Creation and Revision of Alphanumeric Tax Code (ATC) for Pure Business

The CIR of the bureau has issued Revenue Memorandum Order (RMO) No. 67-2016 recently for the creation and modification of the Description of Alphanumeric Tax Code (ATC) for Pure Business. The main objective is to facilitate the proper identification of tax collection from Pure Business agreeable to the Sec. 32 (A) (2) of the National Internal Revenue Code (NIRC), and in connection with the Bureau's Tax Forms Enhancement Program.

The following ATC is hereby created:

 

 

This RMO shall take effect  immediately upon issuance dated  December 23, 2016.

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2067-2016.pdf of the full text of RMO No. 67-2016.

BIR Amends the Early Withdrawal Penalty of RA No. 9505

The Revenue Regulations (RR) No. 10-2016 dated December 27, 2016 has issued by the bureau recently amending Section 10.C. of RR No. 17-2001 Implementing the Early Withdrawal Penalty of Republic Act No. 9505, Otherwise Known as the Personal Equity and Retirement Account (PERA) Act of 2008.

The amendment shall read as follows:

SECTION 2. Amendment. - Section 10.C. of RR No. 17-2011 is hereby amended to read as follows:

"SECTION 10. PERA Distributions and Early Withdrawals. - 

XXX XXX XXX 

C. Imposition of Penalty. -- In case of Early Withdrawals not failing under any of the circumstances under Section 10 (B) above, the Contributor shall pay the following Early Withdrawal Penalties: 

(1) The five percent (5%) tax credit availed by the Contributors for the entire period of the PERA;

(2) A flat rate of twenty percent (20%) based on the total income earned by said account from the time of its opening/creation up to the time of withdrawal.

For full transparency, the Administrator shall fully disclose the above penalty arising from withdrawals to the contributor prior to account opening and shall likewise submit a quarterly report of such termination or withdrawal to the PERA Processing Office, within sixty (60) days following the end of the quarter of the date of termination or withdrawal.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202016/RR%20No.%2010-2016.pdf of the full text of RR No. 10-2016.

Availability of Stamp Verifier App to Authenticate Internal Revenue Stamps on Cigarettes

Revenue Memorandum Circular (RMC) No. 51-2016 was issued by the bureau to inform the public of the availability of a mobile application know as Stamp Verifier app, that will enable the user to determine the authenticity of the internal revenue stamps affixed to locally manufactured cigarettes intended for domestic consumption as well as imported cigarettes required under Revenue Regulations (RR) No. 7-2014 as amended by RR Nos. 8 and 9-2015.

The mobile application is a tool in identifying smuggled and counterfeit cigarettes proliferating in the country.

Stamp Verifier app is an Android and iOS application for BIR and public use to verify validity of QR coded of the stamp affixed on a cigarette pack. QR Code, one of the security features of the stamp, refers to a two-dimensional bar code that holds information relative to the the product to which the stamp is affixed, including a Unique Identifier Code (UIC) which is a code or serial number that represents an internal revenue stamp.

It is also stated the device requirements for the application and the procedures on how to download and install the Stamp Verifier app for Android and iOS. 

Moreover, it is also mentioned in the circular on how to use the Stamp Verifier app for Android and iOS.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2051-2016.pdf of the full text of RMC No. 51-2016.

Limitation on the Availability of Mobile Application on Non-Android Phones to Authenticate Internal Revenue Stamps

The bureau has issued Revenue Memorandum Circular (RMC) No. 132-2016 recently to inform all taxpayers and others concerned on the limitation of the availability of Mobile Application (particularly on non-android phones) affecting the authentication of internal revenue stamps on cigarettes as circularized under RMC No. 51-2016.

It is stated in the circular the limitation is not on the Stamp Verifier Application but rather on non-android phones. 

The new or updated version of the said application can now be downloaded in the Google Play Store.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20132-2016.pdf of the full text of RMC No. 132-2016.

Foreign Account Tax Compliance Act

Securities and Exchange Commission (SEC ) Memorandum Circular No. 8 was approved by the Commission En Banc in its meeting held on April 3, 2014. The objective of the circular is to guide non-bank financial institutions (NBFIs) that are covered by Foreign Account Tax Compliance Act (FATCA) regulations.

FATCA was enacted in 2010 by the United States (U. S.) Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. It was enacted to prevent off-shore tax abuses by U. S. taxpayers. FATCA requires, among others, the on-line registration of foreign financial institutions (FFIs) with the U. S. Internal Revenue Service (IRS) and their reporting to the IRS of information about financial accounts by FFIs in which U. S. taxpayers hold a substantial ownership interest. Under the Act, non-compliance therewith will result to the imposition of a 30 percent withholding tax on payments of U. S.-sourced income to FFIs.

The FFIs referred to in the FATCA pertain to financial institutions which are organized under the laws of a jurisdiction other than the United States of America.

The IRS has included the following FFIs in its non-exclusive list:

* Depository institutions

* Custodial institutions

* Investment entities

* Certain types of insurance companies that have cash value products or annuities

NBFIs that are licensed by the Commission are instructed to conduct the procedures stated in the circular.

Please refer http://www.sec.gov.ph/wp-content/uploads/2015/11/sec-memo-no.-8-s2014.pdf of the full text of SEC Circular No. 8 of the Foreign Account Tax Compliance Act.

List of Personal Equity Retirement Account (PERA) Unit Investment Trust Funds (UITFs) Duly Approved by the BSP

The BIR has issued Revenue Memorandum Circular (RMC) No. 131-2016 to inform the public of the List of Personal Equity Retirement Account (PERA) Unit Investment Trust Funds (UITFs) Duly Approved by the Bangko Sentral ng Pilipinas (BSP).

Further stated in the circular that under Rule 11 of the Rules and Regulations Implementing Republic Act No. 9505, otherwise known as the Personal Equity Retirement Account (PERA) Act of 2008, and Section 9 of Revenue Regulations (RR) No. 17-2011, all income earned from the investments and re-investments of PERA assets in PERA investment products shall be exempt from income taxes provided that said PERA investment products have been duly accredited by the concerned Regulatory Authority.

Below is the list of PERA Unit Investment Trust Funds (UITFs)/investment products duly approved/accredited by the Bangko Sentral ng Pilipinas (BSP):

The only income earned from the investments and re-investments of PERA assets in the above-enumerated PERA investment products shall be exempt from income taxes under Rule 11 of the Rule and Regulations Implementing investments and re-investing of PERA assets in government securities is likewise exempt from income taxes under the said provisions.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20131-2016.pdf of the full text of RMC No. 131-2016 and http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RA%2010693.pdf Annex A of Republic Act No. 10693.

Amendment for the Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms)

The BIR recently issued Revenue Regulations No. 9-2016 amending Section 4 of Revenue Regulations (RR) No. 6-2014, Coverage of Taxpayers Required to File Returns through Electronic Bureau of Internal Revenue Forms (eBIRForms).

Only those non-eFPS filers are covered by these Regulations:

1. Accredited Tax Agents/Practitioners and all its client-taxpayers;
2. Accredited Printers of Principal and Supplementary Receipts/Invoices;
3. One-Time Transaction (ONETT) taxpayers who are classified as real estate dealers/developers; those who are considered as habitually engaged in the sale of real property and regular taxpayers already covered by eBIRForms. Thus, taxpayers who are filing BIR Form No. 1706, 1707, 1800 and 2000-OT (for BIR Form Form No. 1706 only) are excluded in the mandatory coverage from using the eBIRForms;
4. Those who shall file a "No Payment Return".
5. Government-Owned-or-Controlled Corporations (GOCCs);
6. Local Government Units (LGUs), except barangays, and
7. Cooperatives registered with National Electrification Administration (NEA) and Local Water Utilities Administration (LWUA).

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202016/RR%20No.%209-2016.pdf

Tax Treatment and Appropriate Withholding Taxes on Income Payments by Departments and Agencies of the Government to Individuals Engaged under a Job Order or Contract of Service Arrangement

The bureau has issued Revenue Memorandum Circular (RMC) No. 130-2016 recently, to clarify the withholding taxes imposed on income payments made by departments and agencies of the government, including government owned and/or -controlled corporations and government financial institutions (GFIs) to individuals whose services are engaged under a contract of service or job order arrangement. 

In the circular, it clarifies the terms "Contract of Service" and "Job Order" that there's  no employer-employee relationship created under either a job order or contract of service, and that services rendered pursuant thereto shall not be considered as government service.

The clarifications are important for the tax treatment of remuneration/fees received by personnel under a job order or contract of for service:

l) Professionals Hired Under Contract For Services Or Job Order

 A. Creditable Withholding T'ax under Section 2.57.2(A) of Revenue Regulations (RR) No. 2-98, as amended. 

In general, individuals who follow an independent. trade, business, or profession, in which they offer their services to the public, are not employees. 

For professionals who are paid for the services they render, they are subject to a withholding tax rate of 10% or 150%, whichever is applicable, on their gross professional fee per Section 2.57.2(A) of RR. No. 2-98, as amended. 

The amount subject to withholding tax under this paragraph shall include not only fees. but also per diems. allowances and any other form of income payments not subject to withholding tax on compensation. 

2. Non-Professionals Hired Under Contract For Services Or Job Order

A. Income Tax: No creditable withholding tax

Income payments to individuals who are not professionals under a contract for service or job order basis shall be not subject to creditable withholding tax rates provided by Section 2.57.2 of RR No. 2-98, as amended. However, such income payments shall be reported as income subject to income tax under Section 24 of the Tax Code of 1997, as amended, in relation to Section 51 of the same Tax Code.

With regards to the Tax Treatment Common to Professionals and Non-Professionals Hired Under Contract for Services or Job Order Basis and full text of the RMC please refer: 

http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20130-2016.pdf 

Why Sin Tax Reform Law Should Be Fully Implemented?

Republic Act 10351, or the Sin Tax Reform Law, is primarily a health measure with revenue implications, but more fundamentally, it is a good governance measure. The Sin Tax Law helps finance the Universal Health Care program of the government, simplified the current excise tax system on alcohol and tobacco products and fixed long standing structural weaknesses, and addresses public health issues relating to alcohol and tobacco consumption.

Recently, the Department of Finance (DOF) urges Congress to let sin tax law 'run its course'. Finance Secretary Carlos Dominguez III has encourage the congressional oversight committee on the Sin Tax Reform Act to start reviewing the revenue and health impact of the tax rates mandated under this law to determine what measures should be undertaken by the Legislature once the statute matures in 2017. He said that the the Sin Tax Reform Act is a very good law and it should be fully implemented and allowed to run its course.

Besides, RA 10351 mandates that the current two-tiered tax rate merge into a unitary tax rate of P30 per cigarette pack for all brands starting Jan. 1, 2017, and the rate indexed to inflation by increasing it to 4 percent annually.

Dominguez also added that DOF expects “this review to occur” as mandated by law and for it to “be done well to inform [us] what we should be doing in the future.”

SOURCE: http://www.dof.gov.ph/index.php/dof-urges-congress-to-let-sin-tax-law-run-its-course/ and http://www.dof.gov.ph/index.php/advocacies/sin-tax-reform/

Formula and Computation of 13th Month Pay

"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year. The minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances, profit-sharing payments, cash equivalent of unused vacation and sick leave credits, overtime pay, premium pay, night shift differential, holiday pay, and all allowances and monetary benefits which are not considered, or integrated as part of the regular or basic salary of the employee.

FORMULA AND COMPUTATION OF 13TH MONTH PAY

The 13th  month pay shall be paid not later than December 24 of every year. An employer, however, may give to his or her employees one-half (1/2) of the 13th month pay before the opening of the regular school year and the remaining half on or before December 24 of every year.

The BIR has issued Revenue Regulations No. 3-2015 implementing the Provisions of Republic Act No. 10653. "An act Adjusting the 13th Month Pay and Other Benefits Ceiling Excluded from the Computation of Gross Income for Purposes of Income Taxation.

Amending the provision on Revenue Regulations No. 2-98 - The amount of Thirty Thousand Pesos (P30,000.00), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computations of revenue Regulations (RR) No. 2-98, as amended, is hereby increased to "Eighty Two Thousand Pesos (P82,000.00)", pursuant to the provisions of RA No. 10653.

SOURCE: http://www.dole.gov.ph/files/LA%20012-13.pdf;  http://www.gov.ph/2015/02/12/republic-act-no-10653/ and http://www.gov.ph/1975/12/16/presidential-decree-no-851-s-1975/ and http://philippinetaxtalk.blogspot.com/2015/03/republic-act-no-10653-increase-of-total.html 

Lifting of Suspension of Effectivity of Certain Revenue Issuances under RMC No. 127-2016

The bureau just issued Revenue Memorandum Circular (RMC) No. 127-2016 for the suspension of effectivity of all  revenue issuances promulgated under RMC No. 69-2016 dated July 1, 2016 within the period covering June 1 to 30, 2016.

 

The suspension of the following revenue issuances is hereby lifted:

 

RMC / Title/Description of RMC

 

RMC No. 61-2016 - Prescribing Policies and Guidelines for Accounting and Recording Transactions Involving "Netting" or "Offsetting".

 

RMC No. 62-2016 - Clarification on Property Tax Treatment of Passed-on Gross Receipts Tax

 

The RMC is dated November 15, 2016 and the lifting of suspension of the effectivity of the foregoing revenue issuances the same shall be effective immediately.

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20127-2016.pdf of the full text of RMC No. 127-2016.

Implement Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs ACT"

The bureau has issued Revenue Memorandum Circular (RMC) No. 124-2016 for the information and guidance of all internal revenue officials, employees and others concerned with regards to the Implementing Rules and Regulations of Republic Act No. 10693 otherwise known as the "Microfinance NGOs Act."

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20124-2016.pdf of the full text of RMC No. 124-2016.

BIR Registration Forms for the Implementation of Taxpayer Registration System (TRS) under Electronic Tax Information System (eTIS-1)

Revenue Memorandum Circular (RMC) No. 9-2015 was issued by the bureau to inform taxpayers and others concerned on the availability of the  enhanced version (November 2014 ENCS) of the registration forms applicable only to the District Offices covered by the Systems Roll-out of Taxpayer Registration System (TRS) under the Electronic Tax Information System (eTIS-1), as follows:

 

BIR Form No. / Description

 

1901 - Application for Registration for Self-Employed (Single Proprietor/ Professional), Mixed Income Individuals, Marginal Income Earner, Non-resident Alien Engaged in trade/ Business, Estate and Trust

 

1902 - Application for Registration for Individuals Earning Purely Compensation Income (Local Employee and Resident Alien Employee)

 

1903 - Application for Registration for Corporations, Partnerships (Taxable/Non-taxable), including Government Agencies and Instrumentalities (GAIs), Local Government Units (LGUs), Cooperatives and Associations

 

1904 - Application for Registration for One-time Taxpayer/Person Registering under E. O. 98 and Foreign National

 

1905 - Application for Registration Information Update/Correction/Cancellation

 

2305 - Certificate of Update of Exemption and of Employer's and Employee's Information

 

Please refer:  http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%209-2015.pdf of the full text of RMC No. 9-2015.

 

 

Gov't Debt Ratio and BIR's Tax Effort Improves

Did you know that the Gov't debt ratio improves in September?

According to the news released by the Department of Finance, the Gov’t debt ratio improves in September. The share of debt to the country’s economy slid further as of September this year as the gross domestic product (GDP) continued to grow faster than government liabilities, latest data from the Department of Finance (DOF) showed.

Following a series of liability management measures of the DOF, Finance Undersecretary Gil Beltran reported that the government debt-to-GDP ratio further improved to 44.2 percent by end-September from 44.7 percent in the same month last year.

“Debt management measures led to the continuing drop in the debt-GDP ratio to 44.2 percent as of September 2016, an improvement from end-2015 ratio of 44.7 percent,” Beltran, who is the DOF’s chief economist, said in a report to Finance Secretary Carlos Dominguez III.

The debt-to-GDP ratio is projected to sustain the yearly decline until falling to about 35 percent by the end of the Duterte administration.

The national government debt as a proportion of GDP had continually dropped from 52.4 percent in 2010 to 44.7 percent in 2015.

“Strong fiscal fundamentals will continue to underpin robust economic growth during the rest of the year,” said Beltran.

The Bureau of Internal Revenue’s tax effort improved to 11.31 percent from 11.27 percent, while the Bureau of Customs’ figure slightly fell to 2.78 percent from 2.81 percent.

Source: http://www.dof.gov.ph/index.php/govt-debt-ratio-improves-in-september/

BIR signs Memorandum of Agreement (MOA) with DTI for faster Tax Identification Number (TIN) issuance

As part of the bureau's campaign of "ease of doing business in the Philippines", the Bureau of Internal Revenue (BIR) and the Department of Trade and Industry (DTI) agreed to collaborate together to facilitate the issuance of Taxpayer Identification Number (TIN) to registering small and medium domestic businesses.

The Memorandum of Agreement (MOA) was signed by Commissioner Caesar R. Dulay (for the BIR) and Secretary Ramon M. Lopez (for the DTI) on October 10, 2016 at the Executive Conference Room in the BIR National Office.

The Commissioner mentioned during the open forum about the BIR's issuance of a Revenue Memorandum Circular (RMC) No. 93-2016, which streamlined the business registration process and documentary requirements.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_5/2016%20BIR%20Monitor/v18n10%20high%20res.pdf of the full text of BIR News.

Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos

The bureau has issued Revenue Memorandum Circular (RMC) No. 106-2016 publishing the Full Tex of Memorandum Circular No. 06, Entitled "Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos".

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20106-2016.pdf of the full text of  Memorandum Circular No. 06 dated September 20, 2016.

Procedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners

Revenue Memorandum Order (RMO) No. 27-2016 was issued by the bureau relative to the Procedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners from sources with the Philippines.

This Order seeks to provide for the new procedures in claiming preferential tax treaty benefits on dividend, interest and royalty income of nonresidents pursuant to effective tax treaties, thereby amending for this purpose, RMO No. 72-2010.

The foregoing objectives are achieved through:

a. Full disclosure of withholding tax agents on income derived by nonresidents by filing accurate and timely BIR Forms1601-F and1604-CF;

b. Mandatory audit investigation for final withholding tax payments on income of nonresidents deriving dividends, interest and royalty income in the Philippines; and

c. Enhancing BIR Forms 1601-F and 1604-CF.

Nonresidents - are not residents of the Philippines and not citizens thereof. For purposes of this Order they are classified into:

a. Nonresident Alien not engaged in trade or business (NANETB) -The aggregate period of stay in the Philippines does not exceed 180 days during any calendar year.

b. Nonresident foreign corporations (NRFC) - are corporations organized under foreign laws and not engaged in trade or business in the Philippines.

Beneficial Owner - refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. lt also includes those persons who exercise ultimate effective control over a legal person or arrangement.3

The preferential treaty rated for dividends, interests and royalties are granted outright by withholding final taxes at applicable treaty rates as shown in Annex A http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2027-2016%20Annex%20A.PDF of this RMO.

Guidelines for the Availment of Preferential Treaty Rates 

1. A duly accomplished BIR Form No. 1601-F and 1604-CF 1904-shall be filed before the appropriate RDO where the domestic withholding agents of nonresidents are registered. All particulars in the form must be properly filled up and timely filed in accordance with the provisions of the National lnternal Revenue Code (NIRC) of 1997, as amended. 

2. Payment of pertinent final taxes due shall be made to Authorized Agent Banks.

3. ln the event of audit investigation, withholding agents shall keep the following supporting documents in the records of the office pursuant to Revenue Regulations (RR) No. 5-20144 for substantiation of the claim for preferential treaty rates: 

a. Consularized Proof of Residency; 

b. For Dividends - 

1. Certification from Corporate Secretary. original copy of a duly notarized certificate executed by the corporate secretary of the domestic corporation showing all the following information: 

i. Details of dividend declaration (with attached related Board Resolution); 

ii. Nurnber, value and type of shares of the nonresident income earner as of the date of record/transaction, and as of the date of payment of the subject dividends; 

iii. Percentage of ownership of the nonresident income earner as of the date of record/transaction, and as of the date of the payment of subject dividends; 

iv. Acquisition date(s) of the subject shares; and 

v. Mode of acquisition of the subject shares.  

2. Board of lnvestments (BOl) Registration, if applicable 

Certified copy of Board of Investments registration of the payor of the interest, including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

c. For lnterest - original or certified copy of the notarized contract of loan or loan agreement. Board of lnvestments (BOl) Registration, if applicable certified copy of Board of lnvestments registration of the payor of the interest, including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

d. For Royalties - 

1. original or certified copy of the duly notarized Royalty Agreement, Technology Transfer Agreement, or Licensing Agreement; 

2. When applicable, 

i. Certified copy of Board of lnvestments registration of the payor of the royalties, including a Sworn Statement that such registration has not been cancelled at the time of the transaction; 

ii. A certified copy of the registration of the payor of the income or withholding agent with the Philippine Economic Zone Authority (PEZA) of the payor of the royalties including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

iii. Certified copy of lntellectual Property Office (IPO) registration. 

The BIR reserves the right to request other additional documents in the the course of audit. 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2027-2016.pdf of the full text of RMO No. 27-2016.

Procedures Relative to Issuance of Subpoena Duces Tecum, and Submission of Reports of Investigation/Verification on Tax Cases/Dockets

Recently, the bureau has issued Revenue Memorandum Circular (RMC) No. 111-2016 to clarify clarify and accordingly reiterate the procedures relative issuance of Subpoena Duces Tecum (SDT), and submission of reports of investigation/verification on tax cases/dockets to the reviewing Office.

It is stated in the circular:

One of the powers of the Commissioner under Section 6 of title National Internal Revenue Code of 1997 ("Tax Code"), as amended, is to authorize the examination of any taxpayer for the purpose of assessing the taxpayer's correct internal revenue tax liabilities. However, the issuance of an assessment must be made, generally, within the three (3)-year prescriptive period or, exceptionally, within the ten (10)-year' prescriptive period pursuant to Sections 203 and 222, respectively, of the Tax Code, as amended.

In this statutory context of prescription, when the taxpayer fails to present or submit his books of accounts and/or pertinent records, or to account for all sales/receipts/invoices and to substantiate all or any of the deductions, exemptions or credits claimed in his return, there are instances when jeopardy assessments, issued basically to comply with the prescriptive period, are resorted to by our Revenue Officers. To prevent the issuance of such assessments, the procedures for the issuance and enforcement of SDTs, as prescribed under Revenue Memorandum Order No. 10-2013, as amended by RMO No.8-2014, must best strictly observed by all concerned to compel taxpayers to submit or otherwise present the required books, records and documents.

Likewise, to ensure that the Bureau is not deprived of its right to assess and collect the correct amount of tax or any deficiency taxes so assessed, a tax docket with deficiency tax collections/assessments shall be transmitted by the investigating office to the reviewing/approving official not later than sixth months prior to prescription date (e. g., if the income tax case will prescribe on April 15, 2017, the docket should have been transmitted on October 15, 2016). The reviewing/approving official shall not accept any tax docket alter the aforesaid period, unless a duly accomplished "waiver form" is attached thereto.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20111-2016.pdf of the full text of RMC No. 111-2016.

Amending Certain Provision of RMO No. 19-2015 Pertaining to Audit Policies

Revenue Memorandum Order (RMO) No. 64-2016 was recently issued by the bureau  to amend the policies and procedures requiring the approval of the Commissioner of Internal Revenue before a taxpayer may be audited for the (3rd) time and the removal of the fifty (50%) surcharge.

AMENDMENT

For purposes of auditing a taxpayer for the three succeeding years, the policy stated in Sec. lll No.4 of RMO NO. 19-2015 is hereby amended to read as follows: 

"lf the taxpayer has been audited for the last two (2) years and has been selected for audit an the current or third (3rd ) year, the RDO/LTD/LTAD shall encode right away the requested audit of the subject taxpayer in eLAMS/ eTIS-CMS which shall be approved by the Regional Director/ Assistant Commissioner who heads the investigating office. The Selection Code shall depend on the reason why the taxpayer has been selected." 

"Then deficiency assessment on these cases shall only be imposed with twenty-five percent (25%) surcharge unless the under declaration of income or overstatement oi expenses/ deductions reaches 30% or more which shall be imposed with fifty percent (50%) surcharge." 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2064-2016.pdf of RMO No. 64-2016

Rules and Regulations Implementing the Tax Incentives Available to Tourism Enterprises Duly Registered with the Tourism Enterprises

The bureau recently issued Revenue Regulations (RR) No. 7-2016 dated November 15, 2016 implementing the Tax Incentives Available to Tourism Enterprises Duly Registered with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) under Republic Act No. 9593 otherwise known as the Tourism Act of 2009.

In the regulations, it also stated the Terms,  Fiscal Incentives of Tourism Enterprises Within TEs, Fiscal Incentives of Tourism Enterprises outside TEZs, Availment of Tax Incentives, Withholding Taxes, TEZs not Treated as Separate Customs Territories, Maintenance of Separate Books of Account for each TIEZA-registered Activity, Compliance with RA No. 10708, No Double Availment of Incentives Schemes, Period of Availment and Payment of Back Taxes.

These regulations shall take effect after fifteen (15) days following publication in the Official Gazette or a newspaper of general circulation, whichever comes first.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202016/RR%20No.%207-2016.pdf of the full text of RR No. 7-2016.

Non-Suspension of All Audit and other Field Operations of the BIR During Christmas Season

In connection with the thrust of the Bureau of Internal Revenue (BIR) to intensify taxpayer compliance and increase revenue collections, all field audit and other field operations including all enforcement activities shall continue during this holiday season.

 

The CIR is also reminded that all efforts should be directed to ensure maximum revenue collection throughout the year.

 

The Revenue Memorandum Circular (RMC) No. 109-2016 shall take effect immediately.

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20109-2016.pdf of the full text of RMC No. 109-2016.

Streamlining the Business Registration Process and Documentary Requirements for the Registration of Each Type of Application

The bureau has issued Revenue Memorandum Circular (RMC) No. 93-2016  to streamline the Business Registration Process and Documentary Requirements by further Amending the List of Documentary Requirements for the Registration of Each Type of Application under "Annex A" of Revenue Regulations (RR) No. 7-2012, as Clarified Under RMC No. 70-2013 and RMC No. 37-2016.

 

The revised checklist of documentary requirements herein attached as Annexes "A1-A11" included the acknowledgement of the applicant on the identified lacking documents for completion to facilitate the processing of application.

 

Steps for the registration of business in the Bureau of Internal Revenue to be implemented as follows:

 

STEP/PROCESS

 

1. Apply for Registration [with complete documentary requirements (Annexes "A1-A11")]

2. Pay Annual Registration Fee [thru Mobile Revenue Collection Officers System (mRCOs), Authorized Agent Banks, Revenue Collection Officer or GCash]

3. Get Certificate of Registration with auto-approved Authority to Print (ATP) for initial principal receipts/invoices.

 

The auto-approved ATP for initial principal receipts/invoices is only applicable to newly registered business taxpayer. However, subsequent application for receipts/invoices shall be processed in accordance with the procedures specified under existing issuances.

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2093-2016.pdf 

Proper Due Dates for Filing of Returns and Payment of Taxes for the Purpose of Imposition of Penalties for Late Filing and/or Late Payment

Revenue Memorandum Circular (RMC) No. 65-2016 was issued by the bureau to clarify the rules on appropriate due date of filing of return and payment of taxes when the exact due dates fall on a Saturday, Sunday, or a holiday both for electronic and manual filers and payers of taxes., for the purpose of imposition of penalties for Late Filing and/or Late Payment.

A. For Taxpayers under the Electronic Filing and Payment Svstem (EFPS)

For taxpayers mandatorily covered by the EFPS rules and those taxpayers registered and enrolled under the EFPS, the due date of , filing of return and the payment of taxes shall be the exact dates stated in the law or regulations for filing or payment. However, if the' deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing and payment shall fall on the next business day.

Transmission of electronic returns and electronic payment must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for the filing and payment of the relevant return. Otherwise, the same shall be considered to have been filed late or paid late, and thus shall be subject to the appropriate penalty for late filing/late payment.

In case of dispute, the taxpayer shall present the written advice of the BIR that its electronic system for filing and payment of taxes is down or unavailable, which shall be issued by the BIR everytime its electronic system for filing and payment of taxes is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns and/or pay the taxes on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns and/or pay the taxes, or for late filing/late payment whichever is applicable.

B. For Taxpayers under the Online eBlR Form System

For those taxpayers covered by eFiling of Return under the Online eBlR Forms System and those taxpayers registered and enrolled under the Online eBlR Forms System, the due date of filing of return shall be the exact dates stated in the law or regulations for filing of said return. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing shall fall on the next business day.

Transmission of electronic returns must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for'the filing of the relevant return. Otherwise, the same shall be considered to have been filed late and thus shall be subject to the appropriate penalty for late filing.

In case of dispute, the taxpayer shall present the written advice of the BIR that its online eBlR Forms System ' is down or unavailable, which shall be issued by the BIR everytime its Online eBlR Forms System is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and ' thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns or for late filing whichever is applicable.

The due date for the payment of taxes due for the returns filed under the Online eBlR Forms System shall be made on the exact dates stated in the law or regulations for payment thereof. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the payment thereof shall fall on the next business day, or on the same deadline for the filing of the returns under the Online eBlR Forms System.

C. For Taxpayers who are Manual Filers or are using the Offline eBlR Forms Package

Taxpayers not mandatorily covered or enrolled under either the EFPS or the Online eBlR Form System or are users of the Offline eBlR Form Package are classified as Manual Filers. Manual filers are required to file and pay on or before the due date stated in the law or regulation for filing returns and/or payment of taxes due thereon, however, if such due date falls on a Saturday, Sunday or a holiday the act of filing and payment shall be done on the next business day. Any returns filed and/or tax paid beyond the dates stated in this paragraph, shall be subject to the appropriate penalty for none filing/payment, or late filing/payment, whichever is applicable.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2065-2016.pdf 

Clarification on the Requirement of Taxpayer Identification Number (TIN) for Members of Cooperatives Applying for Certificate of Tax Exemption (CTE)

Did you know that the bureau has issued Revenue Memorandum Circular (RMC) No. 102-2016 to clarify the Requirement of Taxpayer Identification Number (TIN) for Members of Cooperatives Applying for Certificate of Tax Exemption (CTE)?

This is relative to Revenue Memorandum Order (RMO) No. 76-2010 and RMC No. 81-2010. RMO No. 076-2010 (Prescribing the Policies and Guidelines in the Issuance of Certificate of Tax Exemption of Cooperatives and the Monitoring Thereof) requires, for the issuance of the Certificate of Tax Exemption (CTE), that cooperatives submit, among others, an Original Copy of Certification under Oath of the List of Cooperative Members with their respective Taxpayer Identification Number (TIN) and their capital contributions, prepared by authorized official of the Cooperative. The above requirement has been relaxed by RMC No. 81-2010 which allowed, in lieu thereof, the submission of Certified Photocopy of the List of Cooperative Members with their Respective Capital Contributions.

Click: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/Annex%20A_RMC%20102-2016.pdf to download the BIR Form No. 1945 Application for Certificate of Tax Exemption for Cooperatives.

Click: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/Annex%20B_RMC%20102-2016.pdf to download BIR Form No. 1904 Application for Registration.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20102-2016.pdf of the full text of RMC No. 102-2016.

Submission of Mandatory Documentary Requirements for One-time Transactions Involving Transfer of Real Property

The bureau recently issued Revenue Memorandum Circular (RMC) No. 105-2016 amending certain provisions of RMC No. 76-2007, in relation to the Submission of Mandatory Documentary Requirements for One-time Transactions Involving Transfer of Real Property.

 

Item No. 2 of RMC No. 76-2007 shall no longer be required in the processing of one-time transactions involving transfer of real property and the issuance of electronic Certificate Authorizing Registration (eCAR):

 

"2. Certified true copy of the original CAR (copy of the Registry of Deeds) pertaining to the transfer of property prior to the issuance of Original/Transfer Certificate of Title (OCT/TCT) or Condominium Certificate of Title (CCT) which is the subject of the current sale/transfer, or certification issued by the Registry of Deeds indicating the serial number of the CAR, date of issuance of CAR, the Revenue District Office Number of the district office that issued of the CAR, the name of the Revenue District Officer who signed the CAR, the type of taxes paid and the amount of payment per tax type.

 

The aforementioned document shall be submitted for OCT/TCT/CCT issued starting 2007, in case the Register of Deeds fails to annotate the information contained in the CAR as prescribed under Section 5 of Revenue Regulations No. 24-2002 dated November 15, 2002 and Section 1 of Memorandum Order No. 233 dated December 11, 2006 issued by President Gloria Macapagal-Arroyo, as circularized in Revenue Memorandum Circular No. 3-2007."

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No.%20105-2016.pdf of the full text of RMC No. 105-2016.

Validity of eCARs reckoned from the Date of Issuance for Purposes of Presenting the Same to Registry of Deeds

The bureau  has issued Revenue Memorandum Order (RMO) No. 55-2016 amending  certain provisions of RMO No. 15-2003, as amended by RMO No. 22-2016, relative to the Processing of Electronic Certificate Authorizing Registration (eCAR) and its Signatories.

It is stated in the RMO under Section III Policies and Guidelines, Item No. 6 of RMO No. 22-2016 is likewise amended to read as follows:

"6. eCARs shall have a validity of three (3) years reckoned from the date of issuance for purposes of presenting the same to the Registry of Deeds. Xxx. The LT Division Chief/RDOs or ARDOs shall issue a new eCAR to the taxpayer in case the latter fails to present the eCAR to the Registry of Deeds within the three (3) year validity period. Xxx."

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2055-2016.pdf of the full text of RMO No. 55-2016.

Use of Non-Thermal Paper and for the Procurement and Reconfiguration of lnformation on All Cash Register Machines (CRMs)/PointOf-Sales (POS) Machines and Other lnvoice/Receipt Generating Machine/ Software

The bureau recently issued Revenue Regulations (RR) No. 6-2016 amending further Sections 4 and 8 of Revenue Regulations (RR) No. 10-2015, as amended by RR Nos. 12-2015 and 14-2015, extending the deadline prescribed for the Use of Non-Thermal Paper and for the Procurement and Reconfiguration of lnformation on All Cash Register Machines (CRMs)/PointOf-Sales (POS) Machines and Other lnvoice/Receipt Generating Machine/ Software 

SECTION 1. SCOPE. - Pursuant to the provisions of Section 244, in relation to Sections 203, 222 and 235 of the National lnternal Revenue Code (NIRC) of 1997, as amended, these Regulations is hereby promulgated to further amend Sections 4 and 8 of RR No. 10-2015, as amended by RR Nos. 12-2015 and 14-2015, extending the prescribed deadline for the use of Nonthermal paper and for the procurement and reconfiguration of information on all CRM/POS and other invoice/receipt- generating machine/software. 

SECTTON 2. AMENDMENTS. - Sections 4 and 8 of RR No. 10-2015, are hereby amended to read as follows: 

"SECTION 4. EXISTING REGISTERED TAXPAYERS WITH CRM/POS/OTHER SIMILAR MACHINE/SOFTWARE USING THERMAL PAPER. - Xxx xxx xxx. Accordingly, all existing taxpayers with CRM/POS/other similar machines/software using thermal paper for their daily transactions are subject to the herein prescribed staggered implementation dates, to wit: 

For those subject machines registered starting: Staggered lmplementation Dates: 

July 1, 2014 onwards On or before July 1, 2018 

July 1, 2013 - June 30, 2014 On or before July 1,2017 

Prior July 1,2012 - June 30, 2013 

On or before December 31, 2016 xxx xxx xxx." "SECTlON 8. TRANSITORY PROVISIONS. - ln order to provide ample time in procuring, reconfiguring machines and systems, to comply with Section 5, adjustments shall be undertaken on or before December 3l, 2016. Any extension due to enhancements of systems required to be undertaken abroad shall seek the approval from the concerned Regional Director or ACIR, Large Taxpayer Service which shall not be longer than six (6) months from the effectivity of these Regulations." 

SECTION 3. EFFECTIVITY. -These Regulations shalltake effect fifteen (15) days after its publication in a newspaper of general circulation. 

Issue-Based Audit Under the VAT Audit Program

The bureau recently issued Revenue Memorandum Order No. 59-2016 dated September 19, 2016 with regards to the Issue-Based Audit Under the VAT Audit Program.

I. Objectives 
1. To increase audit coverage of VAT-registered taxpayers;

2. To introduce issue-based audit as part of the VAT Audit Program (VAP);

3. To facilitate completion and reporting of cases under the VAP; and

4. To prescribe policies for issue-based audits under VAP.

II. Coverage and Selection Criteria

This order shall cover the issue-based audit/investigation of VAT liabilities of VAT taxpayers by the VAT Audit Section in the Assessment Division of Revenue Regional Offices for taxable quarter(s) of 2015 and thereafter. Cases for issue-based audit shall be selected following these criteria:

A. Mandatory Case:

1. Taxpayers with VAT returns reflecting erroneous input tax carry-over (Selection Code: ITCO)

B. Priority Cases:

1. Taxpayers whose VAT compliance is below the established industry benchmarks (Selection Code: BENI)

2. Taxpayers with zero-rated and/or exempt sales due to availment of tax incentives or exemptions (Selection Code: ZEXI)

3. Taxpayers engaged in business where 80%, more or less, of their transactions are on a cash basis and whose purchases of goods and services do not generate substantial amount of input tax, such as restaurants, remittance/payment centers, etc. (Selection Code: CASI)

4. Taxpayers with VATable transactions which were subjected to expanded withholding tax but with no VAT remittance (Based on BIR Form Nos. 2550Q and 1604) (Selection Code: VTXI)

5. Taxpayers who failed to remit/declare VAT due from purchase of services from non-resident aliens (Based on BIR Form Nos. 2550Q and 1600) (Selection Code: NRAI)

6. Taxpayers who fail to declare gross sales/receipts subjected to VAT withholding on purchases of goods/services with waiver of privilege to claim input tax credit [creditable]; (Based on BIR Form Nos. 2550Q and 1600) (Selection Code: VTWI)

7. Taxpayers whose gross sales/receipts per income tax returns are greater than gross sales/receipts declared per VAT returns (Selection Code: GSRI)

8. Taxpayers filing percentage tax returns whose gross sales/receipts exceed the VAT threshold (Selection Code: PERI)

C. Exceptions: 

The following VAT returns shall be excluded from the coverage of this Order:

1. Claims for issuance of Tax Credit Certificates/refunds; and

2. VAT returns selected for audit by the National Investigation Division under the Enforcement and Advocacy Service and by the Regional Investigation Division of the Revenue Regional Offices.

III. Policies and Procedures 
1. Only Revenue Officers – Assessment (ROs - A) in the VAT Audit Section of the Assessment Division shall be authorized to conduct audit/investigation of VAT returns, whether in principal or assisting capacity.

2. The VAT Audit Section Chief shall identify VAT taxpayers for issue-based audit in accordance with the selection criteria prescribed in this Order for approval of the Regional Director (RD).

3. The Electronic Letter of Authority Monitoring System (eLAMS) or eTIS -CMS, where applicable, shall be used in the request, approval and issuance of eLAs, as well as in updating the status of the same.

4. The Assistant Commissioner – Assessment Service (ACIR – AS) may review and evaluate the approved list, which may be retrieved from the eLAMS or eTIS - CMS, to determine compliance with the guidelines set in selecting the VAT taxpayers for audit and in the assignment of cases. If upon evaluation, it is found out that a violation has been committed, the ACIR-AS thru the Deputy Commissioner-Operations Group (DCIR-OG), may recommend to the Commissioner the cancellation of the eLA and the institution of administrative proceedings against the erring official and/or employee.

5. One (1) eLA shall be issued for each taxable quarter or for two (2) quarters by the RD upon recommendation of the VAT Audit Section Chief thru the Chief, Assessment Division.

6. If an eLA has been issued under the VAP even for one (1) quarter or for two (2) quarters only, and subsequently, the same taxpayer becomes a candidate for regular audit in the Revenue District Office (RDO) based on the selection criteria prescribed in the BIR Audit Program or memorandum order issued for the purpose, the eLA covering the same taxable year for regular audit of the RDO should not include the VAT liability.

7. Each RO in the VAT Audit Section shall be required to conduct issue-based audit on ten (10) out of the maximum workload of thirty (30) cases, not counting the mandatory ITCO cases. Thus, each RO shall be assigned 10 issue-based cases based on the selection criteria prescribed in this Order and 20 regular cases based on the selection criteria identified in RMO No. 20-2012 at a given time, subject to replenishment upon the submission of the report of investigation/closure of each case. However, no RO shall be assigned the maximum workload of 10 issue-based and 20 regular cases if there are other ROs who have not been assigned the same number of cases.

8. All pending cases covered by eLAs, including cases covered by Memorandum of Assignment (cases for reinvestigation) as of the effectivity of this Order shall be counted as part of the initial workload of the RO. Thus, no new case pursuant to this Order shall be assigned to the concerned Revenue Officer until such time that his workload shall fall below the maximum workload.

9. Before the service of the eLA, the RO assigned shall perform audit analysis and prepare an Audit Plan (Annex "A") for each case to provide an audit trail for the scope of the audit and to ensure that the audit activity planned, and books and records to be examined will address the identified risks.

10. The RO shall serve, together with the electronic Letter of Authority (eLA), the Notice for the Presentation/Submission of Documents/Records (Annex "B") with checklist of requirements to the taxpayers. The concerned taxpayer shall be given ten (10) days from receipt of the Notice to present/submit the required documents and records.

If he/it does not comply with the Notice, a reminder letter (Annex "C") shall be sent immediately after the lapse of the ten-day period before a Subpoena Duces Tecum (SDT) can be recommended for issuance. No further extension for the presentation/submission of documents and records shall be allowed.

11. To facilitate the reporting of VAT audit cases, ROs shall perform only the audit procedures under Revenue Audit Memorandum Order (RAMO) No. 1-99, VAT Audit Manual, and in other revenue issuances applicable to risks identified for case selection and as a result of pre-audit analysis. Likewise, only documentary requirements prescribed in RMO No. 53-98, as amended by RMO Nos. 16-2007, 22-2007 and Revenue Memorandum Circular No. 29-2009 relating to big ticket items, that are applicable and relevant to the case, shall be attached to the docket.

Nevertheless, the RO is not precluded from applying the relevant policies and procedures of the aforementioned revenue issuances depending on the risks/areas of assessment found.

12. Third Party Information (TPI) available in the National Office shall be utilized in the audit of VAT taxpayers. For expediency, the VAT Audit Section Chief need not prepare the required Request Form. Upon receipt of the List of Selected Taxpayers for VAT Audit with eLAs Issued from the Assessment Division, the AS shall furnish the Audit Information Tax Exemption and Incentives Division (AITEID) with a copy of the said list. Subsequently, the AITEID shall provide the concerned VAT Audit Section of the Assessment Division with the preprocessed RELIEF data within five (5) days from receipt of the list.

The VAT Audit Section Chief shall submit reports prescribed under existing revenue issuances on the results of the utilization of the preprocessed RELIEF data.

13. Revenue Officers shall finish their cases and submit reports of investigation within sixty (60) and ninety (90) days from the date of issuance of eLAs covering one (1) and two (2) quarters, respectively. If the RO cannot submit the report of investigation within the prescribed audit period, he shall prepare a progress report stating therein the reason for the delay to be noted by the VAT Audit Section Chief who shall furnish a copy thereof to the Regional Director thru the Chief, Assessment Division prior to the lapse of the 60 or 90 day period, as the case may be.

14. Based on the audit findings or violations uncovered during the audit, the VAT Audit Section Chief may recommend surveillance, closure or other enforcement activity on the taxpayer.

If there are findings on VAT that may impact the income tax aspect, such findings shall be communicated by the Chief, AD to the concerned investigating office. The head of the investigating office is required to submit to the Chief AD a written memorandum as to the action taken on these findings. Thereafter, the Chief AD shall monitor the same during the review of the case.

15. In case there are deficiency VAT liabilities as result of the audit, the issuance of Preliminary Assessment Notice (PAN) and Final Assessment Notice (FAN) will be in accordance with existing revenue issuances. All cases, even those with deficiency taxes agreed to be paid by the taxpayer, should have, at the very least, duly issued PANs.

16. Cases returned to the RO after review for compliance with certain documentary audit requirements or for further conduct of audit to meet some procedural requirements or for correction of the report and/or PAN shall be considered as an addition to his existing workload upon receipt of the returned case or docket. In case the ROs’ inventory exceeded the maximum workload upon receipt of the returned cases, the excess thereon shall not be considered as a violation of this Order. Returned cases requiring compliance with certain review requirements shall be acted upon within fifteen (15) days from the receipt of the docket to ensure the conduct of quality audit and that top priority action shall be given by the concerned RO on these returned cases.

17. Issue-based cases referred to the Legal Division for issuance of SDT, issuance of legal opinion or for filing of criminal action shall be removed from the inventory of the concerned RO for purposes of replenishment of cases. The SDT shall be issued and served in accordance with RMO No. 10-2013, as amended by RMO No. 8-2014.

However, once the case is returned to the RO for continuation of audit/investigation after rendering the desired resolution/opinion on certain legal issues or after compliance of the taxpayer with the SDT, this shall be considered as part of his inventory or workload. If such returned cases result to an excess over the maximum workload, this situation will not be considered a violation.

18. All reports of investigation shall be submitted by the VAT Audit Section Chief to the Review and Evaluation Section of the Assessment Division for regular review and appropriate recommendation by the Chief, Assessment Division prior to approval by the Regional Director. The Regional Director shall act on these cases within five (5) days from receipt thereof.

19. Dockets on selected paid cases may be subjected to revalida upon instruction of the Commissioner.

20. The AS shall closely monitor the progress of eLA cases issued under the VAP. For this purpose, the concerned office under the AS shall submit a monthly summary report on the results of the VAP not later than the 10th day after the close of each month.

IV. Reporting Requirements 
a. The Chief, Assessment Division shall submit to the ACIR – AS the following reports not later than the 10th day of each month:

Name of Report / Annex

1. List of Selected Taxpayers for VAT Audit With eLAs Issued - D

2. Monthly Report on Assessment Notices Issued/ Protested/Cancelled - E

3. Monthly Report on Cases Collected - F

4. Monthly Report on Disputed and Collectible Assessments Posted in Form 40 - G 

5. Monthly Report on eLAs Issued That Were Cancelled/Transferred to Other Office/Cannot Be Located Taxpayers/Cases With No Discrepancy - H 

6. Monthly Report on Cases Referred to the Legal Division - I

b. The Chiefs of the Legal Division shall submit to the ACIR-AS, a monthly status report of cases (Annex J) not later than the 10th day of the month following the month of receipt of the docket from the VAT Audit Section thru the Chief, Assessment Division.

c. The Chiefs of the Assessment and Legal Divisions shall furnish their concerned Regional Director with a copy of the reports submitted to the ACIR – AS.

Upon the effectivity of this Order, the report format prescribed herein shall be strictly observed by all Regional Assessment Divisions and Legal Divisions. 

V. Violations 

Any violation of this Order shall be referred by the concerned revenue official to the ACIR – Internal Affairs Service (IAS), Attention: The Chief, Internal Investigation Division (IID) for investigation or the IAS, through the IID, may initiate its own fact-finding revalida on the violation/infraction of revenue officials/officers. In this regard, the ACIR-IAS, through the DCIR-OG, may recommend to the Commissioner the relief, re-assignment, transfer or imposition of administrative sanctions on any revenue official/RO violating any provisions of this Order. 

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2059-2016.pdf

Streamlining the Business Registration Process and Documentary Requirements

The bureau just recently issued Revenue Memorandum Circular (RMC) No. 93-2016 Streamlining the Business Registration Process and Documentary Requirements by Further Amending the List of Documentary Requirements for the Registration of Each Type of Application under "Annex A" of Revenue Regulations (RR) No. 7-2012, as Clarified Under Revenue Memorandum Circular (RMC) No. 70-2013 and RMC No. 37-2016.

1. Primary and secondary registration requirements amending the list of documentary requirements of each type of application published as "Annex A" of RR No. 7-2012 dated April 2, 2012, as clarified under RMC No. 70-2013 and RMC No. 37-2016.

The revised checklist of documentary requirements herein attached as Annexes "A1A11" included the acknowledgement of the applicant on the identified lacking documents for completion to facilitate the processing of application.

2. Steps for the registration of business in the Bureau of Internal Revenue (BIR) to be implemented as follows:

STEP 1. Apply for Registration [with complete documentary requirements (Annexes "A1-A11")]

STEP 2. Pay Annual Registration Fee [thru Mobile Revenue Collection Officers System (mRCOs), Authorized Agent Banks, Revenue Collection Officer or GCash]

STEP 3. Get Certificate of Registration with auto-approved Authority to Print (ATP) for initial principal receipts/invoices

The auto-approved ATP for initial principal receipts/invoices is only applicable to newly registered business taxpayer. But, subsequent application for receipts/invoices shall be processed in accordance with the procedures specified under existing issuances.

This Circular revokes all other circulars or issuances inconsistent herewith and shall take effect immediately. All internal revenue officers and employees are hereby enjoined to give this Circular a wide publicity as possible.

Reference: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2093-2016.pdf

eBIRForms Package v6.2 is Now Available (New)

Offline eBIRForms Package. The Offline eBIRForms Package is a tax preparation software that allows taxpayers and ATAs to accomplish or fill up tax forms offline. Instead of the conventional manual process of filling up tax returns on pre-printed forms that is highly susceptible to human error, taxpayers/ATAs can directly encode data, validate, edit, save, delete, view, print and submit their tax returns. The package can do automatic computations and has the capability to validate information encoded by taxpayers/ATAs. After filling out the forms in this package, taxpayers/ATAs can submit it to the Online eBIRForms System.

The bureau just recently updated the eBIRForms Package from v6.1 to v6.2

To download the Offline eBIRForms Package v6.2, just click the following link:

http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

Alternative sites to obtain/download the Offline eBIRForms Package:

Websites: www.knowyourtaxes.ph; www.dof.gov.ph

Direct link: http://ftp.pregi.net/bir/ebirforms_package_v6.2.zip

To download the new version of eBIRForms Package v6.3:

http://philippinetaxtalk.blogspot.com/2017/04/ebirforms-package-v63-new-version.html

Certificate Authorizing Registration (CAR) shall be issued within Five (5) Days from the Submission of Complete Documentary Requirements

The CIR of the bureau recently issued Revenue Memorandum Order (RMO) No. 41-2016 dated July 12, 2016 to restate about the Revenue Memorandum Circular (RMC) No. 039-15 "Updated BIR Citizens Charter as Consolidated" and the Provision on "Accessing Frontline Services", on Certificate Authorizing Registration (CAR) issuance.

CARs covering transactions on sale of real property, transfer or assignment of stocks not traded in the stock exchange(s), transfers subject to donor's tax and other taxes including documentary stamp tax related to the sale/transfer of properties shall be issued within five (5) days from the submission of complete documentary requirements.

BIR Officials and employees found to be in violation of this directive shall be subject to the administrative and criminal penalties enumerated under Republic Act (RA) No. 9485, otherwise known as the "Anti-red Tape Act of 2007" (ARTA).

This Order took effect immediately upon approval of the Commissioner of Internal Revenue, Caesar R. Dulay.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2041-2016.pdf of the full text of RMO No. 41-2016.

What is Internal Revenue Service (IRS)?

Learning about the Internal Revenue Service (IRS) for me is a continuous process to familiarize the system, payment of taxes and its procedures and other related tax matters.

Origin 

The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment

In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

A New Name

In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.
SOURCE: https://www.irs.gov/uac/brief-history-of-irs

Streamlining Requirements and Process in Issuing Tax Clearances Required Under executive Order No. 398

The bureau issued recently the Revenue Memorandum Circular (RMC) No. 74-2016 dated July 13, 2016, in order to streamline the requirements and the process in issuing Tax Clearances required under executive Order No. 398 with details as follows:

1. The Tax Clearance shall be processed and released with two (2) working days from the submission of the complete documents.

2. The following are the documentary requirements necessary to support the application of the tax clearance:

2.1 Duly accomplished and notarized application form with two (2) pieces loose Documentary Stamp Tax;

2.2 Print-out of Certification fee paid thru the BIR's electronic Filing and Payment System (eFPS), with payment confirmation; and

2.3 Deliquiency Verification issued by concerned LTS or National/Regional Offices with a validity period of one (1) month from the date of issued.

The Deliquency Verification shall be issued by the concerned BIR Offices with twenty four (24) hours from filing of the application by the taxpayer.

3. The criteria for approving applications for Tax Clearance shall be governed by the provisions of existing issuances on the matter.

This order took effect immediately.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2074-2016.pdf