BIR EXTENDS THE DEADLINE FOR REPLACEMENT OF ASK FOR RECEIPT WITH NOTICE TO ISSUE RECEIPT/INVOICE
- TAX & BUSINESS-RELATED NEWS [JULY 6-12]
- BIR EXTENDS THE DEADLINE FOR REPLACEMENT OF ASK FOR RECEIPT WITH NOTICE TO ISSUE RECEIPT/INVOICE
- BIR RULINGS
1. TAX & BUSINESS-RELATED NEWS [JULY 17-24]
- ChatGPT sued over AI copyright
- PH second ‘most attacked’ by crypto phishing in Southeast Asia —Kaspersky
- D&L starts commercial operations of Batangas plant
- LIST: Best places to work in IT, BPO sector
- Landbank-DBP merger delayed to H1 next year – DOF
- Financing firms told to register with CIC
- COA can audit POGO earnings, DOJ says
- Binance execs quit amid problems
- Carmona now a city after successful plebiscite
- NGCP blames red tape, right-of-way issues for woes
- Parañaque top performing LGU – ARTA
- DBP loan to fund Iloilo transport co-op fleet
- PhilHealth yet to pay P500-M claims of hospitals due to lack of papers —COA
- BPI waives transfer fees for small transactions
- BIR extends deadline for posting of new-format receipt notice
- BPI waives interbank transfer fees until end-September
- BIR EXTENDS THE DEADLINE FOR REPLACEMENT OF ASK FOR RECEIPT WITH NOTICE TO ISSUE RECEIPT/INVOICE
Revenue Memorandum Circular (RMC) No. 75-2023, issued on July 5, 2023, extends the deadline for the replacement of Ask for Receipt Notice (ARN) with Notice to Issue Receipt/Invoice (NIRI) on or before September 30, 2023.
To secure the NIRI, taxpayer shall fill out BIR Form 1905-Registration Update Sheet to indicate/update the designated official email address, which will be used by the BIR as an additional manner in serving BIR orders, notices, letters, communications, and other processes to the taxpayers. Business taxpayers who failed to renew on or before September 30, 2023, shall be imposed a penalty of not more than ₱ 1,000.
It may be recalled that under Revenue Regulations (RR) No. 10-2019 and RMO No. 43-2022, all business taxpayers were mandated to exhibit at their place of business the new BIR Notice to the Public or NIRI to replace their old “Ask for Receipt” until June 30, 2023.
- BIR RULINGS
SOFT COPY OR SCANNED COPY OF RECEIPTS IS NOT SUFFICIENT TO COMPLY WITH BIR RETENTION POLICY
B Co. is seeking an opinion on maintaining only the soft copy of documents evidencing staff claims for reimbursements. As represented, B Co. provides management consulting services and commonly that its staff will incur business expenditures when performing their duties wherein the staff is allowed to file claims for expenses electronically which are retained in the expenses management system. In reply, Section 34 (A)(1)(b) of the 1997 Tax Code, as amended, provides for the substantiation requirement of ordinary or business expenses with sufficient evidence, such as official receipts or other adequate records. In BIR Ruling No. 027-01 citing the cases of Zamora vs. Collector and Visayan Cebu Terminal Co., Inc. vs. Collector, provides that for an expense to be deductible, generally, the BIR only accepts the original copy of the receipt/s. A taxpayer may retain only an electronic copy of such accounting records in an electronic storage system for the remaining five (5) year period, provided that the taxpayer shall comply with Section 2-A of Revenue Regulations (RR) No. 17-2013, as amended. Furthermore, the absence of original receipts or records does not prevent a taxpayer from proving by other evidence that the claimed deduction was really paid or incurred. However, pursuant to Republic Act (RA) No. 8792, otherwise known as the “Electronic Commerce Act of the Philippines (E-Commerce Act)” scanned document alone cannot prove the integrity of the document. Thus, it is not considered an electronic document and, therefore, not an original document. In view of the foregoing, the scanned copies of the receipts/bills evidencing the business expenses incurred by the staff are not sufficient for record-keeping purposes under Sections 34 (A)(1)(b) and 237 of the 1997 Tax Code, as amended. [BIR RULING NO. 070-2023, JUNE 06, 2023]
A MERGER, TO BE CONSIDERED TAX-FREE, REQUIRES THE ISSUANCE OF NEW SHARES IN EXCHANGE FOR PROPERTY
M Co. is requesting a ruling that the merger between M Co. and P Co. qualifies as a tax-free merger in accordance with Revenue Regulations (RR) No. 18-2001 and Revenue Memorandum Order (RMO) No. 32-2001 pursuant to Section 40 (c) of the 1997 Tax Code, as amended. In reply, Section 40 (C) of the 1997 Tax Code, as amended, provides that to qualify as an exception to the recognition of the gain or loss upon the sale or exchange of property, a corporation that is a party to a merger exchanges its property for stock in another corporation which is also a party to the merger. Here, there was no exchange of property solely for stock in another corporation. P Co., as the absorbed corporation, transferred all the respective rights, businesses, assets, and other properties including, but not limited to, all and real properties, contractual rights, licenses, privileges, property rights, claims, bank deposits, stocks, accounts receivable, credit lines, supplies, equipment, motor vehicles, and such other assets to M Co., as the surviving corporation, without any issuance of shares of stocks in favor of the stockholders of P Co. Although the merger is a valid reorganization, that alone is not sufficient to afford non-recognition of gain or loss obtained in the transactions. Therefore, the merger of P Co. into M Co. does not qualify as a tax-free merger under Section 40 (C) of the 1997 Tax Code, as amended. [BIR RULING NO. 064-2023, JUNE 6, 2023]
VAT ZERO RATING ON SERVICES RENDERED BY FILIPINO ENTITY TO NON-RESIDENT FOREIGN CORPORATION NOT DOING BUSINESS IN THE PHILIPPINES
The Defense Threat Reduction Agency (DTRA), a non-resident foreign corporation, not doing business in the Philippines, is requesting confirmation that any Filipino entity who renders service to the DTRA and pays the former in an acceptable foreign currency, is subject to a zero-rated Value-Added Tax (VAT) rate. In reply, Section 108 (B) (2) of the 1997 Tax Code, as amended, provides that services rendered by any Filipino VAT-registered entity towards DTRA or any of its foreign based contractors, which are paid for in acceptable foreign currency, may qualify for VAT zero-rating, provided, that the same is remitted inwardly and accounted for in according with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). Citing the Supreme Court case of Chevron Holdings, Inc. vs. Commissioner of Internal Revenue (CIR), the requirements for VAT zero-rating in Section 108 (B) (2) that must concur are: (1) services rendered should be other than processing, manufacturing or repacking of goods; (2) services are performed in the Philippines; (3) service recipient is a person engaged in business conducted outside the Philippines or a non-resident person not engaged in a business which is outside the Philippines when the services are performed; and (4) services are paid for in acceptable foreign currency inwardly remitted and accounted for in conformity with BSP rules and regulations. Thus, services rendered by any Filipino VAT-registered entity towards DTRA or any of its foreign based contractors may qualify for VAT zero-rating. [BIR RULING NO. 060-2023, MAY 29, 2023]
DENIED INPUT VAT ARISING FROM FAILURE TO SUBSTANTIATE ZERO-RATED SALES CANNOT BE CLAIMED AS DEDUCTIONS
L Co. is requesting confirmation that a denial of its application for input Value-Added Tax (VAT) refund due to non-substantiation of its zero-rated transactions, shall allow the company to utilize the denied amount of claim as a deduction for income tax purposes. As represented, L Co. filed its application for a VAT refund for excess input VAT related to zero-rated sales on its export sales operation. However, it was denied due to its failure to substantiate the existence of zero-rated sales. In reply, Section 112(A) of the 1997 Tax Code, as amended, provides that the excess input tax attributable to zero-rated or effectively zero-rated transactions can only be refunded or credited against the taxpayer’s other national internal revenue tax. Electing one of the options has the effect of excluding the other form being availed of. However, nothing in the Tax Code, as amended, authorizes the utilization of the denied claim for input VAT refund as deductions to its income tax. Consequently, the request for confirmation was denied for lack of legal basis. [BIR RULING NO. 059-2023, MAY 19, 2023]
TAX EXEMPTION ON INVOLUNTARY SEPARATION PAY AS A RESULT OF NATIONAL FOOD AUTHORITY RESTRUCTURING DUE TO RICE TARIFFICATION LAW
The National Food Authority (NFA) is requesting a ruling that the proceeds it paid to its NFA Regional Office No. IV employees affected by the restructuring of the NFA pursuant to the Republic Act (R.A.) No. 11203 or the “Rice Tariffication Act” and its Implementing Rules and Regulations (IRR), who were involuntarily separated from government service under NFA’s Separation Incentive Package (SIP) are tax exempt. In reply, Section 32 (B) (6) (b) of the 1997 Tax Code, as amended, provides that any amount received by an official or employee or by his heirs from the employer as a consequence of the separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee is exempt from taxes regardless of age or length of service. The separation from the service of the official or employee must not be of his own making. Thus, the separation of the officials and employees identified and recommended by the NFA to have met the criteria for SIP is involuntary and is a consequence of the restructuring of the NFA. Therefore, any and all amounts to be received by them as a consequence of their involuntary separation from the service is not subject to the income tax imposed under Section 24 (A) of the 1997 Tax Code, as amended and, consequently, to the withholding tax on wages pursuant to Section 79 of the same Code. [BIR RULING NO. 046-2023, MAY 18, 2023]
GOVERNMENT AGENCY SELLING SMUGGLED AGRICULTURAL PRODUCTS IS EXEMPT FROM INCOME TAX & VAT
The Department of Agriculture (DA) is requesting an opinion if the sale to the general public of the donated seized smuggled agricultural products is subject to tax. In reply, Section 32 (B) (7) (b) of the 1997 Tax Code, as amended, excludes from the gross income and exempts from income tax, income derived from the discharge of any essential governmental functions accruing to the Government of the Philippines or any of its political subdivisions. The sale of the donated seized smuggled goods is intended to promote market price stability and to give the general public access to reasonable price in accordance with Section 3, Title IV, Chapter 1 of the Administrative Code of 1987. Furthermore, Section 109 of the same Code provides that the sale of agricultural food products in their original state is not subject to Value-Added Tax (VAT). Moreover, the sale is not a regular or habitual activity considered in the course of trade or business and not aimed at generating profit, but an event conducted to stabilize market prices and provide affordable agricultural products to the public to fulfill the mandate of the government. Thus, any income by the DA from the sale of donated smuggled goods is considered derived from carrying out an essential governmental function and, therefore, is not considered as part of its gross income, thus, exempt from income tax and VAT. [BIR RULING NO. 031-2023, APRIL 14, 2023]
ChatGPT sued over AI copyright [The Manila Times, July 12, 2023]
WASHINGTON, D.C.: US comedian Sarah Silverman and two other authors have sued Open AI over copyright infringement in the latest pushback by creatives since the company’s release of ChatGPT took the world by storm.
PH second ‘most attacked’ by crypto phishing in Southeast Asia —Kaspersky [GMA News Online, July 11, 2023]
Data released by the company on Tuesday showed that crypto phishing attacks detected in the country surged by 169.93% to 24,737 attacks in the past year, only second to Vietnam, which had 64,080 attacks.
D&L starts commercial operations of Batangas plant [The Philippine Star, July 11, 2023]
D&L Industries, a chemicals and food ingredients company, has commenced commercial operations of its new manufacturing facility in Batangas.
LIST: Best places to work in IT, BPO sector [ABS-CBN News, July 11, 2023]
The IT and Business Process Association of the Philippines (IBPAP) has released a list of the best places to work in the IT and business process outsourcing (BPO) sector in the Philippines.
Landbank-DBP merger delayed to H1 next year – DOF [The Philippine Star, July 10, 2023]
The Finance chief earlier argued that the merged bank would be in the best position to serve as the sole authorized government depository bank for all state agencies and corporations, government instrumentalities and local government units.
Financing firms told to register with CIC [The Manila Times, July 10, 2023]
ALL financing and lending firms with online platforms should register with the Credit Information Corp. (CIC) as part of efforts to improve investor protection, the Securities and Exchange Commission (SEC) said last week.
COA can audit POGO earnings, DOJ says [GMA News Online, July 10, 2023]
In a legal opinion dated June 30, the DOJ said there appears to be legal basis and sound fiscal reasons for the Commission on Audit (COA) to audit the gross gaming receipts (GRR) of POGOs, while the Philippine Amusement and Gaming Corporation (PAGCOR) is still in the process of procuring the services of a qualified third-party audit platform.
Binance execs quit amid problems [The Manila Times, July 9, 2023]
PARIS: Several top executives have quit cryptocurrency firm Binance as the company faces a widening net of legal probes across the world.
Carmona now a city after successful plebiscite [ABS-CBN News, July 9, 2023]
According to the results, 30,363 residents voted “yes” to ratifying the municipality’s conversion against 1,016 “no” votes–a whopping 29,347 lead.
NGCP blames red tape, right-of-way issues for woes [Inquirer Mobile, July 8, 2023]
The country’s lone grid operator insisted it had “successfully managed the transmission grid” despite being called out by the Energy Regulatory Commission (ERC) for 37 delayed projects, with some still not completed over 2,000 days beyond their expected energization dates.
Parañaque top performing LGU – ARTA [The Philippine Star, July 8, 2023]
The ARISE Awards are an overarching award for all national government agencies and local government units (LGUs), recognizing their efforts in pursuit of President Marcos’ directive to improve bureaucratic efficiency in the country.
DBP loan to fund Iloilo transport co-op fleet [Inquirer Mobile, July 8, 2023]
DBP president and CEO Michael de Jesus said a statement that the loan to Metro Iloilo Transport Service Cooperative or MITS Co-op was part of the state-run bank’s efforts to promote efficient, safer and greener public transportation system in the province.
PhilHealth yet to pay P500-M claims of hospitals due to lack of papers —COA [GMA News Online, July 7, 2023]
State insurer Philippine Health Insurance Corporation (PhilHealth) has yet to reimburse more than P500 million worth of claims filed by specialty hospitals due to lack of documents, the Commission on Audit (COA) said Friday.
BPI waives transfer fees for small transactions [ABS-CBN News, July 6, 2023]
In a statement, BPI said users of their new app can make InstaPay transfers of up to P1,000 to other bank accounts from July 5 until the end of September.
BIR extends deadline for posting of new-format receipt notice [BusinessWorld, July 6, 2023]
Businesses now have until Sept. 30 to obtain and display the NIRI, which will replace the previous Ask for Receipt Notice (ARN).
BPI waives interbank transfer fees until end-September [GMA News Online, July 6, 2023]
In an advisory, BPI said it would waive transfer fees for InstaPay transfers of up to P1,000 from July 5 to September 30, 2023, as it called on clients to move to its new application launched in April. The earlier version of the application is set to be phased out by the end of the year.