SEC GRANTS AMNESTY FOR NON-FILING & LATE FILING OF THE GENERAL INFORMATION SHEET (GIS) & ANNUAL FINANCIAL STATEMENTS (AFS)
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [MARCH 14-20]
- SEC GRANTS AMNESTY FOR NON-FILING & LATE FILING OF THE GENERAL INFORMATION SHEET (GIS) & ANNUAL FINANCIAL STATEMENTS (AFS)
- DOLE LABOR ADVISORY ON THE ANNUAL SUBMISSION OF WAGE REPORT FOR CY 2022
- CTA CASES ON THE TAX EXEMPTION OF ELECTRIC COOPERATIVES REGISTERED WITH NEA & LOCAL BUSINESS TAX REFUND
- BIR RULINGS ON THE PROPER TAX TREATMENT OF FOREX GAIN OR LOSS OF A PEZA ENTITY & WITHHOLDING TAX EXEMPTION OF PER DIEM ALLOWANCE OF FIELD PERSONNEL
- SUPREME COURT CASE ON VOID ASSESSMENT AS A RESULT OF ABSENCE OF LOA ON THE PART OF BIR EXAMINER
1. TAX & BUSINESS-RELATED NEWS [MARCH 14-20]
- ‘SMS OTP no longer secure’: Data security threats in digital banking bared
- UK banking system ‘safe’ after Credit Suisse rescue
- Reader’s Digest reveals the most trusted brands and personalities in 2023
- SMC terminates 1,800-MW supply contracts with Meralco
- PH facing shortage of accountants – CPA group
- Capitol fences off NIA office in Banilad over lot dispute
- GCash adds new security feature to arrest account takeovers
- BIR files P25.5B tax evasion charges vs four corporations ‘selling fake receipts’
- Udenna eyes growing Wendy’s, Conti’s store network
- Marcos orders construction of fish ports in 11 provinces
- MPTC ‘keen’ to help build Metro Cebu Expressway
- House OKs bill for President to defer PhilHealth hikes
- Wall Street expert Robert Kiyosaki predicts next US bank to fail
- Construction of Cavite-Bataan bridge set for late 2023: DPWH
- British crypto lender suffers $200 million hack
‘SMS OTP no longer secure’: Data security threats in digital banking bared [interaksyon, March 20, 2023]
Data security experts revealed that the use of one-time passwords (OTP), which are common in online transactions, is no longer as effective as before.
UK banking system ‘safe’ after Credit Suisse rescue [BBC, March 20, 2023]
The UK’s central bank has said banks are “safe” after regulators agreed a rescue deal for Credit Suisse aimed at preventing fears over banks spreading.
Reader’s Digest reveals the most trusted brands and personalities in 2023 [Manila Bulletin, March 20, 2023]
The survey is an independently commissioned poll, with the results appearing exclusively in Reader’s Digest Philippines. Leading market research agency Catalyst Research surveyed a representative sample of 8000 individuals from the Philippines, Singapore, Malaysia, Hong Kong and Taiwan to determine which brands consumers trust most.
SMC terminates 1,800-MW supply contracts with Meralco [Manila Bulletin, March 18, 2023]
In an official statement to the media, Meralco affirmed that the notice of termination had already been lodged by SMC’s Excellent Energy Resources Inc. (EERI) for the 1,200MW of gas-generated capacity due for delivery in December 2024. Also terminated is the 600MW from Masinloc Power Partners Co. Ltd. that had been scheduled for commercial operations date (COD) in May 2025.
PH facing shortage of accountants – CPA group [CNN Philippines, March 17, 2023]
“That’s a big problem now of the profession because several of the CPAs here in the Philippines are migrating abroad, or they are working online for foreign companies,” said PICPA national president Erwin Alcala.
Capitol fences off NIA office in Banilad over lot dispute [SunStar Cebu, March 17, 2023]
Capitol plans to develop the area, which is near the Cebu IT Park, into economic enterprises that will generate a steady stream of revenue for the Province of Cebu, Sugbo News, the Capitol’s social media arm, reported on Friday morning.
GCash adds new security feature to arrest account takeovers [The Philippine Star, March 17, 2023]
DoubleSafe will be activated for every first login to a new mobile phone. To prevent account takeovers, GCash said the latest feature uses facial recognition to secure an account even if users inadvertently shared their mobile pin and OTP to fraudsters.
BIR files P25.5B tax evasion charges vs four corporations ‘selling fake receipts’ [Manila Bulletin, March 16, 2023]
BIR Commissioner Romeo D. Lumagui Jr. identified the four corporations as Decarich Super Trade, Phil Force, Crazy Kitchen, and Redington Corporation.
Udenna eyes growing Wendy’s, Conti’s store network [ABS-CBN News, March 15, 2023]
Udenna Group’s food arm Eight8Ate eyes expanding its brands Wendy’s and Conti’s store network to 200 this year, an official said on Wednesday.
Marcos orders construction of fish ports in 11 provinces [The Manila Times, March 15, 2023]
He said the plan is to build 11 more cold storage facilities on top of those already being constructed in various ports in the cities of General Santos and Cagayan de Oro.
MPTC ‘keen’ to help build Metro Cebu Expressway [SunStar Cebu, March 15, 2023]
The project traverses the slopes in the mountains of the City of Naga in the south to Danao City in the north. It has a distance of 72 kilometers.
House OKs bill for President to defer PhilHealth hikes [ABS-CBN News, March 14, 2023]
The House of Representatives approved on second reading House Bill 6772 which would authorize the President of the Philippines to suspend the increase in premium payments to the Philippine Health Insurance Corporation (PhilHealth).
Wall Street expert Robert Kiyosaki predicts next US bank to fail [News.Com.AU, March 14, 2023]
Renowned finance expert Robert Kiyosaki, best known for his successful prediction of the 2008 Lehman Brothers’ collapse that sparked the global financial crisis, has once again made waves with his latest forecast.
Construction of Cavite-Bataan bridge set for late 2023: DPWH [ABS-CBN News, March 14, 2023]
DPWH Secretary Manuel Bonoan said the cable-stayed bridge will be about 32 kilometers across Manila Bay and will cut travel time from over 3 hours to “less than 2 hours” if the passenger will come from Manila.
British crypto lender suffers $200 million hack [ABS-CBN News, March 14, 2023]
Hackers on Monday stole almost $200 million from a British company that specializes in lending to crypto projects, a security firm said, in the biggest such attack for months.
2. SEC GRANTS AMNESTY FOR NON-FILING & LATE FILING OF THE GIS & AFS
SEC Memorandum Circular No. 2, Series of 2023, dated March 15, 2023, grants amnesty for non-filing and late filing of the General Information Sheet (GIS) and Annual Financial Statements (AFS), and non-compliance with the creation and designation of official contact details pursuant to MC No. 28, Series of 2020.
Highlights include covered violations, amnesty rates, application processes and supporting documents, and exclusion from the coverage.
3. DOLE LABOR ADVISORY ON THE ANNUAL SUBMISSION OF WAGE REPORT FOR CY 2022
DOLE Labor Advisory No. 04, dated March 10, 2023, has advised all private establishments to submit an Annual Report on the verified itemized listing of their labor component, specifying the names of the rank-and-file employees, including learners, apprentices, and workers with disabilities, pursuant to Article 124 of the Labor Code, as amended by Republic Act (R.A.) No. 6727, otherwise known as the “Wage Rationalization Act.”
All private establishments are required to register, log-in, and submit their reports as of December 31, 2022, to the Annual Establishment Report on Wages (AERW) online portal.
4. CTA CASES ON THE TAX EXEMPTION OF ELECTRIC COOPERATIVES REGISTERED WITH NEA & LOCAL BUSINESS TAX REFUND
[NEA REGISTERED ELECTRIC COOPERATIVE (EC) IS INCOME TAX EXEMPT EVEN IF IT DID NOT OPT TO REGISTER UNDER CDA] [UNDER PD 269, EC IS ENTITLED TO A PERMANENT EXEMPTION FROM PAYMENT OF INCOME TAXES DURING ITS EXISTENCE]
Petitioner Misamis Oriental II Rural Electric Service Cooperative Inc. filed a Petition for Review praying for the cancellation of the Final Decision on Disputed Assessment (FDDA) issued by the Respondent Commissioner of Internal Revenue (CIR). Petitioner contended that as an Electric Cooperative (EC), it is exempted from payment of Income Tax by virtue of Section 39 of Presidential Decree (P.D.) No. 269, otherwise known as the “National Electrification Administration (NEA) Decree,” despite its non-registration with the Cooperative Development Authority (CDA). On the other hand, the Respondent countered that the Petitioner’s Income Tax exemption is dependent on its successful registration with the CDA. In ruling, the law gives an EC the three (3) options as regards its registration with the passage of the Republic Act (R.A.) No. 6939, otherwise known as the “Cooperative Development Authority (CDA) Law.” First, it may choose to remain as a non-stock, non-profit cooperative. Second, it may convert itself into a stock cooperative and register under the CDA. Third, it may convert itself into a stock corporation registered under the Securities and Exchange Commission (SEC). If an EC elects the 1st option, it will be governed by the provisions of P.D. No. 269 but will not be entitled to the incentives under the CDA Law. If the EC chooses the 2nd option, it shall continue to enjoy the benefits of P.D. No. 269 but the enjoyment of the incentives under R.A. No. 6939 shall be dependent on its successful registration with the CDA. If the EC opts for the 3rd option, it shall be entitled to all the rights and powers of any stock corporation but no longer enjoy the incentives provided by P.D. No. 269, as amended, or R.A. No. 6939, as amended. Notwithstanding the ECs’ choice, it will nevertheless remain subject to the NEA’s regulatory power. Here, the Petitioner has opted for the 1st option. The Court held that R.A. No. 10531, which strengthens P.D. No. 269, does not require an EC to register with the CDA as a condition precedent to enjoy the incentives under R.A. No. 10531. R.A. No. 9520, which amends the Philippine Cooperative Code, also affirmed the EC’s right to remain registered with the NEA without necessarily registering with the CDA. Contrary also to the Respondent’s contention, EC’s Income Tax exemption under P.D. No. 269 is not dependent on any condition other than an EC’s legal existence; hence, the exemption stands as long as the Petitioner legally operates. Thus, the Petition was GRANTED, and the Respondent was ENJOINED from collecting from the Petitioner. [MISAMIS ORIENTAL II RURAL ELECTRIC SERVICE COOPERATIVE, INC. (MORESCO-II) VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10145, FEBRUARY 28, 2023]
[ADMINISTRATIVE & JUDICIAL CLAIM FOR REFUND OF LBT MUST BE FILED WITHIN 2 YEARS FROM PAYMENT OF TAX] [DATA & ASSESSMENT FORM IS NOT TANTAMOUNT TO THE NOTICE OF ASSESSMENT] [NOTICE OF ASSESSMENT IS REQUIRED FOR THE ASSESSMENT TO BE VALID]
Petitioners City of Manila and its OIC-City Treasurer filed a Petition for Review seeking for the reversal of the Regional Trial Court (RTC)’s earlier Decision granting the claim for refund in favor of the Respondent Marina Square Properties, Inc. Petitioners argued that the Respondent failed to establish its alleged overpayment for Local Business Taxes (LBT). Likewise, the competence of the Respondent’s witness, the Chief Accountant, to testify was not duly established, and that the Respondent is guilty of undue delay in claiming a refund. On the other hand, the Respondent countered that its claims for refund of overpaid LBT were filed within the 2-year prescription period. Further, its witness need not be armed with a Board Resolution authorizing her to testify for the Respondent since she merely testified as a witness for the Respondent. In ruling, to be entitled to a claim for a refund of erroneously or illegally collected LBT, the taxpayer must first file a written claim for a refund or credit with the Local Treasurer; and subsequently file a judicial case for a refund, both of which must be filed within two (2) years from the payment of the tax. Here, records show that the Respondent paid the LBT and other local fees on February 12, 2016, as a prerequisite for the renewal of Respondent’s business permit. Hence, the Respondent’s administrative claim filed on November 3, 2017, and its judicial claim for refund filed on February 1, 2018, were timely instituted. Also, the Court held that the RTC committed no reversible error in giving credence to the testimony of Respondent’s sole witness. There is no substantive or procedural rule which requires a witness for a party to present some form of authorization to testify as a witness for the party presenting him or her. Moreover, a perusal of records disclosed that no notice of assessment was issued against the Respondent for the alleged deficiency taxes, except for a Data and Assessment Form. Lastly, the Court finds the Respondent entitled to a refund of erroneously collected and paid LBT. Consequently, the Petition was DENIED for lack of merit. [CITY OF MANILA AS REPRESENTED BY ITS CITY MAYOR, HONORABLE FRANCISCO “ISKO MORENO” DOMAGOSO & OIC-CITY TREASURER VS. MARINA SQUARE PROPERTIES, CTA AC NO. 252, FEBRUARY 20, 2023]
5. BIR RULINGS ON THE PROPER TAX TREATMENT OF FOREX GAIN OR LOSS OF A PEZA ENTITY & WITHHOLDING TAX EXEMPTION OF PER DIEM ALLOWANCE OF FIELD PERSONNEL
PROPER TAX TREATMENT OF FOREIGN EXCHANGE GAIN OR LOSS OF A PEZA-REGISTERED ENTITY
B Co., a Philippine Economic Zone Authority (PEZA)-registered Ecozone Export Enterprise, is requesting confirmation that the realized foreign exchange gain from transactions directly attributable to its registered activities should be covered by the same income tax incentives. As represented, B Co. transacts with suppliers and clients using foreign currencies resulting in foreign exchange gains or losses realized due to the fluctuations in values of foreign exchange on the date of recording and date of actual settlement. In reply, the tax treatment of foreign exchange gains shall depend on the activities from which they arise. Thus, the realized foreign exchange gains attributable to the registered activities of B Co. shall be covered by the same income tax incentives (i.e., income tax holiday and/or 5% gross income tax, whichever is applicable) as stated in the terms and conditions granted by PEZA. Meanwhile, if the foreign exchange gain is not attributed to its registered activities, such gain shall be subject to the regular income tax rate. [BIR RULING NO. 009-2023, FEBRUARY 16, 2023]
OUT-OF-TOWN PRE-CALCULATED PER DIEM ALLOWANCE TO FIELD ENGINEERS IS EXEMPT FROM WITHHOLDING TAX & SUBSTANTIATION
M. Co is seeking confirmation that per diems provided to its Filipino field service engineers are exempt from withholding tax on compensation. As represented, per diems cover the latter’s cost of daily expenses incidental to the business and are pre-calculated based on the cost of living in a particular destination where they will be deployed. In reply, Section 2.78.1(A)(6)(b) of Revenue Regulations (RR) No. 2-98, as amended, provides that any advances received by rank and file or managerial employees, in addition to their compensation relating to the ordinary and necessary expenses incurred or reasonably expected to be incurred in the performance of their duties and responsibilities, which are pre-computed on a daily basis and are paid to its employee on its assignment or duty, are not subject to withholding and requirements of substantiation. Moreover, for managerial employees, Section 2.33 (C) of RR No. 3-98 provides that allowances received that are necessary to the trade or business or for the convenience of the employer are Fringe Benefits not subject to Fringe Benefits Tax (FBT). Thus, the per diems paid to the employees are exempt from withholding tax and substantiation requirements. [BIR RULING NO. 008-2023, FEBRUARY 16, 2023]
6. SUPREME COURT CASE ON VOID ASSESSMENT AS A RESULT OF ABSENCE OF LOA ON THE PART OF BIR EXAMINER
[REASSIGNMENT OR TRANSFER OF REVENUE OFFICER REQUIRES NEW LOA] [VOID ASSESSMENT DUE TO ISSUANCE OF MOA AS SUBSTITUTE TO LOA] [MOA IS NOT A PROOF OF AUTHORITY OF REVENUE OFFICER TO AUDIT OR INVESTIGATE]
Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review on Certiorari assailing the Court of Tax Appeals (CTA) En Banc’s earlier Decision and Resolution declaring void the subject assessments for having been issued without a Letter of Authority (LOA) by Petitioner or his duly authorized representative. In ruling, the Court found no error on the part of the CTA En Banc when it raised the issue of lack of authority of the Revenue Officers (ROs) who conducted the audit. Citing the Court’s ruling in CIR vs. McDonald’s Philippines Realty Corporation, the Court held that: (1) the reassignment or transfer of RO requires the issuance of a new or amended LOA for the substitute or replacement RO to continue the audit; (2) the use of a Memorandum of Assignment (MOA), Referral Memorandum, or such equivalent document, directing the continuation of the audit by an unauthorized RO usurps the functions of the LOA; and (3) Revenue Memorandum Order (RMO) No. 43-90 expressly and specifically requires the issuance of a new LOA if ROs are reassigned or transferred. Moreover, the MOA, Referral Memorandum, or any equivalent document is not proof of the existence of authority of the substitute or replacement ROs to examine a taxpayer’s books of accounts, which is the function of an LOA. Consequently, the Petition was DENIED, and the earlier Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. WELLINGTON INVESTMENT & MANUFACTURING CORPORATION, G.R. NO. 249795, NOVEMBER 29, 2022, UPLOADED JANUARY 22, 2023]