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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.

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.