More transparency urged for PhilHealth finances to aid budget preparation

November 8, 2021 | 8:03 pm

PhilHealth-1 — PHILSTAR FILE PHOTO/PHILHEALTH

THE COMMISSION on Audit (CoA) needs to release a full report on the Philippine Health Insurance Corp. (PhilHealth) to aid in the preparation of the 2022 budget, a Senator said as the spending plan enters plenary debate in the chamber.

“We at the Senate need to examine PhilHealth’s finances and take that into consideration in the discussions for the 2022 government budget,” Senator Mary Grace Natividad S. Poe-Llamanzares said in a statement Monday.

The CoA report, Ms. Poe said, will serve as a credible starting point for determining the standing of the government-owned health insurer and ensure that funds are effectively used, particularly on the matter of its long-delayed payables.

“We need to know exactly how much PhilHealth owes hospitals and healthcare workers,” she added. “They must be paid soon and government must figure out where to get the funds.”

The Private Hospitals Association of the Philippines, Inc. (PHAPi) has said that its members are still awaiting PhilHealth payment on coronavirus disease 2019 (COVID-19) claims from 2020, noting that this has led some hospitals to consider not renewing their PhilHealth accreditation.

“This will make it difficult for PhilHealth members to reap the full benefits of their membership as they will have to pay for their medical expenses out of pocket and hope that the state health insurer will reimburse them,” Ms. Poe said.

Of the 35,147 COVID-19 reimbursement claims from hospitals in 2020, PhilHealth has settled 10,265, with a payout of P2.5 billion, she said.

The 2019 CoA report, she added, cited concerns about PhilHealth’s actuarial life. — Alyssa Nicole O. Tan

Common findings in tax assessments

November 8, 2021 | 8:03 pm

During a Bureau of Internal Revenue (BIR) tax audit, taxpayers avoid, as much as possible, receiving a Final Assessment Notice (FAN) or think of elevating their concerns to the Court of Tax Appeals. These late stages of the tax assessment process mean incurring significant costs and expending effort to challenge the assessment or defend taxpayers’ arguments, with little to no assurance of a reduction or cancellation of the assessment.

Accordingly, most taxpayers try to end the tax assessment process at the initial stage (during Notice of Discrepancy or Preliminary Assessment Notice stages). During these stages, the closure of the assessment normally involves dealing with the findings or computation of tax deficiencies by the BIR.

There are common findings generally observed for most tax assessments. They can be addressed through reconciliation, factual arguments, and submission of documents. One need not escalate the assessment to FAN or elevate the case to the Court if the tax assessment can be closed or terminated at the early stages of the assessment process.

Below are some of the common BIR findings and how to address them.

DIFFERENCES OF AMOUNTS PER BOOKS VS PER TAX RETURNS
The BIR’s part in the audit procedure is to compare the income based on the taxpayer’s books such as financial statements, trial balance, or schedules as against income per duly filed income tax return (ITR) or Value-Added Tax (VAT) return. Any difference may result in income tax and/or VAT deficiencies.

It is expected that the taxpayer reconcile and explain the differences. It is important to note that not all differences may result in tax deficiencies. Certain transactions may follow specific tax rules for reporting income or expenses which are different from accounting rules for reporting. For instance, for tax purposes, income recognition of a real estate company follows the 25% deferred or installment rule. Lessors or lessees of real property declare income or claim expenses based on contract of lease, while construction companies recognize income based on architects’ or engineers’ certificates showing percentage of project completion. Hence, the resulting book versus tax return differences must be explained by the taxpayers to the BIR examiners to avoid substantial deficiency tax assessments.

Income and expenses per books can also be based on provisions or estimates, whereas per tax returns, these are based on closed and completed transactions. For example, provisions for sales return and discounts are deducted from the sales per books, but it is only upon actual sales return or availment of discount that these are allowed as deductions from taxable sales in the ITR. Provisions for bad debts are deductible as expenses per books, but only when the receivables are actually written off that such are allowed as deductible expense in the ITR. Again, these differences on the timing of reporting expenses in the books as compared to tax returns must also be reconciled by the taxpayers to refute the BIR findings.

SUBSTANTIATION REQUIREMENT
The BIR normally requests supporting documents to substantiate claims for exemption from taxes, deductible expenses, claims for input taxes, and income tax credits.

If the taxpayer fails to submit documents supporting the exemptions, such as certificate of tax incentives or VAT zero-rating certificate, the BIR will impose deficiency taxes on the reported exempt or zero-rated income.

Similarly, if the taxpayer submits documents that are not compliant with the VAT invoicing requirements, the BIR will disallow the VAT input and compute for the VAT deficiency on the transactions. Examples of this noncompliance with invoicing requirements are: a) failure to present the zero-rated sales in the zero-rated sale section of the VAT official receipt (OR) or sales invoice, b) input VAT on purchase of goods unsupported by a VAT sales invoice and the input VAT for purchase of services is not supported by VAT OR, or c) failure to indicate required taxpayer’s information such as tax identification number (TIN) in the VAT sales invoice or OR.

RECONCILIATION WITH THIRD-PARTY INFORMATION
The BIR has a database gathered from the attachments of tax returns, such as the Summary List of Sales, Purchases, and Importations (SLSPI), and alphalist of payees (Alphalist). Using this information, the BIR matches the data provided by customers or suppliers as against the taxpayers’ declaration. Any difference would again result in tax deficiency findings. The common explanations for these findings are timing differences or errors in reporting.

In some cases, the deficiency findings can be attributed to timing differences between the income reported by the seller, as compared to the purchases reported by the buyer. On one hand, the seller of services may have declared its income in the Summary List of Sales (SLS) based on collection. On the other hand, the buyer may have reported the purchase of services in the Summary List of Purchases (SLP) upon receipt of billing invoices, notwithstanding that the proper timing of reporting purchases on services is upon payment.

Another reason for the difference is mistake or error in computing the tax bases. Some taxpayers compute taxable sales net of estimated sales returns and allowances, while others recognize as tax base for purchases the amount gross of VAT or net of withholding taxes. Other common errors also result in significant differences, such as typographical error in the customer’s or supplier’s TIN, double reporting of sales or purchases, imports erroneously reported under local purchases, or even sliding and transposition errors.

These are some common findings of the BIR during tax assessments. Taxpayers who have gone through the painstaking assessment process have realized the importance of adopting preventive measures to avoid paying significant tax deficiencies due to noncompliance with tax rules. Taxpayers should always be aware of tax updates and changes in tax rules and procedures. They should also conduct their own tax health checks from time to time to set in place remedial measures as early as possible. Company policies and protocols must likewise be adopted to specifically guide the tax department in complying with tax rules.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

Marie Fe F. Dangiwan is a director of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Mayors want to scrap face shield requirement

November 8, 2021 | 7:53 pm

MAYORS in the capital region want the government not to require face shields anymore, except in critical areas, amid decreasing coronavirus infections.

“Critical areas include hospitals, barangay health centers and public transportation,” Metropolitan Manila Development Authority (MMDA) Chairman Benjamin “Benhur” de Castro Abalos, Jr. said by telephone on Monday.

Metro Manila mayors made the recommendation to an inter-agency task force during a recent meeting, he said.

Manila City Mayor Francisco “Isko” M. Domagoso on Monday signed an order allowing residents of the capital not to wear face shields anymore except in hospitals.

The order cited a report that the task force favored lifting the face shield requirement.

Mr. Domagoso urged businesses in the Philippine capital to start accepting customers who are only wearing face masks.

The Manila chief has said there’s no evidence that face shields, which he said only adds to the expenses of Filipinos, prevent the spread of the coronavirus.

“Your requests, letters and messages to study the use of the face shield carefully have been heard,” Mr. Domagoso said in a statement. “All we have to do is wear a face mask to somehow reduce your daily expenses because of face shields.”

“We have the same intention,” Mr. Abalos said of Mr. Domagoso’s order. “Maybe there was no proper coordination. He was not present in our last meeting.”

People should continue to use face shields pending review by the task force of the mayors’ proposal, presidential spokesman Herminio L. Roque, Jr. told a televised news briefing.

Mayors should follow the task force, which “exercises derivative authority from the President,” he said. “All mayors are under the supervision of the President.”

Mr. Roque said the order of Mr. Domagoso, who is running for president next year under a rival political party, is void “for being in violation of an existing executive policy decreed by the President himself in the exercise of police powers.”

Health officials were set to meet with task force members on Monday to submit their own recommendations, Health Undersecretary Maria Rosario S. Vergeire separately told an online news briefing.

Face shields are only required in closed and crowded areas.

Other cities in the country such as Davao have issued similar ordinances making the use of face shields voluntary.

Meanwhile, malls in the Philippine capital and nearby cities will adjust operating hours starting mid-November.

This was after Metro Manila mayors lifted the general curfew in the capital region last week along with the easing of the lockdown to Alert Level 2.

Malls in Metro Manila will operate from 11:00 a.m. to 11:00 p.m. beginning Nov. 15. Operations during weekends and holidays may start as early as 10 a.m.

The OCTA Research Group from the University of the Philippines earlier said Metro Manila was back to where it was before it struggled to contain a spike in infections spurred by a highly contagious Delta variant.

Daily coronavirus infections in the Philippines could fall to fewer than 1,000 by the end of the month, it said.

The granular lockdowns in the capital region had helped reverse a surge of the more contagious Delta coronavirus variant, OCTA fellow Fredegusto P. David told CNN Philippines on Friday.

The capital region was placed under Alert Level 2 from Nov. 5 to 21 amid decreasing infections.

Under the lockdown level, businesses may operate indoors at 50% capacity. They will get an additional 10% capacity if they have a so-called safety seal from the government. For outdoor operations, they may operate at 70% capacity.

It will also allow minors to leave their homes. Local government units can impose “reasonable restrictions” on their movements as long as they are not stricter than higher alert levels.

Ms. Vergeire had said the alert level system first tested in Metro Manila would be expanded nationwide by Dec. 1.

The state started granular lockdowns in the capital region in mid-September to spur business activity. — Kyle Aristophere T. Atienza and Russell Louis C. Ku

DoH reports first case of Delta sub-variant under monitoring

November 8, 2021 | 7:52 pm

THE PHILIPPINES on Monday reported its first case of the B.1.617.1 coronavirus variant, formerly called Kappa, which was classified as a “variant under monitoring” by the World Health Organization (DoH) in September. 

During the time of sample collection, the B.1.617.1 variant was classified as a variant of interest, Health Undersecretary Health Undersecretary Maria Rosario S. Vergeire told an online news briefing.

A 32-year-old male patient from Floridablanca, Pampanga who got the virus had recovered, Ms. Vergeire said. He only showed mild symptoms.

The B.1.617.1 is one of three notable sub-variants of the Delta variant. It was first detected in India in Dec. 2020. By late March, half of all reported sequences there were B.1.617.1, but that proportion fell in April according to NewScientist.

B.1.617.1 has also been called the “Indian double mutant” because of the fact that Delta has two mutations of particular concern in the spike protein of the virus.

These two mutations, known as L452R and E484Q, might make antibodies to older variants or existing vaccines less effective against the variant, but this has yet to be confirmed, it said.

Of the three sub-variants, the one of most concern is called B.1.617.2, which was also first detected in India in Dec. 2020. It remained rare until early March, when it became the dominant variant reported, NewScientist said. It has since spread to many other countries and is now the dominant strain in the UK.

DoH said the country also posted another case of the B.1.1318 coronavirus variant that triggered a virus surge in Mauritius. No additional details were given.

Philippine health authorities on Monday reported 651 more infections involving a more contagious Delta coronavirus variant, bringing the total to 5,982.

The new Delta cases accounted for 87.3% of 748 samples collected from March to October.

Ms. Vergeire also said 22 more people had been infected with the Alpha variant first detected in the United Kingdom, bringing the total to 3,128.

The country now has 3,577 cases of the Beta variant after 15 more people got infected with the virus first detected in South Africa, she added.

The Department of Health (DoH) reported 2,087 coronavirus cases on Monday, bringing the total to 2.8 million. 

The death toll rose to 44,521 after 91 more patients died, while recoveries increased by 3,510 to 2.7 million, it said in a bulletin.

There were 32,077 active cases, 64.7% of which were mild, 5.8% did not show symptoms, 9.5% were severe, 16.09% were moderate and 4% were critical. 

The Health department said six duplicates had been removed from the tally, five of which were recoveries, while 66 recoveries were reclassified as deaths. Eight laboratories failed to submit data on Nov 6.

DoH said 43% of intensive care units in the Philippines were occupied, while the rate in Metro Manila was 40%.

B.1.617.1 has also been called the “Indian double mutant” because of the fact that Delta has two mutations of particular concern in the spike protein of the virus.

The Philippines targets to inoculate at least 50% of its adult population by yearend.

The country was set to take delivery on Monday night of 2.8 million doses of the Sputnik V vaccine from Russia, presidential spokesman Herminio L. Roque, Jr. separately told a televised news briefing.

He said almost 64.2 million doses of coronavirus vaccines had been given out as of Nov. 7.

About 29.5 million people or 38.21% of adult Filipinos have been fully vaccinated against the coronavirus, he added.

Mr. Roque said 426,160 doses were given out on Sunday.

More than 320,000 doses were given out on Saturday, while 938,625 doses were injected on Friday, he added. — Kyle Aristophere T. Atienza

Lacson-Sotto agri sector plan: Gov’t to directly buy 50% of output

November 8, 2021 | 7:47 pm

AT LEAST half of the country’s local agricultural output will be directly purchased by the government under a Lacson-Sotto administration, Senate President and vice-presidential aspirant Vicente C. Sotto III said over the weekend.

“One of our programs for the farmers and fisherfolk is that 50% of their output will be bought by the government directly at their own price without the middleman,” said Mr. Sotto III in a mix of English and Filipino during a public forum.

Mr. Sotto is running with Senator Panfilo M. Lacson as Partido Reporma’s standard bearer.

By cutting out the middlemen in the process, it would help keep food prices competitive in the local markets without affecting the potential earnings of farmers and fishermen, he added.

Mr. Sotto noted that this concept was put forward by Partido Reporma Secretary-General and Davao del Norte Governor Edwin I. Jubahib, who has been implementing a similar program in his province.

This plan, Mr. Sotto said, has already been incorporated into their flagship program, Budget Reform Advocacy for Village Empowerment (BRAVE).

The BRAVE program aims to rationalize the budget process wherein local government units would have more influence over the National Expenditure Program.

One of its goals is to provide support to the agricultural industry, which remains vulnerable to economic pressures and natural calamities, Mr. Sotto said. — Alyssa Nicole O. Tan

US-funded mobile testing units, vaccination teams launched in QC

November 8, 2021 | 7:47 pm

USAID-QC-mobile-testunits-USEMBASSY — US EMBASSY

QUEZON CITY’S coronavirus response received further boost on Monday with the launching of six mobile testing units and the deployment of a mobile vaccination team with funding support from the US Agency for International Development (USAID).

“Through USAID’s support, Quezon City is more resilient and responsive in protecting the lives of many, including the marginalized sectors,” Maria Josefina “Joy” G. Belmonte is quoted in a press release from the US Embassy.

As of Nov. 7, data from the local government show the city has exceeded its target adult population for inoculation against coronavirus disease 2019 (COVID-19) with over 1.79 million residents and workers fully vaccinated. This total is 105.84% of the target.

Pediatric vaccination for those aged 12-17 is ongoing.

“The mobile vaccination and testing teams with 30 healthcare workers will bolster Quezon City’s testing efforts and vaccination coverage and ultimately benefit poor households, senior citizens, vulnerable groups, and hard-to-reach areas,” the US Embassy said.

The mobile testing units are seen to contribute 6,000 tests monthly in addition to the current 20,000 average. The mobile vaccination team, meanwhile, is expected to deliver about 15,000 jabs monthly.

The US government has previously provided support to Quezon City’s testing capacity through the establishment of four community-based testing centers.

US Embassy in the Philippines Chargé d’Affaires ad interim Heather Variava also announced an additional P565 million in USAID support to the Philippines through the American Rescue Plan Act (ARPA).

This additional funding will strengthen the capacity of local governments to respond to the pandemic and fast-track vaccination in high-risk areas.

The US government has also facilitated the donation of almost 28 million vaccines to the Philippines through COVAX, the global mechanism for pooled procurement and distribution of COVID-19 vaccines.

Visayan Electric’s 1^st fully digital substation in Mandaue now operational

November 8, 2021 | 7:47 pm

VisayanElectric-VISAYANELECTRIC.COM — VISAYANELECTRIC.COM

VISAYAN ELECTRIC Company, Inc., a subsidiary of Aboitiz Power Corp., has completed the rehabilitation of the Pakna-an substation as its first fully digital substation in Mandaue City after a year of delay due to the pandemic.

With the facility’s digitalization, it can now be monitored and assessed online, which will allow the company to detect technical problems and other possible disruptions in advance for more efficient management.

“Innovating our substations by making them fully digital is a big step toward further improving our network control and reliability,” Visayan Electric President and Chief Operating Officer Raul C. Lucero said in a news release on Monday.

A substation converts high voltage transmission electricity to safe and efficient lower transmission electricity for distribution to homes and businesses.

Its digitalization, according to the company, “boosts the efficiency, reliability, and availability of power supply through real-time control and protection operations.”

The company spent P102 million for the sub-station’s upgrade.

Mr. Lucero said the company is also looking to rehabilitate their other substations in Barangay Lorega and Pardo in Cebu City in the coming years.

Visayan Electric is the country’s second largest electric utility, covering the cities of Cebu, Mandaue, Talisay, Naga, and Metro Cebu’s four municipalities — Liloan, Consolacion, Minglanilla, and San Fernando.

The project is part of AboitizPower’s strategy to digitalize its assets in order to “deliver maximum value in terms of availability and operating efficiency.”

AboitizPower shares at the local bourse inched down by 1.80% or 0.60 centavos to finish at P32.70 each on Monday. — Bianca Angelica D. Añago

67% of Baguio’s lodging businesses still closed

November 8, 2021 | 7:46 pm

Baguio-triagearea-@BAGUIOTOURISM — @BAGUIOTOURISM

MAJORITY of accommodation establishments in Baguio have yet to resume operations despite the city’s recent reopening to tourists.

Tourism Operations Officer Aloysius C. Mapalo, in a press release Monday, said more than 800 lodgings, or about 67% of the 1,200 total registered pre-pandemic, are still closed as leisure travelers allowed to enter the city remains limited.

He said most of these businesses are small-scale accommodations.

“With the recent re-opening of the city to tourists… the local government is hopeful that the accommodation establishments that are not yet operational will be able to gradually and safely resume their operations with the expected influx of visitors even if the number of travelers to the city is currently being limited to around 2,000 daily,” Mr. Mapalo said.

Those planning to go to Baguio must pre-register through visita.baguio.gov.ph. Fully-vaccinated guests are no longer required to submit a negative coronavirus test result.

All visitors are still required to go through the central triage area at the Baguio Convention Center for checking of documents.

Mr. Mapalo said three hotels — Baguio Country Club, Camp John Hay Manor, and Forest Lodge — have also been accredited by the local government to conduct triaging for their respective guests.

Senate approves bill providing protection to judiciary officials, members

November 8, 2021 | 7:46 pm

THE SENATE on Monday passed on third and final reading a bill that will create a security force that will protect judiciary officials and other members.

Senator Richard J. Gordon, Sr., primary sponsor of the bill, cited in a statement that 157 lawyers, judges, and court personnel were killed from 2016 to July 2021 under the administration of President Rodrigo R. Duterte.

Senate Bill 1947 or An Act Creating the Office of the Judiciary Marshals was passed with 21 affirmative votes and one abstention from Senator Ronald M. Dela Rosa.

The former police officer previously cited possible constitutional issues on the overlapping of functions between and among law enforcement agencies, as the proposed measure grants investigative powers to the office. In response, Mr. Gordon assured that the scope of investigations will be confined to the order of the High Court.

Under the proposed measure, the judiciary marshals will be primarily responsible for the security, safety, and protection of the members, officials, personnel, and property of the judicial branch, including the integrity of the courts and their proceedings.

An initial funding of P50 million will be needed for the enactment of the proposed law. The counterpart bill in the House of Representatives was passed on third reading in June. — Alyssa Nicole O. Tan

Ex-cop revives drug link allegation vs former Duterte adviser

November 8, 2021 | 7:45 pm

FORMER POLICE officer Eduardo P. Acierto, who has been in hiding for three years, has challenged a Senate panel to act on his earlier intelligence report linking President Rodrigo R. Duterte’s former economic adviser Michael Yang to the country’s illegal drug trade.

In a 10-minute video posted on Facebook, Mr. Acierto appealed to the Senate Blue Ribbon Committee to make him a witness as it investigates Mr. Yang, who was implicated in the Budget department’s procurement of allegedly overpriced medical supplies.

“The real drug lords are Michael Yang and Allan Lim, along with their protectors,” Mr. Acierto said in Filipino, decrying his persecution after he moved to investigate these two personalities.

The former anti-drug cop said the Senate panel would not be investigating the government’s deals with Pharmally Pharmaceutical Corp. if it had acted on his first report in 2018.

Mr. Yang has been linked to Pharmally, the government’s seemingly most favored pandemic supplier that got a bulk of government contracts. Pharmally’s executives have identified Mr. Yang as their financier and guarantor to suppliers operating in China.

Mr. Yang has dismissed claims that he and Mr. Lim had transactional relationships. The latter’s wife, however, had told senators earlier this month that the two were business partners.

In March 2019, Mr. Acierto accused the President and his former police chief, now Senator Ronald M. Dela Rosa, of blocking a potential investigation into Mr. Yang’s involvement in the illegal drug trade. He also questioned the Senate panel for failing to act on his intelligence report, which linked Mr. Yang to a drug lab that his team raided in Davao City.

Mr. Gordon said in a media statement then that “all he was saying had no evidence.”

In the same month, the Presidential Palace announced that Mr. Yang was no longer economic adviser of the President since his contract expired in Dec. 2018.

AFFIDAVIT
On Monday, Mr. Gordon said in a statement issued after Mr. Acierto’s video circulated online that, “No report or testimony was ever blocked from being displayed to the public.”

Given the Senate panel’s previous experience with Mr. Acierto, the senator’s office said they strongly suggest “that the former police officer execute and submit an affidavit for further scrutiny before a grant of his request to appear in this or in another investigation is given due consideration.”

Before the release of a committee report in Dec. 2018, Mr. Gordon’s office said Mr. Acierto privately showed some photocopies of documents linking Mr. Yang to illegal drug operations.

“Senator Gordon asked Acierto to present his documents and subject them to cross-examination. Acierto, however, did not appear and went incommunicado then,” it said.

“We nonetheless confirm that Acierto, through an emissary in the Senate, is now ‘more than willing’ to testify on Yang’s alleged drug involvement in the course of the current investigation on the alleged anomalous transactions on the use of the pandemic funds.” — Kyle Aristophere T. Atienza

Moms’ go-to health app offers big savings on telemedicine

November 8, 2021 | 7:45 pm

Get 3 doctor video consultations for only P249

Just three months after its launch, Metro Pacific Investments Corporation (PSE: MPI)’s mWell PH has become the go-to app of moms for their health and wellness needs. The app delivers dependable telemedicine services and expert advice straight to the palm of your hands.

This holiday season, we’re giving you more reasons to love this app! Introducing mWell PH’s latest treat – Gift of mWellness. Don’t miss out on the mWellness Subscription Package with 3 doctor video consultations for only P249 – that’s P1500 in savings. Avail now until December 31 with no booking fee. Want to upgrade to 10 doctor video consultations? Choose the P549 package and save us much as P5400 (until November 15 only) – valid for 3 months.

Discover for yourself the top reasons why moms love the mWell PH app:

Discovering the mWell PH app was such a relief! It’s an all-in-one app where you can find everything from doctor consultations, healthy recipes, fitness programs and more! It’s an app that moms can depend on. – Sunshine Cruz, Actress, Singer
From doctor consultations to fitness programs, mWell is complete. With the mWellness Package, we get 3 doctor video consultations for only P249. Super big savings! — Ara Mina, Actress, Entrepreneur
The top feature that I like is being able to book doctor appointments anytime with the option to see a doctor right away. Very convenient! — Gwen Zamora, Actress, Entrepreneur, Fitness enthusiast
COVID isn’t the only disease out there. I’m so thankful that I discovered mWell PH app to teleconsult with doctors in just one tap–Roxanne Montealegre, Actress, Host, Designer
Being a single working mom is extra challenging especially with the pandemic. That’s why I make sure that I am healthy — physically, mentally, and emotionally so I can take care of my baby girl so much better. I can avail of doctor consultations and wellness tips for my baby and me anytime. —Geneva Cruz, Singer
These days, hindi natin maiiwasan ang magka-anxiety lalo na sa mga moms na busy na sa work pero kailangan pa din mag attend ng needs ng kids and family. I’m glad na there’s already an app for online consultation with trusted doctors including pediatricians for our kids. — Empress Schuck, Actress, Fashion Designer
The pandemic has caused fear especially for us Moms who worry so much about our family’s health and safety. The mWell PH app has helped me reach doctors who can address my questions and understand what I’m going through. — Nikki Valdez, Actress, Baker
Nowadays, health is the topmost priority for our families. We all need a dependable partner like mWell PH that can connect us to doctors and give us nutrition guides and expert fitness programs in one click. —Divine Lee Go, Entrepreneur, Blogger
Nakaka-anxious magpunta sa hospitals. Add to that, the demands of caring for a newborn and a toddler at the same time. Good thing I found mWell PH app for doctor consultations and even wellness tips. – Miriam Quiambao, Beauty Queen
I’m a COVID survivor, a mom and a doctor so I know very well that going in and out of the hospital is traumatic. Having the mWell PH app can put my mind at ease and helps address medical concerns to avoid self-medication. Xzy Shane Domingo, Dermatologist
As parents, we naturally worry about our kids’ health and well-being lalo na ngayon. Many of us have not seen our doctors and missed regular check-ups. mWell PH is the all-in-one app that features 24/7 video consult with any doctor, anytime. – Nina Corpuz, Media Practitioner
The partnership between mWell and Glam-o-Mamas couldn’t have come at a more perfect season. In a time when our children are restricted to move around and moms are highly anxious about giving the best care for their family, mWell has provided our community some ease and comfort with their easy-to-use mobile app that allows moms to do online consultations with health professionals. – Trix Clasara, Digital Marketing Head and Community Manager of Glam-O-Mamas, a social media mom community and support group

With mWell, moms can easily reach primary care and specialized doctors including pediatricians. Among them is Dr. Catherine Onghangseng. Doc Cae, as she is fondly called, says “Moms know the importance of regular check-up for kids. Through the mWell PH app, I can easily offer medical advice to moms who can’t bring their kids to the clinic.”

mWell’s growing line-up of partner-doctors includes those from top hospitals such as Makati Medical Center, Cardinal Santos, Asian Hospital and Medical Center De Los Santos Medical Center, Manila Doctors Hospital and Marikina Valley Medical Center.

As a mom, Chaye Cabal-Revilla, Chief Finance & Sustainability Officer of Metro Pacific Investments Corporation, recognizes the need for convenient healthcare for the family. Cabal-Revilla says, “I want to provide the best possible future for my daughter. As part of mWell, I am able to help moms like me receive the healthcare they deserve.”

MPIC Group is committed to work towards the achievement of the UN’s Sustainable Development Goals, particularly SDG 3: Good Health and Well-being. It also supports the MVP Group’s Gabay Kalusugan advocacy focusing on quality and affordable healthcare.

MPIC Chairman, Manny V. Pangilinan says, “MPIC group’s newest foray in digital healthcare brings healthcare closer to every Filipino.” He added that mWell is committed to providing innovative healthcare solutions through a wide and sustainable network of medical experts and services. Beyond telemedicine, Joey Lim, MPIC’s President and CEO said “mWell will be a partner in every stage of the wellness journey.”

In partnership with active8me and Aktivo, mWell offers calorie-controlled recipes developed by nutritionists and workout plans by Olympians and exercise physiologists. Soon it shall enable users to generate their mWellness Score, tracking their physical activities towards a healthier lifestyle. The app’s constantly evolving ecosystem is supported by industry and technology stalwarts including CareSpan, Telus and LotusFlare and runs on fast secure payments via PayMaya.

Download the mWell PH app from the Apple App Store or Google Play Store. Follow mWell on Facebook and mwellph on Instagram for more updates.

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A new global tax regime

November 8, 2021 | 6:10 pm

coins — ORIGINAL PHOTO BY MICHAEL LONGMIRE-UNSPLASH

(Second of two parts)

This article focuses on Pillar 2 which requires the imposition of a 15% global minimum corporate tax on multinational enterprises (MNEs).

As mentioned in Part 1, this new global tax regime consisting of a two-pillar solution (Pillar 1 and 2) was agreed to by 136 members of the Organization of Economic Co-operation and Development (OECD) representing more than 90% of global GDP. It is regarded as the most radical overhaul of the global tax system which establishes a new framework for international tax, aligned with a digitalized and globalized economy. (Pillar 1 was discussed in an earlier article).

The core feature of Pillar 2 is the introduction of GloBE or Global Anti-Base Erosion which fixes a global minimum corporate tax of 15% at the overall income of a multinational, and for every jurisdiction it operates, thus putting a floor on tax competition. It requires the ultimate parent company to account for its share of its income from member companies in low tax jurisdiction and taxes that income to the 15% minimum tax.

Overall, GloBE is meant to make MNEs account for the income of its members in various jurisdiction ensuring that the 15% minimum corporate tax is paid in that country. It is a measure to protect the tax bases of countries from harmful tax practices especially with the proliferation of tax havens and the practice of “race to the bottom” lowered tax rates and super generous tax incentives.

How does this work? Multinationals with an effective tax rate below the 15% minimum global tax rate in any particular jurisdiction will be required to pay top-up tax on the income of its members that does not meet the 15% minimum tax.

For example, the parent company of an MNE operating in the Philippines may be required to pay a top-up tax if its effective tax payment in the Philippines is lower than 15%, as in the case where there is availment of generous incentives that brings the effective tax rate below 15%. There are however, carve out rules for incentives based on substantial activities in the host jurisdiction and are meant to support valid policy considerations.

The application of Pillar 2 is not all encompassing. It applies only to large and profitable businesses with global revenues exceeding €750 million (or P44 billion in global revenue), and there are exclusions and carve outs. Industries excluded may include global shipping companies, government organizations and certain fund vehicles. As of now, there are no detailed rules yet for the standard determination of the minimum corporate tax but expectedly, a set of formulaic and non-formulaic standards for global application will be soon be out.

The application of the global minimum tax consists of four principle-rules, as follows:

i. The Income Inclusion Rule (IIR), which imposes a top-up tax on a parent entity in respect of low taxed income of a constituent member entity. The IIR will require a parent company to bring profits of foreign subsidiaries into account for domestic taxation. It will apply in respect of each jurisdiction in which the MNE group has a subsidiary or branch.

Under the IIR, the effective tax rate of each jurisdiction, calculated in accordance with specific global minimum tax rules, will be determined based on all of the consolidated companies or branches in that jurisdiction. It will then be compared with the minimum effective tax rate (ETR) of at least 15%. Top-up tax will be charged to the head office to make up for any shortfall. For example, if a wholly owned subsidiary has an ETR of 12%, based on a minimum rate of 15%, top-up tax at 3% should be applied at the level of the parent on the subsidiary’s undertaxed income.

ii. The Undertaxed Payments Rule (UTPR) denies deductions or requires an adjustment to the extent the low taxed income of a branch or subsidiary is not subject to the global minimum corporate tax.

It acts as a backstop to IIR to deal with circumstances where the IIR is unable, by itself, to bring low tax jurisdictions in line with the minimum rate. This reduces the incentives for tax driven inversions where business entities relocate operations overseas to reduce their income tax burden. Companies undertaking a corporate inversion usually select a country which has a lower tax rate than their home country. The UTPR discourages this practice.

iii. The Switch-Over Rule (SOR) enables jurisdictions to overturn treaty obligations where there are commitments to exempt incomes attributable to foreign permanent establishments under tax treaties. This will enable jurisdictions to remove tax treaty hindrances and subject the income to the minimum tax.

iv. The Subject to Tax Rule (STTR) allows the source jurisdiction to impose tax on certain related-party payments below the minimum rate. The STTR is a treaty-based rule, which may override treaty benefits in existing treaties in respect of certain payments where those payments are not subject to a minimum level of tax in the recipient jurisdiction. The covered payments include interest, royalties and other payments for mobile factors such as capital, assets, or risks.

IMPLEMENTATION
At the latest by the end of 2022 an implementation framework will be developed that facilitates the coordinated implementation of the GloBE rules. Pillar 2 should be brought into law in 2022, to be effective in 2023, with the UTPR coming into effect in 2024.

The implementation framework will include safe harbors and other mechanisms to simplify administration and implementation. It will be a targeted implementation, as much as possible, to avoid compliance and administrative costs disproportionate to the objectives of the measures.

WHAT’S IN IT FOR THE COUNTRY?
Foremost, the imposition of the GloBe Rules relieves the country from the pressure of having to compete in providing excessively generous tax incentives or low taxes in what we call a “race to the bottom” practice around the region. It levels the playing field in attracting investments, staying away from the use of fiscal incentives, and focusing instead on non-fiscal attractiveness of the country. To the extent that the income is subject to a floor or a minimum tax of 15%, the incentive to shift or siphon income out of the country is lessened.

Even post CREATE, our corporate tax of 25% remain the highest in the region which could make us still a favorite victim of harmful tax practices, base erosion and profit shifting, by multinational enterprises operating in the country. With the 15% global minimum tax, the incentive to shift income to low tax jurisdictions, would be lessened, though not totally eradicated unless we bring our corporate tax rate to 15%.

Will it remove tax competition? Not totally, but it will be lessened. There would still be variations in tax rules in each jurisdiction and MNEs would still try to maximize those differences for higher group profits.

In terms of revenue, it is expected that the Philippines, considered as a high-tax jurisdiction (thus, a natural favorite victim of harmful tax practices) compared to its peers, will earn additional revenues from these measures. Based on OECD estimate, corporate tax avoidance costs countries anywhere from $100 billion to $240 billion annually, which is equivalent to 4% to 10% of global corporate income tax revenues.

WHAT TO WATCH OUT FOR
The proposals open up as many questions as they answer. The four components of Pillar 2 are complex and have a significant overlap and it is far from clear how they will interact. One thing is clear — it will be difficult for developing countries like the Philippines to implement and achieve the Pillar 2 objective of a minimum effective tax.

The two-pillar Blueprint acknowledges that both the Subject to Tax Rule and the Switch-Over Rule would require changes to existing bilateral tax treaties which could be implemented through bilateral negotiations and amendments to individual treaties or more efficiently through a multilateral instrument.

While the Income Inclusion Rule and the Undertaxed Payment Rule could be implemented through changes to domestic law, this by itself is also a difficult and long process. Also, further guidance and mechanisms should be developed to ensure there is a consistent, comprehensive and coherent application of these rules, and there is effective overall coordination of their application across multiple jurisdictions. This would require a comprehensive model legislation and guidance together with a multilateral review process.

The practical application of Pillar 2 would also be a challenge for developing countries since it will be difficult to determine the tax base for global income. The Pillar 2 consultation document suggests the use of consolidated financial statements but that pose its own challenges. Which accounting principles (GGAP) should be used? How will local tax authorities audit consolidated financial statements? How will the change in tax base bring changes to accounting principles?

It is not without a doubt whether the Blueprint will be enforced — they will certainly be enforced in the years to come.

Where we end up remains to be seen but businesses and governments should keep abreast of developments to enable them to remain agile, review their operations and prepare for adoption. This is the main objective of this article.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or MAP.

Benedicta “Dick” Du-Baladad is chair of the MAP Tax Committee, and founding partner and CEO of Du-Baladad and Associates (BDB Law).

map.map@map.org.ph

dick.du-baladad@bdblaw.com.ph

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