BIR ISSUANCES [2017] - PICPA | Homepicpa.com.ph/attachment/224201793958837.pdf · The BIR shall...

TAX UPDATES 2017 Atty. Maria Theresa C. San Pablo-Llamado

Tax Partner, CAZLA Law

PICPA Seminar

15 February 2017

BIR ISSUANCES [2017]

REVENUE REGULATIONS

RR 1-2016 as amended by RR 8-2016: - Amends RR 3-2005 on requirement of timely payment of taxes as a precondition for government contracts.

Adds a requirement that government contractors must file through EFPS.

Before the amendment, Tax Clearance is issued only to an applicant who has no delinquent account (i.e., no pending case for disputed assessment).

Tax Clearance, with a validity period of one (1) year from the date of issuance shall be issued to any applicant who has satisfied the following criteria:

1. No unpaid registration fee; 2. No open valid “stop-filer” cases; 3. A regular user of the BIR’s Electronic Filing and Payment System

(eFPS) for at least two (2) consecutive months prior to the application for Tax Clearance; The required two (2) consecutive months usage of eFPS shall only apply to new applicants. For those which were previously issued Tax Clearance for bidding purposes, the requested Tax Clearance shall only be issued if they are found to be regular eFPS users from the time of enrollment up to the time of application.

4. Not tagged as “Cannot Be Located” taxpayer; 5. No pending criminal information has been filed in any court of

competent jurisdiction arising from any tax or tax related cases; and 6. No delinquent account.


Delinquent account shall refer to the outstanding tax liabilities arising from either self-assessed taxes (i.e., unpaid second installment of income tax due per income tax return filed, unredeemed dishonored check, tax payments using expired Tax Debit Memo and any unpaid tax due as declared in the tax return filed) or a result of an audit or third party information thru the issuance of an assessment notice which was not validly protested within the prescribed period.


If a tax delinquency arises within one year of issuance of tax clearance, the taxpayer shall be notified and may settle the liability within 30 days, otherwise the tax clearance will cease to be valid.


Verification of tax clearance

A Tax Clearance obtained must be verified for authenticity through the BIR website (www.bir.gov.ph) , by accessing Tax Clearance under “announcement”, then choose the applicable period for issuance.

Those Tax Clearances which have been revoked for valid reasons are also posted in the BIR website.


RR 8-2016 Amends RR 1-2016, adds additional requirements on Tax Clearance for government contractors

Tax assessments timely protested administratively and/or elevated to CTA or to higher court within the prescribed period, and where the collection of the assessments are not yet considered final, executory and demandable, shall not be considered delinquent account.

Timeliness in the filing of the administrative protest and/or the elevation of the case to the competent court must be certified by the handling office and this certification shall form part of the documentary requirements in the filing of an application for Tax Clearance.

[Removed under RR 8-2016]

RR 2-2016: ATRIG issuance for imported vehicles

Reiterates the strict requirement of ATRIG (authority to release imported goods) and gives the presumption that without ATRIG, taxes on imported vehicles have not been paid properly.

The vehicle may be detained by any revenue officer, and if warranted, subsequently forfeited. The person/s responsible for the same shall be held liable for unlawful possession or removal without payment of tax pursuant to Section 263.

All imported automobiles found to have been released from customs custody after March 31, 2016 without the required ATRIG shall be subject to seizure.

RR 3-2016: Prescribes policies in adoption of credit/debit/prepaid card payments

General Policies 1. Payment of taxes by credit/debit/prepaid card shall be

voluntary or optional on the part of the taxpayer. As such, the taxpayer shall bear the convenience fee and other fees being charged by banks and/or credit card companies for the use of this payment facility; and, that such fees, including the "Merchant Discount Rate" (MDR), shall, in no case, be deducted from any amount of tax due to the BIR.

2. In the payment of taxes, thru credit/debit/prepaid card, the taxpayer has the option to choose from the available online payment facilities provided by the EPSP for the processing of its/his/her tax payments.

3. The authority to accept tax payments, thru credit/debit/prepaid cards, and act as Acquirers shall be limited to AABs only.

RR 3-2016: Prescribes policies in adoption of credit/debit/prepaid card payments

4. The BIR shall neither have any responsibility nor liability on any issues concerning the taxpayer-cardholder and the card issuer, including, but not limited to, "charge back", erroneous posting or charging, non-payment of the taxpayer-cardholder to the issuer, and other issues.

5. In case the taxpayer-cardholder made erroneous tax payment transactions through this prescribed payment mode, the same shall not give rise to any automatic "charge back" to the taxpayer-cardholder's account. In meritorious cases, the taxpayer shall apply for refund/tax credit with the BIR in accordance with existing revenue issuances.

6. Only the Philippine-issued credit/debit/prepaid cards under the name of the taxpayer-cardholder shall be used in payment of its/his/her tax liabilities.

RR 2-2017 amending RR 3-2016: Payment deemed made on date and time in confirmation receipt

When Payment is Deemed Made. — The payment of taxes through credit/debit/prepaid card, shall be deemed made on the date and time appearing in the system-generated payment confirmation receipt issued to the taxpayer-cardholder by the AAB-Acquirer. provided that payment is actually received by the BIR pursuant to these Regulations.

However, in case of late remittance or non-remittance of taxes to the BIR, despite the timely issuance of a valid confirmation receipt by the AAB-Acquirer to the taxpayer-cardholder, the liability to pay the tax rests upon the AAB-Acquirer considering that from the time of issuance of valid confirmation receipt to the taxpayer-cardholder, the AAB-Acquirer becomes the trustee of the government with the obligation to remit the payment on time to the BIR.

RR 5-2016: Additional criteria for accreditation of printers of ORs, OSIs, etc., amending RR 5-2012

1. Added criteria that it has no record of any criminal complaint with the BIR for tax offenses

2. Printer has not been indicated as cannot be located taxpayer in the BIR system

3. Not tagged as inactive taxpayer

4. Accreditation shall have a validity of five years from the date of issuance of certificate of accreditation

RR 7-2016: Tax incentives available for Tourism Enterprises duly registered with the Tourism Infra and Enterprise Zone Authority (TIEZA) under RA 9593

Fiscal incentives for RTEs within TEZs. Income Tax Holiday

Grant of six years Income Tax Holiday to Greenfield and Brownfield TEZs Greenfield: Six years, extendible once for another six

Brownfield: Non-extendible six years if there is a substantial expansion, meaning substantial CAPEX actually spent to upgrade physical assets / upgrade rooms and classification (ex: 3-star to 5-star)

Alternatively, in lieu of ITH, can be taxed at 5% of Gross Income (GI), remitted 1/3 each to the LGU, national government and TIEZA

GI – similar definition as GI for PEZA enterprises in RR 11-05

Allowable deductions – direct costs with similar enumeration to RR 11-05 for PEZA. But see CTA East Asia Utilities v. CIR (2014), not exclusive

Fiscal incentives for RTEs within TEZs.

Net Loss Carry Over – allowed as a deduction for 6 consecutive years after incurring the loss; covering NOL incurred after start of business operations and TIEZA registration. Registered and non-registered activities to be accounted for separately for NOLCO deduction computation.

Exemption from taxes on importation of capital investment and equipment, transportation equipment and spare parts, subject to certain conditions.


Note: Requires prior TIEZA approval for importation and subsequent disposition. Subsequent disposition, if made within 5 years, to be granted only: To another RTE enjoying similar exemption

For reasons of proven technical obsolescence

For replacement to improve and/or expand RTE operations

In cases of withdrawal or cessation from operations


Goods and Service Incentives

Exemption from VAT and excise tax on importation of goods necessary to carry out registered activities, provided it is not for the purpose of operating a wholesale or retail establishment in competition with Duty Free Philippines

Tax credit on national internal revenue taxes paid on all locally source goods and services used by the RTE for services pursuant to its registered activity which are actually rendered within the TEZ.


Social Incentive: Entitlement to a tax deduction of up to 50% of amounts spent for the following activities performed in surrounding areas with prior TIEZA approval: Environmental activities

Cultural heritage preservation activities

Sustainable livelihood programs for local communities in the surrounding areas of the enterprise or the TEZ

Other similar activities as may be determined by the TIEZA Board.

Activities should have prior approval of TIEZA and do not comprise and are not ancillary to the registered activities of the RTE

Fiscal incentives for RTEs not within TEZs.

Income Tax Holiday (same)

Exemption from taxes on importation of capital investment and equipment

Net loss carry over.

Other Provisions

Required to obtain from TIEZA a Certificate of Entitlement (CE) of incentives on an annual basis.

TEZs are not considered separate customs territories.

RR 7-2016: Tax incentives available for Tourism Enterprises duly registered with the Tourism Infra and Enterprise Zone Authority (TIEZA) under RA 9593

RR 10-2016: Amends RR 17-2011, Implementing the Early Withdrawal Penalty of RA 9505 or the PERA Act

Modifies early withdrawal penalties which had included all income taxes in addition to the 5% tax credit availed by the Contributor, to a single flat rate of 20% based on the total income earned from time of opening to withdrawal

RR 1-2017: Prescribing Regulations for VAT Refund under Sec 112 prior to RMC 54-2014

RMC 54-2014: Provides that the Commissioner shall have 120 days from date of submission of complete documents to grant or deny claim for refund. Inaction shall be deemed a denial.

RMC 54-2014 was being given retroactive effect because pending claims were deemed denied upon the expiration of the 120-day period from the date the claims were filed even though the taxpayer-claimants are still in the process of submitting the complete documents which was allowed in the previous RMC [RMC 49-2003].


Administrative claim must be made within 2 years after the close of the taxable quarter when sales were made

Documents must be completed within the 2-year period

Pending administrative claims prior to the effectivity of RMC 54-2014 shall be processed by the concerned offices based on available documents submitted within the 2-year period.


Claims not covered:

1. Those claims filed beyond the 2-year prescriptive period

2. Those denied in writing by approving authority

3. Those approved/granted fully or partially by the approving authority

4. Those already appealed to and pending with the CTA unless there is proof of withdrawal of the case filed with the CTA.

REVENUE MEMORANDUM ORDERS

Compromise Settlement and Abatement

RMO 04-2016 All applications for compromise settlement,

abatement or cancellation of internal revenue tax liabilities that have been reviewed by the Regional Evaluation Board, Large Taxpayer Service (LTS) Sub-Technical Working Committee or the LTS Evaluation Board, resulting in a recommendation for denial shall be considered FINAL

The outstanding tax liabilities and/or penalties shall be immediately collected.

Compromise Settlement and Abatement

RMO 04-2016 Previously, there was a chance that the

Commissioner could review or evaluate the substantive aspects of the case even if the recommendation was a denial.

The LTS Sub-TWC/EB and all regional TWGs/REBs shall evaluate and release their respective board’s decision within fifteen (15) calendar days from receipt of any application for compromise settlement or abatement.

Decentralization of receiving and processing

certifications of internal revenue tax payments

RMO 07-2016 From the Revenue Accounting Division (RAD)

– reassigned as follows: a) RAD – for all TPs for tax payments 1999 and

prior years (for payments thru AABs) and 1989 prior year (for payments thru RCOs)

b) LTS – for large TPs for tax payments 2000 and thereafter

c) RDO – Collection – for TPs under RDO jurisdiction for tax payments not falling under a or b.

Waiver of Statute of Limitations

RMO 14-2016 The waiver may not necessarily be in the form prescribed by RMO 20-90 or RDAO 05-01 provided that the following conditions are complied with:

1. Must be executed before the expiration of the period to assess or to collect taxes. The date of execution shall be specifically indicated in the waiver.

2. The waiver shall be signed by the taxpayer himself or his duly authorized representative. In the case of a corporation, the waiver must be signed by any of its responsible officials;

3. The expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription should be indicated.


RMO 14-2016 Except for waiver of collection of taxes which shall

indicate the particular taxes assessed, the waiver need not specify the particular taxes to be assessed nor the amount thereof, and it may simply state "all internal revenue taxes“

The taxpayer is charged with the burden of ensuring that the waivers of statute of limitation are validly executed by its authorized representative.


RMO 14-2016 The waiver may be notarized. However, it is sufficient that

the waiver is in writing. lt shall be the duty of the taxpayer to submit its duly

executed waiver to the BIR. The waiver can be accepted by the Commissioner’s

authorized representative as prescribed in existing regulations, the revenue district officer, or the group supervisor designated in the Letter of Authority for the audit.

The two material dates that need to be present on the waiver are the date of execution of the waiver by the taxpayer or its authorized representative; and the expiry date of the period the taxpayer waives the statute of limitations.

Old requisites Under RMO 14-2016

Form As prescribed by RDAO No. 05-01

May or may not be in the form prescribed under RMO 20-90 or RDAO 05-01

Notarized Notarization optional

Person authorized to sign for taxpayer

Signed by taxpayer or his duly-authorized representative. For the corporations, it must be signed by any of its responsible officials Note: Authority of representative cannot be contested to invalidate the waiver under new rules.

BIR Officers authorized to accept

The CIR or authorized revenue official indicating date of acceptance.

The CIR or officials previously designated in existing issuances or concerned RDO or group of supervisors designated in the LOA/MOA.



Time of Execution by the taxpayer and Acceptance by the BIR

Date of execution and acceptance must be before expiration of the prescriptive period or lapse of the period previously agreed upon.

Material dates a) Execution by the taxpayer;

b) Notarization; c) Acceptance by BIR d) Expiry date of the period

the taxpayer waives the statute of limitations

a) Execution b) Expiry date of the period the

taxpayer waives the statute of limitations



Number of copies and receipt of a copy by the Taxpayer

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

Number of copies not indicated. The taxpayer shall have the duty to retain a copy of the accepted waiver.


Tax-Free Exchange under Sec. 40(C)(2) in relation to Sec. 40(C)(6)(c)

RMO 17-2016 Specifically, this deals with the number of

shares to be issued by the transferee corporation in exchange for the property received from the transferor.

The value of shares to be issued by reason of exchange should be equal to the fair market value of the property transferred.

Does not allow recognition of APIC.

Procedure for eCAR

RMO 22-2016 All manually-issued CARs that are outstanding and

not yet presented to the Registry of Deeds and other manually-issued expired CARs that are due for revalidation are no longer valid and shall be cancelled and replaced with an eCAR.

eCARs shall have a validity of one (1) year reckoned from the date of issuance. eCARs may be re-issued by the RDO in case of expiration.

Under RMO 55-2016, validity of eCARs is 3 years from date of issuance.

Procedure for eCAR

RMO 22-2016 Titled real properties:

One eCAR per property covered by OCT/TCT/CCT.

Untitled real properties: one eCAR shall be issued for each tax

declaration, including the improvements thereon.

Personal properties: One separate (single) eCAR shall be issued for all

personal properties per transfer document

Procedure for Handling Disputed Assessments

RMO 26-2016 Protest against PAN is optional

FLD / FAN will issue 15 days from date of receipt of taxpayer of PAN regardless whether the same was protested or not.

Within 30 days from receipt of FAN, TP either –

a) Pay assessment

b) File Protest


RMO 26-2016 - If TP opts to File Protest, protest WITHIN 30 DAYS

FROM RECEIPT OF FAN in the form of either – a) Request for reconsideration – no additional

evidence o Unless stated otherwise, all protests deemed as requests for

reconsideration.

b) Request for reinvestigation – with additional evidence

o TP given 60 days to submit evidence from filing of protest.

o Only available for issued FAN/FLD. Not available if FDDA is issued.


RMO 26-2016 - If protest not acted upon by CIR’s authorized

representative –

a) If protest is by way of request for reconsideration o Appeal to CTA within 30 days from lapse of 180

day period from filing of protest; or

o File request for recon with the CIR, appeal to CTA within 30 days from lapse of 180 days (in case of inaction), or from receipt of the CIR’s decision.


RMO 26-2016 - If protest not acted upon by CIR’s authorized

representative –

b) If protest by way of request for reinvestigation o Appeal to CTA within 30 days from lapse of the

180 day period from end of 60 days to submit documents.

o Or appeal by request for RECON to CIR


RMO 26-2016 - If FDDA is issued by CIR’s authorized

representative, TP within 30 days from receipt either –

a) File request for reconsideration to CIR o If FDDA is issued by CIR, you may file a request for

reconsideration but it will NOT TOLL the running of the 30 day period to appeal to the CTA.

b) Appeal to the CTA

Procedure for Claiming Tax Treaty Benefits for Dividends, Interest and Royalty Income of Nonresident Income Earners

RMO 27-2016

In lieu of the mandatory tax relief applications (TTRA), preferential treaty rates for dividends, interests and royalties are granted outright by withholding final taxes at applicable treaty rates.

Withholding agents shall file the appropriate BIR Form 1601-F and 1604-F in accordance with existing regulations. Incomplete information provided on the form shall lead to the penalties as provided under Section 8 of this Order.

Procedure for Claiming Tax Treaty Benefits for Dividends, Interest and Royalty Income of Nonresident Income Earners

RMO 27-2016 Supporting documents to avail of the reduced rate of 15%

on intercorporate dividends received by Non-Resident Foreign Corporation: Application letter; Authenticated proof of residency; A consularized copy of the law of the country of the

NRFC expressly stating that the country in which the NRFC is domiciled allows a credit against the tax due from the NRFC taxes deemed to have been paid in a foreign country (Philippines) equivalent to 15%;

Certification from the Corporate Secretary of the domestic corporation stating the important details of the dividend declaration; and

Special Power of Attorney, if applicable.

PERA Law

RMO 42-2016 Applications for Accreditation of PERA

Administrator need to have a "Qualification Certificate" issued by the regulatory concerned - BSP, IC or SEC.

The accreditation of a PERA Administrator shall be valid from the date of issuance of the Certificate of Accreditation until it is suspended or revoked

Tax credits arising from PERA contributions can be used as payment for delinquent accounts but in no case will it be refundable or convertible into cash or transferrable to any other party

Importer's Clearance Certificate (ICC) and Broker's Clearance Certificate (BCC)

RMO 56-2016

oAmends policies, guidelines and procedure in applying for ICC and BCCs.

Issue-based Audit under VAT audit program

RMO 59-2016 Taxpayers with VAT returns reflecting erroneous

input tax carry-over are mandatory cases for issue-based audit.

The priority cases for issue-based audit are the following:

Taxpayers whose VAT compliance is below the established industry benchmarks;

Taxpayers with zero-rated and/or exempt sales due to availment of tax incentives or exemptions;

Issue-based audit under VAT audit program

RMO 59-2016 The priority cases for issue-based audit are the

following:

Taxpayers engaged in business where 80%, more or less, of their transactions are on a cash basis and whose purchases of goods and services do not generate substantial amount of input tax, such as restaurants, remittance/payment centers, etc.;

Taxpayers with VATable transactions which were subjected to expanded Withholding Tax but with no VAT remittance;



following:

Taxpayers who failed to remit/declare VAT due from purchase of services from nonresident aliens

Taxpayers who fail to declare gross sales/receipts subjected to VAT withholding on purchases of goods/services with waiver of privilege to claim input tax credit [creditable];



following:

Taxpayers whose gross sales/receipts per Income Tax returns are greater than gross sales/receipts declared per VAT returns; and

Taxpayers filing Percentage Tax returns whose gross sales/receipts exceed the VAT threshold

Audit Policies

RMO 64-2016 Amends the requirement of securing approval from

CIR before TP is audited for the 3rd consecutive year.

If the taxpayer has been audited for the last two years and has been selected for audit on the current or 3rd year, the RDO/LTS shall encode the requested audit, and it shall be approved by the Regional Director/Assistant Commissioner who heads the investigating office.

Audit Policies

RMO 64-2016 The deficiency assessment on said cases shall only be

imposed with two 5% surcharge unless the under-declaration of income or overstatement of expenses/deductions reaches 30% or more, which shall be imposed with 50% surcharge.

Separation Benefits for Causes Beyond Control of Employees

RMO 66-2016 Devolves to RDO or applicable LT office

where ER is registered the processing of requests for tax exemption of separation benefits received by EE as consequence of separation due to causes beyond its control, such as, but not limited to, RETRENCHMENT, REDUNDANCY, INSTALLATION OF LABOR-SAVING DEVICES and CLOSURE OF BUSINESS.

Separation Benefits

RMO 66-2016 Requirements:

Letter request from the official/employee (or by his heirs) or the employer for the exemption of separation benefits from income tax and withholding tax;

If Death: Certified true copy of Death Certificate

If Sickness Sworn affidavits to be executed by the employer's physician or the

employee's attending physician and the head of office/entity or his representative

Clinical record of the official/employee

Laboratory examination confirming the illness suffered

REVENUE MEMORANDUM CIRCULARS

RMC 15-2016

The renegotiated Philippines-Germany Tax Treaty entered into force on 18 December 2015 and shall have effect in respect of taxes covered by said treaty, including taxes withheld at source, for any taxable period beginning on or the first day of January 2016.

Renegotiated Philippines-Germany Tax Treaty

Expanded definition of resident - Article 4

A partnership is deemed to be a resident of Germany if the place of effective management is situated in Germany.



PE definition – Article 5

The Revised Treaty includes a PE provision in which the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, would create a PE if the service activities continue for the same or a connected project within a Contracting State for period or periods aggregating more than 6 months within any 12-month period.


Dividends, Interest and Royalties – Articles 10, 11 and 12

Adds a new 5% preferential tax rate on dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 70% of the capital of the company paying the dividends.

Generally applies a 10% withholding tax on interest. Provides a fixed 10% withholding tax on royalties.

Allows both countries to impose a 10% tax on branch profit remittances.


Capital gains – Article 13

Contracting State may tax gains from the disposition of shares only if the assets of the company consist, directly or indirectly, principally of immovable property situated in that State.


Elimination of double taxation – Article 24

German Tax payable on income will be allowed as tax credit against Phil. Tax payable.

Germany generally applies the exemption method on income derived in the Phil.

- Dividends paid by a PH resident company to German resident company holding directly at least 10% of the PH company.

Board of Accountancy Resolution No. 3 applicability

RMC 36-2016 BOA Resolution No. 3 entitled “Requiring

the submission of Certificate by the Responsible Certified Public Accountants on the Compilation Services for the Preparation of Financial Statements and Notes Thereto” is not applicable for ITRs covering the calendar year 2015, but becomes effective only for FS to be submitted for the FY ending 30 June 2016 and subsequent periods.

Policies for Accounting and Recording Transactions involving "netting" or "offsetting”

RMC 61-2016 The practice of offsetting due to/due

from and/or payable/receivable transactions of taxpayers and consequently the accounting and recording of the same and its related transactions in the books of the parties is strictly prohibited for taxation purposes.

RMC 61-2016

At all times, the accrued receivables or payables arising from sale or lease of goods or properties or the performance of service shall be recognized at gross for Income and Value-Added Tax or Percentage Tax purposes.


RMC 61-2016 Income payments subject to Creditable or

FWT shall be recorded at gross, regardless of whether the transactions are actually offset or the same provide for net settlement of cash flows.

Any amount offset against the income payments by the payor not subjected to Creditable or FWT shall not be allowed as deductible expense of the payor.


Passed-on Gross Receipts Tax

RMC 62-2016 All banks, non-bank financial intermediaries

performing quasi-banking functions, financing companies and other financial intermediaries not performing quasi-banking functions doing business in the Philippines are directly liable for GRT.


RMC 62-2016 GRT passed-on to customers / clients /

borrowers should form part of the tax base upon which the GRT is computed.

The "passed-on" GRT shall be considered as receipt of gross income specified under Section 32(A) of the Tax Code.

RMC 62-2016

The “passed-on” GRT is considered as other fees and charges.

Banks and non-bank financial intermediaries can claim the GRT paid as a deductible expense, for income tax purposes, subject to the actual remittance of the GRT.


Exemption on Certification

RMC 84-2016

Exempts all taxpayers applying for issuance of tax credit/refund based on Writ of Execution issued by the Court of Tax Appeals and Supreme Court from the requirement of Certifications on Outstanding Tax Liabilities/Delinquency Verification Slips.

Requirement of TIN for Certificate of Tax Exemption (cooperatives)

RMC 102-2016 RDOs may process and evaluate the certificate of

Tax Exemption of cooperatives that have not yet submitted the TIN of its members

In lieu thereof, a certification under oath of the list of members and their capital contribution must be submitted

However, cooperatives are still required to complete and submit to the concerned RDO the TINs of its members within six months from the issuance of the CTE.

One Time Transactions involving real property

RMC 105-2016

NO LONGER REQUIRED: Certified true

copies of the original CAR pertaining to transfer of property prior to issuance of OCT/TCT or CCT which is subject of the current sale/transfer.

BIR RULINGS

Separation benefits

BIR Ruling No. 231-16 dated June 1, 2016

Separation benefits received by displaced teaching and non-teaching personnel of HEIs brought about by the implementation of the K to 12 program are not subjected to income tax & withholding tax.

Facts:

Teaching and non-teaching personnel of higher educational institutions (HEIs) were displaced brought about by the implementation of the K to 12 Program.

Department of Labor and Employment (DOLE) is requesting exemption from income tax, and consequently from withholding tax, on the early retirement benefits/separation benefits to be received by the affected employees.

Separation benefits

BIR Ruling No. 231-16 dated June 1, 2016 Ruling:

The retrenchment/separation from employment of the personnel by reason of the implementation of the K to 12 Program falls within the meaning of the phrase "for any cause beyond the control of the said official or employee” considering that the implementation of the said Program was neither asked for nor initiated by the employees.

Retrenchment/separation benefits shall not be subject to income tax, and consequently to the withholding tax.

Socialized Housing Projects


Sale by landowner to NHA of real properties to be utilized for low-cost and socialized housing are exempt from the VAT and CGT. No DST is also due since NHA is exempt from payment of DST in connection with socialized housing projects pursuant to RMC No. 42-01.

Facts:

A construction company is engaged by NHA to undertake construction of 1,000 Housing Units with its necessary construction components for its Yolanda Housing Project.



Ruling:

Urban Development and Housing Act of 1992 (“RA 7279”) provides for the incentives for private sector participating in socialized housing, such as, exemption from the payment of project-related income taxes, CGT and VAT. Thus, the landowner who sells their properties for use in a socialized housing project is exempt from the payment of the capital gains tax.



Ruling:

The income directly realized by the construction company from the land development and housing construction shall be exempt from project-related income taxes and VAT.

However, the purchases of goods/articles by the project contractor shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services.



Ruling:

NHA is exempted from the payment of DST in connection with socialized housing projects. (RMC No. 42-01 dated October 5, 2001)

The exemption from documentary stamp tax of NHA in connection with any of its socialized housing project extends to the other party (either seller or buyer) that deals or transacts with the NHA.

Consequently, since NHA is a party to the sale, no documentary stamp tax shall be due on such sale.


BIR Ruling No. 234-16 dated June 3, 2016 (similar ruling as BIR Ruling No. 232-16)

The owner of the raw land is exempt from the payment of capital gains tax or the withholding tax on the sale of a parcel of land which shall be utilized in a socialized housing project. No DST is also due since NHA is a party to the sale.

Facts: NHA acquired a parcel of land to be developed into a residential

project under the Community Initiative Approach Program (CIAP) of the NHA. On various dates, Deeds of Absolute of Sale (DOAS) were executed by and between the co-owners and the NHA whereby the former sold to the latter the above described property to be utilized by the NHA for its socialized housing project.

Socialized Housing Projects BIR Ruling No. 234-16 dated June 3, 2016

Ruling:

The owner of the raw land is exempt from the payment of capital gains tax or the withholding tax under Revenue Regulations No. 2-98, as amended, on the sale of a parcel of land which shall be utilized in a socialized housing project. (BIR Ruling No. 066-2011 dated March 9, 2011)

Thus, the sale by the landowners to LHA of the area on which the 365 socialized housing units shall be constructed is exempt from the payment of CGT or CWT.

No DST is also due since NHA is a party to the sale.



Ruling:

Under Section 20 (d) (3) of RA 7279, the sale of a socialized housing as defined therein shall also be exempt from the payment of value-added tax (VAT).

Thus, the sale by the developer to NHA of the 365 developed lots or parcels of land shall be exempt from VAT.

However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services.



The landowner who sold its property under CMP for use in a socialized housing project are exempt from the payment of capital gains tax. DST still payable.

Facts:

The landowner transferred and conveyed 17,770 sq.m. portion of the subject properties to a homeowners association. Pursuant to the certification issued by Social Housing Finance Corporation (SHFC), 17,770 sq.m. out of 19,704 sq.m. covered actually comprises a Community Mortgage Program (CMP) Project and shall be proportionately distributed to the association's qualified member-beneficiaries.



Ruling:

Pursuant to Section 32 of RA No. 7279, the landowner who sold its property under CMP for use in a socialized housing project are exempt from the payment of capital gains tax.

However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 32 of RA 7279. Accordingly, the landowners are liable to pay the documentary stamp tax on the document conveying the afore-stated property imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realties or their fair market values determined in accordance with Section 6 (E) of the said Code, whichever is higher.

Income Tax Holiday of BOI-registered enterprises

BIR Ruling No. 347-16 dated August 11, 2016 ITH entitlement for BOI registered projects shall be vested upon compliance with the provisions of the specific terms and conditions of the corporation’s BOI registration Facts:

A company is registered with the Board of Investments (BOI) as a New Developer of Low-Cost Mass Housing Project on a Non-Pioneer status. It has been granted Income Tax Holiday (ITH) by the BOI for a period of four (4) years from date of BOI certification or actual start of commercial operations/selling, whichever is earlier but in no case earlier than the date of registration.

Under the specific terms and conditions of its BOI registration, it shall construct and sell 415 units of low-cost mass housing for its housing project in Laguna.


BIR Ruling No. 347-16 dated August 11, 2016

Ruling:

Income payments received by a corporation for a BOI registered project is exempt from creditable withholding tax (CWT) during the period under which it is granted ITH.

The above exemption from CWT covers only revenues from its registered activity.

Exemption does not cover revenues from units with selling price exceeding PhP2,500,000.00.

Exemptions shall be vested upon compliance with the provisions of the specific terms and conditions of the corporation’s BOI registration.


BIR Ruling No. 347-16 dated August 11, 2016

Ruling:

BOI-registered enterprises enjoy no tax exemption/privileges other than those granted under EO 226. It is clearly granted a 4-year ITH but it remains to be subject to VAT and DST on its sales of house and lot units pursuant to Sections 106(A0(1)(a) and 196 of the Tax Code of 1997, as amended.

Sale of housing units with selling price of not more than PhP1,919,500.00 shall be exempt from VAT pursuant to Section 109(1)(P) of the Tax Code.

Separation pay due to retrenchment

BIR Ruling No. 353- 16 dated October 18, 2016

Separation pay received due to retrenchment exempt from tax

Facts:

The company is engaged in business process outsourcing (BPO). Three of its employees had to be separated as a result of the termination of the company’s contract with one of its clients. The workers have been duly notified of their termination.



Ruling:

Section 32(B)(6)(b) of the Tax Code of 1997, as amended, excludes from the computation of gross income any amount received by an employee from his employer as a consequence of separation from service due to death, sickness or other physical disability or for any cause beyond the control of the said employee.

The separation pay that will be received by retrenched employees shall be exempt from income tax and, consequently, from withholding tax.


Ruling:

The terminal pay shall likewise not be subject to income tax and consequently to withholding tax, i.e., commutation and payment of monetized unused vacation leave credits not exceeding 10 days. This however is not applicable to sick leave credits.

This exemption does not include payment of salaries, and 13th month pay and other benefits in excess of Php 82,000.


Donation to religious corporation

BIR Ruling No. 358-16 dated October 19, 2016

Donation to religious corporation exempt from donor’s tax and DST

Facts:

An individual donated a parcel of land in favor of a religious corporation.

Ruling: Any donation in favor of a religious corporation is exempt from

donor’s tax pursuant to Section 101 (A) (3) of the National Internal Revenue Code (NIRC) of 1997. The exemption, however, requires that not more than 30% of the said gift shall be used by the donee for administrative purposes.

Donation to religious corporation

BIR Ruling No. 358-16 dated October 19, 2016

Ruling:

For donation of land, the Register of Deeds shall annotate the 30% condition at the back of the titles because failure to comply with this condition will subject the donation to donor’s tax. In addition, conveyance of realties without consideration such as through donation is likewise not subject to DST as prescribed under Section 196 of the NIRC. Only Php 15.00 DST under Sec. 188 shall be imposed.

Sale of principal residence BIR Ruling No. 369-16 dated November 3, 2016 Execution of the deed of absolute sale and not the date of notarization constitutes consent for sale of property for purposes of availing CGT exemption under Section 24(d)(2) of the NIRC. Other documentary requirements can also be considered by BIR. Facts:

Deed of Absolute Sale was executed between the seller and the buyer wherein the principal residence of the seller was sold to the buyer.

Date of execution – 2 September 2013 Date of notarization – 10 September 2013 Acquisition of new principal residence – September 2, 2013 as

date of execution and notarization of the Deed of Absolute Sale.

Sale of principal residence

BIR Ruling No. 369-16 dated November 3, 2016

Ruling:

Sale of a principal residence by a natural person may be exempted from capital gains tax under Section 24(D)(2) of the Tax Code of 1997, provided that all the requirements in the said law as implemented by RR 13-99 as amended by RR 14-2000 have been complied with.

The sale or disposition of the principal residence must precede the acquisition of a new principal residence.

The acquisition or construction of a new principal residence must be done within eighteen (18) calendar months from the date of the disposition to be exempt from capital gains tax.



Ruling:

It is provided under RR 13-99 that, in general, the “date of sale or disposition of a property refers to the date of notarization of the document evidencing the transfer of said property.”

Art. 1315 of the Civil Code provides that “Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law”

The consent of both parties was manifested upon the date of execution of the Deed of Absolute Sale and thereupon became valid and not on the date of notarization.



Ruling:

In this query, it appears that acquisition of the seller’s new residence came after the sale of its old residence as shown by other documents submitted such as Cashier’s Checks (dated in August 2013) and CARs for both transactions (October for the sale and December 2013 for the acquisition of new residence). These documents show that the date of sale of the principal residence was actually made prior to the acquisition of the new residence.

Therefore, the sale shall not be subject to 6% CGT under Section 24 (d) (2) of the NIRC of 1997.

When will an alien be considered a resident of the Philippines


Indefinite stay within the Philippines renders a foreigner a resident. A resident alien is subject to income tax in the same manner as a Filipino citizen

Facts:

A domestic corporation’s President is a French citizen who owns approx.. 99.9% of the outstanding stock of the corporation. He had ben its President since its incorporation in 1989 and he is married to a Filipina since 2000, owns and maintains residence in the Philippines.

This ruling seeks confirmation that the President of the said Company is a resident alien for Philippine income tax purposes, as defined in Section 22(F) of the Tax Code as amended.



Ruling:

An alien may be considered a resident of the Philippines for income tax purposes if:

1. He/she is not a mere transient or sojourner,

2. He/ she has no definite intention as to his stay, or

3. His/her purpose is of such nature that an extended stay may be necessary for its accomplishment, and to that end the alien makes his or he home temporarily in the Philippines. (Section 5 RR No. 2)



Ruling:

The alien, in this ruling, has shown that there is an intention on his part to stay in the Philippines indefinitely given the fact that:

a) he invested in the Philippines and served as the company’s President;

b) he acquired real property and is actually present most of the time in the Philippines since 1989; and

c) he registered as a taxpayer with the BIR. All of these circumstances show that he is not a mere transient or sojourner.

Accordingly, it is clear that the alien has acquired residency in the Philippines.



Ruling:

Thus, he is a resident alien and is taxable as a resident alien for income tax purposes for the duration of his stay in the Philippines. He is subject to income tax in the same manner as a Filipino citizen. He can also avail of the personal tax deductions and tax exemptions allowed to Filipino citizens under the Tax Code.

BIR did not confirm that cash dividends that will be receive by TP in the future is subject to 10% FT, being a hypothetical issue.

Importations of denatured ethyl alcohol not covered by the exemption of excise tax


Importations of denatured ethyl alcohol are not covered by the exemption of excise tax per Section 134 of the Tax Code, and not subject to zero percent (0%) VAT on account of the Company’s registration with PEZA.

Facts:

The Company is duly registered with PEZA as an Ecozone Export Enterprise. It uses denatured ethyl alcohol in its PEZA-registered activity. However, its request that its importation of denatured ethyl alcohol be exempt from excise tax and VAT.



Ruling:

The request for exemption from VAT and excise tax is denied for the ff. reasons:

There is no provision under Section 134 of the Tax Code for exemption covering importations. Section 134 covers only domestic denatured alcohol. Importations of denatured alcohol is subject to excise tax under Section 141 of the NIRC.



The Company’s PEZA certification only mentions VAT-zero rating in its transactions with its local suppliers of goods, properties, and services in connection with its PEZA-registered activities. Thus, the Company cannot invoke said certification in claiming VAT zero-rating on its importations of the denatured ethyl alcohol.

Its Permit to Buy/Use Denatured Alcohol only allows the Company to use/buy denatured ethyl alcohol from local suppliers that are duly registered with the BIR. Non-compliance with or violation of any of the conditions for the grant of the Permit to Buy/Use Denatured Alcohol shall be a valid ground for the revocation of the same.

Transfer of real property based on a court-approved compromise agreement

BIR Ruling No. 423-2016 dated 07 December 2016

A reconveyance of real property based on a compromise agreement duly approved by a court is still subject to payment of capital gains tax (CGT) and documentary stamp tax (DST).

The transfer of property pursuant to a compromise agreement is covered by the clause “other disposition of real property” under Section 24(D)(1) of the Tax Code of 1997 on capital gains tax. The phrase “other disposition” includes all kinds of dispositions of real property unless specifically excluded therefrom or subject to another tax treatment.

The reconveyance of the subject real property is subject to DST under Section 196 of the Tax Code.

Reversion of property to trustor

BIR Ruling No. 445-2016 dated 19 December 2016

The termination, liquidation and reversion of the property (real or personal) back to the trustor is not subject to income tax, capital gains tax and withholding tax on the ground that there is no sale or transfer of property involved in said transaction.

Facts: An individual (“Trustor”) entered into a Trust Agreement with a bank

(“Trustee”), by virtue of which a Trust Account was established where the Trustor conveyed to the Trustee PhP1.7M in cash, to be held in trust, managed, invested, reinvested and for other purposes for the benefit of the beneficiaries. Another Trust Account was opened with initial investment of PhP195,000. With the cash investment, the Trustee purchased two condominium units and registered the same in the name of the Trustee.

Reversion of property to trustor BIR Ruling No. 445-2016 dated 19 December 2016 Facts:

The trustee bank merged with another bank with the latter being the surviving entity and the Trust Accounts had new account numbers. The Trustor now wants the properties covered by the trust to be transferred back to his name.

Ruling: The transfer of title of the properties by the trustee in favor of the

trustor, who is the beneficial owner thereof is not subject to capital gains tax nor to the creditable withholding tax. The conveyance is merely to be treated as a continuation and confirmation of title in favor of the ultimate and real beneficiaries of the properties. The transfer of the properties to the trustor is not also subject to the 12% VAT because the said property is not held primarily for sale to customers or for lease in the ordinary course of business. No gift tax is also due.

Non-stock non-profit educational institution

BIR Ruling No. 001-2017 dated 05 January 2017

Facts:

A non-stock and non-profit educational institution with SEC registration dated 7 February 2014 requested for the issuance of a certificate of tax exemption enjoyed by non-stock and non-profit educational institution under Section 30(H) of the Tax Code of 1997.

In reply, the BIR said that it cannot as yet issue the requested ruling/certificate of tax exemption because the school has to be proved by actual operation for at least 3 years that it is really a corporation/association exempt from income tax under Section 30(H) of the Tax Code.

Non-stock non-profit educational institution


Ruling:

In the meantime, it can file the necessary annual information return instead of an income tax return on or before the 15th day of the fourth month following the end of its taxable year. Based on this return, the BIR shall conduct the necessary investigation and the letter of exemption shall be issued thereafter. For purposes of securing a certificate of exemption after the three-year period, it is required to submit the documentary requirements enumerated in Section 2 of RMO 44-2016.

Separation pay subject to withholding tax if separated with cause


Separation pay of an employee who was separated for cause is subject to withholding tax

Facts:

An employee in a pharmacy was separated from employment on the ground of Serious Dishonesty and Willful Disobedience. This ruling seeks to exempt the separation pay given to her from withholding tax pursuant to Sec 32 (B)(6)(b) of the Tax Code.


Ruling:

The separation of the employee in the case at bar cannot be considered an involuntary separation within the contemplation of Sec 32 (B)(6)(b) since her separation is for cause, i.e. “on the ground of Serious Dishonesty and Willful Disobedience.”

Separation pay subject to withholding tax if separated with cause

Sale of socialized housing units to qualified beneficiaries


The sale of socialized housing units to qualified beneficiaries shall be exempt from income tax, and consequently from creditable expanded withholding tax. A project contractor of a socialized housing project shall also be exempt from the payment of VAT on the project concerned where the price ceiling per unit is P450,000.00 for house and lots and P180,000.00 for lots only.

Facts:

This ruling refers to a request for a Certificate of Tax Exemption on the sale of socialized housing units pursuant to RA 7229 or the Urban Development and Housing Act of 1992.



Ruling:

Only the sale of socialized housing units to qualified beneficiaries shall be exempt from income tax, and consequently from creditable expanded withholding tax.



Ruling:

Developer of socialized housing shall be exempt from VAT. But purchases of goods/articles by project contractor shall be subject to VAT, even if used for socialized housing projects.

The owner/project developer/seller shall be liable to pay DST on the documents conveying the properties under Sec 196 of the Tax Code.

Sale of house and lot packages from a landowner/developer to the NHA


The sale of house and lot packages from a landowner/developer to the NHA under the Urban Development and Housing Act of 1992 is exempt from the payment of the capital gains tax, project-related income taxes, and consequently from withholding tax pursuant to Sec20 of RA 7279. The sale is also exempt from VAT.

Facts:

The landowner/developer of properties sold 312 developed lots to NHA at an agreed price of around Php34M. The purchased developed lots and completed housing units shall be financed through the Community Initiative Approach of the NHA for Php220,000.00 for every developed lot and completed housing unit per family.

Sale of house and lot packages from a landowner/developer to the NHA

BIR Ruling No. 004-2017 dated 12 January 2017 Ruling:

The sale of 312 house and lot packages by the landowner/developer t are exempt from the payment of the capital gains tax, project-related income taxes, and consequently from withholding tax pursuant to Sec20 of RA 7279. The sale from landowner to NHA of the house and lot packages are likewise exempt from DST imposed under Sec196 of the Tax Code pursuant to RMC No. 42-01. The exemption from DST of NHA in connection with any of its socialized housing project extends to the other party that deals or transacts with the NHA.

Moreover, the sale of the 312 house and lot packages shall be exempt from VAT. However, purchases of goods/articles by the project contractor shall be subject to VAT, even if the said purchases are to be used for the socialized housing project.

Donation to LGU


Facts:

UNICEF donated a locally-purchased vehicle to the Municipality of Burauen, Leyte, one of the towns which was badly hit by Yolanda.

Donation to LGU


Ruling: Donations made in favor of the Government or any of its

agencies which are not conducted for profit, or to any of its political subdivisions are exempt from the payment of donor’s tax pursuant to the provisions of Sections 101 (A)(2) and Section 101 (B0(1) of the Tax Code of 1997. Since the Municipality of Burauen, Leyte is a political subdivision of the National Government, the donation made by UNICEF in its favor is exempt from the payment of donor’s tax.

The Deed of Donation is subject to DST of P15.00 imposed under Section 188 of the Tax Code.

SEC ISSUANCES

SEC OPINIONS

Corporate Term

SEC Opinion No. 16-24

Max term of educational institutions:

Corp Code requires indication of a term

Corporation Law Corporation Code

No term prescribed = perpetual

50 years

Corporate Term


Failure to comply with the requisite to indicate a term results in the term being deemed to have begun on 01 May 1980.

Consequently, the term of an educational institution incorporated under the Corporation Law but that did not amend its AOI pursuant to the Corporation Code will be until 01 May 2030.

Corporate Term


Stock corporations incorporated under the Corporation Law follow the 50 year term and cannot be deemed to have a new 50 years starting 01 May 1980.

The 50 year term requirement is not new to stock corporations, unlike with educational institutions

Stockholder Meetings


Teleconferencing and videoconferencing are not allowed in stockholder’s meetings.

Under Section 51 of the Corporation Code, all of the stockholders must be in the same physical place during the meeting.

Quorum in Meetings


Quorum in board meetings cannot be decreased to lower than “a majority of the number of directors or trustees as fixed in the articles of incorporation.”

This number may be increased in the articles of incorporation or the by-laws, but it cannot be reduced.

Quorum in Meetings


Stockholders or members in a stock corporation and non-stock corporation, respectively, who are entitled to vote, must be present or represented by another person in order to constitute a quorum.

Directors/Corporate Officers


Corporations cannot have alien presidents/chairmen when the corporation is involved in real estate.

Directors/Corporate Officers


Non-stock non-profit organizations are entitled to have alien trustees in its board, and a foreigner as its President/Chairman provided that the organization is not involved in any nationalized or partly nationalized business or industry.

Calls for Payment

SEC Opinion No. 16-05 A call for payment for the balance of

subscriptions may be made by installments. Stock certificates cannot be issued for the

equivalent of the shares partially paid in a subscription. Subscriptions are one, entire, and indivisible contract.

Cash dividends cannot be directly applied to the balance of a non-delinquent subscription. Neither can stock dividends.

Delinquency Sale

SEC Opinion No. 16-09 In a delinquency sale, certificates of stock

will be issued only upon full amount of the bid price, together with the interest and expenses

Treasury Shares


Treasury shares may be treated as part of the issued shares as long as they are not cancelled or retired.

The 25% of the 25% requirement is mandatory only during the pre-incorporation period and when the corporation undertakes to increase its authorized capital stock.

Foreign Equity


Foreign equity participation cannot be allowed in the registration of corporations that intend to engage in the practice of interior design

Freight Forwarder


An international forwarding company with more than 40% foreign equity can provide trucking service to its clients through sub-contracting to local trucking companies as it is an activity that is necessary included in, or implied by, its business as an international freight forwarder.

Nationalized Industries


No foreign participation is allowed in corporations, such as a real estate brokerage company, that will engage in the practice of real estate service.



Advertising agencies that lease out billboard spaces are mass media companies that must be wholly owned by Filipinos.



An online English school, which will provide formal training courses or programs for a fee and shall provide Diplomas or Certificates of Program Completion, must comply with the 60-40 Filipino-Foreign equity requirement.



All educational institutes, other than those established by religious orders and mission boards, and those established for foreign diplomatic personnel and their dependents, and for other foreign temporary residents, is subject to 40% foreign ownership limitation.



Business process outsourcing is not a nationalized industry. Therefore, foreign nationals may be appointed as directors of companies that engage in business process outsourcing.



Renewable energy companies are engaged in a nationalized industry, therefore foreign nationals cannot be elected as President.

Control Test


Absent any doubt, the Control Test is used in determining the nationality of a corporation specially in cases where foreign ownership restrictions apply.

Joint Ventures


Corporations may enter into joint ventures provided that it is line with the business authorized by their charters.

Representative Offices


Representative offices may engage in information dissemination and other support activities to the main office, but it must strictly adhere to the restrictions imposed upon it.

Retail


Service centers are not engaged in retail; purchases of replacement parts are merely incidental to the repair

Sales to the general public, through a single outlet owned by a manufacturer of products manufactured, processed or assembled in the Philippines is not considered as retail.

Retail SEC Opinion No. 16-03 The sale of motorbikes to industrial users on a

wholesale basis is not retail since it involves producer goods, not consumer goods for household purposes.

By producer goods, the IRR of the Retail Trade Law means that the consumers of these products render service to the general public and/or produce or manufacture goods which are then sold by them.

Retail


Sales to the government, its agencies and GOCCs are not retail.

Retail

SEC Opinion No. 16-06 Restaurant operations by a hotel owner are

not considered as retail as long as the same is incidental to the hotel business. This principle holds true even if the restaurant engages in catering services.

Gift stores in hotels are not considered as engaging in the retail trade as this is merely incidental to hotel operations.

SEC Memorandum Circulars

Submission to Credit Information Cooperation

SEC Memorandum Circular No. 3

Financing companies are required to submit to the Credit Information Corporation their basic credit data namely:

(1) their 5-year historical data and

(2) their current data on or before 31 August 2016, and are enjoined from attending orientations/road shows.

Judicial Affidavit Rule


The Judicial Affidavit Rule is applicable in hearings before the SEC.

The JAR will apply in all actions, proceedings and incidents requiring the reception of evidence.

Address in AOI/GIS


Specific addresses must be given for the principal office of the corporation, and of each incorporator, director, trustee or partner.

(Building Unit, Name of Building, Street No., Street Name, Barangay, City)

Certificate of Nationality of Non-Stock Corporations


A certification on the nationality of non-stock corporations shall be issued upon request to the Commission’s Company Registration and Monitoring Department for a fee in the amount of Five Thousand (Php5,000.00) pesos.

Special Audit Report

SEC Memorandum Circular No. 11 Amends Item 2 of Memorandum 06-2012

regarding the submission of a Special Audit Report for increases in authorized capital stock.

Special Audit Reports are not needed where the payment to the subscription to the increase is less than Fifty Million Pesos (P50,000.00)

Special Audit Report

If a special audit report is not needed, then a notarized Subscription Contract among the stockholder/s, treasurer and president for the corporation stating the number of additional shares subscribed to and paid for shall be submitted by the corporation.

Certificate of Paid Up Capital

SEC Memorandum Circular No. 13 To secure a Certification of Paid Up Capital,

the following must be submitted by the corporation: a. Duly Accomplished Request Form stating

the basis of certification

b. Audited F/S as of the last fiscal year

c. Audited Interim Financial Statements

d. Notarized Sec Cert of No Pending Intra-Corporate Dispute; and

e. Monitoring Clearance

New GIS Forms


New GIS forms to be used starting January 2017.

Addition of TIN page at the end of the GIS, which will not be uploaded for the privacy of the corporate officers and stockholders.

Payment of Annual Fees of Capital Market Participants

SEC Memorandum Circular No. 17 Guidelines on the applications for Payment of

Annual Fees of Capital Market Participants.

Payment made Consequence

November Payment Due

December 50% Surcharge

Subsequent Months 100% Surcharge

Not at all Suspension or revocation of the registration/license after due notice and hearing.

Payment of Annual Fees of Capital Market Participants Guidelines are applicable to SEC-registered/licenses

Capital Market Participants, namely:

Brokers Dealers in Securities,

Brokers in Securities,

Dealers in Securities,

Brokers in Proprietary Shares,

Voice Brokers, Investment Houses, Investment Houses

Engaged in Dealing Government

Securities, Underwriters of

Securities Engaged in Dealing Government Securities,

Government Securities Eligible Dealers,

Investment Company Advisers,

Mutual Fund Distributors, and their respective Associated Persons,

Compliance Officers,

Salesmen, Fixed Income

Market Salesmen, and

Certified Investment Solicitors

Requirements for Financing and Lending Companies


Streamlines the documentary requirements for financing and lending companies, by no longer requiring the submission of:

SEC Form Q-EPS;

Certification of the Corporate Secretary on the attendance of Directors to Board Meetings; and

Corporate Governance Scorecard.

Code of Corporate Governance

SEC Memorandum Circular No. 19 Revised Code of Corporate Governance for

Publicly-Listed Companies (the ”Code”). The Code provides guidelines and

recommendations to raise corporate governance standards.

Companies are not required to comply but will be required to explain in their Annual Corporate Governance Report why it was unable to comply with certain provisions.

Code of Corporate Governance

All Publicly Listed Companies must submit their 2016 Annual Corporate Governance Report (“ACGR”) must be submitted to the SEC on or before 30 May 2017.

Five days from submission to the SEC, the ACGR must be uploaded on the company’s website.

Future ACGR submissions will be based on the Code of Corporate Governance (SEC Memorandum Circular No. 19).

Auditing Standards


The SEC has adopted revised guidelines for auditing standards and standards on assurance engagements and other related services.

All of the new and revised auditing standards have been adopted by the Auditing and Assurance Standards Council and approved by the Board of Accountancy and Professional Regulations Commission and published in the Official Gazette.

PROPOSED BILLS ON TAX

TAX REFORM BILL

HB 4774

Income Tax Rates

Tax Schedule effective July 1, 2017 and taxable years 2018 and 2019:

Not over P250,000 Exempt

Over P250,000 but not over P400,000 20% of excess over P250,000

Over P400,000 but not over P800,000 P30,000 + 25% of excess over P400,000

Over P800,000 but not over P2M P130,000 + P30% of excess over P800,000

Over P2M but not over P5M P490,000 + 32% of excess over P2M

Over P5M P1,450,500 + 35% of excess over P5M

Income Tax Rates

For 2020 onwards, the proposed tax brackets are:

Not over P250,000 Exempt

Over P250,000 but not over P400,000 15% of excess over P250,000

Over P400,000 but not over P800,000 P22,500 + 20% of excess over P400,000

Over P800,000 but not over P2M P102,500 + P325% of excess over P800,000

Over P2M but not over P5M P402,500 + 30% of excess over P2M

Over P5M P1,302,500 + 35% of excess over P5M

Income Tax Rates

Under proposed bill after 2020, the taxable income levels in the above schedules shall be adjusted once every five years through rules and regulations issued by the DOF, upon recommendation of the Commissioner of BIR.

Excise Tax on Petroleum Products

Under the bill, the excise tax on petroleum products will increase every year starting 2017 to 2019.

Lubricating oils and greases - from P4.50 to P7 in 2017, P9 in 2018 and P10 in 2019

Processed gas, per liter of volume capacity - from P0.05 to P3 in 2017, P5 in 2018 and P6 in 2019

Waxes and petrolatum, per kilogram - from P3.50 to P7 in 2017, P9 in 2018 and P10 in 2019

Denatured alcohol to be used for motive power, per liter of volume capacity - from P0.05 to P3 in 2017, P5 in 2018 and P6 in 2019

Reduce estate and donor’s tax to 6%

The bill provided that there shall be levied, assessed and collected and paid upon the transfer of the net estate, whether resident or non-resident of the Philippines, a six percent (6%) tax based on the value of such net estate.

The bill added that the donor’s tax for each calendar year shall be six percent (6%) and shall be computed on the basis of the total net gifts made during the calendar year, provided that annual net gifts not exceeding P100,000 shall be exempt.

ESTATE TAX AMENSTY

HB 3010/ HB 4814

Estate Tax Amnesty

Per HB 3010:

Cover all unpaid estate taxes as of the time the Act shall have taken effect and those due within (3) years henceforth.

Proposed tax table is as follows per HB 3010:

Update: HB 4814 passed 13 February 2017

Estate tax amnesty within (2) years from the issuance of IRR

Fixed rate of 6 % of the decedent’s net estate

Over But Not Over

Tax Plus Excess Over

3,000,000 0

3,000,000 6,000,000 20,000 5% 3,000,000

6,000,000 12,000,000 200,000 8% 6,000,000

12,000,000 650,000 11% 12,000,000

NATIONAL REVENUE AUTHORITY BILL

HB 695

National Revenue Authority Bill

Creates a public organization known as National Revenue Authority

Attached to the DOF

Responsible for the implementation of internal revenue laws

Primary responsibility and objective is to raise revenues to finance government operations.

It shall give effect to and administer the supervisory and police powers conferred to the BIR by the Code and other laws.

Employees of the Authority shall be hired on a fixed term performance-based contracts.

The End

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