BIR circularizes the extension for the availment of Tax Amnesty
Other Relevant Tax Updates:
TAX & BUSINESS-RELATED NEWS [AUGUST 15-22]
BIR CIRCULARIZES THE EXTENSION FOR THE AVAILMENT OF TAX AMNESTY
BIR AMENDS POLICIES IN THE ISSUANCE OF TVN IN CLAIMING VAT CREDIT/REFUND
BIR ISSUES RULES & REGULATIONS ON EXCISE TAX OF PERFUMES & TOILET WATERS
COURT OF TAX APPEALS CASES
SUPREME COURT CASE
FIRB ISSUES GUIDELINES FOR THE SUSPENSION OR WITHDRAWAL OF TAX INCENTIVES
SEC LEGAL OPINION ON THE LIBERALIZED FOREIGN EQUITY OWNERSHIP OF FREIGHT FORWARDING
1. TAX & BUSINESS-RELATED NEWS [AUGUST 15-22]
1. ERC seeks suspension of public listing for small RE firms
2. SEC urges firms to avail of amnesty program for late filers
3. CHEd to PCU: Stop offering programs without permit
4. Monde Nissin completes restructure of meat alternative business
5. IPOPHL extends ‘Eat Bulaga’ trademark
6. ICTSI expands equipment fleet in Australia
7. SC: PNB should pay its employees’ cost of living, amelioration allowances
8. Marcos under ‘pressure from rich developers’ on Manila Bay reclamation projects—Enrile
9. Cebu Pacific makes headway in electric vehicles program
10. As ‘holiday economics’ gains public support, PPA pushes for e-ticketing system in PH ports
11. Holcim faces PSE penalties for flouting reporting obligations
12. Bill seeking lowered power, fuel costs through three-year tax cuts filed
13. Cashless tollway system begins this September
14. DOT suspends another contract with ad agency
15. ACEN RES to supply renewable energy to JPMorgan Chase Tower
16. Malolos-Clark segment of North-South Commuter Railway now 48.08% complete
17. SM Foundation introduces rainwater harvesting in Palawan’s health facility
18. Official: MPTC, SMC to construct Cavite-Batangas, Nasubu-Bauan Expressways
2. BIR CIRCULARIZES THE EXTENSION FOR THE AVAILMENT OF TAX AMNESTY
Revenue Memorandum Circular (RMC) No. 83-2023, issued on August 14, 2023, circularizes the extension of the period of availment of the Estate Tax Amnesty until June 14, 2025, pursuant to the Republic Act (R.A.) No. 11956, entitled “An Act Further Amending R.A. No. 11213, otherwise known as the “The Tax Amnesty Act,” as amended by R.A. No. 11569.
3. BIR AMENDS POLICIES IN THE ISSUANCE OF TVN IN CLAIMING VAT CREDIT/REFUND
Revenue Memorandum Order (RMO) No. 28-2023, issued on August 10, 2023, amends certain provisions of RMO No. 23-2023 relative to the issuance of Tax Verification Notices (TVNs) in the processing of claims for Value-Added Tax (VAT) credit/refund except those under the authority and jurisdiction of the Legal Group. Specifically, the amendment provides the clarification in the “head of processing offices” mentioned in several provisions under RMO No. 23-2023, including its Annexes and those authorized to issue the respective TVN for VAT credit/refund claims duly filed under their jurisdiction.
It may be recalled that under RMO No. 23-2023, the BIR provides the updated guidelines and prescribes the mandatory documentary requirements and procedures in the processing and grant of VAT credit/refund claims except those under the authority and jurisdiction of the legal group under Sections 112, 204(C) and 229 of the 1997 Tax Code, as amended.
4. BIR ISSUES RULES & REGULATIONS ON EXCISE TAX OF PERFUMES & TOILET WATERS
Revenue Regulations (RR) No. 9-2023, issued on August 3, 2023, prescribes the rules and regulations governing the imposition of excise tax on perfumes and toilet waters as provided under Section 150(b) of the 1997 Tax Code, as amended. Highlights include rate and base of tax, persons liable to excise tax, time, place, and manner of filing of returns and payment of excise tax, and other administrative requirements.
5. BIR RULING
IT WOULD NOT BE FAIR TO ALLOW REAL ESTATE BUSINESSES TO PAY THE LOWER CAPITAL GAINS TAX RATE WHILE OTHER BUSINESSES ARE SUBJECT TO THE HIGHER INCOME TAX RATE
Development Bank of the Philippines (DBP) is requesting for the amendment of Section 3(e) of the Revenue Regulations (RR) No. 7-2003 in connection with the treatment of abandoned and idle properties acquired by a taxpayer engaged in the real estate business. Section 3(e) of RR No. 7-2003 mandates that abandonment of real properties that formed part of the stock in trade of a taxpayer engaged in real estate business, will not convert the classification of the said properties from ordinary assets to capital assets. In ruling, the request for amendment cannot be granted for lack of legal basis. For real estate businesses, selling real properties is not just a one-time event but a regular and integral part of their business operations. As such, it is appropriate for real estate businesses to be subjected to regular income tax on their profits, rather than capital gains tax, which is generally intended for individuals who may have only occasional capital gains. [BIR RULING NO. 067-2023, JUNE 6, 2023]
6. COURT OF TAX APPEALS CASES
ONLY AFTER RECEIVING THE TAXPAYER’S RESPONSE CAN THE BIR ISSUE THE FLD/FAN
Petitioner Hi-Stakes Gaming Inc. filed a Petition for Review seeking the cancellation of the assessment issued by the Respondent Commissioner of Internal Revenue (CIR). Petitioner claimed that it was denied the right to due process, explaining that the Preliminary Assessment Notice (PAN) dated 7 October 2014, was only received on 13 October 2014. Consequently, it had fifteen (15) days from receipt of PAN or until 28 October 2014 within which to file a protest. However, a perusal of documents showed that the Respondent already issued a FAN/FLD on 28 October 2014. Likewise, the Petitioner argued that its income from bingo games should only be subject to franchise tax in lieu of all kinds of taxes. On the other hand, the Respondent maintains that the Court has no jurisdiction over the assessment that has become final, executory, and demandable due to failure of the Petitioner to timely protest the FAN/FLD. Likewise, the Petitioner’s franchise with the Philippine Amusement and Gaming Corporation (PAGCOR) is limited to conduct traditional bingo operations which does not extend to operation of casinos. Thus, the exemption granted by Presidential Decree (P.D.) 1869, (PAGCOR Charter) on the payment of 5% Franchise Tax, in lieu of Corporate Income Tax, does not extend to the Petitioner. Further, Revenue Memorandum Circular (RMC) No. 33-2013 expressly provides that income from traditional bingo, electronic bingo, and other bingo variations are income from “other related operations” that are subject to corporate income tax. Also, it is merely a clarificatory issuance and did not alter, modify, or amend the intent of Section 13(2)(b) of P.D. No. 1869. In ruling, Petitioner’s right to due process was violated when the Respondent issued the FLD/FAN before the lapse of the 15-day period from the Petitioner’s receipt of the PAN. Here, the Respondent did not wait for the lapse of the mandatory fifteen (15)-day period prior to the issuance of the FLD/FAN. Consequently, the Petition was GRANTED, and the deficiency income tax was CANCELLED and WITHDRAWN. [HI-STAKES INCORPORATED VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10172, JULY 28, 2023]
MEMORANDUM OF ASSIGNMENT (MOA) WITHOUT NEW LOA RESULTS IN A VOID ASSESSMENT
Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review assailing the CTA 3rd Division’s earlier Decision and Resolution cancelling the assessment issued to the Petitioner Robinsons Toys, Inc. Petitioner argued that the assessment is still valid despite the lack of an Electronic Letter of Authority (eLOA) because there was an issued LOA that previously authorized the Revenue Officer (RO) to conduct an audit. Likewise, Revenue Memorandum Order (RMO) No. 61-2010 and 69-2010 were substantially complied with when the Memorandum of Assignment (MOA) was issued for the reassignment of the audit to a new RO. Further, the absence of due dates on the assessment notice should not be a ground to invalidate the assessment and it already contained a definite amount of tax liability. On the other hand, the Respondent maintained that the assessment is void due to the absence of LOA to conduct the audit and failure to state due dates for payment in the subject assessment. In ruling, the Court held that the absence of an eLOA does not automatically invalidate the assessments, and a manual LOA still validly authorized an RO to conduct an audit. However, the Court finds that the assessment against the Respondent is void due to the absence of new LOA for reassignment of the audit, failure to observe due process in issuing assessment notices, and failure to indicate a definite due date for payment in the subject Formal Assessment Notice. Consequently, the Petition was DENIED for lack of merit, and the earlier Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. ROBINSONS TOYS, INC., CTA EN BANC CASE NO. 2560, JULY 13, 2023]
7. SUPREME COURT CASE
[A PARTY WHO DESIRES THE COURT TO REJECT THE ADMISSION OF ANY EVIDENCE FORMALLY OFFERED, MUST DO SO IN THE FORM OF A TIMELY OBJECTION] [IT IS ONLY UPON THE FORMAL OFFER THAT THE PURPOSE OF A DOCUMENT IS DISCLOSED AND ASCERTAINED & THAT AN OBJECTION CAN BE MADE AGAINST ITS ADMISSION AS AN EXHIBIT]
Petitioner Commissioner of Internal Revenue filed a Petition seeking to reverse and set aside the earlier Decision and Resolution of the CTA En Banc, which affirmed the Amended Decision of the CTA Division. The CTA Division partially granted Respondent Vestas Services Philippines, Inc.’s claim for a refund or issuance of a Tax Credit Certificate (TCC) for its unutilized input Value-Added Tax (VAT) attributable to its zero-rated receipts. Petitioner anchored his Petition on the supposed error on the part of the CTA Division in allowing the Respondent to present additional evidence and thereafter, admitting such additional evidence, despite irregularities in its Motion for Reconsideration. Thus, for Respondent’s alleged failure to properly establish the timeliness of its judicial claim, its claim for tax refund or credit should be denied. Respondent averred that while the CIR indeed opposed the motion, it never objected to the presentation of the Transmittal Letter as secondary evidence. The CIR failed to object or comment on the Respondent’s Supplemental Formal Offer of Evidence. In ruling, the Court emphasized that objection to documentary evidence must be made at the time it is formally offered, not earlier, because it is at that time the purpose of the offer has already been disclosed and ascertained. Thus, the Petitioner’s opposition made prior to the Respondent’s Supplemental Formal Offer of Evidence cannot possibly substitute the objection required under the rules. The Petitioner likewise chose not to file a Supplemental Memorandum where he could have explained his earlier omission to file a comment on the formal offer, and where he could have raised his objections to the admission of the Transmittal Letter. The records are also bereft of any showing that the Petitioner questioned the testimony of the Respondent’s witness nor the veracity of the Transmittal Letter during the hearing for the presentation of the Respondent’s additional evidence. Thus, without any prompt objection from the Petitioner, the admission of the supplemental evidence was justified. As to the timeliness of the judicial claim, the Court found that the Respondent was able to timely file its judicial claim before the CTA. Consequently, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. VESTAS SERVICES PHILIPPINES, INC., G.R. NO. 255085, MARCH 29, 2023, UPLOADED MAY 11, 2023]
8. FIRB ISSUES GUIDELINES FOR THE SUSPENSION OR WITHDRAWAL OF TAX INCENTIVES
Fiscal Incentives Review Board (FIRB) Administrative Order No. 004-2023, dated May 2, 2023, provides the guidelines for the suspension or withdrawal of tax incentives and cancellation of Certificate of Registration (COR) of Registered Business Enterprises (RBEs) pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. It provides that a Show Cause Order shall be issued requiring the RBE to file its justification within fifteen (15) calendar days from receipt of the order and that only one (1) justification to the Show Cause Order shall be allowed. Subsequently, the FIRB shall decide within ninety (90) calendar days counted from the date the case is deemed submitted for decision. Furthermore, it provides the imposition of fines and/or penalties, whenever applicable.
9. SEC LEGAL OPINION ON THE LIBERALIZED FOREIGN EQUITY OWNERSHIP OF FREIGHT FORWARDING
PUBLIC SERVICE ACT AS AMENDED NOW ALLOWS FREIGHT FORWARDING LIBERALIZED PERCENTAGE OF FOREIGN OWNERSHIP
X Co. is requesting an opinion regarding the implications of the Republic Act (RA) No. 11659 which amended Commonwealth Act No. 146 or the Public Service Act, as amended, on a freight forwarding/logistics company engaged in domestic operations. In reply, before R.A. No. 11659, a freight forwarder is an operator of a public utility which the Constitution requires that at least 60% of the shareholdings must be owned by citizens of the Philippines. With the passage of R.A. No. 11659, the definition of public utility is now limited to the six (6) public services which are operated, managed, or controlled for public use, namely: (1) distribution of electricity; (2) transmission of electricity; (3) petroleum and petroleum products pipeline transmission systems; (4) water pipeline distribution systems and wastewater pipeline systems; (5) seaports; and (6) public utility vehicles (PUVs). Thus, a freight forwarding company is not a public utility per se, but may be considered as a PUV, thus a public utility, if its activities include carrying and/or transporting domestic cargoes from the place of receipt to the place of destination for a fee, to the public. In this case, the 40% foreign equity restriction over public utilities shall apply. Also, if the freight forwarding company includes in its operation yellow plated trucks-for-hire, then the 40% foreign equity restriction for public utilities applies. As long as the corporation is not a public utility, both in paper and in actual operations, X Co. will be allowed to have 100% foreign ownership. It is worth noting, however, that the Implementing Rules and Regulations of R.A. No. 11659 is yet to be issued. [SEC OFFICE OF THE GENERAL COUNSEL LEGAL OPINION NO. 23-03, FEBRUARY 23, 2023]
ERC seeks suspension of public listing for small RE firms [The Philippine Star, August 22, 2023]
Section 43(t) of the Electric Power Industry Reform Act of 2001 (EPIRA) requires generation companies to publicly offer and sell not less than 15 percent of their common shares of stocks in the stock market. However, the ERC noted that 51 percent of generation companies, or 118 out of 143, have not met the requirement.
SEC urges firms to avail of amnesty program for late filers [The Philippine Star, August 21, 2023]
Corporations and associations that have incurred penalties due to the late or non-filing of their annual reports may avail of the amnesty program before they face higher penalties starting on Oct. 1, the SEC said.
CHEd to PCU: Stop offering programs without permit [The Manila Times, August 21, 2023]
THE Commission on Higher Education (CHED) on Monday issued a show cause order against the Philippine Christian University (PCU) for what it said were “a series of offenses.”
Monde Nissin completes restructure of meat alternative business [The Philippine Star, August 21, 2023]
Snack food giant Monde Nissin Corp. has completed the restructuring of its meat alternative business, cautiously optimistic of the growth of this business segment in the coming quarters.
IPOPHL extends ‘Eat Bulaga’ trademark [Manila Bulletin, August 21, 2023]
“IPOPHL confirms the approval on June 14, 2023 of the request to extend the term of registration over EAT BULAGA AND EB covered by TM Reg. No. 42011005951, for Nice Classes 16, 18, 21 and 25 for another 10 years,” the agency said in a statement Monday, Aug. 21.
ICTSI expands equipment fleet in Australia [The Philippine Star, August 21, 2023]
Australia’s first fully automated container terminal, Victoria International Container Terminal (VICT), is expanding its equipment fleet, parent firm International Container Terminal Services Inc.’s (ICTSI) said on Monday, Aug. 21.
SC: PNB should pay its employees’ cost of living, amelioration allowances [Rappler, August 20, 2023]
The PNB was found liable to pay the employees 40% of the COLA and 10% amelioration allowance of their basic salary covering the period of July 1, 1989 to May 26, 1996. The SC junked the the appeal of the PNB questioning the CA decision, saying there was no actual basis.
Marcos under ‘pressure from rich developers’ on Manila Bay reclamation projects—Enrile [Manila Bulletin, August 20, 2023]
The former Senate president said during an interview on television program “Dito sa Bayan ni Juan” on Saturday, Aug. 19, that one of the developers of the suspended projects even pleaded for the President to allow it to continue.
Cebu Pacific makes headway in electric vehicles program [The Philippine Star, August 20, 2023]
The low-cost carrier is set to commission a demo run for the use of an electric tractor in handling luggages at Terminals 3 and 4 of the Ninoy Aquino International Airport (NAIA).
As ‘holiday economics’ gains public support, PPA pushes for e-ticketing system in PH ports [Manila Bulletin, August 20, 2023]
“The e-ticketing system is part of our big electronic management system. It aims to assist our kababayan from spending a lot of time in long lines just to purchase a ticket in our ports,” said Santiago.
Holcim faces PSE penalties for flouting reporting obligations [Bilyonaryo, August 20, 2023]
As per Section 4.1, the PSE mandates listed entities to promptly disclose material information, corporate actions, developments, or events, within 10 minutes of awareness or occurrence.
Bill seeking lowered power, fuel costs through three-year tax cuts filed [Manila Bulletin, August 20, 2023]
Camarines Sur 2nd district Rep. LRay Villafuerte filed in the current 19th Congress House Bill (HB) No.8231, or the proposed Act lowering the cost of electricity and petroleum products.
Cashless tollway system begins this September [The Philippine Star, August 16, 2023]
Motorists are advised to prepare as cash lanes will be removed on Sept. 1 and radio frequency identification (RFID) stickers will be used to pass through expressways, as the Metro Pacific Tollways Corp. (MPTC) implements a cashless payment system.
DOT suspends another contract with ad agency [The Philippine Star, August 16, 2023]
The Department of Tourism (DOT) has suspended another contract with advertising agency DDB Philippines over the botched tourism video for its tourism campaign “Love the Philippines,” according to Secretary Christina Frasco.
ACEN RES to supply renewable energy to JPMorgan Chase Tower [The Philippine Star, August 16, 2023]
JPMorgan Chase, through its lessor Asia Affinity, signed a retail electricity supply agreement with ACEN RES for 25 ACEN’s portfolio of wind, solar, and geothermal plants.
Malolos-Clark segment of North-South Commuter Railway now 48.08% complete [Top Gear Philippines, August 15, 2023]
In total, the NSCR project will span 147km across 28 different cities in Central Luzon, the National Capital Region (NCR), and Calabarzon. There will be 35 stations servicing up to 464 train cars. One train set can supposedly carry up to 2,228 passengers at a time and run up to 120kph.
SM Foundation introduces rainwater harvesting in Palawan’s health facility [The Manila Times, August 15, 2023]
With an 800-liter storage capacity, the rainwater harvesting system operates without electricity and features labeled faucets for intuitive recycled water use.
Official: MPTC, SMC to construct Cavite-Batangas, Nasubu-Bauan Expressways [Top Gear Philippines, August 15, 2023]
CBEX will stretch 27.06km from CALAX’s Silang-Aguinaldo Interchange to Nasugbu. NBEX will be 60.90km long and will connect Nasugbu to Bauan. They will traverse the Cavite towns of Silang, Amadeo, Tagaytay, Indang, Mendez, and Alfonso.