeyearsthatitisanorganizationexemptfromincometaxunderSection30(G)oftheTaxCode,subjecttootherrequirements.
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Rulings:
1. No.AnorganizationhastoprovebyactualoperationforatleastthreeyearsthatitisreallyanorganizationexemptfromincometaxunderSection30(G)oftheTaxCode.Forthispurpose,anorganizationcanfilethenecessaryannualinformationreturn,insteadofanincometaxreturn,onorbeforethe15thdayofthe4thmonthfollowingtheendofitstaxableyear,asrequiredunderSection24ofRRNo.2-40.Basedontheinformationreturn,theBIRwillconductaninvestigationontheactivitiesundertakenbytheorganizationduringthatperiod,andacertificateoftaxexemptionmaybeissueddependingontheresultsoftheinvestigation.
Forpurposesofsecuringapermanentexemptionafterthethree-yearperiod,ACo.isrequiredtosubmitthefollowingpursuanttoRMCNo.14-2001:
a. CertifiedtruecopyoftheCertificateofRegistrationwiththeSEC;
b. CertifiedtruecopyoftheArticlesofIncorporation,whichincludesthefollowingprovisions:
i. ThatACo.isnon-stockandnon-profit;
ii. ThattheprimarypurposeforwhichitwascreatedisoneofthoseenumeratedunderSec.30oftheTaxCode;
iii. Thatnopartofthenetincomeshallinuretothebenefitofanyofitsmembers;
iv. Thatthetrusteesdonotreceiveanycompensation;and
v. Thatincaseofdissolution,assetsofthecorporationshallbetransferredtosimilarinstitutionsortothegovernment;
c. CertifiedtruecopyoftheBy-Laws;
d. CertifiedtruecopyoftheAnnualInformationReturnsandFinancialStatementsforthelastthreeyearsofoperation;
e. CertificationunderoaththattherehasnotbeenanychangeintheBy-Laws,ArticlesofIncorporation,mannerofactivitiesaswellasthesourcesanddispositionofincome;and
f. BIRCertificateofRegistration.
2. Yes.ACo.issubjecttothefollowinginternalrevenuetaxes:
a. Taxonincomederivedfromitsproperties,realorpersonal,oranyactivityconductedforprofitregardlessofthedispositionthereof;
b. 20%FWToninterestincomefromcurrencybankdepositsandyieldoranymonetarybenefitsderivedfromdepositsubstitutesandfromtrustfundsandsimilararrangements,androyaltiesderivedfromsourceswithinthePhilippines;and
c. 7.5%FWToninterestincomederivedfromadepositorybankundertheexpandedforeigncurrencydepositsystem.
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3. Yes.ACo.issubjecttothefollowingreportingobligations:
a. Filingonorbeforethe15thdayofthe4thmonthfollowingtheendoftheaccountingperiodaProfitandLossStatementandBalanceSheetwiththeAnnualInformationReturnunderoath,statingitsgrossincomeandexpensesincurredduringtheprecedingperiodandacertificateshowingthattherehasnotbeenanychangeinitsBy-Laws,ArticlesofIncorporation,mannerofoperationandactivitiesaswellassourcesofdispositionofincome;
b. Actingasawithholdingagentofthegovernmentifitactsasanemployeranditsemployeesreceivecompensationincomesubjecttowithholdingtax,orifitmakesincomepaymentstoindividualsorcorporationssubjecttoexpandedwithholdingtax(EWT);
c. Maintenanceofbooksofaccountandotherpertinentrecordsoftax-exemptorganizationsorgranteesoftaxincentives,whichshallbesubjecttoBIRexamination;
d. PaymentofannualregistrationfeeofPhp500.00;and
e. Issuanceofdulyregisteredreceiptsorsalesorcommercialinvoicesforeachsaleortransferofmerchandiseorforservicesrendered,whicharenotdirectlyrelatedtotheactivitiesforwhichtheassociationisregistered.
BIR Issuances
Revenue Regulations No. 9-2013 dated May 10, 2013
• Section6ofRRNo.30-2002isamendedtoreadasfollows:
“SECTION6.APPROVALOFOFFEROFCOMPROMISE–ExceptforoffersofcompromisewheretheapprovalisdelegatedtotheREBpursuanttothesucceedingparagraph,allcompromisesettlementswithinthejurisdictionoftheNationalOffice(NO)shallbeapprovedbyamajorityofallthemembersoftheNEBcomposedoftheCommissionerandthefourDeputyCommissioners.AlldecisionsoftheNEB,grantingtherequestofthetaxpayerorfavorabletothetaxpayer,shallhavetheconcurrenceoftheCommissioner.
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Thecompromiseoffershallbepaidbythetaxpayeruponfilingoftheapplicationforcompromisesettlement.Noapplicationforcompromisesettlementshallbeprocessedwithoutthefullsettlementoftheofferedamount.Incaseofdisapprovaloftheapplicationforcompromisesettlement,theamountpaiduponfilingoftheaforesaidapplicationshallbedeductedfromthetotaloutstandingtaxliabilities.”
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• TheseRegulationsshalltakeeffect15daysafterpublicationinanynewspaperofgeneralcirculation.
[Editor’s Note: RR No. 9-2013 was published in the ManilaBulletin on May 11, 2013.]
RRNo.9-2013amendscertainprovisionsofRRNo.30-2002onthepaymentoftheamountofferedascompromisesettlementpursuanttoSection204oftheTaxCode.
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Revenue Regulations No. 10-2003 dated May 2, 2013
• Section2.57.2(A)(1)ofRRNo.2-98,aslastamendedbyRRNo.30-2003,isfurtheramendedtoreadasfollows:
“Section 2.57.2. Income payments subject to creditable withholding tax and rates prescribed thereon. - xxx xxx
(A) Professional fees, talent fees, etc., for services rendered by individuals.–Onthegrossprofessional,promotionalandtalentfeesoranyotherformofremunerationfortheservicesofthefollowingindividuals–15%ifthegrossincomeforthecurrentyearexceedsPhp720,000.00,and10%ifotherwise:
(1) Thoseindividuallyengagedinthepracticeofprofessionorcallings:xxxdesigners,realestateservicepractitioners(RESPs),(i.e.,realestateconsultants,realestateappraisersandrealestatebrokers)requiringagovernmentlicensureexaminationgivenbytheRealEstateService,pursuanttoRepublicActNo.9646,andallotherprofessionsrequiringgovernmentlicensureexaminationsregulatedbytheProfessionalRegulationsCommission,SupremeCourt,etc.xxx”
• Section2.57.2(G)ofRR2-98,aslastamendedbyRR14-2002,isfurtheramendedtoreadasfollows:
“(G) Income payments to certain brokers and agents.-Ongrosscommissionsofcustoms,insurance,stock,immigrationandcommercialbrokers,feesofagentsofprofessionalentertainersandrealestateservicepractitioners(RESPs),(i.e.,realestateconsultants,realestateappraisersandrealestatebrokers)whofailedordidnottakeupthelicensureexaminationgivenbyandnotregisteredwiththeRealEstateServiceundertheProfessionalRegulationsCommission–10%.”
• TheseregulationsshalltakeeffectonJune1,2013andshallcoverincomepaymentstobepaidorpayablestartingJune1,2013,whicharerequiredtoberemittedwithinthemonthofJuly,2013.
[Editor’s Note: RR No. 10-2013 was published in the ManilaBulletin on June 8, 2013.]
Revenue Regulations No. 11-2013 dated May 20, 2013
• Section2.83ofRRNo.2-98isfurtheramendedtoreadasfollows:
“Sec.2.83.StatementsandReturns.—
Section2.83.1.Employees Withholding Statements (BIR Form No. 2316).—Ingeneral,everyemployerorotherpersonwhoisrequiredtodeductandwithholdthetaxoncompensation,includingfringebenefitsgiventorankandfileemployees,shallfurnisheveryemployeefromwhosecompensationtaxeshavebeenwithheldtheCertificateofCompensationPayment/TaxWithheld(BIRFormNo.2316)onorbeforeJanuary31ofthesucceedingcalendaryear,orifemploymentisterminatedbeforethecloseofsuchcalendaryear,onthedayonwhichthelastpaymentofcompensationismade.Failuretofurnishthesameshallbeagroundforthemandatoryauditofpayor’sincometaxliabilities(includingwithholdingtax)uponverifiedcomplaintofthepayee.
RRNo.10-2003amendsRRNo.2-98toincludeRealEstateServicePractitioners(i.e.,realestateconsultants,appraisersandbrokers):(1)whopassedthelicensureexaminationgivenbytheRealEstateService,pursuanttoRANo.9646“TheRealEstateServiceActofthePhilippines,”asamongthoseprofessionalsfallingunderSection2.57.2(A)(1)ofRRNo.2-98subjecttothe10%or15%EWTonprofessionals;and(2)thosewhodidnotpassordidnottakethelicensureexaminationgivenbytheRealEstateServiceamongthebrokersandagentsunderSection2.57.2(G)ofRRNo.2-98.
RRNo.11-2013requiresthefiling/submissionofhardcopyoftheCertificateofCompensationPayment/TaxWithheld(BIRForm2316)coveringemployeeswhoarequalifiedforsubstitutedfiling.
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EmployersofMinimumWageEarners(MWEs)arestillrequiredtoissueBIRFormNo.2316(June2008Encsversion)totheMWEsonorbeforeJanuary31ofthefollowingyear.
Asarule,theemployershallfurnisheachemployeewiththeoriginalandduplicatecopiesofBIRFormNo.2316showingthenameandaddressoftheemployer;employer’sTIN;nameandaddressoftheemployee;employee’sTIN;amountofexemptionsclaimed,amountofpremiumpaymentsonhealthand/orhospitalizationinsurancenotexceedingPhp2,400.00,ifany;thesumofcompensationpaidincludingthenon-taxablebenefits;theamountofstatutoryminimumwagereceivedbyMWEs;Overtimepay,holidaypay,nightshiftdifferentialpayandhazardpayreceivedbyMWEs;theamountoftaxdue;theamountoftaxwithheldduringthecalendaryearandsuchotherinformationasmayberequired.Thestatementmustbesignedbyboththeemployerorotherauthorizedofficerandtheemployee,andshallcontainawrittendeclarationthatitismadeunderthepenaltiesofperjury.IftheemployeristheGovernmentofthePhilippines,itspoliticalsubdivision,agencyorinstrumentalityorgovernment-ownedorcontrolledcorporation,thestatementshallbesignedbythedulydesignatedofficeroremployee.
However,incasescoveredbysubstitutedfiling,theemployershallfurnisheachemployeewiththeoriginalcopyofBIRFormNo.2316andfile/submittotheBIRtheduplicatecopynotlaterthanFebruary28followingthecloseofthecalendaryear.
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• Anyemployer/withholdingagent,includingthegovernmentoranyofitspoliticalsubdivisionsandgovernmentownedandcontrolledcorporations,who/whichfailstocomplywiththeabovefiling/submissionofBIRFormNo.2316withinthetimerequiredbyRRNo.11-2013,maybeheldliableunderSection250oftheTaxCodewhichprovides:
“Inthecaseofeachfailuretofileaninformationreturn,statementorlist,orkeepanyrecord,orsupplyanyinformationrequiredbythisCodeorbytheCommissioneronthedateprescribedtherefor,unlessitisshownthatsuchfailureisduetoreasonablecauseandnottowillfulneglect,thereshall,uponnoticeanddemandbytheCommissioner,bepaidbythepersonfailingtofile,keeporsupplythesame,Php1,000.00foreachsuchfailure:Provided,however,ThattheaggregateamounttobeimposedforallsuchfailuresduringacalendaryearshallnotexceedPhp25,000.00.”
• However,anyemployer/withholdingagent,includingthegovernmentoranyofitspoliticalsubdivisionsandgovernmentownedandcontrolledcorporations,who/whichfailstocomplywiththeabovefiling/submissionofBIRForm2316withinthetimerequiredbyRRNo.11-2013fortwoconsecutiveyearsmaybedealtwithinaccordancewithSection255whichprovidesinpart:
“AnypersonrequiredunderthisCode,orbyrulesandregulationspromulgatedthereunder,topayanytax,makeanyreturn,keepanyrecord,orsupplycorrectandaccurateinformation,whowilfullyfailstopaysuchtax,makesuchreturn,keepsuchrecord,orsupplysuchcorrectandaccurateinformation,orwithholdorremittaxeswithheld,orrefundexcesstaxeswithheldoncompensation,atthetimeortimesrequiredbylaworrulesandregulationsshall,inadditiontootherpenaltiesprovidedbylaw,uponconvictionthereof,bepunishedbyafineofnotlessthanPhp10,000.00andsufferimprisonmentofnotlessthanoneyearbutnotmorethan10years.”
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• Insettlementunderthissituation,thecompromisefeeshallbePhp1,000.00foreachBIRFormNo.2316notfiledwithoutanymaximumthreshold.
• RRNo.11-2013shalltakeeffectbeginningwiththecalendaryear2013.
[Editor’s Note: RR No. 10-2013 was published in the ManilaBulletin on June 8, 2013.]
Revenue Memorandum Circular No. 34-2013 dated April 22, 2013
• Responsibilities of the Heir/Executor/Administrator
1. Estatetaxreturnshallbefiledunderanyofthefollowingsituations:
a. Inallcasesoftransferssubjecttoestatetax;or
b. Where,thoughexemptfromestatetax,thegrossvalueoftheestateexceedsPhp200,000.00;or
c. Where,regardlessofthegrossvalue,theestateconsistsofregisteredorregistrablepropertysuchasrealproperty,motorvehicles,sharesofstockorothersimilarproperty,forwhichaclearancefromtheBIRisrequiredasaprerequisiteforthetransferofitsownershipinthenameofthetransferee.
2. Theheirs/authorizedrepresentative/administrator/executorshallfiletheestatetaxreturnwith,andpaythecorrespondingestatetaxto,theAuthorizedAgentBank(AAB),RevenueCollectionOfficer(RCO)ordulyauthorizedtreasurerofthecityormunicipalityintheRevenueDistrictOffice(RDO)havingjurisdictionovertheplaceofdomicileofthedecedentatthetimeofhisdeath.
3. Incaseofanon-residentdecedentwithanexecutororadministratorinthePhilippines,theestatetaxreturnshallbefiledwiththeAABoftheRDOwheresuchexecutor/administratorisregisteredorisdomiciled,ifnotyetregisteredwiththeBIR.
4. Fornon-residentdecedentwithnoexecutororadministratorinthePhilippines,theestatetaxreturnshallbefiledwiththeAABunderthejurisdictionofRDONo.39–SouthQuezonCity.
5. Infillingoutthereturn,theexecutor,administratororanyofthelegalheirsshallexerciseduediligenceinaccomplishingthesameproperly,fillingoutcompletelyitemswithvaluesandentering“0”intheboxtoindicatenoneornil,ifthereisnoapplicablevalue.
6. Theheir/authorizedrepresentative/administrator/executorshallsubmitalltheapplicabledocumentaryrequirementsasprescribedinAnnexesA-6andA-6.1ofRevenueMemorandumOrder(RMO)No.15-2003andproofofpaymenttotheRDOwhichhasjurisdictionovertheplaceofresidenceofthedecedent,ortotheRDOwheretheexecutororadministratorisregistered,ortoRDONo.39–SouthQuezonCity,whicheverisapplicable.
RMCNo.34-2013clarifiestheproperaccomplishmentandfilingofestatetaxreturns.
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• Responsibilities of the RDO and Document Processing Division (DPD)
1. TheRDOshallprocesstheestatetaxreturninaccordancewiththeprocedureindicatedinRMONo.15-2003.
2. ExemptestatetaxreturnswhichhavetobefileddirectlywiththeRDO,andestatetaxreturnswithpayment,whichshallbereceivedbytheRCO,shallnotbereceivedbytheRDO/RCOiftheyarenotproperlyaccomplished.
3. TheRDOorDPD(forRegionalOfficeswithDPD)shallscrutinizetheentriesinthereturnsanddetermineanymissing/incompleteinformationforthetaxreturnswithpaymentfileddirectlywiththeAABs.
4. Withinfivedaysfromdiscovery,theDPDheadshalltransmitalistofestatetaxreturnswithmissing/incompleteinformation.
5. Withinfivedaysfromreceiptofthelist,theRDOshallviewandprintthereturnsandshallnotifyinwritingtheheir/authorizedrepresentative/administrator/executoroftheestateofsuchfactandrequiretheamendmentofthereturnwithinfivedaysfromreceiptofthewrittennotice.
6. TheRDOshallalsoimposethecompromisepenaltyforviolationofSection255oftheTaxCode,asprescribedunderRMONo.19-2007.Incaseoflatefiling,theapplicablepenaltiesundertheTaxCodeshallbeimposed.
Revenue Memorandum Circular No. 35-2013 dated April 25, 2013
“DEPARTMENT ORDER NO. 18-2013
AMENDMENTOFSECTION12OFDEPARTMENTORDERNO.03-08ENTITLED‘RULESANDREGULATIONSTOIMPLEMENTREPUBLICACT9400,ANACT
AMENDINGREPUBLICACT7227,OTHERWISEKNOWNASTHEBASESCONVERSIONANDDEVELOPMENTACTOF1992,ANDFOROTHERPURPOSES.’
SECTION1.Section12ofDOFDepartmentOrderNo.03-08isherebyamendedtoreadasfollows:
Section12.Availment of Incentives-Itisunderstoodthathenceforth,registeredEcozoneandFreeportEnterprisesalreadyavailingoftheincentivesandbenefitsunderRA9400inaccordancewiththeserules,shallbeexpresslydisqualifiedfromavailingoftheincentivesandbenefitsdefinedand/orgrantedunderotherlaws,rulesandregulations.QualifiedenterprisesalreadyenjoyingincentivesunderotherpreferentialregimesshouldhavetheirregistrationsthereundercancelledbeforetheymaysubsequentlyavailofthebenefitsprovidedunderRA9400.
SECTION2.RepealingClause-Allorders,circulars,memoranda,andotherissuances,orpartsthereof,whichareinconsistentwiththisDepartmentOrder,areherebyrepealedormodifiedaccordingly.SECTION3.Effectivity-ThisDepartmentOrdershalltakeeffect15daysafteritspublicationintheOfficialGazetteorintwonewspapersofgeneralcirculation.”
[Editor’s Note: DO No. 18-2013 was published in the PhilippineDailyInquirer on April 29, 2013.]
RMCNo.35-2013circularizesthefulltextofDONo.18-2013datedApril16,2013oftheDOFontheamendmentofSection12ofDONo.03-08entitled“RulesandRegulationstoImplementRepublicAct9400,AnActAmendingRepublicAct7277,otherwiseknownastheBasesConversionandDevelopmentActof1992”.
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Revenue Memorandum Circular No. 37-2013 dated April 25, 2013
• Salient Features of DOF DO No. 17-2013:
1. Port Accreditation–Onlyparticularportswillbeaccreditedforsensitivecommoditiessuchasoil,steel,grains,tiles,goldandvehicles,subjecttostandards,technicalrequirementsandapplicablelaws,rulesandregulations.AccreditedportsaretosubmittotheDOFmonthlytradestatisticalreportsthatwillbecross-checkedwithdatafromtheDepartmentofEnergy(DOE),PhilippinePortsAuthority(PPA),andotherrelevantagencies,onaper-volumeandper-vesselbasistoeliminatediscrepanciesinimportandconsumptiondata.
2. Submission of a Rolling Import Plan-Inordertobetteranticipateimports,theBOCshallrequireallimportersofsensitivecommoditiestosubmittheirannualrollingimportplanindicatingquantity,type,sourceandlocationofintendedportarrival.TheCommissionerofCustomsshallpre-authorizeimportationofsensitivecommoditiesinaccordancewiththeannualimportplan.
3. Trade Statistics Reconciliation–PortsshallsubmittotheBOCandtheDOFamonthlylistofimportationsarrivingperport,whetherseaorairport,internationalordomestic,andshallincludedetails,suchasdateofarrival,nameofcountry/portoforigin,capacityofvessel/aircraft,typeofcommodities,andconsigneedetails.
Collecteddatafromtheportsshallbecross-checkedwithdatafromtheDOE,PPA,andotherrelevantagencies,onaper-volumeandper-vesselbasis.
MonthlylistofimportationsfromJanuary2013shouldbesubmittedwithin10daysfromthedateofthisOrder.
4. Other measures
a. StrictimplementationofRRNo.2-2012,whichrequiresimporterstopayvalue-addedtax(VAT)andexcisetaxonalloilimportsuponarrivalinthePhilippines.
b. SubmissionofIncomeTaxReturnasreceivedbytheBIRasoneoftherequirementsforaccreditationofimporterswiththeBOC.
c. Conductofpost-auditexaminationsonimportationofsensitivecommodities.
d. BOCshallworkcloselywiththeBIRandtherespectivelocalgovernmentunits,subjecttoexistinglawsonexchangeofinformationwithregardtoimportersofsensitivecommodities.
e. ImprovereportingformsandadministrativesupporttotheBOCStatisticsOfficeandtheManagementInformationSystemandTechnologyGrouptocapturedatarequired.
5. Regular monitoring of cases filed against oil smugglers
a. Casesinvolvingoilsmugglingshallbeestablishedandpursued.
b. AsidefromthemonthlyRunAfterTheSmugglers(RATS)report,BOCshallsubmittotheDOFabimonthlystatusreportofoilsmugglingcases.
RMCNo.37-2013circularizesthefulltextofDOFDONo.17-2013datedApril11,2013.
14 Tax Bulletin
Revenue Memorandum Circular No. 38-2013 dated May 2, 2013
• On the audit/investigation pursuant to issued Letters of Authority (LOAs)
1. Thenormalprocessand/orproceduresrelatedtoaudit/investigationarisingfromelectronicLettersofAuthority(eLAs)issuedwillnotbesuspendednotwithstandingthereceiptofLegalPetitionNotices(LPNs)questioningthevalidityandenforceabilityoftheeLAs.
2. TheNationalOfficeshallnolongerentertainanyLPNquestioningthevalidityandenforceabilityoftheeLAdulyissuedbytheconcernedRegionalDirectorfortheauditofataxpayerwithintheregion,inasmuchastheissuehasalreadybeenclarifiedunderRMCNo.6-2013.
3. Thereshallbenoimpedimenttotheinvestigationofthetaxpayer’sinternalrevenuetaxliabilitiesandtheeventualrecommendationfortheissuanceofaSubpoena Duces Tecum(SDT),ifwarranted,inaccordancewithRMONos.45-2010and88-2010.
• On the issuance of Preliminary Assessment Notice (PAN), Formal Letter of Demand (FLD) and Final Assessment Notice (FAN)
1. UponreceiptofthePANorFLDandFAN,thetaxpayerisgiven15or30days,asthecasemaybe,torebuttheassessmentuponcompliancewiththerequirementsoffilingaprotestpursuanttoRRNo.12-99.
2. AnyLPN,declarationoranysimilardocumentprotestingtheassessmentaddressedtotheCommissioneroranyofficialintheNationalOffice,withouttheissuanceofaFinalDecisiononDisputedAssessment(FDDA)fromtheregionaloffice,shallbeconsideredprematureandinvalid.
• Responsibility of Taxpayers on their LPN
1. TheBIRcanrefusetotransactofficialbusinesswithtaxagents/practitionerswhoarenotaccreditedbeforeit,asstatedinSection9ofRRNo.11-2006,asamendedandclarifiedinRMCNo.6-2013;
2. Theresponsibilityisonthetaxpayerstoensurethatthetaxagents/practitionerswhomtheychoosetoengageareaccreditedwiththeBIR.
Revenue Memorandum Circular No. 39-2013 dated April 4, 2013
• Allprotestletters,requestsforreinvestigation/reconsiderationandsimilarcorrespondencesshallonlybefiledbythetaxpayersortheirdulyauthorizedrepresentatives,inpersonorthroughregisteredmailwithreturncard,withtheOfficeoftheconcernedRegionalDirector(RD),AssistantCommissioner-LargeTaxpayersService(ACIR-LTS)andAssistantCommissioner-EnforcementService(ACIR-ES),whosignedthePANs,FANsandFLDs,forproperrecordingoftheprotestsandevaluationofthesameinaccordancewithSection228oftheTaxCode.
• Iftheaforesaidproceduresarenotfollowed,thenthelettersofprotest,requestsforreinvestigation/reconsiderationandsimilarcorrespondencesshallbeconsideredvoidandwithoutforceandeffect.
RMCNo.38-2013clarifiestheimplicationoflegalpetitionnotices/declarationsandsimilardocumentsontheaudit/assessmentprocess.
RMCNo.39-2013prescribestheguidelinesforreceiptofprotestlettersonFANsandothersimilarcorrespondences.
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• Theaboverevenueofficialsshallbeprimarilyresponsibleinensuringthepreparationofacomplete/accuratereportonallproteststhatwerefiledintheirrespectiveofficesanditspromptsubmissiontotheCommissionerofInternalRevenue(CIR)everyMondayofeachweekinhardandsoftcopies.
• Basedontheweeklyreport,theOfficeoftheCIRshallcreateadatabaseof
alllettersofprotest,requestsforreinvestigation/reconsiderationandsimilarcorrespondencesreceivedbythedifferentofficesoftheBIR.
• Anyprotestletter,requestforreinvestigation/reconsideration,orothersimilarcommunicationallegedlyfiledbyanytaxpayer,butnotincludedinthedatabase,shallbedeemedasnotofficiallyfiledwiththeBIRandshallnotbeusedasbasisforthegrantofanyrequestforreinvestigation/reconsiderationofanyFANorFDDAissuedagainstthetaxpayer.
• Allprotestletters,requestsforreinvestigation/reconsiderationorsimilar
correspondencesthatwillbeacceptedfromtaxpayersbeginningApril29,2013shallbeguidedbythisCircular.
Revenue Memorandum Circular No. 41-2013 dated April 17, 2013
• Definition of Terms
1. Childreferstoapersonbelow18yearsofage,oronewhoisover18butisunabletofullytakecareof,orprotect,himselforherselffromabuse,neglect,cruelty,exploitationordiscriminationbecauseofaphysicalormentaldisabilityorcondition.
2. Foster ChildreferstoachildplacedunderFosterCare.
3. Foster ParentreferstoapersondulylicensedbytheDSWDtoprovideFosterCare.
4. Agencyreferstoanychild-caringorchild-placinginstitutionlicensedandaccreditedbytheDSWDtoimplementtheFosterCareProgram.
• Who may be placed under Foster Care
1. Achildwhoisabandoned,surrendered,neglected,dependentororphaned;
2. Achildwhoisavictimofsexual,physical,oranyotherformofabuseorexploitation*;
3. Achildwithspecialneeds*;
4. Achildwhosefamilymembersaretemporarilyorpermanentlyunableorunwillingtoprovidethechildwithadequatecare;
5. Achildawaitingadoptiveplacementandwhowouldhavetobepreparedforfamilylife,includingachildwhohasalreadybeenmatchedforadoptionbutcontinuestoreceiveinstitutionalcare;
6. Achildwhoneedslong-termcareandclosefamilytiesbutwhocannotbeplacedfordomesticadoption*;
7. Achildwhoseadoptionhasbeendisrupted;
RMCNo.41-2013publishesofthefulltextoftheimplementingrulesandregulations(IRR)ofRepublicAct(RA)No.10165,otherwiseknownastheFosterCareActof2012.
16 Tax Bulletin
8. Achildwhoisundersociallydifficultcircumstancessuchas,butnotlimitedto,astreetchild,achildinarmedconflictoravictimofchildlaborortrafficking*;
9. Achildwhocommittedaminoroffensebuthasbeenreleasedonrecognizance,orwhoisincustodysupervision,orwhosecasehasbeendismissed*;and
10. Achildwhoisinneedofspecialprotectionasassessedbyasocialworker,anagency,ortheDSWD*.
* Inthesecases,thechildmusthavenofamilywillingandcapableofcaringandprovidingforhim/her.
• Qualifications of a Foster Parent
1. Mustbeoflegalage;
2. Mustbeatleast16yearsolderthantheFosterChild,unlesstheapplicantisarelativeoftheFosterChild;
3. Musthaveagenuineinterest,capacityandcommitmentinparentingtheFosterChildandabletoprovidetheFosterChildwithafamilialatmosphere;
4. Musthaveahealthyandharmoniousrelationshipwitheachfamilymemberlivingwithhim/her;
5. Mustbeofgoodmoralcharacter;
6. Mustbephysicallyandmentallycapableandemotionallymature;
7. Musthavesufficientresourcestobeabletoprovideforthefamily’sneeds;and
8. Mustbewillingtobetrainedorreceiveadviceforthepurposeofincreasingorimprovinghisorherknowledge,attitudesandskillsincaringforachild.
9. ForanalientoqualifyasaFosterParent,he/shemust:(a)belegallydocumented;(b)possessallthequalificationsabove-stated;(c)haveresidedinthePhilippinesforatleast12continuousmonthsatthetimeoftheapplication;and(d)undertaketomaintainsuchresidenceuntiltheterminationofplacementbytheDSWDorexpirationoftheFosterFamilyCareLicense.
10. Forpurposesofdeterminingcontinuousresidence,thealienmustnothavespentmorethan60daysofthelast12-monthperiodpriortothefilingoftheapplicationoutsideofthePhilippines,andthenonlyformeritoriousreasons.
• Additional Exemption for Dependents
1. Thedefinitionoftheterm“dependent”underSection35(B)oftheTaxCodeshallbeamendedtoincludea“FosterChild”;
2. AFosterParentshallbeallowedanadditionalexemptionofPhp25,000.00foreachqualifieddependentprovided,however,thatthetotalnumberofdependents,includingaFosterChildqualifiedtobeclaimedasadependent
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forwhichadditionalexemptionsmaybeclaimed,shallnotexceedfour,asprovidedunderRANo.9504;
3. ThePhp25,000.00additionalexemptionforaFosterChildshallbeallowedonlyiftheperiodoffostercareisatleastacontinuousperiodofonetaxableyear;
4. OnlyoneFosterParentcantreattheFosterChildasadependentforaparticulartaxableyear.Assuch,nootherparentorFosterParentcanclaimsaidchildasadependentforthatperiod.
• Incentives to Agencies
1. ExemptionfromIncomeTax–AgenciesshallbeexemptfromincometaxonincomederivedbythemassuchorganizationspursuanttoSection30oftheTaxCode,asimplementedbyRRNo.13-98.
2. QualificationasaDoneeInstitution–Agenciescanalsoapplyforqualificationasdoneeinstitutions.
• Incentives to Donors
1. AllowableDeductions–DonorsshallbegrantedallowabledeductionsfromtheirgrossincometotheextentoftheamountdonatedtoAgenciesinaccordancewithSection34(H)oftheTaxCode.
2. ExemptionfromDonor’sTax–DonorsshallbeexemptedfromDonor’sTaxunderSection101oftheTaxCode,providedthatnotmorethan30%oftheamountofdonationsshallbespentforadministrativeexpenses.
Revenue Memorandum Order No. 12-2013 dated May 2, 2013
• OnlyBIRAccreditedPrintersshallbeauthorizedtoprintPrincipalandSupplementaryReceiptsandInvoicespursuanttoRRNo.15-2012.
• Printersthatwereissuedaprovisionalaccreditationnumbershallalsobeallowedtoprintprincipalandsupplementaryreceipts/invoices.Sub-contractingtonon-accreditedprinter/sisstrictlyprohibited.
• Taxpayersengagedinbusiness,whethergovernmentorprivate,thatusemanually-issuedreceipts/invoicesshallabidebytheguidelinesandproceduresprescribedinthisRMO.
• Taxpayersengagedinbusiness,whethergovernmentorprivate,thatusereceipts/invoicesissuedthroughCashRegisterMachine/Point-Of-SaleMachines(CRM/POS)and/orComputerizedAccountingSystem(CAS)arenotcoveredbythisRMO,butshallbecoveredbyaseparaterevenueissuance.
• AlltheinformationrequiredunderthisRMOintheprintingofORs/SIs/CIsshallbepreprintedonthefaceoftheloose-leafreceipts/invoicesusingcomputer-aidedmachines(e.g.,MSExcel).
• Nationalgovernmentagencies,governmentownedandcontrolledcorporationsandlocalgovernmentunitsreferredtohereasGovernmentInstrumentalities(GIs),shallbeguidedbythefollowingpolicies:
RMONo.12-2013prescribesadditionalpoliciesanduniformguidelinesandproceduresintheprocessingofATPORs,SIsandotherCIsintheinterimperioduntiltheOn-lineATPsystemisavailableforimplementation.
18 Tax Bulletin
1. ForGIsengagedingovernmentalfunctions:
a. ApplyforregistrationwiththeBIRforunregisteredgovernmentalfunctions.
b. NotrequiredtosecureATPinprintingofGovernmentAccountableFormNo.51,RevenueOfficialReceipts(RORs),TaxReceiptsandotherreceiptsinwhatevernameorformbeingissuedforgovernmentalfunctions.
2. ForGIsengagedinproprietaryfunctions:
a. Forunregisteredproprietaryfunctions
Iftheregisteredaddressofthebusinessactivityissimilarorco-locatedwiththeGIwhosegovernmentalfunctionisalreadyregistered,theGIshallfilearegistrationinformationupdatebyfilingBIRFormNo.1905forthefollowing:
i. BusinessActivity/ies
ii. AdditionalTaxType/sDetails
iii. TradeName(ifapplicable)
iv. BooksofAccounts
v. IftheregisteredaddressofthebusinessactivityisotherthantheregisteredaddressoftheGI,theGIshallfileanApplicationforRegistrationasBranchusingBIRformNo.1903.
b. Forregisteredproprietaryfunctions,theGIisrequiredtosecureATPpriortotheprintingofitsprincipalandsupplementaryreceipts/invoicesindicatingallinformationrequiredunderthisRMO.
• TheapplicationforATP(BIRFormNo.1906,asrevised),togetherwiththe
necessarydocumentaryrequirements,shallbesubmittedtotheRevenueDistrictOffice(RDO)/LargeTaxpayerOffice(LTOffice)havingjurisdictionovertheHeadOffice(HO)ofthetaxpayer-applicant.
• TheoldBIRFormNo.1906shallstillbeuseduntiltherevisedformbecomesavailable.
• Intheinterim,allapplicationsforATPshallbeprocessedusingtheRegistrationSystemoftheIntegratedTaxSystem(ITS),whichshallgeneratetheprescribedATPunderRMONo.83-99,asamendedbyRMONo.28-2002.
• ThefollowinginformationshallbetypedorprintedontheATPthatwillserveasguide/referenceforaccreditedprintersinprintingprincipalandsupplementaryreceiptsandinvoices:
1. DateofATP
2. ValidityperiodoftheATP
3. Printer’sAccreditationNumber
4. DateofAccreditation
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• TheprincipalandsupplementaryreceiptsandinvoicesoftheHOandeachofthebranchesshallhaveitsownindependentseriesofserialnumbers.
• Ataxpayerwithexpiringprincipalandsupplementaryreceipts/invoicesshallapplyforanewATPnotlaterthan60dayspriortotheactualexpirydate.
• Procedurefortaxpayerapplicant:
1. Submitinventorylisting/sandsurrenderthehardcopiesoftheunused/expiredreceipts/invoices,togetherwithphotocopiesoftheoldandnewATPsandcorrespondingPrinter’sCertificateofDeliverytotheRDOwhereitisregistered.Branchoffice/sshallsubmitandsurrenderthesametotheRDO/LTOfficewherethebranchisregistered;
2. ChoosetheBIRAccreditedPrinterfromtheupdatedlistofdulyaccreditedprintersavailableintheBIRwebsite;
3. FiletheapplicationforATPwiththesupportingdocumentslistedbelow(attheRDO/LTOfficeconcernedwheretheHOisregisteredusingtheprescribedBIRForm):
a. Originalcopyofsamplelayout/templateofOR/SI/CI
b. OriginalPrinter’sJobOrder
c. PhotocopyofpreviousATP.Ifnotavailable,thelastseriesoftheprintedOR/SI/CI.Thenewsetofreceipts/invoicesshallcontinuewiththelastserialnumberindicatedinthepreviousATPissued.However,forprintingmachineswithlimitedcapacityastothemaximumrangeofserialnumbers,theserialnumbermaystartfromoneandprefixedwithaspecial/alphacodetoavoidduplication(e.g.,A0001)
d. PhotocopyofLoose-leafPermit,ifapplicable;
4. Anauthorizedrepresentativeisaduly-designatedresponsibleofficer/employeeofthecompanywithawrittenauthorizationdulysignedbythetaxpayer-applicantoraresponsibleofficer/employeeoftheaccreditedprinterasindicatedintheATPApplicationForm;
5. SignintheofficelogbookasproofofactualreceiptoftheapprovedATP;
6. BIRAccreditedPrintersshallsubmitthefollowingtotheRDO/LTOfficeconcerned:
a. QuarterlyReportofPrinter(BIRFormNo.1932,asrevised),onorbeforethe20thdayofthemonthfollowingtheendofeachcalendarquarter
b. Printer’sCertificateofDeliveryofReceipts/InvoicesandtheSwornStatementofthetaxpayerpursuanttoSection4ofRRNo.26-2003.
• Allunused/unissuedprincipalandsupplementaryreceipts/invoicesprintedpriortoJanuary19,2013(effectivityofRRNo.18-2012)andthoseprintedbyprinters,whicharenotcompliantwiththisRMO,shallbevaliduntilJune30,2013.
20 Tax Bulletin
• Thetaxpayershallsubmitaninventorylistofprincipalandsupplementaryreceipts/invoices,andsurrenderthehardcopiesofthereceipts/invoicestotheRDO/LTOfficewherethetaxpayerisregisteredonorbeforeJuly10,2013.
• BranchOffice/sshallsubmitandsurrenderthesametotheRDO/LTOfficewherethebranchisregistered.
• Allnewset/sofprincipalandsupplementaryreceipts/invoicestobeprinted,whicharecompliantwiththerequirementsprescribedunderthisRMO,shallhaveavalidityperiodoffiveyears.
• Allunused/expired/expiringORs/SIs/CIsshallbesurrenderedtogetherwithaninventorylistingtotheBIROfficehavingjurisdictionoverthetaxpayerfordestructiononorbeforethe10thdayafterthevalidityperiodoftheexpiredreceipts/invoices.
• PendingtheavailabilityoftheOn-lineATPSystem,thescannedcopyoftheissuedATPshallbeprintedattheinsidebackportionofthecardboardcoverofeachbooklet/padofprincipalandsupplementaryreceipts/invoicesprinted.
• ATPsgeneratedthroughtheITSpursuanttothisRMOshallbemigratedtotheOn-lineATPSystemuponitsavailability,thenecessaryguidelinesandproceduresofwhichshallbeprescribedinaseparaterevenueissuance.
Revenue Memorandum Order No. 13-2013 dated May 2, 2013
• AllregisteredprintersintheITSwhoappliedforaccreditation,andwereinitiallyevaluatedbytheRDOs/officesunderLargeTaxpayersService(LTS)astothecompletenessofthedocumentaryrequirementsperOperationsMemorandumdatedJanuary24,2013shallbepublishedorpostedintheBIRwebsiteas‘deemedAccreditedPrinters’.
• AProvisionalAccreditationNumbershallbeissuedtoall‘deemedAccreditedPrinters’.
• TheProvisionalAccreditationshallbegivenavalidityperiodofsixmonthsfrompostingintheBIRwebsite.
• ACertificateofAccreditationwithPermanentAccreditationNumbershallbeissuedtotheprinteronlyafterevaluationandapprovalbytheNational/RegionalAccreditationBoard(N/RAB)withtheexclusionofthoseundertheInformationSystemsGroup(ISG).
• TheAccreditedPrinterswithCertificateofAccreditationshallceaseusingtheassignedProvisionalAccreditationNumber.
• ThePermanentAccreditationNumbershallbeusedinprintingORs,SIsand/orinvoices.
• The‘deemedAccreditedPrinters’,whichwereissuedRevocationNoticesshallnotbeallowedtoapplyforAuthoritytoPrint(ATP)ReceiptandInvoices.However,allreceiptsandinvoicesprintedbytheseprintersshallremainvaliduntilexpirationoruntilfullutilization,whichevercomesfirst.
• AllprintersissuedtheLetterofDenial/RevocationNoticewhointendtobeaccreditedwillobservethesameprocedureasanewapplicantforaccreditation,andshallundergothesameaccreditationprocess.
RMONo.13-2013prescribeswork-aroundprocedurespendingtheavailabilityoftheOnlineSystemforAccreditationofPrinters(OCAP)pursuanttoRRNo.15-2012datedDecember3,2012.
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• AlistofregisteredprintersintheITSandtaggedasTPENGAGEDINPRTGforatleastthreeyearsasofDecember31,2012shallbetheinitialcandidatesforaccreditation.
BOC Issuance
Customs Administrative Order No. 2-2013 dated May 2, 2013
• Immediatelyuponarrivalofthecarryingvessel,themasteroragentthereofmustsubmittothePiersandInspectionDivision(PID)oritsequivalentunitfoursetsoftheInwardForeignManifest,tobedistributedasfollows:
1. PIDorequivalentoffice;
2. IntelligenceEnforcementGroup;
3. AssessmentandOperationsCoordinatingGroup;
4. COAResidentAuditor.
• TheCommissionerofCustoms,uponconsultationwithprivatestakeholders,shallissuetherulesandregulationstoimplementCAONo.2-2013.
• Allorders,memoranda,circularsorpartsthereof,whichareinconsistentwithCAONo.2-2013aredeemedrevoked,amended,ormodifiedaccordingly.
• CAONo.2-2013shalltakeeffect15daysafterpublicationinanewspaperofgeneralcirculation.
[Editor’s Note: CAO No. 2-2013 was published in the ManilaTimes and ManilaStandardToday on May 9, 2013.]
PEZA Issuance
Memorandum Circular No. 2013-013 dated April 30, 2013
• The50%reductioninallPEZAprocessingfeesforecozoneimport/exportfullcontainerloadshipmentsattheBatangasInternationalPort(BIP)isextendedforanotheryear(January-December2013).
• ThePhilippinePortsAuthorityhasalsoreduceditsportcharges(portduesanddockageforvessels)by50%foraperiodofoneyear(January-December2013).
SEC Issuances
SEC Memorandum Circular No. 7 dated April 8, 2013.
• DuringitsmeetingonApril8,2013,theSECEn BancapprovedtheamendmentofRule3oftheImplementingRulesandRegulationsoftheLendingCompanyActof2007(RANo.9474)byrequiringlendingcompaniestocomplywiththeSingleBorrower’sLimit(SBL)andcreditlimitonDirectors,Officers,StockholdersandRelatedInterests(DOSRI).
• Thetotalcreditthatalendingcompanymayextendtoitsdirectors,officersandstockholdersshallnotexceed15%ofitsnetworth.
CustomsAdministrativeOrder(CAO)No.2-2013amendsCAONo.1-2007,whichrequiresthesubmissionofInwardForeignManifestandConsolidatedCargoManifest.
PEZAMCNo.2013-013announcesthesecondextensionofthe50%reductioninallPEZAprocessingfeesforEcozoneImport/ExportFull-ContainerLoadShipmentsviatheBIP.
SECMCNo.7prescribestheSBLandCreditLimitonDOSRIofalendingcompany.
22 Tax Bulletin
• Forthispurpose,loansandothercreditextendedbyalendingcompanytothefollowingrelatedinterestsshallbedeemed“extendedtoitsdirectors,officersandstockholders”:
1. Spouseorrelativeswithinthefirstdegreeofconsanguinityoraffinity,orrelativesbylegaladoption,oftheofficer,directororstockholderofthelendingcompany;
2. Partnershipinwhichadirectororofficerorstockholderofthelendingcompany,ortheirspouseorrelativesreferredtointheprecedingitem1isageneralpartner;
3. Corporationswhereadirectororofficerorstockholderofthelendingcompanyortheirspouseorrelativesreferredtoinitem1aboveisalsoadirectororofficerofthecorporation;
4. Corporationswheremorethan20%ofitssubscribedcapitalstockisownedbyadirectororofficerorstockholderofthelendingcompanyortheirspouseorrelativesreferredtoinitem1above;
5. Corporationswhollyormajority-ownedorcontrolledbyentitiesmentionedinitems2,3and4above.
• Thetotalcreditthatalendingcompanymayextendtoanyperson,company,corporationorfirmshallnotexceed30%ofitsnetworth.
[Editor’s Note: SEC MC No. 7 was published in ManilaStandardToday on May 9, 2013.]
SEC Memorandum Circular No. 8 dated May 20, 2013.
• Allcoveredcorporationsshall,atalltimes,observetheConstitutionalorstatutoryownershiprequirement.
• TherequiredpercentageofFilipinoownershipshallbeappliedtoBOTH:
1. Thetotalnumberofoutstandingsharesofstockentitledtovoteintheelectionofdirectors;AND
2. Thetotalnumberofoutstandingsharesofstock,whetherornotentitledtovoteintheelectionofdirectors.
• AllCorporateSecretariesofcoveredcorporationsaredirectedtomonitorandobservecompliancewiththeownershiprequirements.TheCorporateSecretarycannotdelegatethisresponsibilitywithouttheexpressauthorityfromtheBoardofDirectorsorTrustees.
• Allcoveredcorporationswhicharenon-compliantshallbegivenaperiodofoneyearfromthedateofeffectivityofthisMCwithinwhichtocomplywithsaidownershiprequirement.
[Editor’s Note: SEC MC No. 8 was published in the BusinessMirror on May 22, 2013.]
SECMCNo.8prescribestheguidelinesforcomplyingwiththeFilipino-foreignownershiprequirementsasprescribedintheConstitutionandexistinglawsbycorporationsengagedinnationalizedandpartlynationalizedactivities.
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SEC Memorandum Circular No. 9 dated May 20, 2013
• OnMarch20,2013,theSECissuedMCNo.5,requiringalllistedcompaniestosubmitonMay30,2013theirAnnualCorporateGovernanceReport(ACGR)inaccordancewiththeguidelinessetforththerein.
• However,duetothenumberofrequestsreceivedandconsideringfurtherthatthisisthefirsttimesaidcompaniesshallbefilingthesaidreport,theSECinitsmeetingonMay20,2013approvedthegrantingofa30-dayextension(i.e.,untilJune30,2013)togiveampletimetoalllistedcompaniesincludingtheirrespectivesignatoriestocomplywithMCNo.5.
[Editor’s Note: SEC MC No. 9 was published in the PhilippineStar on May 23, 2013.]
BSP Issuance
BSP Circular No. 796 dated May 3, 2013
• TheprovisionsoftheManualofRegulationsforBanks(MORB)onthegeneralfeaturesofamicrofinancesavingsdepositaccountareamendedasfollows:
“G.GeneralFeaturesofaMicrofinanceSavingsDepositAccount
1. MinimummaintainingbalancenotexceedingPhp100.00
2. Notsubjecttodormancycharges
3. OnlyforindividualmicrofinanceclientswhoseaveragedailysavingsaccountbalancedoesnotexceedPhp40,000.00
xxx”
• ThisCircularshalltakeeffect15calendardaysfollowingitspublicationeitherintheOfficialGazetteorinanewspaperofgeneralcirculation.
[Editor’s Note: Circular No. 796 was published in the ManilaTimes on May 10, 2013.]
Court Decisions
First Lepanto Taisho Insurance Corporation vs. Commissioner of Internal RevenueSupremeCourt(ThirdDivision)G.R.No.197117promulgatedApril10,2013
Facts:
TheBIRassessedPetitionerFirstLepantoTaishoInsuranceCorporation(FirstLepanto),anon-lifeinsurancecorporationandalargetaxpayer,variousdeficiencytaxesfortheyear2007.
BecauseofinactionbytheBIRonitsprotest,FirstLepantoappealedtotheCourtofTaxAppeals(CTA)whichupheldthedeficiencytaxassessmentsforwithholdingtaxoncompensation(WTC),expandedwithholdingtax(EWT)andfinalwithholdingtax(FWT).TheCTAalsoorderedthepaymentofa20%delinquencyinterestfromthedateFirstLepantoreceivedtheFormalLetterofDemand(FLD)untilactualpaymentismade.
SECMCNo.9extendsthedeadlinetosubmittheACGRforlistedcompaniesfromMay30,2103toJune30,2013.
CircularNo.796amendsAppendix45(NotesonMicrofinance)ofSectionX361oftheMORB.
AstipulationbetweentheBIRandthetaxpayerattheCTAproceedingsthattaxeshavebeencorrectlyremittedtothegovernmentcannotbindthecourt.Thetaxpayerisstillrequiredtopresentproofthatitcorrectlyremittedthetaxes.
A20%delinquencyinterestisdueonunpaiddeficiencytaxesassessedbytheBIRcomputedfromthedateprescribedfortheirpaymentuntilfullpaymentismade.
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FirstLepantoappealedtotheSupremeCourt.FirstLepantocontendedthat:(i)paymentstodirectors,notbeingemployees,shouldnotbesubjecttoWTC;and(ii)itnolongerneedstopresentevidenceontheEWTonitspaymentsforcontractorsandpurchases,sinceithadalreadystipulatedwiththeBIRattheCTAproceedingsthattheCompanywithheldthecorrectEWTonitspaymentsforcontractorsandpurchases.Issue:
IsFirstLepantoliableforthedeficiencytaxesandfordelinquencyinterest?
Ruling:
Yes.FirstLepantoisliablefordeficiencyWTC,EWTandFWTandfordelinquencyinterest.
OntheWTCassessment,adirectorwasconsideredanemployeeundertheWithholdingTaxRegulationstheninforce.TheCompanyfailedtoprovewithdocumentsthatthedirectorswerenotitsemployees.Hence,thepaymentsareproperlysubjecttoWTC.
TheCompanyalsofailedtoprovewithrelevantsourcedocuments(suchasreimbursementforms/voucherswithattachedSIs/ORs,withappropriatetracingtospecificgeneralledgerentries)thatthepaymentsoffixedtransportation,subsistenceandlodgingallowances,andfixedrepresentationexpensestoemployeesweremerereimbursementsofactualexpenses.Becauseofthis,theallowancesaretreatedasemployees’compensationsubjecttoWTC.
OntheEWTassessment,FirstLepantofailedtopresentdocuments(likereinsuranceagreements/contracts)toshowthatthecommissionswerepaidtoinsurancecompanies,whicharenotagentsorbrokers,andtherefore,shouldnotbesubjecttoEWT.Therewasalsounder-withholdingofEWTontheCompany’soccupancycosts.
OntheargumentthattheBIRandtheCompanyhavejointlystipulatedattheCTAproceedingsthattheCompanyhadcorrectlywithheldtheEWTdueonpaymentsforcontractorsandpurchases,and,therefore,isnolongerrequiredtopresentevidenceontherelatedEWTremittance,stipulationscannotdefeattherightoftheStatetocollectthecorrecttaxesduebecausetaxesarethelifebloodofournationanditscollectionshouldbeactivelypursued.
OntheFWTassessment,FirstLepantofailedtopresentproofofFWTremittanceonpaymentsofdividendsandcomputerizationexpensestonon-residentforeigncorporations.
Finally,theCompanyfailedtopaythedeficiencytaxassessedwithinthetimeprescribedforitspayment.Hence,the20%delinquencyinterestiscorrectlyimposedontheunpaiddeficiencytaxesassessed,reckonedfromthedateprescribedforitspaymentuntilfullpaymentismade.
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Pelizloy Realty Corporation vs. The Province of BenguetSupremeCourt(ThirdDivision)G.R.No.183137promulgatedApril10,2013
Facts:
PetitionerPelizloyRealtyCorporation(Pelizloy)ownsPalmGroveResort,whichhasfacilitieslikeswimmingpools,spa,andfunctionhallslocatedinTuba,Benguet.
TheProvinceofBenguetenactedtheBenguetRevenueCodeof2005,whichlevieda10%amusementtaxongrossreceiptsfromadmissionsto“resorts,swimmingpools,bathhouses,hotspringsandtouristspots.”
PelizloyquestionedthevalidityoftheprovisionbeforetheSecretaryofJustice.UponfailureoftheSecretarytodecidewithinthe60day-periodprovidedundertheLGC,PelizloyfiledaPetitionforDeclaratoryReliefwiththeRegionalTrialCourt(RTC)inLaTrinidad,Benguet.
PelizloyarguedthattheBenguetRevenueCodeimposedapercentagetax,whichprovincesarenotallowedtolevyunderthecommonlimitationsonthetaxingpowersofLGUs.Section133(i)oftheLGCprohibitsLGUsfromimposingpercentagetaxorVATonsales,barters,exchangesorsimilartransactionsongoodsorservices,exceptwhenotherwiseprovidedbytheLGC.
TheRTCdismissedthepetition.PelizloyappealedtotheSupremeCourt.
Issues:
1. IstheamusementtaxapercentagetaxwhichtheProvinceofBenguetisnotallowedtolevy?
2. Canprovincesimposeamusementtaxesonadmissionfeestoresorts,swimmingpools,bathhouses,hotspringsandtouristspots?
Ruling:
1. Yes.TheamusementtaxleviedundertheBenguetRevenueCodeisapercentagetax.However,aprovinceisallowedtolevyamusementtaxesundertheLGC.
Apercentagetaxisataxmeasuredbyacertainpercentageofthegrosssellingpriceorgrossvalueinmoneyofgoodssold,barteredorimported;orofthegrossreceiptsorearningsderivedbyanypersonengagedinthesaleofservices.TheTaxCodelistsamusementtaxesasamongthepercentagetaxes,whichareleviedregardlessofwhetherornotataxpayerisalreadyliabletopayVAT.
Amusementtaxesarefixedatacertainpercentageofthegrossreceiptsincurredbyspecifiedestablishments.Hence,theamusementtaxleviedundertheBenguetRevenueCodeisapercentagetax.
WhiletheLGCprohibitsallLGUs,includingprovinces,fromlevyingpercentagetaxes,theLGCallowsprovincestolevyandcollectanamusementtax,whichisapercentagetax,fromproprietors,lessees,oroperatorsoftheaters,cinemas,concerthalls,circuses,boxingstadia,andotherplacesofamusement.
Swimmingpools,bathhouses,andhotspringscannotbeconsideredas“otherplacesofamusement”subjecttoamusementtaxesundertheLGC.
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However,provincesarenotbarredfromlevyingamusementtaxesbecauseSection133(i)oftheLGCspecificallyprovidesthattheprohibitionissubjecttoexceptionswhichmaybeprovidedundertheLGC.Section140oftheLGCexpresslyallowstheimpositionbyprovincesofamusementtaxes“tobecollectedfromtheproprietors,lessees,oroperatorsoftheaters,cinemas,concerthalls,circuses,boxingstadia,andotherplacesofamusement.”
2. No.Provincesmaynotimposeanamusementtaxonadmissionfeestoswimmingpools,resorts,bathhouses,hotsprings,andtouristspots,asthesefacilitiesdonotqualifyas“otherplacesofamusement”undertheLGC.
Section131(c)oftheLGCdefines“amusementplaces”as“theaters,cinemas,concerthalls,circusesandotherplacesofamusementwhereoneseeksadmissiontoentertainoneselfbyseeingorviewingtheshoworperformances.”Accordingly,“otherplacesofamusement”mustbeinterpretedasvenueswhereoneseeksadmissiontoentertainoneselfbyseeingorviewingtheshoworperformancesorasvenuesprimarilyusedtostagespectaclesorholdpublicshows,exhibitions,performances,andothereventsmeanttobeviewedbyanaudience.
Waterfront Philippines, Inc. vs. Commissioner of Internal RevenueCourtofTaxAppeals(SpecialFirstDivision)CaseNo.8024promulgatedApril24,2013
Facts:
RespondentCommissionerofInternalRevenue(CIR)assessedPetitionerWaterfrontPhilippines,Inc.(Waterfront)forallegeddeficiencytaxesfortaxableyear2006,includingVAToninterestincomederivedfromloansgrantedtoaffiliatesMetroAllianceHoldingsandEquitiesCorporationandWellexGroup,Inc.
TheCIRclaimsthatintheordinarycourseofbusiness,Waterfrontextendsandobtainscashadvancesandloanstoandfromrelatedpartiestomeetworkingcapitalrequirementsandtofinancetheconstructionandoperationofitshotelprojects,infurtheranceoftheprimarypurposestatedintheArticlesofIncorporation.TheCIRallegesthatsaidinterestincomeissubjecttoVAT.Waterfrontprotestedtheassessment.
UpondenialofitsprotestbytheCIR,WaterfrontfiledaPetitionforReviewwiththeCTA.TheCTAFirstDivisionruledthattheinterestincomefromloansoradvancesgrantedtoaffiliatesbyWaterfront,whichisnotengagedinthebusinessoflendingmoney,isnotsubjecttoVAT.TheCIRfiledaMotionforReconsiderationandarguedthatWaterfrontwasassessedfordeficiencyVATnotasalendinginvestorbutforinterestincomerealizedfromloansandadvancesgrantedtorelatedpartiesintheordinarycourseoftradeorbusiness.
InterestincomefromloansandadvancestoaffiliatesisconsideredasrevenuerealizedfromservicesrenderedinthenormalcourseoftradeorbusinessthatissubjecttoVAT.
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Issue:
IstheinterestincomederivedbyWaterfrontfromloansandadvancesgrantedtoaffiliatessubjecttoVAT?
Ruling:
Yes.TheinterestincomefromloansandadvancesextendedbyWaterfronttoitsaffiliatesissubjecttoVAT.
TheCIRassessedWaterfrontfordeficiencyVATnotasalendinginvestorbutbecausetheinterestincomereceivedisrevenuerealizedfromservicesrenderedinitsnormalcourseoftradeorbusiness.
Section105oftheTaxCodedefines‘inthecourseoftradeorbusiness’astheregularconductorpursuitbyanypersonofacommercialoraneconomicactivity,includingtransactionsincidentalthereto.Section108oftheTaxCodealsoprovidesthatVATisdueonthe‘saleorexchangeofservices’ortheperformanceofallkindsofservicesinthePhilippinesforothersforafeeorconsiderationregardlessofwhethertheperformanceofsuchservicescallsfortheexerciseoruseofphysicalormentalfaculties.
TheCTAcitedDiaz, et al. vs. Secretary of Finance, et al. promulgated on July 19, 2011,wheretheSupremeCourtheldthatVATisimposedonallkindsofservicesinthePhilippinesforafee.TheenumerationofservicessubjecttoVATinSection108oftheTaxCodeisnotexclusive.ThelistingofspecificservicesillustrateshowbroadtheVATcoverageis.Everyactivitythatcanbeimaginedasaformofservicerenderedforafeeshouldbedeemedincludedunlessaspecificprovisionoflawexcludesit.Thus,whetherWaterfrontisalendinginvestorwouldnotbematerialasitisonlyoneoftheactivitiessubjecttoVATenumeratedinSection108oftheTaxCode.
Waterfrontextendedcashadvancestoitsaffiliates,whichisclearlyaperformanceofserviceforafee(withinterestasthefeeorconsideration)thatiscoveredbytheVATprovisionsoftheTaxCode.Whiletheactofextendingcashadvanceswithinteresttoaffiliatesmaybeanisolatedtransaction,itdoesnotfollowthatthesamecannotbetreatedasanincidentaltransactionsubjecttoVAT.
[Editor’s Note: This is an ‘Amended Decision’ of the CTA Special First Division reversing the ruling of the CTA First Division in its ‘Decision’ promulgated on November 13, 2012, which was published in the November 2012 Tax Bulletin.]
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