Bureau of Internal Revenue Issuances
Tax Law
REPUBLIC ACT No. 12022
Official Gazette / October 2, 2024
An act defining the crimes of agricultural economic sabotage, prescribing penalties therefor, vesting jurisdiction over such offenses with the court of tax appeals, providing mechanism for its implementation and enforcement, repealing for the purpose Republic Act No. 10845 or the “Anti-Agricultural Smuggling Act of 2018”
https://www.officialgazette.gov.ph/2024/09/26/republic-act-no-12022/
REPUBLIC ACT No. 12023
Official Gazette / October 3, 2024
An Act Amending Sections 105, 108, 109, 110, 113, 114, 115, 128, 236, and 288 and adding new sections 108-A and 108-B of the National Revenue Code of 1997, as amended
https://www.officialgazette.gov.ph/2024/10/02/republic-act-no-12023/
Tax And Business Related News
Cambridge International Symposium on Economic Crime Invited Commissioner Lumagui as the First PH Government Official to Speak Before the Symposium
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. presented the BIR’s fight against Ghost Receipts during the Cambridge International Symposium on Economic Crime (CIDOEC) at Cambridge, United Kingdom last September 3, 2024. Commissioner Lumagui is the first government official in the Philippines to have been invited as speaker in the said event. “I am grateful to be the first Philippine government official to have been invited as a speaker in the Cambridge International Symposium on Economic Crime. Our fight against Ghost Receipts, through the Run After Fake Transactions (RAFT) task force, has gained international recognition. This is the new standard of the BIR, we want an agency that is at par with international institutions,” Commissioner Lumagui stated.
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https://bir-cdn.bir.gov.ph/BIR/pdf/PR67SEP2024.pdf
Early 2025: Digital services VAT to hit Filipino wallets
Manila Bulletin / Ben Arnold De Vega / October 5, 2024
Downward Philippine inflation in the near term would be slightly offset by the new law imposing 12-percent value added tax (VAT) on digital services, Singapore-based United Overseas Bank (UOB) said. In an Oct. 4 report, UOB senior economist Julia Goh and economist Loke Siew Ting noted that there is a three-month period to come out with the implementing guidelines of Republic Act (RA) No. 12023 signed by President Ferdinand Marcos Jr. last Oct. 2. Also, RA 12023’s guidelines could be implemented within another 120-day period. “As such, the impact of the digital tax on consumer price inflation will only be felt as early as in the first quarter of 2025 while the pass-through effects remain unclear at this juncture,” UOB said. This VAT slapped on foreign digital service providers is considered by UOB to be an inflation consideration for Philippine policymakers, alongside the risk emanating from escalating tensions in the Middle East.
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https://mb.com.ph/2024/10/5/digital-services-vat-to-hit-filipino-wallets
BIR: Incomplete VAT refund claims automatically deemed ‘high risk’
Business World / Beatriz Maria D. Cruz / October 6, 2024
THE Bureau of Internal Revenue (BIR) will now automatically classify value-added tax (VAT) refund claims with incomplete information as “high risk,” subject to full verification. In a memorandum order, the BIR said incomplete claims include those with no reference details and incomplete or no transaction details on the schedules of sales and purchases. A VAT refund claim classified as “high risk” would need 100% verification of sales and purchases, according to an earlier memorandum issued by the BIR.
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https://www.bworldonline.com/economy/2024/10/06/626095/bir-incomplete-vat-refund-claims-automatically-deemed-high-risk/
Dole tax petition vs Davao junked
Business World / Chloe Mari A. Hufana / October 6, 2024
THE Court of Tax Appeals (CTA) junked the petition of Dole Philippines, Inc.-Stanfilco Divison which challenged Davao City’s Watershed Code and environmental tax, citing lack of jurisdiction. The tax court’s Second Division said the environmental tax is a regulatory fee, not a tax intended to generate revenue. “Correspondingly, this Court is without jurisdiction to entertain the present appeal of the assailed Decision and assailed Order issued by the Regional Trial Court (RTC),” the 17-paged decision, penned by Associate Justice Corazon G. Ferrer-Flores, read.
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https://www.bworldonline.com/the-nation/2024/10/06/626101/dole-tax-petition-vs-davao-junked/
Easier to tax, easier to pay, easier to collect (Let’s Talk Tax)
Business World / Micheal L. Milan / October 7, 2024
BIR STRATEGIC PILLAR: DIGITALIZATION AND SIMPLIFIED PROCESS – The Bureau of Internal Revenue (BIR) under Commissioner Romeo Lumagui’s administration has set four strategic pillars in its 2024 Priority Programs and Projects according to Revenue Memorandum Circular (RMC) 42-2024: Provide excellent service to taxpayers; Develop highly digital processes; Intensify audit and enforce process; and Strengthen integrity and professionalism of the employees and the institution. To that end, the BIR has in recent years digitalized and simplified processes for the convenience of taxpayers. Easier to tax, easier to pay, easier to collect.
CONGRESS AND TAX REFORM – Congress has also been pursuing tax reform initiatives that have made compliance simpler and easier with the recent passage of the Ease of Paying Taxes (EoPT) Law. For its part, the BIR has put in significant effort to implement the EoPT law and clarify its provisions. Here are some of the RMCs issued this year to clarify some pertinent provisions of the law. Thanks to the EoPT Law, the annual registration fee was eliminated, as clarified in RMC 14-2024, and the civil penalties were reduced for small and micro taxpayers per RR 6-2024. Also, the obligation of the taxpayer to preserve and maintain books of account and other accounting records from 10 years to five years was also shortened as per RR 7-2024.
WORKS IN PROGRESS – There are still some initiatives of the BIR that are works in progress. Some of these are the full implementation of the Electronic Invoicing/Receipting System (EIS) and the integration of the EIS with the BIR System. Another is the issuance of an Acknowledgement Certificate (AC) within three working days from receipt of complete documents under RMC 5-2021. In practice, this is usually not the case for many taxpayers registering their Computerized Books of Account. The review process is still tedious for some RDOs, as it still takes weeks and even months to complete and issue the AC.
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https://www.bworldonline.com/economy/2024/10/07/626370/easier-to-tax-easier-to-pay-easier-to-collect/
Ease of compliance seen determining success of new VAT on foreign DSPs
Business World / Beatriz Marie D. Cruz / October 7, 2024
COMPLIANCE with a new value-added tax (VAT) by foreign digital service providers (DSPs) will hinge on how seamless the online registration and payment process can be made, analysts said. The revenue target for the new 12% VAT on DSPs was set at P105 billion a year following the signing of Republic Act No. 12023, highlighting the pressure on the government to raise funds for its various spending commitments. “Since the main targets of the law are nonresident foreign providers, the main challenge is making compliance such as registration, filing, and payment easy for the taxpayers,” Eleanor L. Roque, tax principal of P&A Grant Thornton, said via Viber.
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https://www.bworldonline.com/economy/2024/10/07/626336/ease-of-compliance-seen-determining-success-of-new-vat-on-foreign-dsps/
BIR confiscates illicit cigarettes
Business World / Beatriz Marie D. Cruz / October 7, 2024
THE Bureau of Internal Revenue (BIR) on Monday said it has seized illicit cigarettes worth P8.06 billion in foregone taxes following a raid in Pampanga. In a statement, the agency said the illegal cigarettes were found after four large-scale manufacturers were raided in Clark, Pampanga. “A total of P8.06 billion in tax liability has been initially computed by the BIR, due to its discovery of illicit cigarettes and unregistered machines,” the bureau said in a statement
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https://www.bworldonline.com/the-nation/2024/10/07/626348/bir-confiscates-illicit-cigarettes-2/
Simplicity key to VAT law’s success
Philippine Daily Inquirer / October 7, 2024
The measure imposing a 12-percent value-added tax (VAT) on foreign digital service providers (DSPs) of video and music streaming such as Netflix and Spotify and online marketplaces such as Lazada, Shopee, and Amazon was signed last week by President Marcos. Republic Act No. 12023 amended the 1997 National Internal Revenue Code to include non-resident DSPs in the coverage of VAT to remove their undue advantage over their local counterparts that pay the tax. The government is hoping to raise about P105 billion in revenues over the next five years from this law. The newly signed law is not a new tax. It just aligns the Philippines with other countries that have implemented similar tax measures to capture revenue from global tech giants and digital platforms. Commissioner Romeo Lumagui Jr. of the Bureau of Internal Revenue (BIR) said the government expects around 100 foreign DSPs to register for the payment of digital VAT with the passage of RA 12023. Nina Asuncion, director of the Department of Finance’s revenue operations group, added that the BIR is already working on a simplified registration system for non-resident DSPs and the filing and payment system for digital VAT.
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https://opinion.inquirer.net/177345/simplicity-key-to-vat-laws-success#ixzz8oEmXBdQq
BIR confident digitalization timetable on track
Business World / Luisa Maria Jacinta C. Jocson / October 8, 2024
THE Bureau of Internal Revenue (BIR) expressed confidence in meeting its internal deadline for fully digitalizing its services and operations by 2028. “By 2028, the BIR needs to be fully digitalized. That’s our aspiration. With the ongoing digitalization process, we believe we can attain that by 2028,” BIR Regional Director Renato M. Molina said at a forum on Tuesday. Mr. Molina said that most of the agency’s processes are currently digitalized, including filing and payment of taxes and submission of reports and documentation. “Because of the passing of the Ease of Paying Taxes law, all taxpayers can file wherever. You can pay anywhere. With that, we are hopeful we can serve the taxpayers in the coming months and years.”
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https://www.bworldonline.com/economy/2024/10/08/626630/bir-confident-digitalization-timetable-on-track/
Push for wealth tax resurfaces
The Philippine Star / Louise Maureen Simeon / October 8, 2024
The proposal to tax the wealthy population has resurfaced again after the government imposed a value-added tax (VAT) on foreign digital service providers which would hit Filipino consumers anew. Consumer group Samahan at Ugnayan ng mga Konsyumer para sa Ikauunlad ng Bayan (SUKI) Network renewed its call for a wealth tax while decrying the recently enacted 12-percent VAT on all digital services consumed in the Philippines. The group said the new VAT is a burden to consumers and instead called for a direct tax on corporations and billionaires. The new law on digital services includes online search engines, marketplaces, cloud services, online media, online advertising and digital goods. This covers video streaming such as Netflix, Viu, Prime Video and HBO, music streaming like Spotify and Apple Music and service vendors iTunes Store and Google Play, as well as video games like Activision and Nintendo. According to SUKI, this will just worsen the tax burden that already comes with the use of local digital services such as GCash, Maya, Globe and Smart online payment and financial services, digital advertising and marketing and telecommunication services.
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https://www.philstar.com/business/2024/10/08/2390832/push-wealth-tax-resurfaces
BoI touts tax savings for RBEs under CREATE MORE measure
Business World / Justine Irish D. Tabile / October 8, 2024
THE passage of the bill amending the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act will result in registered business enterprises (RBEs) saving on their tax bills, the Board of Investments (BoI) said. During his presentation at the Philippines-South Korea Business Forum on Monday, Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo cited simulations that indicated that RBEs could reduce their taxes by as much as 75% under the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill. “The Department of Trade and Industry (DTI) worked with an accounting and auditing firm to simulate the possible impact on a currently registered export manufacturer in the Visayas with about 6,500 workers,” Mr. Rodolfo said.
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https://www.bworldonline.com/economy/2024/10/08/626634/boi-touts-tax-savings-for-rbes-under-create-more-measure/
Group pushes for tax-free, higher pay for poll workers
Manila Bulletin / Merlina Hernando – Malipot / October 9, 2024
A group of teachers on Wednesday, Oct. 9, pushed for additional benefits for poll workers as the Certificate of Candidacy (COC) filing for the 2025 National and Local Elections officially closed. The Alliance of Concerned Teachers (ACT) Philippines called on lawmakers and relevant agencies to address the demands of poll workers, advocating for increased honoraria, allowances, benefits, and enhanced legal and security protections for teachers serving as members of the Board of Election Inspectors (BEI).
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https://mb.com.ph/2024/10/9/tax-free-higher-pay-for-poll-workers
Finding ways to reimburse your taxes
Business World / Francis Jeffrey C. Valerio / October 9, 2024
Such a situation is not unusual in taxation. At times, taxpayers find themselves paying taxes in excess of what is required. Just like the commuter who hopes to get proper change, the taxpayer also has remedies available to him. The Tax Code provides for two kinds of tax refund: (1) refund of unutilized creditable input VAT under Section 112; and (2) the recovery of any erroneously paid or illegally collected taxes under Section 229. It’s important to know the difference between these, as the applicable rules and requirements will depend on it. In the Supreme Court (SC) case of Manila Peninsula Hotel, Inc. vs. Commissioner of Internal Revenue (Manila Peninsula case), an opportunity to clarify the differences between the two remedies arose when the taxpayer filed for a tax refund under Section 229 over what it argued to be erroneously paid or illegally collected VAT from its sales to Delta Air. In its decision, the SC differentiated the provisions according to their nature. Section 112 pertains to unutilized creditable input VAT arising from expenses that are attributable to zero-rated sale transactions. In other words, this is a tax cost incurred by, and legally paid by, a VAT-registered seller of goods, property, or services which are considered zero-rated transactions. In this type of refund case, the input VAT collected is deemed correct and proper. Any input VAT passed over cannot be regarded the same as taxes erroneously paid or collected. This tax refund is a legislative grace in the form of a tax exemption, which is construed against the taxpayer.
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https://www.bworldonline.com/economy/2024/10/09/626926/finding-ways-to-reimburse-your-taxes/
PAL to recover P6.89M in excise taxes, CTA rules
Business World / Chloe Mari A. Hufana / October 10, 2024
THE COURT of Tax Appeals (CTA) has partially granted Philippine Airlines, Inc.’s (PAL) petition for a tax refund, ruling that the airline is entitled to recover P6.89 million in excise taxes erroneously paid on the importation of liquors and wines intended for international flight consumption. The tax court’s second division affirmed the airline’s exemption for most of the imported liquors and wines. Still, the court noted that it failed to prove that certain cigarette imports and some alcoholic products were not locally available at a reasonable price.
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https://www.bworldonline.com/corporate/2024/10/10/626876/pal-to-recover-p6-89m-in-excise-taxes-cta-rules/
Sweeter tax
Business World / Marvin Tort / October 10, 2024
The Philippines, like many countries, faces the challenge of managing a growing budget deficit while addressing rising public health concerns. With the country proposing its highest-ever national budget of P6.352 trillion for 2025, and government revenues projected to slightly dip, the International Monetary Fund (IMF) has recommended additional tax measures to sustain public finances. Among the suggestions were increasing the collection efficiency of value-added tax (VAT) and the introduction of carbon taxes to aid the country’s transition to greener energy sources. In my opinion, excise taxes remain a particularly attractive option for the Philippine government, especially for goods associated with “negative externalities” — those products whose consumption results in broader societal costs. One such example, highly relevant in the public health domain, is the tax on sugar-sweetened beverages (SSBs). The country has already imposed taxes on SSBs since 2018, but I believe it is time to extend or adjust this tax to cover a wider range of “sweetened” products, such as confectionery items, in an effort to promote healthier lifestyles and generate much-needed revenue.
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https://www.bworldonline.com/editors-picks/2024/10/10/626793/sweeter-tax/
BIR-7 stepping up crackdown on unregistered Airbnb units
Cebu News – The Freeman / The Philippine Star /Jonnavie Villa / October 10, 2024
CEBU, Philippines — The Bureau of Internal Revenue in Central Visayas (BIR-7) is stepping up efforts in detecting unregistered Airbnb or short-term property rentals, Regional Director Douglas A. Rufino said on Tuesday, October 9, 2024. BIR has noticed the widespread use of condo units and other real properties converted into Airbnb units that are often unregistered and are not paying taxes. The agency is currently coordinating with condo management to help in ensuring that the unit owners register with the BIR, warning that non-compliance could result in hefty fines.
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https://www.philstar.com/the-freeman/cebu-news/2024/10/10/2391521/bir-7-stepping-crackdown-unregistered-airbnb-units
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