Tax 2 Selected Topics

A Presentation made by Atty. Cabreros only for St.
Paul School of Professional Studies (March 3, 2018)) 1
TAX LAW REVIEW:

FOCUS ON SELECTED TOPICS
ON TAX 2
Presentation for
St. Paul School of Professional Studies
Palo, Leyte
Atty. Marissa O. Cabreros, CPA CESO IV

March 3, 2018
TAXES ON GRATUITOUS
TRANSFER OF
PROPERTIES
Title III – Estate and Donor’s Tax
Coverage
•  Chapter I
•  Estate Tax: Sec 84 to 97 & 104
•  Chapter II
•  Donor’s Tax: Sec 98 to 104
•  Implementing Rules
•  Revenue Regulations No. 2-2003 [Jan 17, 2003]
•  Soon a new RR because of
4
Types of gratuitous transfer
•  Donation Mortis Causa – transmission of properties

by operation of law (succession) due to the death of
the owner (without consideration)
•  Donation Inter Vivos – transfer effected during the
lifetime of the owner without consideration
Comparison
Estate Tax Donor’s Tax
Tax imposed on the privilege Tax imposed upon the
to transmit property to heirs privilege to give
Flow of transfer of property: Flow of transfer of property:

from the deceased to the from donor to donee (between
living, through the estate the living)
Parties: between natural Parties: may take place

parties only between natural and juridical
person
ESTATE TAX
SECTIONS 84 TO 97 & 104
Estate Tax Rate (Sec 84)
Effective: January 1, 2018
TAX RATE: 6% of net gifts

8
Specific Rules on Inclusions and

Exclusions (Sec 85)
•  Decedent’s interest
•  Transfer in Contemplation of death
•  Revocable transfer
•  Property passing under general power of
appointment
•  Proceeds of life insurance
•  Transfer for insufficient consideration
•  Capital of the surviving spouse
9
Decedent’s interest
•  Refers to all interest of the decedent over all property, real
or personal, tangible or intangible
•  Only properties within the CONTROL of the decedent
•  Residents and Citizens – All properties wherever situated
•  Non-resident Aliens – Only properties situated in the Philippines,
provided that, with respect to intangible personal properties
•  Reciprocity: Applies only to intangible personal properties

situated in the Philippines owned by a non-resident alien
[Collector v. Campos Rueda, G.R. No. L13250, October
29, 1971]
Rule on Intangibles (Sec 104)
•  Franchise must be exercised in the Philippines
•  Shares, obligations or bonds issued by any corporation or
sociedad anomina organized or constituted in the
Philippines
•  Shares, obligations or bonds issued by foreign corporation
85% of the business is located in the Philippines
•  Shares, obligations or bonds issued by any foreign
corporation, if such shares, obligations or bonds have
acquired business situs in the Philippines
•  Shares, rights in any partnership business or industry
established in the Philippines
11
Transfers in Contemplation of Death

•  It must be a transfer for insufficient consideration or
without any consideration
•  Motivated by thought of death [without regard to the
health of the transferor]
•  Transfer was made before decedent died where
decedent retained:
•  Possession or enjoyment of property; or
•  Enjoyment of income of the property; or
•  The right alone or with another to designate a person who
shall possess or enjoy the property or its income
EXCEPT, bona fide sales
Revocable Transfers
•  Transfers during the lifetime of decedent where the
enjoyment given to the transferee is subject to change at
a given period
Property Passing Through General Power
of Appointment (GPA)
•  GPA: power to designate without restrictions
•  How:
•  By will
•  Deed executed by contemplation of death
•  Deed executed where transferor retains during his lifetime or a
period which does not end before his death:
•  Possession, enjoyment or income
•  Except bona fide sale

14
Proceeds of Life Insurance

•  Proceeds of life insurance are not subject to income
tax. [Sec 32(B)]
•  Proceeds may or may not be included as part of
gross estate depending on the designation of the
beneficiary.
•  Part of gross estate if:
•  Beneficiary is the estate or administrator, whether
designation is revocable or irrevocable
•  Beneficiary is other than the estate and designation is
revocable
Prior Interests
•  Applies to any and all transfers trusts, estates, interests,
rights, powers and relinquishment of powers whether
made or created before or after the effectivity of the Tax
Code of 1997
Transfers for Insufficient Consideration
•  For items covered by Sec 85 (B), (C) and (D) that are not
bona fide sale for an adequate and full consideration in
money or money’s worth
•  Amount to be included: excess of FMV at the time of
death over consideration received
17
Exempt Transfers (Section 87)
•  Merger of the usufruct in the owner of the naked title

•  Transmission by the fiduciary heir or legatee to the
fideicommissary
•  Transmission from the first heir to another beneficiary
in accordance with the wishes of the predecessor
•  Bequests, devices, legacies or transfers to social
welfare, cultural and charitable institutions
18
Illustration: Merger of Usufruct & Naked

Title
C Usufruct for life
B
Decedent
merger
D Naked Title
Transmission of full ownership to from C to
D is tax-exempt
19
Illustration: (1) Fiduciary Heir or Legatee to

Fideicommissary ; (2) From one heir to another heir
C
Minor
son of A
A
Decedent
B
Brother of A
D
Another
Heir
Transmission from A to B is subject to estate tax

Transmission from B to C or B to D is not subject
to tax
20
Rules of Valuation (Section 88)
•  FMV of all properties as of the time of death

•  Real property – higher value between the FMV
determined by the Commissioner and the FMV as
shown in the schedule of values fixed by the
Provincial and City Assessors
•  Personal Property recently acquired by the
decedent – purchase price may indicate FMV
21
Rules of Valuation - continued
•  In case of shares of stocks, the FMV will depend

on whether or not the shares are traded in the
stock exchange
•  Listed Shares – arithmetic mean between highest and
lowest quotation
•  Unlisted shares
•  Common Shares – Book Value nearest the time of death
•  Preferred shares – Par Value
22
Deductions from the Gross Estate

(Sec 86 (A)) [for Citizens / Residents]
•  Standard deduction
•  Claims against the estate
•  Claims against insolvent person
•  Unpaid mortgages
•  Transfer for public use
•  Vanishing deduction
•  Family home
•  Benefits under RA 4917
•  Share of surviving spouse
Standard Deduction
•  -Php 5,000,000
•  No need for substantiation
•  Meant to cover funeral expense, judicial expenses, losses

and medical expenses
Claim against the estate
•  Debts/ claims against the decedent enforce against him
during his lifetime
•  Debt must have been notarized
•  Statement under oath by administrator as to the
disposition of said loan if loan was contracted within 3 yrs
prior to death of decedent
Claims against insolvent person / Unpaid
mortgage
•  Must be included in gross estate (maybe as receivable)
•  Value of property undiminished by the mortgage must be

included in the gross estate
Transfers for Public Use
•  Disposition in last will or testament
•  To take effect upon death
•  To the government
•  Exclusively for public use
•  Value included in the gross estate
Vanishing Deduction
•  Property previously subjected to transfer taxes (estate or
donor’s tax)
•  Present decedent acquired the property by inheritance or
gift with 5 yrs prior to his death
•  Property previously part of gross estate or gross gift
where estate tax or donors tax was previously paid
•  Not subject to vanishing deduction in previous estate of
prior decedent
28
Formula for Vanishing Deduction

Value taken of PPT (past or present value
whichever is lower) xxx
Less: Mortgage paid by present decedent xxx
Equals : Initial Basis of the PPT xxx
Less: Initial Basis x ELIT &

Present GE TPU xxx
Final Basis of Vanishing Deduction xxx
Multiplied by rate of vanishing deduction %
Equals: Vanishing deduction allowed xxx

===
Vanishing Deduction Rate
• 0 to 1 yr (within 1 yr) 100%
• > 1 yr to 2 yrs 80%
• > 2 yrs to 3 yrs 60%
• > 3 yrs to 4 yrs 40%
• > 4 yrs to 5 yrs 20%
Family Home
•  Value of Family but not to exceed P10,000,000
•  Certified by the barangay captain of the locality where
located
•  Only one family home
•  Must have been part of the gross estate (conjugal or
absolute community or exclusive (paraphernal property)
Amount received by heirs (RA 4917)
•  Received by heirs from decedents employer (retirement
benefits of private firm employees)
•  Must have been included in the gross estate
Net share of surviving spouse
•  ½ of the conjugal estate or communal property (absolute
community of property)
•  Must exclude properties covered by pre-nuptial
agreements (as exclusive property of the surviving spouse
& not part of the gross estate)
•  Marriage on or after August 4, 1988
•  Marriage before August 4, 1988
33
Deductions from the Gross Estate

(Sec 86 (B)) [for Non-Residents]
•  Standard deduction of P500,000
•  Value of
•  Claims against the estate
•  Claims against insolvent person
•  Unpaid mortgages
In proportion to the value of the entire gross estate
situated in the Philippines
•  Transfer for public use
•  Vanishing deduction
34
Administrative Provisions
•  Notice of death – all cases of transfers subject to tax or

exempt but value of GE exceeds P20,000
•  Time of giving notice – within 2 months from death or

within like period after qualifying as such executor or
administrator
35
Administrative Provisions
Filing of the estate tax return
•  Attachment to the return – Statement of Assets and Liability
certified by a CPA if gross estate exceeds P5.0M
•  Who will file – executor, administrator or heirs
•  Time for filing & payment – within 1 yr from death; Pay-as-
you-file procedure; extension of time to file return in
meritorious cases for a period not exceeding 30 days
•  Extension of time to pay due to financial difficulties – 5 years
if settled judicially and 2 years if settled extra-judicially
•  Installment payment – within 2 years without civil penalty and
interest
Withdrawals from Cash Account
•  6% Final Tax
•  On any withdrawals from bank deposits of decedent who
died starting January 1, 2018
Decedent / Administrator / Heir
Decedent Decedent thru Administrator or
Executor Heir
(during his lifetime)
(during settlement of estate)
•  An Individual •  An Estate •  An Individual

•  Income Tax: •  Income Tax: •  On Income from Estate (during
•  Tax Rate: Sec 24 / 25 •  Tax Rate: Sec 24 / 25 the settlement of estate)
•  Gross Income: Sec 32 •  Gross Income: Sec 32 / 60 •  Income Tax: same as decedent
•  Deduction: Sec 34 •  Deduction: Sec 34 / 61 (during his lifetime)
•  Personal & Additional •  Personal & Additional
Exemption: Sec 35 Exemption: Sec 62 •  On the Income Properties of
•  Estate Tax: none •  Estate Tax: Estate (after distribution of
estate)
•  Donors Tax: •  Tax Rate: Sec 84
•  Income Tax: as an Individual
•  Tax Rate: Sec 98 •  Gross estate: Sec 85
•  Deduction: Sec 86
•  A Corporation (undivided /
unregistered partnership)
•  Income Tax:
•  Tax Rate: Sec 27
•  Gross Income: Sec 32
•  Deduction: Sec 34
DONOR’S TAX
SECTIONS 98 TO 104
39
Purpose and Definition

•  The donor’s tax law was enacted not only to prevent estate tax
avoidance [Sec 84], but also to prevent income tax avoidance [Sec
32(B)]by reducing yearly income and thereby escaping the effect of
the progressive rates of the income tax (Smith v. Shaughnessy, 318
US 176)
•  Donation – It is a valid transfer of property from one person to
another without compensation or consideration therefor (Prentice
Hall Federal Tax Course)
40
Meaning of Consideration
•  The word “consideration” means that, when the
transferor gives something away and does not at the
same time replace it with money of equal value or
some goods or services capable of being valuated in
money, he is deemed to have made a gift within the
taxing law (Commissioner v. Bristol, 121 F(2d) 129)
•  Consideration must be measurable in money or
money’s worth. Mere legal consideration is not
sufficient.
•  The consideration must flow to the donor; mere
detriment to the donee does not satisfy the purpose of
the statute
41
When is there gift?

•  A gift occurs when the donor surrenders CONTROL
over the property. If the donor retains an unlimited
power to revoke a gift, no gift has occurred.
•  If the donor does not relinquish control over the

property during his lifetime (i.e. right of
possession, enjoyment, income), the donation is a
donation mortis causa subject to the estate tax.
42
Composition of the Gross Gift

•  Only properties upon which the donor divests
himself of CONTROL during his lifetime
•  Residents and Citizens – All properties wherever
situated
•  Non-resident Aliens – Only properties situated in
the Philippines, provided that, with respect to
intangible personal properties, we follow the rule
of reciprocity
•  Section 98 in relation to Section 104, NIRC
43
Rules of Valuation
•  FMV of property donated (Section 102)

•  Real property – higher value between the FMV
determined by the CIR and the FMV as shown in
the schedule of values fixed by the Provincial and
City Assessors
•  Personal Property recently acquired by the donor
– purchase price may indicate FMV
44
Rules of Valuation - continued

•  In case of shares of stocks, the FMV will depend
on whether or not the shares are traded in the
SE
•  Listed Shares – arithmetic mean between highest and
lowest quotation
•  Unlisted shares
•  Common Shares – Book Value
•  Preferred shares – Par Value
Concept of Net Gift
•  Net Gift refers to the economic benefit that accrues to the
donee
•  If a donee will be given a property but he will be required
to assume the mortgage thereon, the net gift would be the
difference between the FMV of the property donated
minus the mortgage assumed
•  Tax Base – Cumulative net gifts during the calendar year
Donor’s Tax Rate (Sec 99)
Effective January 1, 2018
TAX RATE : 6% for net gift in excess of P250,000

47
Exempt Donations (Sec 101)

•  Gifts made to or for use of the National
Government or any entity created by any of its
agencies which is not conducted for profit, or to
any political subdivision of the said Government
•  Gifts in favor of an educational and/or charitable,
religious, cultural or social welfare corporation,
institution, accredited NGO, trust or philanthropic
organization or research institution or organization;
provided that not more than 30% of said gifts is
used by donee for administration purposes
Administrative Rules
•  Filing of the donor’s tax return
•  Who will file – donor
•  Time for filing & payment –
Ø Within 30 days from date of donation
Ø Pay-as-you-file procedure
Ø No extension of time to file return
49
Trust Arrangements
•  Irrevocable Trusts are taxed as a donation upon

transfer of the property to the trustee.
•  Trust income is subject to income tax but the

incidence of the tax depends on the provision on
distribution.
•  Transfer of divided interest will make the usufructuary

liable to income tax. Merger of the usufruct in the
owner of the naked title is not subject to estate tax.
50
Other tax implications of inter vivos gift
•  Splitting of gifts during the calendar year to avoid

cumulative effect of the donor’s tax.
•  Property donated is not subject to income tax in
the hands of the donee but the income from said
property is taxable.
•  Encumbrances on the property reduces the value
of the taxable gift.
Donor / Trustor & Beneficiary
Donor Trust
(during his lifetime) Beneficiary of Trust
(during and after lifetime of Donor)
• An Individual • A Trust • An Individual
• Income Tax: • Income Tax (during and after lifetime • On Income from Trust actually distributed
• Tax Rate: Sec 24 / 25 before liquidation of trust): • Income Tax: same as decedent (during
• Gross Income: Sec 32 • Tax Rate: Sec 24 / 25 his lifetime)
• Deduction: Sec 34 • Gross Income: Sec 32 / 60 • Tax Rate: Sec 24 / 25
• Personal & Additional Exemption: Sec • Deduction: Sec 34 / 61 • Gross Income: Sec 32
35 • Personal & Additional Exemption: Sec • Deduction: Sec 34
• Estate Tax: 62 • Personal & Additional Exemption: Sec
• Subject to estate tax upon death if trust 35
is revocable • Estate Tax
• Not subject to estate tax upon death if • If revocable, reverted back to estate of
trust is irrevocable decedent):
• Donors Tax: • Tax Rate: Sec 84
• Tax Rate: Sec 98 • Gross estate: Sec 85
• Subject to donor’s tax if irrevocable trust • Deduction: Sec 86
• If Irrevocable (property of beneficiary and

not the decedent)
Scenario
•  Mr. A, married 90 yrs old has only one property in Alaya
Alabang
•  House & Lot
•  Bought in 2000 P 8,000,000
•  FMV P10,000,000
•  SP P10,000,000
Sell / Donate or wait for estate?

53
Illustration: Tax Rules on NIRC /

Succession Rules on Civil Code
X C
Minor
Daughter of A & S son of X
A
Decedent
Y D
Son of A & S Another
Minor
Z
son of X
S
Spouse of Right to Inherit:
Illegitimate son of A
Decedent By Succession, By Representation, By Accretion, By Law (As a matter of right)
Renunciation/Repudiation of Right:
When subject to Estate Tax Only? When subject to Estate Tax and Donors Tax?
54
BUSINESS TAXES:
(1) VALUE ADDED TAX
Part I
Title IV – Value Added Tax
55
Business Taxes
•  Valued Added Tax
•  Other Percentage Tax
•  Excise Taxes
56
References
•  Tax Code – Title IV
•  Recently amended by RA 10963
•  Chapter I : Imposition of Tax
•  Sections 105 to 112
•  Chapter II: Compliance Requirements
•  Sections 113 to 115
•  BIR Revenue Regulations
•  RR 16-2005 Consolidated VAT Regulations
•  RR 2-2007
•  RR 4-2007
•  RR 6-2007
•  RR 13-2008
•  RR 10-2011
•  RR 16-2011
•  RR 15-2013
57
What is VAT?
•  A Form of Sales Tax
•  Tax on consumption levied on
-sale of goods, properties and services
-importation of goods
•  An indirect tax imposed on sellers but actually borne by the
buyers.
•  Sellers act merely as tax collectors
58
Who are liable to VAT?

•  Any person who in the course of trade / business /
practice of profession
•  sells goods, properties,
•  renders service or
•  lease properties
•  Whose Gross Sales / Gross Receipts for 12 months exceeds P3.0
Million (effective Jan 1, 2018)
•  Importers
59
What are the VAT Rates?
• 12%
•  0%
60
Comparison:
Rates in Other Countries
•  El Salvador 13% •  Nepal 10%
•  India 10-40% •  Peru 18%
•  Indonesia 10% •  Tajikistan 20%
•  Japan 5% •  Tanzania 20%
•  Jordan 13% •  Thailand 7%
•  Kazakhstan 16% •  Vietnam 0%/5%/10%/
•  Kyrgyztan 20% 20%
61
“In the course of trade or business”

•  Regular conduct or pursuit of a commercial or economic
activity, including incidental transactions thereto, by
any person regardless of whether or not the person is a
non-stock, non-profit organization or is a government
entity
•  Includes non-resident persons who perform services in
the Philippines even if performance of service is not
regular (i.e. rental or royalties)
62
What transactions are covered by VAT?

•  Sale or Exchange of Goods or Properties
•  Importation of Goods
•  Leasing or Properties (Real / Personal)
•  Sale of Services
•  Transactions Deemed Sale
63
“goods or properties”
•  The term “goods or properties” refer to all tangible and
intangible objects which are capable of pecuniary estimation
and shall include
•  (1) Real properties held primarily for sale to customers or held for
lease in the ordinary course of trade or business;
•  (2)The right or the privilege to use patent, copyright, design or model,
plan, secret formula or process, goodwill, trademark, trade brand or
other like property or right;
•  (3) The right or the privilege to use any industrial commercial or
scientific equipment;
•  (4) The right or the privilege to use motion picture films, films, tapes
and discs; and
•  (5) Radio, television, satellite transmission and cable television time.
64
“sale of real properties”

•  Sale of real properties held primarily for sale to customers
or held for lease in the ordinary course of trade or
business of the seller shall be subject to VAT.
•  Residential Lot: more than PhP1,500,000
•  Residential House & Lot: more than PhP2,500,000
•  Pre-selling of real estate properties by real estate dealers

shall be subject to VAT.
•  Sale or real property not primarily held for sale but the
same is used in the trade or business of of the seller
(ordinary asset of seller)
65
“sale of real property in installment plan”

•  In the case of sale of real properties on the installment
plan, the real estate dealer shall be subject to VAT on the
installment payments, including interest and penalties,
actually and/or constructively received on or after January
1, 1996.
•  “Sale of real property on installment plan” means sale
of real property by a real estate dealer, the initial
payments of which in the year of sale do not exceed
twenty-five percent (25%) of the gross selling price.
66
“sale of real property in deferred payment

plan”
•  “Sale of real property on deferred payment plan”
means sale of real property by a real estate dealer, the
initial payments of which in the year of sale is at least
twenty-five percent (25%) of the gross selling price.
•  In which case of sale of real properties on the by the real
estate dealer shall be subject to VAT as if sold and fully
paid in cash
67
“initial payment”
•  “Initial payments” means payment or payments which
the seller receives before or upon execution of the
instrument of sale and payments which he expects or is
scheduled to receive in cash or property (other than
evidence of indebtedness of the purchaser) during the
year when the sale or disposition of the real property was
made.
•  It covers any down payment made and includes all
payments actually or constructively received during the
year of sale, the aggregate of which determines the limit
set by law.
68
NOT “initial payment”

•  Initial payments do not include the amount of mortgage on
the real property sold except when such mortgage
exceeds the cost or other basis of the property to the
seller, in which case, the excess shall be considered part
of the initial payments.
•  Also excluded from initial payments are notes or other
evidence of indebtedness issued by the purchaser to the
seller at the time of the sale.
69
“gross selling price”

•  Total amount of money or its equivalent which the
purchaser pay or is obligated to pay
•  In case of real property: selling price or fair market value
whichever is higher
•  If VAT is not separately billed in the deed, the amount of
selling price is deemed inclusive of VAT
•  If consideration is based on Zonal Value, it is deemed
exclusive of VAT
70
“gross selling price”

•  If real property on installment, and ZV higher than SP: VAT
shall be based on the ratio of actual collection (net of VAT)
against actual consideration (net of VAT) to the VAT on the
ZV
•  Installment (net of VAT) x ZV *12%

Agreed Consideration (net of VAT)
Requires separate billing of VAT for buyer

71
“sale and exchange of services”

•  Sale or exchange of services means the performance of
all kinds of services in the Philippines for others for a fee,
remuneration or consideration. It includes those
performed or rendered by the following:
•  1. Construction and service contractors;
•  2. Stock, real estate, commercial, customs and
immigration brokers (subject to VAT under RA 7716);
72

•  3. Lessors of property, whether personal or real;
•  4. Persons engaged in warehousing services;
•  5. Lessors or distributors of cinematographic films;
•  6. Persons engaged in milling (except palay into rice,
corn into corn grits and sugar cane into raw sugar),
processing, manufacturing or repacking goods for
others;
•  7. Proprietors, operators, or keepers of hotels, motels,
resthouses, pension houses, inns, resorts;
73

•  8. Proprietors or operators of restaurants, refreshment
parlors, cafes, and other eating places, including clubs
and caterers;
•  9. Dealers in securities;
•  10. Lending investors;
•  11.Transportation contractors on their transport of goods
or cargoes, including persons who transport goods or
cargoes for hire;
74

•  12.Other domestic common carriers by land, air and water
relative to their transport of goods or cargoes;
•  13.Sales of electricity by generation, transmission, and/or
distribution companies;
•  14.Franchise grantees of electric utilities, telephone and
telegraph, radio and/or television broadcasting companies
whose annual gross receipt of the preceding year exceeds
P10M and all other franchise grantees except those
under Section 119 of the Code;
75

•  15. Non-life insurance companies (except their crop
insurances and premiums on reinsurance), including
surety, fidelity, indemnity and bonding companies;
•  16. Pre-need companies
•  17. Similar services regardless of whether or not the
performance thereof calls for the exercise or use of the
physical or mental faculties [Sec. 2 (a), Rev. Reg. No.
7-95].
76

•  18. Transmission charges by NGCP
•  19. Electric Cooperatives
77
“sale and exchange of service” also

includes
•  a. The lease or the use of, or the right or privilege
to use any copyright, patent, design or model, plan,
secret formula or process, goodwill, trademark,
trade brand or other like property or right;
•  b. The lease or the use of, or the right to use of any
industrial, commercial or scientific equipment;
•  c. The supply of scientific, technical, industrial, or
commercial knowledge or information;
78

includes
•  d. The supply of any assistance that is ancillary and
subsidiary to and is furnished as a means of enabling
the application or enjoyment of any such property, or
right as is mentioned in subparagraph (b), or any such
knowledge or information as is mentioned in
subparagraph (c);
•  e. The supply of services by a non-resident person or
his employee in connection with the use of property or
rights belonging to, or the installation or operation of any
brand, machinery, or other apparatus purchased from
such non-resident person;
79

includes
•  f. The supply of technical advice, assistance or
services rendered in connection with technical
management or administration of any scientific,
industrial or commercial undertaking, venue,
project or scheme;
•  g. The lease of motion picture films, films, tapes,
discs and;
•  h. The lease or the use of or the right to use radio,
television, satellite transmission and cable television
time.
80
Zero- Rated Transactions

•  Sale of Goods or Properties
•  Sale of Services
81
Zero-rates sales: Export Sale

•  1. Sale and actual shipment of goods from the
Philippines to a foreign country, irrespective of any
shipping arrangement, paid for in acceptable foreign
currency or its equivalent in goods or services, and
accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP);
82

•  2. Sale of raw materials or packaging materials to a
non-resident buyer for delivery to a resident local export-
oriented enterprise to be used in manufacturing,
processing, packing or repacking in the Philippines of
the said buyer’s goods and paid for in acceptable foreign
currency and accounted for in accordance with the rules
and regulations of the BSP;
83

•  3. Sale of raw materials or packaging materials to
export-oriented enterprise whose export sales exceed
seventy percent (70%) of total annual production;
•  4. Those considered export sales under E.O. 226,
otherwise known as the Omnibus Investment Code of 1987,
and other special laws.
•  5. Sale of goods, supplies, equipment and fuel to persons
engaged in international shipping or international air
transport, provided, that the goods, supplies, equipment and
fuel have been sold and used for international shipping or air
transport operations.
84
Additional Provision
•  Items 3, 4, and 5 shall be subject to the 12% VAT and no
longer be considered export sales subject to 0% VAT
upon satisfaction of the following conditions:
ü  There is a successful establishment and implementation
of an enhanced VAT refund system that grants refunds of
creditable input tax within 90 days from the filing of the
VAT refund application with the Bureau.
ü  All pending VAT refund claims as of December 31, 2017

shall be fully paid in cash by December 31, 2019.
85
•  The Department of Finance shall establish a VAT Refund
Center in the BIR and BOC that will handle the processing and
granting of cash refunds of creditable input tax.
•  An amount equivalent to 5% of the total VAT collection of the

BIR and BOC from the immediately preceding year shall
automatically be appropriated annually and shall be treated as
a special account in the General Fund or as trust receipts for
funding VAT refund claims.
•  Further, the BIR and BOC shall be required to submit to the

Congressional Oversight Committee on the CTRP a quarterly
report of all pending claims for refund and any unused fund.
86
Deleted provision
The following shall no longer be subject to 0% VAT:
1.  Sale of gold to BSP [now VAT – exempt]

2.  Foreign-currency denominated sales [now subject to
12% VAT]
87
Effectively zero-rated
•  The term “effectively zero-rated sales of goods and
properties” shall refer to the sale by a VAT-registered
person to a person or entity who was granted indirect tax
exemption under special laws, e.g. RA 7227 or
international agreements, e.g. ADB, IRRI, EO 226.
•  Effectively zero-rated transactions shall cover local sale of
goods and properties to persons or entities enjoying
exemptions from indirect taxes.
88
Zero-rated sale of services

•  1. Processing, manufacturing or repacking goods for
other persons doing business outside the Philippines,
which goods are subsequently exported, where the
services are paid for in acceptable foreign currency and
accounted for in accordance with the rules and
regulations of the BSP;
•  2. Services other than those mentioned in the
preceding paragraph, the consideration for which is
paid for in acceptable foreign currency and accounted
for in accordance with the rules and regulations of the
BSP;
89

•  3. Services rendered to persons or entities whose
exemption under specials laws or international
agreements to which the Philippines is a signatory
effectively subjects the supply of such services to zero
percent (0%) rate;
•  4. Services rendered to persons engaged in
international shipping or international air transport,
provided, that the goods, supplies, equipment and fuel
have been sold and used for international shipping or
air transport operations; and
90

•  5. Services performed by subcontractors and/or contractors
in processing, converting, or manufacturing goods for an
enterprise whose export sales exceed seventy percent (70%)
of total annual production.
•  6. Transport of passengers and cargo by domestic air or
sea carriers from the Philippines to a foreign country.
•  7. Sale of power or fuel generated through renewable
sources of energy such as, but not limited to, biomass, solar,
wind, hydropower, geothermal and steam, ocean energy, and
other emerging sources using technologies such as fuel cells
and hydrogen fuels.
91
•  Items 1 and 5 shall be subject to the 12% VAT and no
longer be considered export sales subject to 0% VAT
upon satisfaction of the following conditions:
ü  There is a successful establishment and implementation
of an enhanced VAT refund system that grants refunds of
creditable input tax within 90 days from the filing of the
VAT refund application with the Bureau.
ü  All pending VAT refund claims as of December 31, 2017

shall be fully paid in cash by December 31, 2019.
92
•  The Department of Finance shall establish a VAT Refund
Center in the BIR and BOC that will handle the processing and
granting of cash refunds of creditable input tax.
•  An amount equivalent to 5% of the total VAT collection of the

BIR and BOC from the immediately preceding year shall
automatically be appropriated annually and shall be treated as
a special account in the General Fund or as trust receipts for
funding VAT refund claims.
•  Further, the BIR and BOC shall be required to submit to the

Congressional Oversight Committee on the CTRP a quarterly
report of all pending claims for refund and any unused fund.
93
Effectively Zero-rated sales of good & services:

Special Law or International agreement
•  Sales to persons or entities whose exemption under
special laws, e.g. R.A. No. 7227 duly registered and
accredited enterprises with Subic Bay Metropolitan
Authority (SBMA) duly registered and accredited
enterprises with the Philippine Economic Zone Authority
(PEZA) under RA. No. 7916 or international
agreements, e.g. Asian Development Bank (ADB),
International Rice Research Institute (IRRI), etc. to
which the Philippines is signatory, effectively subject
such sales to zero-rate.
94
Transaction Deemed Sale

•  (1) Transfer, use or consumption not in the course of
business of goods or properties originally intended for
sale or for use in the course of business. Transfer of
goods or properties not in the course of business can take
place when the VAT-registered person withdraws goods
from his business for his personal use;
95

•  (2) Distribution or transfer to:
•  i. Shareholders or investors share in the profits of the VAT-
registered person; Property dividends which constitute stocks in
trade or properties primarily held for sale or lease declared out of
retained earnings on or after January 1, 1996 and distributed by the
company to its shareholders shall be subject to VAT based on the
zonal value or fair market value at the time of distribution,
whichever is applicable.
•  ii. Creditors in payment of debt or obligation.
96

•  (3) Consignment of goods if actual sale is not made
within 60 days following the date such goods were
consigned. Consigned goods returned by the consignee
within the 60-day period is not deemed sold;
97
•  (4) Retirement from or cessation of business with

respect to all goods on hand, whether capital goods,
stock-in-trade, supplies or materials as of the date of such
retirement or cessation, whether or not the business is
continued by the new owner or successor. The following
circumstances shall among others, give rise to
transactions “deemed sale” for purposes of this Section;
•  i. Change of ownership of the business; and
•  ii. Dissolution of a partnership other than a general professional
98
•  (4) ‘cont
•  i. Change of ownership of the business;
•  Except: (Not subject to VAT)
•  Change in trade name
•  Mergers
•  Consolidation
•  ii. Dissolution of a partnership other than a general professional
99
Exempt Transactions (Sec 109)

A.  Sale or importation of agricultural and marine food
products in their original state, livestock and poultry of
a kind for human consumption; and breeding stock
and genetic materials;
B.  Sale or importation of the following:
- fertilizers
- seeds, seedlings and fingerlings
- fish, prawn, livestock and poultry feeds
100

C.  Importation of personal and household effects to
the residents of the Philippines returning from abroad
and non-resident citizens coming to resettle in the
Philippines
D.  Importation of professional instruments and
implements, tools of trade, occupation or employment ,
wearing apparel, domestic animals and personal
household effects (except any vehicle, vessel, aircraft,
machinery, other goods for use in manufacture and
merchandise of any kind in commercial quantity)
belonging to persons or to Filipinos or their families
101

E. Services subject to Percentage Tax under Title V, NIRC
F. Services by agricultural contract growers and milling for
others of palay into rice, corn into grits, and sugar cane
into raw sugar.
G. Medical, dental, hospital and veterinary services, except
those rendered by professionals.
102

H. Educational services by private institutions, duly accredited
by the Department of Education, Culture and Sports (DECS) and
the Commission on Higher Education (CHED) and the Technical
Education and Skills Development Authority (TESDA) and those
rendered by government educational institutions.
I. Services rendered by individuals pursuant to an employer-
employee relationship
J. Regional or Area Headquarter established in the Philippines
by Multinational Corp. which act as supervisory, communications
and coordinating centers for their affiliates, subsidiaries or
branches in the Asia-Pacific Region and do not earn or derive
income from the Philippines
103

K. Transactions which are exempt under International Agreement
to which the Philippines is a signatory or under special laws
L. Sales by agricultural cooperative duly registered and
in good standing with the CDA
M. Gross receipts from lending activities by credit or multi-
purpose cooperative duly registered and in good standing
with the Cooperative Development Authority (CDA).
N. Sale by non-agricultural, non-electric and non-credit
cooperatives: provided that the share capital contribution of
each member does not exceed Fifteen thousand pesos
(P15,000) and regardless of the aggregate capital and met
surplus ratable distributed among the members
O. Export sales by a non-VAT registered person
104

P. Real property transactions such as:
•  Sale of real properties not primarily held for sale or lease in the ordinary
course of trade or business;
•  Sale of real properties utilized for low-cost housing wherein the price ceiling
per unit is P750,000.00
•  Sale of real properties utilized for socialized housing wherein the price ceiling
per unit is P400,000.00 (house & lot) (if lot only 40% of P400,000).
[Effective Jan 1, 2014, ceiling is now P450,000 & P180,000 based on
HUDCC Resolution No. 1 (2013)]
•  - Sale of residential lot valued at P1,500,000.00 and below, and house and lot
valued at P2,500,000.00 and below
•  Provided that beginning Jan 1, 2021, VAT exemption shall only apply to sale
of real properties not primarily held for sale to customers or held for lease n
the ordinary course of trade or business, sale of real property utilized for
socialized housing, sale of house and lot and other residential dwellings with
selling price of not more than P2.0Million
105

Q. Lease of residential unit with a monthly rental per unit
not exceeding P15,000.00
R. Sale, importation, printing or publication of books
and any newspaper, magazine, review or bulletin
which appears at regular intervals with fixed prices for
subscription or sale
S. Transport of passengers by international carriers
T. Sale, importation or lease of passenger or cargo vessels

and aircraft, including engine, equipment and spare
parts for domestic and international transport operations
106

U. Importation of fuel, goods and supplies by person
engaged in international shipping or air transport
operations, provided the same is utilized for
international operations
V. Services of banks, non-bank financial intermediaries
performing quasi-banking functions, and other non-bank
financial intermediaries
W. Sale or lease of goods and services to senior citizens
and PWD
X. Transfer of property under Sec 40(C)(2)
107

Y. Association dues , membership fees and other
assessments and charges collected by homeowner
associations and condominium corporation
Z. Sale of gold to BSP
AA. Sale of drugs and medicines prescribed for diabetes,
high cholesterol, and hypertension beginning January 1,
2019;
BB. Sale or lease of goods or properties or the
performance of services whose gross annual sales/or
receipts do not exceed P3,000,000.00
108
TAX BASE
•  Sale of goods - Gross Selling Price
•  Sale of service - Gross Receipts

109
VAT Liability
Sales > Output Tax
Less:
Cost/Expenses (VATable) > Input Tax
Profit > VAT Payable

(excess input tax)
110
Effect of VAT Exemption

•  An exemption means that the sale of goods, properties,
services, use or lease of properties is NOT subject to VAT
(output tax) and the seller is not allowed any tax credit
(input tax) previously paid, thus, the person making the
exempt sale of goods, properties or services shall not bill
any output tax to his customers because the said
transaction is not subject to VAT.
111
Effect of Zero-rating
•  A zero-rated sale of goods or properties (by a VAT-
registered person) is a taxable transaction for VAT
purposes, but shall not result in any output tax. However,
the input tax on purchases of goods, properties or
services, related to such zero-rated sale, shall be
available as tax credit or refund in accordance with these
regulations
112
VAT Zero-rate or VAT-Exempt

•  Which really reduces cost burden of VAT, ZERO-RATING
or EXEMPTION?
113
Zero-Rate vs. Exempt

Zero-Rate Exempt
On sales: On Sales:
•  No VAT •  No VAT
•  Still within the VAT System •  Not within the VAT System
•  Subject to 0% VAT •  Not subject to VAT
On purchases: On purchases:
•  VAT passed on is input tax •  VAT passed on is cost
•  Input tax is creditable •  Input tax is a cost
against output tax thus component thus item of
reducing VAT liability deduction reducing only
taxable income
114
VAT System (All VAT)

Raw Material (VAT) Manufacturer (VAT) Trader (VAT) End-User
SP (100+12) 100 112 SP (300 + 36) 300 336 SP (450 +54) 450 504
Cost 50 Cost (100 + 12) 100 112 Cost (300+36) 300 336
Profit 50 Profit 200 Profit 150
Purchase 112 Purchases 336 Purchases 504

Input VAT 12 12% VAT 36 12% VAT 54
OT 12% 12 OT 12% 36 OT 12% 54

IT 0 IT 12 IT 36
VAT Payable 12 Vat Payable 24 VAT Payable 18
VAT to BIR 12 VAT to BIR 24 VAT to BIR 18 Total VAT 54

115
VAT System (VAT Exempt 1st chain)

Raw Material (VAT Manufacturer Trader End-User
Exempt)
SP (100+ 0) 100 SP (300 + 36) 300 336 SP (450 +54) 450 504
Cost 50 Cost (100) 100 Cost (300+36) 300 336

Input VAT 0 12% VAT 36 12% VAT 54
OT 12% 0 OT 12% 36 OT 12% 54

IT 0 IT 0 IT 36
116
VAT System (VAT Exempt mid-chain)

Raw Material Manufacturer (VAT Trader End-User
Exempt)
SP (100+12) 100 112 SP (300) 300 SP (450 +54) 450 504
Cost 50 Cost (100 + 12) 100 112 Cost (300) 300

No Input VAT 0 No VAT 0 12% VAT 54
OT 12% 12 OT 12% 0 OT 12% 54

IT 0 IT 0 IT 0
VAT to BIR 12 VAT to BIR 0 VAT to BIR 54 Total VAT 66

117
VAT System (VAT zero-rate mid-chain)

Raw Material Manufacturer (VAT Zero- Trader End-User
rate)
SP (100+12) 100 112 SP (300+ 0) 300 SP (450 +54) 450 504
Cost 50 Cost (100 + 12) 100 112 Cost (300) 300

No Input VAT 12 No VAT 0 12% VAT 54
OT 12% 12 OT 12% 0 OT 12% 54

IT 0 IT 12 IT 0
VAT Payable 12 Vat Payable ( 12) VAT Payable 54
VAT to BIR 12 VAT to BIR (12) VAT to BIR 54 Total VAT 54

118
Sources of Input Tax

•  Purchase or importation of goods
•  For sale
•  For conversion into or intended to for part of finished goods
•  For use as supplies
•  For use as raw materials for sale of services
•  Capital expenditures subject to depreciation
119
Sources of Input Tax

•  Purchase of real property
•  Transaction deemed sale
•  Transitional input tax
•  Presumptive input tax
•  Creditable withholding VAT
120
Transitional Input Tax

•  A person who becomes liable to VAT for the first time
•  Allowed to claim input tax on beginning inventory of
goods, materials and supplies
•  Equal to 2% of the value of such inventory or actual VAT
paid whichever is higher
121
Presumptive Input Credit

•  Persons or firms engaged in the processing of sardines,
mackerel, and milk and in the manufacturing of refined
sugar cooking, cooking oil and packed noodle-based
instant meals
•  4% of the gross value in money of their purchases of
primary agricultural products which are used as inputs to
production
122
Input tax on Capital Expenditure

•  Any vat-registered person
•  Purchase or imports capital expenditure
•  Acquisition cost of more than P1 million
•  Input tax claim will be spread over a period of 5 years or
over the life of the capital asset whichever is shorter
•  But only until December 31, 2021
123
Mixed Transactions
•  Claim only input tax directly attributable to vatable activity
•  Can’t claim input tax directly attributable to exempt activity
•  Can claim ratable portion attributable to vatable activity for
input tax that cannot be directly identified to either activity
(subject to apportionment/attribution allocation)
•  Input tax attributable to exempt transaction are not
creditable
124
VAT Refund
•  Zero-rated and effectively zero-rated sales of goods,
properties or services
•  On related input tax, within 2 yrs after close of taxable quarter
when sales where made
•  Mandatory 90 day-rule
•  Cancellation of VAT registration
•  On unused input tax, within two years from cancellation of
registration
125
Filing of VAT return

•  BIR Form 2550M: monthly VAT return for the first two
months of every quarter due every 20th of the following
month
•  BIR Form 2550Q: quarterly due every 25th of the
following month at the close of the quarter
•  Follows the taxable year reporting of the taxpayer
126
Administrative and Penal Provision

•  Mandatory Invoicing requirement
•  Filing of Summary List of Sales and Purchases
•  Suspension of business operation (closure of not less
than 5 days)
•  Failure to issue receipts or invoice
•  Failure to file VAT returns
•  Understatement of sales/receipts by 30%
•  Failure to register
127
BUSINESS TAXES:
(2) OTHER PERCENTAGE
TAX
Title V – Percentage Tax
128
•  Reference:
•  Revenue Regulations (RR) 16-2005 as amended
•  RR 15-2013 (on international carriers)
•  Either VAT or Percentage Tax and never both
•  Also a business tax
•  An excise tax
•  An indirect tax
129
•  1. [Sec 116] Those exempt from VAT

•  3% of gross quarterly gross sale or receipts
•  Vatable person but less than 3.0 million gross annual sales and
receipt
•  2. [Sec 117] Tax on domestic carriers and keepers of
garage
•  3% of gross quarterly gross receipt
•  Covers car for rent/hire driven by the lessee, transportation
contractors, domestic carriers by land, air or water for transport of
passengers (excluding bancas and kalesa)
130
•  3. [Sec 118] Tax on International carrier

•  3% of quarterly gross receipts
•  International air carriers and international shipping carriers doing
business in the Philippines on transport of cargoes
131
Carriers by Land / Air / Sea

Area Object Kind Business Tax Income Tax
By Land Person Domestic Carrier 3% Percentage Regular Tax
(e.g. Victory Tax (Sec 117
Liner) Common
Carrier’s Tax)
Cargo/Goods Domestic Carrier 12% VAT (Sec Regular Tax

(e.g. Air Freight 108)
21)
132

By Air Person Domestic Carrier Domestic flight - Regular Tax
(e.g. PAL) 12% VAT (Sec
108)
International Regular tax
flight – 0% VAT
[Sec 108(B)]
International Exempt from Gross Philippine

Carrier (e.g. VAT [Sec 109(S)] Billing / Exempt
Emirates Airline subject to
reciprocity
133

By Air Cargo / Goods Domestic Carrier Domestic flight - Regular Tax
(e.g. LBC) 12% VAT (Sec
108)
flight – 0% VAT
[Sec 108(B)]
International 3% Percentage Gross Philippine

Carrier (e.g. UB Tax (Sec 118 Billing / Exempt
Express) International but subject to
Carrier’s Tax) reciprocity
134

By Sea Person Domestic Carrier Domestic waters Regular Tax
(e.g. 2Go - 12% VAT (Sec
Shipping Co.) 108)
waters – 0% VAT
[Sec 108(B)]
International Exempt from Gross Philippine

Carrier (e.g. Star VAT / Not subject Billing / Exempt
Cruises) to Carrier’s Tax subject to
[Sec 109(S)] reciprocity
135

By Sea Cargo / Goods Domestic Carrier Domestic waters Regular Tax
(e.g. Lorenzo - 12% VAT (Sec
Shipping Co.) 108)
waters – 0% VAT
[Sec 108(B)]
International 3% Percentage Gross Philippine

Carrier (e.g. Tax (Carrier’s Billing / Exempt
Altamar Tax) (Sec 118 but subject to
International International reciprocity
Shipping) Carrier’s Tax)
136
•  4.[Sec 119] Tax on Franchise

•  3% for radio and broadcast companies whose annual gross
receipts of the preceding year do not exceed P10million (except if
opted to be VAT registered)
•  2% for gas and water utilities
137
•  5. [Sec 120] Overseas Communications Tax (OCT)

•  10% on gross receipts for placing overseas call
•  6. Gross Receipts Tax (GRT)
•  [Sec 121] 5% / 1% / 0% / 7% On Banks and non-bank financial
intermediaries performing quasi-banking functions
•  [Sec 122] 5% / 3% On other non-bank financial intermediaries
138
•  7. [Sec 123] Tax on Life Insurance Premiums

•  5% on premiums collected
•  8. [Sec 124] Tax on Agents of foreign insurance
companies
•  10% on total premiums collected
•  9. [Sec 125] Amusement Tax
•  18% / 10% / 15% / 30%
139
•  10. [Sec 126] Tax on winnings

•  10% / 4% / 10%
•  11. [Sec 127] Stock Transaction Tax
•  ½ of 1% of gross selling price
•  4% / 2% / 1% IPO tax
•  Note: final tax, not subject to income tax
140
BUSINESS TAXES:
(3) EXCISE TAX
Title VI – Excise Tax
141
•  Also subject to VAT

•  Mostly on sin products
•  Imposed to curtail consumption of certain products
•  Types:
•  Specific Tax – based on quantity, volume or weight
•  Ad Valorem Tax – based on selling price or value
142
[Sec 129]
Goods and Services subject to excise
•  Goods manufactured or produced in the Philippines for
domestic sale or consumption or any other disposition
•  Things imported
•  Services performed in the Philippines
143
Goods subject to excise

•  Distilled spirits
•  Wines
•  Fermented liquor
•  Tobacco products
•  Cigars
•  Cigarettes
•  Automobile
•  Manufactured oils and fuels
•  Sweetened Beverages
•  Invasive Cosmetic procedures
•  Mineral products
•  Non-essential goods
144
When does excise tax accrues

•  For Cosmetic Procedure
•  Before procedure ?
•  Local Products
•  As soon as products are produced or comes into existence
•  Imported Products
•  As soon as products reaches Philippine territory and there is
intention to unload it into the country
145
[Sec 130] Filing and Payment

•  Who:
•  Every person liable to tax, manufacturer, producer, owner, importer,
•  In the case of sweetened beverage
•  It’s the manufacturer / producer
•  It’s the brand owner in case of toll arrangements
•  In case of indigenous petroleum, natural gas or liquefied natural
gas
•  it’s the paid by the first buyer, purchaser
•  In case exported, its paid by the owner, lessee, concessionaire or
operator of the mining claim
•  When:
•  Before removal from place of production
146
•  Determination of base
•  Specific tax: based on volume, weight, quantity
•  Ad valorem tax: based on gross selling price net of the VAT
•  Manufacturer’s or Producer’s Sworn Statement
•  Filed by every producer showing all the products and their
corresponding gross selling price and cost of production
147
•  Crediting of excise taxes

•  Excise taxes paid on materials actually exported
•  Only upon submission of proof of actual exportation of the products
produced
148
[Sec 131] On things imported

•  Who pays:
•  Owner, importer
•  Possessor, if already release from Customs without payment of
taxes
•  Pay to Customs Officers
149
New Rate Structure / Excisable Product

•  Refer to forms for summary
•  New Rate Structure under RA 10963
•  RR 1-2018
•  RR 2-2018
•  RR 3-2018
•  RR 5-2018
•  RR on sweetened beverages
•  RR on cosmetic procedures
150
New administrative provision

•  Fuel Marker Technology
151
DOCUMENTARY STAMP
TAX
Title VII –
152
References
•  Tax Code:
•  Secs. 173 to 201
•  Revenue Regulations No. 4-2018
153
Nature
•  Tax on documents, instruments, paper evidencing the
acceptance, assignment, sale or transfer of an
obligations, right or property
•  An excise tax
•  Paid for the privilege to enter into the transaction
•  Various DST rates depending on the document and the
face value of the document/instrument
154
[Sec 173] Persons liable

•  Person making, signing, issuing, accepting or transferring
the documents wherever the document was executed
•  Whenever one party is exempt the other party not exempt
shall be liable to DST
155
Who are require to file DST return

•  For one time transaction:
•  BIR Form 2000-OT
•  Seller, transferor, buyer of real property or shares of stock
•  For regular transaction:
•  BIR Form 2000
•  Person making, signing, issuing, accepting, transferring
•  Bank/Insurance: for user of metering machines
•  BIR Collection Agent: for seller of loose strip stamps
156
When to file
•  On or before the 5th day following the close of the month
of transaction
157
Effect of non-payment of DST

•  Document shall not be recorded
•  Cannot be admitted as evidence in any court until DST is
paid or affixed
•  Shall not be acknowledged by a notary
158
New TAX Rates

•  RA No. 10963
ORGANIZATION AND
FUNCTION OF THE BUREAU
OF INTERNAL REVENUE
Title I – National Internal Revenue Code
Sections 1 to 21
Finance Bureaus
Bureau of
Internal
Revenue
Bureau of
Local DEPARTMENT Bureau of
Government OF FINANCE Customs
Finance
Bureau of
Treasury
Finance Agencies & GOCCs
Insurance
Commission
Privatization
and National Tax
Research
Management
Center
Office
DEPARTMENT
OF FINANCE
Central Board
Cooperative of
Development
Assessment
Authority
Appeal
Philippine
Philippine Deposit
Export-Import
Insurance
Credit Agency
Corporation
Chiefs Officials of the BIR [Sec 2]
Deputy Commissioner –
Operations Group
Legal &
Commissioner
of Internal Inspection Group
Revenue
Resource
Management Group
Information
Systems Group
Regional & District Offices
[Sec 9 & 10]
DCIR - OG 1
Regions 19 + 2
District
Offices 119 + 8
Powers & Duties of the BIR [Sec 2]
•  Assess and collect of all internal revenue taxes, fees, and
charges, and
•  Enforce all forfeitures, penalties, and fines connected with
the assessment & collection function
•  Execute favorable judgments of the Court of Tax Appeals
and the ordinary courts.
Powers of the Commissioner [Sec 4]
•  Interpret:
•  exclusive and original jurisdiction to interpret the provisions tax
laws (subject to review by the Secretary of Finance)
•  Decide:
•  To decide on, (subject to the exclusive appellate jurisdiction of the
Court of Tax Appeals)
•  disputed assessments
•  refunds of internal revenue taxes, fees or other charges, penalties
imposed in relation thereto,
Powers of the Commissioner [Sec 5]
•  Purpose:
•  Ascertain correctness of any return
•  Making a return when none was prepared
•  Determining tax liability
•  Collection of tax liability
•  Evaluating tax compliance
Power of Commissioner [Sec 5]
•  Examination
•  Notice of Audit, Letters of Authority, Tax Verification Notice, Letter
Notice
•  Obtain information
•  Request for Third Party Information, Data-Linkage
•  Summon any person
•  Subpoena Duces Tecum
•  Take testimony
•  Subpoena Ad Testificandum
•  To order canvass [survey or surveillance]
•  Mission Orders
Power of the Commissioner [Sec 6]
•  (A) Examination of Returns
•  Absence of a return does not prelude examination [Sec 222]
•  Filed return cannot be withdrawn [Sec 255]
•  May be modified, changed or amended within the period of 3 years
from filing, provided no notice of audit or investigation has been
actually served upon the taxpayer
Power of the Commissioner [Sec 6]
•  (B) Assess based on Best Evidence Obtainable
•  When taxpayer fails to file a return or document required
•  When there is reason to believe that the return filed is false,
incomplete or erroneous
•  RMC 23-2000
•  Rationale: unhampered assessment and collection function
•  Burden of proof is upon the taxpayer to show clearly that
the assessment is wrong and without basis or is
erroneous.
•  Failure to do so on the part of the taxpayer justify the
judicial affirmation of the assessment.
•  (C) Inventory Taking, Surveillance, Prescribe Presumptive
Gross Sales & Receipts
•  Inventory Stock-Taking
•  All taxpayer, excise
•  Surveillance
•  Spot-checking, open surveillance (covert or overt operations)
•  Presumptive Sales/Receipts
•  Sec 113 & 237
•  Benchmarking
•  Prima facie correct as basis to compute tax liability
•  (D) Terminate Taxable Period
•  Retirement of business
•  Intending to leave the country
•  Remove, hide or conceal property
•  Obstruction in collection activity
•  Calls for termination of taxable period with immediate payment of

tax liability
•  (E) Prescribe Real Property Values
•  Zonal valuations
•  Upon consultation with competent appraisers (private and public)
•  Purpose
•  Compute any internal revenue tax (higher of FMV of CIR or FMV of City
Assessors Office (Tax Declaration of Property)
•  (F) Inquire into Bank Accounts
•  Decedent
•  Persons who will file a compromise case on account of financial
incapacity
•  Tax Treaty requests
•  Republic Act No. 10021 (Exchange of Information on Tax Matters Act of
2009)
•  Revenue Regulations 10-2010
•  (G) Accredit & Register Tax Agents
•  RR No. 4-2010 dated Feb 26, 2010
•  Amends RR No. 11-2006 & RR 15-99 relative to the accreditation
of tax practitioners/agents as a prerequisite to their practice or
representation before the Bureau of Internal Revenue
•  (H) Prescribe Additional Procedural or Documentary
Requirements
•  Compliance requirements
•  In connection with submission of financial statements attached to
the returns
CIR’s Power to Delegate [Sec 7]
•  Delegate to authorized/define officer certain actions
•  Except:
•  Revenue Regulations [Sec 244]
•  1st impression rulings
•  Revise, modify or revoke existing ruling
•  Compromise or Abate any tax liability [Sec 204(A)]
•  2 yr rule on assign/re-assign ROOPs [Sec 16, Sec 152, Sec 171]
•  Note: does not include 3 yr rule on assign of ROs [Sec 17]
Authorized Collection Agents of the BIR
[Sec 12]
•  (a) BOC
•  (b)
•  (c) Accredited Banks
•  Sec 10: Authority of a Regional Director
•  Sec 11: Authority of a Revenue District Officer
•  Sec 13: Authority of a Revenue Officer
•  Sec 14: Oaths
•  Sec 15: Arrest & Seizures
180
REMEDIES
Title VIII –
181
References
•  Tax Code:
•  Title VIII, Secs. 202 to 231
182
Remedies of the Government

•  (Sec 204) Compromise and Abatement
•  (Sec 205-208) Actual and Constructive Distraint
•  (Sec 207) Levy
•  (Sec 219) Tax Lien
•  (Sec 221) Civil Action
•  (Sec 221-222) Criminal Action
•  (Sec 224-225) Forfeiture of Property
•  (Sec 115) For VAT violation: Closure of Business for at
least 5 days
183
Authority of the Commissioner to Compromise

•  The Commissioner can compromise a tax liability based
on either of the following grounds:
1.  Reasonable doubt on the validity of the assessment; and
2.  Financial incapacity on the part of the taxpayer.
•  What may be compromised?

1.  Civil liability – tax assessments
2.  All criminal violations except:
a) Those already filed in court
b) Those involving fraud
184
Other important points on Compromise

•  Minimum amounts of Compromise:
Ø  Financial incapacity – 10% of the basic tax assessed
Ø Other cases – 40% of the basic tax assessed
•  Where the basic tax involved exceeds P1 million

or settlement offered is less than the minimum
amounts, the compromise shall be subject to
approval by the NEB
•  The taxpayer’s offer for compromise based on
financial incapacity shall not be considered unless
he waives his privilege under RA 1405
185
Other important points on Compromise

•  Other cases not subject to compromise
•  Withholding tax (always pay 100% of basic tax)
•  Delinquent accounts with approved installment scheme
•  Cases with agreement for payment from taxpayer
•  Cases already final and executory after final judgment of a court
Compromise Penalty
incremental penalty impose in lieu of criminal prosecution
subject to consent by a taxpayer
186
Authority of the Commissioner to Abate Taxes
•  Abatement means the cancellation of the taxpayer’s tax

liability and is authorized on the following grounds:
1.  The tax or any portion thereof appears to be unjustly or

excessively assessed; or
2.  The tax administration and collection cost involved do not justify
the collection of the amount due.
187
•  Abatement: there can be a cancellation of entire tax

liability or cancellation of incremental penalties on taxes
due
•  Compromise: there is only a mere reduction in tax liability
(basic plus incremental penalties)
188
Remedies of the BIR in Collection

•  Actual or Constructive Distraint– The collection of
taxes is enforced on the goods, chattels or effects
of the taxpayer including other personal
properties such as stocks, debts, credits, bank
accounts and interests in and rights to personal
properties (Section 207(A), NIRC).
189
When is constructive distraint resorted to

•  When is constructive distraint resorted to:
•  Taxpayer hides or conceals his property
•  Performance of acts tending to obstruct tax collection proceeding
•  Retirement of business
•  Taxpayer intents to leave the country
•  Taxpayer is delinquent
190
Remedies of the BIR in Collection

•  Levy– The collection of taxes is enforced on the
real property of the taxpayer. The levy may be
made before, simultaneously with or after the
distraint of personal property (Section 207(B),
NIRC).
•  Tax Lien – The tax liability shall be a lien in favor
of the government from the time the assessment
was made until paid with interest, penalties and
costs that may accrue in addition thereto upon all
property and rights to property belonging to the
taxpayer (Section 219, NIRC)
191
Remedies of the BIR in Collection (con’t)

•  Civil Action – Filing of a collection case in the regular
courts or with the CTA where the assessment is
already final and demandable. No civil action for
recovery of taxes shall be commenced without the
approval of the Commissioner.
•  Criminal Action – instituted on behalf of the
Government of the Philippines by legal officers of the
BIR. No criminal action shall be commenced without
the approval of the Commissioner. Judgment in the
criminal case shall not only impose the penalty but
shall also order the payment of the taxes subject of
the criminal case as finally decided by the
Commissioner (Section 205(b), NIRC).
192
Notes on Civil action

•  Resorted as a means to collect delinquency taxes when:
•  Final, executory and demandable assessment (when taxpayer fails
to file a timely administrative protest)
•  When administrative protest was
•  Denied in whole or in part or is not acted upon within 180 days from
submission of documents and the taxpayer adversely affected by the
decision or inaction fails to file an appeal with the CTA
193
Notes on civil collection

•  Filed with CTA (at least Php1million) or regular courts
(less than Php1million)
•  Approval of CIR needed in filing the case but approval
may be delegated
•  Taxpayer barred to raise defense of prescription or
invalidity/illegality of assessment once assessments are
final executory and demandable
194
Notes on criminal action

•  Resorted to as a means not only to collect taxes but also
as a means to enforce penal provisions of the tax code
•  Filed with CTA or regular courts
•  Acquittal of taxpayer does not exonerate him from liability
to pay taxes
195
Notes on Criminal Action

•  Penal Code vs. Tax Code
•  Penal: Civil liability arises our of the criminal liability, thus, when a
person is not criminally liable then he cannot be civilly liable
•  Tax: Criminal liability arises out of civil liability (e.g. non-payment of
taxes), thus, if taxpayer found not criminally liable it does not mean
he is no longer civilly liable to pay unpaid taxes (Peo vs. Patanao)
•  Subsequent settlement of civil obligation does not
extinguish criminal liability
196
Notes on criminal action

•  Maybe instituted during the pendency of an administrative
protest on a case
•  Presence of an assessment is not a mandatory
requirement to institute a criminal case (UngabvsCusi
note: Fortune Tobacco is a mere exception to Ungab
decision)
•  Just like civil action, it must be made in the name of the
government
197
Remedies of the BIR in Collection (con’t)

•  Forfeiture– In case there is no bidder for the real
property in the public sale (levy on real property)
or if the amount of the highest bid is insufficient to
pay the taxes, the property shall be forfeited by
the Government.
•  Suspension of Business – closure of business for
not less than five (5) days for failure to issue
receipt or invoice; failure to file VAT return or
understatement of sales by at least 30%. (Sec
115) [OplanKandado Project]
198
Injunction
•  General Rule
•  (Sec 218) No court shall have authority to grant an injunction to restrain
the collection of any NIRC imposed taxes, fees or charges
•  Exception
•  (Se 11, RA 1125 as amended) Injunction may be issued by the CTA
when in it opinion collection of taxes may jeopardize the interest of the
Government and/or the taxpayer, where the court may require the
taxpayer to deposit the amount or post a surety bond not more than
double the amount being collected with the CTA
199
What is an assessment?
•  It is a formal notice to the taxpayer stating that the amount
thereon is due as a tax and containing a demand for the
payment thereof. An assessment contains not only a
computation of tax liabilities but also a demand for
payment within a prescribed period (Alhambra Cigar v.
Collector, 1959).
•  An affidavit, which was executed by revenue officers

stating the tax liabilities of a taxpayer and attached to a
criminal complaint for tax evasion, can not be deemed an
assessment that can be questioned before the CTA (CIR
v. Pascor Realty, June 1999).
200
Requisites of a valid assessment

1.  It must be made within the prescriptive period to assess
(Sec. 203)
2.  There must be a preliminary assessment previously
issued except in those instances allowed by law (Sec.
228)
3.  The taxpayer must be informed in writing about the
facts and the law on which the assessment is based
(Sec. 228; CIR v. Azucena T. Reyes, 2006)
4.  It must be served upon taxpayer or any of his
authorized representatives (Gabriel v. CIR, 2004)
201
Period of Limitation on Assessment

•  Internal revenue taxes shall be assessed within three (3)
years after the last day prescribed by law for the filing of
the return. Where the return is filed beyond the period
prescribed by law, the three year period shall be counted
from the day the return was filed (Section 203, NIRC)
•  However, If no return is filed or a return was filed but said
return is false or fraudulent, assessment shall be made
within ten (10) years from discovery of the omission to file,
or discovery of the falsity or fraud (Section 222, NIRC)
202
When is an assessment deemed made?

•  It is not the issue date of the demand and/or
notice that is the reckoning point in prescription
but rather it is the date when the demand letter or
notice of assessment is released, mailed or sent
to the taxpayer that constitutes an actual
assessment(Basilan Estates Inc., vs. CIR, 21
SCRA 17).
•  An assessment notice which is not served upon
the taxpayer or any of his authorized
representatives is not valid and the failure to
protest the same within the period provided by
law (30 days from receipt of the assessment) will
203
Exceptions to Prior Notice of Assessment

•  When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax
appearing on the face of the tax return by the taxpayer; or
•  When a discrepancy has been determined between the
tax withheld and the amount actually remitted by the
withholding agent; or
204

•  When a taxpayer who opted to claim a refund or tax credit
of excess creditable withholding tax for a taxable period
was determined to have carried over and automatically
applied the same amount claimed against the estimated
tax liabilities for the taxable quarter/s of the succeeding
taxable year; or
205

•  When the excise tax due on excisable articles has not
been paid; or
•  When an article locally purchased or imported by an
exempt person, such as but not limited to vehicles, capital
equipment, machineries, and spare parts, has been sold,
traded or transferred to non-exempt persons
206
Taxpayer’s remedies: Administrative Relief
•  Remedy before payment–This comes in the form of

administrative protest which can either be:
1. Request for reconsideration, or
2. Request for re-investigation
Claim for refund of
•  Remedy after payment -
erroneously paid taxes pursuant to Section 204
and Section 229 / Sec 112
207
Taxpayer’s remedies: Judicial Relief
•  Civil Action –
•  Appeal to CTA
•  Contest a forfeiture before sale of forfeited property or
after the its sale (within 6 months) to recover net
proceeds realized
•  Claim damages against BIR officials for acts beyond
official function/grave abuse of authority
•  Criminal Action –
•  Against erring BIR officials and employees
208
Protesting an Assessment
•  A Protest must be filed within thirty (30) days from
receipt of the Final Assessment Notice
•  A Protest may come in two (2) forms:
a)  Request for Reinvestigation – where the taxpayer would
introduce newly discovered evidence;
b)  Request for Reconsideration – where the taxpayer
would invoke misappreciation of facts, misapplication of
law , or both.
•  A protest filed out of time will make the assessment
final, executory and demandable.
•  A late protest will not suspend the prescriptive period to
collect (CIR v. Atlas Con. Mining & Dev. Corp., 2000)
209
Taxpayer’s remedy against CIR’s inaction

on a protest
•  To appeal to the CTA within 30 days from
expiration of the period to resolve the protest (180
days).
•  The 30-day period to appeal is jurisdictional and

failure to comply therewith would bar the appeal
and deprive the CTA of jurisdiction to entertain
and determine the correctness of the
assessment. (RCBC v. CIR, G.R. No. 168498,
210
Alternative remedies of Taxpayer against

CIR inaction
1.  To file a petition for review with the CTA within
30 days after the expiration of the 180-day
period to act.
2.  To await the final decision of the CIR (till
kingdom come) and appeal within 30 days
after receipt of a copy of the decision.
•  These options are mutually exclusive. Resort
to one bars the application of the other. (RCBC
v. CIR, G.R. 168498, April 24, 2007)
211
Basis to appeal to CTA

•  CIR’s final Decision on an appeal to a Final Decision of
Disputed Assessment (RR 12-99)
•  CIR vs. Union Shipping 21 May 1990
•  Clear and unequivocal language of the CIR of his final decision
•  Filing by the BIR of a civil suit for collection of the delinquency tax
•  Actual issuance of a WDL cannot be considered as a FDDA
212
Authority of the Commissioner to Refund Taxes

  Refund of Taxes is anchored on the Principle of Solutio
Indebiti .
  No one, not even the Government, shall enrich himself at
the expense of another (Philex Mining v. CIR).
213
Authority of the Commissioner to Refund Taxes

  The legal requirements for a claim for refund are as
follows:
1. A written claim for refund filed by the taxpayer with
the Commissioner[Section 204(3) and 229, NIRC]
2. The claim for refund must be a categorical demand
for reimbursement (Bermejo vs. Collector, L-3029,
July 25, 1950)
3. The claim for refund or tax credit must be filed with
the Commissioner, or the suit or proceeding therefore
must be commenced in court within two (2) years
from the date of payment of the tax or penalties
214
Sec 112 / Sec 229

•  Sec 112
•  Zero-rated: within two (2) years after the close of the taxable
quarter for input taxes due or paid for the period
•  Cancellation of VAT registration: within two (2) years from date of
cancellation for any unused input tax
•  BIR is given a period of 90 days from complete submission of
documents within which to grant or deny the claim
•  Sec 229
•  Erroneously or illegality collected: within two (2) years from date of
payment
215
Period of Limitation on Collection

1.  If there is an assessment, the period shall be five
(5) years from the date of assessment (Section
222(c), NIRC). This rule is believed to cover by
implication regular assessments, otherwise, the
period to collect an assessment issued under
normal circumstances will be imprescriptible.
2.  In the absence of an assessment, and a return was
filed as long as it is not false or fraudulent, the
period is five (5) years from the date the tax is due.
216
Period of Limitation on Collection
3.  If no return was filed, the period to collect is

within ten (10) years from the date of
discovery of the omission to file without need
for an assessment (Evangelista vs. Collector,
October 15, 1957; Section 222(a), NIRC).
4.  If the return filed was false or fraudulent,
collection maybe resorted to without need of
assessment within ten (10) years from
discovery of the fraud or falsity (Ungab vs.
Cusi, 97 SCRA 887; Section 222(a), NIRC).
217
Exceptions to the Prescriptive Periods

(on Assessment and Collection)
1.  False or fraudulent return, omission to file a return
(Section 222(a), NIRC)
2.  If there is an agreement in writing to extend the period

to assess or to collect (Section 222(b) and (d), NIRC)
218
Requirements of a Valid Waiver

1.  It must not be an indefinite waiver. There should be an
agreed date between the BIR and the taxpayer within
which the former may assess and/or collect revenue
taxes.
2.  It must be signed by the taxpayer and accepted by the
Commissioner before the expiration of the original
period to assess or collect.
3.  A copy of the accepted waiver must be duly served
upon the taxpayer. The requirement to furnish the
taxpayer with a copy of the waiver is not only to give
notice of the existence of the document but of the
219
Suspension of the Prescriptive Periods

1.  For the period where the Commissioner is prohibited from making
the assessment or beginning distraint or levy or a proceeding in
court and for sixty (60) days thereafter (Republic vs. Kerr & Co., 25
SCRA 208)
2.  When the taxpayer requests for a reinvestigation which is granted
by the Commissioner. A request for reconsideration will not
suspend the prescriptive period to collect (BPI vs. Commissioner,
GR No. 139736, October 17, 2005).
3.  When the taxpayer cannot be located in the address given by him
in the return filed upon which a tax is being assessed or collected.
4.  When warrant of distraint or levy is duly served and no property
could be located (Republic vs. Salud , GR No. 130430, December
13, 1999)
220
Will a protest suspend the period

to collect on the assessment?
•  A request for re-investigation which is granted by
the Commissioner suspends the running of the
period to collect (Section 223).
•  A request for reconsideration will not suspend the
period to collect. (BPI v. CIR, G.R. No. 139736,
October 17, 2005)
•  The doctrine laid down in the Wyeth Suaco, (202
SCRA 125) case has been abandoned.
221
Process Flow for the

Assessment and Collection of Taxes
Within three (3) years
Filing of FAN
Notice of
Returns Issuance Informal PAN
of LA Conference 15 days
(15 days to
respond) Not paid/
Protested Not protested
Served Audit Paid w/in
w/in 30 w/in 30 days
w/in 30
Terminate 30 days
d in 120 days
days days
Assessmen
t Final
Claim for
refund A
Admin & Judicial
2 years after payment Remedies
(w/in 5 yrs)
No Yes
SC CTA Granted TCC /
Gov’t check
For Final
End Decisio
Execution n End
222
Process Flow for the
Assessment and Collection of Taxes ( as amended by
RR 18-2013) Within three (3) years
Filing of FAN
Returns Issuance PAN
of LA 15 days
Not paid/
Protested Not protested
Served Audit Paid w/in
w/in 30 w/in 30 days
w/in 30
Terminate 30 days
d in 120 days
days days
Assessmen
t Final
Claim for
refund A
Admin & Judicial
2 years after payment Remedies
(w/in 5 yrs)
No Yes
SC CTA Granted TCC /
Gov’t check
For Final
End Decisio
Execution n End
223
Process Flow for the Assessment

and Collection of Taxes (cont’d.)
Protest w/in
A 30 days
Reconsideration Reinvestigation
- Not suspend -Suspends collection
collection - 60 days to submit
docs
CIR CIR Decision

CIR Inaction
after
Decision 180 days 180days
Yes Favorabl
End Favorabl No e
e
Yes
No
Final End
Decisio SC CTA Adverse
End
n
224
COMPLIANCE
REQUIREMENTS
Title IX –
225
Chapter I
•  Sec 232 – Keeping of Books of Accounts
•  Relevant and appropriate set of bookkeeping records
•  CPA certificate needed is gross annual sales/receipts exceed
P3.0million
•  Sec 233 – Subsidiary Books
•  Keep as the business requires
•  Will form part of accounting system
226
•  Sec 234 – Language

•  English or Spanish
•  Sec 235 – Preservation of Books of Accounts and other
Accounting Records
•  Preserve in compliance with Sec 203
•  For income tax purposes: investigation should be done once a
year except when there is (a) fraud; (b) reinvestigation; (c )
verification of withholding tax; (d) verification of capital gains tax;
(e) exercise of CIR power, retirement
227
Chapter II
•  Sec 236 – Registration Requirements
•  Simple registration requirements for SEPs
•  No option to be VAT registered for entities who opted to be under the
8% income tax rate
•  Sec 237 – Issuance of Receipts or Sales or Commercial
Invoices
•  P100.00
•  Mandatory shift to e-receipts within 5 years
•  Sec
237 (A) – Electronic Sales Reporting System
•  Sec
238 – Printing of Receipts or Sales or Commercial Invoices
•  Sec
239 & 240 – Exhibit signs for excisable entities
•  Sec
241 – Exhibition of Certificate of Payment at Place of
Business
228
•  Sec 242 – Continuance of Business of Deceased Persons

•  Sec 243 – Removal of Business to Other Locations
229
Chapter III
•  Sec 244: Authority to promulgate rules and regulations
vest upon the Secretary of Finance upon recommendation
of the Commissioner
•  Sec 245: Specific Provisions in a Rules and Regulations
•  Sec 246: Non-retroactivity of Rulings
230
STATUTORY OFFENSES
AND PENALTIES
Title X –
231
•  Chapter I
•  Additions to Tax: Secs 247 - 252
•  Chapter II
•  Crimes, Other Offenses and Forfeitures: Secs 253 - 268
•  Chapter III
•  Penalties Imposed on Public Officers: Secs 269 - 273
•  Chapter IV
•  Other Penal Provisions: Secs 274 - 282
232
Civil Penalties: Additions to Tax

•  Surcharge
•  25% surcharge
•  Failure to file a return and pay the tax
•  Wrong venue filing and payment
•  Failure to pay delinquency taxes
•  Failure to pay in full or part taxes due where no return is required
•  50% surcharge
•  Willful neglect to file a return
•  False or fraudulent return
•  Prima facie: underdeclaration of sales / overdeclaration of deduction of more
than 30%
233
Civil Penalties
•  Interest
•  Double the legal interest rate set by BSP
•  Deficiency interest vs. delinquency interest – one time computation
of interest
•  From due date until paid
•  Compromise Penalty
•  In lieu of criminal prosecution
•  Voluntary only on the part of the taxpayer
234
Failure to file a return

•  Sec 250
•  1,000 per unfiled return or declaration required
•  Not to exceed P25,000 in a calendar year
235
Failure of a withholding agent

•  Sec 251 / 252
•  To refund excess withholding
•  To Withhold or remit taxes
•  Penalty:
•  equivalent to amount of withholding taxes
•  In relation with Sec 34 (K): disallowance of deduction for income tax
purposes
236
Crimes and Offenses

•  Sec 253 General Provisions
•  Sec 254 to 266 NIRC Crimes
•  Tax Evasion
•  Failure to file return, supply correct and accurate information
•  Making false entries, records or reports or using falsified or fake
accountable forms
•  Unlawful pursuit of business
•  Illegal collection of foreign payments
237
Crimes and Offenses

•  Con’t: Sec 254 to 266 NIRC Crimes
•  Unlawful possession of cigarette paper or bobbins
•  Unlawful use of denatured alcohol
•  False brand or name or imitation
•  Removal without payment of excise taxes
•  Failure or refusal to issue receipts/invoices
•  Offenses related to stamps
•  Failure to obey summons
•  Perjury
238
Sec 254: Attempt to Evade or Defeat Tax
• Elements:
•  Any person
•  willfully attempts in any manner
•  to evade or defeat any tax
MOC: 2010 Workshop on RATE 239
Sec 254: Attempt to Evade or Defeat Tax
•  Penalties
•  Fine of not less than P30,000.00 500,000

but not more than P100,000 10,000,000.
•  Imprisonment of not less than two 2 6
years but not more than four 4 10 years
Sec 255. Failure to File Return, Supply Correct and
Accurate Information, Pay Tax, Withhold and Remit Tax and
Refund Excess Taxes Withheld on Compensation.
•  1st paragraph
•  Elements.
1.  Any person
2.  Required under the Tax Code or by rules and
regulations to pay any tax, make a return, keep any
record, or supply correct and accurate information,
3.  willfully fails to pay such tax, make such return,
keep such record, or supply such correct and
accurate information or withhold or remit taxes
withheld, or refund excess taxes withheld on
compensation

•  Penalties
•  Fine of not less than P10,000.00 and
•  Imprisonment of not less than one (1) year

but not more than ten (10) years.

•  2nd paragraph
•  Elements.
•  Any person
•  attempts to make it appear for any reason that he or
another has in fact filed a return or statement, or
•  actually files a return or statement and subsequently
withdraws the same return or statement after
securing the official receiving seal or stamp of receipt
of an internal revenue office wherein the same was
actually filed.
243

•  Penalties
•  Fine of not less than P10,000.00 but not

more than P20,000.00, and
•  Imprisonment of not less than one (1) year
but not more than three (3) years.
Sec 257. Making False Entries , Records or Reports
or Using Falsified or False Accountable Forms
•  Sec 257 (A) Elements:
•  Any financial officer or independent CPA

engaged to examine and audit books of
accounts of taxpayers under Section 232 (A)
and any person under his direction
•  Sec 257 (A) Elements (con’t):
•  Willfully falsifies any report or statement

bearing on any examination or audit, or
renders a report, including exhibits,
statements, schedules or other forms of
accountancy work which has not been verified
by him personally or under his supervision or
by a member of his firm or by a member of his
staff in accordance with sound auditing
•  Sec 257 (A) Elements (con’t):
•  Certifies financial statements of a business

enterprise containing an essential
misstatement of facts or omission in respect
of the transactions, taxable income, deduction
and exemption of his client
•  Sec 257 (B) Elements:
•  Any person who not being a CPA or a

financial officer
•  Examines and audits books of accounts of
taxpayer, or
•  Offers to sign and certify financial statements
without audit, or
•  Offers any taxpayer the use of accounting

bookkeeping records for internal revenue
purposes not in conformity with the
requirements prescribed in the Tax Code or its
rules and regulations, or
•  Knowingly makes any false entry or enters
any false or fictitious name in the books of
accounts or records mentioned in the
•  Keeps two (2) or more sets of such records

or books of accounts.
•  In any way commits an act or omission, in
violation of the provisions of this section.
•  Fails to keep the books of accounts or

records mentioned in Section 232 in a native
language, English or Spanish, or to make a
true and complete translation as required in
Section 234 of this Code, or whose books of
accounts or records kept in a native language,
English or Spanish and found to be at
material variance with books or records kept
•  Willfully attempts in any manner to evade

or defeat any tax imposed under this Code,
or knowingly uses fake or falsified revenue
official receipts, Letters of Authority,
certificates authorizing registration, Tax
Credit Certificates, Tax debit memoranda
and other accountable forms.
•  Penalties
•  For each act or omission, a fine of not less than P50,000

but not more than P100,000.00, and
•  Suffer imprisonment of not less than two (2) years but
not more than six (6) years.
•  If the offender is a CPA, his certificate as a CPA shall be
automatically revoked or canceled upon conviction. In
case of foreigners conviction under this Code shall result
in his immediate deportation after serving sentence
without further proceedings for deportation.
Sec 258. Unlawful Pursuit of Business
•  Elements:
•  Any person
•  Carries on any business for which an annual registration fee is
imposed
•  Without paying the tax as required by law shall upon conviction.
Sec 258. Unlawful Pursuit of Business
•  Penalties
•  For each act or omission, a fine of not less than P5,000.00 but
not more than P20,000.00
•  Suffer imprisonment of not less than six (6) months but not
more than two (2) years
•  That in the case of a person engaged in the business of
distilling, rectifying, repacking, compounding or manufacturing
any article subject to excise tax, for each act or omission, be
punished by a fine of not less than P30,000.00 but not more
than P50,000.00 and suffer imprisonment of not less than two
(2) year but not more than four (4) years.
Sec 259. Illegal Collection of Foreign

Payments
•  Elements:
•  Any person
•  Knowingly undertakes the collection of foreign
payments as provided under Section 67 of this
Code
•  Without having obtained a license therefor or
without complying with its implementing rules
and regulations
•  For each act or omission
Sec 259. Illegal Collection of Foreign

Payments
•  Penalties:
•  For each act or omission, a fine of not less than

P20,000 but not more than P50,000.00, and
•  Suffer imprisonment of not less than one (1)
year but not more than two (2) years
Sec 260. Unlawful Possession of

Cigarette Paper in Bobbins or Rolls
•  Elements:
•  Any person
•  Possession cigarette paper in bobbins or rolls,
cigarette tipping paper or cigarette filter tips
•  Without the corresponding authority therefor
issued by the CIR
Sec 260. Unlawful Possession of

Cigarette Paper in Bobbins or Rolls
•  Penalties:

•  Suffer imprisonment of not less than six (6)
years and 1 day but not more than twelve (12)
years.
Sec 261. Unlawful use of denatured

alcohol
•  Elements 1st paragraph:
•  Any person
•  For the purpose of manufacturing any beverage
•  Uses denatured alcohol or alcohol specifically denatured to be
used for motive power or withhdrawn under bond for industrial uses
or alcohol knowingly misrepresented to be denatured to be unfit for
oral intake, or

alcohol
•  Elements 1st paragraph (con’t):
•  Knowingly sells or offers for sale any beverage made in whole or in
part from such alcohol or who uses such alcohol for manufacture of
liquid medical preparations taken internally
•  Knowingly sells or offers for sale such preparations containing as
an ingredient such alcohol

alcohol
•  Elements 2nd paragraph:
•  Any person
•  Unlawfully recover or attempt to recover by distillation or process
any denatured alcohol, or
•  Knowingly sells or offers for sale, conceals or otherwise disposes of
alcohol so recovered or redistilled

alcohol
•  Penalties:

•  Suffer imprisonment of not less than six (6)
years and 1 day but not more than twelve (12)
years.
Section 262. Shipment or Removal of Liquor or Tobacco Products under
False Name or Brand or as an imitation of any existing or otherwise known
product name or brand
•  Elements:
•  Any person
•  Who ships, transports or removes spirituous,
compounded or fermented liquors, wines or any
manufactured products of tobacco under any other
than the proper name or brand known to the trade
as designating the kind and quality of the contents
of the cask, bottle or package containing the same
or as an imitation of any existing or otherwise
known product name or brand or causes such act
to be done.
Section 262. Shipment or Removal of Liquor or Tobacco Products under
False Name or Brand or as an imitation of any existing or otherwise known
product name or brand
•  Penalties

P20,000.00 but not more than P100,000.00
•  Imprisonment of not less than six (6) years and one (1)
day but not more than 12 years.
Section 263. Unlawful Possession or Removal of Articles

Subject to Excise Tax Without Payment of Tax.
•  Any person
•  Who owns and/or is found in possession of imported
articles subject to excise tax, the tax on which has not
been paid in accordance with law, or any person who
owns and/or is found in possession of imported tax-
exempt articles other than those to whom they are legally
issued.

•  Penalties
•  Fine of not less than P1,000.00 nor more than P2,000.00 and
suffer imprisonment of not less than 60 days but not more than
100 days if the appraised value , to be determined in the
manner prescribed in the Tariff and Customs Code (TCC),
including duties and taxes of the articles exceeds P1,000.00
but does not exceed P50,000.00.
•  Fine of not less than P10,000.00 but not more than P20,000.00
and imprisonment of not less than 2 years but not more than 4
years , if the appraised value , to be determined in the manner
prescribed in the TCC, including duties and taxes of the articles
exceeds P50,000.00.

•  Fine of not less than P30,000.00 but not more than P60,000.00
and imprisonment of not less than four years but not more than
six years, if the appraised value , to be determined in the same
manner prescribed in the TCC, including duties and taxes of
the articles is more than P50,000.00 but does not exceed
P150,000.00;
•  Fine of not less than P50,000.00 but not more than P100,000
and suffer imprisonment of not less than 10 years but not more
than 12 years, if the appraised value, to be determined in the
manner prescribed in the TCC, including duties and taxes of
the articles exceeds P150,000.00

•  Fine of not less than 10 times the amount of excise tax

due on the articles found but not less than P500.00.
•  Imprisonment of not less than two (2) years but not more
than four (4) years.

•  Any manufacturer, owner or person in charge of any

article subject to excise tax who removes or allows or
causes the unlawful removal of any such articles from the
place of production or bonded warehouse, upon which
the excise tax has not been paid at the time and in the
manner required, and any person who knowingly aids or
abets in the removal of such articles aforesaid, or
conceals the same after illegal removal.
•  Mere unexplained possession of articles subject to excise
tax, the tax on which has not been paid in accordance
with law, shall be punishable under this section.

•  Penalties
•  For the first offense, a fine of not less than 10 times the
amount of excise tax due on the articles but not less than
P1,000.00 and suffer imprisonment of not less than one
(1) year but not more than two (2) years.
271
Section 264. Failure or Refusal to Issue Receipts or Sales or Commercial

Invoices, Violations Related to the Printing of such receipts or invoices and
Other Violations.
•  Elements Paragraph (a):

•  Any person who, being required under Section 237 to
issue receipts or sales or commercial invoices, fails or
refuses to issue such receipts or invoices, issues
receipts or invoices that do not truly reflect and/or
contain all the information required to be shown
therein , or uses multiple or double receipts or
invoices.

Other Violations.
•  Elements Paragraph (b):

•  Any person who commits any of the acts
hereunder enumerated:
1)  Printing of double or multiple sets of invoices or receipts.
2)  Printing of receipts or sales or commercial invoices
without authority from the BIR.
3)  Printing unnumbered receipts or sales or commercial
invoices, not bearing the name, business style, TIN and
business address of the person or entity.

Other Violations.
•  Penalties

P1,000.00 500,000 but not more than P50,000.00
10,000,000, and
•  Suffer imprisonment of not less than two (2) 6 years but
not more than four (4) 10 years.
Sec 264 – A Failure to transmit sales data
•  Daily penalty equivalent to 1/10 of 1% of previous annual
net income or 10,000 whichever is higher
•  More than 180 days – shall lead to permanent closure of
taxpayer
•  Acceptable excuse – force majeure or causes beyond the
control of the taxpayer
Sec 264 – B Offense related to Sales
Suppression Devices
•  Covered person shall be any person who purchase, use,
possess, sell or offer to sell, install, transfer, update,
upgrade, keep, or maintain such automated sales
suppression device or software designed for or is capable
of:
ü  Suppressing the creation of electronic records of sale
transactions that a taxpayer is required to keep under
existing tax laws and/or regulation; or
ü  Modifying, hiding or deleting electronic records of sales
transactions and providing ready means of access to
them
Sec 264 – B Offense related to Sales
Suppression Devices
•  Penalty:
•  Fine of not less than P500,000 but not more than
P10,000,000 and imprisonment of not less than 2 years
but not more than 4 years
•  Cumulative suppression of electronic sales record in

excess of P50,000,000 shall be considered as economic
sabotage and shall be subject to maximum penalty
Sec 265. Offenses Relating to Stamps
•  Elements
•  Any person
•  Who commits any of the following acts:
•  Making, importing, selling, using or possessing without express
authority from the CIR, any die, for printing or making stamps, labels,
tags or playing cards;
•  Erasing the cancellation marks of any stamp previously used, or
altering the written figures or letters or cancellation marks on internal
revenue stamps;
•  Possessing false, counterfeit, restored or altered stamps, labels or tags
or causing the commision of any such offense by another;
•  Elements
•  Any person
•  Who commits any of the following acts:
•  Selling or offering for sale any box or package containing articles
subject to excise tax with false, spurious or counterfeit stamps or labels
or selling from any such fraudulent box, package or container as
aforementioned; or
•  Giving away or accepting from another, or selling, buying or using
containers on which the stamps are not completely destroyed.
•  Penalties

P20,000.00 but not more than P50,000.00, and
•  Suffer imprisonment of not less than two (2) years but not
more than eight (8) years.
Sec 265 – A Offense related with Fuel
Marker
•  Additional punishment for all offenses relating to fuel
marking:
a.  Any person engaged in the sale, trade, delivery,
distribution or transportation of unmarked fuel in
commercial quantity held for domestic use or
merchandise (upon conviction)
b.  Any person who:
ü  causes removal of the official fuel marking agent from
marked fuel, and the adulteration or dilution of the fuel
intended for sale to the domestic market, or
Marker
ü  knows the possession, storage, transfer or offer for sale
of fuel obtained as a result of such removal, adulteration
or dilution
•  First offense
•  ₱2,500,000
•  Second offense
•  ₱5,0100,000
•  Third offense
•  ₱10,000,000 plus revocation of license to engage in any
trade or business
Marker
c.  fine of not less than P1,000,000 but not more than P5,000,000
AND imprisonment of not less than 4 years but not more than 8
years for any person who commits any of the following acts:
ü  Making, importing, selling, using or possessing fuel markers
without express authority
ü  Making, importing, selling, using or possessing counterfeit fuel
markers
Marker
ü Causing another person or entity to commit any of the
two preceding acts
ü Causing the sale, distribution, supply or transport of
legitimately imported, in-transit, manufactured or
procured controlled precursors and essential chemicals
to any person or entity penalized under the preceding
and this subsection
Marker
•  D. Fine of not less than P5,000,000 but no more than
P10,000,000 AND imprisonment of not less than 4 years
but not more than 8 years for any person who willfully
inserts, places, adds or attaches whatever quantity of any
unmarked fuel, counterfeit additive or chemical in the
person, house, effects, inventory, or in the immediate
vicinity of an innocent individual for the purpose of
implicating, incriminating or imputing the commission of
any violation herein
Marker
e.  Any person authorized, licensed or accredited to conduct
fuel tests, who issues false or fraudulent test results
knowingly, willfully OR through gross negligence, shall
suffer additional penalty of imprisonment from 1 year and
1 day to 2 years and 6 months
Additional penalties that may be imposed by the court:

ü  Revocation of the license to practice profession in case
of a practitioner
ü  Closure of the fuel testing facility
Sec 266. Failure to obey

summons
•  Elements:
•  Any person
•  Duly summoned to appear to testify, or
•  To appear and produce books of accounts, records, memoranda, or
other papers, or
•  To furnish information as require under the pertinent provisions of
this code
•  Neglects to appear or to produce such books of accounts,
memoranda or other papers, or to furnish such information
Sec 266. Failure to obey

summons
•  Penalties

P5,000.00 but not more than P10,000.00, and
•  Suffer imprisonment of not less than one (1) year but not
more than two (2) years.
Sec 267. Declarations under penalties

of perjury
•  Elements:
•  Any person
•  Willfully files a declaration, return or statement
•  Containing information which is not true and correct as to every
material matter
Sec 268. Other Crimes and Offenses

•  Sec 268(A) Misdeclaration or Misrepresentation of
Manufacturers Subject to Excise Tax
•  Sec 268 (B) Forfeiture of property used in unlicensed
business or dies used for printing false stamps, labels or
tags which purports to be a lawful stamp, label or tag.
•  Sec 268 (C) Forfeiture of goods illegally stored or
removed
•  Penalty: Forfeiture
290
Notes on Tax Evasion

•  Tax Evasion is the commission of illegal acts or devices
to escape taxation. It connotes the integration of 3
factors:
Commissioner of Internal Revenue vs. Toda, G.R. No.
147188 dated September 14, 2004
•  End to be achieved is payment of less than that known by taxpayer
to be legally (underdeclaration) due or non-payment of tax when it
is shown that a tax is due (non-filing/non-payment).
•  An accompanying state of mind which is described as being ‘evil’,
in ‘bad faith’, ‘willfull’ or ‘deliberate and not accidental’ (fraud).
•  A course of action or failure of action which is unlawful (not tax
avoidance).
291
Burden of proof in establishing fraud

•  A tax evasion case is a criminal case and the burden of
proof is on the BIR, the prosecutor; all the elements of
fraud must be proven beyond reasonable doubt, i.e. not
absolute certainty precluding possibility of error but moral
certainty which produces conviction in an unprejudiced
mind.
292
Clear and convincing evidence
•  The following Supreme Court cases required “clear and

convincing evidence” for establishing the element of fraud
and not mere preponderance of evidence:
•  Yutivo Sons Hardware Co. vs. CTA,CIR [G.R. No. L-13203, Jan.
28, 1961]
•  The Coll. Of Internal Revenue vs. Benipayo [G.R. No. L-13656,
Jan. 31, 1962]
•  Elevator Service Co., Inc. vs CIR [G.R. No. 61509, April 19, 1988]
Tax Crimes: Leading SC cases

•  Aznar vs. CTA (GR No. L-20569, 23 Aug 1974, 58 SCRA
519
•  Ungab vs. Cusi (GR No. L-41919-24, 30 May 1980)
•  CIR vs. Javier (GR No. 78953, 31 July 1991, 199 SCRA
824)
•  CIR vs. CA (GR No. 119322, 04 June 1996, 257 SCRA
200)

•  The Philippine Guaranty Co., Inc vs. CIR (GR No.
L-22074 6 September 1965)
•  Sia vs. Peo of the Philippines (GR No. L-30896 28 Apr
1983)
•  CIR vs. Air India (GR No. 72443 29 January 1988)
•  CIR vs. B.F. Goodrich (GR 104171 24 February 1999)
•  CIR vs. Pascor Realty (GR No. 128315 29 June 1999)

•  People of the Philippines vs. Lucio Tan (GR No. 147188
14 September 2004)
•  CIR vs. Estate of Benigno Toda (GR No. 147188 14
September 2004)
•  Adamson vs. CA (GR No. 120935 21 May 2009)
•  Republic of the Phils vs. Marcos et.al (GR Nos. 130371 &
130855 4 Aug 2009)
296
Crimes of Public Officers

•  Sec 269 – Violations committed by Government
Enforcement Officers
•  Sec 270 – Unlawful Divulgence
•  Recently amended by RA 10021 (Exchange of Information Act)
•  Sec 271 – Unlawful Business Interest
•  Sec 272 – Violation of Withholding Tax Provision
•  Sec 273 – Failure to Issue and Execute Warrant
297
Informer’s Reward
•  Sec 282
•  10% of amount collected but not more than Php1,000,000
•  Subject to 10% final withholding taxes
298
COURT OF TAX APPEALS

Republic Act No. 9282
299
•  Republic Act No. 1125 as amended by Republic Act No.

9282
•  New law expanded the jurisdiction of CTA and elevated it
to the level of the Court of Appeals
•  Presiding Justice
•  Associate Justices
•  3 branches of 3 justices total of 9 justices
•  Decides cases En Banc and in Divisions
300
Appellate Jurisdiction
•  Decisions of the CIR
•  Inaction of the CIR
•  Decision of RTC on local tax cases
•  Decision of Commissioner of Customs
•  Decisions of Central Board Assessment Appeal (CBAA)
•  Decisions of DOF on customs cases elevated on
automatic review
•  Decisions of DTI (on non-agri products) and DA (on agri
products) involving dumping and countervailing duties
301
Criminal case
•  Original jurisdiction
•  Offenses arising out of violations of NIRC, TCC and other laws
administered by BIR and BOC where principal amount (excluding
penalties) is at least Php1,000,000
•  Appellate jurisdiction
•  On appeals on judgments by RTC on cases less than
Php1,000,000
•  On Petition for Review on decisions of RTC in their appellate
jurisdiction over MTC cases
302
Civil Case
•  Original jurisdiction
•  Tax collection cases where the principal amount is Php1,000,000 or
more
•  Appellate jurisdiction
•  Appeals over decision of RTC in tax collection cases
•  Petition for review over decisions of RTC on appeal over MTC
decisions
303
Court of Tax Appeals En Supreme

MTC RTC Banc Court
Div I Div II Div III
Tax Review on
Case Certiorari
LBA CBAA
Motion for
Review
BIR BOC CBAA DTI DA
Petition for Review
(en banc)

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A Presentation made by Atty. Cabreros only for St.

Paul School of Professional Studies (March 3, 2018)) 1

TAX LAW REVIEW:

Atty. Marissa O. Cabreros, CPA CESO IV

Types of gratuitous transfer

• Donation Mortis Causa – transmission of properties

Flow of transfer of property: Flow of transfer of property:

Parties: between natural Parties: may take place

TAX RATE: 6% of net gifts

Specific Rules on Inclusions and

• Reciprocity: Applies only to intangible personal properties

Transfers in Contemplation of Death

• Except bona fide sale

Proceeds of Life Insurance

Exempt Transfers (Section 87)

• Merger of the usufruct in the owner of the naked title

Illustration: Merger of Usufruct & Naked

Illustration: (1) Fiduciary Heir or Legatee to

Transmission from A to B is subject to estate tax

Rules of Valuation (Section 88)

• FMV of all properties as of the time of death

Rules of Valuation - continued

• In case of shares of stocks, the FMV will depend

Deductions from the Gross Estate

• Meant to cover funeral expense, judicial expenses, losses

• Value of property undiminished by the mortgage must be

Formula for Vanishing Deduction

Equals : Initial Basis of the PPT xxx

Less: Initial Basis x ELIT &

Final Basis of Vanishing Deduction xxx

Multiplied by rate of vanishing deduction %

Equals: Vanishing deduction allowed xxx

Deductions from the Gross Estate

• Notice of death – all cases of transfers subject to tax or

• Time of giving notice – within 2 months from death or

• An Individual • An Estate • An Individual

Purpose and Definition

When is there gift?

• If the donor does not relinquish control over the

Composition of the Gross Gift

• FMV of property donated (Section 102)

Rules of Valuation - continued

TAX RATE : 6% for net gift in excess of P250,000

Exempt Donations (Sec 101)

• Irrevocable Trusts are taxed as a donation upon

• Trust income is subject to income tax but the

• Transfer of divided interest will make the usufructuary

Other tax implications of inter vivos gift

• Splitting of gifts during the calendar year to avoid

• If Irrevocable (property of beneficiary and

Sell / Donate or wait for estate?

Illustration: Tax Rules on NIRC /

Decedent By Succession, By Representation, By Accretion, By Law (As a matter of right)

Who are liable to VAT?

What are the VAT Rates?

“In the course of trade or business”

What transactions are covered by VAT?

“sale of real properties”

• Pre-selling of real estate properties by real estate dealers

“sale of real property in installment plan”

“sale of real property in deferred payment

NOT “initial payment”

“gross selling price”

“gross selling price”

•  Donation Mortis Causa – transmission of properties

•  Reciprocity: Applies only to intangible personal properties

•  Except bona fide sale

•  Merger of the usufruct in the owner of the naked title

•  FMV of all properties as of the time of death

•  In case of shares of stocks, the FMV will depend

•  Meant to cover funeral expense, judicial expenses, losses

•  Value of property undiminished by the mortgage must be

•  Notice of death – all cases of transfers subject to tax or

•  Time of giving notice – within 2 months from death or

•  An Individual •  An Estate •  An Individual

•  If the donor does not relinquish control over the

•  FMV of property donated (Section 102)

•  Irrevocable Trusts are taxed as a donation upon

•  Trust income is subject to income tax but the

•  Transfer of divided interest will make the usufructuary

•  Splitting of gifts during the calendar year to avoid

• If Irrevocable (property of beneficiary and

•  Pre-selling of real estate properties by real estate dealers

•  Installment (net of VAT) x ZV *12%

ü  All pending VAT refund claims as of December 31, 2017

•  An amount equivalent to 5% of the total VAT collection of the

•  Further, the BIR and BOC shall be required to submit to the

1.  Sale of gold to BSP [now VAT – exempt]

ü  All pending VAT refund claims as of December 31, 2017

•  An amount equivalent to 5% of the total VAT collection of the

•  Further, the BIR and BOC shall be required to submit to the

•  (4) Retirement from or cessation of business with

•  Sale of service - Gross Receipts

•  1. [Sec 116] Those exempt from VAT