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TAX UPDATE: Latest BIR

Issuances
October 16, 2014

2014 Punongbayan & Araullo. All rights reserved.

Topic Outline
Topic

Revenue Issuances

Due process requirement in tax assessment

RR 18-2013

Submission of Alphabetical List of


Employees/Payees of Income Payments

RR No. 1-2014

Monitoring of service fees of professionals

RR 4-2014

Preservation of books of accounts

RR 5-2014

Presentation of tax exemption certificate

RMC 8-2014

Rule on doubtful validity of assessment

RMC 34-2014

Revised price ceiling on socialized housing

RMC 35-2014

Tax treatment of Payouts by employee pension


plans

RMC 39-2014

Use of electronic certificate of authorizing


registration

RMC 40-2014

DST on financial lease

RMC 46-2014

2014 Punongbayan & Araullo. All rights reserved.

Topic Outline
Topic

Revenue Issuances

Clarification on inurement provision under Sec. 30


of the Tax Code

RMC 51-2014

Clarification on VAT refund/credit under Sec. 112 of


the Tax Code

RMC 54-2014

Clarification on Withholding tax rates on dividend


payments to Philippine Depository nominees

RMC 73-2014

Availability of BIR Forms for Alcohol and Tobacco


Products

RMC 74-2014

Supplemental guidelines on accreditation of


importers and brokers

RMO 22-2014

Amendment of procedures on accreditation of


CRM/POS

RMO 27-2014

Clarification on the issuance of tax exemption


rulings on Non-stock Non-profit organizations under
Section 30 of the Tax Code

RMO 34-2014

2014 Punongbayan & Araullo. All rights reserved.

Due process requirement in tax assessment


RR 18-2013
RDO Chief OAS
Issues notice of informal
Conference

Regulations (RR) 18-2013


removed the requirement to
issue Notice of Informal
Conference prior to the
issuance of Preliminary
Assessment Notice (PAN).

2014 Punongbayan & Araullo. All rights reserved.

Stages of Assessment
RR 18-2013

2014 Punongbayan & Araullo. All rights reserved.

Salient Features of Revenue Regulation 18-2013

1. Formal Letter of Demand (FLD) and Final


Assessment Notice (FAN) will be issued 15 days
2. Taxpayer is required to state the nature of protest
(reconsideration or reinvestigation) to the FLD/FAN;

2014 Punongbayan & Araullo. All rights reserved.

Salient Features of Revenue Regulation 18-2013


3. Introduction of the remedy of Administrative Appeal
with the CIR
4. Prescribed modes of service (a) Personal Service, (b) Substituted Service or (c)
by mail

2014 Punongbayan & Araullo. All rights reserved.

Salient Features of Revenue Regulation 18-2013

5. Imposition of deficiency interest


and delinquency interest

2014 Punongbayan & Araullo. All rights reserved.

Submission of Alphabetical List of


Employees/Payees of Income Payments
RR No. 1-2014

Lumping into one single amount shall

not be allowed

Various employees
Various payees
PCD nominees
Others
etc.

Shall be deemed not as received and shall not qualify as a


deductible expense for income tax purposes

2014 Punongbayan & Araullo. All rights reserved.

Guidelines and Policies for the Monitoring of


Service Fees of Professional
(RR 4-2014 dated March 3, 2014)
Policies and Guidelines
All Self-employed professionals are required to:






Register and pay Annual Registration Fee


Submit an affidavit (disclosing the rates, manner of billing)
Register its books of accounts
Register its official appointment books
Register its receipts and invoices

2014 Punongbayan & Araullo. All rights reserved.

Guidelines and Policies for the Monitoring of Service


Fees of Professional
(RR 4-2014 dated March 3, 2014)
Current development:
The Supreme Court issued Temporary Restraining Order
(TRO) against its enforcement covering lawyers, doctors
and accountants.

2014 Punongbayan & Araullo. All rights reserved.

Retention Period of Books of Accounts and other


Accounting Records
(RR 17-2013, as amended by RR 5-2014 dated Jan. 29,2014)
All taxpayers are required to retain its
books of accounts,
subsidiary books and
other accounting records

for a period of (10)

ten years.

2014 Punongbayan & Araullo. All rights reserved.

Retention Period of Books of Accounts and other


Accounting Records
(RR 17-2013, as amended by RR 5-2014 dated Jan. 29,2014)
Prescribed manner:
1st - 5th Year

Issuances

6th - 10th Year

RR 17-13

Hard copies

Hard copies

RR 5-14

Hard copies

Hard copies
or
Soft copies

2014 Punongbayan & Araullo. All rights reserved.

Retention Period of Books of Accounts and other


Accounting Records
(RR 17-2013, as amended by RR 5-2014 dated Jan. 29,2014)
The Electronic Storage System (Section 2-A of RR 5-14)
must comply with the requirements of the BIR.

2014 Punongbayan & Araullo. All rights reserved.

Retention Period of Books of Accounts and other


Accounting Records
(RR 17-2013, as amended by RR 5-2014 dated Jan. 29,2014)
BIR Testing of Electronic Storage System
However, the examination/inspection should not undergo the
meaning of Sec. 235 of the Tax Code (determination of tax
liability)

2014 Punongbayan & Araullo. All rights reserved.

Certificate of Tax Exemption/Ruling


(RMC 8-2014 dated February 6, 2014)

All taxpayers claiming exemption from income tax


/expanded withholding tax must provide a Tax Exemption
Certificate or a valid BIR ruling.
The certificate or ruling must explicitly recognize the grant of
privilege.

2014 Punongbayan & Araullo. All rights reserved.

Certificate of Tax Exemption / BIR Ruling


(RMC 8-2014 dated February 6, 2014)

Tax Consequence:

Penalties of non-withholding under


Section 251 and other pertinent
provision of Tax Code.

2014 Punongbayan & Araullo. All rights reserved.

Certificate of Tax Exemption / BIR Ruling


(RMC 8-2014 dated February 6, 2014)
Illustration:
Mahabagin Corp. failed to withhold on its transaction amounting to
P1,120,000 (inclusive of VAT) with Nagpapanggap Enterprise, an
individual contractor, who is claiming with a tax incentives privilege.
Tax Consequences:
Tax Type

Tax Calculation

Tax Due

Withholding Tax

1,000,000 x 2%

P20,000 (payment of
w/tax)

Income Tax

1,000,000 x 30%

P300,000 (disallowance of
expense which would
require payment of tax)

2014 Punongbayan & Araullo. All rights reserved.

Certificate of Tax Exemption/Ruling


(RMC 8-2014 dated February 6, 2014)

With issuance of RMC 60-14, dated July 24, 2014, it was


further clarified that:
General Professional Partnership (GPP) are not required to
present exemption certificate.

2014 Punongbayan & Araullo. All rights reserved.

Clarification of Doubtful Validity of Assessment


(RMC 34-2014, dated May 8, 2014)

Background
Rev. Reg. 30-02 cited two grounds for a taxpayer could avail of
compromise settlement:
1. Financial incapacity; and
2. Doubtful validity of the assessment

2014 Punongbayan & Araullo. All rights reserved.

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Clarification of Doubtful Validity of Assessment


(RMC 34-2014, dated May 8, 2014)

Doubtful validity of the assessment is accepted on the following


circumstances (RR 30-02):
1.

Jeopardy assessment

2. Arbitrary in nature
3. Assessments based on the "Best Evidence Obtainable
Rule"

2014 Punongbayan & Araullo. All rights reserved.

Clarification of Doubtful Validity of Assessment


(RMC 34-2014, dated May 8, 2014)
Best evidence obtainable rule should not be automatically
considered as doubtful assessment
Failure of the taxpayer to present or submit document
necessary to make the assessment, the examiner can resort to
application of best evidenced obtainable rule.

2014 Punongbayan & Araullo. All rights reserved.

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Revised price ceiling on socialized housing


(RMC 35-2014 dated May 8, 2014)

Adjusted price ceiling for horizontal


socialized housing is P400,000 to P450,000.

2014 Punongbayan & Araullo. All rights reserved.

Clarifying the Tax Treatment of Payouts of Employee


Pension Plans
(RMC 39-2014 dated May 12, 2014)

Two types of Pension plans


1. Contributory Pension
2. Non-Contributory Pension

2014 Punongbayan & Araullo. All rights reserved.

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Clarifying the Tax Treatment of Payouts of Employee


Pension Plans
(RMC 39-2014 dated May 12, 2014)
.

Scenario

Contributory
Pension

Non-Contributory
Pension

Taxable
(whole amount)

Taxable
(whole amount)

Taxable in the extent


of excess fund only after
deducting the
contribution made the
employee.

Taxable
(whole amount)

Employee received
dividends from the
Provident fund
Employee resigned and
received benefits that do
not qualify as tax
exempt from separation

2014 Punongbayan & Araullo. All rights reserved.

DST on Lease Agreement


(RMC 46-2014 dated April 25, 2014)
Transactions under a finance lease are subject to
documentary stamp tax of P1 for every P200
(Section 179 of Tax Code)

2014 Punongbayan & Araullo. All rights reserved.

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DST on Lease Agreement


(RMC 46-2014 dated April 25, 2014)
Illustration of computation - DST on Loan vs Rentals
Assuming the lease contract is worth P1,000,000
Sec.179 - Loan

Sec.194 - Rental

P 5,000

P 1,001

Computation:
P 1,000,000

- P5,000

Computation:
P2,000
- P3
P998,000
- P998

2014 Punongbayan & Araullo. All rights reserved.

Use of electronic Certificate of Authorizing


Registration (eCAR)
(RMC 40-2014 and RMC 42-2014 , May 2014)
 Discontinuance of the issuance of the manual Certificate
Authorizing Registration upon rollout of the eCAR
 1st Roll out took effect on May 19, 2014 which covered the
jurisidtion under Revenue Region No. 1 (Calasiao, Pangasinan)
 RDO/LT Audit Division where eCAR system is not yet available
shall continue to issue manually prepared CARs

2014 Punongbayan & Araullo. All rights reserved.

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Use of electronic Certificate of Authorizing


Registration (eCAR)
(RMC 40-2014 and RMC 42-2014 , May 2014)

Under the eCAR system


Real Property

Personal Property

One (1) eCAR for every real property. One (1) eCAR may be issued for
more than one personal property.

2014 Punongbayan & Araullo. All rights reserved.

Clarification on Inurement Provision Under Section


30 of Tax Code
(RMC 51-2014, June 6, 2014)

Non-stock means no part of its income is distributable as


dividends
Non-profit means no net income or assets accrues to or benefits
any member or specific person

2014 Punongbayan & Araullo. All rights reserved.

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Clarification on Inurement Provision Under Section


30 of Tax Code
(RMC 51-2014, June 6, 2014)
The following are considered "Inurements":
1. The payments of compensation, salaries, or honorarium to its trustees
or organizers;
2. The payment of exorbitant or unreasonable compensation to its
employees;
3. The provision of welfare aid and financial assistance to its members.
4. Donation to any person or entity (except donations made to other
entities formed for the purpose/ purposes similar to its own);

2014 Punongbayan & Araullo. All rights reserved.

Clarification on Inurement Provision Under Section


30 of Tax Code
(RMC 51-2014, June 6, 2014)
5. Purchase of goods or services for amounts in excess of the fair market
value of such goods or services from an entity in which one
or more of its trustees, officers or fiduciaries has an interest; and
6. Upon dissolution, the remaining assets of the entity are distributed to its
trustees, organizers, officers or members.

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)

Administrative and Judicial Claim both filed within the


2-year period

2014 Punongbayan & Araullo. All rights reserved.

VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)

120 day + 30 day rule for filing Judicial Claims

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Filing and Processing of Administrative Claim
Application must be accompanied by complete supporting
documents and should be under oath of completeness
Attachment of under oath statement (stating the
completeness and no other document will be presented
further)
Note: For a juridical taxpayer, it should be signed by the companys board of director.

2014 Punongbayan & Araullo. All rights reserved.

VAT Refund
54-2014, June 17, 2014)

Annex A
Checklist of
Mandatory
Requirements
for claims for
VAT
credit/Refund

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Filing and Processing of Administrative Claim
Failure to submit the complete documents is a ground for
denial of the request for refund

2014 Punongbayan & Araullo. All rights reserved.

VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Prescriptive period of administrative claim
VAT-registered persons engaged in zero-rated
or effectively zero-rated sales may apply for tax
refund or issuance of tax credit within two (2)
years after the close of the taxable quarter when
sales were made [ Sec. 112 of Tax Code]

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Prescriptive period of administrative claim
BIR Commissioner shall have 120 days, upon submission of
the complete documents, to decide whether or not to grant
the application of the refund or issuance tax credit
certificates.

2014 Punongbayan & Araullo. All rights reserved.

VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Prescriptive period of administrative claim
If the Commissioner did not act upon the 120 days period,
such inaction shall be deemed a denial of the application.

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Mandatory 120 + 30 days period
Taxpayer can file an appeal either by:
1. File the judicial claim within 30 days after the Commissioner
denies the claim within the 120 day
2. File the judicial claim within 30 days after the 120 days
period if the Commissioner does not act within the 120period.

2014 Punongbayan & Araullo. All rights reserved.

VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Mandatory 120 + 30 days period
In case of full / partial denial or inaction of the BIR, the
taxpayer within the receipt of the decision or lapse of 120 day
period should appeal the decision to the Court of Tax Appeals
(CTA)

2014 Punongbayan & Araullo. All rights reserved.

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VAT Refund - Filing and Processing


(RMC 54-2014, June 17, 2014)
Treatment of pending administrative claims
If the taxpayer failed to file a judicial claim within the
required period to the CTA, the decision or inaction of the
Commissioner is final and unappealable.

2014 Punongbayan & Araullo. All rights reserved.

Certificate of withholding tax rates on dividends paid


to PCD nominees
(RMC 73-2014, September 12, 2014)

Filipino PCD Nominee


-Subject to 10%

tax

-Exception: intercorporate dividends

2014 Punongbayan & Araullo. All rights reserved.

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Certificate of withholding tax rates on dividends paid


to PCD nominees
(RMC 73-2014, September 12, 2014)

Non-Filipino PCD Nominee


-non-resident foreign corporationsubject to 30% final
withholding tax
-Exception

2014 Punongbayan & Araullo. All rights reserved.

BIR Forms for Alcohol and Tobacco Products


RMC 74-2014 dated September 17, 2014
Implementation of Republic Act No. 10351- An Act Restructuring
the Excise Tax on Alcohol and Tobacco Products
New/enhanced BIR forms:
-BIR Form 2200-A ( Excise Tax Return for Alcohol
Products)
-BIR Form 2200-T ( Excise Tax Return for Tobacco
Products)
The forms are available in eBIR Forms Offline Package for noneFPS filers.

2014 Punongbayan & Araullo. All rights reserved.

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Guidelines: Accreditation of Importers and Custom


Brokers
(RMO 10-2014, RMO 22-2014 and RMC 55-2014)

All importers and customers brokers are required to secure


accreditation both from:

BIR - first phase


BOC - second and final phase

2014 Punongbayan & Araullo. All rights reserved.

Guidelines: Accreditation of Importers and Custom


Brokers
(RMO 10-2014, RMO 22-2014 and RMC 55-2014)

Applicant must comply with the BIR accreditation criteria.

2014 Punongbayan & Araullo. All rights reserved.

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Amendment of Procedures on Accreditation of Cash


Register Machines (CRM), Point of Sale (POS), etc.
(RMO 27-2014 dated July 21, 2014)
The taxpayer-users and store personnel are required to
present the machine for inspection and reading by revenue
officer(s).

After 48 hours from demand, the continued refusal shall be


a ground for the revocation of the permit to use the
CRM/POS and other sales machines.

2014 Punongbayan & Araullo. All rights reserved.

Effect of Non-filing of tax exemption rulings of Nonstock Non-profit (NSNP) organizations


RMO No. 34-2014 dated September 18, 2014
Tax exemption rulings issued prior to June 30, 2012 must
be revalidated. (RMO No. 20-2013, as amended by RMO 28-2013)
Otherwise, the NSNP shall be subject to the appropriate
withholding tax on the income payment they received
from income payors on their transactions.

2014 Punongbayan & Araullo. All rights reserved.

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Effect of Non-filing of tax exemption rulings of Nonstock Non-profit (NSNP) organizations


RMO No. 34-2014 dated September 18, 2014

Absence of valid, current and subsisting tax exemption ruling

will not operate to divest qualified NSNPs of tax


exemption granted to them under the Constitution or Section 30
of the Tax Code.

2014 Punongbayan & Araullo. All rights reserved.

Effect of Non-filing of tax exemption rulings of Nonstock Non-profit (NSNP) organizations


RMO No. 34-2014 dated September 18, 2014
Applications for tax exemption rulings may be filed by
umbrella organizations or confederations on behalf of
any of its members-non-stock, non-profit entities subject
to the submission of appropriate board resolution
authorizing the organization or confederation to file the
application, as well as documentary requirements under
RMO 20-2013.

2014 Punongbayan & Araullo. All rights reserved.

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Questions
& feedback

2014 Punongbayan & Araullo. All rights reserved.

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