CORONAVIRUS DRIVES 6.65 MILLION TO FILE FOR US JOBLESS BENEFITS + 83 ELECTRIC COOPS COMMIT TO EXTEND PAYMENT PERIOD FOR CUSTOMERS + FACEBOOK LAUNCHES DESKTOP VERSION FOR MESSENGER AS VIDEO
Other Relevant Tax Updates:
- Bureau of Internal Revenue (BIR) issuances on suspension on the running of prescriptive period and extended deadline to avail tax amnesty, submission of Certificate of Residence for Tax Treaty Relief (CORTT) form, and position paper and BIR correspondences
- BIR ruling digest on disqualification of a beneficiary association from tax exemption due to failure to meet requirements pursuant to section 30 (c) of the tax code
- BIR International Tax Affairs Division (ITAD) rulings
- Court of Tax Appeals (CTA) case digests
- Tax and business-related news [March 20 – April 3]
I. BIR ISSUANCES ON SUSPENSION ON THE RUNNING OF PRESCRIPTIVE PERIOD AND EXTENDED DEADLINE TO AVAIL TAX AMNESTY, SUBMISSION OF CERTIFICATE OF RESIDENCE FOR TAX TREATY RELIEF (CORTT) FORM, AND POSITION PAPER AND BIR CORRESPONDENCES
SUSPENSION OF THE RUNNING OF THE PERIOD OF STATUTE OF LIMITATIONS
Revenue Memorandum Circular (RMC) No. 34-2020, dated March 30, 2020, clarifies the running of the prescriptive period on the right of the BIR to assess and collect. The circular suspends the running of Statute of Limitations in the assessment and collection of taxes, set forth under the 1997 Tax Code, for sixty (60) days due to the Enhanced Community Quarantine (ECQ). This means that prescribing assessments are halt and suspended and the running of prescriptive period to assess and collect will be reinstated after sixty (60) days.
EXTENDED DEADLINE FOR THE AVAILMENT OF TAX AMNESTY ON DELINQUENCY
RMC No. 33-2020, dated March 24, 2020, extends the deadline on the availment of Tax Amnesty on Delinquencies from April 23, 2020 to May 23, 2020, in light of the implementation of ECQ.
EXTENDED DEADLINE FOR CORTT FORM SUBMISSION
RMC No. 32-2020, dated March 23, 2020, extends the deadline for the filing of CORTT Forms for Final Withholding Taxes (FWT) on dividends, interests, and royalties which were paid on or before March 10, 2020, from April 13, 2020 to April 30, 2020. The circular aims to give relief to taxpayer affected by the ECQ.
EXTENDED DEADLINE FOR THE SUBMISSION OF BIR POSITION PAPER AND OTHER CORRESPONDENCES
RMC No. 31-2020, dated March 23, 2020, extends the deadline for the filing of position paper and supporting documents in response to the BIR assessment. The 30-day extension is applicable only to taxpayers whose response is required to be submitted within the duration of ECQ.
II. BIR RULING DIGEST ON DISQUALIFICATION OF A BENEFICIARY ASSOCIATION FROM TAX EXEMPTION DUE TO FAILURE TO MEET REQUIREMENTS PURSUANT TO SECTION 30 (C) OF THE TAX CODE
A Co. is requesting issuance of a Certificate of Tax Exemption enjoyed by non-stock, non-profit corporation or association pursuant to Section 30 of the Tax Code. A Co., an association, was incorporated to organize conferences and other similar events for information and communications industry in Asia, to provide venue for international telecommunication professionals to debate current issues, and to organize and establish corporate social responsibility projects to benefit selected beneficiaries. In reply, the BIR states that to avail of the tax exemption under Section 30(C), which was further clarified by RMC No. 64-2016, the entity must be organized as; (i) a beneficiary society, order or association, operating for the exclusive benefit of the members such as fraternal organization operating under lodge system; (ii) a mutual aid association (iii) a non-stock corporation organized by employees providing for the payment of life, sickness accident, or other benefits exclusively to the members of such society, order, or association, or non-stock corporation or their dependents, and must provide for the payment of life, sick, accident, or other benefits to the members of such society, order or association or their dependents. Likewise, to exempt from income taxes, the provisions require that the institution be “organized and operated exclusively for the benefits of its member or dependents”. After perusal of the submitted documents, there is no showing that the A Co. meets the aforementioned criteria, hence, it cannot be qualified as a non-stock, non-profit corporation. Thus, the BIR opined that A Co. does not qualify for exemption under Section 30 (C) of the Tax Code; therefore, it is liable for income taxes imposed by the same law. [BIR RULING NO. 540-2019, SEPTEMBER 27, 2019]
III. BIR ITAD RULINGS
- Service fees paid to foreign corporation not engaged in trade or business may be exempted from income tax and vat based on tax treaty agreements
- Upon expiration of VAT Exemption Certificate (VEC), embassy personnel may proceed to secure vat refund on purchases of local goods and services in the Philippines subject to limitations; holders of VEC may still enjoy point-of-purchase vat exemption on official and personal purchase of goods and services until its expiration; embassy personnel are entitled to the same vat exemption privileges through reimbursement/refund and not through Point-of-Sale (POS) basis
- Gross Philippine billings and application of most-favoured nation
- Extent of vat exemption on local purchases of the Embassy of France pursuant to the principle of reciprocity
- Extent of vat exemption on local purchases of the Embassy of Hungary pursuant to the principle of reciprocity
- Extent of vat exemption on local purchases of the Embassy of the Republic of Turkey pursuant to the principle of reciprocity
- Extent of vat exemption on local purchases of the Royal Danish Embassy pursuant to the principle of reciprocity
SERVICE FEES PAID TO FOREIGN CORPORATION NOT ENGAGED IN TRADE OR BUSINESS MAY BE EXEMPTED FROM INCOME TAX AND VAT BASED ON TAX TREATY AGREEMENTS
P Co. is seeking confirmation whether service fees paid to Bet Shemesh Engines Ltd. (Bet Shemesh), a corporation existing under the laws of Israel, is exempt from income tax. As represented, P Co. and Bet Shemesh entered into various contracts with the procurement of spare parts, and agreement to repair and overhaul the aircraft and engines of P Co. Aircraft and engines will be exported to Bet Shemesh in Israel for assessment, repair and overhaul, and will be returned to the Philippines after such services. In ruling, the BIR cited the provisions of 1997 Tax Code which provides that income derived by foreign corporation not engaged in trade or business in the Philippines is subject to income tax. However, such income may be exempted based on RP-Israel tax treaty. Since Bet Shemesh has no permanent establishment in the Philippines, service fees will not be taxable for income tax purposes. Likewise, the service fee will be exempt from VAT based on cross-border doctrine of the VAT system as there will be no services rendered in the Philippines, since the repair and overhauling of aircraft will all be done in Israel. [ITAD BIR RULING NO. 040-19, DECEMBER 9, 2019]
[UPON EXPIRATION OF VEC, EMBASSY PERSONNEL MAY PROCEED TO SECURE VAT REFUND ON PURCHASES OF LOCAL GOODS AND SERVICES IN THE PHILIPPINES SUBJECT TO LIMITATIONS] [HOLDERS OF VEC MAY STILL ENJOY POINT-OF-PURCHASE VAT EXEMPTION ON OFFICIAL AND PERSONAL PURCHASE OF GOODS AND SERVICES UNTIL ITS EXPIRATION] [EMBASSY PERSONNEL ARE ENTITLED TO THE SAME VAT EXEMPTION PRIVILEGES THROUGH REIMBURSEMENT/REFUND AND NOT THROUGH POS BASIS]
Delegation of the European Union to the Philippines is requesting for the renewal of VEC in connection with the availment of VAT exemption on local purchase of goods and services for their personal use. In reply, BIR applied the Principle of Reciprocity and RMO No. 10-2019. Under the Principle of Reciprocity, the BIR may grant tax privileges to a foreign embassy and to its members on their local purchases of goods and services, provided they can submit proof that the government of the concerned embassy allows similar tax privileges to the Philippine Foreign Service Post and its personnel on purchases of goods or services in their country. Moreover, pursuant RMO No. 10-2019, diplomatic and non-diplomatic personnel of Delegation of the European Union in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund, and not through POS basis. Hence, the expiring VEC of the embassy personnel shall not be renewed anymore. Accordingly, upon expiration, embassy personnel may proceed to secure VAT refund on purchases of local goods and services in the Philippines subject to limitations set forth in RMO No. 10-2019. [BIR RULING NO. 030-19, OCTOBER 14, 2019]
[UPON VEC EXPIRATION, EMBASSY PERSONNEL MAY PROCEED TO SECURE VAT REFUND ON PURCHASES OF LOCAL GOODS AND SERVICES IN THE PHILIPPINES SUBJECT TO LIMITATIONS] [HOLDERS OF VEC MAY STILL ENJOY POINT-OF-PURCHASE VAT EXEMPTION ON OFFICIAL AND PERSONAL PURCHASE OF GOODS AND SERVICES UNTIL ITS EXPIRATION] [EMBASSY PERSONNEL ARE ENTITLED TO THE SAME VAT EXEMPTION PRIVILEGES THROUGH REIMBURSEMENT/REFUND AND NOT THROUGH POS BASIS]
Royal Norwegian Embassy is requesting for the renewal of VEC in connection with the availment of VAT exemption on local purchase of goods and services for their personal use. In reply, BIR applied the Principle of Reciprocity and RMO No. 10-2019. Under the Principle of Reciprocity, the BIR may grant tax privileges to a foreign embassy and to its members on their local purchases of goods and services, provided they can submit proof that the government of the concerned embassy allows similar tax privileges to the Philippine Foreign Service Post and its personnel on purchases of goods or services in their country. Moreover, pursuant RMO No. 10-2019, the embassy, its diplomatic and non-diplomatic personnel are entitled to the same VAT exemption privileges through reimbursement/refund, and not through POS basis. Hence, the expiring VEC of the embassy personnel shall not be renewed anymore. Accordingly, upon expiration, the embassy may proceed to secure VAT refund on purchases of local goods and services in the Philippines subject to limitations set forth in RMO No. 10-2019. [BIR RULING NO. 024-19, SEPTEMBER 6, 2019]
GROSS PHILIPPINE BILLINGS AND APPLICATION OF MOST-FAVORED NATION
K Airlines is requesting confirmation if it continues to be exempt from income tax on its Gross Philippine Billings on the basis of reciprocity pursuant to Section 28 (A) (3) (a), of the 1997 Tax Code. K Airlines is an international air carrier organized and existing under the laws of the Netherland and was issued a license to establish a branch office in the Philippines. In ruling, the BIR revisited the said provisions as invoked in relation to Section 4.2 (B) of Revenue Regulations (RR) No. 15-2013. Accordingly, it strictly requires that for reciprocity to be invoked, the Philippine air carriers operating in the Netherlands must actually be enjoying tax exemption therein. This cannot be determined for the reason that there are no Philippine air carriers operating in international traffic in the Netherlands. Nonetheless, paragraph 2, Article 8 of the RP-Netherlands tax treaty provides relief to K Airlines which subjects it to a lower tax of 1 ½ on its Gross Philippine Billings, or the lowest rate of income tax on such Gross Philippine Billings derived by an enterprise of a third State (“most favoured nation treatment”). To avail such relief, K Airlines must submit to the BIR International Tax Affairs Division an authenticated Certificate of Residence issued by the Tax Authority of the Netherlands, and a BIR confirmatory ruling will then be issued. [ITAD BIR RULING NO. 019-19, DATED JUNE 20, 2019]
EXTENT OF VAT EXEMPTION ON LOCAL PURCHASES OF THE EMBASSY OF FRANCE PURSUANT TO THE PRINCIPLE OF RECIPROCITY
The Embassy of France is requesting for a ruling on the VAT exemption on its local purchases including that of its personnel. In ruling, the BIR opined that it can grant VAT exemption privileges to a foreign embassy and to its members on their local purchase provided that they can submit proof that they allow similar tax privileges to the Philippine Embassy or its personnel on purchases in their country. As per the endorsement of the DFA-OP and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts, Philippine Embassy and its diplomatic personnel in Paris, France enjoy VAT exemption through reimbursement/refund, subject to the following limitations:
- Purchase of goods and services
- For the Embassy only;
- Minimum amount of purchase per invoice/receipt is €175.01 (more or less Php 11,352.25)
- Purchase of gas, petrol, fuel and other petroleum products
- For the Embassy and its diplomatic personnel;
- 200 litres per month
Applying the Principle of Reciprocity, the Embassy of France and its diplomatic personnel in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund, and not through POS basis. [ITAD BIR RULING NO. 017-19, JUNE 20, 2019]
EXTENT OF VAT EXEMPTION ON LOCAL PURCHASES OF THE EMBASSY OF HUNGARY PURSUANT TO THE PRINCIPLE OF RECIPROCITY
The Embassy of Hungary is requesting for a ruling on the VAT exemption on its local purchases including that of its personnel. In ruling, the BIR opined that it can grant VAT exemption privileges to a foreign embassy and to its members on their local purchase provided that they can submit proof that they allow similar tax privileges to the Philippine Embassy or its personnel on purchases in their country. As per the Endorsement of the DFA-OP and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts, Philippine Embassy and its diplomatic and non-diplomatic personnel in Budapest, Hungary enjoy VAT exemption through reimbursement/refund, subject to the following limitations: (1) for the Embassy, there is no limit in the amount that can be refunded per year (2) for the diplomatic and non-diplomatic personnel, the maximum total amount that can be refunded on purchase of goods, services, utilities, motor vehicle and petrol is Php 60,000 per year, per person. Applying the Principle of Reciprocity, the Embassy of Hungary and its diplomatic and non-diplomatic personnel in the Philippines are entitled to the same VAT exemption privileges through reimbursement/refund, and not through POS basis. [ITAD BIR RULING NO. 016-19, JUNE 20, 2019]
EXTENT OF VAT EXEMPTION ON LOCAL PURCHASES OF THE EMBASSY OF THE REPUBLIC OF TURKEY PURSUANT TO THE PRINCIPLE OF RECIPROCITY
The Embassy of the Republic of Turkey is requesting for a ruling on the VAT exemption on its local purchases including that of its personnel. In ruling, the BIR opined that it can grant VAT exemption privileges to a foreign embassy and to its members on their local purchase provided that they can submit proof that they allow similar tax privileges to the Philippine Embassy or its personnel on purchases in their country. As per the Endorsement of the DFA-OP and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts, Philippine Embassy and the head of mission in Ankara, Turkey enjoy VAT exemption at POS, while its diplomatic and non-diplomatic personnel enjoy VAT exemption through reimbursement/refund, subject to the following limitations: (1) alcohol and tobacco products are NOT EXEMPT, and (2) the minimum amount of purchase per invoice/receipt is Php 750.00. Applying the Principle of Reciprocity, the Embassy of the Republic of Turkey and the Head of its Mission (i.e., Ambassador) in the Philippines are entitled to VAT exemption at POS; while the embassy’s diplomatic and non-diplomatic personnel are entitled to VAT exemption privileges through reimbursement/refund basis. [ITAD BIR RULING NO. 015-19, JUNE 20, 2019]
EXTENT OF VAT EXEMPTION ON LOCAL PURCHASES OF THE ROYAL DANISH EMBASSY PURSUANT TO THE PRINCIPLE OF RECIPROCITY
The Royal Danish Embassy is requesting for a ruling on the VAT exemption on its local purchases including that of its diplomatic and non-diplomatic personnel. In ruling, the BIR opined that it can grant VAT exemption privileges to a foreign embassy and to its members on their local purchase provided that they can submit proof that they allow similar tax privileges to the Philippine Embassy or its personnel on purchases in their country. As per the Endorsement of the DFA-OP and the DFA Matrix of VAT Privileges Enjoyed by the Philippine Foreign Service Posts, Philippine Embassy its diplomatic and non-diplomatic personnel in Copenhagen, Denmark enjoy VAT exemption privileges through reimbursement/refund, subject to the following limitations: (1) Minimum amount of purchase should be DKK 1,500.00 (more or less Php 12,000) and the VAT amount is not less than DKK 300.00, which must appear in one single bill/invoice and must be paid in one transaction. The minimum amount does not apply to supply of electricity, town gas, natural gas, water, heating oil, district heating, waste disposal and sewage service; (2) VAT exempt purchases of goods and services include newspapers, stamps, passenger transport, dentists and doctors’ bills except from health certificates, insurance policies, admission fees for museums, school fees, petrol and diesel fuel (3) Purchase of the items/services below are not exempt, hence VAT paid cannot be reimbursed: antiques; auctioned items; second-hand items; gift certificates; medicine; ammunition and firearms; bridge tolls; membership fees for clubs and associations; renovation of a privately owned property; admission fees for entertainment; construction material; installation and construction expenses; expenses in relation to buying and selling of property; insurance cases when expense is covered by the insurance company. Applying the Principle of Reciprocity, the Royal Danish Embassy, its diplomatic and non-diplomatic personnel in the Philippines are entitled to the same VAT exemption through reimbursement/refund, and not through POS basis. [ITAD BIR RULING NO. 014-19, JUNE 04, 2019]
IV. CTA CASE DIGESTS
Letter Notice (LN) VAT assessment cancelled due to failure of the BIR to prove that assessment notices were received by taxpayer who changed address;
- Taxpayers only remedy upon receipt of Final Decision on Disputed Assessment (FDDA) issued by Commissioner of Internal Revenue (CIR) is to file an appeal before the court; failure to appeal is tantamount to waiving its remedy of appeal before court;
- A pioneer enterprise registered with the Board of Investments (BOI) is exempt from paying Local Business Tax (LBT) for 6 years; a year is defined as 12 calendar months, irrespective of the number of days; options to recover the amount illegally or erroneously collected are through tax refund or tax credit (TCC); refund of LBT can be recovered if timely filed;
- Refund of erroneously paid compromise penalty as a result of tax compliance violations; no written compromise offer of penalties is a violation of BIR directives;
- Taxpayer was issued with TCC higher than what should be granted upon scrutiny by CTA en banc; grounds for motion for new trial to be granted must be fraud, accident, mistake, excusable negligence or newly discovered evidence.
[LN VAT ASSESSMENT CANCELLED DUE TO FAILURE OF THE BIR TO PROVE THAT ASSESSMENT NOTICES WERE RECEIVED BY TAXPAYER WHO CHANGED ADDRESS]
Petitioner Jones Lang Lasalle (Philippines), Inc. filed a Petition for Review seeking for the cancellation of the assessment issued by the Respondent CIR. Petitioner argued that it cannot be held liable for deficiency VAT assessment pursuant to LN since the PAN and FAN are void for not being properly addressed to Petitioner, as in fact, were not received by Petitioner in the regular course of mail as these were returned to sender for the reason that addressee has already moved out. Moreover, Respondent did not offer in evidence any LOA for the Special VAT Assessment, hence, the assessment notices are void for being issued only pursuant to an LN and that proper procedures were not followed. In ruling, the Court found that no competent evidence was presented by Respondent to prove actual receipt of Petitioner of the assessment notices. Having failed to prove compliance, Respondent denied Petitioner of its right to due process. Consequently, the Petition for Review is GRANTED resulting in the CANCELLATION of the assessment. [JONES LANG LASALLE (PHILIPPINES), INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9590, MARCH 12, 2020]
[TAXPAYERS ONLY REMEDY UPON RECEIPT OF FDDA ISSUED BY CIR IS TO FILE AN APPEAL BEFORE THE COURT] [FAILURE TO APPEAL IS TANTAMOUNT TO WAIVING ITS REMEDY OF APPEAL BEFORE COURT]
Petitioner JG Summit Holdings Inc. filed a Petition for Review seeking for the reversal of the earlier Decision of the Court holding it liable to Revised Final Decision on Disputed Assessment (RFDDA) issued by the Respondent CIR. Perusal of the documents showed that the Petitioner received FDDA issued by the Respondent on December 5, 2014. The Petitioner filed a request for reconsideration before the Respondent and RFDDA was issued in August 2015. Upon receipt of the RFDDA, the Petitioner filed an appeal before CTA. Petitioner insisted that it has timely filed the Petition for Review and the 30-day reglementary period for filing an appeal with the Court should begin to run from the receipt of the RFDDA. In ruling, the Court citing the Supreme Court case in PAGCOR vs. BIR, et al. explained the following options in protesting the case when the FDDA was received: (1) a whole or partial denial by the CIR’s authorized representative may be appealed to the CIR or to the CTA; (2) a whole or partial denial by the CIR may be appealed to the CTA; and (3) the CIR or the CIR’s authorized representative’s failure to act may be appealed to the CTA. Based on the foregoing, the Court ruled that the Petitioners request for reconsideration of the previous assessment is tantamount to waiving its remedy of appeal before the Court. Thus, the Petition for Review is DENIED for lack of jurisdiction. [JG SUMMIT HOLDINGS INC. VS COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9147, MARCH 12, 2020]
[A PIONEER ENTERPRISE REGISTERED WITH BOI IS EXEMPT FROM PAYING LBT FOR 6 YEARS] [A YEAR IS DEFINED AS 12 CALENDAR MONTHS, IRRESPECTIVE OF THE NUMBER OF DAYS] [OPTIONS TO RECOVER THE AMOUNT ILLEGALLY OR ERRONEOUSLY COLLECTED ARE THROUGH TAX REFUND OR TAX CREDIT] [REFUND OF LBT CAN BE RECOVERED IF TIMELY FILED]
Petitioners City Government of Makati and City Treasurer of Makati filed a Petition for Review seeking reversal of the previous Decision and Resolution granting the claim for refund of Respondent South Luzon Toll ways Corporation for the erroneously paid LBT. The Respondent claimed that it was registered as a pioneer enterprise with the BOI on March 3, 2010, hence, exempt from paying LBT until March 3, 2016. The RTC and Court in Division ruled that Respondent was able to satisfy all the requisites for LBT refund under Section 196 of the Local Government Code (LGC). Petitioners argued that 2-year period is equivalent to seven hundred thirty (730) days, following Article 13 of the Civil Code or until January 30, 2014 to claim the refund; hence, its Petition was belatedly instituted on February 3, 2014. It also asserted that under Section 7B.14 of Revised Makati Revenue Code (RMRC), it only permits a grant of a tax credit, and not a tax refund. In ruling, the Court ruled that a year is defined as twelve (12) calendar months, irrespective of the number of days in a year. Considering that January 31, 2014 was officially declared as a special non-working holiday, Respondent had the succeeding business day, or until February 3, 2014 to seek judicial refund of such LBT. Consistent with the jurisprudential teachings, Section 196 of the LGC, side by side with paragraph (d), Section 7B.14 of RMRC, confer upon the option to recover the amount illegally or erroneously collected through tax refund or tax credit. The Respondent may not be legally faulted in seeking cash refund in lieu of tax credit on the LBT erroneously or illegally collected from it by Petitioners. The Petition is DENIED and the challenged Decision and Resolution are AFFIRMED. [THE CITY GOVERNMENT OF MAKATI AND CITY TREASURER OF MAKATI VS. SOUTH LUZON TOLLWAYS CORPORATION, CTA EN BANC CASE NO. 1928, MARCH 11, 2020]
[REFUND OF ERRONEOUSLY PAID COMPROMISE PENALTY AS A RESULT OF TAX COMPLIANCE VIOLATIONS] [NO WRITTEN COMPROMISE OFFER OF PENALTIES IS VIOLATIVE OF BIR DIRECTIVES]
Petitioner CIR filed a Petition for Review seeking reversal of the earlier Decision of the Court in Division granting refund of excessive and illegally collected compromise penalties in the amount of Php 5,600,000 in favour of the Respondent Frankport, Inc. The Petitioner argued that the penalties imposed are neither excessive nor illegal. Revenue Memorandum Order (RMO) No. 19-2007 allows the Petitioner to penalize the Respondent for the following tax compliance violations: failure to keep books of accounts for its 56 machines; failure to issue official receipts for its 56 machines; failure to maintain back-end report; failure to account for POS of 56 machines at Php 25,000 per machine. Further, the Petitioner argued that the offer to pay for the violations which was subsequently accepted came from the Respondent to avoid criminal prosecution. The Respondent, on the other hand, argued that the Petitioner failed to inform the Respondent of the factual and legal bases for the penalties. Likewise, the Petitioner failed to provide breakdown of the respective amounts of penalties for each violation, in order to arrive at the total amount of penalty to be imposed. Further, the Petitioner failed to show proof that it offered to pay penalties for its alleged violations. In ruling, the Court DENIED the Petition. Although the Respondent violations are evident, RMO No. 19-2007 requires strict adherence to the schedule of penalties listed in Annex A. In all cases, all offers must be in writing, and when an Apprehension Slip is issued, the form designated as Annex “B” in the said RMO must be used. A compromise offer must be written either in the form of Annex B or, in cases wherein it is not applicable, the compromise agreement regarding penalties must be signed by both the taxpayer and the CIR, or his concerned deputies, in appropriate cases. Since there was an absence of any compromise offer of penalties, the Petitioner violated its own rules resulting in the DENIAL of Petition. [COMMISSIONER OF INTERNAL REVENUE VS. FRANKFORT, INC., CTA CASE NO. 1947, MARCH 9, 2020]
[TAXPAYER WAS ISSUED WITH TCC HIGHER THAN WHAT SHOULD BE GRANTED UPON SCRUTINY BY CTA EB] [GROUNDS FOR MOTION FOR NEW TRIAL TO BE GRANTED MUST BE FRAUD, ACCIDENT, MISTAKE, EXCUSABLE NEGLIGENCE OR NEWLY DISCOVERED EVIDENCE]
Petitioner Carmen Copper Corporation filed a Petition for Review seeking reversal of the earlier Decision and Resolution partially denying its claim for refund of alleged excess and unutilized input taxes attributable to its zero-rated sales for the first and second quarters of taxable year 2013. Petitioner argued that the export sales declared in the schedule submitted matches with the relevant sales invoices issued. The variances noted by Respondent CIR were due to Petitioner’s system of pricing. In the same way, the total amount remitted as per sales invoice matches with the amounts indicated in the Certificate of Inward Remittance. In addition, the Petitioner further asserted that the case should be re-open for the purpose of correcting evidences previously submitted. In resolving the case, the Court determined whether the Petitioner has complied with the requisites for entitlement of VAT refund. Scrutiny of documents revealed that refund of input taxes should be granted to Petitioner in the amount lower than what the Respondent already issued for TCC. Since the administrative level (BIR) already granted higher amount of VAT refund, it is presumed that that amount computed in the judicial level (CTA EB) is included in the TCC issued. Thus, additional claim for disallowed refund is denied. Notwithstanding, the Court also ruled that Petitioner’s motion to re-open case for presentation of additional evidence is untenable. A motion to re-open should be filed before judgement is made. However, Petitioner filed its motion to re-open case after the Court has rendered its judgement. Even if the Court treats the Petitioner’s motion as a motion for new trial, the same should still be dismissed for lack of merit. A motion for new trial may only be granted upon specific well-defined grounds, namely, fraud, accident, mistake, excusable negligence or newly discovered evidence. Examination of Petitioner’s motion shows that it does not fall under any of the grounds enumerated. Considering all premises, the Petition for Review is DENIED. The Decision and Resolution previously promulgated are AFFIRMED. [CARMEN COPPER CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2018, MARCH 9, 2020]
V. TAX & BUSINESS-RELATED NEWS [MARCH 20-APRIL 3]
- Pandemic to slow Philippine economy ‘substantially,’ says ADB
- Lockdown lifting rests on health before business: trade chief
- Low interest loans available for small businessmen post-lockdown: trade chief
- Meralco lockdown bill based on 3-month average: spokesperson
- SEC warns against scammers exploiting COVID-19 crisis
- Donated PPEs from overseas exempt from donor’s tax
- Airline industry braces for prolonged recovery from coronavirus crisis
- Turkish Airlines extends flight cancellations until May 1
- P100 billion for first tranche of cash aid released: budget dept.
- World Bank to roll out $160 bln emergency aid over 15 months
- Meralco lockdown bill based on 3-month average: spokesperson
- Port congestion due to COVID-19 ‘abnormality,’ trucker group says
- No late fees, finance charges on credit card payments during grace period: BSP
- Virus-hit Europe must ‘go further, act stronger’ to boost economy: France
- Amid Luzon lockdown, TESDA offers online courses for people stuck at home
- Google boosts support for checking coronavirus facts
- COVID-19 relief: SSS, GSIS pensions come early
- COVID-19 impact: Firm servicing airlines to lay off 400 workers
- DBM already released P100B to DSWD for COVID-19 relief cash aid
- DTI backs businessmen’s proposal to gradually lift Luzon lockdown
- Private group to help disburse gov’t subsidies
- Pagcor expects up to P6 billion losses from gaming suspension
- COVID19 relief: DOF issues guidelines for loan payment moratorium
- All loans due during lockdown period get 30-day payment extension, gov’t says
- BIR hits pause button on tax probes as COVID-19 menace continues
- Return of 35-day T-bills after 15 years a let-down as investors wanted excessive rates
- Airlines to suspend Clark airport flights starting April 3
- 100,000 employers awaiting cash rescue during COVID-19 lockdown: Labor dept.
- DBM to directly remit gov’t share of workers’ GSIS fees starting April
- 30-day extension of expiring insurance policies, HMO agreements ordered
- 83 electric coops commit to extend payment period for customers
- Proof of life requirement for SSS pension set aside during COVID-19 onslaught
- Max’s Group suspends store operations nationwide until April 14
- San Miguel Corp waives toll fees for health workers fighting COVID-19
- Manila airport to move all flights to Terminal 1 as COVID-19 halts air travel
- AirAsia extends options for flights cancelled due to COVID-19
- PAL eyes April 15 resumption of flights, last international departure March 25
- Airlines keep planes flying for essential cargo amid COVID-19 restrictions
- To keep gov’t contractual workers at home during COVID-19 quarantine, DBM guarantees they would be paid without working
Pandemic to slow Philippine economy ‘substantially,’ says ADB [ABS-CBN News, April 3, 2020]
Gross domestic product could expand by 2 percent this year, from 5.9 percent in 2019, the ADB said. Socioeconomic Planning Sec. Ernesto Pernia earlier said that depending on how long the crisis would last, GDP could contract by 0.6 percent or grow by 4.3 percent.
Source:https://news.abs-cbn.com/business/04/03/20/coronavirus-pandemic-philippines-economy-gdp-adb
Lockdown lifting rests on health before business: trade chief [ABS-CBN News, April 3, 2020]
The Philippines will consider health before business in deciding when to lift lockdown on half of its 100 million people to fight the COVID-19 pandemic, an economic manager said Friday.
Source:https://news.abs-cbn.com/business/04/03/20/philippines-coronavirus-lockdown-lifting-health-business
Low interest loans available for small businessmen post-lockdown: trade chief [ABS-CBN News, April 3, 2020]
The government is offering up to P200,000 for micro SMEs and up to P500,000 for medium-sized firms, with 0.5 percent monthly interest and payable in 2 to 5 years. There will be a grace period of 5 to 6 months for payments, Lopez said.
Meralco lockdown bill based on 3-month average: spokesperson [ABS-CBN News, April 2, 2020]
Customers of the Manila Electic Co this month will be charged the average of their last 3 bills, a company spokesperson said Thursday, as he assured the public of steady power supply halfway into the month-long lockdown of Luzon to contain the COVID-19 pandemic.
SEC warns against scammers exploiting COVID-19 crisis [Philippine Daily Inquirer, April 3, 2020]
The Securities and Exchange Commission (SEC) has warned the public against dealing with individuals and groups exploiting the COVID-19 pandemic to defraud investors and consumers.
Source: https://business.inquirer.net/294045/sec-warns-against-scammers-exploiting-covid-19-crisis#ixzz6IWAhPBII
Donated PPEs from overseas exempt from donor’s tax [Philippine Daily Inquirer, April 3, 2020]
Imported personal protective equipment (PPE) and other medical supplies to be used in the fight against the new coronavirus disease (COVID-19) will not only enjoy tax- and duty-free entry but also exemption from donor’s tax, the Bureau of Internal Revenue (BIR) said.
Source: https://business.inquirer.net/294013/donated-ppes-from-overseas-exempt-from-donors-tax#ixzz6IWAtZM1L
Airline industry braces for prolonged recovery from coronavirus crisis [ABS-CBN News, April 3, 2020]
A full airline industry recovery from the coronavirus looks prolonged at best, analysts said, as new data showed international seat capacity had fallen to 23 percent of last year’s levels and around half the world’s airplane fleet is in storage.
Turkish Airlines extends flight cancellations until May 1 [ABS-CBN News, April 3, 2020]
Turkish Airlines has extended the cancellation of its flights from April 17 to May 1 over the coronavirus outbreak, its CEO Bilal Eksi said on Wednesday, adding that limited domestic flights would continue.
Source:https://news.abs-cbn.com/business/04/02/20/turkish-airlines-extends-flight-cancellations-until-may-1
P100 billion for first tranche of cash aid released: budget dept. [ABS-CBN News, April 3, 2020]
The Department of Budget and Management said Friday it released an initial P100 billion to fund the state’s cash aid program for poor families during the COVID-19 pandemic.
World Bank to roll out $160 bln emergency aid over 15 months [ABS-CBN News, April 3, 2020]
The World Bank on Thursday approved the first steps in a plan to roll out $160 billion in emergency aid over 15 months to help countries deal with the impact of the global coronavirus pandemic.
Meralco lockdown bill based on 3-month average: spokesperson [ABS-CBN News, April 2, 2020]
Customers of the Manila Electric Co this month will be charged the average of their last 3 bills, a company spokesperson said Thursday, as he assured the public of steady power supply halfway into the month long lockdown of Luzon to contain the COVID-19 pandemic.
Port congestion due to COVID-19 ‘abnormality,’ trucker group says [ABS-CBN News, April 2, 2020]
The Philippine Ports Authority and private stakeholders earlier appealed to consignees, cargo owners and truckers to withdraw “overstaying cargoes” to decongest Manila ports.
No late fees, finance charges on credit card payments during grace period: BSP [ABS-CBN News, April 2, 2020]
Credit card users don’t need to worry about paying late fees and finance charges during the 30-day grace period for payments due within the enhanced community quarantine in Luzon, the Bangko Sentral ng Pilipinas said on Thursday.
Virus-hit Europe must ‘go further, act stronger’ to boost economy: France [ABS-CBN News, April 2, 2020]
France’s finance minister urged European nations on Thursday to “go further and act stronger” to help each other’s economies recover from the ravages of the coronavirus crisis.
Amid Luzon lockdown, TESDA offers online courses for people stuck at home [ABS-CBN News, April 2, 2020]
Amid the Luzon lockdown due to the coronavirus outbreak, the Technical Education and Skills Development Authority (TESDA) offered Thursday its online courses that people can take advantage of while in their respective homes.
Google boosts support for checking coronavirus facts [ABS-CBN News, April 2, 2020]
Google on Thursday said it is pumping $6.5 million into fact-checkers and non-profits as it ramps up its battle against coronavirus misinformation.
Source:https://news.abs-cbn.com/business/04/02/20/google-boosts-support-for-checking-coronavirus-facts
COVID-19 relief: SSS, GSIS pensions came early [Philippine Daily Inquirer, April 2, 2020]
Cash benefits of Government Service Insurance System (GSIS) pensioners came earlier than usual after the GSIS released these on Thursday (April 2).
Source: https://business.inquirer.net/293985/covid-19-relief-sss-gsis-pensions-come-early#ixzz6IWBSsnsE
COVID-19 impact: Firm servicing airlines to lay off 400 workers [Philippine Daily Inquirer, April 2, 2020]
A company servicing ground handling needs of airlines is laying off 400 workers as the fallout from the COVID-19 pandemic extended beyond the airline industry into allied sectors.
Source: https://business.inquirer.net/293973/covid-19-impact-firm-servicing-airlines-to-lay-off-400-workers#ixzz6IWBZkyft
DBM already released P100B to DSWD for COVID-19 relief cash aid [Philippine Daily Inquirer, April 2, 2020]
At least P100 billion for distribution to households vulnerable to COVID-19 restrictions has already been released to finance at least two months’ worth of aid, Duterte administration economic managers said.
DTI backs businessmen’s proposal to gradually lift Luzon lockdown [Philippine Daily Inquirer, April 2, 2020]
Trade Secretary Ramon Lopez on Wednesday supported businessmen’s proposal for a gradual lifting of the Luzon lockdown from mid-April, which would see more people in essential industries go back to work.
Private group to help disburse gov’t subsidies [Philippine Daily Inquirer, April 2, 2020]
An army of rural banks, cooperatives, microfinance institutions, nongovernmental organizations and payment collection company has taken position to offer an alternative way of disbursing the government’s more than P200 billion in emergency cash subsidy to 18 million of the country’s poorest households.
Source: https://business.inquirer.net/293917/private-group-to-help-disburse-govt-subsidies#ixzz6IWFquzkh
Pagcor expects up to P6 billion losses from gaming suspension [Philippine Star, April 2, 2020]
The Philippine Amusement and Gaming Corp. (PAGCOR) expects to lose as much as P6 billion in revenues a month following the suspension of gaming operations to prevent the spread of the coronavirus disease 2019 or COVID-19.
COVID19 relief: DOF issues guidelines for loan payment moratorium [Philippine Daily Inquirer, April 1, 2020]
The Department of Finance (DOF) on Wednesday (April 1) released the guidelines for the 30-day loan payment moratorium under the Bayanihan to Heal as One Act.
All loans due during lockdown period get 30-day payment extension, gov’t says [ABS-CBN News, April 1, 2020]
All lending institutions are required to give a 30-day grace period for all loans with payment dues that fall within the month-long Luzon lockdown, according to implementing rules of a new law to address the COVID-19 pandemic.
BIR hits pause button on tax probes as COVID-19 menace continues [Philippine Daily Inquirer, March 31, 2020]
The Bureau of Internal Revenue (BIR) paused its investigation of tax delinquents as Luzon and other parts of the country lock themselves down to stop the transmission of COVID-19.
Source: https://business.inquirer.net/293825/bir-hits-pause-button-on-tax-probes-as-covid-19-menace-continues#ixzz6IWGnAdxu
Return of 35-day T-bills after 15 years a let-down as investors wanted excessive rates [Philippine Daily Inquirer, March 31, 2020]
The Bureau of the Treasury on Tuesday suffered yet another setback in its campaign to raise more funds locally amid the COVID-19 pandemic, as it rejected offers to buy 35-day T-bills, returning after 15 years, because of high bid rates.
Airlines to suspend Clark airport flights starting April 3 [ABS-CBN News, March 31, 2020]
Clark International Airport on Tuesday said airlines will suspend commercial flights there starting April 3 due to travel restrictions being implemented in the Philippines and abroad to check the spread of COVID-19.
100,000 employers awaiting cash rescue during COVID-19 lockdown: Labor dept. [ABS-CBN News, March 31, 2020]
Some 100,000 employers are awaiting cash aid from government, the Department of Labor and Employment (DOLE) said Tuesday, as workers reeled from Luzon’s month-long lockdown.
DBM to directly remit gov’t share of workers’ GSIS fees starting April [Philippine Daily Inquirer, March 30, 2020]
Beginning April and amid the COVID-19 pandemic, the government’s 12-percent share in its personnel’s monthly Government Service Insurance System (GSIS) contributions will be directly remitted by the Department of Budget and Management (DBM) to the state-run pension fund.
30-day extension of expiring insurance policies, HMO agreements ordered [Philippine Daily Inquirer, March 28, 2020]
The Insurance Commission (IC) has ordered a minimum 30-day extension of insurance policies, pre-need plans and health maintenance organization (HMO) agreements that lapsed or will end during the one-month enhanced community quarantine imposed in Luzon and other parts of the country.
83 electric coops commit to extend payment period for customers [Manila Bulletin, March 28, 2020]
At least 83 electric cooperatives (ECs) have positively responded to the directive of the
National Electrification Administration (NEA) for them to grant 30-day payment extension for the electric bills of their customers.
Proof of life requirement for SSS pension set aside during COVID-19 onslaught [Philippine Daily Inquirer, March 27, 2020]
Social Security System (SSS) pensioners need not present themselves anymore in SSS offices to prove they’re alive to receive pension.
Max’s Group suspends store operations nationwide until April 14 [Philippine Daily Inquirer, March 27, 2020]
The country’s leading casual dining chain operator Max’s Group Inc. (MGI) has suspended operations of all local food retailing operations, citing the need to help mitigate risk of further COVID-19 infection in the country.
San Miguel Corp waives toll fees for health workers fighting COVID-19 [ABS-CBN News, March 27, 2020]
San Miguel Corp said Friday medical workers fighting against the 2019 novel coronavirus 2019 (COVID-19) would get a free pass on its expressways for the entire duration of the Luzon-wide lockdown.
Manila airport to move all flights to Terminal 1 as COVID-19 halts air travel [ABS-CBN News, March 26, 2020]
Starting March 28, Gulf Air, Korean Airlines, Asiana Airlines, China Airlines, Hong Kong Air, Eva Air, Japan Airlines, Jeju Air, All Nippon Airways, Cathay Pacific, Qatar Airways, Singapore Airlines and Royal Brunei will operate from Terminal 1, MIAA said.
AirAsia extends options for flights cancelled due to COVID-19 [ABS-CBN News, March 25, 2020]
Passengers with bookings made on or before March 22 with a departure date from March 23 to May 31 can choose from the following options for future travel, the airline said: Unlimited flight change to any travel date before Oct. 31, 2020, on the same route without any additional costs credit amount of the booking for future travel to be redeemed within 365 days from the issuance date.
PAL eyes April 15 resumption of flights, last international departure March 25 [ABS-CBN News, March 25, 2020]
Philippine Airlines said its last international flight would depart Manila for the US on Wednesday before it suspends operations until April 14, as the country rides out a lockdown due to the coronavirus pandemic.
Airlines keep planes flying for essential cargo amid COVID-19 restrictions [Philippine Daily Inquirer, March 20, 2020]
Local carriers on Friday (March 20) said cargo operations from Manila will continue after passenger services were halted for the duration of the enhanced community quarantine in Luzon against COVID-19.
To keep gov’t contractual workers at home during COVID-19 quarantine, DBM guarantees they would be paid without working [Philippine Daily Inquirer, March 20, 2020]
Contractual workers in government service will get paid despite the community quarantines being implemented in the country, the Department of Budget and Management (DBM) said on Friday (March 20).
If you wish to get a copy of the complete texts of the above issuances, send us an email thru taxseminars@dmdcpa.com.ph.
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