RMC No. 120-2024
November 5, 2024
Circularizing the Updated List of Accredited Microfinance Non-Government Organizations.
Advisory
As of November 8, 2024 – Advisory on the Unavailability/Inaccessibility of eSales System.
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 INTERNAL REVENUE CODE OF 1997, AS AMENDED.
https://www.officialgazette.gov.ph/2024/10/02/republic-act-no-12023/
Carbon tax seen generating essential revenue for Asia-Pacific, ADB says
Business World / Beatriz Marie D. Cruz / October 31, 2024
IMPOSING a carbon tax and an emissions trading system will help generate additional revenue for Asia-Pacific countries, and will likely have little inflation impact, the Asian Development Bank (ADB) said. “Both can provide a clear carbon-price signal, either in terms of the cost of future emissions or the quantity of expected emissions reductions,” the ADB said in its Asia-Pacific Climate Report. “They can also generate additional revenue for governments, which can then be used to support sustainable economic growth and ‘green’ investment.” A carbon pricing scheme pushes companies to reduce their own emissions to minimize their tax exposure. Its proceeds are usually spent on greenhouse gas mitigation projects. “A carbon tax is not only an effective approach to reducing emissions, but can also raise significant revenues that could be redirected to the highest-value public uses,” the bank said.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2024/10/31/632118/carbon-tax-seen-generating-essential-revenue-for-asia-pacific-adb-says/
Lumagui: BIR raids another large-scale Illicit Cigarette Factory in Cabanatuan with 636M Tax Liability
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. reports another win in his war against illicit trade with a successful raid of a clandestine factory that manufactures illicit cigarettes. Said factory is located in Cabanatuan City. An estimate of Php 636,935,703.54 of unpaid taxes and penalties will be assessed against those behind this illicit cigarette factory.
Click the link below to read the full news from the source:
https://bir-cdn.bir.gov.ph/BIR/pdf/PR78OCT2924.pdf
BIR collects P1 billion from vape stamps
The Philippine Star / Louise Maureen Simeon / November 7, 2024
MANILA, Philippines — The Bureau of Internal Revenue (BIR) has collected about P1 billion from the imposition of excise stamps on vape products but the amount is deemed small as many players have yet to fully comply. In a roundtable discussion late Tuesday night, BIR commissioner Romeo Lumagui Jr. said initial data showed that the agency has so far collected P1 billion from vape stamps since vape sellers were mandated to use them.
Click the link below to read the full news from the source:
https://www.philstar.com/business/2024/11/07/2398141/bir-collects-p1-billion-vape-stamps
BIR files 2 cases of tax evasion via ‘ghost receipts’
Philippine Daily Inquirer / Mariedel Irish U. Catilogo / November 1, 2024
The Bureau of Internal Revenue (BIR) has cracked two cases of corporations and officers using “ghost receipts,” leading to the filing of criminal charges at the courts. “The BIR wins another set of criminal cases involving ghost receipts. Twenty-six criminal informations were filed before the courts. Warrants of arrest will be issued against the responsible corporate officers,” BIR Commissioner Romeo Lumagui Jr. said in a statement.
Click the link below to read the full news from the source:
https://business.inquirer.net/487783/bir-files-2-cases-of-tax-evasion-via-ghost-receipts#ixzz8qsHU2hBf
CTA denies Pilipinas Shell’s P43-million tax refund claim
Business World / Chloe Mari A. Hufana / November 1, 2024
THE COURT of Tax Appeals (CTA) denied Pilipinas Shell Petroleum Corp.’s petition for a P43-million tax refund on excise taxes for Jet A-1 fuel sold to tax-exempt international air carriers, citing lack of evidence. The tax court’s Third Division, in a 15-page decision, said the oil company failed to prove payment of excise tax for the imported Jet A-1 fuel. While Shell provided details of the alleged importations and excise tax payments, the Court noted the absence of supporting documentation. The tribunal also emphasized the need for concrete evidence in tax refund cases, especially regarding the payment or collection of the refunded tax.
Click the link below to read the full news from the source:
https://www.bworldonline.com/corporate/2024/11/01/632111/cta-denies-pilipinas-shells-p43-million-tax-refund-claim/
More tax reforms needed to narrow deficit—World Bank
Manila Bulletin / Ben Arnold De Vera / November 1, 2024
The Philippines needs to keep pursuing tax reform measures pending in Congress en route to its plan to narrow its yawning budget deficit, according to the World Bank. In its Philippines Monthly Economic Developments report for October 2024, the World Bank noted that the fiscal deficit as a share of gross domestic product (GDP) narrowed to 5.1 percent as of end-September from 5.7 percent during the same nine-month period last year as revenue collection growth outpaced the rise in public spending.
Click the link below to read the full news from the source:
https://mb.com.ph/2024/11/1/world-bank-pushes-for-ph-tax-reform
SEC warns of Nov. 30 amnesty deadline
Manila Bulletin / James A. Loyola / November 4, 2024
The Securities and Exchange Commission (SEC) warned corporations that they have less than a month left to clear their record and avoid higher fines and penalties for the late and non-filing of reportorial requirements. Ending on Nov. 30, the SEC Enhanced Compliance Incentive Plan (ECIP) under Memorandum Circular (MC) No. 13, Series of 2024 provides eligible corporations a final chance to regain their good standing and pay penalties at significantly lower rates. “With less than a month left before we officially close ECIP, we encourage non-compliant, suspended and revoked corporations to complete their applications to ensure the continuous operations of their businesses,” SEC Chairperson Emilio B. Aquino said. He added that “we remind corporations that the submission of reportorial requirements is mandated by law, and failure to comply could result in the suspension or revocation of their corporate registration.”
Click the link below to read the full news from the source:
https://mb.com.ph/2024/11/4/sec-warns-of-nov-30-amnesty-deadline
Common tax findings with construction firms
Business World / Trisha Amor M. Gatdula / November 4, 2024
The Bureau of Internal Revenue (BIR) wields significant authority not only to levy taxes but also to investigate taxpayers’ books of account and accounting records. These investigations typically focus on verifying the accuracy and completeness of revenue and costs and deductions claimed by taxpayers. Avoiding tax investigations is often just a matter of hope. For construction firms, given the complexities and unique nature of construction projects, which often involve multiple contracts, subcontractors, and varying timelines, the likelihood of tax scrutiny is heightened, making it essential to maintain meticulous records and stay compliant with tax regulations.
TIMING OF REPORTING OF CONSTRUCTION REVENUE AND RETENTION FEES
Taxpayers facing tax investigations know very well that the Revenue Officers (RO) often compare the revenue reported in the Annual Income Tax Return (AITR) and Value-added Tax (VAT) returns. This comparison frequently yields discrepancies. For income tax purposes, construction firms report revenue on the basis of the percentage of completion, whereas for VAT purposes, such firms issue the invoice and report the revenue in the month in which the service is rendered or supplied. Ideally, there should be no timing difference as the two rules are parallel.
TECHNICAL FEES PAID TO NON-RESIDENT FOREIGN ENTITIES
Usually, construction firms have technical support agreements with their non-resident foreign parent company or head office. In tax investigations, payment of technical service fees to a foreign parent company or head office repeatedly results in deficiency final withholding tax (FWT) and withholding VAT (WVAT) due to non-withholding of tax. Thus, construction firms must have knowledge of the withholding tax rules to avoid this tax finding or to defend their position. The Philippine Tax Code, as amended, provides that non-resident foreign corporations be taxed on their taxable income from all sources within the Philippines. For rendition of services, the income is sourced within the Philippines if the services are performed in the Philippines. If rendered outside the Philippines, the income is sourced outside the Philippines, hence not taxable.
CONSTRUCTION-RELATED BENEFITS OF WORKERS
Construction firms typically provide their workers, particularly those working directly on site, with a variety of benefits, such as housing, transportation, industrial safety uniforms, and others. These benefits won’t pass the keen eyes of the RO and will be subjected to tax.5% CREDITABLE WITHHOLDING VAT ON SALES TO THE GOVERNMENT
Having construction projects with the government sometimes bring headaches to construction firms. Under the tax rules, the government or any of its political subdivisions, instrumentalities, or agencies, including government-owned or -controlled corporations (GOCCs), must, before making payment on account of each purchase of goods or services that are subject to VAT, deduct and withhold a final VAT at the rate of 5% of the gross payment thereof. Provided, beginning Jan. 1, 2021, the VAT withholding system shall shift from final to creditable. Such 5% VAT withheld by the government can be claimed by the construction firms as tax credits if these are evidenced by valid BIR Form No. 2307 issued by the government entities.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2024/11/04/632754/common-tax-findings-with-construction-firms/
BIR receives three outstanding service certifications
Manila Bulletin / Jun Ramirez / November 4, 2024
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. announced that, under his leadership over the past two years, the agency has achieved three major certifications, marking significant milestones in service and operational standards. The BIR received a 100 percent Nationwide ISO Certification for its key services, the Civil Service Commission’s (CSC) Program to Institutionalize Meritocracy and Excellence in Human Resource Management (PRIME-HRM) Maturity Level II Accreditation, and the National Privacy Commission (NPC) Seal of Registration. With these achievements, the BIR is now the first government agency in the country to achieve full ISO Certification for services nationwide, underscoring its commitment to quality management.
Click the link below to read the full news from the source:
https://mb.com.ph/2024/11/4/bir-receives-three-outstanding-service-certifications
PEZA, Cebu’s Topline sign supply deal
Business World / Justine Irish D. Tabile / November 4, 2024
The Philippine Economic Zone Authority (PEZA) said it signed a partnership agreement with Topline Energy Solutions Corp. last month to ensure stable power supply in its economic zones. In a social media post, PEZA said it signed a memorandum of understanding (MoU) with the Cebu-based fuel trading company on Oct. 19. “The MoU formalizes a strategic partnership aimed at promoting investment activities in the Philippines by providing stable and reliable power supply to various industries, particularly in the Visayas,” the investment promotion agency (IPA) said.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2024/11/04/632756/peza-cebus-topline-sign-supply-deal/
Tourism by VAT refund
The Philippine Star / Anne Christelle Santiago / November 5, 2024
The report also highlighted that high-income economies like the United States, Spain, Japan, France and Australia have shown significant recovery in their tourism sectors, as these countries offer more favorable conditions for travel and tourism development. However, for other countries like the Philippines, challenges still remain in trying to reach pre-pandemic tourism levels and growth. In an effort to aid the tourism sector, Senate Bill 2415 was introduced by lawmakers. The bill was approved on Sept. 23, 2024, on its third and final reading. Senate Bill 2415 proposes to introduce a new section, Section 112-A, to the National Internal Revenue Code, as amended, which will offer a value added tax (VAT) refund to tourists who are non-resident foreign passport holders. Under this section, a tourist would be eligible for a VAT refund on locally purchased goods, which may be made either electronically or in cash, provided that the following requirements are met.
Click the link below to read the full news from the source:
https://www.philstar.com/business/2024/11/05/2397625/tourism-vat-refund
Estate tax planning
Inquirer.Net / John Philip Siao / November 5, 2024
When someone passes away, their net worth—including property, possessions, and other assets—forms their “estate.” This is why planning for the smooth transfer of our assets is called “estate planning.” When done thoughtfully and in accordance with the law, estate tax planning can be a beneficial form of tax avoidance. Tax avoidance and tax evasion are two approaches to managing tax liabilities. Tax avoidance involves using legal strategies to minimize taxes and is valid and legal. On the other hand, tax evasion refers to illegal methods that can lead to civil and criminal penalties. (CIR v. The Estate of Benigno P. Toda, Jr., GR 147188, Sept. 14, 2004).
Here are some allowable estate tax planning methods.
1. Donation – The TRAIN Law has lowered the donor’s tax to 6% of the value of the property donated. Accordingly, estate tax, donor’s tax and capital gains tax on sale of real property are now all set at 6%.
2. Irrevocable trust – The creation of a trust is also tool for estate planning. Notably, transfers of assets to an Irrevocable Trust, one which generally the terms and conditions can no longer be modified once created, is treated as a donation and will be subject to the 6% donor’s tax.
3. Life insurance – Our Tax Code provides that proceeds from life insurance policies shall not be included in the computation of the estate of the deceased when the beneficiary is other than the estate, executor or administrator, and the designation is “expressly stipulated” to be irrevocable.
4. Tax free exchange of property – A discussion on estate tax planning will not be complete without mentioning one of the most used tax planning tool which is the tax free exchange of property. Under Section 40(C) (2) of the Tax Code, as amended by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act,
5. Estate and the family home – For those who have availed of the other methods of estate tax planning, they could also choose to retain their family home in their names depending on the value of their property. The Tax Code provides that there are deductions to the gross value of the estate which are the Standard Deduction of PhP5 million and a maximum of PhP10 million for the family home. Accordingly, for those estates with assets that will not exceed the said amounts, there would be zero estate taxes due to be paid.
Estate tax amnesty – Before ending, it is worth mentioning that the estate tax amnesty has been extended to until June 14, 2025 and it covers the estates of persons who passed away on or before May 31, 2022. Penalties and interests have been waived and the estate tax rate is set at 6%.
Click the link below to read the full news from the source:
https://business.inquirer.net/488317/estate-tax-planning#ixzz8qsFDut29
506 illegal vape sellers flagged
Business World / Aubrey Rose A. Inosante / November 6, 2024
THE Bureau of Internal Revenue (BIR) said it flagged 506 sellers of illicit vape products as of the end of October after nationwide raids. The BIR estimated a tax liability worth P181.70 million, inclusive of penalties, through the continuous raids. After the nationwide raid carried out on Oct. 16, there was a “substantial increase of elicit vape stores,” BIR Commissioner Romeo D. Lumagui, Jr. said in a statement on Wednesday.
Click the link below to read the full news from the source:
https://www.bworldonline.com/the-nation/2024/11/06/633320/506-illegal-vape-sellers-flagged/
CREATE-ing new strategies through tax-free reorganizations (Taxwise Or Otherwise)
Business World / Bon Yannicka M. Chua / November 6, 2024
In 2021, I discussed under this column the new tax-free exchange (TFE) provisions under Section 40(C)(2) of the Tax Code as introduced in the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), and my initial impressions on how the rules could provide businesses with additional restructuring options and resolve pre-existing TFE implementation hurdles.
SECTION 40(C)(2)(B) VS US CODE’S ‘TYPE B REORGANIZATION’
Section 40(C)(2)(b) of the Philippine Tax Code covers “the acquisition by one corporation, in exchange solely for all or a part of its voting stock, or in exchange solely for all or part of the voting stock of a corporation which is in control of the acquiring corporation, of stock of another corporation if, immediately after the acquisition, the acquiring corporation has control of such other corporation whether or not such acquiring corporation had control immediately before the acquisition.”
SECTION 40(C)(2)(C) VS US CODE’S ‘TYPE C REORGANIZATION’
Section 40(C)(2)(c) of the Philippine Tax Code deals with “the acquisition by one corporation, in exchange solely for all or a part of its voting stock or in exchange solely for all or part of the voting stock of a corporation which is in control of the acquiring corporation, of substantially all of the properties of another corporation.” It appears to have been lifted from Section 368(a)(1)(C) of the US Code (referred to as a Type C Reorganization or a stock-for-asset acquisition).
RECAPITALIZATION UNDER SECTION 40(C)(2)(D) VS US CODE’S ‘TYPE E REORGANIZATION’
The CREATE Act defines “recapitalization” as “an agreement whereby the stock and bonds of a corporation are readjusted as to amount, income, or priority or an arrangement of all stockholders and creditors to change and increase or decrease the capitalization or debts of the corporation or both.” The same term can be found in Section 368(a)(1)(E) of the US Code. However, it was not explicitly defined in the US Code itself.
SECTION 40(C)(2)(E) — REINCORPORATION
“Reincorporation” shall mean the formation of the same corporate business with the same assets and the same stockholders surviving under a new charter. The reincorporation provision in the CREATE Act does not have an exact equivalent in the US Code.
As the additional tax-free reorganizations are still relatively new within Philippine tax legislation, legal precedents and administrative guidelines may take time to develop. Also, foreign tax regulations/jurisprudence only have persuasive, and not binding, effect in the Philippines.
Click the link below to read the full news from the source:
https://www.bworldonline.com/economy/2024/11/06/633357/create-ing-new-strategies-through-tax-free-reorganizations/
The difference between taxes and fees
The Manila Times / Elaisha Nelle C. Espinosa / November 7, 2024
LOCAL government units (LGUs) enjoy the constitutional mandate to levy taxes, fees, and charges subject to the limitations set by the Philippine Congress. (Section 5, Article 10, 1987 Constitution). Any dispute regarding the decisions of LGUs with respect to the imposition of local taxes may be brought to the Regional Trial Courts (RTCs). The Court of Tax Appeals (CTA), on the other hand, is empowered to review decisions over local tax cases pronounced by the RTCs, pursuant to its power embodied in Section 7(a)(3) of Republic Act (RA) 1125, as amended by RA 9282.
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https://www.manilatimes.net/2024/11/07/business/top-business/the-difference-between-taxes-and-fees/1998761
Topline tapped for energy solutions in ecozones
The Philippine Star / Louella Desiderio / November 7, 2024
MANILA, Philippines — The Philippine Economic Zone Authority (PEZA) has teamed up with fuel trading company Topline Energy Solutions Corp. for the supply of energy solutions in economic zones. PEZA director general Tereso Panga and Topline president and CEO Eugene Erik Lapasaran Lim signed a memorandum of understanding (MOU) for a strategic partnership aimed at promoting investment activities in the country by providing stable and reliable power supply to various industries, particularly in the Visayas. Under the MOU, the PEZA and Topline will work together to promote the adoption of clean, environmentally friendly energy solutions, including liquified natural gas, energy efficiency measures and advanced smart energy technologies.
Click the link below to read the full news from the source:
https://www.philstar.com/business/2024/11/07/2398134/topline-tapped-energy-solutions-ecozones
Lumagui: Vape tax compliance ‘still small’
Manila Bulletin / Derco Rosal / November 7, 2024
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui expressed uncertainty whether the P1-billion collected from vape stamps will be sufficient to close the country’s excise tax deficit for 2024. “It might still not be enough, since it [the system] has just started,” Lumagui told reporters on November 5th when asked about the collection’s potential impact on the excise tax gap.
Click the link below to read the full news from the source:
https://mb.com.ph/2024/11/7/lumagui-vape-tax-compliance-still-small