tax volume3series21

8/11/2019 Tax Volume3Series21

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TAX DIGEST

Member, RSM International

In this issue:

BIR ISSUANCES

Brokerage Companies

Required to Submit

Quarterly List of

Client-Importers

New Guidelines on

Availment of 15%

Preferential Income Tax

eSales Reporting for Large

Taxpayers

SUPREME COURT

DECISIONS

Zero-rated must bePrinted on Invoice to Claim

Tax Refund

Previous Tax Examination

does not Bar Tax Fraud

Audit

BIR ISSUANCES

Brokerage Companies Required to Submit Quarterly List of

Client-Importers

Taxpayers engaged in the business

of providing customs brokerage

services are now required to

submit a list of their client

importers for cross-checking and

verification with the records of the

Bureau of Customs (BOC). The list

should have the tax identification

number (TIN), name of

client-importer, address and

Voulme 3, Series 21

Accreditation Service (CAS)

Registration Number. The

quarterly list shall include

additional client-importers for the

quarter as well as those that

ceased to be their clients.

(Revenue Memorandum Circular

No. 84-2010, October 25, 2010)

Tax Calendar 2011

Get a free copy of our tax calendar 2011 through our Business

Development Department. Call 759-5090 or visit our website at

www.rsm-alasoplascpas.com.

Alas, Oplas & Co., CPAs


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Tax DigestVolume 3, Series 21

New Guidelines on Availment of 15% Preferential Income Tax

The BIR clarifies the term Managerial and TechnicalPositions and modifies previous guidelines on availment of15% preferential income tax rate for qualified Filipino

personnel employed by Regional or Area Headquarters(RHQs) and Regional Operating Headquarters (ROHQs) ofmultinational companies.The Tax Code provides that every alien individual occupyingmanagerial and technical position in RHQs and ROHQsestablished in the Philippines shall be subject to 15% finalwithholding tax. The same tax treatment shall apply toFilipinos employed and occupying the same positions asthose aliens employed by RHQs and ROHQs, regardless of

whether or not there is an alien executive occupying thesame position.

The term multinational company means a foreign firm orentity engaged in the international trade with its affiliatesor subsidiaries or branch offices in Asia-Pacific Region andother foreign markets.Filipinos employed by RHQs and ROHQs may exercise theoption to be taxed at 15% but must meet the followingrequirements:

To avail of this 15% preferential income tax rate, it shall nolonger be necessary for the RHQ or ROHQ to file a requestfor ruling with the BIR National Office. Instead, the RHQ orOffice or with the LT Assistance Division/LT Regulatory

1. Position and Function Test the employee mustoccupy a managerial or technical position AND mustactually be exercising such managerial or technicalfunctions pertaining to said position;

2. Compensation Threshold Test the employeemust have received or is due to receive under acontract of employment, a gross annual taxablecompensation of at least Php 975,000.00, whetheror not actually received. Provided that, a change

that the employee will receive a lessercompensation within a calendar year will result tobeing subjected to the regular income tax rate; and

3. Exclusivity Test the Filipino managerial ortechnical employee must be working exclusively forthe RHQ or ROHQ as a regular employee and not justas a consultant or contractual personnel. Exclusivitymeans having just one employer at a time.

ROHQ must file the following not later than January 31st ofthe succeeding year to their respective Revenue DistrictDivision/LTDO:

a. Declaration of Employees Availment of the 15%

b. Employers sworn declaration stating under oath:

c. Employees sworn declaration, under oath:

Failure to file any of the requirements or filing of falseinformation shall subject the employee on the regularincome tax.

(Revenue Regulations No. 11-2010, October 26, 2010)

i.

ii.

iii.

iv.

the name of its employees who received, or are due toreceive, under an employment contract, a gross annualcompensation equivalent to or more than Php975,000.00or its adjusted amount;

the inclusive dates for the relevant calendar year whenthe employee received, or are due to receive, grossannual compensation equivalent to or more thanPhp975,000.00 or its adjusted amount;

that the employees received compensation solely fromthe ROHQs or RHQs and not from the company of which itis a branch, or from other entity which may be an affiliateor subsidiary of the said company; and

that such employees exercise managerial or technicalfunctions.

his complete name, Taxpayer Identification Number(TIN);

job title and brief description and responsibility;

the equivalent amount of gross annual compensationwhich he received or is due to receive must be at leastPhp 975,000.00 or its adjusted amount;

the inclusive dates of the calendar year when he

received or is due to receive gross annual compensationof at least Php 975,000.00 or its adjusted amount;

that he is exclusively employed by the ROHQ or RHQ;

that he does have any other employer other than theRHOQ or RHQ;

that he does not receive compensation from sourcesother than the RHOQ or RHQ where he is employed; and

that he exercises managerial or technical functions.

i.

ii.

iii.

iv.

v.

vi.

vii.

viii.

Preferential Tax Rate of every qualified employee (BIRForm No. 1947).


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Tax DigestVolume 3, Series 21

SUPREME COURT DECISIONS

Zero-rated must be Printed on Invoice to Claim Tax Refund

J.R.A. Philippines, Inc. is a registeredcompany with the Bureau of InternalRevenue (BIR) as a VAT taxpayer and as

an Ecozone Export Enterprise with thePhilippine Economic Zone Authority(PEZA). It filed with the BIR anapplication for tax credit/refund ofunutilized input VAT on its zero-ratedsales for the taxable quarters of 2000but was not acted upon by the bureau.

A petition was filed before the Court ofTax Appeals but was denied, hence, J.R.A.Philippines, Inc. elevated the matterbefore the highest court.

The solitary issue is whether the failureto print the word zero-rated on theinvoices/receipts is fatal to a claim for

credit/refund of input VAT on zero-ratedsales.

The Supreme Court confirmed thedecision of the CTA. The appearance ofthe word zero-rated on the face ofinvoices covering zero-rated salesprevents buyers from falsely claiminginput VAT from their purchases when noVAT was actually paid. If not, for anyclaim for input VAT, the government

would be refunding money it did notcollect. Further, the printing of the wordzero-rated on the invoice helps

segregate sales that are subject to 12%VAT from those sales that are zero-rated.Moreover, the requirement is reasonableand is in accord with the efficientcollection of VAT from the covered salesof goods and services. Unable to submitthe proper invoices, a taxpayer has beenunable to substantiate its claim forrefund.

(J.R.A. PHILIPPINES, INC. vs.

COMMISSIONER OF INTERNAL

REVENUE, G.R. NO. 177127, October 11,

2010)

eSales Reporting for Large Taxpayers

The BIR re-implements the Electronic Sales (eSales)Reporting. Large Taxpayers using Cash Register Machines(CRMs), Point-of-Sale (POS) Machines and other similarsales machines are required to report their monthly saleson or before the 10th day of the month for each CRM/POS.

Sales report should be in accordance with the requiredformat under this memorandum circular and underRevenue Regulations No. 5-2005. It should contain theMachine Identification Number (MIN), Gross Monthly Salesper machine as stored in the machines non-volatile

memory (with or without sales), Month and Year of salesbeing reported, and Serial Number of the last OfficialReceipt/Transaction Number of the last sales transactionissued for the month being reported.

Taxpayers who will fail to comply for three (3) consecutivemonths shall be subject to penalty Section 250 of the Tax

Code and to the following:

1st offense Reminder Letter2nd offense Machine Inspection/Post-Evaluation3rd offense Revocation of Permit/Cancellation of MIN

This shall take effect on January 2011.

(Revenue Memorandum Circular No. 92-1010, November

25, 2010)


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Tax Digest

Volume 3, Series 21

In this case, the non-declaration by LMCEC for the taxable

years 1997, 1998 and 1999 of an amount exceeding 30%

income declared in its return is considered a substantialunderdeclaration of income, which constituted prima

facie evidence of false or fraudulent return under Section

248(B) of the NIRC, as amended.

Further, RR No. 2-99 was issued providing for last priority in

audit and investigation of tax returns to accomplish the

said objective without, however, compromising the

revenue collection that would have been generated from

audit and enforcement activities. The program Economic

Recovery Assistance Payment (ERAP) Program grantedimmunity from audit and investigation of income tax, VAT

and percentage tax returns for 1998. Since such immunity

from audit and investigation does not preclude the

collection of revenues generated from audit and

enforcement activities, it follows that the BIR is likewise not

barred from collecting any tax deficiency discovered as a

result of tax fraud investigations.

(Commissioner of Internal Revenue Vs. Hon. Raul M.

Gonzalez, Secretary Of Justice, L. M. Camus Engineering

Corporation, G.R. No. 177279, October 13, 2010)

This publication should not be used or treated as

professional advice. The information in this

publication should not be relied upon to replace

professional advice on specific matters and its

contents must not be used as a basis for

formulating decisions under any circumstances.

Readers of this material are advised to seekprofessional advice before making any business

decision or you may call and ask for the full text.

Tax Updates by: Marissa C. YambaoThe author is a tax lawyer at Alas, Oplas & Co. CPAs.

For clarification, tax queries or if you need our

assistance, you may call us at telephone number

(632)759-5090 or email us at

[email protected] or visit usat our website: www.rsm-alasoplascpas.com

Previous Tax Examination does not Bar Tax Fraud Audit

The BIR National Office conducted a fraud investigation for

all internal revenue taxes to determine the tax liabilities of

L. M. Camus Engineering Corporation (LMCEC) for thetaxable years 1997, 1998 and 1999 due to the information

provided by an informer that it had substantial

underdeclared income for the said period.

LMCEC failed to comply with the subpoena duces tecum

issued in connection with the tax fraud investigation,

hence, a criminal complaint was instituted by the BIR for

violation of Section 266 of the NIRC against LMCEC, Luis M.

Camus and Lino D. Mendoza, the latter two were sued in

their capacities as President and Comptroller, respectively.

Camus and Mendoza assail the validity of the complaint

and further aver that the company had already undergone

a series of routine examinations for the years 1997, 1998

and 1999 for under the NIRC, only one examination of the

books of accounts is allowed per taxable year.

The Chief State Prosecutor, the Secretary of Justice and the

Court of Appeals dismissed the complaint instituted by the

BIR. Hence, this petition was filed before the SupremeCourt.

The core issue is whether LMCEC and its corporate officers

may be prosecuted for violation of Sections 254 (Attempt

to Evade or Defeat Tax) and 255 (Willful Failure to Supply

Correct and Accurate Information and Pay Tax) of the Tax

Code.

The Supreme Court ruled in favor of the BIR. LMCEC cannot

claim as excuse from the reopening of its books of

accounts the previous investigations and examinations.

Under Section 235 (a), an exception was provided in the

rule on once a year audit examination in case of fraud,

irregularity or mistakes, as determined by the

Commissioner. The distinction between a Regular Audit

Examination and Tax Fraud Audit Examination lies in the

fact that the former is conducted by the district offices of

the Bureaus Regional Offices, the authority emanating

from the Regional Director, while the latter is conducted by

the TFD of the National Office only when instances of fraud

had been determined by the BIR.

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