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SMEs in the digital world: reboot or robots?

With the dizzying speed of digital disruption occurring in the global business environment, small and medium enterprises (SMEs) are increasingly realizing the urgent need to explore digitalization. Incorporating digitalization in their business will help expand and create new sources of value for their enterprises to remain competitive and relevant to their markets.

Seven lessons from IFRS 17 live engagements

The financial statements of companies issuing insurance contracts are bound to change dramatically beginning Jan. 1, 2022, as the date marks the global adoption of International Financial Reporting Standard (IFRS) 17.

Digital audits: the advantages add up

The rules of business have changed. Gone are the days when business leaders had the luxury of time to ponder significant business decisions and make momentous changes to their organizations or processes. Now, businesses are transacting and making decisions practically in real time, which also necessitates that businesses manage risks and leverage opportunities with speed, accuracy and efficiency.

Is there a sweet spot in the new tax laws?

In the previous article, we discussed the salient points of the excise tax on Sweetened Beverages (SBs), the costs associated with its implementation, compliance with applicable regulations, and the applicability of the Prior Disclosure Program (PDP) to importers of SBs. In this second part of the article, we will examine some business considerations which importers as well as producers in the SB industry should consider, including possible opportunities brought about by the new excise tax law.

Is there a sweet spot in the new tax laws?

When Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law took effect on Jan. 1, 2018, it introduced Section 150–B of the Tax Code, which imposes excise tax on manufacturers and importers of Sweetened Beverages (SBs). This article specifically covers importers of SBs.

Responding to competition through organizational agility

With the emergence of threats or opportunities brought about by disruption in business, many organizations are being forced to not only reshape their business model and priorities, but also their operating model and business practices.

Will REITs soon be within reach?

Real Estate Investment Trusts (REITs) had been gaining propulsion globally for many years. Locally however, since the introduction of REITs a decade ago, industry players have yet to launch the first such offering to the public. Recently, there have been positive regulatory developments that are expected to provide an attractive landscape for potential players to proceed. While it is true that there are many opportunities in this field, players must find ways to operate within the regulatory framework, allocate the asset portfolio effectively, comply with governance requirements, and adapt to continuing industry disruption.

Transfer pricing audit issues requiring attention

In the previous article, we discussed the salient points of RAMO No. 1-2019, the Transfer Pricing (TP) Audit Guidelines and the urgent need to have a TP documentation to prepare for the TP audits.

Transfer pricing audits are coming… Get ready!

Related party transactions have come under renewed scrutiny from regulators lately due to their importance in promoting corporate good governance and in preventing further erosion of the tax base.

Preparing for the IBOR transition

In the first part of this article, we highlighted the current state of Interbank Offered Rates (IBORs), the factors behind the shift from IBORs to Alternate Reference Rates (ARRs), and the top 10 challenges to be faced in transitioning to the ARRs. In this second part, we will delve into the key operational, financial and accounting considerations that come along with the imminent discontinuation of IBORs.

Preparing for the IBOR Transition

Financial markets globally are preparing the shift from referring to Interbank offered rates (IBORs) as a benchmark for financial products and services to alternative reference rates (ARRs).

Redefining corporate rules

In the first part of this article, we covered Republic Act 112321 or the Revised Corporation Code of the Philippines (RCC), which redefined the corporate rules to promote ease and flexibility in doing business, as well as take full advantage of technological innovation.

Redefining corporate rules

For nearly 40 years, Batas Pambansa 68 or the old Corporation Code governed the way corporations operate in the Philippines. While the Code has been interpreted by jurisprudence and has been complemented by the Securities Regulations Code (SRC), the Revised Code of Corporate Governance, and the Foreign Investments Act, among others, it has taken nearly four decades to overhaul its provisions.

The Bureau of Customs’ police authority

Every business aims to minimize disruption in its operations. For importers, effective and efficient supply chain management is vital to ensuring business performance targets are achieved. These enterprises heavily rely on the smooth and free flow of imported goods for use in their operations, be they for manufacturing or retail. As such, any risk of a freeze in movement or seizure of goods which may arise from the Bureau of Customs’ (BoC) exercise of police authority is potentially troublesome.

Project management in the transformative age

New platforms and drivers of productivity are creating new possibilities at unprecedented speeds, with steady advances in robotics, cognitive technologies and intelligent automation. To remain relevant and competitive, businesses are looking to implement digital strategies to keep up with the speed of change.

Being a top withholding agent: boon or bane?

Being categorized as a “top” withholding agent (or TWA) could give the impression that a company is doing well. It could be an indication of increased revenue, or engaging in more business transactions that warrant a “top” classification.

Benchmarking Philippine VAT against global key trends

In 2017, EY launched a Worldwide Indirect Tax Developments Map. It is a tool designed to track changes occurring around the world in value added tax (VAT), goods and services tax (GST) and other sales taxes, global trade, excise and other indirect taxes. Initially, the team gathered 400 records for VAT/GST and sales taxes from across the globe and noted an average of 30 to 40 changes per month. Based on these developments, five key VAT trends for succeeding years were identified:

Alternative credit scoring through mobile phone data

Traditionally, credit is extended to customers based on a credit score. Lenders such as banks, credit card companies and other financial institutions assess creditworthiness using information from credit bureaus and their own databases. The traditional credit-scoring process usually verifies customers’ identity and assesses their ability and willingness to pay. The ability to pay is based on current income and outstanding debt, and willingness to pay is based on past credit performance.

Final call for applications: SSS condonation program

The new Charter of the Social Security System (SSS) took effect on March 5 with the passage into law of Republic Act (RA) No. 11199 or the “Social Security Act of 2018.”

The essence of digital trends

We continue to see how technology disrupts traditional business models, resulting in new trends, products, and services, as well as how it dramatically transforms customer behaviors. Technology and innovation are considered great enablers, with the potential to rapidly remake the way we live, work and play. Yet, nearly all of today’s greatest disruptions have one common element -- at their very core, these innovations are again empowering people.

SEC finalizes rules on material RPT for listed firms

In line with efforts to better protect minority investors and improve corporate governance, the Securities and Exchange Commission (SEC) now requires Publicly-Listed Companies (PLCs) to disclose dealings with their related parties. SEC Memorandum Circular No. 10 provides the rules on reporting material related party transactions (RPT) and the minimum requirements in drafting the RPT policies of PLCs.

Digital transformation for SMEs

Established in 2015, the ASEAN Economic Community promotes the significant growth and potential of the region’s emerging economies. Key drivers of emerging economies are small and medium enterprises (SMEs). However, with rapid digitalization occurring across almost all business sectors, ASEAN SMEs are increasingly looking to transform their enterprises. SMEs are considering tapping into digital trends to further grow and strengthen their competitive edge as well as making use of emerging technologies to maintain their profitability.

VAT refund claims under the TRAIN Law

Taxpayers are sometimes reluctant to file VAT refund claims because it triggers a mandatory VAT audit, not to mention the need to submit voluminous of documents and the uncertainty of when the processing will be completed. Any delay in the processing of a VAT refund claim may cause cash flow problems to the claimant because the input VAT remains unutilized when it could have been invested or used as working capital.

Transforming the HR function through technology

With the fast-paced development of technology, the fourth industrial revolution is reshaping nearly every aspect of business. We often read about how technology and disruption are transforming critical business functions, and one such function that needs to keep up is human resources or HR. More and more, the HR function needs to explore how new solutions, trends and technologies (such as automation) can have a direct impact on productivity.

Automatic exchange of information: What’s in it for the Philippines?

In February, President Rodrigo R. Duterte signed into law Republic Act No. 11213, “An Act Enhancing Revenue Administration and Collection by Granting an Amnesty on All Unpaid Internal Revenue Taxes Imposed by the National Government for Taxable Year 2017 and Prior Years with Respect to Estate Tax, Other Internal Revenue Taxes, and Tax on Delinquencies.” However, it was signed with certain line item vetoes including the grant of a general tax amnesty which was vetoed in its entirety.

A risk-based approach to your AML/CTF strategy

Since 2016, the Anti-Money Laundering Council (AMLC) and its supervisory agencies have issued significant updates and tightened anti-money laundering (AML) and counter terrorist financing (CTF) regulations in the Philippines, aligning them closer with international standards.

Risk and cybersecurity for critical infrastructure

When we talk about cybersecurity, we usually think of information technology systems that manage and access data. But there’s another side of technology that is often overlooked by enterprise security processes -- the industrial control systems that handle physical processes through monitoring or direct control, such as valves, pumps and similar systems that have a physical “switching” function. The reason for this is that most of these systems have traditionally been isolated from corporate information networks, operated separately as they have functions outside of processing data -- such as regulating power or water flow for utilities companies, the control network of a train system, or medical scanning equipment in a health care entity.

Tomorrow’s tax professionals

The global business environment continues to evolve at a rapid pace, with factors such as globalization and technology disrupting traditional roles, processes and operations. One of these areas is in the tax landscape, where the changes are fundamentally and permanently changing how tax professionals operate.

Banks and fintech: the next step

In recent years, the Philippine banking ecosystem has undergone rapid digital transformation driven by sweeping technological advances. The Philippine Banking Almanac states that the Philippine banking industry started as a government venture to provide deposit services and fund production in the agricultural and commercial industries. That was 160 years ago and since then, the industry has evolved to include various aspects of financing, up to the ubiquitous digital systems that are now used all over the world. This is no surprise since the banking industry has always been characterized by continuous, customer-driven innovation.

The Tax Amnesty Act of 2019: Welcome news for delinquent taxpayers

On Feb. 14, the President signed into law Republic Act No. 11213 or the Tax Amnesty Act of 2019 (RA 11213). The law provides for estate tax amnesty and tax amnesty on delinquencies. In this article, we will zoom in on the tax amnesty on delinquencies.

Big data and dark data: Balancing the costs and benefits

Big data is starting to become a cliché among business executives, given that almost everyone is now leveraging big data in decision making. “Big data” was defined in 2012 by Gartner (a global research and advisory firm) as “high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.”

Evolving to match future markets

Traditionally, businesses have used the term “markets” to refer to economies. Hence the terms “developed market” or “emerging market” are usually associated with countries at a certain level of development. However, given the changing times and consumer paradigms, businesses may need to shift their focus to smaller “markets.” Cities, for example, are expected to grow further. A United Nations study projects that by 2050, 68% of the world’s populations will live in urban areas, with corresponding effects on infrastructure and the environment, as well as consumption behaviors.

Entrepreneurs inspire!

Every two years, the Entrepreneur Of The Year (EOY) Philippines program stages a road show to announce the start of the nomination period for entrepreneurship awards. In our recent road shows in Cebu and Davao, the local reporters were curious to know our observations on entrepreneurship in the country since we launched the awards in 2003. This was a good point to reflect on after 16 years of celebrating the best among Filipino entrepreneurs.

New lease accounting standard: the road to adoption

The new lease standard under Philippine Financial Reporting Standard (PFRS) 16 has been effective for annual periods beginning on or after January 1, 2019.

A New Green Revolution: The Green Bonds

In the first part of this article, we discussed some of the environmental consequences brought on by the rapid increase of infrastructure and economic development in the country. Although the Philippines maintains the lowest ecological footprint in ASEAN, growing overconsumption, unregulated production, and waste mismanagement all contribute to the environmental burden on the land.

A New Green Revolution: Green Bonds

The Philippines’ GDP growth has maintained a relatively stable upward trend over the last decade. Regionally, the archipelago continues to outpace most of its neighbors, maintaining an average annual growth rate of six to seven percent in the last seven years. The driving force behind this economic and developmental progress is the reinvigoration of the national government’s investment in public works, health and education infrastructure, and improved public financial management. However, the effort and resources expended towards the modernization and overall development of the Philippines still falls short in one key consideration -- climate and environmental resilience and the sustainability of these infrastructural pursuits, and of the overall development and growth path of the country in its entirety.

How non-financial reports can tell your value creation story

Of late, a number of companies in the Philippines have been releasing non-financial reports, either called “Environmental, Social and Governance (ESG) Reports,” or “Integrated Reports,” or “Sustainability Reports.” However, these are not yet mandatory. In fact, it was just recently that the Securities and Exchange Commission (SEC) released Memorandum Circular No. 4, which provides the sustainability reporting guidelines for publicly-listed companies on a “comply or explain” approach for the first three years of implementation, starting with the 2019 reporting period. In the absence of a reporting requirement, a key driver that has influenced companies to disclose non-financial information has been the demand from their investors for such reports.

Revitalizing retirement, pensions and social security

If we evolve our thinking about social security, pension, retirement and voluntary savings, could we deliver better socioeconomic outcomes for the Philippines and improve the financial well-being of millions of Filipinos?

Revitalizing retirement, pensions and social security

If we evolve our thinking about social security, pension, retirement and voluntary savings, could we deliver better socio-economic outcomes for the Philippines and better financial well-being for millions of Filipinos?

Data is power: Using analytics for a Customs audit

Our last four Suits the C-Suite articles have emphasized the need for importers to be audit-ready in the event that the Bureau of Customs (BoC) conducts a Post Clearance Audit (PCA). The BoC has already issued 32 Audit Notification Letters (ANLs) to importers; anyone could be next on the list.

Dealing with common issues in a BoC Audit

When shipments are “cleared” at the border after payment of duties and taxes, importers often assume that the Bureau of Customs (BoC) will simply move on without double-checking the shipment. This assumption is inaccurate. The BoC can actually conduct an audit of past transactions, similar to the function of the Bureau of Internal Revenue (BIR). This exercise is the Post-Clearance Audit (PCA). It usually covers the last three years of importations and the PCA is undertaken to check the correctness of importers’ goods declarations, and the accuracy of their tax payments.

To have and to hold: Customs import documents

Many struggle to remember certain details, such as the phone numbers even of those close to them. This is due to the intrinsic limitation of human memory, or perhaps some see the brain simply as an organ to process information but not to store data. In any case, we acknowledge the importance of keeping records appropriately -- not just mentally -- but in some retrievable form. With the current strides in digital disruption and innovation, we now have more tools and devices to assist in storing and accessing whatever information we need.

Prior disclosure or a customs audit: Which is the wiser option?

As discussed in last week’s column, Customs Administrative Order (CAO) No. 01-2019 has been issued. The CAO covers the conduct of the post clearance audit (PCA) and implementation of the prior disclosure program (PDP). Considering the high penalties -- ranging from 125% to 600% of the revenue loss -- to be imposed during a customs audit, it is imperative for an importer to consider if it will be beneficial to avail of the PDP.

Are you ready for a customs audit?

It has been more than a year since Executive Order (EO) No. 46 was issued which revived the post clearance audit (PCA) function of the Bureau of Customs (BoC). Finally, the implementing rules necessary for the BoC to resume audits have now been issued.

Tech-based compliance in emerging markets

The nature of business today is very different from how it was just a few years ago. Technology, innovation and new consumption behaviors are driving disruption every day. Yet, some things – such as fraud, bribery and corruption – have remained constant. This was the main finding of the EY Global Fraud Survey 2018: Integrity in the spotlight, which focused on emerging markets.