Updates

COURT OF TAX APPEALS (CTA) DIGEST

 

[TTRA SHOULD NOT OPERATE TO DIVEST ENTITLEMENT]

 

[FAILURE TO COMPLY WITH ADMINISTRATIVE ISSUANCE DOES NOT DEPRIVE THOSE WHO ARE ENTITLED TO THE BENEFIT OF A TTRA]

 

[AVAILMENT OF THE PREFERENTIAL RATES UNDER TAX TREATIES ENTERED INTO BY THE PHILIPPINES IS NOT CONDITIONED UPON THE FILING OF A PRIOR TTRA]

 

SEC LEGAL OPINION

 

CORPORATIONS COVERED BY SPECIAL LAWS SHALL FOLLOW THEIR OWN PROVISION ON STATUTORY OWNERSHIP REQUIREMENT; 40% OF THE VOTING STOCK OF INVESTMENT HOUSE SHALL BE OWNED BY FILIPINO CITIZENS

A.     BIR ISSUANCES

 

The BIR has issued the following:

 

1.       Revenue Memorandum Circular (RMC) No. 73-2018 dated August 31, 2018 circularizes the availability of new BIR Form No.’s 0619-E (Monthly Remittance Form of Creditable Income Taxes Withheld-Expanded and 0619-F (Monthly Remittance Form of Final Income Taxes Withheld) both January 2018 version.

BIR ISSUES NEW ALPHANUMERIC TAX CODE (ATC)

 

The BIR has issued Revenue Memorandum Order (RMO) No. 38-2018 dated April 3, 2018 [with released date on September 3, 2018] which creates, modifies, and drops Alphanumeric Tax Code (ATC) of selected revenue source under TRAIN Law. The changes are aligned to the objective of the BIR in facilitating the proper identification and monitoring of tax collection from income payments subject to creditable and final withholding taxes pursuant to TRAIN Law and the issuance of Implementing Rules on Regulations on Withholding Tax (i.e. RR 11-2018).

SUPREME COURT (SC) DIGEST

DOCKET FEE IS JURISDICTIONAL BUT FAILURE TO PAY THE SAME DOES NOT AUTOMATICALLY CAUSE THE DISMISSAL OF THE CASE

SEC LEGAL OPINION

CORPORATE TERM OF RELIGIOUS CORPORATION IS DEEMED PERPETUAL UNLESS ARTICLES OF INCORPORATION STIPULATES OTHERWISE

A.    BIR TAX ADVISORY ON UNAVAILABILITY OF BIR FORMS 0619-E & 0619-F & IMPROPER USAGE OF BIR PAYMENT FORM 0605 FOR NO PAYMENT

The BIR has advised the public to not use BIR Payment Form 0605 in the absence of any remittance and as a substitute form for BIR Forms 0619-E and 0619-F or the monthly withholding tax remittance forms for Expanded Withholding Tax and Final Withholding Tax, respectively. Accordingly, the BIR will announce its availability. 

A.     SEC AMENDMENT ON THE USE OF CORPORATE & PARTNERSHIP NAME

To prevent the formation of bogus organizations that could misinterpret itself as an affiliate of an international governmental organization, and usurp the authority of the latter, the Commission En Banc, in its meeting on July 10, 2018, resolved to amend SEC Memorandum Circular No. 14, Series of 2017 “Consolidated Guidelines and Procedures on the Use of Corporate and Partnership Names”. Accordingly, the name of any international organization such as “International Criminal Police Organization“ (INTERPOL), “International Monetary Fund” (IMF), and “International Labour Organization” (ILO), may not be used as part of a corporate or partnership name unless the same is duly authorized or allowed by the Commission. [SEC MEMORANDUM CIRCULAR NO. 9, SERIES OF 2018, JULY 18, 2018]

BIR ISSUANCE ON TRAIN LAW-ESTATE TAX IMPLEMENTATION FOR THIS WEEK

TAX HIGHLIGHTS FOR THE REQUIREMENTS ON THE WITHDRAWAL FROM THE BANK DEPOSIT ACCOUNT(S) OF A DECEASED DEPOSITORS/JOINT DEPOSITOR WITHOUT THE REQUIRED e-CAR

A.     COURT OF TAX APPEALS (CTA) DIGEST FOR THIS WEEK

 

TO BE LIABLE TO 18% AMUSEMENT PERCENTAGE TAX, DANCING MUST BE THE MAIN BUSINESS OF A CABARET, NIGHT OR DAY CLUB

The Petitioner Hard Rock Café, Inc. filed a Petition for Review praying for the cancellation of the Percentage Tax Assessment issued by the Respondent Commissioner of Internal Revenue on the ground that the Petitioner falls under the category of cabarets, night or day clubs” and therefore liable to Amusement Tax of 18%, a kind of Percentage Tax under the Tax Code. Likewise, the Respondent premised its assessment on the provisions of Revenue Memorandum Circular No. 18-2010 which clarifies the coverage and taxability of amusement places. Based on the investigation conducted, the Respondent found that the Petitioners business premise is considered an amusement place mainly because it serves liquor and food to its customers, with stage performances by musicians and dancers. In one case, the Supreme Court defined cabarets as place of amusement where customers go because of their desire to dance and where the bailarinas are the main attraction. On the other hand, it defines Night Clubs as a place or establishment selling to the public food or drinks, where the customers are allowed to dance. In final conclusion, the CTA said that it appears from the definitions that the primary and common activity to cabarets, night and day clubs is dancing. In the said places, the customers are allowed to dance either with their own partners or with professional hostesses provided by the cabarets or clubs. Thus, to be deemed a cabaret, or night and day club, it must be established that its operations involve dancing as the main business and customers patronize the place in order to dance either with their own partners or with professional hostesses engaged by Petitioner for that purpose. The evidence however shows that the business activities of the Petitioner do not fall within the scope or coverage of the cabarets and/or day clubs, since there is no indication that its customers frequent its establishment to dance, either with their own partners, or with professional hostesses provided by the Petitioner. More importantly, the evidence presented show that the actual business activities of the Petitioner are those of restaurant, with the entertainment usually by the performances of live bands, which is merely incidental to its main business to encourage or attract customers with the end view of promoting sales of foods and drinks served in the restaurant. The Petition for Review is GRANTED and the Percentage Tax Assessment is CANCELLED. [HARD ROCK CAFÉ, INC. VS COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9279, JULY 12, 2018]

A.     BIR ISSUANCE ON THE NEW INVOICING REQUIREMENTS

The BIR has issued Revenue Regulations (RR) No. 16-2018 dated April 30 [with released date on May 25, 2018] to amend RR 10-2015 on the use of non-thermal paper for all Cash Register Machines (CRM)/Point of Sale (POS) Machines and other invoice/receipt generating machine/software. Accordingly, the BIR has finally allowed businesses to have the option to use the type of paper depending on their business requirements, subject to the retention and preservation of accounting records.

BIR MEDIA RELEASES

1.      BIR fires 2 Makati tax examiners who were caught in an entrapment operations conducted by the National Bureau of Investigation.

2.      Bukidnon adventure park businessman charged with seven (7) counts of unlawful pursuit of business for issuance of unregistered and unauthorized receipt as entrance fee for the adventure park.

BIR MEDIA RELEASE

Makati-based shareholder charged with tax evasion for unreported income following the networth method.

SECURITIES & EXCHANGE COMMISSION (SEC) LEGAL OPINION FOR THIS WEEK

 

EFFECT OF MERGER ON THE EXISTING LICENSE AS REGIONAL OPERATING HEADQUARTER (ROHQ)

Langdon & Seah Asia Company Limited (LSACL), a Company organized in Hong Kong (HK) and licensed by the SEC to do business in the Philippine as an ROHQ, is contemplating a merger with its affiliate, Arcadis Asia Limited (AAL), a company also organized in HK. Under the proposed merger, AAL will be the surviving corporation while LSACL will be the absorbed corporation. In rendering legal opinion, the SEC provides for the effects of the proposed merger. Accordingly, LSACL shall file with the SEC within 60 days after the merger becomes effective, a copy of the Articles of Merger duly authenticated in HK. Likewise, LSACL being a dissolving company shall file a Petition for Withdrawal of License in accordance with Section 136 of the Corporation Code. Further, it is required to submit documents to SEC to legally effect the withdrawal of a foreign corporation’s License to Transact Business in the Philippines. If AAL will continue the business of LSACL in the Philippines, it must file its own Application for a License To Do Business in the Philippines in compliance with Sections 123, 124, 126 and 128 of the Corporation Code. It must also comply with all the requirements prescribed by the Company Registration and Monitoring Department (CRMD) of SEC [SEC-OFFICE OF THE GENERAL COUNSEL OPINION NO. 18-11, JUNE 5, 2018]

BIR ISSUANCES ON TRAIN LAW IMPLEMENTATION FOR THIS WEEK

The BIR has issued the following in relation to the TRAIN Law implementation.