BIR LOSES PHP 17M TAX CASE DUE TO SLOPPY AUDIT + BIR TO PLUG LOOPHOLE IN TAX COLLECTION CASES
Dear Clients & Friends,
We are sending the following relevant tax updates for this week, for your reference and information:
SEC LEGAL OPINION
CORPORATIONS COVERED BY SPECIAL LAWS SHALL FOLLOW THEIR OWN PROVISION ON
STATUTORY OWNERSHIP REQUIREMENT; 40% OF THE VOTING STOCK OF INVESTMENT HOUSE
SHALL BE OWNED BY FILIPINO CITIZENS
UBS Investment Philippines is seeking legal opinion on whether as one engaged in the activity of
investment housing it is covered under SEC’s Memorandum Circular (MC) No. 08-13 which
circularizes the constitutional and statutory ownership requirement to all covered corporations, and
whether there is a need to revise or amend its current ownership structure as part of its compliance.
In rendering opinion, the SEC provides that “Corporations covered by special laws which provide
specific citizenship requirements shall comply with the provisions of said law”. Accordingly,
Presidential Decree No. 129 or the Investment Houses Law is a special law which provides that at
least 40% of the voting stock of an investment house shall be owned by citizens of the Philippines.
Hence, in determining compliance with the nationality requirement, the basis is only the voting stock
and not the two tiered test mentioned in MC No. 08-13. Consequently, since 40% of the voting stock
of UBS Philippines is held by Filipino citizens, then UBS Philippines need not revise or amend its
current ownership. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 18-17, SEPTEMBER 5,
TAX BENEFIT OF PAGCOR EXTENDS TO ITS CONTRACTEES & LICENSESS
Both the Petitioner Thunderbird Pilipinas Hotels Resorts, Inc. and the Respondent Commissioner of
Internal Revenue filed a Motion for Reconsideration (MR) on the earlier decision of the CTA 2nd
Division relative to the assessments on Special Preferential Rate Tax (SPRT), Franchise Tax, EWT,
FWT, and DST. The main issue is centered on the deficiency SPRT in which the Petitioner insists that
its revenues from gaming activities are not subject to that rate in the light of Supreme Court’s latest
jurisprudence on Philippine Amusement & Gaming Corporation (PAGCOR)’s tax exemption status and
benefit derived therefrom by its contractees and licensees. Moreover, it was clarified that the tax
benefit being enjoyed by PAGCOR also extends to its contractees and licensees. In the light of the
foregoing, the Court resolved to grant the Petitioner’s MR. Consequently, the deficiency SPRT, FWT
and DST issues have been CANCELLED whereas the deficiency Franchise Tax and EWT have been
affirmed with modification. [THUNDERBIRD PILIPINAS HOTELS & RESORTS, INC. VS. COMMISSIONER
OF INTERNAL REVENUE, CTA CASE NO. 8612, SEPTEMBER 6, 2018]
BIR MEDIA RELEASE
BIR LTS incinerates 320,440 more packs of seized Mighty cigarettes.
BIR ISSUANCES IN RELATION TO THE IMPLEMENTATION OF TRAIN LAW
The BIR has issued the following in relation to the implementation of TRAIN Law:
- Revenue Regulations (RR) No. 20-2018 dated July 25, 2018 prescribing the implementing rules and
guidelines on the imposition of Excise Tax on Sweetened Beverages
- RR No. 21-2018 dated September 14, 2018 which implements the interest imposition provision of
Section 249 of the Tax Code of 1997, as amended. Accordingly, effective January 1, 2018 there
shall be no double imposition of interest such that in no case shall the deficiency and delinquency
interest shall be imposed simultaneously. However, in cases where deficiency taxes became due
before January 1, 2018 but the full payment thereof will only be made after January 1, 2018, the
rate of interest shall be applied as follows:
- For the period up to December 31, 2017-deficiency and/or delinquency interest at 20%
- For the period January 1, 2018 until full payment of tax liability-deficiency and/or delinquency
interest at 12%
If you are interest to get a copy of complete text of the above digests, please e-mail us.
- DOF to provide online training to treasurers via tax academy
- BIR to plug loophole in tax collection cases
- Oil, gas firms oppose scrapping of tax incentives
- SM is top SJDM taxpayer
- BIR loses P17M tax case due to sloppy audit
- Employers, worried by inflation, seek fuel excise tax suspension
- Senate reviews 2nd tax reform program after House approval
- Taiwanese to build ecozone in Clark
- Offshore online casinos need BIR registration
DOF to provide online training to treasurers via tax academy [Business Mirror, September 14, 2018]
The Department of Finance (DOF) is eyeing to provide training and continuing education programs for
local government treasurers through online courses offered by the Philippine Tax Academy (PTA),
possibly in partnership with Chinese firm Huawei’s Philippine office.
BIR to plug loophole in tax collection cases [Manila Bulletin, September 13, 2018]
The Bureau of Internal Revenue (BIR) on Thursday instructed regional and district officials nationwide to strictly follow procedures while investigating taxpayers as prescribed in the Tax Code and prevent losing tax collection cases filed before the Court of Tax Appeals (CTA).
Oil, gas firms oppose scrapping of tax incentives [Philippine Daily Inquirer, September 13, 2018]
Oil and gas companies yesterday added their voice to those of businesses worried about the scrapping of tax perks through the proposed Tax Reform for Attracting Better and High-Quality Opportunities
(Trabaho) bill, saying this could hinder new investments.
SM is top SJDM taxpayer [Manila Bulletin, September 12, 2018]
SAN JOSE DEL MONTE CITY, Bulacan – The city government recognized the SM Group of Companies and other businesses who contributed to the overall growth and development of the city during the
Investor’s Night held at the Colinas Verdes Club House recently.
BIR loses P17M tax case due to sloppy audit [Manila Bulletin, September 12, 2018]
The Court of Tax Appeals (CTA) has voided the more than P17 million deficiency tax assessment imposed by the Bureau of Internal Revenue (BIR) against an advertising agency due to incorrect audit procedure.
Employers, worried by inflation, seek fuel excise tax suspension [Business Mirror, September 12, 2018]
The rising inflation is now sending shivers down the spine of employers, and they are now
recommending the suspension of the excise tax on oil to temper the cost of transport and power.
Senate reviews 2nd tax reform program after House approval [Manila Bulletin, September 11, 2018]
The Senate will now start reviewing the second tranche of the administration’s tax reform program after its approval in the House of Representatives.
Taiwanese to build ecozone in Clark [Manila Bulletin, September 9, 2018]
Taiwanese firms are establishing a new industrial estate in Clark Freeport as their economic zone in Subic has already run out of space with more Taiwanese companies investing in the country.
Offshore online casinos need BIR registration [Manila Bulletin, September 9, 2018]
The Bureau of Internal Revenue (BIR) said that offshore gaming licensees operating in the Philippines but based abroad are required to register with the local tax agency and pay their dues.
Thanks and best regards.
WILLIE B. SANTIAGO
Lawyer and Certified Public Accountant
Tax & Corporate Services Division