This is a publication about developments in Philippine taxation. The contents usually include latest Republic Acts, Bureau of Internal Revenue issuances, Customs regulations, Court decisions, BSP circulars, SEC circulars, Department of Justice opinions and Executive Orders relevant to Tax practice.
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PwC PH hosts Integrity Initiative FGD with academic leaders
PwC Philippines hosted Integrity Initiative, Inc.'s (II, Inc.) focus group discussion (FGD) with 16 academic leaders on 20 June 2019 at the Tower Club, Philamlife Tower, Makati City.
The FGD, led by PwC Philippines Chairman and Senior Partner, and concurrently II, Inc. Chairman Alex Cabrera, is aimed at supporting II, Inc.'s efforts to establish an Integrity subject for private and public schools.
Educators from major state and private universities shared their insights on revisiting and enhancing the existing Ethics subjects.
II, Inc. is primarily engaged in a long-term private sector-led campaign to promote common ethical and acceptable integrity standards in the business community and among various sectors of society.
Taxes, compliance matters, assessments, and refunds
Internal conflicts
When the CTA has no jurisdiction
If the disputing parties in tax-related cases are both public entities, the cases shall be governed by PD No. 242; wherein the dispute should be administratively settled or adjudicated by the Secretary of Justice, the Solicitor General, or the General Corporate Counsel, as the case may be. Accordingly, the CTA has no jurisdiction over such cases.
(CTA EB No. 1833, promulgated 13 June 2019)
Acceptable loss
Deductibility of input VAT for purposes of computing income taxes
Input VAT pertaining to a claim for refund or issuance of tax credit certificate (TCC) of input VAT attributable to zero-rated sales, which was denied by the Department of Finance, may be deducted from gross income as a loss, not as bad debts expense.
(CTA EB No. 1786, promulgated 13 June 2019)
Expansion project
Amending the definition of ‘top withholding agents’
The definition of ‘top withholding agents’ (TWAs) has been amended to refer to those taxpayers whose gross sales/receipts or gross purchases, or claimed deductible itemized expenses, as the case may be, amounted to PHP12m during the preceding taxable year.
Taxpayers classified as TWAs prior to the effectivity of RR No. 7-2019 shall remain as such until their failure to satisfy the above criterion, and until publication as delisted from the existing list of TWAs.
(Revenue Regulations No. 7-2019, published 14 June 2019)
Departure areas
Amendments to the consolidated IRR on Estate Taxes and Donor’s Taxes
Section 10 of RR No. 12-2018[1] has been amended to include the following:
- Estate taxes may be paid by cash installments within two (2) years from the date of filing of the estate tax return, using the Payment Form (BIR Form No. 0605) or a payment form dedicated for this transaction.
- The bank shall remit the 6% FWT to the BIR using the Monthly Remittance Form of Tax Withheld on the Amount Withdrawn from the Decedent’s Deposit Account (BIR Form No. 0620) within ten (10) days following the month when the 6% FWT was withheld.
- However, if the 6% FWT was withheld during the third month of the quarter, the bank shall remit the same to the BIR using the Quarterly Remittance Return of Tax Withheld on the Amount Withdrawn from Decedent’s Deposit Account (BIR Form No. 0621) on or before the last day of the month following the close of the quarter.
- The bank shall issue the BIR Form No. 2306 as follows:
- Original and duplicate copies to the executor, administrator or any of the legal heirs
- Third copy to be retained by the bank
- The duplicate copy of the BIR Form No. 2306 is required to be submitted by the executor, administrator or legal heir to the concerned Revenue District Office within five (5) days from receipt from the bank.
- The 6% FWT is creditable against the estate tax due, if the amount withdrawn and subject to the 6% FWT was actually included in the gross estate declared in the estate tax return.
(Revenue Regulations No. 8-2019, published 26 June 2019)
[1] Consolidated Regulations on Estate Taxes and Donor’s Taxes
Go for gold
Tax exemptions of the sale of gold to the BSP and to accredited traders
The BIR circularized RA No. 11256 which amends Sections 32(B)(7) and 151 of the Tax Code. Under the amendments, the sale of gold to the BSP by registered small-scale miners and by accredited traders, and the sale of gold by registered small-scale miners to accredited traders for eventual sale to the BSP are exempt from income tax and excise tax.
(Revenue Memorandum Circular No. 61-2019, issued 11 June 2019)
Fund administration
Fuel Marking Program Funds
The BIR circularized DOF-DBM-COA Joint Circular No. 001-2018 entitled "Rules and Regulations Implementing Section 148-A, Subsection (h) Chapter V of the Tax Code on the use of Fuel Marking Program Funds.”
(Revenue Memorandum Circular No. 62-2019, issued 13 June 2019)
Clearing operation
Issuance of Delinquency Verification Certificates for VAT refund/credit claims
In the issuance of Delinquency Verification Certificates (DVCs) for the processing of VAT refund/credit claims within the required ninety (90)-day period, certain BIR offices fail to comply with the correct determination of outstanding liabilities which indicate only a one-month validity instead of six (6) months, or which commit other errors and deviation in policies.
In this light, clarification has been issued regarding the following items:
- Accounts Receivable / Delinquent Account arising from self-assessed tax liability, and final and executory deficiency tax assessment;
- BIR offices allowed to issue DVCs; and
- Official format of DVCs for VAT refund/credit claims.
(Revenue Memorandum Circular No. 64-2019, issued 18 June 2019)
Tightening the noose
Submission of tax incentive report by the CDA to the BIR
The BIR published the full text of Joint Administrative Order No. 1-2019 (Rules and Regulations Implementing Section 3 of RA No. 10963) in relation to Section 5(b) of the Tax Code, regarding the submission by the CDA of a tax incentive report to the BIR.
The Joint Administrative Order provides for the:
- Compliance requirements of registered cooperatives which include the submission of an Annual Tax Incentives Report to the CDA;
- Incentives-monitoring mechanisms; and
- Penalties for non-compliance.
(Revenue Memorandum Circular No. 59-2019, issued 7 June 2019)
Alien registration
Policies and guidelines in the tax registration of foreign nationals
Foreign nationals with the following permits who are planning to work or engage in trade and business in the Philippines are required to secure Taxpayer Identification Numbers (TINs):
- Alien employment permits (AEPs)
- Provisional work permits (PWPs)
- Special temporary permits
- Special work permits (SWPs)
In this relation, RMO No. 28-2019 identifies the appropriate RDO where TIN applications and the corresponding documentary requirements should be filed.
Non-resident aliens not engaged in trade or business in the Philippines, deriving Philippine-source income, are also required to secure TIN for withholding tax purposes. However, the withholding agents shall apply for the TIN of these non-resident aliens respectively.
Employers of foreign nationals with PWPs registered under EO No. 98, but were later issued AEPs or working visas (9g), are required to update their registration information with the RDO where they have been registered. On the other hand, foreign nationals with SWPs registered under EO No. 98, but were later issued working visas (9g), are required to apply for transfer of registration from RDO No. 39 to the appropriate RDO.
Registered foreign nationals may avail of preferential income tax rates under applicable tax treaties and opt to file a tax treaty relief application with the International Tax Affairs Division of the BIR.
(Revenue Memorandum Order No. 28-2019, issued 31 May 2019)
Bank job
Advising all AABs to accept BIR Form No. 0621EA
Further to the implementation of the estate tax amnesty under RA No. 11213, all AABs are advised to accept BIR Form No. 0621EA (Acceptance Payment Form Estate Tax Amnesty), and to follow the procedures in Bank Bulletin No. 2018-01.
(BIR Bank Bulletin No. 2019-12, dated 23 May 2019)
Actions for partition
Splitting of Revenue Regions No. 7 and 8
The CIR prescribed the splitting of Revenue Region (RR) No. 7 – Quezon City and RR No. 8 – Makati City, and redefining of their areas of jurisdiction.
RR No. 7 shall be split as follows:
RR No. 7A – Quezon City |
RR No. 7B – East NCR |
| RDO No. 28 – Novaliches | RDO No. 41 – Mandaluyong City |
| RDO No. 38 – North Quezon City | RDO No. 42 – San Juan City |
| RDO No. 39 – South Quezon City | RDO No. 43 – Pasig City |
| RDO No. 40 – Cubao | RDO No. 45 – Marikina City |
| RDO No. 46 – Cainta-Taytay |
On the other hand, RR No. 8 shall be split as follows:
| RR No. 8A – Makati City | RR No. 8B – South NCR |
| RDO No. 47 – East Makati City | RDO No. 44 – Taguig City-Pateros |
| RDO No. 48 – West Makati City | RDO No. 51 – Pasay City |
| RDO No. 49 – North Makati City | RDO No. 52 – Parañaque City |
| RDO No. 50 – South Makati City | RDO No. 53A – Las Piñas City |
| RDO No. 53B – Muntinlupa City |
The CIR also prescribed the redefinition of cities/municipalities and barangays which compose the jurisdiction of certain RDOs.
(Revenue Administrative Order No. 4-2019, dated 18 June 2019)
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