DMCI unit’s energy sales up 17% in Q1

May 24, 2018 | 12:01 am

DMCI Power Corp. recorded a 17% increase in its energy sales in the first quarter to 63 gigawatt-hours (GWh) from 54 GWh, after the off-grid areas it serves all recorded higher volumes during the period.
“The increasing electricity demand in our service areas is primarily driven by the growth in household consumption and entrepreneurial activities. This is supported by a reliable and adequate supply of electricity,” said DMCI Power President Nestor D. Dadivas in a statement.
In a disclosure to the stock exchange, its parent firm DMCI Holdings, Inc. said the unit posted a 29% sales growth in Palawan to 28 GWh.
Masbate and Oriental Mindoro both showed a 9% increase in dispatch. Masbate recorded 24 GWh during the first three months from 22 GWh previously, while Mindoro posted a growth to 11 GWh from 10 GWh.
DMCI Power was put up in 2006 to provide sufficient and reliable electricity to areas that are not connected to the main transmission grid.
Earlier this month, DMCI said the off-grid energy subsidiary will have a capital expenditure of P2.034 billion, mainly to fund the development of a 15-megawatt (MW) power plant in Masbate province.
In March, the parent firm said DMCI Power had been allocated P160 million to acquire seven new diesel generating sets for its Masbate and Palawan operations.
The additional units, which have a total capacity of 11.2 MW, will raise DMCI Power’s generation capacity in the two missionary areas to 90 MW, or an improvement of 14% from last year. — Victor V. Saulon

How PSEi member stocks performed — May 23, 2018

May 24, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Wednesday, May 23, 2018.

Aquino calls for mechanism to suspend fuel excise taxes

May 23, 2018 | 9:30 pm

SENATOR Paolo Benigno A. Aquino IV on Wednesday said he wants a “reasonable mechanism” for suspending fuel excise taxes if inflation breaches certain thresholds, and denied that such a suspension would significantly set back the government’s revenue collection efforts.
In a privilege speech, Mr. Aquino noted that a bill he filed on May 10 seeks to amend Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law. The bill specifies an inflation-related trigger event of three months of inflation exceeding government targets leading to the automatic suspension of excise taxes on fuel, which have been blamed for stoking inflation.
“There are those who are saying that if we suspend the excise taxes, there would be no money for ‘Build, Build, Build,’ free tuition law, and other programs of the government. This is not true. After all, the target collection of excise tax on fuel based on TRAIN (Tax Reform for Acceleration and Inclusion) is only P70 billion,” he said in his speech.
He said the current provision to suspend fuel excise taxes under TRAIN only applies to price increases after January 2019.
TRAIN raised the excise on gasoline and diesel to P7 per liter and P2.50 per liter, respectively. It also contains a suspension provision on the scheduled increase of fuel excise tax if the Dubai light sweet crude benchmark in the three months prior to the scheduled increase averages $80 per barrel or higher.
“What we need is a safeguard, Mr. President, which is responsive to the surges in prices and the needs of our countrymen,” Mr. Aquino said.
The senator also maintained that the government could replace the P70 billion worth of foregone fuel excise taxes from its P319 billion worth of underspending in 2017.
He also called for more efficient tax collection by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC).
“I’m sure we can find that P70 billion from different government departments and agencies to cover the losses if we will suspend the fuel excise tax,” he said.
While acknowledging the external factors causing inflation, Mr. Aquino maintained that the government could act on other fronts to address rising inflation.
Aside from the suspension of fuel excise taxes under TRAIN, Mr. Aquino also called for the full implementation and an increase in unconditional cash transfers under TRAIN, issued to the poorest families to counter the impact of higher taxes.
The senator also pushed for the passage of the rice tariffication bill, which remains pending in the committee level, to address high rice prices. — Camille A. Aguinaldo

S&P sees PHL growth sustained with no danger of overheating

May 23, 2018 | 9:29 pm

S&P Global Ratings said it is not concerned about any overheating in the Philippine economy, saying that robust investment and a growing labor force have made current growth levels sustainable.
S&P Asia-Pacific economist Vincent Conti said such levels of growth would have been a source of worry previously.
“In the previous years, half a decade or so ago, if we see Philippine growth significantly above the 6-6.5% range, we would have worried about overheating,” Mr. Conti said in a webcast Wednesday.
“But the fact is that a lot of investments have increased the capacity of the economy to grow at above 6.5% rate on a sustained basis.”
Mr. Conti said investments as a share of GDP are “much higher,” while the working-age population is still “robustly” growing.
“Both of which contribute to a higher potential growth rate for the Philippines, allowing its growth at this pace, or even faster, for a bit longer without overheating the economy,” Mr. Conti said.
The government is embarking on an P8-trillion infrastructure program, which is expected to raise public infrastructure spending to 7.3% of GDP from 5.4% this year.
Meanwhile, Andrew Wood, S&P’s Sovereign and International Public Finance Ratings Director, said the current account deficit is not an indication of an overheating economy.
“The way we look at this is mostly driven by higher capital imports which are part and parcel of the stronger investments story,” Mr. Wood said in the webcast. “It’s not very much of a concern for us and it’s not something indicative of an overheating economy either.”
Mr. Conti added that the Philippines is seeing higher capital goods and raw materials imports that contribute to the current account deficit.
The Bangko Sentral ng Pilipinas reported in March that the Philippines posted a $2.52-billion current account deficit in 2017, equivalent to 0.8% of GDP.
“When we take all of these holistically, it’s not something that’s very much of a concern for our positive outlook for the sovereign rating of the Philippines,” Mr. Wood added.
S&P last month raised its outlook on the Philippine economy to “positive” from “stable,” which raise the probability of a ratings upgrade.
S&P cited the “increasingly effective fiscal policies” enacted by the government, “marked by improvements to the quality of expenditures, still-limited fiscal deficits, and low levels of general government indebtedness.”
The Philippines holds a “BBB” rating from S&P, a notch above the minimum investment grade. Prior to the outlook revision, the rating has had a “stable” outlook since April 2015. — Karl Angelo N. Vidal

Finance dep’t claims backing of business groups for tax reform package 2

May 23, 2018 | 9:28 pm

THE DEPARTMENT of Finance (DoF) said that it has received letters of support from business and civil society groups on the second package of the comprehensive tax reform package.
Following the start of the deliberations for the new tax program on Tuesday, the DoF issued a statement yesterday that several groups back the reduction in corporate income tax rates and the modernization of the investment incentives to enhance the country’s competitiveness within the region.
The Management Association of the Philippines (MAP) in a letter to Mr. Dominguez, said: “We agree with the need to rationalize and modernize the tax incentive system to make incentives time-bound, performance-based, and not excessively complex with far too many different, even overlapping laws, rules and regulations.”
The Federation of Indian Chambers of Commerce (Phil.) Inc., meanwhile, said that it supports the reform measure “insofar as it seeks to lower the corporate income tax (CIT) rate, rationalize the country’s tax incentives programs, and broaden the tax base and increase revenues that will support the administration’s initiatives.”
The Samahang Industriya ng Agrikultura said it “supports investments and public incentives that will boost the agriculture industry, improve efficiency, increase productivity, promote rural livelihoods and ensure the country’s food self-sufficiency.”
The DoF proposes to cut the corporate income tax rate by 1 percentage point gradually from 30% to 25% on the condition of savings equivalent to 0.15% of gross domestic product, or P26 billion, from rationalizing tax incentives. Meanwhile, House Bill 7458 seeks an annual unconditional 1 percentage point cut to the CIT until it hits 20%.
Reform proposals would have the effect of repealing 123 investment incentive laws. Incentives granted by 14 investment promotion agencies are to be harmonized with the government’s medium-term Strategic Investment Priority Plan (SIPP), producing an omnibus incentive code to be administered by the Fiscal Incentives Review Board (FIRB). The reforms also hope to replace the 5% gross income earned (GIE) tax in lieu of all taxes with a 15% rate on net taxable income over five years; disallowing the use of value-added tax exemptions as an investment incentive; and expanding the coverage of the Tax Incentives Management and Transparency Act.
The DoF, together with the Philippine Chamber of Commerce and Industry, conducted nationwide road shows in the three months to March to consult stakeholders on the second tax reform package.
The second public hearing on the measure at the House ways and means committee will focus on private-sector concerns, after the airing of government agencies’ positions in the first hearing on Tuesday. — Elijah Joseph C. Tubayan

NFA expects rice prices to stabilize next week

May 23, 2018 | 9:27 pm

THE National Food Authority (NFA) said it expects rice prices to stabilize with subsidized rice selling for between P27 to P32 per kilogram to be made available to the public by next week.
In a statement on Wednesday, NFA Administrator Jason Laureano Y. Aquino said: “With the expected arrival of fresh stocks for our food security and stabilization functions, the public will be watching us on how we can effectively stabilize, and possibly pull down rice prices.”
A total of 250,000 metric tons (MT) of rice from Thailand and Vietnam procured through a government-to-governement (G2G) scheme is set to arrive starting in late May, which will help replenish the NFA’s buffer stocks.
On Tuesday, the NFA also bid out another order for 250,000 MT from 13 private traders to reinforce inventories during the lean months.
Reuters has reported that private Thai suppliers won 212,500 MT of the order at between $465,04 and $461.75 per MT.
Mr. Aquino also cautioned that the subsidized rice “should go directly to its intended beneficiaries.”
Aside from injecting cheap rice into the market to stabilize prices, the NFA also provides rice to areas hit by calamities, provinces that are unable to produce enough rice and to poor beneficiaries supported by the Department of Social Welfare and Development. — Anna Gabriela A. Mogato

DoE cites role as arbiter of fuel tax suspension

May 23, 2018 | 9:26 pm

THE tax reform law contains a mechanism authorizing the Department of Energy (DoE) to trigger the suspension of another increase in taxes imposed on petroleum products next year, an official said.
Rino E. Abad, director of the DoE’s Oil Industry Management Bureau, said the Tax Reform for Acceleration and Inclusion (TRAIN) law requires the department to monitor international crude prices in the months of September, October and November this year.
He said should prices during the three months average at least $80 per barrel, the DoE can “certify” that the ceiling had been breached, prompting the Department of Finance (DoF) to call for the suspension of the TRAIN law’s second tranche.
“If recent events persist — for example the Iran sanctions, the Venezuela ongoing economic and political crises and of course, the objective of the OPEC especially Saudi Arabia to really achieve the $80 per barrel crude oil price — then the indication… in the short term leads towards the increase in price,” he told reporters.
He said such “indications” are expected by the DoE in the next to three to six months.
He said the DoE has a subscription to Mean of Platts Singapore (MOPS), the average of a set of Singapore-based oil product price assessments published by global information provider Platts. He said Platts also provides the department with three-month forecasts on crude prices.
Mr. Abad said the new taxes that have been imposed starting this year will remain. The TRAIN law this year added P2.65 per liter to the price of gasoline as excise tax, P0.32 per liter as value-added tax, or a total of P2.97 per liter.
For diesel, the law resulted in an increase of P2.50 per liter as excise tax and P0.30 as value-added tax (VAT), or a total of P2.80 per liter. Diesel used to be free of VAT and excise tax.
Aside from the two commonly used products, TRAIN also imposed excise and value-added taxes on aviation fuel, kerosene, fuel oil, liquefied petroleum gas (LPG) and auto LPG.
The second tranche of TRAIN is set to add P2.24 per liter to the price of gasoline and P2.24 per liter for diesel as excise and value-added taxes.
The taxes come as the underlying prices of petroleum products are rising on the international market.
Based on the DoE’s monitoring, the international price of diesel hit $73.64 per barrel as of May 18, a big jump from $26.81 per barrel in January 2016.
Mr. Abad said that aside from the $80-per-barrel price ceiling, the TRAIN law also calls for the distribution of fuel vouchers to drivers of public utility vehicles to soften the impact of higher petroleum prices. He said the fuel voucher is a direct subsidy.
DoE data estimate gasoline prices as of May 18 at P54.02 per liter, while kerosene was at P50.76 and diesel P40.50.
Mr. Abad said taxes are just a component of the prices of petroleum products. The components of the diesel price, for instance, include more than 62% for the cost of the fuel on international markets and 21% as the “industry take.” Taxes account for the rest.
He said “industry take” is controlled by the oil companies, and include their fixed and variable costs in doing business, plus profit.
He said what is not clear in the law is whether the suspension of the second tranche of TRAIN will result in the third tranche being implemented once the tax reform resumes. He said the law is clear that the reforms are to be in place only until 2020.
Earlier this week, Senator Sherwin T. Gatchalian called on the DoE to “accurately forecast the expected price of crude oil over the next six months and lead the preparation of strategies that would minimize the impact of surging prices on public utility drivers and private consumers.”
Mr. Gatchalian, who heads the Senate energy committee, said Patrick Pouyanne, the chief executive officer of French oil company Total SA, has warned that oil prices could hit $100 per barrel in the coming months. — Victor V. Saulon

Q1 livestock output rises led by layer chickens

May 23, 2018 | 9:25 pm

THE Philippine Statistics Authority (PSA) said most subcategories of the livestock sector reported increased production in the first quarter, led by chickens specialized for egg laying.
According to the PSA situation report for the quarter this year, chicken egg production grew by 7.42% year on year to 130,549 metric tons (MT).
The Calabarzon Region, representing the provinces directly south and east of Metro Manila, was the egg production leader in the quarter at 39,332 MT.
As of April 1, the inventory of layer chickens rose 7.15% year-on-year to 37.05 million. PSA said that due to increased production and chicken populations, farmgate prices for chicken eggs fell 4.52% year on year during the quarter.
Output of chicken grew 4.93% year on year to 439,956 MT, with broiler chicken, specifically raised for its meat, accounting for 79.89% of the total. Central Luzon produced 162,321 metric tons (MT) of chicken.
As of April 1, total chicken inventory was 184.23 million, up 2.96% from a year earlier.
Layer chicken numbers grew 7.15% while those for broiler chicken fell 1.11%.
The farmgate price for chicken during the quarter rose 5.68% year on year to P87.54 per kilogram (kg), liveweight.
Meanwhile, swine production grew 2.39% year on year to 558,730 MT.
As of April 1, PSA noted a 1.92% increase in swine population to 12.75 million, with commercial and backyard farm populations rising 4.82% and 0.34%, respectively, year-on-year.
Central Luzon accounted for 16.91% of the swine total, while Calabarzon and Western Visayas followed with 12.29% and 9.92%, respectively.
PSA recorded a 14.03% year-on-year increase in the farmgate price for live hogs at P112.56 per kg.
Carabao production grew 0.86% in the first quarter to 30,920 MT.
The carabao population rose 0.03% year on year during the quarter to 2.88 million head, led by a 0.04% increase in carabao numbers in backyard farms. The commercial farm population, on the other hand, dropped by 2.45%.
The farmgate price of carabao meant for slaughter rose 11.85% during the quarter to P92.85 per kg, liveweight.
Cattle production rose 0.02% to 61,986 MT, bolstered by production in Northern Mindanao, Ilocos, and Central Visayas, where output was 9,807 MT, 6,898 MT and 6,227 MT, respectively, making up nearly 40% of the total.
As of Jan. 1, the overall cattle population rose 0.25% year on year, after a 4.90% decrease in cattle numbers at commercial farms, while those in backyard farms rose 0.59%.
Calabarzon, Central Visayas and Ilocos cattle populations accounted for 33.12% of the national total.
The average farmgate price for cattle on a liveweight basis rose 7.55% year on year to P103.80 per kg. — Anna Gabriela A. Mogato

Debt-to-GDP ratio rises to 56.2% in Q1 ahead of Fed rate hikes

May 23, 2018 | 9:24 pm

GOVERNMENT debt as a percentage of gross domestic product rose from a year earlier to 56.2% in the first quarter amid an increase in borrowing ahead of higher US interest rates, the Department of Finance (DoF) said.
“The National Government (NG) debt-GDP (gross domestic product) ratio rose from 55.2% as of end-March 2017 to 56.2% as of end-March 2018 as the country advanced its borrowing ahead of the projected triple adjustments in the Fed policy rate,” the DoF said in an economic bulletin yesterday.
“However, net debt-GDP ratio which nets out the NG cash balance from the debt level, dropped from 40.1% to 39.6%,” it added.
The DoF said that the “excellent design and timing of borrowings has allowed government to tap cheaper rates and longer maturities with higher volumes, enabling government to optimize savings for the ‘Build, Build, Build’ program and social expenditures.”
The Federal Reserve raised its benchmark rates by 25 basis points in March, and is believed to be considering two more rate hikes within the year. Last month, US 10-year bond rates breached 3% for the first time in four years.
The government expects outstanding debt as a share of the economy to decline to 38.9% by 2022 from 42.1% at the end of 2017.
The DoF said the government’s “proactive debt management” approach has created wider fiscal space to enable more spending. The share of debt relative to the economy declined to 42.1% in 2017 from 87.2% in 2006.
Outstanding debt was P6.879 trillion in the first quarter, up 0.85% from the end of February but up 11.1% from a year earlier, as the government issued more government securities domestically and increased its dollar bond issues and floated its first renminbi bonds.
Some 35.08% or P2.413 trillion of the loan portfolio was originated overseas.
This year, the government plans to borrow a total of P888.23 billion. It has set a 65-35% borrowing mix in favor of domestic creditors.
The government forecasts outstanding debt to rise to P6.995 trillion at the end of 2018. If the projection pans out, debt will have grown 5.16% from the actual total at the end of 2017. — Elijah Joseph C. Tubayan

OPEC may decide to ease oil supply restrictions in June

May 23, 2018 | 9:24 pm

KHOBAR, SAUDI ARABIA/LONDON — The Organization of the Petroleum Exporting Countries (OPEC) may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.
Gulf OPEC countries are leading the initial talks on when the exporting group can boost oil production to cool the oil market after crude rose above $80 a barrel last week, and how many barrels each member can add, the sources said.
The OPEC and non-OPEC producers led by Russia have agreed to curb output by about 1.8 million barrels per day (bpd) until the end of 2018 to reduce high global oil stocks, but the inventory overhang has now fallen close to OPEC’s target.
“All options are on the table,” one Gulf oil source told Reuters, adding that a decision to raise output might be taken in June when OPEC next meets to decide on its output policy, but there is no certain number yet by how much the group would need to ease its oil supply curbs.
OPEC and its non-OPEC allies may opt to relax record high compliance with the supply curb agreement, another source said.
OPEC’s compliance with the deal reached an unprecedented 166% in April, meaning it has cut well above its target.
“We are still studying the different scenarios,” the second source said, adding that even if OPEC decided to ease the output restrictions in June it may take three to four months to put into effect.
“That is one of the options,” an OPEC source said, referring to adding more supply at the June meeting.
Falling Venezuelan output due to an economic crisis has helped OPEC and its allies deliver a bigger cut than intended.
Saudi Energy Minister Khalid al-Falih is set to meet his counterparts from Russia and the United Arab Emirates, which holds the OPEC presidency in 2018, in St. Petersburg this week to discuss this issue, sources said.
So far, OPEC has said it sees no need to ease output restrictions despite a fall in global stocks to the group’s desired levels and concerns among consuming nations that the price rally could undermine demand.
But the sources said that the quick decline in global oil inventories and worries about the impact on oil supplies after the US decision to withdraw from the international nuclear deal with Iran, as well as Venezuela’s collapsing oil output, were behind the change in OPEC’s thinking.
Concerns raised by the United States that oil prices were too high also made the exporting group start internal discussions, the sources added.
US President Donald Trump accused OPEC last month of “artificially” boosting oil prices.
Last week, Falih, OPEC’s most influential energy minister, said he had called his counterparts in the UAE, the US and Russia, as well as major oil consumer South Korea, to “coordinate global action to ease global market anxiety.”
Earlier this month, an OPEC source familiar with the kingdom’s oil thinking told Reuters that Saudi Arabia is monitoring the impact on oil supplies of the U.S. withdrawal from the Iran nuclear deal and is ready to offset any shortage but it will not act alone to fill the gap. — Reuters

DILG awaiting 72 provinces’ road dev’t plans

May 23, 2018 | 9:23 pm

THE Department of Interior and Local Government (DILG) called on 72 provinces to fast-track their drafting of Land Road Network Development Plans (LRNDP) in order for them to receive their share of the P8.3 billion set aside this year for road and bridge repair, rehabilitation and improvement.
The funds fall under the Conditional Matching Grant to Provinces (CMGP) program.
“The provincial LGUs (local government units) must fast-track the completion and submission of their LRNDPs for the CMGP funds to be downloaded to them,” Officer-in-Charge Secretary Eduardo M. Año said in a statement Wednesday.
The DILG noted that nine out of 81 provinces have completed their plans, which is required for the release of the CMGP funds.
LRNDPs outline each province’s “core roads that need to be improved or rehabilitated in the next five years to support local economic drivers, particularly agriculture, trade, logistics, and tourism hubs,” according to the DILG.
The plan is expected to contain a value chain analysis, a network map, and other information which “show the state of connectivity between national and local road networks,” DILG added.
Last year, DILG allocated P18.03 billion for provincial road repair and rehabilitation under CMGP. — Minde Nyl R. dela Cruz

Cue the new 1701Q

May 23, 2018 | 9:22 pm

The past few months have seen a myriad of changes in politics, economics, finance and taxation. While some perceive these changes to be progressive and beneficial, others are more skeptical.
One significant change in the individual taxation field these recent weeks is the newly revised BIR Form 1701Q also known as the Quarterly Income Tax Return for Individuals, Estates and Trusts which was circularized by the Bureau of Internal Revenue (BIR) in Revenue Memorandum Circular (RMC) No. 32-2018. The revision is in line with the initiative to streamline and simplify the tax filing process pursuant to the Tax Reform for Acceleration and Inclusion (TRAIN).
For those unfamiliar with BIR Form 1701Q, this tax return is for quarterly filing by individuals who are engaged in business or practice a profession in the Philippines, and persons acting in any fiduciary capacity (i.e. trustees, guardians or executors/administrators) for a trust, estate, or minor.
WHAT ARE THE NOTABLE CHANGES IN THE REVISED BIR FORM 1701Q?
Previously, taxpayers required to file BIR Form 1701Q only had to accomplish a one-page return; however, they are now required to fill out two pages. The additional page accommodates the numerous inclusions and changes in entries. Taxpayers may feel some level of unease and uncertainty in accomplishing the new form for the first time. To avoid errors and potential issues with the BIR, taxpayers may seek advice from the BIR-Customer Assistance Division or tax consultants/specialists should they have questions after reviewing the guidelines.
Aside from the additional page, another noteworthy change is the option for taxpayers to either be taxed at graduated rates from 0% to 35% or at a flat rate of 8%. The 8% gross income tax option is one of the salient amendments in TRAIN pertaining to individual taxation, which essentially provides those within a certain earnings threshold the discretion to be taxed at a significantly lower rate.
Other changes in the return pertain to the inclusion of additional sections vis-a-vis foreign tax credits, foreign tax number and specification of non-operating income, among others.
HOW DO I ELECT TO BE TAXED AT THE 8% FLAT RATE?
The option to be taxed at either the graduated tax rates or 8% flat rate is only available to taxpayers earning aggregate gross revenue or receipts and non-operating income not exceeding the value-added tax (VAT) threshold of P3,000,000. Taxpayers with revenue above the VAT threshold will automatically be subject to the graduated tax rates plus 12% VAT, even if the 8% flat rate was initially selected.
Presumably, taxpayers with revenue below the VAT threshold would most likely elect the 8% flat rate as a more advantageous option that would generate tax savings. However, in cases where they opt to be taxed at the graduated rates or are deemed subject to graduated rates by failure to properly signify their intention to be taxed at 8%, then they will also be subject to 3% percentage tax on top of the income tax.
What is critical in availing of the 8% flat rate is establishing the clear intention to elect this option. Pursuant to Revenue Memorandum Order (RMO) No. 23-2018 and RMC 32-2018, the taxpayer must signify his intent to be taxed at the 8% tax regime through any of the following ways:
A. New Business Registrants

(1) Upon registration, by filing BIR Form No. 1901 or Application for Registration; and

(2) Checking Item No. 13 in BIR Form No. 2551Q or Quarterly Percentage Tax Return and/or Item No. 16 in BIR Form No. 1701Q on the initial quarter returns after the commencement of the business.

B. Existing Business Taxpayers

(1) Filing BIR Form No. 1905 or Application for Registration Information Update to either de-register for VAT (for VAT-registered taxpayers) or end-date percentage tax registration (for Non-VAT registered taxpayers); and

(2) Checking Item No. 13 in BIR Form No. 2551Q and/or Item No. 16 in BIR Form No. 1701Q.

It is also of paramount importance to follow the proper timing in the election of the 8% flat rate. Under Revenue Regulations (RR) 8-2018, the taxpayer is required to signify his intent in the first quarter return (BIR Form 1701Q and/or BIR Form 2551Q) for existing business taxpayers, or on the initial quarter return of the taxable year after commencing a new business or practice of profession for new business registrants. Otherwise, he is considered as having availed of the graduated rates of income tax.
Such election is deemed irrevocable for the taxable year. Once the taxable year ends, the taxpayer is again required to elect his tax rate for the next taxable year. Thus, taxpayers who prefer to continue the 8% tax rate must annually signify their intention to elect the flat rate option in their first quarter returns.
WHAT CAN I DO IF I FILE THE OLD VERSION OF BIR FORM 1701Q?
Based on RMC 32-2018, taxpayers who have manually filed and paid their first quarter 1701Q using the old version of the form are still mandated to file the new and revised 1701Q as an amended return. The amended return will be the basis of the BIR in determining whether qualified taxpayers have elected to be taxed at the 8% flat rate option instead of the graduated rates.
Any tax payments using the old form should be indicated in Item No. 59 (Tax Paid in Return Previously Filed, if this is an Amended Return) of the newly revised Form. If the amendment results in additional income tax liability due to the change in the tax regime, then taxpayers should settle the outstanding balance and applicable penalties (i.e. 12% deficiency interest per annum and 25% surcharge), if payment is made after the filing deadline. For no payment or overpayment, however, the existing procedure for “No Payment Return” should be followed, that is, through the use of the eBIRForms platform of the BIR.
As these changes develop with reforms under way, the BIR should be lauded for its incessant efforts in ensuring that the TRAIN runs as smoothly as possible. While some may contend that the reforms impact us adversely, from an overall view, the reforms are necessary and beneficial because there can be no growth without change. It is my sincere hope, however, that the proposed and implemented changes in the current and future tax reform packages ultimately result in the betterment and benefit not just of the taxpayers, but also the Philippine economy at large.
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.

Mark Paul C. Gecha is a senior consultant at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.
+63 (2) 845-2728
mark.paul.gecha@ph.pwc.com

1...12,54712,54812,549...14,238 Page 12,548 of 14,238