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COVID-19 impact on transfer pricing documentation

Transfer pricing is the latest tax-related compliance issue in the Philippines after the Bureau of Internal Revenue (BIR) required all taxpayers with related-party transactions to file the Information Return on Related-Party Transactions (BIR Form 1709) alongside supporting documents including the transfer pricing documentation (TPD) as an attachment to the annual income tax return. 

Electronic Letter of Authority (eLA) right at your doorstep

It has been around 217 days or close to seven months, yet the COVID-19 pandemic is still with us in the form of quarantines and lockdowns of varying levels on most people except essential workers. Consequently, we have seen how operations have been disrupted for many businesses — a growing number of companies with office-based work, including our firm, have continued with and strengthened work-from-home (WFH) arrangements to keep things business as usual in these unusual times.

Broadening the retirement tax exemption

The COVID-19 pandemic caused not only a global health crisis, but also economic slowdown and disrupted business operations. The adverse economic impact resulted in companies, if not going out of business, employing cost-reduction measures by reducing headcount using various means.

On tax breaks and CREATE-ing tax cuts

With the emergence of coronavirus disease 2019 (COVID-19), many businesses have collapsed, unemployment rates have increased, while many Micro, Small, and Medium Enterprises (MSMEs) are on the verge of bankruptcy. In cognizance of the adverse impact of the COVID-19 on the Philippine economy, government mechanisms are currently being put in place to contain the damage. 

Easing the burden through Bayanihan II’s tax breaks

It has been over six months of quarantine and the fight against this pandemic has been challenging. Coronavirus disease 2019, or COVID-19, is an unusual enemy that does not allow us to fight back head-on or face-to-face. It is the type of enemy that makes us hide and stay at home if we want to win the battle. Nonetheless, I believe that resilience is inherent among us Filipinos, with all the difficulties we may have probably experienced in our lives.

Update on tax assessment due process from NIC to ND

Due process is an obligation of the state to respect all the legal rights owed to a person. This balances the power of law of the land and protects the individual person from it. In law, due process contemplates notice and opportunity to be heard before judgment is rendered.

Helping our nation through voluntary tax compliance

The world we are living in right now is very different from the one we were used to. Whenever I hear news about the rising number of COVID-19 cases, employees losing their jobs, and businesses shutting down their operations, which were all brought about by the COVID-19 pandemic, I find myself helpless.

Revised BIR rules on fair market value of unlisted shares

For foreign and domestic investors, selling shares in Philippine companies have always been fraught with difficulty and uncertainty. In the past, the most complex issue has been the determination of the fair market value of the shares to be sold. The rules created various complications and requirements that sellers and buyers had to be aware of before even considering the transaction. Hence, any move to simplify the process is certainly a welcome development. One of these new developments is Revenue Regulations 20-2020 (RR 20-20) published on Aug. 19. The revenue regulations make the determination of fair market value relatively easier for shareholders selling shares.

Conquer your transfer pricing blues

The year 2020 is like no other. With a pandemic still raging, a volcanic eruption, explosions, wildfires, plane crashes, social unrest, tragic deaths, and many other unexpected events — each one of us is affected one way or another. The year is not yet over but it has dished out something out of the ordinary to each and every one of us.

Implications of COVID-19 pandemic on permanent establishments

The global pandemic has been an ordeal for our society and economy. Recently, the government presented a range of measures to contain the impact of COVID-19, including various forms of quarantine such as the enhanced community quarantine (ECQ), modified enhanced community quarantine (MECQ) and general community quarantine (GCQ) as well as travel restrictions.

Government assistance to vulnerable MSMEs during the pandemic

Human society is composed not only of the privileged, the wise, and the good, but also of the vulnerable.

The saga of transfer pricing continues

Last month, I wrote an article about the saga of transfer pricing in the Philippines. The tale begins in 1939 when the Commonwealth Act 466 or the “National Internal Revenue Code was passed. This is the source of the Commissioner of Internal Revenue’s (CIR) authority to review, allocate and distribute the income and deductions of related-party transactions (RPT), both cross-border and domestic, including intra-firm transactions between related parties, to determine the appropriate revenue and taxable income.

VAT on digital services — what you need to know

It has been almost five months since the implementation of the community quarantine due to the COVID-19 pandemic. Most of us had no choice but to stay indoors. Thus, we were forced to entertain, educate, and make ourselves useful within our homes. With the help of the internet and other electronic platforms, we got to binge-watch our favorite shows, shop, buy groceries, start on our fitness goals, finish online courses, play online games, etc. Netflix, Google, Amazon, and even YouTube have somehow helped us to hold on to our sanity during these challenging times.

Are you prepared for BIR Form No. 1709?

Nearly a month ago, many taxpayers finally put an end to the longest tax season when they finally submitted their annual income tax returns (ITRs). Others, however, have to brace for the submission of a new set of attachments to the ITR. These refer to the Bureau of Internal Revenue (BIR) Form No. 1709 or the Information Return on Related Party Transactions (Domestic and/or Foreign) and its related attachments, as prescribed by Revenue Regulations (RR) No. 19-2020. RR No. 19-2020 requires not only the proper disclosure of related-party transactions, but also the documents that would support that these transactions have been conducted at arm’s length.

BIR’s new and improved policy on inventory/asset destruction/disposal

According to Greek philosopher Heraclitus, “The only constant in life is change.” In Japanese, business people believe that constant, increasing improvement adds to substantial change over time. “Kaizen” is a Japanese productivity philosophy that means continuing development in personal, family, social, and professional life. The word “kaizen” comes from the two words: “kai,” which means “change,” and “zen,” which means “for the better.”

Transfer pricing: related party transactions now made known

Humanity has a natural desire to know about its ancestry and to keep the family name alive. Over and above the inclination of man to keep records of births and relationships, genealogy has been critical to chronology, particularly in the early years of human history.

Business registration in the new normal

Since the World Health Organization classified COVID-19 as a pandemic on March 11, “the new normal” became the go-to term for describing the new reality. Throughout history, we survived calamities because of our ability to adapt to changing times. With our mobility limited by social distancing protocols, we see a sudden business shift from physical stores to online platforms. Aspiring entrepreneurs taking advantage of new-normal opportunities might ask, “Can I start a new business during the pandemic?”

The resilient taxpayer: Not an ode

The longest busy season for income tax filing has finally come to a close. Amidst the sleepless nights and pandemic-induced stress, tax practitioners, tax authorities, and taxpayers alike can only remind themselves that the dictum “taxes are the lifeblood of the nation” rings ever more true.

Reconciling the Condominium Act and the NIRC for tax exemption

Well settled is the rule that tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the government. As a result, exemptions must be shown to exist clearly and categorically, and supported by clear legal provisions. In other words, one who seeks an exemption must justify it by words “too plain to be mistaken and categorical to be misinterpreted.” Thus, the burden of proving that one is tax-exempt rests on the taxpayer.

Transfer pricing issues from COVID

Businesses today are confronted with numerous and wide ranging concerns as a result of the COVID-19 pandemic. There are pressing issues on production or client servicing, supply chains, human resources, cash flow, market demand, financing, or survival at the extreme. Tax obligations, likewise, have to be dealt with regardless of the company’s financial position.

Ease of tax filing and payment during community quarantine

The COVID-19 crisis has been sweeping the globe, affecting Filipinos everywhere. To finance public initiatives and to control the pandemic, the government is increasing its efforts to raise revenue despite the difficulties brought about by quarantine restrictions.

Proposed tax reform in a time of pandemic

The government’s plan to improve our corporate tax system and to develop a more efficient and competitive tax incentives regime has been ongoing for quite some time. In February, the proposed measure, known as the Corporate Income Tax and Incentives Reform Act (CITIRA) Bill, reached the Senate. Many hopes were raised that the CITIRA Bill would soon be enacted into law.

Are we ‘half-ready’ for the new normal?

Are we prepared for when we begin our “new normal”? Who else misses going out, joining social gatherings, playing outdoor sports, and attending Sunday mass? We spent the summer of 2020 in the comfort of our own homes, thanks to the coronavirus or the COVID-19 pandemic.

2020 Tax Filing: A whole new level of extraordinary

May 15 marks the last day of the extended enhanced community quarantine (ECQ) for most parts of the country, including the National Capital Region. In spite of the continuing increase in the number of new COVID-19 cases being reported each day, the government has decided to relax restrictions in certain parts of the country in hopes of gradually getting the economy going again after a two-month lockdown.

Not all losses go to waste

The COVID-19 pandemic is disrupting economies and societies worldwide. We are going through another global recession as business operations stood still for months in most parts of the world. Stock markets are down. Tourism and travel are almost nil. Schools are empty, while hospitals are overcrowded. Medical professionals struggle in saving lives, including their own. Employees are not allowed to go to work and are forced to rely on government subsidies to feed their families.

On relief packs and tax relief

Establishments have been looking forward to the lifting of the enhanced community quarantine (ECQ), especially as most economic activity ground to a halt after March 16. For more than six weeks, the COVID-19 pandemic and the resulting ECQ have crippled some businesses and the economy. The most vulnerable have been reduced to relying on emergency relief goods after being denied the opportunity to work. The government’s revenue-collecting agencies have missed their targets for the first quarter of this year, mainly due to the lockdown, which runs until May 15.

The power to tax is the power to save more lives

The government has extended the enhanced community quarantine (ECQ) in certain high-risk COVID-19 areas to May 15. In addition, for moderate- and low-risk areas, a modified form of general community quarantine (GCQ) will be implemented beginning May 1. During these extraordinary times, social distancing is the new normal and staying at home is a civic duty. More importantly, more and more people are lending a hand to communities.

Is there taxable liquidation in an upstream merger?

At a time when all hope seems lost, witnessing people coming together to help each other in the battle against COVID-19 may be what’s needed to have one’s faith in humanity restored. Frontliners, from health care workers and emergency response teams to grocery workers and food delivery riders, are being lauded as heroes, and rightfully so. Whether it is our lives or dinners that are on the line, these frontliners work hand in hand and with the rest of the world, despite the risk to their personal safety every time. The Bayanihan spirit we have been seeing these past few weeks is a show of solidarity that is definitely one for the ages.

Kindness knows no tax boundaries

Last week, many believers all over the world celebrated the most important event in the Christian calendar -- Holy Week. For devout Christians like me, Holy Week is a time for prayer, sacrifice, repentance, and reflection. This year, however, Holy Week was celebrated differently in response to the government’s call to contain the transmission of COVID-19. Christian rituals and local traditions were carried out without crowds, while masses were televised or streamed online. Undoubtedly, this outbreak continues to affect life in more ways than we could have imagined. We can bear witness to how this pandemic brought new meaning and significance to our lives. It invited us to see the greater reality of what is important in life, brought many people back to their faith, and inspired people to show more kindness and empathy for others.

Certainty in uncertain times

As the number of novel coronavirus disease 2019 (COVID-19) cases rapidly increased over the past few weeks, we have developed an obsession with figures and statistics. How many new cases have been reported in our country? What is the mortality rate? How many have recovered? How can we flatten the infection curve? What are the measures do we need to follow to avoid being infected?

Of extensions and lockdowns

It has been a week since the government imposed the enhanced community quarantine (ECQ) and stringent social distancing measures on Luzon. This has resulted in the suspension of classes, public transportation, and travel by land, air, and sea. Strict home quarantine is being imposed and public gatherings are prohibited. Most business establishments, except for those that provide basic necessities, such as public markets, supermarkets, hospitals, pharmacies, banks and public utilities (e.g., power, water and telecommunications facilities) companies, remain open. To ensure the continuity of government services, work from home and minimal staffing arrangements are being implemented in the executive branch, except for the PNP, AFP, PCG, and health and emergency frontline services, border control and other critical services.

Taxpayers’ right to due process: Can a new assessment be raised...

As the world is now facing a coronavirus (COVID-19) pandemic, each of us is reminded by the World Health Organization of the correct procedures for preventing infection, such as frequently washing hands with soap, maintaining social distancing, practicing respiratory hygiene, and seeking medical care early.

Empowering taxpayers during tax assessments

March is International Women’s Month; we are celebrating the contributions of women to society, upholding women’s rights, and advocating women empowerment.

CITIRA: Are we there yet?

It has been more than a year since the first version of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) bill was discussed in Congress. Some said the passage of the CITIRA bill will discourage investment and cause the pullout of foreign investors, displacing workers; others said the bill will eliminate unfair incentives, attract more foreign investment, and make SMEs more competitive in the region.

Property, plant, and equipment vital to business operations

Investing in Property, Plant, and Equipment (PPE) is generally a good indication of growth for many businesses. PPE assets represent a fairly large investment...

Second chance at tax amnesty on delinquency

If you failed to qualify for the tax amnesty on delinquencies, there may be a second chance for you.

BIR gives Valentine’s gift amidst nCov

Are you anxious every time you leave your home, because of the outbreak of the 2019 Novel Coronavirus (2019-nCov)? If you are, it is normal. Most people now refrain from going to the malls, parks, and churches, and prefer to stay at home to prevent from catching the virus. Even my mother has observed that fewer people walk down Session Road in Baguio.

Assessment and 2019 nCoV

The Department of Health (DoH) confirmed on Thursday, Jan. 30, the first case of novel coronavirus (2019-nCoV) in the Philippines. This alarmed many Filipinos.

Feeling gREITful

Today, I celebrate my one-year anniversary working at Punongbayan & Araullo (P&A). In the past 12 months, my life has changed, and my priorities have transformed in ways I could never have imagined. It’s challenging, but these challenges were just one of many things that helped me grow and develop my professional work opportunities.

Blessed with income tax incentives, it pays to know your compliance...

Sunday was the Feast of the Sto. Niño or the Child Jesus. While attending Sunday mass, we were reminded to be obedient like a child to be more worthy of the kingdom of God. Obey the rules and you will be rewarded.

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.