WEEKLY TAX UPDATES [SEPTEMBER 17-21, 2018]

A.     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

UBS Investment Philippines is seeking legal opinion on whether as one engaged in the activity of investment housing it is covered under SEC’s Memorandum Circular (MC) No. 08-13 which circularizes the constitutional and statutory ownership requirement to all covered corporations, and whether there is a need to revise or amend its current ownership structure as part of its compliance. In rendering opinion, the SEC provides that “Corporations covered by special laws which provide specific citizenship requirements shall comply with the provisions of said law”. Accordingly, Presidential Decree No. 129 or the Investment Houses Law is a special law which provides that at least 40% of the voting stock of an investment house shall be owned by citizens of the Philippines. Hence, in determining compliance with the nationality requirement, the basis is only the voting stock and not the two tiered test mentioned in MC No. 08-13. Consequently, since 40% of the voting stock of UBS Philippines is held by Filipino citizens, then UBS Philippines need not revise or amend its current ownership. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 18-17, SEPTEMBER 5, 2018]

 

B.      CTA DECISION

 

TAX BENEFIT OF PAGCOR EXTENDS TO ITS CONTRACTEES & LICENSESS

Both the Petitioner Thunderbird Pilipinas Hotels Resorts, Inc. and the Respondent Commissioner of Internal Revenue filed a Motion for Reconsideration (MR) on the earlier decision of the CTA 2nd Division relative to the assessments on Special Preferential Rate Tax (SPRT), Franchise Tax, EWT, FWT, and DST. The main issue is centered on the deficiency SPRT in which the Petitioner insists that its revenues from gaming activities are not subject to that rate in the light of Supreme Court’s latest jurisprudence on Philippine Amusement & Gaming Corporation (PAGCOR)’s tax exemption status and benefit derived therefrom by its contractees and licensees. Moreover, it was clarified that the tax benefit being enjoyed by PAGCOR also extends to its contractees and licensees. In the light of the foregoing, the Court resolved to grant the Petitioner’s MR. Consequently, the deficiency SPRT, FWT and DST issues have been CANCELLED whereas the deficiency Franchise Tax and EWT have been affirmed with modification. [THUNDERBIRD PILIPINAS HOTELS & RESORTS, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 8612, SEPTEMBER 6, 2018]

 

C.      BIR MEDIA RELEASE

 

BIR LTS incinerates 320,440 more packs of seized Mighty cigarettes.

 

D.     BIR ISSUANCES IN RELATION TO THE IMPLEMENTATION OF TRAIN LAW

 

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

 

  1. Revenue Regulations (RR) No. 20-2018 dated July 25, 2018 prescribing the implementing rules and guidelines on the imposition of Excise Tax on Sweetened Beverages

 

  1. RR No. 21-2018 dated September 14, 2018 which implements the interest imposition provision of Section 249 of the Tax Code of 1997, as amended. Accordingly, effective January 1, 2018 there shall be no double imposition of interest such that in no case shall the deficiency and delinquency interest shall be imposed simultaneously. However, in cases where deficiency taxes became due before January 1, 2018 but the full payment thereof will only be made after January 1, 2018, the rate of interest shall be applied as follows:

 

  1. For the period up to December 31, 2017-deficiency and/or delinquency interest at 20%
  2. For the period January 1, 2018 until full payment of tax liability-deficiency and/or delinquency interest at 12%