Senate OKs Taxpayer’s Bill of Rights on final reading

Other Relevant Tax Updates:

  1. TAX & BUSINESS-RELATED NEWS [JULY 26-31]

  2. BIR RULINGS ON SCANNED COPY OF RECEIPTS & INVOICES, TAX-EXEMPT SEPARATION PAY, PROPER TREATMENT OF DENIED INPUT VAT REFUND & CAPITAL VS ORDINARY ASSET

1. TAX & BUSINESS-RELATED NEWS [JULY 26-31]

1. Senate OKs Taxpayer’s Bill of Rights on final reading

2. FIRB grants tax incentives for 25 projects in telco, data centers

3. ‘Certify as urgent ease of paying taxes bill’

4. Report: Mitsubishi Xpander, Nissan Livina could see local production

5. House panel revives bill establishing Bulacan airport zone

6. Marcos vows reform of tax incentives law

7. Grace Poe wants PPA’s TOP-CRMS scrapped

8. AI won’t take over BPO jobs, execs assure

9. Pag-IBIG Fund offers calamity assistance to members affected by ST Egay

10. Angkas, Pag-IBIG seek to empower riders through voluntary contribution collection

11. Customs seizes 51 high-end vehicles discovered in Pasig showroom

12. NGCP pressed to cut approval process for RE projects

13. P183 billion strategic investments get green lane certificates

14. PH Resorts teases new investors for delayed Cebu casino project

15. House measure seeks 43% tax on luxury items

16. AboitizPower earnings rise on higher plant availability

17. QC gov’t set to grant discounts on RPTs

18. Peza unfazed by drop in PH ranking as outsourcing hub

19. BIR eyes to collect 1% withholding tax from online merchants by Q4

20. Port fees in Manila, Dumaguete hiked

21. Malaysian milk company to invest $20M for cattle breeding in PH

22. DATEM completes P15-B projects, to finish 4 LRT1 Cavite Extension stations

23. Philippines still world’s second biggest banana exporter

24. Government savings eyed to help fund MUP pensions

25. TAPE, TVJ hearing on injunction case about ‘Eat Bulaga’ starts; Joey de Leon testifies

26. Chiz: Marcos tax measures ‘won’t be a slam dunk’ in the Senate

27. Philippines’ ‘biggest hotel’ to open by end of 2023

28. Filinvest Land buys RCBC subsidiaries in Cavite

29. Conglomerate Filinvest Dev’t Corp. shakes up management board

2. BIR RULINGS ON SCANNED COPY OF RECEIPTS & INVOICES, TAX-EXEMPT SEPARATION PAY, PROPER TREATMENT OF DENIED INPUT VAT REFUND & CAPITAL VS ORDINARY ASSET

PRESERVATION OF ELECTRONIC SCANNED COPIES OF INVOICES & RECEIPTS INSTEAD OF ORIGINAL MUST COMPLY WITH RULES ON RETENTION PERIOD

AG Co. and AP Co. are requesting a confirmatory ruling that its preservation of the electronic scanned copies of the invoices and receipts of their domestic suppliers and vendors, instead of the original hard copies, is sufficient to comply with Section 237 of the 1997 Tax Code, as amended by Republic Act (R.A.) No. 10963, otherwise known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law.” As represented, both are classified as Large Taxpayers (LTs) and have been granted a Permit to Adopt/Use Computerized Books of Account and other Accounting Records (CBA/AR). In reply, Section 237 (A) of the 1997 Tax Code, as amended, provides the rule on the preservation and maintenance of the original of each receipt and invoice to the purchases, customers, or clients. As noted, the TRAIN Law now allows electronic receipts and commercial invoices in lieu of manual receipts and invoices, subject to the rules and regulations to be issued by the Secretary of Finance. However, the criteria for assessing the integrity cannot be satisfied by a scanned document if the original document from which the scanned document was based does not exist anymore pursuant to R.A. No. 8792, otherwise known as the “Electronic Commerce Act of the Philippines (E-Commerce Act).” Therefore, electronic receipts, sales, or commercial invoices entail documents generated electronically and without an existing print-out or hard copy, however, there is no paperless practice as the scanned copy came from an original document. Consequently, the preservation of hard copies of the invoices and receipts of its domestic suppliers and vendors must still observe the retention period provided in Section 2 of Revenue Regulations (RR) No. 17-2013, as amended by RR No. 05-2014. [BIR RULING NO. 057-2023, MAY 19, 2023]

 

INVOLUNTARY SEPARATION PAY IS EXEMPT FROM TAX

The National Food Authority (NFA) is requesting a ruling that separation pay to its involuntarily separated employees as a result of the restructuring pursuant to the Republic Act (RA) No. 11203 or the “Rice Tariffication Act” under the 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. Consequently, any and all amounts to be received by them as a consequence of their involuntary separation from the service are not subject to income tax and, consequently, to the withholding tax on wages. [BIR RULING NO. 054-2023, MAY 19, 2023]

 

DENIED APPLICATION OR UNACTED APPLICATION OF REFUND CANNOT BE REVERTED TO EXCESS INPUT TAX IN THE VAT RETURNS

M Co. is requesting a legal opinion on whether it may be allowed to reverse/return the amount applied for tax credit to its Value-Added Tax (VAT) returns as excess input tax. In reply, Section 110(B) of the 1997 Tax Code, as amended, provides that if the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter/s, provided, however, that any input tax attributable to zero-rated sales by a VAT-registered person may, at his option, be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112 of the same Code. As noted, only the claim for tax credit and/or refund for the year 2010 was denied, and no action was made for the years 2005, 2006, and 2007. However, there is no specific provision expressly providing for another mode of recovering unapplied input taxes, more so a denied application or unacted application of tax credit and/or refund, through a reversal/return to VAT returns to be considered as excess input tax. Consequently, the request to allow the return of the amount previously applied for conversion for tax credit or return as excess input tax on its VAT returns lacks legal basis. [BIR RULING NO. 045-2023, MAY 9, 2023]

 

CAPITAL GAINS TAX OF ACQUIRED PROPERTY OF THE DEPARTMENT OF PUBLIC WORKS & HIGHWAYS IS BASED ON RATES PREVAILING DURING THE TIME OF TAKING OF THE PROPERTY

The Department of Public Works and Highways (DPWH) is seeking confirmation on whether it is legally possible to pay the Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) of an acquired property based on the rates prevailing during the time of taking of the subject property. In reply, Section 6 (6.11) of the Implementing Rules and Regulations (IRR) of the Republic Act (R.A.) No. 10752, or the “Right-of-Way Act” provides the extent of applicability of the said IRR in outstanding claims of Right-of-Way payments. Specifically, it governs the negotiated sales except in the consideration of outstanding claims that have already been concluded prior to the effectivity of R.A. No. 10752. Likewise, it does not apply to the amount to be offered on outstanding claims for Right-of-Way payments which is limited only to the price at the time of taking of the property including legal interest until fully paid. In BIR Ruling No. 983-2018 and 389-2016, it was ruled that Section 5 (c) of R.A. No. 10752 must be read in relation to Section 24 (D) (1) of the 1997 Tax Code, as amended. Thus, the tax base of CGT, in case of negotiated transfer of Right-of-Way site shall be the Gross Selling Price or Zonal Value of the real property as determined in accordance with Section 6 (E) of the same Code.  The date of notarization of the Deed of Sale is the operative act that should be ascertained in computing the CGT as it serves as the reckoning point for the presumed gain or profit realized or received, actually or constructively. Thus, granting that a duly notarized Deed of Sale was executed in 2011, the Gross Selling Price or the Zonal Value during the said year, whichever is higher, shall be the basis for computing the CGT in accordance with the formula provided under the new IRR. However, it is subject to penalties and surcharges incidental to the belated payment of the CGT. On the other hand, if the deed of sale was only notarized after the time of taking, the basis for computing the CGT shall be the Gross Selling Price or the prevailing Zonal Value at the time of notarization, whichever is higher. [BIR RULING NO. 034-2023, MAY 5, 2023]

 

TAXPAYER NOT ENGAGED IN THE REAL ESTATE BUSINESS & PROPERTY NOT FORMING PART OF HIS INVENTORY IS CONSIDERED A CAPITAL ASSET

J&M Co. is requesting a confirmatory ruling that the sale of its parcel of land is subject only to 6% Capital Gains Tax (CGT) and not subject to Creditable Withholding Tax (CWT) and Value-Added Tax (VAT). As represented, J&M Co. acquired a residential house and lot for investment purposes and not for lease in the ordinary course of business. The subject property is booked as “Non-Current Assets” under Investment. It has remained vacant and has never been leased out from the time of its acquisition, as evidenced by a Certificate of Non-Tenancy. In reply, Section 39 (A)(1) of the 1997 Tax Code, as amended, provides that if the property is not actually used in the trade of business of the taxpayer, whether connected with his trade or business, or not held for lease or sale to customers, it will be classified as a capital asset. Further, if the property is merely held for capital appreciation and investment purposes and remains vacant and idle, it is deemed a capital asset. Considering that J&M Co. is not engaged in the real estate business and has not been used in the ordinary course of trade or business, the asset is classified as a capital asset. Thus, the sale of the subject property, being a capital asset, is subject only to CGT under Section 27 (D)(5) of the 1997 Tax Code, as amended, and shall not be subject to CWT and VAT. [BIR RULING NO. 032-2023, APRIL 20, 2023]

Senate OKs Taxpayer’s Bill of Rights on final reading [GMA News Online, July 31, 2023]

The proposed legislation also provides for the right to timely and expeditious completion and finality of tax audits, right against baseless assessment, right to be given an opportunity for amicable settlement, right to avail of installment payment, right to pay no more than the correct amount of tax, right to relief from paying interests, surcharges and penalties, among others.

 

FIRB grants tax incentives for 25 projects in telco, data centers [ABS-CBN News, July 31, 2023]

Companies that secured the incentives are engaged in telecommunications, data center, manufacturing, tourism, hospital, energy, and mass housing, the Finance chief said in a briefing.

 

‘Certify as urgent ease of paying taxes bill’ [The Philippine Star, July 31, 2023]

Senate Bill 2224, or the Ease of Paying Taxes Act, aims to simplify tax filings for small and medium enterprises, allow most tax processes to be done online, shift to an invoice system to accelerate value-added tax refunds, and create a special division in the Bureau of Internal Revenue for small and medium taxpayers.

 

Report: Mitsubishi Xpander, Nissan Livina could see local production [Top Gear Philippines, July 31, 2023]

Ever since it was released in the country in 2018, the Mitsubishi Xpander for the local market has always been sourced from Indonesia. After all, it has always been the main production hub for the popular MPV-crossover. The same goes for the higher-riding Xpander Cross.

 

House panel revives bill establishing Bulacan airport zone [The Philippine Star, July 31, 2023]

In July 2022, the President vetoed a similar measure contained in House Bill 7575 citing its “substantial fiscal risks to the country” as well as its “infringement on or conflict with other agencies’ mandates and authority.”

 

Marcos vows reform of tax incentives law [Philippine Daily Inquirer, July 30, 2023]

The Philippine VAT of 12 percent is still the second-highest in the region, next only to Myanmar, and the government is currently looking to impose even more VAT on other services, particularly in the digital space.

 

Grace Poe wants PPA’s TOP-CRMS scrapped [GMA News Online, July 30, 2023]

Senator Grace Poe on Sunday called for the removal of the Philippine Ports Authority’s (PPA’s) Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS), which she said would only create redundancy in procedures.

 

AI won’t take over BPO jobs, execs assure [Inquirer Mobile, July 29, 2023]

According to the Contact Center Association of the Philippines (CCAP), this growth would also translate to the employment of 2.5 million workers on the same year even with the emergence of generative Artificial Intelligence (AI).

 

Pag-IBIG Fund offers calamity assistance to members affected by ST Egay [Philippine Information Agency, July 29, 2023]

Pag-IBIG Fund is offering its calamity loan program to members in the Ilocos Region who are affected by Super Typhoon Egay.

 

Angkas, Pag-IBIG seek to empower riders through voluntary contribution collection [Inquirer.Net, July 29, 2023]

Angkas, the leading locally-grown motorcycle ride-hailing platform, and Pag-IBIG Fund, the country’s premier housing and provident fund, have announced a pioneering partnership revolutionizing the landscape of social protection for Angkas rider partners.

 

Customs seizes 51 high-end vehicles discovered in Pasig showroom [GMA News Online, July 28, 2023]

In a statement released by the BOC, Warrants of Seizure and Detention were served on the owners after the vehicles were discovered during the service of a Letter of Authority on July 4.

 

NGCP pressed to cut approval process for RE projects [Inquirer Mobile, July 28, 2023]

In an interview with reporters, Energy Secretary Raphael Lotilla explained that the National Grid Corp. of the Philippines (NGCP) would soon be ordered to shorten its usual two-year timeline in approving the conduct of system impact studies (SIS) to just 60 days.

 

P183 billion strategic investments get green lane certificates [The Philippine Star, July 28, 2023]

Among these projects are SunAsia Energy Inc.’s 1,300- megawatt (MW) floating solar project in Laguna de Bay worth P66 billion and NK Solar One Inc.’s 250 MW floating solar project in Caliraya, Laguna worth P15 billion.

 

PH Resorts teases new investors for delayed Cebu casino project [Inquirer Mobile, July 28, 2023]

Davao-based tycoon Dennis Uy’s PH Resorts Group Holdings announced it is in advanced talks with foreign and local investors to help bankroll the completion of the $300-million Emerald Bay project in Cebu after billionaire Enrique Razon Jr. withdrew from a potential deal.

 

House measure seeks 43% tax on luxury items [The Philippine Star, July 28, 2023]

“The easiest way to tax wealth is through conspicuous or luxurious consumption and through taxation of immovable assets (i.e. land),” Albay Rep. Joey Salceda wrote in his House Bill 6993, which also aims to tax “non-essential” goods like branded bags and jewelry.

 

AboitizPower earnings rise on higher plant availability [Inquirer Mobile, July 28, 2023]

According to the company, its generation and retail supply business recorded a 31-percent increase in earnings before interest, taxes, depreciation and amortization to P30.2 billion on the back of more contributions from GNPower Dinginin Ltd. Co., AboitizPower’s 1,336-megawatt (MW) coal-fired power plant in Mariveles, Bataan province.

 

QC gov’t set to grant discounts on RPTs [manilastandard.net, July 28, 2023]

Under the measure, those who will pay in full their basic RPT and the additional tax accruing to the special education fund (SEF) and barangay share for the following taxable year on or before Dec. 31 will receive a 20 percent discount.

 

Peza unfazed by drop in PH ranking as outsourcing hub [Philippine Daily Inquirer, July 27, 2023]

The Philippines’ ranking dropped to 12th place among 78 countries included in Kearney’s report amid the rise of Mexico and Colombia as nearshore capability centers with proximity to the United States.

 

BIR eyes to collect 1% withholding tax from online merchants by Q4 [GMA News Online, July 27, 2023]

The BIR chief said that collecting withholding tax from those selling on online platforms is similar to how malls collect it from their tenants.

 

Port fees in Manila, Dumaguete hiked [The Philippine Star, July 27, 2023]

Under MC 004-2023, the PPA raised the cranage rates at the Manila North Harbor by 10 percent to P1,558.5 for a loaded 20-footer and below; P1,310.5 for an empty 20-footer and below; P2,180 for a loaded above 20-footer; and P1,689 for an empty above 20-footer.

 

Malaysian milk company to invest $20M for cattle breeding in PH [GMA News Online, July 27, 2023]

Malaysian company Farm Fresh Berhad will make $20 million worth of investments in the Philippines for cattle breeding and milk production.

 

DATEM completes P15-B projects, to finish 4 LRT1 Cavite Extension stations [Manila Bulletin, July 27, 2023]

Construction firm DATEM on Thursday, July 27, announced it has completed P15 billion worth of projects in 2022 and expects to finish the four stations of the P64 billion LRT-1 Cavite Extension, for which it serves as a subcontractor, within 2023.

 

Philippines still world’s second biggest banana exporter [The Philippine Star, July 27, 2023]

Despite the decline, the Philippines placed second to Ecuador, which remains as the world’s top banana exporter with 5.8 million MT shipped last year, representing an “unprecedented” 12.4 percent drop from last year.

 

Government savings eyed to help fund MUP pensions [Philippine Daily Inquirer, July 27, 2023]

According to Diokno, the average monthly pension of MUPs is almost nine times higher compared to that received by Social Security System retirees and three times higher than GSIS retirees’ take.

 

TAPE, TVJ hearing on injunction case about ‘Eat Bulaga’ starts; Joey de Leon testifies [Manila Bulletin, July 27, 2023]

The case was filed by TVJ and Ferre before the Marikina Regional Trial Court Branch 273 for “Copyright Infringement and Unfair Competition under R.A. No. 8293, otherwise known as the Intellectual Property Code of the Philippines, with Application for Issuance of a Writ of Preliminary Injunction.”

 

Chiz: Marcos tax measures ‘won’t be a slam dunk’ in the Senate [GMA News Online, July 27, 2023]

Senator Francis Escudero on Thursday warned that the tax measures proposed by President Ferdinand “Bongbong” Marcos Jr. might not have an easy time in the Senate, if these are seen to “cause misery to an already overtaxed people.”

 

Philippines’ ‘biggest hotel’ to open by end of 2023 [The Philippine Star, July 26, 2023]

Real estate company Megaworld is planning to open by end-2023 its 19-storey, two-tower Grand Westside Hotel, eyed as the Philippines’ biggest hotel development when it accepts guests.

 

Filinvest Land buys RCBC subsidiaries in Cavite [ABS-CBN News, July 26, 2023]

In a statement, Filinvest said it has bought real estate companies Niyog Property Holdings, Inc. (incorporated in 2005) and Cajel Realty Corporation (incorporated in 2008), taking over their land development activities in Bacoor town.

 

Conglomerate Filinvest Dev’t Corp. shakes up management board [The Philippine Star, July 26, 2023]

Huang has more than 30 years of experience working in Philippine companies, and financial and government institutions. She was president of BPI Capital Corp. and branch head of investment banking for Credit Suisse Philippines. She also worked for 19 years under JPMorgan Chase, as FDC noted she was responsible for “expanding the bank’s major corporate relationships.”