DOF REVERSES THE EARLIER BIR RULING ON CWT IMPOSITION ON THE NET DISTRIBUTIVE SHARE OF THE CO-VENTURERS IN A TAX-EXEMPT JV
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [NOVEMBER 22-28]
- DOF REVERSES THE EARLIER BIR RULING ON CWT IMPOSITION ON THE NET DISTRIBUTIVE SHARE OF THE CO-VENTURERS IN A TAX-EXEMPT JV
- BIR ISSUES IRR IMPLEMENTING THE VAPE LAW
- CTA CASES ON LOCAL BUSINESS TAX REFUND & AUTHORITY OF LOCAL TREASURER TO FILE SUIT & BIR SERVICE OF ASSESSMENT NOTICE & CANCELLATION OF LOA
1. TAX & BUSINESS-RELATED NEWS [NOVEMBER 22-28]
- 4th IELTS office opens in PH as more Filipinos take test
- ‘All systems go’: PAL conducts test flight to Loakan Airport in Baguio City
- Baguio relaunches online tourist registration app
- To entice more investors, Peza seeks to enhance perks
- No more cheating? House bill vs game-fixing in sports passed on 3rd reading
- Puregold announces purchase of PSMT Philippines
- Megaworld unit plans Cavite luxury estate
- Road to recovery: Lopez family unloads ABS-CBN’s multi-billion peso lot in Quezon City to cut debt load
- Elon Musk Sends Special Invitation to Bill Gates
- Boy Reyno’s Manila Jockey Club returns to profitability as more people bet on horse racing
- NAIA ranked 3rd ‘most stressful airport’ in Asia, Oceania — study
- SMC power unit wins 60-day TRO from CA
- CAVITEX C5 Link adjusts toll on Sunday, Nov 27
- Local vehicle output revved up by 20% in October
- Marcos admin looking to expand nursing, medical scholarship programs
- International fiber optic cable lands in Batangas
- John Gokongwei’s brother, children, nephews inherit P17 million in JG Summit shares
- P23-B NLEX-SLEX Connector opening 1Q 2023
- GCash to add security camera in fight vs hacking
- Ayala Land unveils new bond program to pay old debts
- Elon Musk says Twitter to provide ‘amnesty’ to some suspended accounts starting next week
- Shoppers transferring to Lazada? CEO reacts
- NEDA Board endorses new EO reducing tariffs on e-vehicles
- The Philippines Positioned As The World’s Maritime Capital
- Quimbo: Grab PH defiant, keeps overcharging passengers despite PCC limits
- Salary increases in Philippines in 2023 to hit pre-pandemic levels: survey
- Hard sell? DITO SIMs being given away for free by some fast food joints
- P33k minimum wage for gov’t workers nationwide sought amid rising prices
- Ain’t in good hands: Metrobank clients lose access to mobile banking services due to buggy app
- Manila Solar City: Tieng brothers unveil new multibillion-peso township
4th IELTS office opens in PH as more Filipinos take test [Philippine Daily Inquirer, November 28, 2022]
International Development Program (IDP) Philippines, the local unit of the Australian-listed firm said it plans to eventually open six more in key cities to bring its services to a larger audience.
‘All systems go’: PAL conducts test flight to Loakan Airport in Baguio City [ABS-CBN News, November 28, 2022]
Philippine Airlines said on Monday it successfully conducted a test flight to the Loakan Airport in Baguio City ahead of its planned Cebu – Baguio route opening on Dec. 16.
Baguio relaunches online tourist registration app [The Manila Times, November 28, 2022]
Supervising Tourism Operations Officer Engr. Aloysius Mapalo stated that the platform is currently being populated with accredited tourism-related establishments, accommodation facilities, tour operators, restaurants, and tourist destinations, among others, that will make it easier for visitors to navigate and schedule their visits to the city.
To entice more investors, Peza seeks to enhance perks [Inquirer Mobile, November 28, 2022]
“We need to amend the Peza law. It’s a 27-year-old law, and we’re saying there is a need to institutionalize work-from-home policy, although this is already the direction, so that both BOI (Board of Investments) and Peza will be on an equal footing,” Panga said during the agency’s recognition day for investors.
No more cheating? House bill vs game-fixing in sports passed on 3rd reading [Manila Bulletin, November 28, 2022]
The House of Representatives unanimously approved on third and final reading Monday afternoon, Nov. 28 a measure that seeks to expand the elements of game-fixing and provides stiffer penalties for such offenses in professional and amateur sports contests.
Puregold announces purchase of PSMT Philippines [The Philippine Star, November 28, 2022]
Kareila Management Corp. is the owner and operator of S&R membership shopping warehouses. Publicly-listed retail holding company Cosco Capital Inc., which is run by the Co family as well, owns Puregold and S&R.
Megaworld unit plans Cavite luxury estate [Inquirer Mobile, November 28, 2022]
The new residential development called Prana Garden Villas will be built in Sherwood Hills, Trece Martires, Cavite. The turnover of the lots will commence in 2026.
Road to recovery: Lopez family unloads ABS-CBN’s multi-billion peso lot in Quezon City to cut debt load [Bilyonaryo, November 27, 2022]
ABS-CBN Broadcasting of the Lopez family has raised fresh cash from the sale of a prime property near its broadcasting compound in Quezon City.
Elon Musk Sends Special Invitation to Bill Gates [TheStreet, November 27, 2022]
Last May, Musk protested because Gates had a short position of $500 million against Tesla. Short selling stock is a bet that the stock price will drop.
Boy Reyno’s Manila Jockey Club returns to profitability as more people bet on horse racing [Bilyonaryo, November 27, 2022]
Horse racing and property firm Manila Jockey Club of the family of Boy Reyno swung to profitability in the first three quarters of the year as more racing days led to higher revenues.
NAIA ranked 3rd ‘most stressful airport’ in Asia, Oceania-study [The Philippine Star, November 26, 2022]
The most stressful airport in the world according to the data is the United Kingdom’s Manchester Airport, which had 82.5% of reviews indicating stress — in fact, four of the top 10 were found in the UK (including Manchester), and another five were elsewhere in Europe.
SMC power unit wins 60-day TRO from CA [Inquirer Mobile, November 26, 2022]
The Court of Appeals has granted the temporary restraining order (TRO) sought by conglomerate San Miguel Corp. (SMC) which, in effect, will temporarily halt the implementation of the power supply deal with Manila Electric Co. (Meralco).
CAVITEX C5 Link adjusts toll on Sunday, Nov 27 [Manila Bulletin, November 26, 2022]
Effective 12:01AM of November 27, 2022, Sunday, motorists passing through CAVITEX C5 Link (Segment 1: Taguig to Merville and Segment 3.2: Merville to E. Rodriguez) will pay the provisional toll rate of P35.00 for Class 1, P69.00 for Class 2 , and P104.00 for Class 3 motorists.
Local vehicle output revved up by 20% in October [Inquirer Mobile, November 26, 2022]
The Philippines’ ranked fifth among six Asean member economies in terms of total output this year, far behind that of Indonesia, Thailand, Malaysia, Thailand and Vietnam.
Marcos admin looking to expand nursing, medical scholarship programs [The Philippine Star, November 26, 2022]
The Marcos administration is looking to expand the nursing and medical scholarship programs to meet the widening demand for health care professionals due to the lingering pandemic.
International fiber optic cable lands in Batangas [Inquirer Mobile, November, November 26, 2022]
The 9,400-kilometer underwater Asia Direct Cable (ADC) “landed” in Nasugbu, Batangas on Friday, marking the first major development since PLDT Inc. announced the start of its construction last month.
John Gokongwei’s brother, children, nephews inherit P17 million in JG Summit shares [Bilyonaryo, November 26, 2022]
Gokongwei’s three children who are active in JG also got a piece of the estate settlement – president and CEO Lance Gokongwei with 29,158 shares; director Robina Gokongwei Pe, and SVP Lisa Gokongwei Cheng with 29,157 shares each.
P23-B NLEX-SLEX Connector opening 1Q 2023 [Manila Bulletin, November 25, 2022]
The NLEX-SLEX Connector, an eight-kilometer, four-lane, all elevated tollway extending the alignment of the North Luzon Expressway (NLEX) from Caloocan City to Santa Mesa in Manila, links up with Skyway Stage 3, and ultimately, to the South Luzon Expressway (SLEX).
GCash to add security camera in fight vs hacking [Philippine Daily Inquirer, November 25, 2022]
E-wallet service provider GCash will introduce a “double authentication” feature in December to protect customers from potential hacking amid the proliferation of text scams.
Ayala Land unveils new bond program to pay old debts [The Philippine Star, November 25, 2022]
At its meeting on Friday, the company’s board of directors approved a plan to borrow up to P45 billion from investors via retail bonds and/or corporate notes, regulatory filing showed. The property giant also has an option to raise the cash through bilateral term loans.
Elon Musk says Twitter to provide ‘amnesty’ to some suspended accounts starting next week [Inquirer Mobile, November 25, 2022]
Elon Musk said on Thursday that Twitter will provide a “general amnesty” to suspended accounts starting next week after running a poll on whether to do so for users who had not broken the law or engaged in egregious spam.
Shoppers transferring to Lazada? CEO reacts [ABS-CBN News, November 24, 2022]
Barrera also reacted to the issue that many transferred to Lazada from its rival Shopee, which found itself in hot water over one of its celebrity endorsers.
NEDA Board endorses new EO reducing tariffs on e-vehicles [The Philippine Star, November 24, 2022]
The National Economic and Development Authority (NEDA) Board approved on Thursday an executive order that will modify the tariffs imposed on electric vehicles (EV), one that could quicken the proliferation of EVs within the Philippines.
The Philippines Positioned As The World’s Maritime Capital [Marine Insight, November 24, 2022]
The Department of Transportation (DOTr) mentioned yesterday that it would establish the country as the “Maritime Capital of the World” by offering the worldwide maritime industry with top-notch Filipino seafarers.
Quimbo: Grab PH defiant, keeps overcharging passengers despite PCC limits [Inquirer.Net, November 24, 2022]
Despite fines imposed by the Philippine Competition Commission (PCC) for overcharging, Grab Philippines has allegedly maintained raising fares, drawing fire from Marikina 2nd District Rep. Stella Luz Quimbo.
Salary increases in Philippines in 2023 to hit pre-pandemic levels: survey [ABS-CBN News, November 23, 2022]
Salaries will increase by around 5.5 percent in 2023, which is higher than the 5.3 percent median rate this year, according to Mercer’s annual Total Remuneration Survey (TRS) 2022.
Hard sell? DITO SIMs being given away for free by some fast food joints [Bilyonaryo, November 23, 2022]
Hard sell? DITO Starter packs are reportedly being given away for free by beleaguered DITO chief Dennis Uy in Wendy’s stores, one of the franchises he is reportedly looking to unload.
P33k minimum wage for gov’t workers nationwide sought amid rising prices [The Philippine Star, November 23, 2022]
This comes after Budge Secretary Amenah Pagdangaman said Tuesday that the DBM would study the possibility of another round of salary increases and review the present benefits of government employees next year.
Ain’t in good hands: Metrobank clients lose access to mobile banking services due to buggy app [Bilyonaryo, November 22, 2022]
It turns out that the bank removed credit card features in the old app on November 11 in anticipation of the new online banking portal by November 16.
Manila Solar City: Tieng brothers unveil new multibillion-peso township [Bilyonaryo, November 22, 2022]
The project involves the reclamation of 148 hectares beside the Cultural Center of the Philippines (CCP) Complex, and behind the Manila Yacht Club and Philippine Navy headquarters.
2. DOF REVERSES THE EARLIER BIR RULING ON CWT IMPOSITION ON THE NET DISTRIBUTIVE SHARE OF THE CO-VENTURERS IN A TAX-EXEMPT JV
TC-DM Joint Venture (TC-DM JV) is requesting a review of BIR’s Ruling, which ordained that the respective net income of the co-venturers derived from the Joint Venture (JV) project is subject to the Creditable Withholding Tax (CWT). It argued that the BIR’s theory that distributive share of the co-venturers is subject to CWT is misplaced for the following reasons: (a) there is no basis for the imposition of the Expanded Withholding Tax (EWT) on the distribution of the net distributable shares of the co-venturers; and (b) the Department of Transportation (DOTr) shall assume any EWT, if any, on the distribution of the net income of TC, a Japanese Corporation co-venturer. In ruling, the DOF agreed that TC-DM JV is a valid JV or consortium fully compliant with the requirements under Revenue Regulations (RR) No. 10-2012, hence, not taxable as a corporation under Section 22 of the 1997 Tax Code, as amended. However, the Bureau made a reversible error when it further declared in the earlier BIR Ruling that the distributive share of the co-venturers in a tax-exempt JV is subject to CWT. As emphasized, the 1997 Tax Code, as amended, does not have an explicit provision imposing CWT on the net income distributed to each co-venturer in a non-taxable JV. Moreover, RR No. 2-98, as amended by RR No. 11-2018, provides a list of income payments subject to CWT and the rates prescribed thereon, which appears to contain an exclusive enumeration of transactions that are subject to withholding tax scheme. [DEPARTMENT OF FINANCE OPINION NO. 018.2022, OCTOBER 17, 2022]
3. BIR ISSUES IRR IMPLEMENTING THE VAPE LAW
Revenue Regulations (RR) No. 14-2022, issued on November 11, 2022, prescribes the rules and regulations implementing the provisions of Republic Act (R.A.) No. 11900, otherwise known as the “Vaporized Nicotine and Non-Nicotine Products Regulation Act” or VAPE Law, relative to the importation, manufacture, sale, packaging, distribution, use, and communication of Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco products. Specifically, the regulations prescribe the amount of excise tax and related fees to be levied and imposed, minimum floor price, registration process for manufacturers, importers, or exporters, and authority of the BIR to conduct inventory, confiscate and seize for the violations committed, among others.
4. CTA CASES
CLAIM FOR LOCAL BUSINESS TAX REFUND SHOULD BE DISMISSED FOR FAILURE TO PROVE WITH PREPONDERANCE OF EVIDENCE
Petitioner Holcim Philippines, Inc. filed a Petition for Review against Respondents City of Manila and its City Treasurer, Josephine Daza, seeking a reversal of the earlier Regional Trial Court (RTC)’s Decision. The Petitioner argued that it does not need a separate business permit deeming it a manufacturer or wholesaler of essential commodities before it could take advantage of the preferential rate of Local Business Tax under the Local Government Code (LGC). It contended that all it needs to comply with are the reglementary periods laid down in the LGC. On the other hand, the Respondent countered that aside from the periods provided in the LGC, the Petitioner is still bound to prove the fact of an erroneous or illegal collection in which it failed to do so. In ruling, for the Petitioner to be entitled to the discounted tax rate, it is incumbent upon the Petitioner to prove that it is engaged in business as a manufacturer, miller, producer, wholesaler, distributor, dealer, or retailer of cement or other essential commodities. However, from the nature of its business, the Petitioner is not exclusively engaged in the sale and/or manufacture of cement. According to its Amended Articles of Incorporation, it may engage in the sale and/or manufacture of all kinds of minerals and building materials that may or may not fall within the scope of the essential commodities. Consequently, the Court finds that the Petitioner has failed to prove, with preponderance of evidence, that it is entitled to the preferential rate. The Court finds no reversible error in the RTC’s denial of the Petitioner’s claim for refund. Consequently, the Petition was DENIED. [HOLCIM PHILIPPINES, INC. VS. THE CITY OF MANILA & JOSEPHINE D. DAZA, IN HER CAPACITY AS THE CITY TREASURER OF THE CITY OF MANILA, CTA AC NO. 251, NOVEMBER 18, 2022]
[IT IS THE PROVINCIAL GOVERNOR WHO HAS THE AUTHORITY TO FILE SUITS ON BEHALF OF THE PROVINCE] [AUTHORITY TO FILE PETITION IS NOT WITH TREASURER]
Petitioners Provincial Treasurer of Benguet and Officer-in-Charge (OIC) of the Municipal Treasury Office of Bakun, Benguet filed a Petition for Review assailing the Central Board of Assessment Appeals (CBAA) Decision and Resolution. The Petitioners claimed that the applicability of Executive Order (E.O.) No. 88-2019 was never raised as an issue before the proceedings in the Local Board Assessment Appeals (LBAA) and the CBAA. On the other hand, the Respondent Luzon Hydro Corporation countered that the CBAA correctly applied E.O. No. 88 and that the Petitioners failed to show authority to file the Petition. In ruling, the Court held that the Petitioners are not empowered to file the Petition and to sign the requisite Verification and Certification of Non-Forum Shopping. Although Sections 183 and 266 of the Local Government Code authorize the Local Treasurer to collect delinquent taxes, fees, charges, or other revenues and real property tax through judicial action, said provisions show that such authority applies specifically to a collection case. The instant Petition does not involve collecting delinquent taxes or real property tax by the Provincial and OIC Municipal Treasurers. The discharge of any other powers may only be made by authority of law or by an ordinance. As the Petitioner filed the Petition in their official capacity, the filing thereof should be supported by a valid authorization from the Sangguniang Panlalawigan, which in this case no written proof of their authority to file the Petition was presented. The Court also held that the CBAA did not err in applying E.O. No. 88. Consequently, the Petition was DISMISSED. [IMELDA MACANES, IN HER CAPACITY AS THE PROVINCIAL TREASURER OF BENGUET & MERLITA G. TOLITO, IN HER CAPACITY AS THE OFFICER-IN-CHARGE OF THE MUNICIPAL TREASURY OFFICE OF BAKUN, BENGUET VS. LUZON HYDRO CORPORATION, CTA EN BANC CASE NO. 2407, NOVEMBER 7, 2022]
[SUBSTITUTED SERVICE CAN BE RESORTED TO WHEN THE PARTY IS NOT PRESENT AT THE REGISTERED OR KNOWN ADDRESS] [IF KNOWN ADDRESS IS THE PLACE OF RESIDENCE, SUBSTITUTED SERVICE CAN BE MADE BY LEAVING THE COPY WITH A PERSON OF LEGAL AGE RESIDING THEREIN]
Accused KJET Enterprises and its sole proprietor Julie Grace Magahis y Rafon were charged for violation of Section 255 of the 1997 Tax Code, as amended, for their failure to pay deficiency taxes. Plaintiff People of the Philippines maintained that due process was observed in the assessment of the Accused. It argued that the Letter of Authority and the assessment notices were validly served through substituted service while all other issuances were properly served via registered mail. Further, despite the finality and adequate notice and demand for payment of deficiency taxes, the Accused failed willfully to pay. On the other hand, the Accused countered that they did not receive any notice of the assessment. They argued that the service of said notices on the Accused Magahis, through her father Esmeraldo, was invalid. In ruling, the rules provide that substituted service may be made at the taxpayer’s residential address by leaving a copy of the notice with a person of legal age residing therein. It must be noted that at the time the notices were first served at Accused KJET’s business address, KJET had already ceased operations and did not notify the BIR of any change in the Accused entity’s registered business address nor the closure of the operations, hence, the BIR was justified in resorting to substituted service. Consequently, the Court sees no issue with the service of the notices to Esmeraldo considering that he is a person of legal age residing therein. All the elements of tax evasion having been proved, the Accused Magahis’ feigned ignorance of the assessment against her cannot exempt her from criminal liability. Consequently, the Court finds the accused GUILTY beyond reasonable doubt of violation of Section 255 of the Tax Code, as amended. [PEOPLE OF THE PHILIPPINES V. KJET ENTERPRISES & JULIE GRACE MAGAHIS y RAFON, CTA CRIMINAL CASE NOS. O-768 AND O-769, NOVEMBER 3, 2022]
[DENIAL OF REQUESTS FOR LOA CANCELLATION IS NEITHER A DECISION NOR A QUASI-JUDICIAL ACT OF THE CIR] [REVENUE OFFICERS, GROUP SUPERVISORS & THE CHIEF OF THE LEGAL DIVISION ARE NOT PERFORMING A QUASI-JUDICIAL FUNCTION WHEN THEY SIGN & ISSUE RESPONSE LETTER]
Petitioners St. Timothy Construction Corporation, et al., filed a Petition for Review under Rule 65 of the Revised Rules of Court, assailing the response letters issued by the Respondent Bureau of Internal Revenue, denying the Petitioners’ respective requests for cancellation of the Letters of Authority (LOAs) issued to them. Petitioners submitted that a Petition for Certiorari filed with the Court of Tax Appeals (CTA) is the correct remedy as the CTA’s jurisdiction is not limited to cases that involve decisions of the Commissioner of Internal Revenue (CIR) on matters involving assessments or refunds but also covers other cases arising from the Tax Code, as amended. Petitioners argued that the denial of their requests for LOA cancellation is a decision of the Commissioner of Internal Revenue (CIR) arising under the Tax Code and its related laws. On the other hand, the Respondent countered that the Petition for Certiorari should be outrightly dismissed since the power of CIR to make assessments and prescribe additional requirements for tax administration and enforcement (i.e., issuance of LOA) are neither judicial nor quasi-judicial in nature. In ruling, the Court held that Petitioners failed to satisfy the essential requisites for a Petition for Certiorari. The issuance of the response letters denying the Petitioners’ request for cancellation of LOAs is not a judicial or quasi-judicial act of the Respondent. Also, the Petitioners failed to show that the issuance of the subject LOAs is tainted with grave abuse of discretion. Lastly, Petitioners failed to exhaust all other remedies available to them. Consequently, the Petition was DISMISSED. [ST. TIMOTHY CONSTRUCTION CORPORATION, ST. MATTHEW GEN. CONTRACTOR & DEVELOPMENT CORPORATION, ALPHA & OMEGA CONTRACTOR & DEVELOPMENT CORPORATION, ST. GERRARD CONSTRUCTION GEN. CONTRACTOR & DEVELOPMENT CORPORATION & PACIFICO F. DISCAYA II VS. BUREAU OF INTERNAL REVENUE, CTA CASE NO. 10472, NOVEMBER 3, 2022]