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Are you a top withholding agent?

On Sunday afternoon, I was surprised to read news of Taal Volcano erupting, spewing ash and causing the shutdown of our international airport. I was caught unaware. A search of my newsfeed showed no prior articles about Taal Volcano, so I was surprised to see graphic images from friends and family of the volcanic eruption suddenly flooding my social media. Perhaps I was more focused on the Iran-US situation or the Duke and Duchess of Sussex’s announcement that they are stepping back from their royal roles to have missed updates on Taal, if there were any.

A clear 2020 vision: New Year requirements

Many things can happen in a year. We realize our dreams, reach our goals, make mistakes, and meet new people; the most important thing is that we learn from experience. The same thing can be said from a business perspective, where we, as stakeholders, learn that each new year brings numerous challenges in complying with government requirements as part of continuing operations in the coming year. Listed below are some of the requirements -- so mark your calendars to plan your activities this January.

Flash Report: Revised BIR reportorial requirements

Last year, I had the chance to write an article about the things that the employers need to know in computing for the annualized tax on compensation. The focus was the changes brought about by the Republic Act (RA) No. 10963 -- Tax Reform for Acceleration and Inclusion (TRAIN) Law and recent Bureau of Internal Revenue (BIR) issuances. This year, I’ll tackle the recent changes in the reportorial requirements, especially now that we’re nearing towards the year-end.

What’s next for taxpayers?

If we ask taxpayers what they think about what’s next for them, we could certainly get varying responses. One would answer, “Tax deadlines, of course!” Another would say, “Tax assessments and maybe, tax reform?” One might even say, “I would rather not think about it right now; don’t spoil my December!”

Common tax issues of PEZA-registered entities

On weekends, I travel from my workplace to my province for a quick break from my busy working life. Every time I travel to my home town, I always notice the expanding industry of Philippine Economic Zone Authority (PEZA) enterprises, with special economic zones and technoparks being established in almost every city of my province, wherever I go. In fact, our province is known for its numerous economic zones. This makes me realize the rise in demand for PEZA-registered entities.

Accounting and tax perspectives for financial instruments — Part 2

Last week, we discussed the definition of financial instrument and how it was categorized both for accounting and tax perspectives.

An overview of accounting and tax perspectives for financial instruments

Most companies will have financial instruments in their portfolios. Their purpose is solely for capital appreciation and income.

Is a PHL Tax Residency Certificate relevant to my corporation?

Taxes are the lifeblood of our government and, by paying the right taxes, we contribute what is due to society. There are instances, however, that another tax could be imposed by the government of another country on the same income; thus, the establishment of a tax resident status by a taxpayer might be necessary.

Accounting for and taxation of finance and operating lease

Last week’s article discussed the accounting treatment for a short-term lease and a lease for low-value assets under the new Philippine Financial Reporting Standard (PFRS) 16 and taxation of operating lease as prescribed in Revenue Regulations (RR) No. 19-86 both for the lessee and the lessor. The discussion also tackled how the lessee and the lessor will record in their respective books various transactions related to leases, such as prepaid rentals and security deposits, and the proper reporting of these transactions for income tax purposes.

Accounting and taxation of short-term leases and lease for low-value assets

Philippine Financial Reporting Standard (PFRS) 16 is the new accounting standard for lease of assets or arrangements that contain a lease. It became effective on Jan. 1. It replaces Philippine Accounting Standard (PAS) 17, which means that entities reporting under PFRS shall apply this new standard in their lease transactions starting on the effectivity date.

A deserved tax break for working mothers

In February, President Rodrigo R. Duterte signed Republic Act No. 11210 or the 105-Day Expanded Maternity Leave Law (EMLL). The expanded maternity leave benefits under the EMLL are fully tax-exempt. This is the interpretation issued by the BIR in RMC 105-2019. Indeed, this is a deserved tax break for working mothers.

Adjusting gears is essential for survival

A moral lesson can be gleaned from the circumstances surrounding the childhood of the greatest man who walked the earth, Jesus. This vital lesson also helps investors thrive in their business transactions, especially amidst fast-changing times.

Difficult times or best moments ahead?

My son, Khalil, will celebrate his 17th birthday next week. He now stands at five feet and 10 inches and is in senior high school. I had Khalil when I was very young. I was then a pregnant adolescent, still navigating through college, definitely lost and amiss. It was a very difficult period in my life. Without the guidance and support of my family and friends, I am not sure if I would have been able to get through such challenging times.

Optimistic changes in dividends tax for NRFCs

“Change is inevitable. Change is constant.” -- Benjamin Disraeli

Not everyone’s option

House Bill No. 4157 or the Corporate Income Tax and Incentives Rationalization Act (CITIRA) is on its way to the Senate after being approved on third reading in the House of Representatives.

BIR ready to conduct transfer pricing audits

The Bureau of Internal Revenue (BIR) has signaled that it will conduct transfer pricing audits with the promulgation of its Transfer Pricing Audit Guidelines under Revenue Audit Memorandum Order (RAMO) No. 1-2019. The Transfer Pricing Guidelines were issued in 2013 through Revenue Regulations (RR) No. 2-2013.

Here comes PIFITA

The Passive Income and Financial Intermediary Taxation Act (PIFITA) or House Bill No. 304 hurdled the scrutiny of the House Ways and Means Committee a few days ago. If passed into law, PIFITA will amend certain provisions of the National Internal Revenue Code of 1997 (Tax Code) on the taxation of passive income and income of financial intermediaries. PIFITA will be the fourth package of the government’s comprehensive tax reform program.

Are they authorized to audit you?

Authorized or not? This question is very relevant to taxpayers who are subject to a tax audit. One should at least know if the Revenue Officer (RO) conducting the audit investigation is duly armed with a valid Letter of Authority (LoA). The Tax Code, as amended, requires the Commissioner of Internal Revenue (CIR) or their duly authorized representative to issue an LoA if it will delegate the examination of a taxpayer.

Heroes of the Philippine tax system

“What love can be purer and greater than love of country? What love? No other love, none.” “A nation will perish, because not of evil men, but of good men who just watch and did nothing.”

Royalties, Customs duties and post-clearance audits

The royalties that you pay relating to the goods that you import may be subject to Customs duties as part of the dutiable value of the importation. Have you made this evaluation? Are you paying duties on those dutiable royalties? Is there a risk that this will be uncovered during a customs audit?

What’s new in BIR registration for employees

More often than not, employees rely solely on their employers to handle matters involving their registration with government offices, such as the Bureau of Internal Revenue (BIR). Unfortunately, employees sometimes find themselves in a situation where they are made to deal with their registration updates on their own rather than their employers doing it for them. This is normally the case when an employee has recently changed employers. If you have not heard the latest updates from the BIR, you are probably bombarding that staff member from Human Resources (HR) now with questions about how you are supposed to update your BIR registration and why it is you, not them, who should handle the update. If your HR team is well versed in the new procedures, lucky you. But what if they are not? You might then have to resort to Googling, hoping to come across a checklist or set of guidelines to refer to. Look no further, because you have just clicked on the right link with the answer to your problem.

Carry-over of excess EWT: Now an option

“Options! Options! Options!” – This was one of the lines I would always remember in the movie Four Sisters and a Wedding. The movie revolves around the abrupt decision of CJ, the youngest in the family, to get married to his fiancée, Princess. His four sisters, Teddie, Bobbie, Alex and Gabbie, connived to formulate a plan to stop the wedding from happening. One of which is to provide CJ with other options as the four sisters believed that CJ is only marrying Princess as she was the “best candidate in a diminishing pool of options.”

Notice for Informal Conference: after over a year of reinstatement

In less than two months, I will tie the knot with my girlfriend of eleven years.

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.