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Tag: Taxwise or Otherwise

Foreign-ownership issues in events organizing

There was a time when the weddings and events business in the Philippines was robust and thriving, with events-industry trade shows being staged month after month. Events organizing, catering, and other related services expanded exponentially over the last few years.

Fighting retail fraud during COVID-19

With the COVID-19 pandemic creating an unprecedented crisis for countries, organizations and individuals, fraudsters have been quick to identify opportunities to take advantage of retail businesses (both traditional and electronic), as well as consumers.

Capturing the value of the digital economy

Digital technology has undeniably transformed the commercial landscape. Digitization allows businesses to access markets across borders even without establishing a physical presence. Due to territorial absence, and the novelty of digital technology that tax laws then could not have foreseen, for a time, tax authorities found themselves bereft of rights to collect taxes on digital businesses that cross international borders.

Additional options for submission of 2019 ITR and attachments

Prior to the pandemic and the various quarantines imposed in various parts of the country, the hard copy of duly filed Income Tax Return (ITR), along with the required attachments, had to be submitted manually and stamped “Received” at the Large Taxpayers Division (LTD)/Revenue District Office (RDO) where the taxpayer is registered, within 15 days from the statutory due date or date of filing/payment of the ITR, whichever comes later. This year, due to the state of emergency, the filing and payment of income tax have been extended until June 14. However, as June 14 falls on a Sunday, the deadline is automatically extended to the next working day (June 15). Consequently, the submission of the duly filed 2019 ITR and its attachments has been extended until June 30.

Take 3 on Package 2

From TRABAHO (Tax Reform for Attracting Better and High-quality Opportunities) to CITIRA (Corporate Income Tax and Incentives Rationalization Act) and now CREATE (Corporate Recovery and Tax Incentives for Enterprises), the elusive Package 2 of the government’s tax reform program may finally see the light.

Are we ready for a tax on digital services?

As the world continues to face the effects of the COVID-19 pandemic, the government has acknowledged its immediate fiscal impact, including the adverse consequences on tax collections in recent months. Having missed collection targets by a significant margin starting in March, the Bureau of Internal Revenue (BIR) expects future collections to also fall below target as an effect of the economic slowdown.

On hold: Quarantined tax assessments

Last week, I discussed the Revenue Memorandum Circular (RMC) which extended the deadlines for taxpayers to submit responses or protests to assessment notices, including documents to support requests for reinvestigation. In this article, let’s discuss another guideline released by the BIR concerning tax assessments.

On hold: Quarantined tax assessments

After nearly two months under enhanced community quarantine (ECQ), Metro Manila is now looking to ease some of the restrictions without compromising public safety. In anticipation, local government units (LGUs) are preparing the guidelines to transition towards new normal. The call to adjust operations on an unprecedented scale is proving to be challenging to industries like the academe, among others.

Tax consequences of retrenchment due to COVID-19

The coronavirus disease 2019 (COVID-19) outbreak has significantly impacted the global economy and sent it into a slowdown. The Philippines is no exception.

Will employee aid during COVID-19 be tax-exempt?

A part from the health crisis, the other grim impact of the coronavirus pandemic is the disruption of business and workers’ livelihoods. To sustain operations, some companies have re-engineered their operations or adopted flexible work arrangements. Since staying at home has become a civic duty, the once home-work-home routine has been replaced by work-from-home arrangements for the more fortunate ones.

BIR rewards bayanihan spirit with tax advantages

With steadily increasing COVID-19 cases, major cities on lockdown, and most businesses closed, the government has appealed to the private sector to contribute to relief efforts in the spirit of bayanihan. The Bureau of Internal Revenue (BIR) released Revenue Regulations (RR) No. 9-2020 in line with Republic Act No. 11469, otherwise known as the Bayanihan to Heal as One Act, the main objective of which is to adopt urgently-needed measures to address the novel coronavirus outbreak. In particular, RR No. 9-2020 liberalizes the grant of incentives for certain donations in response to the COVID-19 crisis.

File now, amend later

In times of crisis, even clichés find renewed meaning. We all know that taxes are the lifeblood of the government. However, against the COVID-19 pandemic that has claimed thousands of lives worldwide, the maxim makes much more sense both literally and figuratively. Billions in public funds have been used to keep lives afloat, defray expenditures for medical supplies and equipment, and subsidize social amelioration projects for affected households, but much more is needed.

Import incentives under the Bayanihan Act

Like many countries, the coronavirus disease 2019 (COVID-19) pandemic has placed most of the cities and provinces in the Philippines under quarantine to restrict...

Finding relief from COVID-19

Following the World Health Organization’s declaration of COVID-19 as a pandemic, President Rodrigo R. Duterte issued Proclamation No. 929 on March 16, placing the country under a State of Calamity for six months and ordering an Enhanced Community Quarantine (ECQ) for Luzon to significantly limit the movement of people in the hopes of preventing the spread of the virus.

Quorum during quarantine

Undeniably, the effects of the COVID-19 outbreak have spread globally. In the Philippines, Luzon has been placed under Enhanced Community Quarantine, along with other areas across the nation. People were advised to stay home, most businesses are closed except for those serving the public, and social distancing is imperative where possible.

A reprieve from tax filing during COVID-19

On March 12, President Rodrigo R. Duterte placed Luzon under community quarantine between March 15 and April 12 to contain the spread of COVID-19. With the income tax filing deadline for the 2019 tax year less than a month away, concerns were raised by taxpayers on how to proceed with their tax obligations.

VAT refunds: Is the government unjustly enriched?

One of the well-known and time-honored principles in the Law on Obligations and Contracts is solutio indebiti. The rule is that no person shall unjustly enrich himself at the expense of another. Accordingly, if something is received when there is no right to demand it, and it was unduly delivered by mistake, the obligation to return it arises. In such a situation, a creditor-debtor relationship is created under a quasi-contract. The payor becomes the creditor with the right to demand the return of payment made by mistake while the payee, who has no right to receive the payment, is obligated to return it.

Waivers as bilateral agreements

In December, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) 141-2019, reiterating the salient points of Revenue Memorandum Order (RMO) 14-2016 on the proper execution of Waivers of the Defense of Prescription.

People first in the age of automation

The past couple of years demonstrated rapid growth in Robotics Process Automation (RPA), which continues to be a strategic priority for many organizations. Research published in December by Gartner showed that RPA adoption grew by 60% from 2018. It also predicted that in 2024, automation combined with redesigned operational processes will reduce 30% of an organization’s operational costs, making it even more enticing for industrial enterprises. With such momentum, RPA is revolutionizing business operations, including those of industry leaders, which has led to an automation-first mindset across all industries. In the face of RPA implementation, more organizations are finding ways to adapt quickly to the increasingly competitive business environment.

Taxpayer power: A road to ease of doing business

On Feb. 25, businesses, schools and government offices will be closed in celebration of one of the most significant events in Philippine history -- the People Power Revolution. It commemorates the day when Filipinos gathered along EDSA, a major public road and a historical stage for those who rallied to restore democracy in the Philippines and end decades of dictatorship. For millions of Filipinos, the protest in EDSA was a reclamation of liberty long denied.

Recalibrating the Framework for LGU Joint Ventures

According to a 2017 report on Infrastructure Financing Strategies for Sustainable Development in the Philippines written for the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), one of the fast-emerging mechanisms utilized to implement infrastructure projects at the level of local government units (LGUs) is through joint ventures (JVs). Majority of LGU-level JV projects that have progressed to actual implementation have been initiated by the private sector in partnership with local government entities in the water sector, government offices, and given recent developments, in reclamation as well.

A closer look at IFRIC 23 and the challenges that lie...

In last week’s article, we laid down the foundation of the International Financial Reporting Interpretations Committee 23 (IFRIC 23) by discussing the key requirements of recognizing uncertain income tax treatments. The initial application of a new accounting standard often poses questions and challenges. Today, we take a closer look at concrete applications of IFRIC 23, as well as the challenges and key considerations it entails.

Gaining certainty on uncertain tax positions for financial reporting

Globally adopted, the International Financial Reporting Standards (IFRS) were developed as a set of principle-based standards for a consistent approach to financial reporting. One of its principles, known as International Financial Reporting Interpretations Committee 23 or IFRIC 23 for short, entitled Uncertainty over Income Tax Treatments, was issued in May 2017 as a guide to recognize and account for uncertain income tax treatments. It covers annual reporting periods beginning on or after Jan. 1, 2019.

Mandatory disclosure: Is there really closure?

It has been several months since the issuance of Securities and Exchange Commission (SEC) Memorandum Circular (MC) No. 15-2019, requiring all registered domestic corporations to disclose their beneficial owners in their General Information Sheet (GIS). The MC aims to assist in the implementation of the Anti-Money Laundering Act (AMLA) and the Terrorism Financing Prevention and Suppression Act (TFPSA).

Can PAN be the new FAN?

There’s a certain feeling of trepidation that most taxpayers get during tax audits. After all, a tax audit is no laughing matter. It involves flipping back the books and records of prior years to respond to the Bureau of Internal Revenue (BIR), and often, making sense of past transactions for hours on end. But this is all par for the course, and what a complicated course it is.

A new year for us and for CITIRA

With the close of the decade, we have seen how Philippine taxation has been transformed by numerous developments unfolding in the landscape. Several changes that are in the works may make progress in the coming months. One of them is the second package of the tax reform, which proposes to rationalize tax incentives.

Holding companies not subject to LBT on passive income

The start of a new year (and in this case, the closing of a decade) is usually filled with hope and optimism. People generally scribble their resolutions, looking forward to another year of achieving more goals and milestones. For finance and accounting practitioners, the new year also marks the beginning of busier times ahead (especially those in companies that follow the calendar year as their accounting period), starting with the closing of accounting books and typically ending with the filing of the annual income tax return.

Wrapping up the year right

December is indeed the most festive period of the year. For most, it is an opportunity to take a much-needed break from work and spend some quality time with loved ones to celebrate Christmas and New Year. However, for us accountants, this marks the start of the busy season as yearend approaches. And so, before taxpayers all go on hiatus this holiday season, here are a few important reminders to ponder in areas of tax and payroll compliance.

The fundamentals of tax residency certificate issuance

Those who are familiar with tax treaty provisions know that they apply only to residents of countries which are parties to the treaty. Thus, the main documentary requirement to support eligibility for tax treaty relief is the proof of residency of the non-resident income-earner. More commonly known as a tax residency certificate (TRC), such proof of residency is a certification issued by the tax authority of the country of the income-earner, attesting that the latter is a resident of such country in the tax year concerned for purposes of the tax treaty being invoked.

Game changers in the digital economy’s taxation landscape

Generally, the power of taxation extends only as far as the territorial jurisdiction of a state. However, digitalization of the economy defies these boundaries as the goods and services of digital enterprises become accessible anywhere around the globe. Digitalization likewise reduces, if not eliminates, the need to maintain bricks-and-mortar shops in a specific market jurisdiction since the customers can easily conclude a transaction with just one click. This new normal in our way of doing business makes it harder for countries, including the Philippines, to impose the appropriate taxes on digital transactions, especially on those that do not have a physical presence in the archipelago.

At the moment: Know more about ATM fees

For those who dare to do their Christmas shopping at the eleventh hour, the ordeal of treading through Manila’s urban jungle is not for the faint-hearted. Lest one is not forewarned, it is wise to start Christmas shopping early, steering clear of the horrendous rush that can risk spoiling the holiday spirit.

ARTA: Path of unease to ease doing business

To enhance efficiency, the government has strengthened and broadened the Anti-Red Tape Act of 2007 by passing Republic Act (RA) 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018. The law took effect on June 17, 2018, intending to create programs that simplify requirements and streamline procedures in government transactions.

Expanded maternity leaves make a difference

In Manila, you can tell that the Christmas season has begun when street posts and trees are adorned with glittering lights; traffic gets heavier, shopping malls become busier; and Christmas songs start playing on the airwaves. For Filipinos, Christmas is the most awaited holiday of the year, anticipated as early as September. Such festivities, fortunately or otherwise, come with gift-giving traditions and family celebrations that often obligate people to dig deeper into their pockets.

What you need to know about the US Tax ID Number...

Comparable to our Bureau of Internal Revenue (BIR)-issued identification number, more popularly known as TIN, the US Internal Revenue Service (IRS) likewise issues an Individual Taxpayer Identification Number (ITIN), which is used as a tax processing number. The ITINs are issued to individuals who are required to obtain one under United States (US) tax law, but who do not have and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).

New guidelines for tax exemption of non-stock non-profits

It is the activities of a non-stock, nonprofit corporation that entitle it to a tax exemption.

Deferred income tax complications under CITIRA

Almost two years after the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) law, corporations are gearing up for the second package in the government’s ongoing tax reform program. House Bill (HB) No. 4157, or the Corporate Income Tax and Incentives Rationalization Act (CITIRA), was approved by the House of Representatives on Sept. 13. It aims to gradually lower the corporate income tax rate and rationalize corporate tax incentives.

How RPA aids in E2E Business Process Management

A powerful tool, a game-changing technology. Robotics Process Automation (RPA) has been a buzz word for years now. By definition, it’s a software robot that does what a user tells it to do – autonomously performing activities the same way a human user would on a machine. It is frequently used for manual, predictable and repetitive tasks to allow a more productive use of the process owner’s time. Its adoption has allowed companies to gain significant improvements in their operational metrics such as increased speed, quality, and functionality.

Substance over new BIR Form

It’s been more than a year since the effectivity of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, but the effects of its implementation are far from over. Just this year, the Bureau of Internal Revenue (BIR) released the following BIR Forms, labeled as January 2018 versions:

Guidelines for foreign workers in the Philippines

The Department of Tourism (DoT) reported a 7.59% increase in tourist arrivals to the Philippines in the first quarter. This increase translates to around 2,204,564 foreign visitors from January to March 2019.

Managing the import duty impact of CITIRA

The proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) or House Bill No. 4157, the successor to the TRABAHO bill, seeks to gradually cut the corporate income tax rate of 30% down to 20%, in exchange for the reduction of incentives granted by investment promotion agencies like the Philippine Economic Zone Authority (PEZA). CITIRA proposes to limit the perpetual grant of a preferential tax rate and to cap import duty exemptions to a maximum of five years. The House approved the bill on third and final reading in September, and when the Senate is ready with its own version, both chambers will sit down in bicameral session to harmonize both bills.

Re-establishment of the prior disclosure program

With the issuance of Executive Order No. 46 on Oct. 20, 2017, the duty of conducting the post clearance audit on imports was transferred to the Bureau of Customs (BoC) from the Department of Finance’s Fiscal Intelligence Unit. Along with the reversion of the Post Clearance Audit (previously known as the Post Entry Audit) to the BoC, it also brought back the Voluntary Disclosure Program (VDP) now called the Prior Disclosure Program (PDP).

The PWD 5% special discount

Persons with Disability (PWDs) have persistently expressed their need for inclusion and to be given equal footing in society. Recognizing the Constitutional mandate to protect their rights, the government enacted Republic Act (RA) Nos. 9442 and 10754, also known as The Magna Carta for Persons with Disability and An Act Expanding the Benefits and Privileges of Persons with Disability (PWD). The main objectives of these laws are to provide PWDs with the opportunity to participate in mainstream society and to support their total well-being.

Tax exemptions for nonprofit club fees

In 2012, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 35-2012, which clarified the taxability of clubs organized and operated exclusively for pleasure, recreation, and other nonprofit purposes.

Tax implications of PFRS 16 – Leases

The Philippine Financial Reporting Standard (PFRS) 16 on Leases became effective on Jan. 1. The new standard requires lessees to recognize all leases on their balance sheet except for relatively small-value assets and leases with terms of 12 months or less.

Double trouble? A drawback to a taxpayer’s double invoicing system

In taxation, it is a basic rule that every transaction must be supported by a valid and relevant proof to establish the existence of either a taxable or non-taxable event. However, no matter how many stacks of documents you keep, if these do not comply with the requirements of the tax laws, they will not serve their purpose.