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Tax Amnesty: The continuing saga

This year, Game of Thrones -- one of my favorite television shows -- finally ended. I remember watching it for the first time eight years ago, finding it boring, and attempting to finish watching the first episode thrice. Since then, I got hooked until the last episode was aired this summer. Just like with any popular movie or television series, there were mixed reactions among fans over how the show ended. Some fans were happy but, of course, Game of Thrones received its fair share of criticism. Most unsatisfied fans wanted a remake with an ending they prefer.

Urbanization: A challenging future

Having the opportunity to work and live in Manila has been a dream of many Filipinos. Many say there are better opportunities in the capital. For a probinsyana like me who has found luck in the urbane, the big city opened my eyes to different things, people, behaviors, experiences, and learnings. Working in Manila has its ups and downs and its ins and outs. In the past 15 years of living in the capital, I believe I have learned and gone through so much -- and I think many can relate.

Tax exemption of expat employees under tax treaties

Can expatriate employees assigned to the Philippines qualify for personal income tax exemptions under tax treaties? This is a question often asked by foreign corporations sending employees to the Philippines for various purposes.

Freedom from past tax burdens — a work in progress

As we are celebrating Philippine Independence this month, I can recall several kinds of freedom. For Filipinos, June 12 is a commemoration of our freedom from being ruled by another nation. Another type of freedom is for young upon reaching the legal age, at which point they can make their own choices. Freedom can also be viewed in the context of moving on from a failed relationship. For the taxpayers’ perspective, freedom would mean liberation from tax burden; and it is fitting to mention that, early this year, a law was passed to set free the taxpayers from the past tax deficiencies.

Weathering the storm of BIR assessments

“Rain, Rain, Go Away” is a nursery rhyme that children sing when they wish the rain to stop so they can go outside and play.

Ease of doing business at the BIR

A few weeks ago, I attended the first anniversary celebration of the Ease of Doing Business Law (Republic Act No. 11032) at the Philippine International Convention Center. RA No. 11032 was signed on May 28, 2018 and became effective on June 17, 2018. Many stakeholders and government officials were present to witness this milestone, all curious how the law has improved government services since its effectivity. Anniversaries are always nostalgic, as they force us to look back and see what has been accomplished in the past year.

ITR compliance for expatriates

When you stroll around your neighborhood, chances are you will bump into a foreigner. They are present everywhere: in parks, malls, restaurants, and public transportation. You also encounter them in economic zones in Laguna, Cavite, Cebu, and Batangas and even in the central business districts of Makati, Oritigas, Bonifacio Global City, and Cebu. A significant number of these foreigners are here not for vacation, but as expatriate employees. There are also reports that foreigners are now employed not as executives, but as rank and file.

Checkpoints on the VAT refund maze

Our hoped-for radical changes in the processing of claims for value-added tax (VAT) refund filed with the Bureau of Internal Revenue (BIR) have seen the light of the day. Gone are the days when taxpayers would wait in vain for the acceptance or denial of their VAT refund application. Looking back, many have seen this as just a prerequisite to the true refund battle in the Court of Tax Appeals.

Forgetting the past and moving forward for taxpayers

Last Saturday, I had my monthly checkup with my gynecologist. Unfortunately, on our way to the hospital, I slipped off the last stair in our condominium lobby. With my right foot sprained, I thought of rescheduling my checkup, as it was so difficult to walk. With a baby inside me, however, I needed to push through. I needed to ensure that she (Yes, it’s a girl!) is fine and was not harmed due to my carelessness. Thankfully, I was able to proceed with my checkup, and the baby is fine.

Taxpayers’ First Quarter Election

Just yesterday, millions of registered Filipino voters headed to their respective precincts to exercise their rights to suffrage. Leading up to Election Day, Filipinos were bombarded with countless campaign advertisements -- from catchy jingles and sponsored social media posts to political rallies and public debates -- all in the hope that candidates could influence and win the people’s vote. Now, candidates and voters alike are in limbo, hoping and praying that the election odds are in their favor.

Transfer pricing of shared services

The continuous globalization of trade has led to an increase in intra-group services. Intra-group services are those provided by one or more entities within a group to other fellow units, or for the benefit of the group as a whole. Such services include administrative, finance, human resources, information technology (IT), management, marketing, procurement, research and development, and technical services, among others.

The parable of the tax collector… and the taxpayer?

In the Christian scriptures, Jesus shared this parable to those who were convinced of their own righteousness and despised everyone else.

2019 Tax filing season: A reflection

Every year, Lent -- which begins on Ash Wednesday and ends on Black Saturday -- is observed by Christians all over the country. For many devout Christians, the season of Lent is a time for repentance, prayer, and self-reflection to strengthen one’s relationship with God.

The greatest love story ever told

One spring afternoon nearly 2,000 years ago, a Roman centurion watched three men die slow, agonizing deaths. That soldier especially noted one of them -- Jesus Christ. Jesus had been nailed to a wooden stake. The midday sky blackened as the moment of his death approached. When Jesus died, the earth shook violently, and the soldier exclaimed, “Certainly, this man was God’s Son.”

2019 ITR filing reminders

Summer is here! As the school break starts, everyone is excited to plan where to spend their holidays. But before gearing up for the vacation, corporate taxpayers adopting calendar taxable year and individual taxpayers can’t think of enjoying summer yet until the April 15 annual income tax return (ITR) deadline passes.

Back into the fold

It is not every day that delinquents are given the chance to avail of tax amnesty. A review of our past tax amnesties, both legislated and administrative, show that delinquents are very seldom given breaks. Of the 10 tax amnesties passed during the Marcos administration, only one covered delinquents (i.e., Presidential Decree No. 68, issued in 1972). Of the three tax amnesties passed during the Corazon Aquino administration, none covered delinquents. However, there was Executive Order No. 44, which authorized the Bureau of Internal Revenue (BIR) to accept compromise payments on delinquent accounts.

Post Clearance Audits: Are you prepared enough?

Hope for the best, prepare for the worst. Preparing for an upcoming customs audit is one way to minimize, if not to avoid, the risk of having deficiency assessments. The recent issuance of the Customs Administrative Order (CAO) No. 1-2019 marks the beginning of the audit season for importers.

Tax treatment of unlisted shares sold for less than fair market...

With the advent of Republic Act (RA) No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, taxpayers and tax practitioners have lauded the amendment made under Section 100 of the National Internal Revenue Code (NIRC). Section 100 imposes donor’s tax on the transfer of property for less than adequate or full consideration in money or money’s worth. The amendment provides an exception to the general rule. In this case, a transaction that is bona fide, at arm’s length, and free from any donative intent will be considered made for an adequate and full consideration, even if the selling price is lower than the established fair market value (FMV).

Unverified third-party data in BIR assessments

A month after President Duterte line-vetoed the general tax amnesty provision of the Tax Amnesty Act of 2019, taxpayers who have long anticipated a clean slate with the Bureau of Internal Revenue (BIR) are once again confronted with the question of whether to expect rigorous tax audits by the BIR.

Happy compliant selling

Do you want to run your own business? Before going into that dream of becoming your own boss, you might want to review the requirements for responsible entrepreneurs, especially tax-wise.

Bank secrecy, the BIR and the Tax Amnesty Law

The concept of being secretive is quite ironic. Before something is considered a “secret,” someone must not only conceal something, but another must also know or be wary of the concealment. In fact, some experts would say that the more people desiring that secrets be divulged gives more power to those who know them.

The vetoed tax amnesty: Expectations vs reality

News of the approval of the Tax Amnesty Act as Republic Act No. 11213 came out early morning on Sunday, February 17. It was signed on Feb. 14. The reports also indicated that the President vetoed the provisions on the general tax amnesty.

How much are we supposed to pay under the amnesty tax?

A tax amnesty is an opportunity to start over with a clean slate. Taxpayers with ongoing audits would consider this an opportunity to settle deficiency taxes more efficiently. An audit, even for taxpayers who are compliant, is costly and stressful. To quantify the degree of relief on offer, some tax accountants and managers have computed the savings that can be realized and even prepared position papers to argue the benefits of availing of a tax amnesty, noting that they outweigh the costs.

Overcoming tax filing predicaments under TRAIN

The comprehensive tax reform program (CTRP) was envisioned to redesign the Philippine tax system to be simpler, fairer and more efficient. Aligned with the said objectives, the first package of the CTRP or the Tax Reform for Acceleration and Inclusion (TRAIN) Law brought many changes on the overall tax compliance procedures. Some of these changes are the streamlined filing of tax returns, adjustments to tax payment deadlines, and revision of tax rates, the implementation of which requires the Bureau of Internal Revenue (BIR) to update its system and issue revised tax returns.

Wrapping up your January tax checklist

In two days’ time, we are about to end the first month of the year. Time really flies so fast, especially when we are too preoccupied with loads of tasks that need to be done. It may be a bit too late now for some, but making a last minute run-down of our tax compliance to-do-list for January should not be given any less attention, even at this point in time. So waste not a single second, go grab that journal and desk calendar, and let us start ticking off the remaining items on your list.

Fund-raising through Initial Coin Offering

As interest in virtual currencies (VCs), blockchain technology, and initial coin offerings (ICOs) continue to heat up, governments around the world are evaluating the benefits and potential risks of these innovations while considering the regulatory issues surrounding them.

Revisiting the TRAIN Law

Nothing is forever, except change. The wise words of Buddha proclaim the undeniable truth that the only thing constant is change. Life is a process of becoming; thus, we should always keep ourselves abreast with the changing times. After all, progress is impossible without changing the status quo.

The first order of business: Local business tax and real property...

As we hit the first month of the year, it is time for another round of renewal and compliance. What better way to start the year than to have a clear mind set of what needs to be accomplished.

The truth will set us free: Availing of the proposed general...

For someone to be forgiven, the truth must first be told. Be it in a quarrel between lovers, wrongdoing by a child, or even in confession to a priest, you must first admit the truth before being forgiven.

Royalties: Active or passive income?

A sentence is said to be written in an active voice if the subject of the sentence performs the action. Conversely, if the subject of the sentence is the recipient of the action, the sentence is written in passive voice. As such, it is simple to determine if a sentence is written in either active or passive voice by merely identifying if the subject performs or receives the action.

HMO premiums remain tax-free

Christmas is definitely here! As an early Christmas blessing to employees, the premium on group health insurance now reverts to being a non-taxable benefit and compensation.

OPCs: A new way of doing business for solo entrepreneurs

We are nearing the end of 2018; so many of our tax laws affected by the Tax Reform for Acceleration and Inclusion (TRAIN) Law have changed. The reforms, however, are not yet over. We are seeing steady developments in the proposed amendment to the Corporation Code of the Philippines. Both the Senate and the House of Representatives have passed on the third and final reading their own versions of bills amending the Corporation Code. As of the date of this publication, the bicameral conference committee session is to reconcile the House and Senate versions.

Tabula Rasa: A clean slate through tax amnesty

Tabula rasa is a Latin phrase popularly translated as “clean slate” or starting fresh. Sometimes our liabilities have become so burdensome such that, whenever an opportunity is presented to settle those liabilities, the tendency is to grab the opportunity to move forward and start anew.

Annualization of Compensation: What employers need to know

The end of the year is fast approaching. Before we get to celebrate and revel in merrymaking this coming holiday season, you and your finance team will need to face one last fight: the year-end closing of books and complying with other reportorial requirements.

Reminders to top withholding agents

Taxpayers have checked the most talked-about list in the Philippine taxation scene today, and have noted whether they have been included, retained, or delisted therefrom. Taxpayers who were recently included in the list may have marked their calendars too, in order not to miss the commencement of their new obligation. Needless to say, the list being referred to is the list of top withholding agents (TWAs) who are obliged to withhold on their purchases of goods and services beginning November 1, 2018. For the new ones on the list, be forewarned that the resolve to withhold tax on purchases of goods and services is often easier said than done. Being aware of the responsibility is just the tip of the iceberg. More challenges are attached to your responsibility to withhold.

Death tax amnesty in our lifetime

The topic of death is usually best avoided, except on All Saints’ and All Souls’ Day when we remember our loved ones who have departed from this world. We must accept that however, even during times of death, we still need to pay taxes. The estate tax is often paid late, and sometimes not at all, for various reasons -- the emotional unpreparedness of those left behind, insufficient liquid assets, and ignorance of the requirements, among others. As a result, collections from the estate tax are among the government’s weakest sources of revenue.

Are you happy to withhold?

It has been said that “happy are those conscious of their spiritual need, since the Kingdom of the heavens belongs to them.”

Handling tax assessments

So, you received that dreaded letter from the Bureau of Internal Revenue (BIR) notifying you of a tax audit. If you are like some people, you will probably start having heart palpitations and cold sweats. For some, going through a BIR tax audit is worse than visiting the gynecologist or proctologist for an annual check-up. At least with the latter, you know that the episode will definitely end after a few minutes or within an hour, at most.

E-invoicing, electronic sales reporting… and the lottery?

About a month ago, House Bill No. 8083 or Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) was passed on to the Senate. Discussions of its provisions are undeniably necessary so that the Philippines does not end up with hasty-implemented rules that may produce unintended consequences.

Can BIR rulings be declared void ab initio?

Last month, President Rodrigo R. Duterte revoked the amnesty that former president Benigno Aquino III granted to Duterte’s antagonist and critic, Senator Antonio F. Trillanes IV.

Can you impose interest on a refund?

Which of these cases would you prefer?

The rise of POGOs: A new landscape in e-casinos and sports...

With the increasing popularity of e-gaming, foreign online casino operators have expressed keen interest in expanding their business in the Philippines. In fact, the Philippine Amusement and Gaming Corporation (PAGCOR) expects Philippine Offshore Gaming Operators (POGOs) to account for additional revenue of P6 billion this year.

BIR letter notices: Not enough for a tax assessment

Imagine driving your car on a clear sunny afternoon, when suddenly, you are blocked and signaled to pull over by an apparent traffic enforcer in civilian clothing. To your surprise, he asks for your driver’s license and hands you a ticket for an alleged violation. Not recognizing his authority as a traffic enforcer, you refuse to give your license and question his right to apprehend you. However, he insists. Fortunately, this situation is not likely to happen; but if it does, you can expect it to be unpleasant.

The irrevocability rule and income tax credits carried over to the...

TWO weeks ago, I was given the opportunity to facilitate a seminar on handling Bureau of Internal Revenue (BIR) tax assessments. During the open forum, a participant shared her experience with the BIR’s “Project 2307” in which taxpayers are issued a letter to authorize BIR examiners to check the validity and completeness of creditable withholding taxes claimed in the taxpayers’ filed income tax returns (ITRs). Taxpayers normally targeted by this project are those who have resulting tax overpayment or excess creditable taxes on their ITRs. As the discussion shifted to excess creditable tax, another participant raised a question about the irrevocability rule, specifically the option ticked by the taxpayer on the annual income tax return about the preferred treatment for overpaid or excess creditable taxes.

Proposed amendments to the Corporation Code

THE buzz on the amendments to the tax laws has not wavered since last year. However, another important proposed change to our laws which deserves to be highlighted is the amendment of the Corporation Code. Senate Bill No. 1280 (SB 1280) “An Act Amending Batas Pambansa Blg. 68 or the Corporation Code of the Philippines,” has hurdled third reading at the Senate.