TAX DIGEST - bdo.net.phbdo.net.ph/taxpubs/2013/taxdigestjan2013.pdf · In case of OCWs or OFWs...

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REVENUE REGULATION 11-2012 SUBJECT: Amending Certain Provisions of Revenue Regulations No. 1-2011 dated February 24, 2011 DATE: August 17, 2012 •Section 3 of RR No. 1-2011 is hereby amended to read as follows: “Section 3. Tax Treatment Xxx C) Other Taxes and Fees: Xxx The remittances of all OCWs or OFWs, upon showing of the OEC, valid Overseas Workers Welfare Administration (OWWA) Membership Certificate, or electronic receipt (e-receipt) issued by POEA, by the OCWs or OFW beneficiary or recipient, shall be exempt from the payment of documentary stamp tax (DST) as imposed under Section 181 of the National Internal Revenue Code of 1997, as amended. For this purpose, in addition to the original copy, a duplicate copy or a certified true copy of the valid proof of entitlement referred to above shall be held and used by hi/her beneficiary in the availment of the DST exemption. In case of OCWs or OFWs whose remittances are sent through the banking system, credited to beneficiaries or recipient’s account in the Philippines and withdrawn through an automatic teller machine (ATM), or sent through non-bank money transfer agents, it shall be the responsibility of the OCW or OFW to show the valid proof of entitlement when making arrangement for his/her remittance transfers. Xxx D. Monitoring Local banks and non-bank money transfer agents are hereby required to document remittances made by OCWs or OFWs following the format below, for monitoring purposes: ****[Indicate Control Number provided by the Philippine Overseas Employment Administration (POEA)] The above information is required to be furnished to the Revenue District Office or Audit Division under the Large Taxpayers Service where the banks and non-bank money transfer agents are registered on a quarterly basis, to be submitted on or before the twentieth (20th) day following the close of the quarter. Name of Name of Amount Proof of Date of Transaction OCW/OFW Recipient (in Peso or Peso Entitlement to DST Equivalent) exemption (i.e., Remittance Encashment OEC, e-receipt, or Date Date OWWA Membership Certificate JAN 2013 Jane Dela Cruz 1. Juan Dela Cruz 20,000 **** OFW Remittances for the First Quarter of 2012 (Exempt from DST imposed under Sec. 181 of the NIRC, as amended, per R.A. No. 10022) Feb 1, 2012 Feb 1, 2012 REVENUE REGULATION 12-2012 SUBJECT: Deductibility of Depreciation Expenses as it Relates to Purchase of Vehicles and Other Expenses Related Thereto, and Input Taxes Allowed Therefor. DATE: October 12, 2012 • No deduction from gross income for depreciation shall be allowed unless said deductions substantiates the purchase with evidence such as official receipts or records which contain the following to wit: o Specific Motor Vehicle Identification Number, Chassis Number or other registrable identification numbers of the vehicle; o The total price of the specific vehicle subject to depreciation; and o The direct connection or relation of the vehicle to the development, management, operation and/or conduct of the trade or business or profession of the taxpayers. • Only one vehicle is allowed for use of an official or employee which should not exceed Two Million Four Hundred Thousand Pesos (Php 2,400,000.00) • No depreciation shall be allowed to yachts, helicopters, airplanes and/or aircrafts and land vehicles which exceed the threshold amount unless the main line of business is transport operation or lease of transport equipment and the vehicles purchased are used in said operations • All maintenance expenses on the non-depreciable vehicles for taxation purposes are disallowed • Input taxes on the purchase of non-depreciable vehicles and its maintenance expenses incurred thereon are likewise disallowed for taxation purposes. 2013 JANUARY ISSUE www.bdo.net.ph TAX DIGEST A Regular Publication of Alba Romeo & Co.

Transcript of TAX DIGEST - bdo.net.phbdo.net.ph/taxpubs/2013/taxdigestjan2013.pdf · In case of OCWs or OFWs...

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REVENUE REGULATION 11-2012

SUBJECT: Amending Certain Provisions of Revenue Regulations No. 1-2011 dated February 24, 2011

DATE: August 17, 2012•Section 3 of RR No. 1-2011 is hereby amended to read as follows:

“Section 3. Tax Treatment

Xxx

C) Other Taxes and Fees:

Xxx

The remittances of all OCWs or OFWs, upon showing of the OEC, valid Overseas Workers Welfare Administration (OWWA) Membership Certificate, or electronic receipt (e-receipt) issued by POEA, by the OCWs or OFW beneficiary or recipient, shall be exempt from the payment of documentary stamp tax (DST) as imposed under Section 181 of the National Internal Revenue Code of 1997, as amended. For this purpose, in addition to the original copy, a duplicate copy or a certified true copy of the valid proof of entitlement referred to above shall be held and used by hi/her beneficiary in the availment of the DST exemption.

In case of OCWs or OFWs whose remittances are sent through the banking system, credited to beneficiaries or recipient’s account in the Philippines and withdrawn through an automatic teller machine (ATM), or sent through non-bank money transfer agents, it shall be the responsibility of the OCW or OFW to show the valid proof of entitlement when making arrangement for his/her remittance transfers.

Xxx

D. Monitoring

Local banks and non-bank money transfer agents are hereby required to document remittances made by OCWs or OFWs following the format below, for monitoring purposes:

****[Indicate Control Number provided by the Philippine Overseas Employment Administration (POEA)]

The above information is required to be furnished to the Revenue District Office or Audit Division under the Large Taxpayers Service where the banks and non-bank money transfer agents are registered on a quarterly basis, to be submitted on or before the twentieth (20th) day following the close of the quarter.

Name of Name of Amount Proof of Date of Transaction OCW/OFW Recipient (in Peso or Peso Entitlement to DST Equivalent) exemption (i.e., Remittance Encashment OEC, e-receipt, or Date Date OWWA Membership Certificate

JAN 2013

Jane Dela Cruz1. Juan Dela Cruz 20,000 ****

OFW Remittances for the First Quarter of 2012 (Exempt from DST imposed under Sec. 181 of the NIRC, as amended, per R.A. No. 10022)

Feb 1, 2012 Feb 1, 2012

REVENUE REGULATION 12-2012SUBJECT: Deductibility of Depreciation Expenses as it Relates to Purchase of Vehicles and Other Expenses Related Thereto, and Input Taxes Allowed Therefor.DATE: October 12, 2012• No deduction from gross income for depreciation shall be allowed unless said deductions substantiates the purchase with evidence such as official receipts or records which contain the following to wit:o Specific Motor Vehicle Identification Number, Chassis Number or other registrable identification numbers of the vehicle;o The total price of the specific vehicle subject to depreciation; ando The direct connection or relation of the vehicle to the development, management, operation and/or conduct of the trade or business or profession of the taxpayers.

• Only one vehicle is allowed for use of an official or employee which should not exceed Two Million Four Hundred Thousand Pesos (Php 2,400,000.00)• No depreciation shall be allowed to yachts, helicopters, airplanes and/or aircrafts and land vehicles which exceed the threshold amount unless the main line of business is transport operation or lease of transport equipment and the vehicles purchased are used in said operations• All maintenance expenses on the non-depreciable vehicles for taxation purposes are disallowed• Input taxes on the purchase of non-depreciable vehicles and its maintenance expenses incurred thereon are likewise disallowed for taxation purposes.

2013 JANUARY ISSUE www.bdo.net.ph

TAX DIGEST A Regular Publication of Alba Romeo & Co.

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REVENUE REGULATION 13-2012SUBJECT: VAT treatment on Sale of Adjacent Residential Lots, house and Lots or Other Residential Dwellings, thereby Amending Certain Provisions of Revenue Regulations No. 16-2005, as amended, Otherwise Known as Consolidated VAT Regulations of 2005

DATE: October 12, 2012• This is an amendment to RR No. 16-2005 on the VAT treatment on sale of real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business of the seller.• A sale, transfer or disposal of two or more adjacent residential lots, house and lots or other residential dwellings within the 12-month period in favor of one buyer, shall be presumed as a single or one sale of real property. It is subject to VAT if the aggregate value of the adjacent properties sold exceeds the threshold of One Million Nine Hundred Nineteen Thousand Five Hundred (Php 1,919,500.00) for residential lots and Three Million One Hundred Ninety Nine Thousand Two Hundred (Php 3,199,200.00) for residential house and lots or other dwellings. • The sale of the condominium parking lot, which may or may not be included in sale of condominium unit/s, is a separate and distinct transaction not covered by the rules on residential exemption threshold, thisbeing not a residential lot, house & lot or a residential dwelling. Thus, it shall be subject to VAT regardless of the amount of selling price.

REVENUE REGULATION 14-2012SUBJECT: Proper Tax Treatment of Interest Income Earnings on Financial instruments and Other Related TransactionsDATE: November 7, 2012• Reiteration of tax rules on the following:o Interest income from government debt instruments and securitieso Interest income on long term deposits or investment certificateso Interest income on currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangementso Interest income on depository banks under the expanded foreign currency deposit system (EFCDU)o Interest income from offshore banking units (OBUs)

• All interest income derived from any other instrument not within the coverage and definition of “deposit substitutes” and the above enumerations shall be subjected 20% creditable withholding tax.• Deposit substitutes must be a borrowing made from twenty (20) or more individual or corporate lenders at any one time or commonly known as “19-Lender Rule.”• The counting of the 19-lender rule requires that any person holding an interest, whether legal or beneficial, on a debt instrument or holding thereof either by assignment or participation, with or without recourse, shall be considered as a lender.• Issuance of government debt instruments and securities are deemed deposit substitutes and the interest income derived therefrom is subject to final tax. However, upon the issuance of the original deposit substitutes, irrespective of the kind of instrument issued (interest or non-interest bearing) and regardless of the actual receipt of interest income, the final tax shall be paid.• Interest income from long-term deposit or investment certificate received by a resident foreign corporation or a domestic corporation shall be subject to regular income tax at the rate of 30% instead of 20% final tax.• DST (Documentary Stamp Tax) shall be imposed on any assignment or re-assignment of the debt instruments unequivocally; meaning, without distinction whether there were alterations in the maturity date or remaining period of coverage from that of the original instrument.

REVENUE REGULATION 15-2012SUBJECT: Regulations on the Accreditation of Printers as a prerequisite to their Printing Services of Official Receipts, Sales Invoices and Other Commercial Receipts and/or InvoicesDATE: December 3, 2012•To qualify for accreditation with the BIR, the applicant-printer must comply with the following:o The printer is registered as engaged in printing services with the BIRo The printer has been in the printing business for no less than 3 years and operating based on a going concern principleo The printer has no delinquent accounts with the BIR at the time of filing for accreditationo The printer has number of printing machines used in printing of principal and supplementary invoices/receipts which are available for inspection of the BIRo The specified printing machines are capable of generating security/special markings/features in printing of the principal and supplementary invoices/ receiptso The printer shall verify compliance with the information requirements, per prevailing revenue issuances, to be printed in the principal and supplementary invoices/receipts of its customer/cliento The printer shall comply with the provision of the bookkeeping regulations and reportorial requirements of the BIRo The printer, or any of its owners (if juridicalentity), is not connected with the BIR or is not related to any BIR official or employee within the fourth civil degree of consanguinity or affinity or the latter’s relatives within the fourth civil degree of consanguinity or affinity

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• All printers registered as engaged in the business of printing principal and supplementary invoices/receipts shall berequired to undergo the accreditation process• All applications for printers shall be submitted using the Online System for Accreditation of Printers. Only the BIR accredited printers shall have the exclusive authority to print principal and supplemen-tary receipts/invoices.• Taxpayers have the option to chose from the lists of duly accredited printers per Revenue District Office (RDO) posted at the BIR website (www.bir.gov.ph or portal https://my.bir.gov.ph) for the printing of their principal and supplementary invoices/receipts. All accredited printers shall enroll with the BIR online Authority to Print (ATP) System for the processing of their customers’ applications for ATP• An accredited printer who will transfer its registration to another RDO is not required to cancel its accreditation from the previous RDO if upon request for a new ‘Certificate of Accreditation’ the old certificate shall be surrendered to the new RDO• The accreditation shall be revoked if during the conduct of the Tax Compliance Verification Drive (TCVD) or in the conduct of regular audit/investigation of the taxpayer’s tax liabilities, the following has been observed/discovered: o Tampered Certificate of Accreditation o Any misrepresentation on the Sworn Statement submitted by the printer o Valid stop filer cases against printer for the last three (3) months of operation, except those with pending application for compromise/abatement for penalties o Requiring a minimum number of booklets from their client/customer o Failure to submit reports as required o Any violation(s) of the accredited printer on the policies and procedures for accreditation prescribed under these Revenue Regulation on Accreditation of Printers

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REVENUE REGULATION 16-2012SUBJECT: Tax Treatment of Sales, Barters, Exchanges or Other Dispositions of Shares of Stock of Publicly-listed Companies Whose Public Ownership Levels Fall Below the Mandatory Minimum Public ownership (MPO) Level, Monitoring of these Companies and their Stock Transactions, and Amending Revenue Regulations No. 06-08 for the Purpose DATE: November 7, 2012• The regulation prescribes the tax treatment of sales, barters, exchanges or other dispositions of shares of stock of publicly-listed companies that are required to maintain the minimum public ownership (MPO) of ten percent (10%) of issued and outstanding shares, or such percentage as may be prescribed by the Securities and Exchange Commission (SEC) or Philippine Stock Exchange (PSE), whichever is higher• The taxes to be imposed on sales, barters, exchanges and other dispositions of shares of stocks of publicly-listed companies that do not comply with the MPO are:o Transactions up to December 31, 2012 – stock transaction tax of one-half of one percent (1/2 of 1%) of the gross selling price or gross value in money of the shares of stocko Transactions after December 31, 2012 – final tax of 5% on the net capital gain up to P100,000.00 and 10% of the net capital gain in excess thereof, and documentary stamp tax under Section 175 of the NIRC• Transfers of ownership of shares of stock of a covered corporation shall not be registered in the books of the corporation, unless the receipts of payment of the above taxes and the Certificate Authorizing Registration (CAR) and/or Tax Clearance Certificate (TCL) are filed with the stock transfer agent or corporate secretary• The taxes mentioned will not be applicable to the following:o Dealers in securities, who are subject to Value Added Tax (VAT) on their gross receipts and Income Tax from their sale or exchange of securitieso Investors in shares of stock in a mutual fund company, with respect to the gains realized upon redemption of said shares of stock

o All other persons, whether natural or juridical, who are specifically exempt from national internal revenue taxes under existing investment incentives and other special laws• The following are required to be submitted to the BIR National Office:o Lists from the Philippine Stock Exchange, Inc. (PSE): List of publicly-listed companies which are non-compliant with MPO as of December 31, 2011 List of publicly-listed companies which are non-compliant with MPO thereafter up to December 31, 2012 List of publicly-listed companies that become non-compliant with MPO as of January 1, 2013, to be submitted within ten (10) calendar days after December 31, 2012 Quarterly list of all publicly-listed companies indicating their public float or public ownership level, to be regularly submitted on or before the month following the end of each quarter

Quarterly List of publicly-listed companies that have become non-compliant with MPO after January 1,2013, to be regularly submitted on or before the month following the end of each quarter Other reports or lists that may be requested by the BIRo Reports from publicly-listed companies: Quarterly Public Ownership Report duly submitted to the PSE, to be submitted to the BIR within fifteen (15) calendar days after the end of each quarter Corporate disclosures involving block sale transactions duly submitted to the PSE, to be submitted to the BIR within three (3) calendar days after the disclosure was made to the PSE• Registration of transfer of ownership without the receipts of payments made on the required taxes and the corresponding CAR/TCL, and non-compliance with the reportorial requirements, are punishable under the NIRC

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REVENUE REGULATION 17-2012SUBJECT: Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Republic Act No. 10351 and to Clarify Certain Provisions of Existing Revenue RegulationsDATE: December 21, 2012• The Excise Tax on alcohol or tobacco products shall be levied, assessed and collected in accordance with the schedule specified in the Regulations• Any alcohol or tobacco product that is introduced in the domestic market on or after the effectivity of RA No. 10351 shall be initially tax classified according to their suggested net retail prices as declared in the prescribed manufacturer’s or importer’s sworn statement, subject to the initial validation and revalidation requirements prescribed under RR No. 3-2006, as amended by Section 6 of this Regulations• In case of an alcohol product that was duly registered before the effectivity or RA No.10351 but was not tax classified by the BIR shall be treated as a newly introduced product upon re-introduction thereof in the domestic market after the effectivity of the Act. The tax classification thereof shall be based on the suggested net retail price declared in the said sworn statement, subject to initial validation and revalidation requirements• The tax classification of all fermented liquor and tobacco products shall be determined every two (2) years from the date of effectivity of the Act• For tax classification purposes on alcohol or tobacco products, whether imported or domestically manufactured , shall betaxed according to their individual brand name (whether or not with prefix or suffix), color and/or design of label (such as logo, font, picturegram, and the like), manner and/or form of packaging or size of container of the product.

• The following but not limited to, shall be taxed differently:o Two products bearing exactly the same root name but with different suffixes or prefixeso Two products bearing exactly the same brand name but with different colors and/or design of labels o Two products bearing exactly the same brand name and label but with diferent form of packaging(e.g., soft packs and hard packs for cigarettes, or in bottles, cans or kegs for alcohol products)o Two products bearing exactly the same brand name and label but with different sizes of container (e.g., one liter, 500 ml., 330 ml., etc., for alcohol products)o One product is sold on a regular basis while the other product is introduced on a limited basis such as a special edition, for specific occasion and other similar instances

• Any downward reclassification of any fermented liquor duly registered upon the effectivity of the said Act that will reduce the tax imposed or payment thereof shall be prohibited. Starting January 1, 2014, the applicable tax rate shall be increased by 4% annually: Provided it shall not be lower than the rates prescribed under Section 3 of this Regulations• The revalidation of the suggested net retail price of a newly introduced alcohol or tobacco shall be after nine (9) months from initial validation.• For the initial registration of alcohol or tobacco product, every local manu-facturer or importer shall submit a duly notarized manufacturer or importer’s sworn statement showing the information specified in this Regulations• The understatement of the suggested net retail price by as much as 15% of the actual net retail price shall render the manufacturer or importer liable for additional Excise Tax equivalent to the tax due and difference between the un-derstated suggested net retail price and the actual net retail price• The importation of alcohol and tobacco products, even if destined for tax and duty-free shops, Duty Free Philippines or into the chartered or legislated economic and/or Freeport zones shall be subject to Excise Tax. If what is imported is different from the already registered and locally sold products, such will be treated as newly introduced product• No tobacco products manufactured in the Philippines for export shall be removed from their place of manufacture without posting an export bond• Tobacco products imported into the Philippines and destined for foreign coun-tries shall not be allowed entry without posting a bond equivalent to the amount of customs duty, Excise and Value-Added taxes due thereon if sold domestically• All cigarettes shall only be packed in 20s and through other packing combina-tions which shall result to not more than 20 sticks of cigarettes: Provided that whatever the combination is, the net retail price of each individual package shall be the basis of imposing the tax rate prescribed under the Act.

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REVENUE REGULATION 18-2012SUBJECT: Regulations in the Processing of Authority to print (ATP) Official Receipts, Sales Invoices, and Other Commercial Invoices using the On-line ATP System and Providing for the Additional Requirements in the Printing ThereofDATE: October 22, 2012

• All persons, private or government, who are engaged in business, shall secure/apply from the BIR an Authority to Print (ATP) principal and supplementary receipts/invoices. National Government Agencies (NGAs), Government Owned and Controlled Corporation (GOCCs) and Local Government Units (LGUs) engaged in proprietary functions are included in such requirement. For newly-registered taxpayers, the ATP shall be secured simultaneously with the Certificate of Registration (COR)

• The application for ATP shall be submitted through the on-line ATP System. In case of systems downtime, ap-plications for ATP shall be manually filed with, and the ATP shall be manually issued by, the RDO or concerned LT Office having jurisdiction over the taxpayer’s Head Office. All applications processed during systems downtime shall be immediately uploaded by the concerned RDO or LT Office upon availability of the on-line ATP System

• There shall be one application per establishment (HO or branch) which shall be filed with the RDO/LT Office where the HO is registered. Each application shall be issued a separate ATP. The principal and supplementary receipt/invoices of the HO and each of the branches must have their own independent series of serial number. Each application and the printed accounting documents shall reflect the exact address of the branch, TIN and the branch code attached to the TIN. The TIN, branch code (if applicable) and address of the HO/branch must be reflected in the printed principal and supplementary receipts/invoices

• The approved ATP shall be valid only upon full usage of the inclusive serial numbers of principal and supplementary receipts/invoices reflected in such ATP for five (5) years from issuance of the same, whichever comes first. Only BIR Accredited Printers shall have the exclusive authority to print principal and supplementary receipts/invoices. All unused/unissued principal and supplementary receipts/invoices printed prior to the effectivity of these Regulations shall be valid until June 30, 2013 only. A taxpayer with expiring ATP shall apply for a new ATP not later than sixty (60) days prior to actual expiry date. All unused/unissued principal and supplementary receipts/invoices shall be surrendered to the concerned RDO on or before the 10th day after the validity period of the expired receipts/invoices for destruction.

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This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Alba Romeo & Co. to discuss these matters in the contextof your particular circumstances. Alba Romeo & Co., its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or any decision based on it.

Alba Romeo & Co., a Philippine professional partnership, is a member of BDO International Limited, a UK company Limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO is the brand name for the BDO network and for each of the BDO member firms.

7/F Multinational Bancorporation Centre 6805 Ayala Avenue, Makati City 1226 PhilippinesTelephone (+63 2) 844 2016Fax (+63 2) 844 2045Email address:[email protected]

3/F Capitol Subdivision Building 15th Lacson Street, Bacolod City 6100 PhilippinesTelephone (+63 34) 433 3878 (+63 34) 435 8386 (+63 34) 709 1796Fax (+63 34) 433 3879Email address: [email protected]

2/F Block A, Mactan Marina Mall MEPZ 1, IboLapu-Lapu City, Metro Cebu 6015 PhilippinesTelephone (+63 32) 340 4037 (+63 32) 494 0306Fax (+63 32) 340 4033Email address: [email protected]

2/F Leonila Neri Building Don Apolinar Velez & C. Pacana Streets, Cagayan de Oro City 9000 PhilipppinesTelephone (+63 88) 856 4532 (+63 88) 852 4214 (+63 88 22) 727 431Fax (+63 88 22) 725 082Email address: [email protected]

LOCATIONS

Makati Bacolod

Cebu Cagayan de Oro