WEEKLY TAX UPDATES [DECEMBER 18-22]

A CTA DECISION ON BIR ASSESSMENT CANCELLED FOR FAILURE TO ESTABLISH RECEIPT OF ASSESSMENT NOTICE

FEATI University, Inc. filed a Petition for Review praying for the cancellation of BIR assessment. According to the Petitioner, it received the First Notice for Presentation of Records and the Final Notice Before Seizure without proper receipt of the Formal Assessment Notice.  Thus, both making the First Notice and Final Notice Before Seizure prematurely issued. The court ruled that the Petitioners right for due process had been violated after failure of the BIR to prove that it had properly served the assessment notices to the Petitioner. Petition for Review is GRANTED and the BIR assessment is CANCELLED. [FEATI UNIVERSITY, INC. VS COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 8659, DECEMBER 05, 2017]

 

A CTA DECISION ON BIR ASSESSMENT PURSUANT TO BENCHMARKING & THIRD-PARTY MATCHING NOT CONCLUSIVE

Wellform Trading Corporation, filed a Petition for Review seeking for the cancellation of BIR deficiency VAT assessment in the amount of Php 96,527,897.39 as a result of comparison made on the sales reported by the Petitioner vis-à-vis sales established based on industry benchmark.  The Petitioner opposes the computation and alleges that the industry benchmark cannot be used as the best evidence to support an assessment. Likewise, the Petitioner argues that there was no mention from the objectives of benchmarking program on the imposition of taxes on the mere basis of a benchmark which could bring about a deficiency assessment against a taxpayer. Respondent CIR, on the other hand, argues that the assessment was based on best evidence obtainable because of Petitioners failure and refusal to make certain records available despite issuance of Subpoena Duces Tecum, hence, there is no means by which the correctness and accuracy of Petitioners receipts can be ascertained. The Court ruled that the use of the benchmark rate in computing the Petitioners tax liability has no legal basis for was arrived at arbitrarily and capriciously. At the very least, the CIR should have assessed the Petitioner based on its own investigation pursuant to a Letter of Authority. Consequently, the Court holds the Petitioner liable at a reduced amount of Php 20,035,440.15 representing other deficiency VAT assessment issues.  [WELLFORM TRADING CORPORATION VS COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9086, NOVEMBER 27, 2017]

 

 

A SEC LEGAL OPINION ON LIMITATION ON COMPENSATION OF TRUSTEES & NATIONALITY OF NON-STOCK NON-PROFIT CORPORATION FOR PURPOSES OF ACQUISITION OF LAND

SEC has confirmed that SEC OGC Opinion No. 15-12 which discusses the limitations on compensation of trustees applies to the Board of Trustees of Sokka Gakkai International Philippines, a non-stock, non-profit religious corporation. However, SEC stressed-out that members of the board may still receive compensation when rendering services in their capacity other than as directors/trustees. In addition, the SEC has also confirmed the applicability of Public Land Act to the corporation as a non-stock non-profit religious corporation. Accordingly, the nationality of a non-stock corporation, in relation to the constitutional provision on land acquisition, is computed on the basis of the nationality of its members and not premised on the membership contribution. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 17-15,NOVEMBER 22, 2017]

 

A SEC LEGAL OPINION ON GOAT FARMING NOT COVERED BY RETAIL TRADE, FOREIGN INVESTMENTS ACT & ANTI DUMMY LAW RESTRICTIONS

SEC has confirmed that Goat Management Inc. (GMI), a domestic corporation engaged in the business of goat farming, production and exclusive sale of its agricultural products through a single outlet, is not covered by the Retail Trade Liberalization Act (RTLA) since GMI sells exclusively and does not carry other brand or product on consignment. Thus, GMI is exempted from complying with the capitalization requirement of the RTLA. Moreover, it can have more than 40% foreign equity and allowed to elect and appoint foreign nationals as part of its BOD and officers as long as it will not be engaged in other nationalized or partly nationalized industry. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 17-16, DECEMBER 4, 2017]