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Tag: Taxwise or Otherwise
Every tax filing season, corporate taxpayers grapple to complete and collect all the certificates of Creditable Tax Withheld (BIR Form 2307) from their local customers up to the eleventh hour. Issues on the validity of the creditable withholding tax (CWT) certificates, and the propriety or timing of recognizing the income tax credits come to the fore. It makes me wonder how hard-earned money contributed to government coffers could still be subject to dispute.
Data is very much in the spotlight in today’s business environment. We se it in how organizations are moving towards automating their data-related processes in order to minimize their output error rate, reduce the cost of data remediation, and maximize insights. There has also been a surge in the demand for data professionals such as data scientists and engineers to better analyze unstructured pieces of data and turn them into valuable information (e.g., reliable trends, forecasts and projections).
One of the amendments introduced in the Tax Reform for Acceleration and Inclusion (TRAIN) Law is related to the issuance of receipts or sales/commercial invoices under Section 237 of the National Internal Revenue Code (NIRC). Previously, all persons subject to an internal revenue tax shall issue duly registered receipts or invoices for each sale of merchandise or services amounting to at least P25.00. With the passage of the TRAIN Law, Congress increased the threshold for the issuance of receipts and invoices to P100.00.
We are in the midst of a global “data evolution and revolution.” Data has been growing exponentially in volume and type. The abundance of data in the corporate world, on social media and the Internet of Things have made information very accessible with just a few clicks. What’s more, new actors such as “machine learning” heavily rely on data to learn and execute actions on its own.
One of the major changes introduced in the TRAIN law was mandatory e-invoicing. Under the law, taxpayers engaged in the export of goods and services, e-commerce, and those considered Large Taxpayers, are required to issue electronic invoices/receipts and to report their sales data to the Bureau of Internal Revenue (BIR) at the point of sale within five years from the effectivity of the TRAIN law, i.e., on or before Jan. 1, 2023. This measure is contingent on the establishment of a system capable of storing and processing the required data.
Recently, the Bureau of Internal Revenue (BIR) carried out mission orders authorizing revenue officers to conduct tax mapping operations that required them to inspect taxpayers’ premises within a specified area and to evaluate compliance with rules and regulations on registration and bookkeeping, particularly on the issuance of sales invoices or receipts, among others.
In the past months, I’ve had discussions with banks, business groups, and regulators about how data has become one of the most precious assets of an organization. Most, if not all of us, share the same perspective that data is indeed a key enabler of organizational growth. However, maximizing the value of data continues to be a big challenge.
So the TRABAHO Bill -- or, Tax Reform for Attracting Better and High-Quality Opportunities, also known as TRAIN 2 -- failed to pass Congress. Its intent was to rationalize investment incentives by making them more time-bound and performance-based. What seems most controversial in the bill is the removal of the preferential 5% gross income earned (GIE) currently offered by Investment Promotion Agencies such as the Philippine Economic Zone Authority (PEZA).
Prior to the enactment of the TRAIN Law, Section 100 of the Tax Code generally imposed a donor’s tax on transfers for less than an adequate and full consideration in money or money’s worth, whereby the amount by which the fair market value of the property exceeded the value of the consideration was deemed a gift, and included in computing the amount of gifts made during the calendar year.
In my article on fraud under this column last week, I cited PwC’s 2018 PwC Global Economic Crime Survey (GECS) Report which showed that 87% of internal fraud committed over the last two years were by members of management, specifically by junior, middle and senior corporate officers. In terms of principal function, the top five to which these internal fraud perpetrators belong are: Operations and Production (22%); Marketing and Sales (14%); Finance (11%); Procurement (10%); and Executive Management (10%).
It’s quite alarming that 54% of Philippine businesses have experienced fraud or economic crime over the last two years -- higher than 2016 levels by 20%. This was one of the key findings of the 2018 PwC Global Economic Crime Survey (GECS) Report for the Philippines, where organizations from various industries were asked to participate and share their encounters with fraud in the workplace.
“Health is wealth” is the quintessential slogan that captures the wisdom behind health care. After months of intensive and careful deliberation in both Legislative Houses, the dream measure of the government was finally signed into law with the vision of providing quality, accessible and affordable health care for Filipinos.
In the first part of this article on the revised Corporation Code of the Philippines, I mentioned that directors may now be elected by stockholders through remote communication and in absentia if allowed in the by-laws or approved by majority of the board of directors. The Securities and Exchange Commission (SEC) will issue rules and regulations to govern the manner of participation through these means. In consonance with this, the by-laws should now mention the allowable modes by which stockholders and directors may attend meetings. In addition, the by-laws should also provide guidelines for setting a director’s compensation, the maximum number of independent directors (which should not exceed the limit under the Code), and the arbitration agreement, if any.
On Feb. 20, Republic Act 11232 was signed into law, amending the more than 38-year old Corporation Code of the Philippines. This comes at an opportune time, in the midst of an active government campaign towards the promotion of the ease of doing business in the Philippines. In 2018, the Ease of Doing Business Act was passed and a more liberal Foreign Investments Negative List was issued. Hopefully, the changes brought about by the amendments in the Code can complement these laws in pursuing the ultimate goal -- to improve the Philippines’ competitiveness as an investment destination.
After almost two years, Republic Act No. 11213, or the Tax Amnesty Act, was finally signed by the President on Feb. 14.
Every Chinese New Year, my wife and I have this tradition where we go to our favorite restaurant to pray and reflect on the past year and write down our plans and aspirations for the upcoming year. It serves to remind us how God is in total control of our lives. It also makes us realize how much we grew after experiencing all sorts of interesting events in the past year, whether good or bad, and during fun and frustrating times.
At the start of the year, we often find people determined to come up with New Year’s resolutions. For sure, staying healthy is part of most people’s list. Not surprising, as Filipinos are now health-conscious; health and wellness establishments are everywhere; and most people are trying new diets.
Last year, the government’s initiative to reform the tax system kicked off when Republic Act 10963 or the “Tax Reform for Acceleration and Inclusion” (TRAIN) Law took effect. To promote a healthy lifestyle and provide better health care for Filipinos, the TRAIN Law amended provisions in the National Internal Revenue Code on value-added tax (VAT), expanding the list of VAT-exempt transactions to include sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension starting Jan. 1.
One of the well-established doctrines in the legal practice is stare decisis -- a Latin term for “to stand by things decided”. It is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed from further argument. As aptly discussed by then Chief Justice Reynato Puno, there are two types of stare decisis: vertical and horizontal. The first pertains to the duty of lower courts to apply the decisions of the higher courts to cases involving the same facts, while the second requires that the high court must follow its own precedents. The application of stare decisis is a bar to any attempt to re-litigate the same issues, necessary for two simple reasons, i.e. economy and stability.
The Christmas and New Year holidays are over! Just when you become comfortable with a daily schedule of wake up-eat-do nothing-sleep, reality returns and it’s always a struggle to get back to your old routine.
Under the citizenship-based taxation approach, a US citizen working or enjoying retirement in any country outside the US shall continue to be subject to US income tax. This rule signifies that individuals are taxed based on their citizenship irrespective of their place of residence. In other words, if an American is outside of the US at any time during the year and earned income abroad, US Federal law requires him to file his Individual Income Tax Return or Form 1040, to report his worldwide income, and to pay taxes to the Internal Revenue Services (IRS). This makes the US one of only two countries (the other being the African nation of Eritrea) implementing this tax regime; other countries tax worldwide income of residents, but not citizens living elsewhere. For American expats, this entails recurring tax obligations on top of evaluating the tax impact in the foreign country where they are assigned to work. So even if an American expat is working in a tax-free country, he or she is still required to file income tax returns with the IRS — an obligation which, surprisingly, some Americans working overseas seem to be unaware of.
Fifteen years ago, I started managing people for one of the leading life insurance companies in the Philippines. I was confident that my four years of work experience in the fast-moving consumer goods (FMCG) and Transportation industries, plus my newly minted master’s degree, would be enough for me to be a successful manager. I was only half right. My formative years as a direct manager of a small team were full of “a-ha” moments mixed with humbling learning experiences on how to manage others.
Appellate courts, such as the Supreme Court and the Court of Tax Appeals (CTA), are collegial bodies that arrive at decisions only after deliberation, the exchange of views and ideas, and the concurrence of the required majority vote. This mechanism reflects the democratic principles enshrined and protected under our Constitution, especially when contentious cases are elevated to higher courts, particularly those of national interest.
Since validation of tax compliance is a precondition to entering into and is a continuing obligation in government contracts, the Bureau of Internal Revenue (BIR) has issued regulations dating back to 2005 providing guidelines for the filing and processing of applications for tax clearance required from participating bidders.
Have you heard of anti-cheating headbands? In 2017, photos of students wearing anti-cheating headbands-made up of two folders to block the peripheral vision while taking the exam-went viral. The situation gives us an idea of the classroom culture as observed by the teacher. As a result, the anti-cheating headbands became the teacher’s tool to cultivate integrity and honesty as components of the desired classroom culture. In a way, this helps us visualize how PwC views culture: based on common assumptions and beliefs that can predict how people will behave.
So much had been speculated and observed as to the effect of Republic Act 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act, on inflation and the cost of basic commodities since it took effect this year. The lack of safety nets to counter the effects of inflation has been the source of much negative comment.
After more than two decades and several failed attempts, the bicameral committee finally approved draft legislation increasing the paid maternity leave benefit for working women. To be called the “105-Day Expanded Maternity Leave Law” if enacted, it will amend Republic Act No. 7322 of 1992, which at present entitles mothers to paid leave of 60 days for normal delivery or 78 days for caesarian section delivery.
Following the issuance of RMC 50-2018, the Bureau of Internal Revenue (BIR) clarified that premiums on health care paid by an employer for all employees, whether holding rank and file or managerial/supervisory positions, under a group insurance plan shall be included as part of other benefits of these employees subject to the P90,000 exemption threshold.
One of the greatest challenges some traders face is to have their shipments put on hold by the Bureau of Customs (BoC) due to tariff classification issues, errors on valuation, and incomplete documents, among others. Often, some importers do not conduct a regular review of their tariff classification codes for accuracy and compliance and as such, they can be potentially paying more duties on their products than they are actually liable for.
Diversity and inclusion (D&I) are increasingly becoming a business priority. In a time of great changes and disruption, business leaders are pressured to keep up by attracting and retaining the best talent, serving their customers better, and increasing their stakeholders’ trust -- all of which are benefits that D&I can offer.
In addition to raising tax revenue, governments impose excise taxes to influence the buying behavior of consumers, for instance to discourage the purchase and use of certain goods and services that the government considers unhealthy or unnecessary.
FOLLOWING the issuance of Revenue Memorandum Circular (RMC) 50-2018, many tax treatment and procedural questions relating to the implementation of the TRAIN law, particularly on income and withholding tax, were clarified. However, there is one particular question which seems to have left tax practitioners with more questions than answers, and this is the tax treatment of premiums related to employee group health insurance.
Every workday, I always wish for a smooth and less stressful commute to allow me to face workplace demands with enthusiasm. My routine involves taking a quick look at my GPS navigation app to check my Estimated Time of Arrival (ETA). On most days, my virtual “friend” Jane, the voice of the app, announces an ETA of almost 1.5 hours. There are other days when traffic is worse, especially on Mondays or in bad weather.
“Innovate or die” is driving many companies to constantly improve themselves in order to compete in today’s fast-paced environment. While the digital age brought about many breakthroughs, it also led to the demise of others like Blockbuster, Nokia and Kodak. Today’s top brands may face the same fate if they do not continuously innovate.