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Cava: More than just Spanish Champagne


THE SPANISH took a page from the French when it came to their sparkling wines. The invention of the bubbly drink known as champagne, the first recorded sparkling wine, was credited to an abbot priest from Hautvillers named Dom Perignon in the 17th century in the Champagne region, France.
This invention would later be known simply as Methode Champenoise, a method that requires two separate fermentations in the making of sparkling wines. The first fermentation takes place in stainless steel tanks, and the second fermentation takes place in the bottle — the same bottle that will reach us, the consumers, as the finished product.
The second fermentation is the one that creates the delicate bubbles or effervescence and its’ longevity. All sparkling wines under this method go through a minimum disciplined period of 15 months, and have to undergo the very tedious remuage process (also known as “riddling,” the slow racking and tilting of the bottle from level position to inverted position, without agitating the yeast), and “disgorging” (when the used yeast is removed). The resulting sparkling wine is one that has a much more complex nose and resulting bubbles that are not only finer, but also longer lasting. You can compare the effervescence when you try either an Asti Spumante or Prosecco — both huge Italian sparkling wines, side by side with a French Champagne. Both Italian bubblies use the simpler Charmat Method or Tank Method, where secondary fermentation takes place in larger pressurized tanks. Both sparkling wines will have courser bubbles and the effervescence will not survive long in the glass after pouring.
SURVIVAL INSTINCT
The champagne phenomenon was the inspiration behind Spanish cava. In 1872, Don Josep Raventos, a descendant of Don Jaume Codorniu, founder of Codorniu (one of the largest cava manufacturers in Spain), made the first recorded bottle of cava in the Penedes region, Northeastern Spain. This was a creation done for survival.
At that time, the dreaded phylloxera plague — louse-like insects that prey on the vineyards — was destroying the vineyards of the predominantly red varietals in Penedes, thus leaving the region with only the white varietals. Unfortunately during that period, the white varietals were not commercially viable when made into good still wines. After learning of the success of French champagne, Raventos cleverly studied the process and worked on its adaptability. With much study and resolute determination, Raventos pushed for the creation of the Spanish version of the champagne, using the same Methode Champenoise, and using abundantly available indigenous Spanish white varietals macabeo, xarello, and parellada. This was the birth of Spanish cava.
A decade later, Manuel Raventos, son of Don Josep, started the ambitious promotion of cava across Europe, and, by 1888, the Codorniu Cavas would win the first of many gold medals and awards, establishing the much needed foothold for Spanish cavas outside of Spain. The rest, as the saying goes, is history. The Raventos name is still very much revered, with its own eponymous cava label, the Codorniu Cuvee Raventos Cava, being the bestselling premium cava in the world.
Fast-forward to modern times — Spanish cavas are on a consistent rise, with production volumes now reaching over 18 million cases (of 9 liter cases), second only to the French champagne. Spanish cava export has more than doubled in the last 10 years, proving that the world is slowly embracing Spanish sparkling wine. And since the Spanish Cava Regulatory Council has less stricter geographic coverage on its D.O. (Denominacion de Origen), the potential of cava in terms of expansion is still far greater.
The registered vineyards for cava are also far bigger than those in Champagne. The wide area of cava defies the usual definition of D.O., which restricts production to a particular demarcated area. In the case of Cava D.O., the name Cava denotes more of a quality standard, specifically the use of Method Champenoise, rather than a regional coverage. The Cava Regulatory Council has, however, permitted a list of areas to be considered Cava D.O., largely in Catalonia, where close to 95% is in Penedes, but also included are those vineyards in La Rioja, Aragon, Castile y Leon, Extremadura, the Basque Country, Navarre, Extremadura, and Valencia.
The Methode Champenoise also became easier with the Spanish invention of the gyropalette, a mechanical device used to riddle (remuage) hundreds of bottles of cavas at any time. This is the method used by the big cava houses in mass-producing their sparkling wines, and with a shorter remuage period. Cava is also Spain’s largest wine export, exceeding that of Rioja, Spain’s most prominent wine region, for almost 10 years now. Cava is surely creating its own identity as cava, and not simply as Spanish Champagne.
BEST VALUE QUALITY BUBBLIES
One of the reasons for the rise of cava is the price advantage. The commercialized success of Champagnes has made the French bubblies’ prices very high. For Spanish cavas, they have to fight the perception of inferiority, especially having to work with relatively unknown Spanish grape varietals macabeo, xarello, and parellada. This augurs well for us consumers, as cavas still have friendly prices and are within our budget.
While admittedly, these three Spanish white varietals do not come close to their Champagne varietal counterparts — namely the most adored chardonnay and the royal pinot noir — these Spanish grapes still exude wonderful aromas, crisp acids, and nice complex flavors that include petals and citrus fruits. Macabeo, is a wonderful inexpensive basic dry white wine that makes decent solo La Mancha D.O. wines, and is also known as Viura, in your basic white Rioja D.O. wine. The xarello is used in a nice majority of solo wine in the Penedes region, and is one of those possible upcoming Spanish whites to look out for. Parellada, on the other hand, is more like a third wheel in this blend and contributes to the floral elements of the wine as well as extra acidity.
In the last decade, the Cava Regulatory Council has allowed both chardonnay and pinot noir (the two most important of the three mainstays of Champagne) to be part of the cava blend. While, I understand why major cava houses would do this, I just feel that cavas should still be more Spanish, in terms of adhering to its indigenous grapes. The use of chardonnay and pinot noir grapes is also bound to cause the prices of cave to skyrocket by creating more Cuvee Prestige styles to rival their French Champagne counterparts.
It would really be interesting to see how cava evolves over time. For now, I’ll take my regular cava and drink to my heart’s delight. After all, a Codorniu Classico Brut or a Freixenet Cordon Negro Brut is just one-fourth the cost of a Moet Chandon. And that is reason enough to celebrate!
The author has been a member of the Federation Internationale des Journalists et Ecrivains du Vin et des Spiritueux or FIJEV since 2010. For comments, inquiries, wine event coverage, and other wine-related concerns, e-mail the author at protegeinc@yahoo.com. He is also on Twitter at twitter.com/sherwinlao.

How PSEi member stocks performed — October 17, 2018

Here’s a quick glance at how PSEi stocks fared on Wednesday, October 17, 2018.

 
Philippine Stock Exchange’s most active stocks by value turnover — October 17, 2018

Comparative daily minimum wages of select Asian economies

Comparative daily minimum wages of select Asian economies

DoF sees reduced corporate taxes creating 1.4 million jobs

THE DEPARTMENT of Finance (DoF) said it expects 1.4 million jobs to be created when the corporate income tax rate is reduced to 20% after 10 years.
In a statement on Wednesday, the Finance department said that the first two-percentage-point reduction in the corporate income tax rate to 28% in 2021 will itself generate an estimated 113,944 new jobs.
“With lower tax rates, such a proposal is hardly inflationary while creating over a million jobs over the medium term as firms expand with more money at their disposal,” Finance Undersecretary Karl Kendrick T. Chua was quoted in the statement as saying.
The DoF’s estimate compares with that of the Confederation of Wearables Exporters of the Philippines (ConWEP) of a 40% reduction in the industry’s work force if incentives are rationalized in the latest round of tax reform legislation. Business groups, especially those registered with the Philippine Economic Zone Authority, have said that incentives rationalization will likely result in job losses as locators seek other production bases.
The House of Representatives approved on final reading House Bill 8083, or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) on Sept. 10. The bill seeks to cut the corporate income tax rate gradually to 20% by 2029 via a two-percentage-point reduction every other year starting 2021.
Fiscal incentives will be limited to industries identified in the Strategic Investments Priority Plan (SIPP) and will make them subject to performance benchmarks. Incentives will be harmonized into a single menu, including: a three-year income tax holiday, after which, a special net income tax rate of 17% will be charged starting 2021; deductions for labor, research and development, training, and infrastructure development expenses; and some customs duties exemptions for up to five years. Following this, companies will be taxed at the prevailing corporate tax scheme.
Currently, income tax holidays can be as long as nine years, with locators enjoying a 5% tax on gross income earned in lieu of all other taxes in perpetuity.
Finance Assistant Secretary Antonio Joselito G. Lambino II said that despite the streamlined incentives, job creation should still be net-positive.
“We also expect to be employment-positive on the fiscal incentives side, particularly because we have included in the bill incentives for job creation and training, among others. Additional employment numbers are difficult to estimate at this point because sectors and industries that will qualify for these employment-enhancing incentives will be based on the Strategic Investments Priority Plan of BoI (Board of Investments),” he said in a mobile phone message yesterday.
The DoF said that most of the country’s top 1,000 corporations enjoy fiscal incentives, while about 90,000 small-and-medium enterprises (SMEs), and some of the hundreds of thousands of micro-enterprises have to pay the regular 30% income tax rate.
SMEs currently employ about 33% of the total labor force, based on 2016 data from the Department of Trade and Industry (DTI).
“This pro-investment tax reform package is seen to be even more attractive to firms because it will give them additional incentives on labor, domestic input and training under the proposed menu of tax incentives, while activities that already provide positive benefits to society, such as those that develop the countryside, create jobs and contribute to exports can continue to enjoy tax incentives,” said Mr. Lambino.
“This second package of the CTRP will level the playing field for business and spur greater economic activity that will spell more jobs in the long haul,” said Finance Secretary Carlos Dominguez III was quoted in the statement as saying.
“The CIT cut will make the business sector more competitive in the region and give a significant boost to SMEs that employ a majority of Filipino workers. With lower taxes and more performance-based incentives, firms’ behavior is directed towards expansion and creation of high-value and better-paying jobs, especially in the countryside, where firms are given additional two years of incentive,” he added.
The government hopes to have the bill signed into law before the end of the year. — Elijah Joseph C. Tubayan

DTI touts reforms behind improved competitiveness

THE Department of Trade and Industry (DTI) said reforms promoting efficient government transactions and ease of doing business are starting to be reflected in the World Economic Forum’s 2018-2019 competitiveness report.
“From day one, the Duterte Administration has worked on various reform initiatives to improve the country’s competitiveness. The recent positive performance in the refined GCI (global competitiveness index) is a testament of the fruits of all of these reform initiatives, and we are gearing up for better,” Trade Secretary Ramon M. Lopez said in a statement on Wednesday.
The Philippines was 56th in the latest report out of 140 economies and fifth out of nine economies in the Association of Southeast Asian Nations (ASEAN). The study’s metrics were not directly comparable with those of the previous study, but the country’s showing amounted to a 12-place improvement from the previous study.
“We are optimistic that with our ongoing reform initiatives with the enactment of the EODB (Ease of Doing Business)/Efficient Government Act, and efforts to promote government technology, the country will move closer to the frontier,” he added.
The ASEAN economies finishing above the Philippines were Singapore at number two globally followed by Malaysia (25th), Thailand (38th), and Indonesia (45th).
Mr. Lopez also touted government efforts including the Inclusive Innovation Industrial Strategy (i3S) and the Inclusive Filipinnovation & Entrepreneurship Roadmap.
“These will foster development in the country’s innovation and entrepreneurial ecosystem by strengthening the collaboration between academe/research community, industry, and government with focus on market-oriented research that would address societal problems and industry issues,” the DTI added.
The DTI together with the departments of Science and Technology, Agriculture, Information and Communications Technology, Education, and the National Economic Development Authority as well as the Commission on Higher Education, will implement the recommendations of the Filipinnovation Roadmap.
The Philippines’ highest scores on the index were for macroeconomic stability; labor market, financial system, market size and business dynamism; number of disruptive businesses; and growth of innovative companies.
The weakest scores related to strength of institutions, controls on organized crime, reliability of police, and conflict of interest regulation, among others. — Janina C. Lim

Peso may have risen due to BSP’s CRPP hedge

THE central bank’s Currency Risk Protection Program (CRPP) may have helped the peso strengthen against the dollar, economists said.
Last month, the Bangko Sentral ng Pilipinas (BSP) issued guidelines for the reopened CRPP facility, which allows borrowers with obligations of at least $50,000 to hedge against foreign exchange-related risk.
The facility is a non-deliverable forward (NDF) contract between the BSP and universal and commercial banks that will allow them to hedge currency risk on behalf of bank clients.
The facility allows parties to agree that on maturity of the forward contract, only the difference between the contracted forward rate and the spot rate will be settled in pesos.
Michael L. Ricafort, economist at Rizal Commercial Banking Corp., said the CRPP reactivation helped ease demand for spot dollar purchases.
“[At the same time, it also] enables qualified importers to effectively and conveniently hedge their regular dollar purchase requirements,” Mr. Ricafort said in a text message.
The CRPP covers unhedged foreign-currency loans and payables such as BSP-registered short-term trade loans, medium to long-term trade loans maturing within 90 days from the date of the CRPP application, short-term trade borrowing made by oil companies from offshore banking units and dollar trust receipts, among others.
Hedging contracts last 90 days, although clients have the option to reavail, the BSP said.
Mr. Ricafort said the reactivation of the CRPP has supported the strengthening of the peso.
“It has indeed partly supported the recent gains of the peso, and at the very least, prevented further peso weakness in recent weeks,” he added.
The peso on Wednesday closed at its one-month high at P53.96 to the dollar.
UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion acknowledged the possibility of the CRPP as a “significant factor” in the strengthening of the peso.
“The said policy may have been a significant factor in the continued strength of the peso,” Mr. Asuncion said in a text message Wednesday, noting that “solid evidence” is still needed to conclude that it is effective against volatility and market speculation.
The CRPP was introduced in 1997 to address the impact of foreign exchange volatility during the Asian Financial Crisis.
It was then updated in 2005. The last availment was in 2009. — Karl Angelo N. Vidal

California bird imports banned on disease fears

THE Department of Agriculture (DA) ordered a temporary ban on the importation of domestic and wild birds, including game fowl, from California due to a reported outbreak of virulent Newcastle Disease.
The United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) has confirmed cases of the disease in Southern California affecting backyard exhibition chickens.
Along with the ban, the DA ordered the immediate suspension of the processing, evaluation of the application and issuance of sanitary and phytosanitary (SPS) import clearances for California birds, which are subject to confiscation if found.
According to APHIS, virulent Newcastle Disease is contagious and fatal, affecting birds’ respiratory, nervous and digestive systems.
APHIS said vND is not a food safety concern and people working directly with sick birds can become infected with mild symptoms only very rarely. — Reicelene Joy N. Ignacio

US projects 2018 PHL dairy imports at 2.7 MT

PHILIPPINE imports of dairy products are estimated at 2.7 metric tons of liquid milk equivalent (MT LME), up from 2.5 million in 2017 the United States Department of Agriculture (USDA)’s Global Agricultural Information Network (GAIN) said.
GAIN said the Philippines is the sixth-largest market for US dairy products by value at $225 million and the fourth-largest by volume at 125,000 MT.
GAIN said that the Philippines produces less than 1% of its total annual dairy requirement. Domestic milk production is expected to hit 24,000 MT in 2018 and 25,000 MT in 2019, with 63% representing cow’s milk, 34% carabao, and 3% goat.
GAIN estimated average milk production per animal in the Philippines at 8 liters per day due to poor feed, management practices, high production costs and lack of adequate dairy infrastructure. Average daily milk yields in the US are at 30 liters per day. In the UK it is 20 liters per day.
According to the Philippine National Daily Authority (NDA), milk production rose to 22,760 MT in 2017 from 21,160 in 2016, of which 14,400 MT was cow’s milk. The average farmgate price of milk was P36.27 ($0.67) so far this year.
The US farmgate price in July was around $0.07 per liter.
GAIN noted that the NDA is hampered by the unavailability of cross-bred animals suitable for tropical climates.
Annual per-capita milk consumption in the Philippines is estimated at 22 kilograms. Thailand is at 26 kg, Malaysia 52 kg, and the US 287 kg.
Major suppliers to the Philippines by volume are New Zealand with a 42% share, the US with 20%, and Australia with 6%. — Reicelene Joy N. Ignacio

Northern Luzon legislators seek relief from higher tobacco excise

LEGISLATORS from tobacco-growing regions have asked the Senate to reconsider bills seeking to further increase tobacco taxes, citing the danger to farm livelihoods.
In a letter to Senate President Vicente C. Sotto III dated Oct. 8, the Northern Luzon Alliance (NLA) said that tobacco is currently heavily taxed, to the detriment of farmers.
“We are saddened by the proposals to raise the excise tax rates by more than 100%. Such a move will certainly affect our constituent-tobacco farmers who are still struggling from the loss of income as a consequence of RA No. 10351 or the Excise Tax Reform law of 2012. And as we all know, the tobacco excise tax rates were further increased under the newly-enacted RA No. 10963 or the TRAIN (Tax Reform for Acceleration and Inclusion) law,” the alliance said.
They cited National Tobacco Administration data showing declining tobacco production in terms of sticks and tobacco leaf volume,the decline in registered tobacco farmers, and the decline in land area planted to tobacco.
“It is our shared responsibility as members of the NLA to protect the interests of our constituents who depend on the tobacco industry,” the letter read.
Under the TRAIN law, tobacco excise taxes were set at P35 per pack in July from P32.50 in January and P30 in 2016. The taxes will gradually increase to P40 per pack until January 2022.
As part of its comprehensive tax reform program, the Department of Finance (DoF) said that it will support Senator Emmanuel D. Pacquiao’s Senate Bill No. 1599 that seeks to increase the excise tax rate to P60 per pack of cigarettes.
Senator Joseph Victor G. Ejercito also filed a similar measure last year under Senate Bill 1605 that raises the excise tax to P90 per pack.
“It is therefore, unfortunate that tobacco is always targeted despite being a big source of revenue for the government. Hence, we ask: why heavily tax tobacco again? Why should Filipinos in this sector suffer again? On behalf of the more than 9 million people living in Northern Luzon, we request your good office to seriously consider the plight of our farmers and other constituents in the tobacco industry. Our fellow Filipinos in Northern Luzon should not be marginalized through successive and unreasonable tax increases,” the group said.
Think tank Action for Economic Reforms (AER) said the bills raising excise tax will help affected farmers improve their competitiveness or shift to higher-value crops.
They noted that funds earmarked for such purposes more than doubled to P10.7 billion in 2015 from P4 billion in 2013.
“These should fund government support programs to tobacco farmers to improve production, and provide for infrastructure, training and market support to develop farmers’ income and livelihood. The opposition of legislators from tobacco-growing areas is thus, unfounded, considering the incremental support that they will get if the taxes are increased,” said AER Fiscal Policy Coordinator Jo-Ann Diosana in an e-mail when sought for comment.
According to the DoF, tobacco excise taxes generated P78.95 billion in government revenue in the first half, up 53.5% from a year earlier and far surpassing the P51.42 billion target.
“The legislators from the so-called Northern Alliance are at it again. They are recycling old arguments,” Ms. Diosana said.
“Congress should also look into the said earmarked funds and evaluate how these are helping the farmers and their families as intended by the law,” said Ms. Diosana. — Elijah Joseph C. Tubayan

PSA cuts third-quarter palay, corn output estimates

THE Philippine Statistics Authority (PSA) said it cut its estimate for output of palay, or unmilled rice, in the three months to September to 3.25 million metric tons (MMT), from the previous estimate of 3.32 MMT.
The latest estimate, if realized, would come in 4.2% lower than the year-earlier total, reflecting the impact of typhoon and monsoon damage in key growing areas.
PSA said typhoons and heavy rains came during the reproductive and maturation stages of the rice crop in Northern Luzon and the key rice-growing area of Nueva Ecija.
PSA said about 34.21% of the updated standing crop has been harvested.
Meanwhile, the estimate for corn output in the three months to September was cut to 2.176 MMT from 2.182 MMT in July. If realized, the new estimate would come in below the year-earlier output of 2.589 MMT.
PSA said the rains brought by the Habagat, or southwest monsoon, reduced yields in Negros Oriental, South Cotabato and Sarangani, while a decline is expected in Cebu due to insufficient soil moisture during the crop’s vegetative stage. — Reicelene Joy N. Ignacio

Arroyo cites Malaysia-Thailand deal as model for joint exploration

SPEAKER Gloria Macapagal-Arroyo said a 1979 agreement between Malaysia and Thailand was a model for joint offshore energy exploration, holding it up as a possible way forward in the development of resources in the disputed South China Sea.
“One good practice of such cooperation is the 1979 Malaysia-Thailand agreement to jointly explore oil and gas in a disputed offshore zone in the Gulf of Thailand,” Ms. Arroyo said in a speech at the 139th International Parliamentary Union (IPU) General Assembly in Geneva.
She said the agreement had “inspired” the joint exploration agreement of the Philippines with China and Vietnam, signed during her time as President.
“That model inspired the 2004 Joint Seismic Marine Undertaking of the Philippine National Oil Co., the China National Offshore Oil Corp., and the Vietnam Oil and Gas Corp. in disputed areas in the South China Sea,” Ms. Arroyo said.
She made the remarks amid a pending review of the draft framework for the Philippine-China joint exploration.
“Last August Philippine President Rodrigo (R.) Duterte approved the Secretary of Foreign Affairs’ proposal for an experts group from the government, academe and the private sector to look into the legal and other aspects of a proposed joint exploration between the Philippines and China in the South China Sea,” she added.
She said that international cooperation models help countries meet their 2030 Sustainable Development Goals. The United Nations (UN) has identified 17 goals to address poverty and hunger, among others.
“International cooperation models, whether scholarship in advanced engineering R&D or joint research or exploration undertakings, are conducive to supporting the 2030 Sustainable Development Goals or SDGs,” she said.
Ms. Arroyo’s speech was her response to the gathering’s call for parliamentary leadership in promoting development.
She said parliaments need to provide adequate funding and legislation to promote science, technology and innovation.
She also cited a UN Educational, Scientific and Cultural Organization (UNESCO) benchmark of 340 people focused on research and development per million population to sustain modernization.
“To achieve that benchmark, parliaments and parliamentarians can provide the budget to encourage more youth to pursue scientific and engineering studies,” Ms. Arroyo said. — Charmaine A. Tadalan

Premiums on health care are taxable, now what?

Following the issuance of RMC 50-2018, the Bureau of Internal Revenue (BIR) clarified that premiums on health care paid by an employer for all employees, whether holding rank and file or managerial/supervisory positions, under a group insurance plan shall be included as part of other benefits of these employees subject to the P90,000 exemption threshold.
Much has been said regarding this controversial issue which is laid down as Q&A Item No. 7 (“Q7 & A7”) in the RMC. Now let’s take a closer look at the practical implications of its implementation.
Who will shoulder the additional tax on health maintenance organization (HMO) premiums?
There’s no question that implementing Q7 & A7 of RMC 50-2018 will create additional income tax when the employees have fully exhausted the P90,000 tax-exempt threshold. The question is who will shoulder the additional tax on HMO premiums?
Following the rules, since the group HMO premium is subject to withholding tax on compensation, the initial answer would be that the tax should be borne by the employee; but, is it that simple?
Unfortunately, it is not, since the additional tax will result in a reduction in the employee’s take-home pay. At a time of soaring inflation, any additional expense is unwelcome news. Moreover, if an employee was healthy all throughout the year and did not utilize his HMO benefit, should he be penalized with an additional tax?
Alternatively, if the employer absorbs the incremental tax, it will be an additional cost to the business that may further fuel inflation. Either way, the additional tax will adversely reduce the bottom-line income of the employee or the employer.
For a better understanding of the tax implications on either the employee or employer, a computation is provided by way of illustration.
HMO & Tax
Hypothetically, if the HMO premium is P2,000 per month and the P90,000 tax-exempt threshold had already been exhausted, an employee with an annual taxable income of P400,000 will have to pay an additional tax of P6,000.
If the employer absorbs the tax on the HMO premium, the employer will have an additional expense of P8,000 which translates to a total cost of P1.6 million for a company with around 200 employees.
When will the corresponding tax be reported and remitted to the BIR?
HMO premiums are generally paid at the beginning of the year and cover a period of one year. Now the question is when the tax on HMO premiums needs to be reported and remitted to the BIR. Should the tax be remitted upon payment of the premiums or should it be spread over the period of coverage and reported every month? Can the tax be remitted every quarter when the corresponding HMO expense is claimed as a deduction in computing the employer’s corporate income tax? Or can it just be reported at the end of the year when the actual tax rate of the employee is already determined?
To avert preparation of multiple reports to monitor the premiums paid, payable, or accrued for purposes of reporting the tax due, here’s a simpler way to report the tax due on the HMO premiums. Considering that HMO premiums are only taxable when the employee has fully exhausted the P90,000 tax-exempt threshold, employers may apply the tax-exempt threshold first on the HMO premiums and then recalculate the tax impact on total bonuses and other benefits, including the HMO premium, during the year-end annualization.
What other matters should the employer consider in implementing RMC 50-2018?
Since RMC 50-2018 was only issued on June 8, employers who treated the HMO premiums as non-taxable may need to assess the tax impact on resigned employees whose final pay was released prior to June 2018.
If the resigned employee has not exhausted the P90,000 tax-exempt threshold, the employer should consider reissuing BIR Form 2316 to reflect the HMO premium and reporting the item in the annual alphabetical list.
If the resigned employee exhausted the P90,000 tax-exempt threshold, the employer should consider recalculating the additional tax due on their account, remitting the amount to BIR and reissue BIR Form 2316 to the resigned employee.
For employers who have not yet assessed the impact of RMC 50-2018 on their company, they have less than three months left before the year-end annualization to do so.
More importantly, employers must not forget to communicate the impact of this RMC to their employees. After all, it is better to forewarn and prepare way in advance than to be blindsided at short notice.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
 
Floredee T. Odulio is a Director at the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.
+63 (2) 845-2728
floredee.t.odulio@ph.pwc.com