Weekly Tax Update[August 6-10, 2018]

QC BPO CHARGED WITH TAX EVASION FOR FILING EFPS WITHOUT PAYMENTS + BINAY SEES MAKATI CITY’S 2018 REVENUE TO EXCEED TARGET

Dear Clients & Friends,

We are sending the following relevant tax updates for this week, for your reference and information:

SEC AMENDMENT ON THE USE OF CORPORATE & PARTNERSHIP NAME

To prevent the formation of bogus organizations that could misinterpret itself as an affiliate of an
international governmental organization, and usurp the authority of the latter, the Commission En
Banc, in its meeting on July 10, 2018, resolved to amend SEC Memorandum Circular No. 14, Series
of 2017 “Consolidated Guidelines and Procedures on the Use of Corporate and Partnership Names”. Accordingly, the name of any international organization such as “International Criminal Police Organization“ (INTERPOL), “International Monetary Fund” (IMF), and “International Labour Organization” (ILO), may not be used as part of a corporate or partnership name unless the same is
duly authorized or allowed by the Commission. [SEC MEMORANDUM CIRCULAR NO. 9, SERIES OF
2018, JULY 18, 2018]

BIR MEDIA RELEASES

• 2 Makati companies, a provider of life science equipment and services and a property developer, charged with tax evasion for failure and continued refusal to pay their long overdue deficiency taxes.
  
• 2 Makati companies, a provider of life science equipment and services and one which is
  engaged in dance instruction other entertainment activities, charged with wilful failure to pay
  taxes for consistently filing their tax returns through eFPS without the corresponding
  payment.
• Quezon City Business Process Outsourcing (BPO) company charged with tax evasion for
  consistently filing eFPS returns without the corresponding payments.
• 4 Quezon City taxpayers engaged in trading business and in training for technical and
  vocational education charged with tax evasion for wilful failure and continued refusal to pay
  their long overdue deficiency taxes.
• 8 Manila taxpayers engaged in cement, commercial, general construction, freight forwarding
  and marketing business charged with tax evasion.
• Palawan-based realtor charged with tax evasion for wilful failure to pay, file, and supply
  correct and accurate information in the tax returns.

BIR AMENDS IMPLEMENTING RULES & REGULATIONS (IRR) ON BARANGAY MICRO BUSINESS
ENTERPISE ACT & GO NEGOSYO ACT

The BIR has issued Revenue Memorandum Circular (RMC) No. 63-2018 dated July 20, 2018 circularizing the issuance of Department of Trade & Industry Administrative Order (DTI-AO) No. 16-01, Series of 2016 which amends certain provisions of IRR of Republic Act No. 9178 also known as

“Barangay Micro Business Enterprises Act” (BMBE) of 2002 and Republic Act No. 10644, otherwise
known as “Go Negosyo Act”.

The Administrative Order is issued to effectively and efficiently meet the objectives of the BMBEs
Act of 2002 and the Go Negosyo Act.

“BMBEs Act of 2002” was issued on November 13, 2002 while its IRR was issued on February 7,
2003 as DAO No. 1, Series of 2003.

Under the Go Negosyo Act, DTI through the Negosyo Center in the city/municipality level, shall
have the sole power to issue the Certificate of Authority (CA) for BMBEs to avail of the benefits
provided by law.

Following are the highlights of amendments:

• In order to be eligible to register as Barangay Micro Business Enterprise (BMBE), it should meet
  the following requirements:
  • With an asset of not more than Three Million Pesos (Php 3,000,000.00) excluding Land
  • Engaged in the production, processing or manufacturing of products or commodities including agro-processing, trading and services
  • Registered with DTI for sole proprietors, Securities and Exchange Commission (SEC) for corporations and associations, and Cooperative Development Authority (CDA) for cooperatives
• Entities rendering services in connection with the exercise of one’s profession by a person licensed by the government after having passed a licensure examination are disqualified from applying.
• The application for BMBE Certificate of Authority shall be filed with Negosyo Centers or in DTIcenters where Negosyo Centers have not been set up.
• Registration shall be free of charge.
• The DTI shall issue the certificate within Fifteen (15) working days from receipt of application
  with complete requirements.
  • No response within the period shall constitute approval of the application.
• BMBE Certificate of Authority is effective for Two (2) years. Renewal of certificate is subject to
  applicant’s continued compliance with requirements.
• The BMBE shall
  • Report to DTI through Negosyo Centers of any change of its ownership structure and
  • Shall surrender the original copy of BMBE Certificate of Authority for Notation.

If you need the full text of the above issuances, please e-mail us.

BIR ISSUES IRR ON REVISED RULES ON VALUATION OF GIFTS MADE IN PROPERTY PURSUANT TO TRAIN LAW

The BIR has issued Revenue Regulations (RR) No. 17-2018 dated July 10 [with released date on July 30, 2018] amending Section 13 of RR 12-2018 on the valuation of gifts made in property. The BIR made a correction that Section 5 instead of Section 6 of RR No. 12-2018 shall be followed in determining the value of gifts made in property.

Pursuant to Section 5 of RR No. 12-2018, if the gift is a real property, the value shall be the higher
between the Fair Market Value (FMV) determined by the Commissioner and the FMV as shown in
the schedule of values fixed by the Provincial and City Assessor.

For unlisted shares of stocks, common shares and preferred shares shall be valued based on book
value and par value respectively. On the other hand, the FMV of listed shares shall be the
arithmetic mean between the highest and lowest quotation at a date nearest the date of donation,
if none is available at the time of donation.

In case of units of participation in any association, recreation or amusement club, the FMV shall be
the bid price nearest the date of donation published in any newspaper or publication of general
circulation.

TAX NEWS

• BIR asks DICT to immediately fix hardware failure
• Higher sin taxes backed
• Gov’t lost P301 billion from tax incentives – DOF
• Economists support DOF’s second tax reform
• Fiscal incentives biased for big companies–DOF
• SC orders release of LGU ‘just share’ in nat’l taxes
• Binay sees Makati City’s 2018 revenue to exceed target
• Govt-led firms remit a total of P31.297B
• GSIS net income up 69 percent to P95B in 2017
• DOF uncovers another tax credit scam
  
  

Thanks and best regards.

WILLIE B. SANTIAGO
Lawyer and Certified Public Accountant
Tax & Corporate Services Division