p4 p6 p7 | reduced rpt on power generation facilities … · (bir ruling no. 373-2014 dated 3...

Client advisory letter

ISSN 2094-1226/February 2015Employees’ tax exemption is now PHP82,000 p4 | Date of actual exportation is controlling p6 | BIR’s inaction within 120 days is deemed denial p7 | Reduced RPT on power generation facilities p8

Isla Lipana & Co.

2 Client advisory letter 2015

At a glanceUpdates, reiterations and clarifications on selected topics

Shift of global economic power to emerging economies set to continue, says PwC economists

Latest on income and withholding taxesEmployees’ tax exemption is now PHP82,000............................. 4Under-declared purchase does not result in taxable income ..... 4Benefit from provident fund received before retirement is taxable ........................................................... 4Compensation for involuntary separation is exempt from income tax ............................................................ 4Private entities engaged in NHA socialized housing are exempt from certain taxes ........................................ 5

Latest on VAT refund Completeness of documents — look out of the VAT refund claimant ............................................................. 6Date of actual exportation is controlling ....................................... 6Proof that input taxes are not subsequently used is essential ... 6BIR’s inaction within 120 days is deemed denial ......................... 7

Latest on RPT, special laws and other taxesReduced RPT on power generation facilities .............................. 8Rural banks are exempt from certain taxes ................................. 8Beneficial use determines RPT liability or exemption .................. 8Customs law is not applicable in claims for refund by PEZA-registered entities .......................................... 9

Latest on tax assessments30-day period to appeal is jurisdictional and non-extendable . 10CTA can rule on the validity of assessment in a tax collection . 10BIR must collect deficiency taxes within five years from assessment .................................................................11Substantial under-declaration makes a tax return false .............11

Latest on other regulatory requirementsDeadline for filing of Annual Corporate Governance Report for newly listed companies ........................ 12BOC accreditation rule also applies to PEZA locators .............. 12Anti-dumping duty on wheat flour imports from Turkey ............ 13Banks to be set up in areas with no existing banks are exempt from branch processing fees ....................................................... 1350% reduction in all PEZA processing fees for Ecozone shipments via Batangas International Port ................................. 13

The global economic power shift away from established advanced economies in North America, Western Europe and Japan will continue over the next 35 years – despite a projected slowdown in Chinese growth after around 2020.

This is one of the key findings from the latest report from PwC economists on The World in 2050: Will the shift in global economic power continue? This presents long-term projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, covering 84% of total global GDP.

The report indicates that the world economy is projected to grow at an average of just over 3% per annum from 2014-50 – doubling in size by 2037 and nearly tripling by 2050. But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.

John Hawksworth, PwC Chief Economist and co-author of the report, comments: “There are different ways of comparing the size of economies, but we project that China will be the largest economy by 2030 on any measure. However, we also expect its growth rate to slow markedly after around 2020 as its population ages, its high investment rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit.

“India has the potential to sustain its higher growth rate for longer and become a $10 trillion economy by around 2020 in purchasing power (PPP) terms, or around 2035 at market exchange rates. But this relies on India making sustained progress on infrastructure investment, institutional reforms and boosting education levels across the whole population.”

The report also contains projections based on GDP at market exchange rates, without this relative price adjustment. On that basis, China is projected to overtake


Shift of global economic power to emerging economies set to continue, says PwC economists

the US in around 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US.

Other highlights from PwC’s projections are:

• Emerging economies like Indonesia, Brazil and Mexico have the potential to be larger than the UK and France by 2030, with Indonesia possibly rising as high as 4th place in the world rankings by 2050 if it can sustain growth-friendly policies.

• Nigeria, Vietnam and the Philippines are notable risers in the global GDP rankings in the long term, reflecting relatively high projected average growth rates of around 4.5-5.5% per annum over the period to 2050.

• Malaysia is also projected to grow at around 4% per annum on average in the period to 2050 – higher than China’s projected average growth rate of around 3.5% per annum over this period, and an impressive performance for what is already a middle income country.

• Colombia is also an economy that PwC projects to grow at a relatively healthy long term rate of around 4% per annum over the period to 2050, noticeably faster than its larger Southern American neighbours like Brazil and Argentina.

• Japanese growth is projected to be the slowest of all 32 countries covered in total terms, driven in part by a steadily declining population; as a result Japan is projected to fall from 4th to 7th place in the global GDP rankings over the period to 2050.

• European economies tend to slide down the rankings, with growth rates in the major Eurozone economies projected to average only around 1.5-2% per annum to 2050.

• Poland is projected to have the highest average growth rate of the large EU economies, and also to outperform Russia in terms of long-run growth.

How should businesses approach emerging markets?The PwC analysis has a number of high-level messages for businesses looking to develop their emerging market strategies, including:

• It may be difficult to sustain the growth rates of the 2000 to 2012 period in the major emerging markets, given the

combination of economic bottlenecks and institutional deficiencies. Some slowdown should be factored into business plans and investment appraisals.

• Emerging markets vary greatly in their institutional strengths and weaknesses, which need to be carefully assessed. There could also be major differences in institutional strengths between industry sectors within countries. Deep local knowledge that is updated in real time is critical to manage businesses successfully in an emerging market environment. Having the right local partners to navigate you through local political, legal and regulatory systems is also critical. Identifying and promoting local talent who understand local business and social cultures better than any outsider will also be an increasing source of comparative advantage.

• For large companies making strategic investments in frontier markets like sub-Saharan Africa, part of their contribution could be to try to improve the local institutional framework. This could involve offering appropriate technical assistance and advice to local governments in areas like corporate governance, fiscal policy and intellectual property rights protection. It could also involve investing in social and economic infrastructure (e.g. schools, roads, railways, power and water networks) where these are vital to a company’s longer term success in a region.

• Finally, don’t forget mature markets in North America and Europe. These will remain very significant players in the global economy for decades to come even if their growth rates average only around 2%. PwC’s analysis shows, for example, that average income levels per person (at PPPs) in 2050 will still only be around 40% of average US levels in China and around a quarter of US levels in India. Advanced economies will also, generally speaking, still be easier and lower risk places to do business given their political and institutional strengths.

John Hawksworth concludes: “While our analysis confirms that emerging markets have huge potential, they can also be an institutional minefield – both managers and investors need to tread carefully.”

Note: A copy of the full report The World in 2050 Will the shift in global economic power continue? is at http://www.pwc.com/world2050


Latest on income and withholding taxes

Employees’ tax exemption is now PHP82,000Last 12 February 2015, the President has signed the law increasing from PHP30,000 to PHP82,000 the tax exemption ceiling for 13th month pay and other benefits (incentives, bonuses, etc.) received by all employees and officials, whether from public or private entities. The ceiling will be reviewed and adjusted to its present value using the National Statistics Office’s (NSO) Consumer Price Index (CPI) every three years.

This new law shall take effect beginning 1 March 2015 or 15 days after its publication in a newspaper of general circulation. The DOF, through the BIR, may issue the implementing rules soon.(Republic Act No. 10653 approved on 12 February 2015)

Under-declared purchase does not result in taxable incomeThe CTA voided the assessments for deficiency income tax and VAT which are based purely on alleged undeclared/under-declared purchase transactions.

The CTA ruled that under-declared purchase does not by itself result in income subject to income tax and VAT. Income tax is imposed only when there is a taxable income received or realized by the taxpayer. There is no basis to assess deficiency income tax just because of undeclared purchases. In fact, a taxpayer is free to deduct from its gross income a lesser amount, or not claim any deduction at all. What is prohibited by the income tax law is to claim a deduction beyond the amount authorized.

The CTA also ruled that output VAT is imposed only when one sells, and not when one purchases.(CTA EB Case No. 1054 dated 13 January 2015)

Benefit from provident fund received before retirement is taxableAccording to the BIR, distribution of employer’s share in a provident fund to non-retiring employees shall be subject to income tax/withholding tax on compensation. The Tax Code1, exempts only the amount received from a qualified provident fund by employee-members representing retirement benefits.(BIR Ruling No. 373-2014 dated 3 October 2014)

Compensation for involuntary separation is exempt from income tax• Separationbenefitisexemptfromincomeandwithholding

tax if:1. it is paid to employees who are separated due to causes

beyond their control; or 2. it represents retirement pay covered by a retirement

plan approved by the BIR

A company which was forced to lay off some of its employees sought the BIR’s ruling on the taxability of employees’ separation packages: (a) retirement benefit under an existing plan approved by the BIR (early retirement pay under the plan plus additional gratuity); and (b) benefits for employees not qualified in the retirement benefit category.

The BIR ruled that the employees qualified for early retirement are exempt from income tax subject to certain conditions2: (1) the employees had been in the service for at least ten years; and (2) the employees are at least 50 years old at the time of retirement. However, the additional benefits (i.e. gratuity) given may not be covered by the exemption unless expressly stated under the Tax Code.

1 Section 32(B)(6) of the Tax Code2 Section 32(B)(6)(b) of the Tax Code


The other employees receiving separation benefits are also exempt from tax provided that their seperation from service was due to a cause beyond their control and they are paid as a result of such separation.

The exemption, however, does not cover regular employees’ salaries, and 13th month pay and other benefits in excess of PHP30,000 (PHP82,000 starting 1 March 2015).(BIR Ruling No. 496-14 dated 12 December 2014)

Private entities engaged in NHA socialized housing are exempt from certain taxesTo encourage participation of the greater private sector in socialized housing, private entities contracting with and for the NHA shall be exempted from income taxes, CGT and VAT on revenues from project related activites.

A BIR Circular3 also provides that the NHA’s exemption from DST on all documents or contracts executed by it and in its favor is extended to the other transacting party, whether seller or buyer. (BIR Ruling Nos. 471-2014 dated 21 November 2014 and 486-2014 dated 10 December 2014)

3 Revenue Memorandum Circular (RMC) No. 42-01 dated 5 October 2011

BIR - Bureau of Internal RevenueCGT - Capital Gains TaxCTA - Court of Tax AppealsDOF - Department of FinanceDST - Documentary Stamp TaxNHA - National Housing AuthorityVAT - Value Added Tax

Glossary


Completeness of documents — look out of the VAT refund claimantThe CTA reiterated that the submission of the supporting documents lies within the sound discretion of the taxpayer. Being the affected party, the taxpayer is in the best position to determine which documents are necessary and essential to garner a favorable decision.

The 120-day period, therefore, should be reckoned from the filing of the application for refund whether the taxpayer submitted certain documents only, or failed, or opted not, to submit any document at all.(CTA EB No. 1133 dated 7 January 2015)

Date of actual exportation is controlling• Bill of ladings and provisional receipts showing the actual

shipment of export prove the transaction date• Final sales invoices issued after the transaction do not

invalidate the refund • Submission of subsidiary purchases & sales journal not

required for VAT refund

In a VAT refund claim based on zero-rated export sales, the CTA En Banc ruled that the shipment date indicated in the bills of lading and provisional invoices is the date of sale transaction. The final invoices, though bearing dates later than the dates of shipment, do not alter the fact that sales and actual shipment had actually transpired during the period of the claim.

Moreover, the CTA clarified that there’s nothing in Section 112(A) of the Tax Code, as amended, that requires the presentation of subsidiary sales journal and subsidiary purchase journal for purposes of refund or issuance of tax credit certificate.

Thus, non-submission of these documents should not deprive a taxpayer of its right to refund.(CTA EB No. 1116 dated 7 January 2015)

Proof that input taxes are not subsequently used is essential• VATreturnsfiledaftertheperiodcoveredbytheinputtaxrefundclaimmustbesubmittedforverification

The CTA denied a claim for VAT refund because the claimant failed to submit its VAT returns as of the quarter when it opted to file the claim. The subsequent VAT returns must show that the claimant excluded the input tax refund claim from its accumulated input taxes carried forward.

The submission of the VAT return is important for the court to verify with certainty whether or not the claimed input VAT was used or carried over as credit to the subsequent quarters.

The CTA’s decision is consistent with the principle that tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and are construed strictly against the person or entity claiming the exemption. (CTA EB Case No. 1056 dated 7 January 2015)

Latest on VAT refund


BIR’s inaction within 120 days is deemed denialThe SC once again confirmed its ruling that the two-year prescriptive period in Section 112 of the Tax Code applies only to the filing of administrative claims with the CIR and not to the filing of judicial claims with the CTA. It also reiterated that compliance with the 120+30 day period is mandatory and jurisdictional.

In this case, the CTA lost its jurisdiction over the taxpayer’s claim for refund since it was filed out of time. Although its administrative claim was filed well within the two-year prescriptive period, its judicial claim, however, was filed more than a year after the last day of the 30-day period for appeal. The taxpayer erroneously thought that the 30-day period does not apply to cases involving the CIR’s inaction after the lapse of the 120-day waiting period and that judicial claim is properly filed as long as it is done within the two-year period.

The court’s decision reminds taxpayers that the lapse of the 120-day period signifies an inaction on the part of the CIR. Such inaction is a decision itself; a denial of the refund claim. Therefore, taxpayers must no longer wait for the CIR to issue a decision thereafter. Instead, they must already file an appeal to the CTA within 30 days from the lapse of the 120-day waiting period.(G.R. No. 168950 dated 14 January 2015)

BIR - Bureau of Internal RevenueCIR - Commissioner of Internal RevenueCTA - Court of Tax AppealsSC - Supreme CourtVAT - Value Added Tax

Glossary


BIR - Bureau of Internal RevenueBOT - Build-Operate-TransferCTA - Court of Tax AppealsDST - Documentary Stamp Taxayment SystemFMV - Fair Market ValueGOCC - Government-Owned and Controlled CorporationsIPP - Independent Power ProducerLGC - Local Government CodePEZA - Philippine Economic Zone AuthorityRPT - Real Property TaxSC - Supreme Court

Glossary

Reduced RPT on power generation facilities • RPT liabilities and penalties on the power generation

facilities of IPPs are reduced and condoned by the President

To prevent the threat on stability of energy prices, an Executive Order4 was issued reducing and condoning all liabilities for RPT on property, machinery and equipment actually and directly used by IPPs for the production of electricity under BOT contracts with GOCCs for all years up to 2014. The reduced RPT shall be computed based on an assessment level of 15% of the FMV of said property depreciated at the rate of two percent (2%) per annum, less any amounts already paid by the IPPs. The fines, penalties and interests on such deficiency RPT liabilities were also waived. (RMC No. 6-2015 dated 5 January 2015)

4 EO No. 173 dated 31 October 2014 –exercise of the authority of the President to condone real properties under Section 277 of the Local Government Code (RA No. 7160)

Rural banks are exempt from certain taxes Applying the Rural Banks Act of 19925 and existing regulations6, the BIR reiterated that all rural banks are exempt from all taxes, fees and charges, except corporate income tax and local taxes/fees/charges, for a period of five years from the date of commencement of operations. This includes exemption from gross receipts tax (GRT) imposed on banks and financial institutions and DST on any loan or transaction extended by rural banks in an amount not exceeding PHP50,000.

However, DST may still be collected under Section 173 of the Tax Code which states that in case one party enjoys exemption from the tax imposed, the other party who is not exempt shall be directly liable for such tax.(BIR Ruling No. 481-2014 dated 3 December 2014)

Beneficial use determines RPT liability or exemption• A GOCC is exempt from real property tax under the LGC if

its real properties are actually, directly and exclusively used in the generation and transmission of electric power

This is one of the cases where a private company is claiming RPT exemption based on its BOT contract with the GOCC. The private company is saying that the GOCC owns the power generation facilities and therefore should be exempt from RPT.

5 Section 15 of RA No. 7353 approved on 2 April 19926 Section 2(B) of RR No. 16-93

Latest on RPT, special laws and other taxes


The CTA once again clarified that under the LGC7, it is the fact of “use,” not “ownership” which determines whether the real properties should be exempt from RPT.

“Actual Use” refers to the purpose for which the property is principally or predominantly utilized by the person in possession of it.

Moreover, the CTA ruled that the subject properties must be “actually, directly and exclusively used” by the GOCC in order to claim exemption.

• Vagueness in a contract of adhesion runs against the party who prepared it

In this case, the CTA emphasized the rule in a contract of adhesion8 that ambiguities in a contract are interpreted against the party that prepared it. (CTA EB No. 1024 dated 7 January 2015)

Customs law is not applicable in claims for refund by PEZA-registered entitiesThe CTA granted the refund by a PEZA-registered taxpayer of customs duties it paid in relation to its local purchases of petroleum products. Following the 2004 SC decision, the Court held that the provisions of the Tariff and Customs Code of the Philippines (TCCP) are not applicable to supplies that are brought inside the economic zone and used for PEZA registered activities.

The court went on to state that it will be the provisions of the Civil Code on solutio indebiti (quasi-contract created in case of payment by mistake) that will govern such claims. As such, the proper prescriptive period for claims of refund by PEZA-registered entities is six years from date of payment.(CTA EB Case No. 1142 dated 5 January 2015)

7 Section 234(c) and Section 216 of the Local Government Code

8 “Adhesion contract” is defined as follows: “A standard-form contract prepared by one party, to be signed by the party in a weaker position, usu. a consumer, who has little choice about the terms. - Also termed contract of adhesion; adhesory contract; adhesionary contract; take-it-or-leave-it contract; leonine contract.” Blacks Law Dictionary 318-319 (7th ed. 1999).


30-day period to appeal is jurisdictional and non-extendableUnder RA No. 1125, as amended by RA No. 9282, the law creating the CTA, the party adversely affected by a decision of the CIR may file an appeal with the CTA within 30 days after the receipt of such decision or ruling.

The SC had, time and again, recognized the jurisdictional character of the 30-day period within which to file an appeal before the CTA. It reiterated that decisions, rulings or inaction of the Commissioner are necessary in order to vest the CTA with jurisdiction to entertain the appeal, provided it is filed within 30 days after the receipt of such decision or ruling, or within 30 days after the expiration of the 180-day period fixed by law for the Commissioner to act on the disputed assessments.

This 30-day period within which to file an appeal is jurisdictional and failure to comply would bar the appeal and deprive the CTA of its jurisdiction to entertain and determine the correctness of the assessments. Such period is not merely directory but mandatory and it is beyond the power of the courts to extend the same.

Further, the court emphasized strict compliance with the jurisdictional conditions on tax refunds. It cautioned itself not to establish precedent whereby non-compliance with mandatory and jurisdictional conditions prescribed by law can be trampled with if the claim is otherwise meritorious.(CTA EB No. 1102 dated 7 January 2015)

Latest on tax assessments

CTA can rule on the validity of assessment in a tax collection• Inacollectionoffinalandexecutoryassessment,the

jurisdiction of the CTA is not limited to timeliness & validity of collection procedure

The CTA reiterated an SC decision9 emphasizing the tax court’s jurisdiction to decide other cases arising under the Tax Code or related laws administered by the BIR. This includes the power of the CTA to look into the validity of a tax assessment that is subject of a collection case. The CTA’s function is not limited to resolving issues on the timeliness and validity of the collection procedure itself.

The CTA has jurisdiction to determine if the warrant of distraint and levy issued by the BIR is valid and to rule whether the assessment has prescribed or if the notice requirement in the issuance of a deficiency tax assessment pursuant to Section 228 of the Tax Code, as amended, was complied with.

• Failure to comply with notice requirements results to denial of due process

Section 228 of the Tax Code and RR No. 12-99 require that the taxpayer must first be informed about the deficiency taxes through a PAN stating the facts and the law upon which the assessment is made.

The CTA, echoing the SC, ruled that failure to comply with this notice requirement is a denial of due process, regardless of the failure to file a protest in the assessment. This makes the assessment void and well-settled is the rule that a void assessment bears no fruit.(CTA EB No. 1076 dated 8 January 2015)

9 Philippine Journalist, Inc. vs. CIR, G.R. No. 162852, 16 December 2004


BIR - Bureau of Internal RevenueCIR - Commissioner of Internal RevenueCTA - Court of Tax AppealsFAN - Final Assessment NoticeNIC - Notice for Informal ConferencePAN - Preliminary Assessment NoticeRA - Republic ActRMC - Revenue Memorandum CircularRMO - Revenue Memorandum OrderSC - Supreme Court

Glossary

BIR must collect deficiency taxes within five years from assessment• While the assessment was seasonably issued, the BIR’s

righttocollectdeficiencytaxeshaslapsedbecausethewaiver is defective

The BIR’s limitation to assess and collect a tax means that once the period established by law for the assessment and collection of taxes has lapsed, the government’s corresponding right to enforce that action is barred by provision of law.

When a waiver is defective, the prescriptive period for collecting deficiency tax is not suspended or tolled since the waiver produces no effect.

In this case, while the assessment was issued within the three-year period, the BIR’s right to collect within five years from the assessment has lapsed.

• Approval of the CIR cannot be implied by actions of the BIR in accommodating the request for reconsideration

• Execution of waiver does not bar the taxpayer from invoking prescription

The SC did not agree with the BIR’s contention that approval of the waiver need not be express but may be implied from the acts of the BIR in accommodating the taxpayer’s request for reinvestigation. The court reiterated its previous ruling that a waiver must strictly conform to RMO No. 20-90. The mandatory nature of the requirements set forth in RMO No. 20-90, as ruled upon by the court, was recognized by the BIR itself in its subsequent issuances, namely, RMC Nos. 6-2005 and 29-2012. Thus, the BIR cannot claim the benefits of extending the period to collect the deficiency tax as a consequence of the waiver when, in truth, it was the BIR’s inaction which is the proximate cause of the defects of the waiver.

Moreover, the court ruled that a waiver is not a unilateral act of the taxpayer and that the BIR must act on it, either by conforming to or by disagreeing with the extension. A waiver of the statute of limitations, whether on assessment or collection, should not be construed as a waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer and the BIR to extend the period to a date certain, within which the latter could still assess or collect taxes due. Thus, the waiver does not imply that the taxpayer altogether relinquishes the right to invoke prescription.(G.R. No. 187589 dated 3 December 2014)

Substantial under-declaration makes a tax return false• The ten-year prescriptive period applies in a false return

The court differentiated “false return” from “fraudulent return” where the first merely implies deviation from the truth, whether intentional or not, while the second implies intentional or deceitful entry with intent to evade the taxes due. In this case, the SC said that the falsity of the subject tax returns lies in the taxpayer’s substantial under-declaration of withholding taxes. This therefore gives the BIR the benefit of the ten-year prescriptive period from discovery of the falsity to assess the correct tax.

• Where the taxpayer is informed in writing of the factual & legalbasesofthedeficiencytaxassessmentintheNICandPAN,therighttodueprocessissubstantiallycompliedwith

The court also ruled that although the FAN and the demand letter issued to petitioner were not accompanied by a written explanation of the legal and factual bases of the deficiency taxes, the record showed that the BIR sent a letter explaining at length the factual and legal bases of the deficiency tax assessments and denying the protest to which the taxpayer had the opportunity to respond. This exchange of correspondence and documents between the parties is considered substantial compliance of the requirements of Section 228. (G.R. No. 193100 dated 10 December 2014)


Deadline for filing of Annual Corporate Governance Report for newly listed companiesThe SEC clarified that all newly-listed companies should submit their ACGR on 30 May following one year from their listing in the Philippine Stock Exchange (PSE). Companies listed from 1 January to 30 May should submit their ACGR on 30 May of the next year, while those listed from 31 May to 31 December should submit on 30 May two years after. The next submission will be five years from the initial filing of the ACGR and every five (5) years thereafter. Any changes and updates in the ACGR during the 2nd to 4th year shall be reported in accordance with SEC Memorandum Circular Nos. 1 and 12 Series of 2014.

The same deadline will be followed for the posting of the ACGR in the companies’ websites.(SEC Memorandum Circular No. 3 dated 14 January 2015)

ACGR - Annual Corporate Governance ReportBIP - Batangas International PortBOC - Bureau of CustomsBOC-AMO - Bureau of Customs - Account Management OfficeBSP - Bangko Sentral ng PilipinasDOF-DO - Department of Finance Department OrderGIS - General Information SheetPEZA - Philippine Economic Zone AuthoritySEC - Securities and Exchange Commission

Glossary

Latest on other regulatory requirements

BOC accreditation rule also applies to PEZA locators• PEZA locators applying for accreditation as importers and

custom brokers are required to comply with the registration procedure under the newly-issued BOC regulation.

This memorandum clarifies that DOF-DO No. 107-201410 covers only those PEZA locators who have not yet submitted complete requirements11, or who have not yet applied for BOC importer accreditation as of 12 January 2015. This effectively repeals previous Customs issuances12 as they relate to the above PEZA locators.

The guidelines detail the procedure for registration of all covered importers and customs brokers under the BOC Client Profile Registration System (CPRS) and the documents required to be submitted by the applicant with the BOC-AMO.

Upon submission of the documents, the BOC-AMO shall notify the company of the decision on its application within 15 working days from its receipt. If approved, the BOC accreditation shall be valid within the term of the company’s PEZA registration, provided all reporting requirements are followed.

The BOC-AMO should be informed of any changes in the business name and personalities of the two most senior officials, responsible officers and authorized signatory for the BOC Import Entries within 15 days from occurrence. The companies should also submit the following documents on or before 31 March of every year, namely: the GIS and company profile (for corporations); the company or trade profile (for cooperatives, partnerships and sole proprietors); updated PEZA registration; mayor’s permit; and proof of lawful occupancy of office. (CMO No. 3-2015 dated 13 January 2015)

10 Provides that all PEZA locators are exempted from the requirements of DO No. 12-2014, as amended, and shall be eligible for accreditation as importers with the BOC-AMO

11 As per CMO No. 4-201412 CMO No. 4-2014 and CMO No. 11-2014


Anti-dumping duty on wheat flour imports from TurkeyIn compliance with the directive of the Department of Agriculture13, all district collectors of the BOC are ordered to collect anti-dumping duties on wheat flour imports from Turkey for a period of five years to be assessed based on the posted dumping margin schedule.

If the provisional anti-dumping duty, in the form of a cash bond, is in excess of that assessed, the remainder shall be immediately returned to the importer.(CMO No. 2-2015 dated 9 January 2015)

Banks to be set up in areas with no existing banks are exempt from branch processing feesIn an effort to promote greater access to financial services for all Filipinos, the Monetary Board, in a recent resolution, waived the collection of branch processing fees for banking offices that will be established in cities and municipalities with no existing banks. The list of cities and municipalities with no banks shall be posted in the BSP’s website and updated quarterly.

Further, the Board expanded the range of services allowable for micro-banking offices (MBOs). Accordingly, MBOs may accept micro-deposits with monthly average daily savings account balance not exceeding PHP40,000 unless a higher amount is approved by the BSP. Also, MBOs may disburse/release proceeds of micro-loans including all types of microfinance loans as defined under the Manual of Regulations for Banks, as well as other loans to microfinance clients.(BSP Circular No. 868 dated 26 January 2015)

13 Department of Agriculture DO No. 10 dated 17 November 2014

50% reduction in all PEZA processing fees for Ecozone shipments via Batangas International PortIn its advocacy to facilitate the immediate and full utilization of the BIP, the PEZA is extending for another year the 50% reduction in all PEZA processing fees for ecozone import/export full-container load shipments to be discharged or loaded at BIP.(PEZA Memorandum Circular No. 2015-05 dated 22 January 2015)


The students listened to a sharing session led by Assurance Partner and HC Leader Emy Castro who was joined by Risk Assurance Associates Krisha Macaraig and Erika Carreon. Along with the HC team they replied to questions coming from student attendees. The Q&A covered topics such as employment rewards, how career choices are made, and how to prepare for the CPA Board exam.

Meet us

Prepare for Work Day goes to FEU Manila

Continuing our efforts to be distinctive in the way we attract talent, Human Capital (HC) conducted the ‘’You Version 2.0: Prepare for Work program” for graduating Accountancy students of Far Eastern University (FEU) last 23 January 2015. Now in its second year in FEU, the recent “Prepare for Work day” had 137 students from the FEU Manila and Makati campuses attending.

HC Director Pam Gregorio started the program with an activity to help students identify what matters most to them and focus on how they can effect positive change.

Learning and Development (L&D) Manager Ron Melendres gave tips and techniques in overcoming barriers to personal success. He supplemented his lecturette with fun activities to illustrate key points.

HC Manager Geri Gaffud shared practical pointers and insights on job application. The session covered what employers look for in an applicant: from proper attire to behaviour and mind-set during a job interview.

Pam Gregorio opens the program with a lively activity.

Isla Lipana team. In back row, from left: Tonette Dabao, Lulu Guades, Giane Aquino, Pam Gregorio, Emy Castro, Ramil Baldres and Earl Borgoñia (FEU Accountancy Department faculty), Geri Gaffud, Nadine Dy and Ron Melendres. In front row, from left: Krisha Macaraig, Erika Carreon and Art Buena.

All of 137 graduating students with Isla Lipana & Co. representatives and FEU-JPIA officers.

Geri Gaffud presents what is the proper behaviour in an interview scenario with L&D Administrative Assistant Nadine Dy and HC Senior AssociateLulu Guades.


Talk to us

For further discussion on the contents of this issue of the Client Advisory Letter, please contact any of our partners.

Alexander B. CabreraChairman & Senior Partner, concurrent Tax PartnerT: +63 (2) 459 2002 [email protected]

Malou P. LimTax Managing PartnerT: +63 (2) 459 2016 malou.p.lim@ ph.pwc.com

Lawrence C. BiscochoT: +63 (2) 459 2007 [email protected]

Carlos T. Carado IIT: +63 (2) 459 2020 carlos.carado@ ph.pwc.com

Fedna B. ParallagT: +63 (2) 459 3109 [email protected]

Request for copies of text

You may ask for the full text of the Client Advisory Letter by writing our Tax Department, Isla Lipana & Co., 29th Floor, Philamlife Tower, 8767 Paseo de Roxas, 1226 Makati City, Philippines. T: +63 (2) 845 2728. F: +63 (2) 845 2806. Email [email protected].

The Generics Pharmacy appoints Isla Lipana & Co. as external auditorsThe Generics Pharmacy (TGP) recently announced its appointment of Isla Lipana & Co. as its external auditors.

The announcement was published in the Philippine Daily Inquirer last 19 February 2015.

The photo release shows (from left): TGP Consultant Atty. Annaleah Lee-Bagadiong, TGP President & CEO Benjamin Liuson, Isla Lipana & Co. Assurance Partner Jan Michael Reyes and Assurance Senior Manager Carlos Federico de Guzman.

The Generics Pharmacy started as a small pharmaceutical company in 1949 to provide the Filipino with a more affordable alternative. In 2001, it ventured into retail, starting with a single outlet. Today, TGP has grown into more than 1,700 branches nationwide and continues to expand and innovate on its product portfolio.

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Disclaimer The contents of this advisory letter are summaries, in general terms, of selected issuances from various government agencies. They do not necessarily reflect the official position of Isla Lipana & Co. They are intended for guidance only and as such should not be regarded as a substitute for professional advice.

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