A compilation of recent legislation and issuances of the Bureau of Internal Revenue and other government agencies relevant to the field of taxation and corporate practice.
Revenue Memorandum Circular (RMC) No. 57-2015 – Submission of Inventory Lists and Other Reporting Requirement
Revenue Memorandum Circular (RMC) 41-2015 - Documentary Requirements Necessary for the Registration of Labor Organizations, Associations, or Group of Unions or Workers under Section III (C) of Annex A of Revenue Regulations (RR) No. 7-2012.
Revenue Memorandum Circular (RMC) No 10-2015 – Filing of Income Tax Returns (BIR Form No. 1700) of Employees who belong to Employer identified as Large Taxpayer
Revenue Memorandum Circular (RMC) No 9-2015 – Enhanced BIR Registration Forms for the Implementation of Taxpayer Registration System (TRS) under Electronic Tax Information System (eTIS-1)
Revised Consolidated Schedule of Compromise Penalties for Violation of the National Internal Revenue Code
The P82,000 tax exemption on 13th month pay and other benefits applies beginning January 1, 2015.
Reduction and condonation of real property taxes on the power generation facilities of IPPs under BOT contracts with GOCCs
The BIR recently issued Revenue Memorandum Circular (RMC) No. 6-2015 which circularizes Executive Order (EO) No. 173 dated October 31, 2014.
Under Section 1 of EO No. 273, as circularized in RMC No. 6-2015, all liabilities for real property tax on property, machinery and equipment (including special levies accruing to the Special Education Fund) actually and directly used by IPPs for the production of electricity under Build-Operate-Transfer (BOT) contracts (whether denominated Power Purchase Agreements (PPA), Energy Conversion Agreements (ECA) or other contractual agreements) with GOCCs, for all years up to 2014 are reduced to an amount equivalent to the tax due computed based on an assessment level of 15% of the fair market value of said property, machinery and equipment depreciated at the rate of 2% per annum, less amounts already paid by the IPPs.
Further, all fines, penalties and interest on such deficiency real property tax liabilities are condoned and the concerned IPPs are relieved from payment.
Revenue Memorandum Order (RMO) 1-2015 - Amendments to the list of requirements for accreditation of Importers and Customs Brokers
RMO 1-2015 was issued by the BIR last December 19, 2014 removing the following from the list of requirements:
1. Certified copy of the BIR Certificate of Registration (COR); and2. SEC Registration and Articles of Incorporation
Revenue Regulations (RR) 1-2015, was published in Manila Bulletin on January 6, 2015 and shall take effect immediately
RR 1-2015 includes as non-taxable “de minimis benefits” the following:
1. Benefits received by an employee by virtue of a collective bargaining agreement (CBA); and 2. Productivity incentive schemes
Provided, that the total annual monetary value received from the 2 items above combined, do not exceed P10,000.00 per employee per taxable year
Emerging Rule for Income Tax Refunds
Revenue Memorandum Order (RMO) No. 34-2014 was issued by the Bureau of Internal Revenue (BIR) on September 18, 2014 clarifying that absence of a valid, current and subsisting tax exemption ruling will not divest such qualified entities of their tax exemption privilege. However, those who fail to secure such tax exemption rulings will just have to prove that they have complied with the conditions set forth in the law for tax exemption during tax investigation.
Revenue Memorandum Order No. 33-2014 - Amending the Policies, Guidelines and Procedures in the Issuance of Importer’s Clearance Certificate (ICC) and Customs Broker’s Clearance Certificate (BCC) relative to Accreditation as Importer or Customs Broker
On September 11, 2014, the Bureau of Internal Revenue (BIR) issued RMO No. 33-2014 amending certain provisions of RMO No. 10-2014 and RMO No. 22-2014.
RMO No. 10-2014 required importers and customs brokers to submit certain documentary requirements in their application for accreditation, such as certified true copies (CTCs) of the applicant’s BIR Certificates of Registration (COR), Annual ITRs and DTI COR of Business Name, among others.
Revenue Memorandum Circular (RMC) No. 73-2014 - Withholding Tax Rates on Dividend Payments to Philippine Central Depository (PCD) Nominees
The BIR recently issued Revenue Memorandum Circular (RMC) No. 73-2014 dated September 12, 2014 clarifying the withholding tax rates on dividend payments to PCD Nominees. Under this circular, a PCD Nominee-Filipino is deemed to be an individual subject to final withholding tax of 10% under Section 24(B)2 of the Tax Code, unless it is satisfactorily shown that the actual equity investor is a domestic corporation. A PCD Nominee – Non Filipino is deemed to be a non-resident foreign corporation subject to final withholding tax of 30% under Section 28(B)1 of the Tax Code, unless it is satisfactorily shown that the actual equity investor is a resident alien, non-resident alien engaged or not engaged in trade or business in the Philippines or resident foreign corporation.
The BIR Regulations did not mention anything about the applicability of reduced withholding rates under existing tax treaties. It can however be presumed that if the non-resident recipient, whether individual or corporate, is qualified to avail of the reduced treaty rates, then such should be the rate applicable.
Revenue Regulation No. 6-2014-Prescribing the Mandatory Use of Electronic Bureau of Internal Revenue Forms (eBIR Forms)
Last September 5, 2014, the Bureau of Internal Revenue (BIR) issued Revenue Regulation 06-2014 prescribing the mandatory use of Electronic Bureau of Internal Revenue Forms (eBIR Forms) in filing of all tax returns by Non-Electronic Filing and Payment System (Non-eFPS) filers. Mandatory coverage of the Regulation are:
Last June 6, 2014, the Bureau of Internal Revenue issued Revenue Memorandum Circular (RMC) No. 51-2014 which clarifies the inurement prohibition of Section 30 of the National Internal Revenue Code relating to non-stock/non-profit corporations/associations/organizations which are exempt from income tax.
Last June 11, 2014, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 54-2014 which clarified the issues relating to the application for Value Added Tax (VAT) refund or credit as provided under Section 12 of the Tax Code. The said RMC seeks to summarize the rules on VAT refunds as stated by the Supreme Court.
Guidelines and Directives to Assist Issuers of Securities Listed and Traded in the Philippine Stock Exchange in Complying with the Requirements of BIR Revenue Regulation No. 1-2014
Last May 22, 2014, the Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No. 10, series of 2014 (MC 10-2014) which provides for the guidelines and directives to assist issuers of securities listed and traded in the Philippine Stock Exchange to comply with the requirements of BIR Revenue Regulation (RR) No. 1-2014. RR No. 1-2014 in turn provides for the requirements of Alphabetical List of Employees/Payees of Income Payments which are to be submitted to the BIR.
On May 8, 2014, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 37-2014 regarding the applicability of the Philippines-Kuwait Double Taxation Agreement entitled “Agreement between the Government of the Philippines and the Government of the State of Kuwait for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income” which was entered into force on April 22, 2013.
The provisions on taxes on income of the Agreement shall apply to income derived or accrued beginning January 1, 2014.
Despite the Deutsche Case where the Supreme Court ruled for the automatic application of tax treaties, the BIR imposed a prerequisite before the Philippine-Kuwait Tax Treaty may take effect. According to the BIR, Tax Treaty Relief Applications (TTRAs) invoking the Philippine-Kuwait Agreement should first be filed and addressed to the International Tax Affairs Division (ITAD) of the BIR, together with duly accomplished BIR Form 0901 (Application for Relief from Double Taxation) and other documentary requirements pursuant to Revenue Memorandum Order (RMO) No. 72-2013 before the tax treaty relief may be enjoyed.
Last February 10, 2014 the Office of the Commissioner of Internal Revenue issued RMO No. 10-2014 providing policies, guidelines and procedure in the accreditation of importers and customs brokers. The said RMO also emphasized that all importers and customs brokers, unless otherwise exempted, are required to secure accreditation from the BIR.
Moreover, RMO No. 10-2014 defines the duties and responsibilities of designated Bureau of Internal Revenue (BIR) offices in the accreditation and dis-accreditation of the importers and customs brokers. It also prescribes the reportorial requirements for the proper monitoring of accredited importers and customs brokers.
Last February 6, 2014, the Office of the Commissioner of the Bureau of Internal Revenue issued RMC NO. 8-2014, mandating all concerned withholding agents to require all individuals and entities claiming tax exemption, to provide a copy of a valid, current and subsisting tax exemption certificate or ruling, before payment of income.
The RMO further provides that the failure on the part of the taxpayer to present the said exemption certificate or ruling as required, shall subject him to the payment of appropriate withholding taxes due on the transaction and that the failure of the withholding agent to withhold, notwithstanding the lack of tax exemption certificate or ruling shall, cause the imposition of penalties under the Tax Code.