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Quasi-banks’ net income up by 182% in first 9 months

THE QUASI-BANKING sector booked a higher net income at end-September backed by a slight improvement in its interest earnings and lower provisions for bad debts.

Data from the Bangko Sentral ng Pilipinas (BSP) showed nonbanks with quasi-banking functions (NBQBs) booked a net income worth P762 million at end-September, nearly three times (182%) the P270 million seen in the same period a year earlier.

Broken down, the net profit of investment houses hit P233 million in the January to September period, turning around from the P101-million net loss posted last year.

Meanwhile, the net income of BSP-supervised financing companies increased by 43% to P529 million at end-September from P370 million a year ago.

The quasi-banking industry’s net interest income inched up by 0.39% to P5.111 billion in the first nine months of 2021 from P5.091 billion.

These firms saw their interest earnings drop by 51.2% to P318 million, while their leasing income improved by 2% to P9.512 billion. Interest expenses dropped by 3.61% to P4.719 billion.

Investment houses alone registered a net interest income of P48 million at end-September, plunging by 80% from P248 million a year earlier.

Meanwhile, the net interest income of financing companies increased by 13% to P5.063 billion at end-September from P4.843 billion a year ago.

At end-September, the fee-based income of quasi-banks increased by 43% to P877 million from P614 million.

The industry recorded P12 million in trading losses in the period, reversing the P14 million in gains a year ago.

Bad debts written off by financing firms amounted to P275 million, higher by 6.46% than the P294 million a year earlier.

Meanwhile, provisions set aside by these companies slipped by 2% year on year to P1.907 billion at end-September from P1.944 billion.

Total assets held by NBQBs stood at P173.628 billion at end-September, lower by 4.4% than the P181.654 billion recorded a year earlier. — L.W.T. Noble

Olympians fete Bounty Agro Ventures with Arête Award

THE Philippine Olympians Association (POA) has feted Bounty Agro Ventures, Inc. (BAVI), the company that owns Chooks-to-Go, for the help and support the latter extended to present and past Olympians.

POA President Akiko Thomson-Guevarra, secretary-general Ral Rosario, and advisor Freddie Webb personally handed over the award to BAVI President Ronald Mascariñas in the latter’s residence in Calauan, Laguna.

“We are blessed that the three of us got here because this is an opportunity for us to know Sir Ronald and personally extend him our appreciation for his efforts,” said Mr. Webb, a member of the national basketball team that competed in the 1972 Munich Games.

“It’s common to see support for Olympians at the peak of their careers but the company just quietly stepped in and provided a means of livelihood for these sports heroes past their glory days,” said Ms. Thomson-Guevarra, who swam for the country in the 1988, 1992 and 1996 editions of the Olympics.

Some of BAVI’s past beneficiaries were boxers Leopoldo Serrantes, Roel and Onyok Velasco, and swimmer Teofilo Yldefonso.

“I am truly honored to personally receive the Arête Award on behalf of Bounty Agro Ventures, Inc,” said Mr. Mascariñas, who together with Hidilyn F. Diaz, won the award this year. “They traveled all the way to my farm in Laguna to physically hand over the award to me. I am humbled and grateful for this gracious act.

“At BAVI, we invest in our country and in our people. And we believe in the power of sports. The Arête Award will inspire us to work even harder to achieve our vision,” he added.

Among the past recipients of the plum were former president of the Philippine Olympic Committee (POC) president Celso Dayrit and bowling legend Rafael “Paeng” Nepomuceno. — Joey Villar

iFUEL looking to expand presence

IFUEL, the petroleum company of iFranchise Business Services Corp., is looking to expand its retail presence to reach 100 gasoline stations next year by offering discounts to retiring overseas Filipino workers (OFWs) and others who want to set up their own business.

“We still do not have an exact amount for the discount we can give for the OFWs but we are already looking into it so we can implement it sooner,” iFUEL President and Founder Krizzia Ann T. Loyang said in a virtual briefing on Monday.

Ms. Loyang, who worked as an OFW for three years, said the offer is for Filipinos abroad who are looking into settling back home once they retire.

“Aside from giving money to their families, at least they can own their own business with minimum capital,” she said.

Founded in 2018, iFUEL is set to open five stores this month to reach 30 for this year. Of the 30, five are franchises while 25 are company-owned.

The fuel franchising company said it will also offer lower fees for those who want to have their own station.

The franchise fee of each gas station is at around P6.5 million to P11 million, while the whole franchise cost including fuel supplies and other expenses is around P11 million to P15 million, depending on the land area.

Instead of paying these fees, franchisers just have to pay a P30,000 marketing fee.

“We are looking forward to positive bounce back and higher impact of expansion next year,” Ms. Loyang said, adding that the franchising business was hard hit by the pandemic. — MCL

Entertainment News (12/7/21)

SPONGE COLA

Christmas concert goes online

VEHICLE manufacturer and automobile exporter MG Philippines brings OPM artists together in a special online edition of MG Live! titled Salubong: The Christmas Concert which will be streamed at KTX.ph on Dec. 10 and 11, 8 p.m. Directed by Paul Alexei Basinillo, Salubong is staged with by ABS-CBN’s ASAP Studio 10. The show will include performances by urban/hip-hop singer CLR, rock band Sponge Cola, and the Aegis. MG Philippines has always championed and celebrated Original Pilipino Music (OPM) through its MG Live! concert series. Aside from enjoying the performances, viewers can sing-along as song lyrics will be flashed onscreen. Shout-outs can also be sent to loved ones around the world. Send a personalized greeting via Salubong using the event’s Salu-Salo Social Wall comment and share board.  Tickets are priced at P1,000.

BLASTER releases melancholy holiday song

FILIPINO experimental/alternative artist BLASTER adds to the Christmas tune canon with a new single that essays the profound sadness and grief of celebrating the holidays in the time of pandemic. His latest offering, “Pasko’y Hindi Na Masaya,” out via Island Records Philippines, is dedicated to the countless people whose lives were hit hard and are dreading experiencing Christmas after a loss. “This one is not really about celebrating Christmas,” says the eclectic singer-songwriter and producer. “It’s more of a tribute to those that we’ve lost, and a nostalgic yearning of how Christmas used to be.” The holiday track will be accompanied by a music video featuring a compilation of old Christmas videos from the 1980s and ’90s. “Pasko’y Hindi Na Masaya” is out now on all streaming platforms worldwide via Island Records Philippines.

Ortigas Malls hold holiday concert

THE ORTIGAS Malls celebrate Christmas with a star-studded cast for a meaningful cause. Christmas with the Stars is an online fundraising concert on Dec. 11, 7 p.m., on ktx.ph for the benefit of the Independent Production Workers Group (IPWG). The concert will feature Ogie Alcasid and Ian Veneracion, along with some of the country’s best OPM artists such as Gary Valenciano, Regine Velasquez-Alcasid, Martin Nievera, Jose Mari Chan, Lani Misalucha, The Company, Dingdong Avanzado, Noel Cabangon, Christian Bautista, Aicelle Santos, Ryan Cayabyab Singers, Lara Maigue, Gian Magdangal, Poppert Bernadas, Moira Lacambra, Krystle, Mr. Ryan Cayabyab and more. A ticket is free for every single or accumulated purchase receipt of P1,000 from any establishment of Ortigas Malls made between Nov. 4 to Dec. 10. Donation of P800 to P1,000 can also be exchanged for a ticket. Visit ortigasmalls.com to claim a ticket. Check out Greenhills Mall, Tiendesitas, Estancia, and Industria Facebook pages for more details!

Lighting ceremony marks beginning of UST’s Paskuhan

THE UNIVERSITY of Santo Tomas (UST) formally began its traditional Paskuhan celebrations with a lighting ceremony for its campus décor and the Eucharistic Celebration at the Plaza Mayor. It was livestreamed through the official UST Facebook page on Nov. 27. To illuminate the campus, 210,000 energy-efficient LEDs (light emitting diodes) will be lit every afternoon at 5:30 until 9 p.m. until the Feast of the Three Kings on Jan. 6, 2022. The theme, “The Pilgrimage: Our Road through Trials, Our Road to Triumph,” according to UST Secretary-General Rev. Fr. Louie Coronel, OP, EHL, is about the pilgrimage that Mary and Joseph took looking for a place where the child Jesus would be born. This pilgrimage is likewise experienced in the present as people look for answers to the many questions posed by the pandemic: how mankind will be able to conquer it, and when will we see its end. “Christmas Fireworks,” a musical piece composed by the Conservatory of Music Dean Antonio Africa, Ph.D., accompanied the lighting of the campus shown alongside a montage of previous year’s Paskuhan lighting ceremonies produced by the UST Communications Bureau. The decorations included the 70-foot-tall Christmas tree, life-sized figures of the Holy Family at the Arch of the Centuries, the Cross atop the Main Building, and many more lights framing the Benavides Park and campus streets. The Christmas Tree is made up of 50,000 blue LEDs that draw attention to the Star, with meteor lights interspersed to enliven the tree. Another 160,000 LEDs, majority of which were reused from previous years, brighten up the other campus trees and structures. Some lights form the shape of gothic arches as a throwback to a time when UST was still in Intramuros. UST’s Paskuhan season will culminate on Dec. 17, with the following activities: a celebration in its virtual Minecraft campus at 9 a.m.; and a Eucharistic Celebration at 5:15 p.m. This year marks the 30th anniversary of UST’s annual Paskuhan. The event will be livestreamed via the official UST Facebook page.

Tom Morello’s new album out now

TWO-time Grammy winner Tom Morello has released his new album, The Atlas Underground Flood, via Mom + Pop Music. The 12-track album is a follow-up to his sister album entitled The Atlas Underground Fire, which debuted this October to both fan and critical acclaim. Mr. Morello — co-founder of Rage Against The Machine, Audioslave and Prophets of Rage — has spoken at length in recent interviews that the collaborative process led to countless songs created during the pandemic, and a second album seemed almost inevitable. Featuring a slew of all-star collaborators including Nathaniel Rateliff, Jim James, IDLES, Ben Harper, Alex Lifeson, Kirk Hammett, X Ambassadors, Barns Courtney, Manchester Orchestra, Andrew McMahon in the Wilderness and more, Mr. Morello continues to showcase his signature extraordinary guitar-playing across these new genre-bending tracks. The release was accompanied by a YouTube exclusive livestream event on Dec. 3 where Mr. Morello talked about the origins and creative process for The Atlas Underground Flood. He was joined by some of the collaborators from the album for a track-by-track listening session, which featured a fan Q&A and the opportunity for viewers to donate to WhyHunger. The listening party can be viewed here: The Atlas Underground Flood Listening Party — YouTube

Wish Ko Lang holds month-long Christmas special

ACTRESSES Barbie Forteza, Kim Domingo, Max Collins, and Jean Garcia banner the line-up of Wish Ko Lang this December dubbed “Pasko ng Pag-asa: The Wish Ko Lang Christmas Specials.” With fresh episodes airing every Saturday afternoon, the award-winning GMA Public Affairs show hosted by Vicky Morales features stories that spark hope and inspiration among viewers. After the initial special which aired on Dec. 4, the next shows are “Lihim ng Punerarya” airing on Dec. 11 starring Kim Domingo, “The Affair” on Dec. 18 headlined by Jean Garcia, and “Gayuma” on Dec. 25 bannered by Max Collins. The Christmas special episodes of Wish Ko Lang air every Saturday, at 4 p.m. on GMA. Viewers outside the Philippines can catch Wish Ko Lang on the Network’s international channel, GMA Pinoy TV.

GMA Affordabox promo in December

GMA Network suggests giving its digital TV receiver GMA Affordabox as a gift with a special Christmas price discount promo of P799 until Dec. 31. With GMA Affordabox, viewers can enjoy a clearer view of GMA’s channels — GMA, GTV, I Heart Movies, Heart of Asia, Hallypop, and DepEd TV — as well as other free-to-air channels in digital broadcast available in the area. Among GMA Affordabox’s free features are the Personal Video Recorder, which lets users record GMA programs so that they can watch highlights of their favorite shows; the Multimedia Player feature to watch videos, listen to music, and view photos; an auto-on alert feature and a nationwide Emergency Warning Broadcast System (EWBS) that receives alerts from the NDRRMC about calamity warnings. GMA Affordabox is available in select locations in Metro Manila, Benguet, La Union, Pangasinan, Bulacan, Pampanga, Nueva Ecija, Tarlac, Batangas, Cavite, Laguna, Quezon, Rizal, Ilocos Sur, Abra, Bohol, Cebu, Leyte, Bacolod (and adjacent areas), Davao de Oro, Davao del Sur, Davao del Norte, Misamis Oriental (including Cagayan de Oro City), Camiguin, Iloilo, Guimaras, with Naga, and General Santos It is available in appliance stores and malls, or online via the official GMA Store and on Shopee and Lazada. For more details, visit www.GMAaffordabox.com and its official social media accounts via the handle @GMAaffordabox.

YeY launches Christmas promo

THE ABS-CBN kids’ channel YeY recently launched the Buzz in the Box Watch and Win Promo for Christmas. To join, participants should watch the featured Buzz in the Box by Toy World video of the week on its Facebook page, then answer the question of the week by visiting bit.ly/BuzzInTheBox. Those with the correct answer are entitled to join the weekly draw for a chance to win gift packs from Toy World. Every week, five winners are drawn and will be announced on YeY’s Facebook page. Promo runs until Dec. 17. For updates on its shows, events, and promos, parents can follow YeY on Facebook (fb.com/yeychannel), Instagram (@yeychannel), TikTok (@yey.channel), and YouTube accounts. Children can catch YeY shows on ABS-CBN Entertainment’s Just Love Kids website at ent.abs-cbn.com/justlovekids.

Alex Bruce releases self-titled EP

AFTER a series of hip-hop singles, Alex Bruce releases her self-titled debut EP under Sony Music Philippines. On the five-track EP, Ms. Bruce offers sharp, playful tunes that celebrate life, young love, and being a young girl trying to make her way in the competitive hip-hop music landscape dominated by men. The EP features co-writing and production duties from some of the biggest names in the global and Philippine music industry, including BTS and Justin Bieber collaborator August Rigo on “Go Crazy,” Michael Cursebox on “Yakap” and “Fake Friends,” Jim Poblete on “Pull It Off,” Markbeats with Brian Lotho on “Dime Girls,” and Bok Bruce on majority of the tracks. Alex Bruce’s self-titled EP is available on all digital music platforms worldwide.

Indie singer JAPPH releases debut single

INDIE singer-songwriter JAPPH has released his official debut single, “I Will,” a feel-good piece with laid-back singing. The song is accompanied by the release of a music video that JAPPH directed himself with cinematography by Welvin Medina. Its visual narrative takes listeners to Liwliwa, a surf town in San Felipe, Zambales. “‘I Will’ is a song about a situation that gives you relief and peace,” the 27-year-old reggae/pop/folk artist said in a statement. “…the one that inspired me is a place called Liwliwa, a small town in San Felipe, Zambales. Whenever I’m there, I always feel that I’m in my safe haven.” “I Will” is the carrier single off JAPPH’s upcoming album, Life Is Way Too Short For Bad Vibes, which will be released in January. Watch the music video of “I Will” at https://www.youtube.com/watch?v=crerb_8i77k.

How PSEi member stocks performed — December 6, 2021

Here’s a quick glance at how PSEi stocks fared on Monday, December 6, 2021.

Philippines improves by a notch in global hunger rankings

Philippines improves by a notch in global hunger rankings

Leisure & Resorts World Corporation to conduct virtual stockholders’ meeting on Jan. 7, 2022

Click to enlarge.

LANDBANK, GSIS to help PCIC overhaul investment practices

FINANCE Secretary Carlos G. Dominguez III said he ordered the Land Bank of the Philippines (LANDBANK) and the Government Service Insurance System (GSIS) to help the Philippine Crop Insurance Corp. (PCIC) better manage risk to allow it to venture away from safe but low-paying treasury investments.

The order follows a PCIC a presentation in which it revealed that it spends 35 centavos for every peso it receives in premiums, much more than other major government institutions that manage portfolios from contribution income. 

GSIS President-General Manager Rolando L. Macasaet said the pension fund for civil servants only spends around three to five centavos, while Mr. Dominguez, who chairs the Social Security Commission, said the Social Security System’s spending is about six centavos for every peso received.

The PCIC has said that most of its P6.8 billion in assets are with LANDBANK and the Bureau of the Treasury.

National Treasurer Rosalia De Leon said the cash being invested by the PCIC comes from the subsidy provided by the government, effectively making the PCIC dependent on the lowest-risk instruments which pay the least instead of managing a portfolio with a risk-reward structure that earns superior returns.

Mr. Dominguez said such funds could have earned more if placed in higher-yielding investments.

Mr. Macasaet from GSIS proposed that the PCIC widen the base of paying clients so it can generate income from its insurance operations. Agriculture Undersecretary Fermin D. Adriano also floated the similar proposal, though he called for a balance between its social welfare function and commercial operations.

LANDBANK President and Chief Executive Officer Cecilia C. Borromeo said the PCIC needs to properly assess the risks associated with various crops or subsectors to help it correctly price its policies.

The PCIC was formerly controlled by the Department of Agriculture, but is now managed by the Department of Finance, which has ordered it to disclose more information about its financial standing in order to bring it internal practices more into line with other professionally-run government financial institutions. — Luz Wendy T. Noble

Candidate Marcos says considering suspension of Rice Tariffication Law

REUTERS

PRESIDENTIAL candidate Ferdinand R. Marcos, Jr. said he is open to a suspension of Republic Act No. 11203 or the Rice Tariffication Law if he is elected in 2022.

“We should minimize our imports. I know it is easy to say but it is not very easy to do. It will take a long while. In the short term, there is still much that we have to do.  I wouldn’t mind if we suspend the Rice Tariffication Law first,” Mr. Marcos said during an online forum organized by the Philippine Chamber of Agriculture and Food, Inc. Monday.  

“The Rice Tariffication Law has many unintended consequences. Earlier this year, the National Food Authority (NFA) was buying at P12. The breakeven price of (a) farmer was P14, P15, P16. Why would you still plant? There is no point,” he added.

Mr. Marcos said farmers responded by not planting, which resulted in lower production, reinforcing the need to import rice.

“That is a cycle that will keep sucking us down into this importation hole until before you know it, we are not producing anything and we are importing everything. And you know, we are not in the best financial situation right now because of the pandemic and its effects on the economy,” Mr. Marcos said.  

Signed by President Rodrigo R. Duterte in March 2019, the law liberalized rice imports and allowed private parties to ship in the grain in exchange for a 35% tariff for rice originating from other ASEAN countries. The government formerly held a monopoly on rice imports and paid out public funds to supplement domestic production. The Philippines has a rice self-sufficiency rate of under 90%.  

The law also created the Rice Competitiveness Enhancement Fund, which seeks to increase the competitiveness of rice farmers relative to imports. It has an annual budget of P10 billion between 2019 to 2024.

Mr. Marcos said there should be an overall plan to improve the production of the agriculture sector and raise the income of farmers as local government units (LGUs) receive more funds from the National Government.

He noted that the agriculture sector will receive a boost with the upcoming implementation of the Supreme Court’s Mandanas ruling in 2022, which will give LGUs a bigger share of the National Government’s tax collections.  

“We might have a good opportunity coming up with the Mandanas ruling that will give LGUs more funding to pursue the aims of the agriculture sector. But it still has to come under an overall plan,” Mr. Marcos said.

“Until we have that (overall plan), it will be difficult to achieve what we want for the agriculture sector. We have to strengthen that partnership between the LGUs and the National Government,” he added.  

The Department of Agriculture has said the Rice Tariffication Law has increased production and farmers’ incomes.

“In particular, regular-milled rice is now cheaper, at P36 to P38 per kilogram (/kg), which is P2 to P8 less than in 2018; well-milled rice is also cheaper by P2 to P5; and premium and special rice are sold P1 to P6/kg less than in 2018,” Agriculture Secretary William D. Dar said. — Revin Mikhael D. Ochave

Japanese companies invited to explore opportunities in PHL medical device industry 

PHILSTAR FILE PHOTO

THE Board of Investments (BoI) said it is inviting Japanese companies invest in medical device manufacturing in the Philippines.

BoI-Manufacturing Industries Service Director Evariste M. Cagatan said Philippine companies are currently producing and exporting syringes, ventilators, infrared thermometers, and personal protective equipment.  

“With a world-class electronics industry, abundance in intellectual talent, ready access to key markets, and ultra-cost efficiencies, the Philippines is where design, development, and manufacture of medical devices go hand-in-hand with profitability serving international and rapidly growing markets,” Ms. Cagatan said in a statement Monday.

“Several of the world-class medical devices companies in the country are Japanese such as Arkray, Terumo, JMS Healthcare, Atomed, Yokoisada, and Tokai Medical Products,” she added. 

According to Philippine Commercial Counselor to Osaka Emmanuel Niño W. Ang, Japan is the third largest market in the world in terms of medical expenditure.

Mr. Ang said Japan’s ranking is complemented by the Kansai Region’s strong presence in medical device manufacturing and life sciences.  

“The region accounts for around 30% of Japan’s total non-pharmaceutical medical products manufacturing, and hosts a large cluster of biomedical-related university and industry research institutions for medical devices as well as 16% of all the Japanese companies engaged in medical-related manufacturing,” Mr. Ang said.  

BoI Governor Angelica P. Mapua-Cayas said Japanese companies may find investing attractive because of the new structure put in place by Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.

“It is a major game-changer for investors in the Philippines since it rationalizes, modernizes, and offers more incentives. As the Philippine economic situation continues to improve, we hope that you will look at our country more closely as a valuable contributor to your global business’ growth,” Ms. Mapua-Cayas said. — Revin Mikhael D. Ochave

BFAR issues red tide warnings for parts of Leyte, Surigao

PHILSTAR

THE Bureau of Fisheries and Aquatic Resources (BFAR) issued red tide warnings for Carigara Bay, Leyte and Litalit Bay, San Benito, Surigao del Norte after the waters tested positive for paralytic shellfish poison.

The BFAR said in its 33rd shellfish bulletin dated Dec. 2 that other areas still positive for red tide include Mariveles, Limay, Orion, Pilar, Balanga, Hermosa, Orani, Abucay, and Samal, Bataan; Dauis and Tagbilaran City, Bohol; Guiuan and Matarinao Bay, Eastern Samar; Dumanquillas Bay, Zamboanga del Sur; Baroy, Lanao del Norte; and Lianga Bay, Surigao del Sur.

All types of shellfish and Acetes sp. or alamang harvested from areas affected by red tide are unfit for human consumption. Other marine species from the same waters can still be consumed with proper handling.

Red tide occurs due to high concentrations of algae in the water. Human consumption of contaminated shellfish may cause paralytic shellfish poisoning, which affects the nervous system.

Typical symptoms of paralytic shellfish poisoning include headache, dizziness, and nausea. Severe cases may result in muscular paralysis and respiratory problems. — Revin Mikhael D. Ochave

Tax reminders on your inventories

As we near the end of the calendar year, many companies will be busy preparing for their year-end inventory tally. In certain industries, such assets make up a significant portion of a company’s balance sheet. Needless to say, it is important for taxpayers to know or review the tax rules and compliance requirements relevant to their inventories. Some of these rules and requirements are described below.

INCOME TAX
Since inventory is a major component in determining the cost of goods sold, any inaccurate reporting of inventory will distort taxable income. Thus, it is important to take note that the rules provide two basic tests on inventories: (1) they must conform as nearly as possible to the best accounting practice in the trade or business, and (2) they must clearly reflect income.

With regard to inventory accounting, taxpayers should also consider that there are instances wherein the volume of inventory for annual income tax returns may be different from that on the financial statements due to the difference in the governing rules, i.e., tax rules vs. accounting rules. Hence, taxpayers should maintain the reconciliations to account for such difference.

Further, any change in the inventory method to be used by taxpayers must be authorized by the Bureau of Internal Revenue (BIR).

On another note, if inventory is to be destroyed, taxpayers should also remember that there is a BIR issuance, Revenue Memorandum Order (RMO) No. 21-2020, which prescribes a “Certificate of Deductibility of Goods/Assets Destructed/Disposed.” On whether the certificate is required for deductibility of the loss on destroyed inventory or not, this could be contentious in the light of conflicting views on the matter considering that the BIR issuance vis-a-vis court decisions on the matter. Thus, if taxpayers would like to avoid disputes, they may consider the procedures in RMO No. 21-2020.

VALUE-ADDED TAX (VAT)
Aside from the actual sale of goods/inventory that are subject to VAT, there are also transactions, which, although not actual sales, are also subject to output VAT. These transactions pertain to “deemed sales” transactions, such as the following:

a. Withdrawal of goods from the business by a VAT-registered person for his personal use;

b. Distribution or transfer to shareholders and creditors;

c. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were consigned; and

d. Retirement from or cessation of business, with respect to all goods on hand, whether capital goods, stock-in-trade, supplies or materials as of the date of such retirement or cessation, whether the business is continued by a new owner or successor.

Thus, it is not only the actual sale of goods/inventory that will give rise to output VAT.

On the other hand, when taxpayers purchase goods/inventories from local suppliers, the purchases from such suppliers should be supported with a VAT invoice that is compliant with the invoicing requirements. Although the seller should issue the invoice, the taxpayer-buyer should be prepared to check whether all the information required to be indicated in the invoice is properly filled out, to ensure that the input VAT on such purchases can be validly claimed by the taxpayer-buyer.

For goods/inventory sourced overseas, the corresponding duties and taxes, including VAT, should be paid, if applicable, before the release of goods from customs. Taxpayer-importers should ensure that all import documents are maintained, as these will be used to support claims for input VAT.

EXCISE TAX
For goods, products, and articles subject to excise tax (e.g., alcohol products and tobacco products, among others), taxpayers must ensure that the corresponding excise taxes are properly remitted. Otherwise, there are penalties and fines for violations. These penalties could be a hefty sum which can significantly affect the financials and the operations of the business.

Hence, taxpayers should be diligent in paying the prescribed excise taxes due.

INVENTORY LIST
The BIR requires the submission of schedules/list of inventory pursuant to Revenue Memorandum Circular (RMC) No. 57-2015. Taxpayers should conform to the prescribed formats of the additional schedules as shown in Annexes “A”, “B”, “B-1” and “C” of the RMC, whichever is applicable depending on the industry of the taxpayer. Taxpayers are also required to execute a sworn declaration, as shown in Annex “D” of the RMC.

The inventory list, together with the schedules and notarized sworn declaration, is due for submission to the BIR every 30th day following the close of the taxable year. Failure to file or failure to use the prescribed format in the RMC will be tantamount to non-filing, and the taxpayer will be subject to penalties.

As the deadline to submit the inventory list comes earlier than the deadline for the submission of the annual income tax return with the audited financial statements, the amounts reflected in the inventory list may not have undergone a complete checking or financial audit. Thus, there could be instances wherein, after annual income tax return is drafted, differences could arise in the inventory list as against the inventory tally per income tax return.

If there are discrepancies, the taxpayer may consider reconciling and amending the initially filed inventory list due to the information that was only verified/made available during the drafting of the income tax return and during the completion of the related financial audit. Failure to reconcile the discrepancies could be a source of tax finding in a future BIR assessment.

With the many various tax rules, it can be said that taxpayers’ compliance is really not easy. Nonetheless, there are no shortcuts available to the taxpayer except to keep in mind and be updated on the tax rules related to the business, including those relating to inventory.

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.

 

Christian Derick D. Villafranca is a manager of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

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