WEEKLY TAX UPDATES [DECEMBER 26-29]

BIR ISSUANCE

The BIR has issued Revenue Memorandum Circular (RMC) No. 100-2017, dated December 18, 2017 [with released date on December 19], which clarifies the sanctions for the non-submission of Alphabetical List of employees/payees of income payments. Accordingly, failure to file and submit the complete and corrected Alphabetical List shall not result to the non-deductibility of expenses considering that the taxes have been withheld and remitted already. However, taxpayer may be held liable to administrative penalty of Php 1,000.00 up to Php 25,000.00.

 

A CTA DECISION ON 70-30% RULE ON HEAD OFFICE & BRANCH LOCAL BUSINESS TAX

City of Makati filed a Petition for Review praying for the reversal of Calambas Regional Trial Courts (RTC) decision holding the Respondent Fuji-Haya International Corporation, liable to accrue fully and solely the Local Business Tax (LBT) to the City of Calamba. City of Makati claimed that Respondent established a branch office in Makati City and therefore it is entitled to the corresponding 30% share of the LBT as remitted to the City of Calamba.  This is evidenced by the place where the books of accounts are kept and that administrative, executive, engineering and accounting activities are being conducted and consummated in Makati. The Court granted the Petition and reversed and set aside the decision of the RTC. Consequently, the Petitioner is entitled to the LBT derived from the sales made in the companys branch office. [THE CITY OF MAKATI VS. THE CITY TREASURER & THE CITY GOVERNMENT OF CALAMBA & FUJI-HAYA INTERNATIONAL CORPORATION, CTA AC NO. 167, DECEMBER 11, 2017]

 

A CTA DECISION ON CAPITAL GAINS TAX (CGT) & DOCUMENTARY STAMP TAX (DST) EXEMPTION AS A RESULT OF TAX-FREE EXCHANGE TRANSACTION

Sartorious Aketiengesellschaft filed a Petition for Review praying for the refund of alleged erroneously paid CGT and DST. Several issues were raised but the main point of contention is whether or not the Petitioner is entitled to claim for refund the erroneously paid CGT and DST. Petitioner contends that the transfer of its shares in Sartorius Philippines to its wholly-owned subsidiary, SWT GmbH, a German-based company is not subject to CGT pursuant to Section 40(C)(2) of the 1997 Tax Code, as amended, which provides that no gain or loss shall be recognized if property is transferred to a corporation by a person in exchange for stock or unit of participation in such a corporation of which as a result of such exchange said person, alone or together with others, not exceeding four (4) persons, gains control of said corporation. Provided, that stocks issued for services shall not be considered as issued in return for property. After careful study and analysis of the case, the Court finds that Petitioner's transfer of its shares in Sartorius Philippines to SWT GmbH satisfied the requisites of a tax-free exchange and is exempt from CGT. Likewise, it is exempt from DST pursuant to Section 199 of the 1997 Tax Code, as amended. [SARTORIOUS AKETIENGESELLSCHAFT VS COMMISSIONER OF INTERNAL REVENUES, CTA CASE NO. 8951, DECEMBER 8, 2017]