BICAM APPROVES CREATE BILL WHICH LOWERS CORPORATE INCOME TAX + GOVT TO TRANSFER SOME FUNCTIONS TO LGUS + DEBENHAMS SHUTS ALL STORES AROUND 12,000 JOBS LOST
Other Relevant Tax Updates:
- Court of Tax Appeals (CTA) Cases Digest
- Bureau of Internal Revenue (BIR) Extends Alphalist Submission
- BIR Prescribes the Format on the List of Recipients who Received Tax-Exempt Benefits Under Bayanihan
- BIR Announces Availability of Central Business Portal
- BIR Clarifies the Effectivity of Revenue Memorandum Order (RMO) No. 47-2020 Which Imposed New Documentary Requirements for the Processing of VAT Refund
- BIR Announces Availability of BIR Mobile Taxpayer Identification Number TIN) Verifier Application
- Tax and Business-Related News [January 23-February 1]
I. CTA CASES DIGEST
- It is crucial in a judicial claim for refundor tax credit to show that administrative claim should have been granted in the first place; it is necessary in a judicial claim to refute basis of denial of administrative claim
- Creditable Withholding Tax (CWT) Certificateis a competent proof to establish the fact that taxes are withheld; prior year ITR is not sufficient to prove prior year’s excess credits; taking of judicial notice necessitates that the parties be heard thereon if such matter is decisive of a material issue in the case; proof of actual remittance of withholding taxes is not necessary in refund cases
- Gross revenue is different from gross receipts for Local Business Tax (LBT)purposes
- The authority of Revenue Officer (RO)to conduct the audit investigation goes into the validity of an assessment
[IT IS CRUCIAL IN A JUDICIAL CLAIM FOR REFUND OR TAX CREDIT TO SHOW THAT ADMINISTRATIVE CLAIM SHOULD HAVE BEEN GRANTED IN THE FIRST PLACE] [IT IS NECESSARY IN A JUDICIAL CLAIM TO REFUTE BASIS OF DENIAL OF ADMINISTRATIVE CLAIM]
Petitioner Amadeus Marketing Philippines, Inc. filed a Petition for Review seeking refund of unutilized input VAT attributable to its zero rated sales for the taxable year 2016. The claim stemmed from the denial of Petitioner’s administrative claim of refund on the basis that Petitioner’s sales cannot be considered as zero-rated sales under Section 108(B)(2) of the 1997 Tax Code since it was made to a customer doing business in the Philippines. In ruling, the Court held that when a judicial claim for refund or tax credit is an appeal of an unsuccessful administrative claim, the taxpayer has to convince the Court that Respondent Commissioner of Internal Revenue (CIR) had no reason to deny its claim. It, thus, becomes imperative for the taxpayer to show the Court that not only it is entitled under substantive law to its claim for refund or tax credit, but also its compliance with all the documentary and evidentiary requirements for an administrative claim. Likewise, it is crucial for a taxpayer in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place. In its Petition, Petitioner failed to show that Respondent committed error in finding that its customer is doing business in the Philippines. Having failed to show that Respondent should not have denied its administrative claim in the first place, the Petition was DENIED. [AMADEUS MARKETING PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9904, JANUARY 15, 2021]
[CWT CERTIFICATE IS A COMPETENT PROOF TO ESTABLISH THE FACT THAT TAXES ARE WITHHELD] [PRIOR YEAR ITR IS NOT SUFFICIENT TO PROVE PRIOR YEAR’S EXCESS CREDITS] [TAKING OF JUDICIAL NOTICE NECESSITATES THAT THE PARTIES BE HEARD THEREON IF SUCH MATTER IS DECISIVE OF A MATERIAL ISSUE IN THE CASE] [PROOF OF ACTUAL REMITTANCE OF WITHHOLDING TAXES IS NOT NECESSARY IN REFUND CASES]
Univation Motor Philippines, Inc. (UMPI) and the CIR both filed Petitions for Review assailing the earlier decision and resolution of the CTA Special 2nd Division partially granting UMPI’s claim for refund of excess and unutilized CWT for the calendar year 2014. In its Petition, UMPI questioned the earlier decision on the disallowance of its prior year’s excess tax credits on the basis of failure to present the CWT certificates from prior years dating as far back as 2005. UMPI argued that the prior year tax credits are sufficiently substantiated by ITRs. Further, UMPI argued that the Court may take judicial notice of substantiated prior year’s excess tax credit in its other cases. In ruling, the Court cited the case of CIR vs. Philippine National Bank wherein the Supreme Court explained that the CWT is a competent proof to establish the fact that taxes are withheld. The ITR, though indeed, reveals the amount of a prior year’s excess credits, does not, in any way, substantiate each of the items composing the said amount. On UPMI’s claim that the Court may take judicial notice of substantiated prior year’s excess tax credit in its other cases, facts of the said cases showed that UPMI likewise failed to present in evidence its alleged substantiated prior year’s excess tax credits. Additionally, UPMI failed to comply with the requisite set forth under Section 3 of Rule 129 of the Rules of Court which necessitates that “the parties be heard thereon if such matter is decisive of a material issue in the case.” On the other hand, the CIR argued that it is incumbent upon UPMI to prove actual remittance of the alleged withheld taxes to the BIR as nothing should be refunded to UPMI when there was no remittance of the alleged CWT to the BIR. The Court, citing the same case of CIR vs. Philippine National Bank, states that proof of actual remittance is not needed in order to prove withholding and remittance of taxes. Thus, both Petitions were DENIED and the assailed decision and resolution were AFFIRMED. [UNIVATION MOTOR PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NOS. 2178 AND 2179, JANUARY 13, 2021]
GROSS REVENUE IS DIFFERENT FROM GROSS RECEIPTS FOR LBT PURPOSES
Petitioner Municipal Treasurer of Claver filed a Petition for Review seeking reversal of the CTA Special 1st Division’s Amended Decision and Resolution cancelling the assessment issued against Respondent Platinum Group Metals Corporation. Petitioner faulted the Special 1st Division for ruling over an issue that was only raised for the first time and stressed that the action is contrary to the prohibition on “changing theory of the case or cause of action on appeal” since the issue raised by Respondent is a question of fact that may only be established by presenting new evidence which is prohibited under the Rules of Court. Petitioner stressed that Respondent never questioned the basis used in the Notice of Assessment and further argued that Respondent is already estopped from questioning the propriety of the said assessment. In ruling, the Court, in the interest of substantial justice and strong public importance, in addition to the requirement that the resolution of the issue will not demand the presentation of new evidence, may relax the technical rules of procedure and resolve the issue that was belatedly raised by any party. Here, the validity and enforceability of the Notice of Assessment is hinged on the correctness of the tax base used by Petitioner. Therefore, not ruling on the issue will open the possibility of allowing the enforcement of a void Notice of Assessment, which is not only contrary to law but also runs counter to Respondent’s rights to due process. In this case, it was noted that the Notice of Assessment is based on the “total gross value of Respondent’s shipment” which is the value of total ore transported by Respondent regardless of whether the same has been paid by Respondent’s customer or not. Thus, the total gross value is not equivalent to gross receipts as contemplated under the Local Government Code (LGC). As discussed in the Ericsson Case, in order for the tax base to be in accordance with the LGC, the same should be based on gross receipts or the amount of consideration actually or constructively received by Respondent. Considering that the tax base used by Petitioner is not in accordance with the mandates of law, it follows that the Notice of Assessment issued against Respondent is void. Aside from the fact that Petitioner failed to establish the legality of the tax base it used in issuing the Notice of Assessment, the Court, likewise, ruled that estoppel does not lie in this case. Consequently, the Petition was DENIED for lack of merit and the Amended Decision and Resolution were AFFIRMED. [THE MUNICIPAL TREASURER OF THE MUNICIPALITY OF CLAVER VS. PLATINUM GROUP METALS CORPORATION, CTA EN BANC CASE NO. 2157, JANUARY 7, 2021]
THE AUTHORITY OF RO TO CONDUCT THE AUDIT INVESTIGATION GOES INTO THE VALIDITY OF AN ASSESSMENT
Petitioner CIR filed a Petition for Review seeking reversal of the CTA 3rd Division’s Decision and Resolution cancelling the assessment issued to Respondent Linde Philippines, Inc. Petitioner argued that the conduct of the audit and the subsequent issuance of the subject assessments were pursuant to a valid Letter of Authority (LOA) and the continuation of the audit by another RO not named in the LOA does not invalidate the assessment. In the Assailed Decision, the Court in Division held the subject assessment void because the ROs who actually conducted the audit investigation of Respondent’s books of accounts and other accounting records were different from those who were named in the LOA. Citing Revenue Memorandum Order (RMO) No. 43-90, the Court in Division ruled that a new LOA is required in cases of re-assignment or transfer of cases to another RO. Moreover, the Court En Banc ruled that the Memorandum Referral issued by OIC-Chief of the Large Taxpayers Audit and Investigation Division (OIC-Chief) cannot validly grant the ROs to conduct the audit examination as the OIC-Chief does not have any power to authorize audit of taxpayers or to effect any modification or amendment to a previously-issued LOA because only the CIR or his duly authorized representatives are granted such power. Hence, the tax assessment arising therefrom is a nullity. As regards the claim for refund, Respondent sufficiently established its entitlement to a refund of erroneous or illegally collected tax. In view of the foregoing, the Court En Banc found no substantial matter much less compelling reason to disturb the findings of the Court in Division in the Assailed Decision and Resolution. Consequently, the Petition was DENIED and the earlier Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. LINDE PHILIPPINES, INC., CTA EN BANC CASE NO. 2194, JANUARY 5, 2021]
II. BIR EXTENDS ALPHALIST SUBMISSION
Revenue Memorandum Circular (RMC) No. 17-2021, issued on January 26, 2021, extends the deadline for the filing of the Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes (BIR Form Nos. 1604-C and 1604-F) from January 31, 2021 to February 28, 2021.
III. BIR PRESCRIBES THE FORMAT ON THE LIST OF RECIPIENTS WHO RECEIVED TAX-EXEMPT BENEFITS UNDER BAYANIHAN
RMC No. 16-2021, issued on January 28, 2021, prescribes the guidelines in the submission of list of recipients of income exempt from income tax pursuant to Bayanihan Act as implemented under Revenue Regulations (RR) No. 29-2020. Pursuant to RR No. 29-2020, all employers required to submit Alphabetical List of Employees/Payees are required to submit a one-time list of recipients of income relative to income payments exempt from income tax per Bayanihan Act. The circular prescribes the format or template to be used for the required list to be submitted on January 31, 2021. In addition to the one-time list, employer shall also submit a quarterly report pertaining to employees who received retirement benefits exempted from income tax but later re-employed by them or their related parties during the succeeding twelve-month period from retirement. The submission of this quarterly report shall be done thirty (30) days from the close of all calendar quarters of 2021.
IV. BIR ANNOUNCES AVAILABILITY OF CENTRAL BUSINESS PORTAL
RMC No. 15-2021, dated January 27, 2021, announces the availability of Central Business Portal (CBP), an online system which serves as a central system to receive applications and captures application data involving business-related transactions and a platform that will promote the use of the electronic payment systems for SEC, BIR, SSS, PhilHealth, and Pag-ibig. It will be available to the following domestic corporations:
- Corporations with two (2) to four (4) incorporators;
- Regular corporations whose incorporators are juridical entities and/or the capital structure is not covered by the 25%-25% rule; and
- One Person Corporation (OPC).
V. BIR CLARIFIES THE EFFECTIVITY OF RMO NO. 47-2020 WHICH IMPOSED NEW DOCUMENTARY REQUIREMENTS FOR THE PROCESSING OF VAT REFUND
RMC No. 14-2021, dated January 12, 2021, clarifies the effectivity date of RMO No. 47-2020 which imposed new documentary requirements for the processing of VAT refund claims pursuant to Section 112 of the Tax Code. RMO No. 47-2020 shall commence on January 19, 2021 or after the effectivity period reckoned from the date of submission of the issuance to UP Law Center. Thus, the following shall be observed:
- VAT refund claims filed prior January 19, 2021 shall be filed and processed following the guidelines and procedures set forth in RMC No. 47-2019 and RMO No. 25-2019; and
- VAT refund claims filed on or after January 19, 2021 shall be filed and processed in accordance with RMO No. 47-2020.
VI. BIR ANNOUNCES AVAILABILITY OF BIR MOBILE TIN VERIFIER APPLICATION
RMC No. 13-2021, dated January 27, 2021, announces the availability of the BIR Mobile TIN Verifier Application, a service channel for taxpayers to send online TIN validation and TIN inquiry using their mobile phones with real-time response from the concerned BIR office.
VII. TAX AND BUSINESS-RELATED NEWS [JANUARY 23-FEBRUARY 1]
- Gov’t to transfer some functions to LGUs
- Duterte tightens anti-money laundering rules to avoid `gray list’
- Millions of pesos in losses estimated as Chinese New Year celebrations go online: FCCCI
- Passage of tax perks bill expected in 2 weeks
- DOF to implement tax administration projects this year
- BIR collected P 7.18B from Pogo sector in 2020
- PEZA probes cigarette smuggling
- Congress urged to focus on ‘doable’ economic bills
- Charter change to bring more benefits than CREATE – Salceda
- Pandemic speeds up automation of BIR, Customs
- Debenhams shuts all stores, around 12,000 jobs lost
- BIR says fewer tax collections last year, but more tax-paying businesses
Gov’t to transfer some functions to LGUs [Philippine Daily Inquirer, February 1, 2021]
Amid a protracted pandemic, President Duterte will step in to ensure that national coffers won’t bleed as much next year by transferring more public functions to local government units (LGUs) while they enjoy a bigger share of tax collections starting 2022.
Duterte tightens anti-money laundering rules to avoid `gray list’ [ABS-CBN New, January 31, 2021]
President Rodrigo Duterte signed a law on Friday to strengthen anti-money laundering and terrorist financing regulations ahead of a Feb. 1 deadline set by a global financial watchdog.
Millions of pesos in losses estimated as Chinese New Year celebrations go online: FCCCI [ABS-CBN News, January 31, 2020]
Millions of pesos in losses are estimated as the pandemic cancels the celebration of Chinese New Year on February 12, the Filipino-Chinese Chamber of Commerce and Industry said Sunday.
Passage of tax perks bill expected in 2 weeks [Philippine Daily Inquirer, January 30, 2021]
A delayed tax reform bill that would significantly cut corporate taxes will be passed in two weeks, according to Sen. Ralph Recto.
DOF to implement tax administration projects this year [Manila Bulletin, January 28, 2021]
The Department of Finance (DOF) expects the full nationwide implementation of the fuel marking program and several digitalization projects this year to improve the government’s tax administration.
BIR collected P 7.18B from Pogo sector in 2020 [Philippine Daily Inquirer, January 27, 2021]
Despite an exodus of Philippines offshore gaming operators (Pogo) due to taxation issues and a high number of COVID-19 infections here, taxes collected by the Bureau of Internal Revenue (BIR) from the sector rose by more than a tenth to P7.18 billion last year.
PEZA probes cigarette smuggling [Manila Bulletin, January 27, 2021]
PEZA Director General Charito “Ching” Plaza said in a statement that on January 18, 2021, the Manila International Container Port (MICP) apprehended 2×40 containers containing undeclared cigarettes allegedly bound to the First Cavite Industrial Estate (FCIE) Special Economic Zone. Plaza lauded the Bureau of Customs (BOC) for the immediate apprehension of shipment containing smuggled cigarettes.
Congress urged to focus on ‘doable’ economic bills [Manila Bulletin, January 27, 2021]
With less than two-years left before the Duterte administration ends its term, the Department of Finance (DOF) urged lawmakers during the House constitutional amendments hearing that they should focus on pending measures that are “immediately doable.”
Charter change to bring more benefits than CREATE – Salceda [Manila Bulletin, January 27, 2021]
Amending the economic provisions of the Constitution will not result in revenue losses for the government unlike the Corporate Recovery and Tax Incentives (CREATE) bill where P1.073 trillion in revenues would be lost once the pending is passed, according to economist congressman Joey Sarte-Salceda.
Pandemic speeds up automation of BIR, Customs [Philippine Daily Inquirer, January 26, 2021]
The COVID-19 pandemic and its ensuing lockdown restrictions have forced the country’s two biggest tax-collection agencies to speed up their digitization efforts, the Department of Finance (DOF) said.
Debenhams shuts all stores, around 12,000 jobs lost [ABS-CBN News, January 25, 2021]
UK department store chain Debenhams is to shut all its outlets, administrators for the collapsed group said Monday, with the loss of around 12,000 jobs.
BIR says fewer tax collections last year, but more tax-paying businesses [ABS-CBN News, January 25, 2021]
The Bureau of Internal Revenue said Monday it collected P1.94 trillion taxes last year, 11.23 percent less than the P2.19 trillion in 2019 as taxpayers were unable to pay taxes amid the pandemic.
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