Bureau of Internal Revenue Issuances
REVENUE MEMORANDUM ORDERS
RMO No. 51-2024
December 16, 2024
Suspension of All Audit and Other Field Operations of the Bureau of Internal Revenue Effective December 16, 2024.
REVENUE MEMORANDUM CIRCULARS
RMC No. 133-2024
December 18, 2024
Amending certain provisions of Revenue Memorandum Circular No. 56-2024 on the issuance of Electronic Certificate Authorizing Registration relative to One-Time Transaction.
REVENUE REGULATIONS
REVENUE REGULATION OF AUTHORITY ORDERS
RDAO No. 33-2024
December 13, 2024
Authorizes the Chief of Assessment Division of RR 1-Calasiao, Pangasinan to sign several documents specified in the Order in view of the approved leave of absence of RR 1’s Assistant Regional Director
RDAO No. 34-2024
December 13, 2024
Authorizes Assistant Regional Director of RR No. 14-Eastern Visayas to sign specified documents in the Order in view of the approved leave of absence of RR 14’s Regional Director
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- VAT on Digital Services
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/
REPUBLIC ACT No. 12066 – CREATE MORE
Official Gazette / November 13, 2024
AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
https://www.officialgazette.gov.ph/2024/11/08/republic-act-no-12066/
Tax And Business Related News
BIR WEEKENDER BRIEFS
Volume No. 15 Issue No 50 Week ending December 13, 2024
A total of six tax cases were filed by BIR district offices under the Bureau’s Run After Tax Evaders (RATE) Program from December 4 to 10.
Click the link below to read the full news from the source:
https://bir-cdn.bir.gov.ph/BIR/pdf/v15n50_.pdf
BIR exempts 16 meds from VAT
Business World / Aubrey Rose A. Inosante / December 16, 2024
THE Bureau of Internal Revenue (BIR) on Monday exempted 16 more medicines for cancer, diabetes, and mental illness from the value-added tax (VAT). “The BIR exempts from VAT an additional 16 medicines for cancer, diabetes, and mental illness. Excellent Taxpayer Service includes the timely tax exemption of eligible medicines,” BIR Commissioner Romeo D. Lumagui, Jr. said, noting the BIR supports the push for more affordable medicine and healthcare. In a memorandum circular no. 131-2024, the BIR updated the list of VAT-exempt medicines to include those for cancer, including the degarelix freeze-dried powder with 80 milligrams (mg) and 120 mg, and tremelimumab concentrates with 25 mg and 300 mg dosages.
https://www.bworldonline.com/the-nation/2024/12/16/641977/bir-exempts-16-meds-from-vat/
2024 BIR issuances Wrapped, plus year-end compliance reminders (Let’s Talk Tax)
Business World / Neymhel Marie I. Obedencio / December 16, 2024
Just as Spotify wrapped up the evolution of our music taste for the year, let’s also take a moment to look back at the ever-changing tax landscape as we review several important regulations and clarifications issued by the BIR this year, primarily focused on the implementation of the Ease of Paying Taxes (EoPT) Act.”
EASE OF PAYING TAXES (EOPT) ACT – The EoPT Act is a significant tax reform law aimed at improving the ease and efficiency of the tax compliance process for businesses and individuals. Below is a summary of the key highlights of the EoPT Act: • Simplification of tax filing and payment procedures • Removal of certain documentary requirements when substantiating invoices for the purpose of claiming input VAT • Enhancements to taxpayer services • Introduction of electronic tax payments to remit taxes, promoting cashless transactions and reducing errors in manual processes • Modernization of tax systems, including the automation of tax assessments, collections, and the enforcement of tax compliance • Tax rate reductions for small and medium enterprises (SMEs) in an effort to promote business growth and sustainability • Stricter penalties for non-compliance with tax filing deadlines or failure to use the digital systems established under the law • Strengthened Taxpayer Education Programs to ensure that businesses and individuals are aware of their tax obligations and the available digital tools for compliance • Revised Taxpayer Identification System (Small, Medium, and Large Taxpayers)
VAT ON DIGITAL SERVICES – The VAT on digital services is a tax imposed on digital services that are supplied over the internet or other electronic networks with the use of information technology, where the supply of the service is essentially automated. This includes those digital services provided by non-resident digital service providers (NDSPs) to consumers in the Philippines. The law aims to equalize the tax obligation of digital service providers located overseas, particularly those engaged in entertainment, content creation, marketplaces, and cloud services. To meet this objective, the law imposes 12% value-added tax (VAT) on digital service providers (DSPs).
CREATE MORE – The CREATE MORE Act (Corporate Recovery and Tax Incentives for Enterprises – Maximize Opportunities for Reinvigorating the Economy) is a continuation of the tax reforms introduced under the CREATE Act (Corporate Recovery and Tax Incentives for Enterprises Act). The law seeks to further promote economic growth, improve tax incentives, and encourage investments by enhancing the tax system for businesses and industries. Below is a summary of the key highlights of the CREATE MORE Act: – • Enhanced tax incentives for registered business enterprises • Reduction in Corporate Income Tax Rates • Incentive rationalization and streamlining • Further VAT exemptions • Enhanced tax administration on improving tax collection efficiency and automation of tax filing • Tax relief for new and expanding businesses • Strengthening incentive-granting agencies • Support for MSMEs (Micro, Small, and Medium Enterprises) • A more competitive business environment by encouraging foreign investment.
BIR YEAR-END TAX COMPLIANCE REMINDERS – As the end of the year approaches, taxpayers need to be mindful of several key compliance requirements set by the BIR. Here are some important reminders for 2024:
1. Submission of Annual Information Returns and Alphalists, together with the Annual Alpha List of Employees/Payees.
• BIR Form 1604-C (Compensation) and the Annual Alphalist of Employees must be submitted by Jan. 31.
• BIR Form 1604-F (Final Withholding Taxes) and the Alphalist of Payees are also due on Jan. 31.
• BIR Form 1604-E (Expanded Withholding Taxes) and the Alphalist of Payees need to be filed by March 1, 2025.
2. Submission of Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) – Employers must provide BIR Form 2316, which details the income earned and taxes withheld for each employee, by Jan. 31. Signed copies must be submitted to the BIR by Feb. 28.
3. Submission of Inventory List and other reporting requirements – Taxpayers maintaining inventory are required to submit soft copies of the annual inventory list and applicable schedules, accompanied by a notarized and signed sworn declaration, within 30 days following the close of the taxable year.
4. Submission of Books of Account
a) Manual Books of Account – • New businesses must register their manual books of account before the deadline of the first quarterly or annual income tax return, whichever is earlier. • Existing businesses must register new sets of manual books before fully consuming the pages of previously registered books.
b) Loose-Leaf Books of Account – These must be submitted annually, within 15 days after the end of each taxable year or within 15 days from the closure of business operations.
c) Computerized Accounting System (CAS) – These must be submitted annually, within 30 days from the end of each taxable year or from the closure of business operations. Further, in compliance with the EoPT Act, the BIR set a deadline of Dec. 31, 2024, for taxpayers to update their CAS to comply with the latest changes, including the issuance of invoices and generation of necessary reports in the format prescribed by the BIR. In 2024, all books of account must be registered online via the BIR’s Online Registration and Update System (ORUS). The registration process now involves generating a QR code, which serves as proof of registration instead of manual stamping. The QR code includes various taxpayer details, such as TIN, registered name, and type of book.
CREATE MORE IRR sets rules for transfers of business registration
Business World / Aubrey Rose A. Inosante / December 17, 2024
THE INTERIM implementing rules and regulations (IRR) for the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act were issued on Tuesday, laying down the rules for the transfer of registrations to other investment promotion agencies (IPAs). Last week, President Ferdinand R. Marcos, Jr. signed the CREATE MORE Act into law. It further reduces the corporate income tax to 20% from 25% for RBEs. CREATE MORE features income tax holidays, a 5% Special Corporate Income Tax, and duty exemptions on imports of capital equipment, raw materials, spare parts, and project accessories. Additionally, RBEs will also enjoy local tax exemptions and VAT exemptions on imports and VAT zero-rating on local purchases of goods and services directly attributable to the registered project or activity.
BIR confident it will hit downgraded P2.85-T target registration
Business World / Aubrey Rose A. Inosante / December 17, 2024
THE Bureau of Internal Revenue (BIR) said it is on track to meet its downgraded P2.85 trillion collection target this year. “As of November, the BIR is on track to meet its 2024 Emerging Goal (set by) the Development Budget Coordination Committee (DBCC) in March,” BIR Commissioner Romeo D. Lumagui, Jr. told BusinessWorld on the sidelines of a briefing at the House of Representatives. He noted that the target had been adjusted then to account for unpassed legislation and weaker-than-expected gross domestic product (GDP) growth. When the original target was set, it factored in revenue from unpassed legislation like the taxes on single-use plastics, pre-mixed alcoholic beverages, sweetened beverages and junk food, as well as the rationalization of the mining fiscal regime Mr. Lumagui said. He called it “unfair” for the Bureau to be held to the original forecast when the new taxes did not happen. “These are the laws that should have been passed for this year that could have or should have collected, that should have generated P107 billion. Shouldn’t that be removed from the goal because the law hasn’t been passed yet? You won’t be able to collect that for this year,” Mr. Lumagui said.
Tax lawyer shares ideas about paying proper taxes
Philstar.com / Ma. Louella “Peaches” Aranas / December 17, 2024
The Bureau of Internal Revenue (BIR) has turned more aggressive in chasing tax violators, whether businesses or individuals. Why is it difficult for many ventures and people to comply with the requirement to pay proper taxes? “It has often been said, ‘Taxes are the lifeblood of a nation.’ To put that in a relatable context, our bodies will not function properly and we can even die if we don’t have enough blood going through our system, carrying oxygen and nutrients to the different organs,” Atty. Peaches explained. “Without taxes, the different government agencies will not function properly, and government services will not be provided to the people. Utilities and basic necessities [services] will not be available; roads and airports will not be built; we will not have policemen or firemen to secure lives and properties. We will not have teachers to educate children, nor will have doctors, dentists, and nurses to take care of our physical health,” she continued. Atty. Peaches reiterates that taxes are what citizens pay for them to be able to live in a civilized society. “Without taxes, a nation will suffer and perish,” she added, emphasizing the importance of complying with the obligation.
Digital economy growth challenging for revenue collection, legislator says – gov’t –
Business World / Kenneth Christiane L. Basilio / December 17, 2024
THE GROWTH of digital marketplaces is posing challenges for the Bureau of Internal Revenue (BIR) in collecting taxes, a legislator said on Tuesday. The Philippine digital economy was estimated at P2.05 trillion in 2023, accounting for 8.4% of gross domestic product, according to the Philippine Statistics Authority. The equivalent totals for 2022 were 7.7% and P1.9 trillion. “The shift to the digital economy is making it difficult for the BIR to collect taxes on the domestic economy,” Albay Rep. Jose Ma. Clemente S. Salceda, said at a committee hearing. The BIR is in the process of digitizing its internal processes, with a focus on training employees to be digitally savvy, upgrading technology infrastructure, and improving the taxpayer experience.
To prevent use/spread of fake ones: PWD IDs to be unified
The Freeman / Caecent No-ot Magsumbol / December 17, 2024
CEBU, Philippines — A unified ID system that will employ a web-based portal that can be used for real-time updating and ID verification by business establishments will be created to stop the proliferation of fake IDs of persons with disabilities, the Department of Social Welfare and Development said. This was among the resolutions of the roundtable discussion with stakeholders presided by Secretary Rex Gatchalian last week at the DSWD’s central office in Quezon City. While still in the process of creating the system, Gatchalian urged the public to report incidents involving the sale of fake PWD IDs to the National Council on Disability Affairs (NCDA), an attached agency of the DSWD, through council@ncda.gov.ph, to the Persons with Disability Affairs Office (PDAO), or any law enforcement agency. These IDs are issued exclusively by the LGU’s PWD Affairs Office after the submission of appropriate documentation confirming the medical or disability condition of a person applying for such ID. The Bureau of Internal Revenue (BIR) has also launched a national crackdown against the sale and use of fake person with disability IDs as revenue losses from this type of tax evasion scheme already amounted to over ?88 billion. Under the law, persons with disabilities’ benefits include a 20% discount and an exemption from value-added tax on certain goods and services. But unscrupulous persons have exploited this system by selling PWD IDs to those fraudulently seeking to claim these benefits via online marketplaces, making them easily accessible.
PEZA projects P215 billion investment approvals by yearend
The Philippine Star / Louella Desiderio / December 17, 2024
MANILA, Philippines — The Philippine Economic Zone Authority (PEZA) expects to end 2024 with approved investments of around P215 billion, the highest in seven years. It is also aiming for a nine to 10 percent increase in investment approvals next year, following the approval of the CREATE MORE and a new free trade agreement (FTA) with South Korea.
On BIR-issued subpoenas duces tecum
The Manila Times / Xela Leona Laqui / December 19, 2024
A SUBPOENA is a vital tool used in the administration of justice and tax enforcement in the Philippines. A subpoena ad testificandum requires an individual to appear and testify at a hearing or trial, or for an investigation, while a subpoena duces tecum (SDT) requires a person to bring with him or her any books, documents or other things under his or her control. The Commissioner of Internal Revenue (CIR) is authorized to issue an SDT to compel the production of essential documents pursuant to Section 5(c) of the National Internal Revenue Code of 1997 (Tax Code). This provision empowers the CIR to summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other.
[B-SIDE Podcast] Concerns over the new CREATE MORE act
Business World / Edg Adrian Eva & Jayson Marinas / December 19, 2024
Philippine President Ferdinand “Bongbong” Marcos Jr. has signed the CREATE MORE Act this November, a law that promises to attract more foreign investments and boost economic growth by reducing the corporate income tax rate from 25% to 20% for registered business enterprises (RBEs). The CREATE MORE Act also offers a VAT zero-rating on essential services like marketing and human resources, among others, that are “directly attributable” to the registered project or activity of a registered company.
CREATE MORE is among PBBM’s biggest Christmas and New Year’s gifts to investors and the Filipino people
Department of Finance / December 19, 2024
The much-awaited enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act in 2024 is one of the Marcos, Jr. administration’s biggest Christmas and New Year’s gifts to both local and foreign investors and the Filipino people. Signed into law on November 11, 2024, Republic Act (RA) No. 12066, or the CREATE MORE Act, transforms the Philippines into an attractive destination for business by making the tax incentives regime more globally competitive, investment-friendly, predictable, and accountable. “CREATE MORE is definitely among the best gifts for our current and future investors as well as the whole nation this year. Matagal na itong hiniling ng business community, and we acted fast on passing this measure,” Finance Secretary Ralph G. Recto said.
SEC opens new office in Lipa, Batangas
Business World / Sheldeen Joy Talavera / December 19, 2024
THE Securities and Exchange Commission (SEC) has opened an extension office in Lipa City, Batangas. “The SEC Lipa Extension Office reaffirms our commitment to providing greater and more effective access to our services, ensuring consistent enforcement of corporate and securities regulations, and establishing closer coordination with partners indispensable in the implementation of our plans and programs at the local level,” SEC Chairperson Emilio B. Aquino said in a statement on Wednesday. The SEC Lipa Extension Office will exercise jurisdiction over cities and provinces within the Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) and Mimaropa (Mindoro, Marinduque, Romblon, and Palawan) regions.
https://www.bworldonline.com/corporate/2024/12/19/642505/sec-opens-new-office-in-lipa-batangas/
BOI-approved investments hit record P1.62 trillion
The Philippine Star / Louella Desiderio / December 20, 2024
MANILA, Philippines — Investment pledges approved by the Board of Investments (BOI) hit a record high of P1.62 trillion this year, exceeding the agency’s 2024 target. The Philippine Economic Zone Authority (PEZA) also exceeded its investment approval’s goal for the year. In a statement, the Department of Trade and Industry (DTI) said that its attached agency, the BOI, approved P1.62 trillion worth of investments this year, surpassing the BOI’s initial target of P1.5 trillion set at the beginning of 2024. The approved investments for 2024 are also 28.6 percent higher than the previous all-time high of P1.26 trillion in 2023, reflecting the strong vote of confidence from both local and international investors, according to the DTI.
DOF and DOE sign joint memorandum circular granting LGU tax exemptions to electric co-ops, empowering them to expand electricity access to all Filipinos
Department of Finance / December 20, 2024
The Department of Finance (DOF) and the Department of Energy (DOE) signed on December 4, 2024 a joint memorandum circular that allows qualified electric cooperatives (ECs) to seek tax exemptions from local government units (LGUs), reducing financial burdens and empowering them to expand electricity access to all Filipinos. Finance Secretary Ralph G. Recto, represented by DOF Undersecretary Bayani Agabin, and DOE Secretary Raphael Lotilla signed the joint memorandum circular, which outlines how ECs can avail of preferential rights under Republic Act (RA) No. 7160 (Local Government Code) in relation to RA No. 10531 (An Act Strengthening the National Electrification Administration). The DOE and the DOF through the Bureau of Local Government Finance (BLGF) were mandated by Section 18 (c) of the Implementing Rules and Regulations (IRR) of RA No. 10531 to draft the applicable guidelines for this purpose.
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