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Tag: Taxwise or Otherwise

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.

Hey, my friend! Where’s your TIN?

When you overhear someone uttering the phrase “Hey, my friend,” it is often from friendly locals greeting visiting foreigners, much like the way Filipinos receive a warm “Hello buddy” or “Hi mate” when abroad. On a typical day at the Department of Labor and Employment (DoLE), Department of Justice (DoJ) or Bureau of Immigration (BI), foreigners intending to work in the Philippines receive a slightly different greeting -- “Where’s your TIN?” The question is a consequence of the Joint Guidelines signed by these agencies with the Bureau of Internal Revenue (BIR) on the issuance of work and employment permits to foreign nationals.

Tax amnesty for delinquency in document submission

Following the issuance of the Implementing Rules and Regulations (IRR) of the Tax Amnesty Act [i.e., Revenue Regulations (RR) No. 4-2019], the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 57-2019 to address frequently-asked questions concerning the Tax Amnesty Application on Tax Delinquencies.

When tax cannot follow accounting

Tax rules are constantly subject to change. Whether covered by new laws or new administrative issuances, these changes are deemed sound policy if they contribute to the efficiency and fairness of our tax system, are uncomplicated to comply with, and ultimately, serve the interest of both the citizenry and the government.

Salary differential under the new maternity leave law

Republic Act (RA) No. 11210, or the Expanded Maternity Leave Law, was signed by President Rodrigo R. Duterte on Feb. 20. Female workers in the private and public sectors can now enjoy a total of 105 days’ paid maternity benefit for live childbirth, regardless of the mode of delivery, with an option to extend for another 30 days without pay. Qualified solo parents are entitled to an additional 15 days’ paid leave. The law also provides 60 days’ paid leave for miscarriage and emergency termination of pregnancy.

Protesting a business tax assessment

A few weeks ago, my friends and I had the chance to visit the fascinating beaches of Boracay after it underwent rehabilitation for six months. I can still remember the last time I was there about two decades ago, recapturing the same feeling of awe when I first set foot on its powdery white sand. It took a while for me to return after reading news articles of how exploitation and profiteering of various business establishments had debased the pristine beauty of this island gem.

Withholding Taxes: Are you on top?

The withholding tax system, specifically that of the creditable/expanded withholding tax or “EWT,” is a means of approximating and collecting in advance the income tax liability of a payee or income earner for certain types of income payments.

Pag-IBIG, no more?

“No more to Pag-IBIG!” is the message of Circular No. 421 released in January by the Home Development Mutual Fund (HDMF), also known as Pag-IBIG. The Circular highlighted three points concerning foreign nationals who are working or assigned to work in the Philippines.

Story telling in data science

What is data storytelling?

Revisiting the rules on claiming withholding tax credits

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.

From foundation to innovation

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).

Business style clarified

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.

Governing data with control and growth mindset

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.

e-Invoicing: Time to get ready!

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.

PEZA sites and their registration requirements

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.

Are you letting your data govern you?

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.

Revisiting the TRABAHO (or no trabaho?) bill

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).

Not business as usual

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.

Embracing the digital financial world

The Philippine financial sector inevitably faces growing global competition as technological innovation moves forward.

It’s that time of year again

Another tax season is about to wrap up.

Fighting conflicts of interest

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%).

Dealing with fraud in the workplace

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.

How burdensome is the burden of proof?

“It is wrong, always, everywhere, and for anyone, to believe anything upon insufficient evidence.”

A new dawn of health care for every Filipino

“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.

Decoding the revised Corporation Code (Part II)

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.

Decoding the revised Corporation Code (Part I)

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.

The tax amnesty and its bittersweet Valentine plot twist

After almost two years, Republic Act No. 11213, or the Tax Amnesty Act, was finally signed by the President on Feb. 14.

Finding success in 2019

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.

Advertising and mass media in the digital age

“You have to have a dream, whether big or small. Then plan, focus, work hard and be very determined to achieve your goals” -- Henry Sy, Sr.

Do VAT-exempt medicines need the BIR’s prescription?

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.

Cheaper medicine for every Juan

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.

Conflict on the irrevocability rule

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.

Just one card

How many identification cards do you have? Which of those are accepted as proof of your identity by the government or private entities?

After the holidays: Some FX guidance for your travels back home

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.

US citizen-based taxation: A drawback for American expats

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.

Mentoring performance in your organization

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.

Defeated in victory

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.

Some ease on the tax clearance

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.

Cementing risk culture in the organization

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.

Plan ahead for a Merry Christmas

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.

Top withholding agents — In for the greater good

“Any change, even a change for the better, is always accompanied by drawbacks and discomforts.” -- Arnold Bennett