ppt tax updates by atty. lumbera[2]

8/3/2019 Ppt Tax Updates by Atty. Lumbera[2]

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Updates in TaxationAtty. Rizalina V. Lumbera


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Updates in TaxationPeriod Covered: 2007 to 2009

(a). Jurisprudence

(b). Tax Laws

Revenue RegulationsRepublic Act 9504


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2007 CASES


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE versus ISABELA CULTURALCORPORATION (ICC) (G.R. 172231 12 February 2007)

Business Expenses:

(a) Expenses for the auditing services;

(b) Expenses for the legal services;

(c) Expense for security services;

Rules:

(a) the expense must be ordinary and necessary;

(b) it must have been paid or incurred during thetaxable year;

(c) it must have been paid or incurred in carrying onthe trade or business of the taxpayer; and

(d) it must be supported by receipts, records or otherpertinent papers.


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE versus ISABELA CULTURALCORPORATION (ICC) (G.R. 172231 12 February 2007)

.Accrual method of accounting, expenses not claimed asdeductions in the current year cannot be claimed as deduction

from income for the succeeding year. A taxpayer who isauthorized to deduct certain expenses and other allowabledeductions for the current year but failed to do so cannotdeduct the same for the next year.


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2007 Cases:FELS ENERGY INC. VS. PROVINCE OF BATANGAS (G.R. 168557 / 2-16-2007)NAPOCOR VS. LBAA OF BATANGAS (G.R. 170628 16 February 2007)

.Are over diesel engine power barges moored in Batangasowned by a private entity and leased to Napocor with

agreement that NAPOCOR is liable for taxes, real or personalproperty?

Article 415 (9) of the New Civil Code provides that "[d]ocks andstructures which, though floating, are intended by their natureand object to remain at a fixed place on a river, lake, or coast"are considered immovable property. Thus, power barges arecategorized as immovable property by destination, being in thenature of machinery and other implements intended by theowner for an industry or work which may be carried on in abuilding or on a piece of land and which tend directly to meet

the needs of said industry or work.


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.Are they subject to real estate tax?

Yes. The power barges are not actually, directly andexclusively used by NAPOCOR in the generation andtransmission of electric power;

For the exemption to apply, the machinery must be actually,directly and exclusively used by the government owned orcontrolled corporation . The mere undertaking of NPC in thelease contract that it shall be responsible for the payment of allreal estate taxes and assessments, does not justify theexemption.


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.What is the remedy of the taxpayer on assessment of realestate tax?

.Appeal to LBAA within sixty (60) days from the date ofreceipt of the written notice of assessment, by filing apetition under oath in the form prescribed for the purpose,together with copies of the tax declarations and suchaffidavits or documents submitted in support of the appeal..Not motion for reconsideration;.Failure to appeal to LBAA renders the assessment final andthe LGU can collect becomes absolut upon the expiration ofthe period to appeal.


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2007 Cases:THE COMMISIONER OF INTERNAL REVENUE versus ACESITE(PHILIPPINES) HOTEL CORPORATION( G.R. No. 147295/ February 16, 2007)

.Can a lessor of PAGCOR shift the VAT due on the rentals whenPAGCOR is exempt from taxes?

No. P.D. 1869, the charter creating PAGCOR, grants the latteran exemption from the payment of taxes. It gives PAGCOR ablanket exemption to taxes with no distinction on whether thetaxes are direct or indirect. Although the law does notspecifically mention PAGCOR.s exemption from indirect taxes,PAGCOR is undoubtedly exempt from such taxes because thelaw exempts from taxes persons or entities contracting withPAGCOR in casino operations. The provision clearly exemptsPAGCOR from indirect taxes.


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2007 Cases:THE COMMISIONER OF INTERNAL REVENUE versus ACESITE(PHILIPPINES) HOTEL CORPORATION( G.R. No. 147295/ February 16, 2007)Is the lessor entitled to refund of the VAT?

Yes. The lessor has discharged the burden of proving

exemption, thus, BIR should release the refund without anyunreasonable delay. Indeed, fair dealing is expected by ourtaxpayers from the BIR and this duty demands that the BIRshould refund without any unreasonable delay what it haserroneously collected.


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2007 Cases:DIGITAL TELECOMMUNICATIONS PHIL., INC. vs. PROVINCEOFPANGASINAN ETC. (G. R. No. 152534/ February 23, 2007

Is DIGITEL exempt from local franchise tax and real estate taxbased on Sec 23 of RA 7925 ("The Public Telecommunications

Policy Act of the Philippines.)?

No. The word "exemption" in the stature refers merely to anexemption from regulatory or reporting requirements of theDOTC or the NTC and not to the grantee.s tax liability.Congress did not intend it to operate as a blanket taxexemption to all telecommunications entities


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.What is the nature of tax exemption?

Tax exemptions are highly disfavored. The tax exemption mustbe expressed in the statute in clear language that leaves nodoubt of the intention of the legislature to grant suchexemption. And, even if it is granted, the exemption must beinterpreted in strictissimi juris against the taxpayer.


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What is the effect of RA 7716 abolishing the franchise taximposed on telecommunications companies effective 1 January

1996 and in its place is imposed a 10 percent Value-Added-Tax(VAT)?

From 1 January 1996, DIGITEL ceased to be liable for nationalfranchise tax and in its stead is imposed a 10% VAT (now 12%)in accordance with Section 108 of the Tax Code.


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2007 Cases:REPUBLIC OF THE PHILIPPINES represented by the Commissioner ofCustoms vs UNIMEX MICRO ELECTRONIC(G.R. Nos. 166309-10/ 09 March 2007)

.Can the CTA later on modify its earlier issued final decision

ordering release by BOC of goods illegally seized by BOC?

Yes. Where facts or events transpire after a decision hasbecome executory, which facts constitute a supervening causerendering the final judgment unenforceable. A final judgmentmay be altered when its execution becomes impossible orunjust.

At the time CTA decision is executory, the goods subjectmatter of seizure by the BOC were inexplicably lost while underthe BOC.s custody. Thus, the modification to order BOC to pay

the equivalent amount of the goods is a valid modification ofdecision.


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Is BOC liable for payment of interest due to delay in payment of

equivalent value of goods?

The case does not involve a monetary obligation to becovered by Article 2209 of the Civil Code.Government wasnever a debtor to the petitioner in order that Article 2209 couldapply. Nor was it in default for there was no monetaryobligation to pay in the first place.

Interest is not chargeable against government exceptwhen it has expressly stipulated to pay it or when interest isallowed by the legislature or in eminent domain cases wheredamages sustained by the owner take the form of interest at the

legal rate.


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.Is BOC liable for actual damages (value of the goods)?

Yes. BOC.s ineptitude and gross negligence in thesafekeeping of respondent.s goods cannot be countenancedby the doctrine of state immunity from suit. The doctrine ofstate immunity must be fairly observed and the State shouldnot avail itself of this prerogative to take undue advantage ofparties that may have legitimate claims against it.

Upon payment of the necessary customs duties byrespondent, payment for the value of the goods lost shall betaken from the sale or sales of goods or properties seized or

forfeited by the Bureau of Customs.


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2007 Cases:ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATIONvs COMMISSIONER OF INTERNAL REVENUE (G.R. No. 145526/ March 16,2007)What are the requisites of refund for excess input tax?

Those seeking tax refunds or credits bear the burden ofproving the factual bases of their claims and of showing, bywords too plain to be mistaken, that the legislature intended toentitle them to such claims. The rule, in this case, requiredpetitioner to (1) show that its sales qualified for zero-rating;and(2) present sufficient evidence that those sales resulted inexcess input taxes. It complied with the first requirement butfailed in the second requirement.


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2007 Cases:BANCO FILIPINO SAVINGS & MORTGAGE BANK VS. COURT OFAPPEALS ET AL.(G.R.No.155682 / March 27, 2007)

What are the requisites for refund of creditable withholding tax?

(1). The claim is filed with the CIR within the two-year period from thedate of payment of the tax;

(2). It is shown on the return of the recipient that the income paymentreceived was declared as part of the gross income; and

(3). The fact of withholding is established by a copy of a statementduly issued by the payor to the payee showing the amount paid andthe amount of the tax withheld therefrom. The third condition isspecifically imposed under Section 10 of Revenue Regulation No. 6-85(as amended)

Failure of the bank to comply with the form (BIR Form No. 1743.1) asprescribed by Revenue Regulations results to denial of the refund.


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2007 Cases:INT'L EXCHANGE BANK VS. COMMISSIONER OF INTERNATIONALREVENUE (G.R. No. 171266 April 4, 2007 )

Are Savings Deposit-Fixed Savings Deposit treated ascertificate[s] of deposits subject to DST under Section 180 of

the NIRC?

Yes. The only difference between a time deposit and FSD lieson the evidence of deposit.A savings deposit-FSD is evidencedby a passbook, while a time deposit is evidenced by acertificate of time deposit."


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE VS. BANK OF THEPHILIPPINE ISLANDS ( G.R. No. 134062/April 17, 2007 )

Is the basis for the assessment required to be statedin the notice of assessment issued by the BIR?

Nothing in the old law requires a written statement tothe taxpayer of the law and facts on which theassessments were based. Jurisprudence, on theother hand, simply requires that the assessmentscontain a computation of tax liabilities, the amountthe taxpayer was to pay and a demand for paymentwithin a prescribed period.


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE VS. BANK OF THEPHILIPPINE ISLANDS ( G.R. No. 134062/April 17, 2007 )

Is a letter of the taxpayer requesting BIR for the basis of theassessment considered as a protest of the assessment?

No. It does not qualify as a protest since the letter itself statedthat "as soon as this is explained and clarified in a proper letterof assessment, we shall inform you of the taxpayer.s decisionon whether to pay or protest the assessment." By its owndeclaration, BPI did not regard this letter as a protest againstthe assessments.


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. PHILIPPINEHEALTH CARE PROVIDERS, INC., Respondent.(G.R. No. 168129/ 24April 2007)

Are the services of a prepaid group practice health care

delivery system or a health maintenance organization (HMO)exempt from VAT?

NO. In an HMO agreement, enrollees are entitled topreventive, diagnostic, and corrective medical services to bedispensed by Health Care's duly licensed physicians,specialists, and other professional technical staff participatingin said group practice health care delivery system establishedand operated by Health Care. Such medical services will bedispensed in a hospital or clinic owned, operated, or accreditedby Health Care. To be entitled to receive such medical servicesfrom Health Care, an individual must enroll in Health Care's

health care program and pay an annual fee;

They do not fall within exempt transactions ( Section 103NIRC), Medical, dental, hospital and veterinary services


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2007 Cases:RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE, Respondent.(G.R. No. 168498/ 24April 2007)

What are the remedies of the taxpayer in case the CIR does not

act on the protest within 180 day period?

A taxpayer can either:

(1) file a petition for review with the Court of Tax Appeals within30 days after the expiration of the 180-day period;

(2) await the final decision of the Commissioner on thedisputed assessments and appeal such final decision to theCourt of Tax Appeals within 30 days after receipt of a copy ofsuch decision.

These options are mutually exclusive, and resort to one barsthe application of the other.


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2007 Cases:RIZAL COMMERCIAL BANKING CORPORATION, Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE, Respondent.(G.R. No. 168498/ 24April 2007)After availing of the first option, i.e., filing a petition for reviewwhich was however filed out of time, petitioner can not

successfully resort to the second option, i.e.,awaiting the finaldecision of the Commissioner and appealing the same to theCourt of Tax Appeals, on the pretext that there is yet no finaldecision on the disputed assessment because of theCommissioner.s inaction.


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2007 Cases:PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OFAPPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and theCITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007)PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. THE HONORABLECOURT OF APPEALS (G.R. No. 150301/ 02 October 2007)

Are reclaimed lands wherein Iloilo Fishing Port Complex (IFPC)was constructed, later on turned over to Philippine FisheriesDevelopment Authority (PFDA) for its operation, and withportions leased to private firms and individuals engaged infishing related businesses, subject to real estate tax?

Yes. PFDA is not a GOCC but an instrumentality of the nationalgovernment which is generally exempt from payment of realproperty tax. However, said exemption does not apply to theportions of the IFPC which the PFDA leased to private entities.


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2007 Cases:PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OFAPPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and theCITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007)PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. THE HONORABLECOURT OF APPEALS (G.R. No. 150301/ 02 October 2007)

The exemption does not apply when the beneficial use of thegovernment property has been granted to a taxable person.Section 234 (a) of the Code states that real property owned bythe Republic of the Philippines or any of its politicalsubdivisions is exempted from payment of the real property tax"except when the beneficial use thereof has been granted, forconsideration or otherwise, to a taxable person .


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2007 Cases:PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OFAPPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and theCITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007)

If real estate tax is not paid, can the LGU sell the reclaimed

lands in a public auction to satisfy the tax due?

NO. The land cannot be sold at public auction to satisfythe tax delinquency. Reclaimed lands are lands of the publicdomain and cannot, without Congressional fiat, be subject of asale, public or private. CA No. 141, on government reclaimed,foreshore and marshy lands of the public domain, provides,that the only way the government can sell to private partiesgovernment reclaimed and marshy disposable lands of thepublic domain is for the legislature to pass a law authorizingsuch sale.

In order to satisfy the tax, the City of Iloilo has to resort toother means of satisfying such delinquency.


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2007 Cases:COMMISSIONER OF INTERNAL REVENUE, vs. ROSEMARIE ACOSTA, asrepresented by Virgilio A. Abogado, (G.R. No. 154068 / August 3, 2007)

Can the taxpayer immediately file a complaint in court claimingrefund without filing the written claim for refund before the

CIR?

A claimant must first file a written claim for refund,categorically demanding recovery of overpaid taxes with theCIR, before resorting to an action in court. This is intended toafford the CIR an opportunity to correct the action ofsubordinate officers; and second, to notify the government thatsuch taxes have been questioned, and the notice should thenbe borne in mind in estimating the revenue available forexpenditure.


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2008 CASES


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2008 Cases:M.E. Holding Corporation versus The Hon. Court of Appeals, Court of TaxAppeals, and the Commissioner of Internal Revenue ( GR 160193/ 03 March 2008)Commissioner of Internal Revenue versus Central Luzon Drug Corporation(LUZON)( GR No. 159610/ 12 June 2008)

What is the treatment of the 20% senior citizen.s discount onthe part of the establishment giving the discount?

Under RA 7432 (old law), the 20% sales discount to seniorcitizens may be claimed by an establishment owner as taxcredit.

Under RA 9257 (new law) The Expanded Senior Citizens Act of2003, the 20% sales discount granted by establishments toqualified senior citizens is to be treated as tax deduction, nolonger as tax credit.


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2008 Cases:Bank of Philippine Islands (formerly Far East Bank and Trust Company) versusThe Commissioner of Internal Revenue ( GR 174942/ 07 March 2008)When does a request for reinvestigation filed by a taxpayer tollthe running of the prescriptive period to assess/collect?

The running of the statute of limitations on the making ofassessment and the beginning of distraint or levy or aproceeding in court for collection, in respect of any deficiency,shall be suspended, among others, when the taxpayer requestsfor a re-investigation which is granted by the Commissioner.

The law is plainly worded. In order to suspend the running ofthe prescriptive periods for assessment and collection, therequest for reinvestigation must be granted by the CIR.

The delay of the CIR in acting upon and resolving the requestfor reinvestigation filed by BPI and in collecting the DST

allegedly due from the latter, resulted in the prescription of thegovernment.s right to collect the deficiency.


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2008 Cases:COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FMFDEVELOPMENT CORPORATION, respondent.( G.R. No. 167765/ 30 June 2008)

What are the requisites of a valid waiver executed by a taxpayer

in order to extend the BIR.s 3 yr period to assess?

1. It must be in the prescribed form ;

2. The waiver shall be signed by the taxpayer, accepted by theBIR, date of such acceptance by the Bureau should beindicated. Both the date of execution by the taxpayer and dateof acceptance by the Bureau should be beforethe expiration ofthe period of prescription or beforethe lapse of the periodagreed upon in case a subsequent agreement is executed.

3. The waiver should be signed by the designated BIR officers.

4. The waiver must be executed in three (3) copies, the originalcopy to be attached to the docket of the case, the second copyfor the taxpayer and the third copy for the Office accepting thewaiver. The fact of receipt by the taxpayer of his/her file copyshall be indicated in the original copy.

5. The prescribed procedures shall be strictly followed.


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2008 Cases:COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FMFDEVELOPMENT CORPORATION, respondent.( G.R. No. 167765/ 30 June 2008)

.In this case: Not a valid waiver, period to assess prescribed

and BIR cannot assess anymore

(1). No proof that respondent was furnished a copy of the BIR-accepted waiver;

(2). Waiver was signed only by a revenue district officer, whenit should have been signed by the Commissioner as it involvesan amount of more than P1 million;

(3). It did not contain the date of acceptance by theCommissioner of Internal Revenue,


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2009 CASES


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2009 Cases:NATIONAL POWER CORPORATION, Petitioner, vs.CENTRAL BOARD OFASSESSMENT APPEALS (CBAA), LOCAL BOARD OF ASSESSMENTAPPEALS (LBAA) OF LA UNION, PROVINCIAL TREASURER, LA UNIONand MUNICIPAL ASSESSOR OF BAUANG, LA UNION, Respondents.( G.R. No. 171470/ 30 January 2009)

What is the real property tax implications of a Build-Operate-Transfer (BOT) agreement between a government-owned andcontrolled corporation (GOCC) (NAPOCOR) that enjoys taxexemption and a private corporation?

The owner-manager-operator of the project is the actual userof its machineries and equipment. Its ownership and use of themachineries and equipment are actual, direct, and immediate,while NAPOCOR.s is contingent and, at this stage of the BOTAgreement, not sufficient to support its claim for taxexemption.


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2009 Cases:Agencia Exquisite of Bohol, Inc. vs. Commissioner of Internal Revenue (GR150141/ 12 February 2009); Commissioner of Internal Revenue versus AgenciaExquisite of Bohol, Inc. ( GR 157359/ 12 February 2009); Exquisite Pawnshop andJewelry, Inc. vs. Commissioner of Internal Revenue ( G.R No. 158644/ 12 February

2009)

Are pawnshops subject to 5% lending investor.s tax?

While pawnshops are indeed engaged in the business oflending money, they cannot be deemed "lending investors" forthe purpose of imposing the 5% lending investor.s tax.


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2009 Cases:LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOSREYES, in their capacities as President, Treasurer and Secretary of AdamsonManagement Corporation, Petitioners, vs. COURT OF APPEALS andLIWAYWAY VINZONS-CHATO, in her capacity as Commissioner of the Bureauof Internal Revenue, Respondents.(G.R. No. 120935/May 21, 2009)

INTERNAL REVENUE, Petitioner, vs. COMMISSIONER OF COURT OFAPPEALS, COURT OF TAX APPEALS, ADAMSON MANAGEMENTCORPORATION, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, andSARA S. DE LOS REYES, Respondents. (G.R. No. 124557/May 21, 2009)

Is an affidavit complaint executed by the CIR providing forthe computation of tax considered as a valid assessment?

NO. BIR examiners. Joint Affidavit attached to the CriminalComplaint contained some details of the tax liabilities of privaterespondents does not ipso factomake it an assessment. Thepurpose of the Joint Affidavit was merely to support and

substantiate the Criminal Complaint for tax evasion. Clearly, itwas not meant to be a notice of the tax due and a demand tothe taxpayers for payment thereof.


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.Is the recommendation letter of the CIR addressed to the DOJconsidered as a valid assessment?

A written communication containing a computation by arevenue officer of the tax liability of a taxpayer and giving him

an opportunity to contest or disprove the BIR examiner.sfindings is not an assessment since it is yet indefinite.

The recommendation letter of the Commissioner cannot beconsidered a formal assessment.

1. It was not addressed to the taxpayers.

2. There was no demand made on the taxpayers to pay the taxliability, nor a period for payment set therein.

3. The letter was never mailed or sent to the taxpayers by the

Commissioner.

The recommendation letter served merely as the prima faciebasis for filing criminal information for tax evasion.


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PART 2

( REPUBLIC ACTS /

REVENUE REGULATIONS/

STATUTES)


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REVENUE REGULATIONS NO. 1 2007 SUBJECT:Amending Revenue Regulations No. 4-2006 Implementingthe Tax Privileges Provisions of R.A. No. 9257, OtherwiseKnown as the Expanded Senior Citizens Act of 2003

.Availment by Establishments of Sales Discounts as Deduction

from Gross Income instead of tax credit;.Basis of Computation of Value-Added Tax on Sale to SeniorCitizens.

Amount of sale (without the VAT)P100.00

Less: 20% sales discount 20.00

Vatable sale 80.00

Plus: 12% VAT (based on P80) 9.60

Amount to be paid by the senior citizenP89.60


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REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmentalOrganizations (NGOs) and Cooperatives Engaged in MicrofinanceActivities

.Microfinance -is a credit and savings mobilization programexclusively intended for the poor to improve the asset base of

households and expand the access to savings of the poor. Itinvolves the use of viable alternative credit schemes andsavings programs including the extension of small loans,simplified loan application procedures, group character loans,collateral-free arrangements, alternative loan repayments,minimum requirements for savings, and small denominatedsavers' instruments;

The maximum individual loan amount provided formicrofinance loans is P150,000.00, subject to periodicdetermination of the Department of Trade and Industry to

reflect economic changes.


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.SECTION 4. Tax Treatment of Microfinance Services Renderedby Cooperatives Duly registered credit cooperatives

dealing/transacting with members only shall be exempt from:

a. Income tax from operations

b. Value -added tax (VAT),

c. 3% percentage tax under Section 116 of the Tax Code of1997, and

d. Documentary stamp tax (DST) imposed under Title VIIof the Tax Code of 1997, as amended, provided,

however, that the other party to the taxabledocument/transaction who is not exempt shall be the onedirectly liable for the tax; and

e. Annual Registration Fee of P500.00


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.Duly registered cooperatives dealing/transacting business withboth members and nonmembers

a. For cooperatives with accumulated reserves andundivided net savings of not more than Ten Million Pesos(P10,000.000.00) exempt from similar taxes;

b. For credit cooperatives with accumulated reserves andundivided net savings of more than Ten Million Pesos(P10,000.000.00)

(i) Exemption from income tax for a period of 10 years fromthe date of registration with CDA, provided, that at least twenty

five percent of the net income of the cooperative is returned tothe members in the form of interest and/or patronage fund.

(ii) Exemption from VAT under Section 109(M) and 3% taxunder Section 116, both of the Tax Code, as amended.

(iii). Subject to all other internal revenue taxes unlessotherwise provided by law.


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.All income of cooperatives which undertake microfinanceactivities in addition to their registered purpose except

credit cooperatives and multi-purpose cooperatives whichhave one of its business activities as those performed bycredit cooperatives, shall be subject to appropriate taxesunder the Tax Code of 1997, as amended..This is applicable to all cooperatives, whether dealing purelywith members or both members and non-members..All cooperatives, regardless of classification, are consideredas withholding agents and are required to file withholdingtax returns and remit withholding taxes on all incomepayments that are subject to withholding.


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REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmentalOrganizations (NGOs) and Cooperatives Engaged in MicrofinanceActivities.Tax Treatment of Microfinance Services Rendered by Non-governmental Organizations

All NGOs under Section 30 of the Tax Code of 1997, as amended, areexempt from income taxes, in respect of income received by them assuch.

Income of such NGOs from microfinance activities, and which are notin respect of their registered activities covered by Section 30 of theTax Code of 1997, as amended, regardless of the disposition made ofsuch income, shall be subject to tax under the Tax Code of 1997, asamended.

Non-stock, non-profit NGOs, whether or not engaged in microfinance

activities, are still also required to file withholding tax returns andremit withholding taxes on all income payments that are subject towithholding as specified in Revenue Memorandum Circular No. 76-2003


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REVENUE REGULATIONS NO. 5-2008: Further Amendments toRevenue Regulations Nos. 2-98 and 3-98, as Last Amended by RevenueRegulations No. 10-2000, With Respect to De Minimis Benefits .

.The following shall be considered as de minimis benefits not subjectto income tax as well as withholding tax on compensation income of

both managerial and rank and file employees: xxxxx

The term DE MINIMIS benefits which are exempt from the fringebenefit tax shall, in general, be limited to facilities or privilegesfurnished or offered by an employer to his employees that are ofrelatively small value and are offered or furnished by the employermerely as a means of promoting the health, goodwill, contentment, orefficiency of his employees such as, among others:

(1). Rice subsidy of P1,500.00 or one (1) sack of 50 kg. rice permonth amounting to not more than P1 ,500.00 ;

(2) Uniform and Clothing allowance not exceeding P4,000.00per annum. Xxxxxx


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REPUBLIC ACT NO 9504 An Act Amending Sections 22,24, 34, 35, 51, 79 of RA 8424 as amended (Effectivity Date:06 July 2008)REVENUE REGULATIONS NO. 10 -2008 ImplementingPertinent Provisions of Republic Act No. 9504, An ActAmending Sections 22, 24, 34, 35, 51, and 79 of Republic Act

No. 8424, as Amended, Otherwise Known as The NationalInternal Revenue Code Relative to the Withholding ofIncome Tax on Compensation and Other Concerns.


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REPUBLIC ACT NO 9504REVENUE REGULATIONS NO. 10 -2008

.(A). DE MINIMIS Benefits

.(B). Minimum Wage Earners

.( C ). Personal Exemptions/Additional

Exemptions.(D). Optional Standard Deduction (OSD)


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A). DE MINIMIS BENEFITS (not subject to income tax andwithholding tax for both managerial and rank and fileemployees):

(1) Monetized unused vacation leave credits of employees notexceeding ten (10) days during the year and the monetized

value of leave credits paid to government officials andemployees;

(2) Medical cash allowance to dependents of employees notexceeding P750.00 per employee per semester or P125 permonth;

(3) Rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice permonth amounting to not more than P1,500.00;

(4) Uniforms and clothing allowance not exceeding P4,000.00per annum;


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(5) Actual yearly medical benefits not exceeding P10,000.00 perannum;

(6) Laundry allowance not exceeding P300.00 per month;

(7) Employees achievement awards, e.g., for length of service orsafety achievement, which must be in the form of a tangible personalproperty other than cash or gift certificate, with an annual monetaryvalue not exceeding P10,000.00 received by the employee under anestablished written plan which does not discriminate in favor of highlypaid employees;

(8) Gifts given during Christmas and major anniversary celebrationsnot exceeding P5,000 .00 per employee per annum;


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(9) Flowers, fruits, books, or similar items given to employeesunder special circumstances, e.g., on account of illness,

marriage, birth of a baby, etc.; and

(10) Daily meal allowance for overtime work not exceedingtwenty five percent (25%) of the basic minimum wage.

Notes:

ExcessoftheceilingamountshallbeconsideredinthecomputationofP30,000.00exemptionofotherbenefits.OnlytheexcessoftheP30,000.00otherbenefits(toincludeheexcessofamountofdeminimisbenefits)shallbetaxable.

Anyamountgivenbytheemployerasbenefitstoitsemployees,whetherclassifiedasdeminimis

benefitsorfringebenefits,shallconstituteasdeductibleexpenseuponsuchemployer


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(B). Minimum Wage Earners (MWEs).Compensation income of MWEs in the private sector, paid theStatutory Minimum Wage (SMW), as fixed by RegionalTripartite Wage and Productivity Board (RTWPB)/NationalWages and Productivity Commission (NWPC), applicable to theplace where he/she is assigned:

Exempt from income tax/not subject to withholding tax


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(B). Minimum Wage Earners (MWEs)

Statutory Minimum Wage. (SMW):

Rate fixed by the Regional Tripartite Wage and ProductivityBoard (RTWPB), as defined by the Bureau of Labor and

Employment Statistics (BLES) of the Department of Labor andEmployment (DOLE). The RTWPB of each region shalldetermine the wage rates in the different regions based onestablished criteria and shall be the basis of exemption fromincome tax for this purpose.


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Other Exempt Income of MWE.s:

(1). Holiday pay;

(2). Overtime pay;

(3). Night shift differential pay; and

(4). Hazard pay.


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Notes:

(1). An employee who receives/earns additional compensationsuch as commissions, honoraria, fringe benefits, benefits in

excess of the allowable statutory amount of P30,000.00, taxableallowances and other taxable income, other than the SMW,holiday pay, overtime pay, hazard pay and night shiftdifferential pay, shall not enjoy the privilege of being a MWE.Entire earnings are not exempt from income tax andwithholding tax.

(2). MWEs with income from the conduct of trade, business, orpractice of profession, in addition to compensation income asMWE, are not exempted from income tax, BUT the SMW,Holiday pay, overtime pay, night shift differential pay andhazard pay shall still be exempt from withholding tax.


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( C ). Personal Exemptions/Additional Exemptions(effective beginning July 1, 2008)

.Individual taxpayers regardless of status:

P50,000.00 (Personal exemption)

P 25,000.00 (Additional exemption)

-per child maximum of four (4) qualifieddependent-children

Dependent

Child of whatever kind and status, not more than 21 years ofage, not married, not gainfully employed, chiefly dependent andliving with the taxpayer, and regardless of age, if incapable of

self-support by reason of physical or mental defect.


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( C ). Personal Exemptions/Additional Exemptions(effective beginning July 1, 2008)

.Husband is the proper claimant of the AE for qualifieddependent children, unless he explicitly waives his right infavor of his wife in the Application for Registration (BIR Form

No. 1902) or in the Certificate of Update of Exemption and ofEmployer.s and Employee.s Information (BIR Form No. 2305),whichever is applicable.

Where the spouse of the employee is unemployed or is anon-resident citizen deriving income from foreign sources, theemployed spouse within the Philippines shall be automaticallyentitled to claim the additional exemptions for children.


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(D). Optional Standard Deduction(OSD) (RA 9504)REVENUE REGULATIONS NO. 16 2008:IMPLEMENTING THE PROVISIONS OFSECTION 34(L) OF THE TAX CODE OF 1997, ASAMENDED BY SECTION 3 OF REPUBLIC ACT

NO. 9504, DEALING ON THE OPTIONALSTANDARD DEDUCTION (OSD) ALLOWEDTO INDIVIDUALS AND CORPORATIONS INCOMPUTING THEIR TAXABLE INCOME


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Optional Standard Deduction(OSD)PERSONS COVERED allowed to claim OSD in lieu of the itemizeddeductions:

1. Individuals:

i. Resident Citizen

ii. Non-resident citizen

iii. Resident Alien

iv. Taxable estates and trusts

2. Corporations:

i. Domestic corporation

ii. Resident foreign corporation

Individual( except nonresident alien): OSD in an amount not exceedingforty percent (40%) of his gross sales or gross receipts;

Corporation: OSD in an amount not exceeding forty percent (40%) of itgross income


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REVENUE REGULATIONS NO. 1-2009:Relating to Privileges of Persons with Disability (PWD)Republic Act No. 9442 Magna Carta for Persons with Disability (PWD)

.Person with disability (PWD) individual suffering fromrestriction or different abilities, as a result of mental, physical

or sensory impairment to perform an activity in a manner orwithin the range considered normal for human being.

.Disability shall mean a physical or mental impairment thatsubstantially limits one or more psychological, physiological oranatomical function of an individual or activities of suchindividuals; a record of such an impairment; or being regardedas having such an impairment.


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.Benefit: At least twenty percent (20%) discount from thefollowing on sale of goods or services for their exclusive use or

enjoyment, viz:

1. Hotels and similar lodging establishments and restaurants;

2. Sports and recreation centers;

3. Theaters, cinema houses, concert halls, circuses, carnivalsand other similar places of culture, leisure and amusement;

4. All drugstores regarding purchase of medicine;

5. Medical and dental privileges in government facilities, suchas but not limited to diagnostic and laboratory fees (e.g., x-rays, computerized tomography scans and blood tests) subjectto guidelines to be issued by the DOH, in coordination with thePhilippine Health Insurance Corporation (Philhealth);


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enjoyment, viz:

6. Medical and dental privileges in private facilities, such as butnot limited to diagnostic and laboratory fees (e.g., x-rays,computerized tomography scans and blood tests), includingprofessional fees of attending doctors, subject to guidelines tobe issued by the DOH, in coordination with Philhealth; and

7. Domestic air and sea transportation based on the actual fareexcept promotional fare. If the promotional fare discount ishigher than the 20% discount privilege, the person with

disability may choose the promotional fare and should nolonger be entitled to the 20% discount privilege; and


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enjoyment, viz:

8. Land transportation privileges in bus fares such as ordinary,aircon fares and on public railways such as LRT, MRT, PNR,and such other similar infrastructure that will be constructed,established and operated by public or private entity. Toll fees ofskyways and expressways are likewise subject to at least 20%discount, however, this privilege can be availed only by aperson with disability owning the vehicle.


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.SEC. 4. AVAILMENT BY ESTABLISHMENTS OF SALESDISCOUNTS AS DEDUCTION FROM GROSS INCOME . -

Establishments granting sales discounts to persons withdisability on their sale of goods and/or services specified underSection 3 above shall be entitled to deduct the said salesdiscount from their gross income.


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REVENUE REGULATIONS NO. 8-2009 Amending FurtherSecs. 2.57.2 and 2.57.3 of Revenue Regulations No.SUBJECT 2-98, as amended, Subjecting to CreditableWithholding Tax the Income Payments Made by PoliticalParties and Candidates of Local and National Elections ofAll Their Campaign Expenditures and Income Payments

Made by an Individual or Juridical Person Forming Partof Their Campaign Contributions to Candidates of Localand National Elections and to Political Parties REVENUEREGULATIONS NO. 10-2009 Amending Further Secs. 2.57.2and 2.58 of Revenue Regulations No. 2-98, as amended,clarifying that sub-paragraph (W) as recently issued underRevenue Regulations No. 8-2009 should be sub-paragraph(X), and Other Concerns


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REVENUE REGULATIONS NO. 8-2009Five percent (5%) withholding tax on:

Income payments made by political parties and candidatesof local and national elections of all their campaignexpenditures, and income payments made by individuals or

juridical persons for their purchases of goods and servicesintended to be given as campaign contribution to politicalparties and candidates

Withholding Agent:

All individuals, juridical persons and political parties, withrespect to their income payments made as campaignexpenditures and/or purchase of goods and servicesintended as campaign contributions are constituted aswithholding agents for purposes of creditable tax on incomepayments.


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THANK YOU


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ppt tax updates by atty. lumbera[2]

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