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Regulator tells UBS to strengthen crisis plans

REUTERS

ZURICH — UBS must improve its emergency plans following its takeover of Credit Suisse to ensure the bank can be wound down or sold without risking financial stability and taxpayer cash, Swiss regulator FINMA said on Tuesday.

FINMA said it had suspended the annual approval of UBS’ recovery and emergency plans while Switzerland’s last globally systemically important bank develops its approach as it integrates Credit Suisse.

“Based on the experience of the Credit Suisse crisis, additional options for action are required to further strengthen crisis preparations and resolution planning for systemically important banks,” FINMA said in a statement.

UBS said it had already begun work on further developing its existing emergency plans “in a targeted manner.”

“As FINMA confirmed in its press release, UBS meets the current requirements to be resolvable in accordance with the preferred restructuring strategy in the event of a crisis,” the Swiss bank said in a statement.

FINMA said UBS’ emergency plan must ensure the Swiss entity can continue to operate without interruption even if there were a risk of insolvency.

“In its emergency plan, UBS must in particular revise the liquidity planning and the refinancing of the Swiss entity when the emergency plan is activated,” the regulator said.

The Credit Suisse crisis had highlighted problems related to the speed and extent of deposit withdrawals, and there needed to be a stronger focus on measures to generate liquidity, it added.

UBS bought Credit Suisse in an emergency rescue in March 2023 after the latter a liquidity crisis.

The collapse of the country’s second-largest lender prompted deep soul-searching among Swiss financial authorities and promises to make the system more robust.

FINMA has repeatedly called for greater powers to oversee banks, after it was accused of doing too little to prevent the implosion of Credit Suisse. — Reuters

Alixia Marie PH creates modern fashion using weaves from Filipino craftsmen

FACEBOOK.COM/ALIXIAMARIE.PH

By Edg Adrian A. Eva

ALIXIA MARIE PH, a young Filipino fashion brand, is supporting local artisans by using indigenous weaves from various regi ons in modern casual fashion.

“One of our taglines is ‘Carry your culture,’” company owner Alixia Mercado said in an interview. “We want to bring their weaves into the spotlight.”

Alixia Marie PH started as a thesis project in 2022, aiming to gain profit while helping local weavers. The startup curates pieces that embody Filipino craftmen’s rich heritage and skill, offering a platform for their work to shine.

The company started creating fashion pieces using solihiya — thin strands of rattan woven into sunburst patterns which, when used as the backrest and seat of chairs, lets air through, providing comfort from the heat.

Alixia Marie PH is working with local weavers from Cebu to source solihiya and turn it into trendy bags.   

The company also gets indigenous weaves from other provinces including Yakan from South Cotabato, Binakol from Ilocos, T’nalak from Mindanao to create women’s tops and dresses.    

They have also partnered with Marikina artisans to assemble their custom-designed shoes and bags.   

“Our goal is to focus not only on one local community but also on different communities altogether,” Ms. Mercado said. “We want to showcase a different community that has their cultural weaves.”

In her work with local weavers, she noticed that some of the weaving traditions are at risk of dying out due to threats from counterfeiting and lack of interest among the youth, primarily due to their unprofitability.

“Local weaves were dying at some point, so brands like us help revive the local weave industry and help them continue it for the future generation,” she said. 

In the preservation of Filipino indigenous weaving culture, Ms. Mercado hopes that more brands will support local weavers. 

“It should not stop here. We want our next generation to celebrate our culture and to celebrate Filipino identity in terms of Filipino weaves,” she added.

Ms. Mercado sees a silver lining in state initiatives to revive indigenous weaves through trade fairs organized by the Department of Trade Industry.

These efforts could be bolstered with more funding and support for weavers to elevate their craftsmanship, she added.

Philippine Seven Corp. opens 4,000th 7-Eleven branch

BW FILE PHOTO

LISTED Philippine Seven Corp. (PSC) has opened the 4,000th 7-Eleven store in the country.

The new store is in Newport District, Pasay City, the company said in a statement on Tuesday.

PSC is the exclusive licensee of the 7-Eleven convenience store brand in the Philippines.

PSC opened its first 7-Eleven store in February 1984, located at the corner of EDSA and Kamias Road in Metro Manila.

PSC also opened another store in Angeles City, Pampanga on Tuesday.

On Tuesday, PSC shares rose by 0.42% or 30 centavos to P72.30 apiece. — Revin Mikhael D. Ochave

VAT meets the Cloud: RA 12023 redefines the digital economy in the Philippines

FREEPIK

The Filipinos’ growing reliance on online platforms has driven massive growth in the Philippine digital economy. This is evident in the 7.7% increase in the gross value added to the country’s Gross Domestic Product (GDP). More Filipinos now engage with digital services, such as streaming, e-commerce, and online banking. Platforms like Netflix, Lazada, and GCash are now integral to their daily lives, making digital services a lifeline for education, work, and retail. The COVID-19 pandemic only accelerated this trend.

With this surge in digital services, the Government found the opportunity to raise tax revenues. It was also necessary to provide similar treatment between local and foreign-based digital service providers. These laid the foundation for the enactment of RA 12023 imposing VAT on digital services. It stands as a significant response to the evolving digital landscape.

Digital giants like Netflix, Amazon, and Google are now subject to VAT on their services. The law describes them as service providers through the “Internet or other electronic networks with the use of information technology and where the supply of the service is essentially automated.” Online educational services are not covered provided they are accredited by the Department of Education, the Commission on Higher Education, or the Technical Education and Skills Development Authority. Banks and non-bank financial intermediaries remain exempt from VAT even on their online services.

The law brings up an interesting nuance on the services abroad rendered by foreign businesses. Are digital services a subset of the controversial cross-border services, which the Bureau of Internal Revenue (BIR) coined early this year? The BIR, in its issuances, refers to activities performed abroad. RA 12023, in turn, refers to services that are digital in nature. Only services that are essentially automated and delivered through the Internet are subject to VAT. For instance, consulting services delivered through the Internet may be considered cross-border services but these are not digital services.

A significant feature of RA 12023 is how it handles VAT collection, especially for foreign-based service providers. Their clients who are VAT-registered must withhold and remit VAT. The service providers must remit the VAT on their services to clients that are not subject to VAT. If they are e-marketplace operators, they must remit the VAT on the transactions coursed through their platforms. To incur this obligation, they must, however, have control over the key aspects in the conclusion of the transactions, specifically in the setting of terms and conditions for the supply of goods, or in the placing of orders or delivery of such goods.

So, how exactly will they remit VAT? The answer lies in a forthcoming innovation. The BIR is set to roll out a simplified, automated registration system specifically for them. This streamlined process will play a crucial role in easing compliance for foreign-based service providers.

Both foreign and local-based service providers should register as VAT taxpayers. They face the possibility of being temporarily prevented from engaging in their activities should they fail to comply with this obligation. The BIR may block these digital services through the National Telecommunications Commission. The regulations need to clarify if foreign-based providers still need to register if their clients are VAT-registered.

What makes RA 12023 even more intriguing is its stance on how digital services by foreign-based service providers are considered to be performed in the Philippines if they are consumed in the Philippines. However, this opens a lot of questions: what exactly defines “consumption”? Is it the residence of the consumer or the location of payment? The law remains vague on this point, leaving us in suspense until the regulations clarify things.

Beyond VAT, this raises another critical issue — will this definition of consumption influence where income tax is levied? Under Section 42 of the Tax Code, services are taxable where they are performed. Now that digital services are subject to VAT, does this mean the income earned will also be subject to income tax? The courts have ruled that tax statutes should be interpreted strictly against the government and in favor of taxpayers, meaning tax statutes should be clear when a tax is imposed. Until then, income tax and VAT should remain distinct unless otherwise specified.

At present, RA 12023 only amends the VAT provisions of the Tax Code, leaving the income tax provisions unchanged. But as the digital economy continues to evolve, this balance may shift if Congress decides to amend the income tax provisions in the future. Until then, the law sits at the crossroads of VAT and income tax, leaving us to wonder what the future holds for the digital tax landscape in the Philippines.

As we wait for further regulations, the digital tax landscape feels like it is awaiting a major software update — until then, we will be watching closely to see how this new feature will function in practice.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

 

Jill Eileen P. Cabais is an associate of the Tax Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

(632) 8830-800

jpcabais@accralaw.com

How PSEi member stocks performed — October 15, 2024

Here’s a quick glance at how PSEi stocks fared on Tuesday, October 15, 2024.

Overseas Filipinos’ Cash Remittances

CASH REMITTANCES from overseas Filipino workers (OFW) rose by an annual 3.2% in August, the Bangko Sentral ng Pilipinas (BSP) said. Read the full story.

Overseas Filipinos’ Cash Remittances

Philippines says Chinese maritime militia boat sideswiped fishery vessel

AN AERIAL VIEW of what Philippine Coast Guard alleges were Chinese vessels, manned by Chinese maritime militia, loitering within the vicinity of Thitu Island, one of nine features occupied by the Philippines in Spratly Islands, in the disputed South China Sea, March 9, 2023. — REUTERS

By Chloe Mari A. Hufana, Reporter

THE PHILIPPINES’ Bureau of Fisheries said a Chinese maritime militia boat deliberately sideswiped one of its two vessels that were conducting a routine maritime patrols near Thitu island in the South China Sea last Friday.

The vessel had sustained dents in its starboard bow, the Bureau of Fisheries and Aquatic Resources (BFAR) said in a statement issued late Monday.

China and the Philippines have been at loggerheads over confrontations near disputed features in the South China, with Manila accusing China’s coast guard of aggression and Beijing furious over what it calls repeated provocations and territorial incursions.

The Philippines has also accused China of maintaining a maritime militia to bolster its presence in the South China Sea. Beijing has maintained they are civilian ships.

Video shared by the bureau showed the Chinese boat with bow number 00108 approaching its vessel, BRP Datu Cabaylo, moving in close proximity before it collided with it.

“Despite the incident, the BFAR vessel maintained its position and was able to continue with its… mission,” the fishery bureau said.

The Chinese Embassy in Manila did not immediately respond to a request for comment.

China claims almost the entire South China Sea, including the Philippine-occupied Thitu, and has rejected a 2016 ruling by the Permanent Court of Arbitration in the Hague that Beijing’s expansive claims have no basis under international law. The case was brought to the court by the Philippines.

Last week’s maritime run-in comes in the wake of a regional summit of Southeast Asian leaders where Philippine President Ferdinand R. Marcos, Jr. called for negotiations on a code of conduct for the South China Sea to be fast-tracked.

Meanwhile, Cagayan de Oro City Rep. Rufus B. Rodriguez urged the US to donate its USS Philippine Sea warship to augment Navy and Coast Guard patrols around the archipelago, including in the South China Sea.

“I am sure that it will be a big asset in our efforts to defend our territorial waters, our sovereign rights and our personnel and fishermen from intruders,” he said in a statement on Tuesday.

The congressman said he wrote separate letters to US Secretary of State Antony Blinken, Defense Secretary Lloyd James Austin III and US Ambassador to the Philippines MaryKay Carlson asking for the donation. The warship is set to be deactivated in 2025.

The USS Philippine Sea is a Ticonderoga-class guided missile cruiser in active service with the US Navy.

The lawmaker in his letters said the USS Philippine Sea was “named for the Battle of the Philippine Sea during World War II.” The warship has been deployed many times including in Operation Enduring Freedom, the US global counterterrorism efforts from 2001 to 2014. 

It was also recently deployed in the Eastern Mediterranean in response to the conflict between Israel and Hamas.

Josue Raphael J. Cortez, an international relations instructor at De La Salle-College of St. Benilde, noted that if the US agrees, it could improve relations with the US.

“It can be an implicit signaling that the US is more than ready to assist us in times where our sovereignty and security are threatened, such as the ongoing tension with China over the West Philippine Sea,” he said in a Facebook Messenger chat, referring to areas of the South China Sea within the country’s exclusive economic zone.

“On the other hand, this might affect the international relations dynamics of the country vis-a-vis China in such a way that the latter may view it as a security dilemma, and in turn deploy more and more naval ships capable of undertaking attacks within the disputed territories,” he added.

Mr. Rodriguez underscored the ship’s significance in Philippine history and its role in rescuing 26 Filipino crew members in a 2011 pirate attack off the coast of Yemen when the warship responded to the distress call of a supertanker.

“Given its historical significance and name, which directly relates to the Philippines’ current territorial challenges in the West Philippine Sea, I am urging the US government to consider donating this vessel to our country,” he added.

The US Embassy in Manila did not immediately reply to a Viber message seeking comment. — with Reuters

Marcos urges regional leaders to support green and blue bond markets

PRESIDENT Ferdinand R. Marcos, Jr. delivers his speech during the official opening of the Asia-Pacific Ministerial Conference on Disaster Risk Reduction held at the Philippine International Convention Center in Pasay City on Tuesday. — PPA POOL/ NOEL B. PABALATE

By Kyle Aristophere T. Atienza, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. on Tuesday urged regional leaders to help advance his country’s green growth financing, particularly the green and blue bond markets, amid the worsening impacts of climate change.

He made the statement as Asia-Pacific leaders gathered in Manila for a four-day conference on disaster risk reduction.

Mr. Marcos said his country has issued guidelines on the issuance of green and blue bonds. “Our green bond market has been recognized by the Asian Development Bank (ADB) for its potential to expand even further,” he said.

He was referring to an ADB survey in 2022 that found institutional investors have limited awareness and resources to expand their green portfolios and underwrite more green bonds.

Mr. Marcos said the country’s “most promising sectors for growth comprise renewable energy, green buildings, sustainable agriculture and water management.”

He said investing in the Philippines’ blue bond market is also essential given the country’s archipelagic nature, which makes it more vulnerable to climate change.

The blue bond market will facilitate the “sustainable growth of industries like fisheries and tourism,” he added.

Mr. Marcos’ remarks send “a strong signal to both big and small businesses, as well as for the general public, to do their share in environmental, social, and governance efforts,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Facebook Messenger chat.

“To think that the private sector would be willing to engage in these investments without government support is just driving false hope,” Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said via Messenger chat.

He added that investment in disaster- and climate-resilient programs and infrastructure “will involve costs and even higher taxes, which this administration has decided not to do.”

In the ADB survey, respondents agreed on the importance and potential of renewable energy, green buildings, sustainable agriculture, and water management — sectors that the multilateral lender said accounted for majority of investors’ portfolios in the Philippine green bond market.

Mr. Marcos said a southwest monsoon enhanced by Typhoon Gaemi had caused more than $82 million (P4.74 billion) in agricultural damage.

“We must significantly increase our investments and develop financing mechanisms in disaster risk reduction,” he added.

This entails ensuring that developing countries, particularly the least developed ones, landlocked nations and small-island developing states have greater access to these resources to advance their policies and build disaster resilience, Mr. Marcos said.

In the latest World Risk Index, the Philippines, which faces an average of 20 typhoons yearly, remained the most disaster-prone country for a 16th straight year.

Mr. Marcos cited the election of the Philippines as host of the Loss and Damage Fund Board, vowing to improve the board’s operations and to “contribute to the success of its institutional architecture.”

Meanwhile, Mr. Marcos said Malaysia wants closer ties with the Philippines in disaster response and rescue efforts.

Kuala Lumpur could send a special disaster group called SMART team to the Philippines during disasters, his office said after a “productive meeting” with Malaysian Deputy Prime Minister Zahid Hamidi in Manila late Monday.

“We talked about how both our nations can work together to strengthen disaster resilience and develop skilled workforces, in line with technological advances through technical education,” Mr. Marcos said.

Citing the huge number of Filipino workers overseas, he said the Philippine government has adopted skill training for plumbers, electricians and carpenters.

Mr. Hamidi, for his part, said Malaysia wants to learn from the Philippine education system, particularly its technical and vocational education and training.

Marcos says 143 Filipinos in UAE pardoned, released

PRESIDENT FERDINAND R. MARCOS, JR. — PCO.GOV.PH

THE United Arab Emirates (UAE) has pardoned 143 Filipinos in jail, Philippine President Ferdinand R. Marcos, Jr. said on Tuesday.

The pardon was in line with the Muslim celebration of this year’s Eid al-Adha.

“I expressed my gratitude for the kindness extended to them, particularly their generous pardon of 143 Filipinos, which has brought relief to many families,” Mr. Marcos told UAE President Sheikh Mohamed bin Zayed by phone, based on a press release from the presidential palace.

Their offenses ranged from drug abuse, theft and immigration-related violations such as absconding and overstaying, Foreign Affairs Undersecretary Eduardo Jose A. de Vega said in a WhatsApp message, citing the Philippine Embassy in Abu Dhabi.

There were no death penalty cases, he added.

The pardon came days after a Filipino was executed in Saudi Arabia for murder.

Mr. De Vega said the Philippine Embassy in Abu Dhabi “always appeals for the grant of humanitarian pardon/mercy to Filipinos incarcerated in the UAE for a range of different offenses.”

The embassy usually requests pardons on joyous occasions such as Eid’l Fitr, Eid al-Adha. “As a general rule, some pardoned individuals are allowed to go home on their own if they have valid passports,” he added.

“If they do not have valid passports, the embassy issues travel documents,” he said. “The list provided by the UAE Embassy contains only the names of the pardoned Filipinos and no other details were shared. In fact, the names were written only in Arabic,” he added.

The embassy has no specific information on each case and has tried to translate their names so it could reach out to them, Mr. De Vega said.

“We were formally informed of this by the UAE Embassy last August, and the Philippines appreciates this kind of gesture of our friends from the UAE,” he separately told reporters in a Viber group message.

“This act of compassion and understanding brings immense relief to the families of those pardoned and strengthens the bonds of friendship and cooperation between our two nations,” Senate President Pro Tempore Jose Pimentel “Jinggoy” Ejercito, Jr. said in a statement.

The UAE was the second-leading destination of overseas Filipino workers in 2023 in Asia, according to the local statistics agency.

Mr. Marcos also recognized the UAE’s support for the Philippines in recent natural disasters. “Our nation’s share strong bonds, rooted in the values and aspirations of our peoples, and I look forward to strengthening this partnership in the years ahead.” — Kyle Aristophere T. Atienza

DoT renews P8-billion request for tourism roads

TOURISM Secretary Christina G. Frasco — PHILIPPINE STAR/KRIZ JOHN ROSALES

THE Department of Tourism (DoT) sought P8 billion anew to fund the construction of new tourism roads next year after it failed to get the approval of the Department of Budget and Management (DBM) and Department of Public Works and Highways (DPWH).

Tourism Secretary Ma. Esperanza Christina G. Frasco told a Senate budget hearing on Tuesday that the DBM has rejected her department’s request, saying it should be under the DPWH.

“We are now at a quandary with the DBM having directed us to propose, the DPWH having rejected the same, leaving these roads that will support our tourism destinations with no funding whatsoever,” Ms. Frasco told a Senate budget hearing on Tuesday.

The DBM had allotted about P6.38 billion for DoT to continue developing existing road projects to popular tourist spots next year, despite the agency’s request for P8 billion to build new ones leading to these destinations.

Budget Assistant Director Maria Cecilia Socorro M. Abogado confirmed the DPWH rejected handling the P8 billion for the roads since it would eat up its budget ceiling intended for the agency’s national road projects next year.

“They (DPWH secretary) also said DoT and the DPWH should be able to come up with a new set of guidelines or criteria wherein they will be able to identify jointly the list of projects under the TRIP (Tourism Road Infrastructure Program),” she told the Senate finance committee.

The Tourism Road Infrastructure Program is a component of the Philippine National Tourism Development Plan, which seeks to improve connectivity to tourism sites and gateways, according to the Public Works department.

Senator Lorna Regina “Loren” B. Legarda, who led the hearing, said the finance committee will review the DoT’s request for funding these roads within the week.

She said for this year the DPWH was given a budget of about P15 billion to implement tourism infrastructure projects.

Quezon City Rep. Marvin D. Rillo had earlier said he backed the move for more tourism road projects next year, which could spur jobs and economic activity.

The Senate has approved on final reading a bill that seeks to establish a value-added tax refund mechanism for nonresident visitors, which is aimed to boost visitor spending.

The DoT is aiming to post 7.7 million international tourist arrivals this year. As of Aug. 7, the Philippines has received 3.62 million inbound visitors, with 92% of them being foreigners, the agency said last month. — John Victor D. Ordoñez

Pinoys accept political dynasties

BW FILE PHOTO

MANY Filipino voters believed that government officials from political dynasties tend to be more corrupt, yet a huge chunk of voters thought there was nothing wrong with candidates from the same family running in elections, according to a WR Numero Research (WR Numero) survey.

In the WR Numero opinion poll of over 1,700 adults from Sept. 5 to 23, 50% agreed that public leaders from the same families may possibly be more corrupt. It said 16% disagreed, while 31% were unsure.

Metro Manila recorded the highest percentage of residents who agree with political dynasties’ tendency to be more corrupt, followed by South Luzon at 58%, Visayas at 51%, North Central Luzon at 43%, and Mindanao at 40%.

“Most Filipinos across all income classes and self-identified partisanship agree that officials from the same family have a higher propensity to be more corrupt,” WR Numero said.

In the same poll, 56% — mostly from the central Philippines — said there was nothing wrong with candidates from the same family joining elections.

It was most acceptable in the Visayas at 65%, followed by Mindanao at 58%, North Central Luzon at 56%, South Luzon at 51%, and Metro Manila at 46%.

About 30% of respondents said otherwise and 15% were unsure.

In terms of partisanship, the participation of political dynasties in elections was most acceptable among administration supporters at 62%, followed by opposition supporters at 58%, and independent supporters at 56%.

“However, more Filipinos in socioeconomic class ABC disagreed (47%) with the acceptability of nominees running from the same families against those who agreed (37%) in that bracket,” WR Numero said.

“This stands in contrast with the other classes, where the majority in classes D (53%) and E (58%) believe there is nothing wrong with dynasties’ participation in the polls,” it added.

The non-commissioned survey has a margin of error of ± 2% at a 95% confidence level. At the subnational level, the margin of error is ± 6% for the National Capital Region, ± 5% for North and Central Luzon, ± 5% for South Luzon, ± 6% for Visayas, and ± 5% for Mindanao, all at the same 95% confidence level. — Kyle Aristophere T. Atienza

Over 47,000 pass eligibility exams

THE Civil Service Commission said 47,449 examinees passed the August 2024 Career Service Examination – Pen and Paper Test.

Of the 296,758 examinees, 42,812 passed the CSE Professional Level, with a passing rate of 14.43%, while, 4,637 out of 32,707 examinees passed the CSE Subprofessional Level, or a 14.18% success rate.

The National Capital Region recorded the highest passing rate at 18.96%, with 8,242 examinees passing out of 43,478. Region III followed closely with an 18.73% passing rate, and Region IV ranked third with a 17.56% rate.

Successful examinees can claim their Certificate of Eligibility (CoE), free of charge, beginning Nov. 20, at the CSC Regional or Field Office where the exam was taken.

The CSC reminded passers to check the availability of their CoE before visiting.

The CSE Professional Level confers eligibility for appointment to first and second-level government positions, while the Subprofessional Level eligibility is suitable for first-level clerical, trades, and custodial roles.

Candidates must also meet other job qualifications such as education, experience, and training. — Chloe Mari A. Hufana

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