Clarification on the Price Ceiling of Socialized Lot

The bureau just recently issued the Revenue Memorandum Circular No. 36-2014 to clarify the price ceiling of socialized lot only pursuant to Revenue Regulations (RR) No. 11-97, RR 17-01 and Housing and Urban Development Coordinating Council (HUDCC) Resolution No. 1, Series of 2013.

Under the circular, the definition of socialized housing was provided in Revenue Regulations (RR) No. 11-97 and reiterated in RR 17-01 to wit:

"Socialized Housing - refers to housing programs and projects covering houses and lots or homelots only that are undertaken by the government or the private sector for the underprivileged and homeless citizens, which shall include sites and services development, long-term financing, liberalized terms on interest payments, and as such other benefits in accordance with the provisions of Republic Act 7279.

"A socialized housing unit shall not exceed P150,000 (now P450,000.00 per issuance of HUDCC Memorandum Circular No. 1, Series of 2013 promulgated on October 16, 2013) for a house and lt package, subject to periodic adjustment or increase as the Housing and Land Use Regulatory Board (HLURB) may effect forty percent (40%) of the maximum limit prescribed for the house and lot package."

The P450,000.00 price ceiling applies to house and lot package, and that if only lot is sold, the price ceiling should only be P180,000/lot (40% of P450,000).

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/86275RMC%20No%2036-2014.pdf of the full text of RMC No. 36-2014.

Mandatory Submission of Quarterly Summary List of Sales and Purchases (SLSP) by All VAT Registered Taxpayer

The bureau has issued Revenue Regulations No. 1-2012 which took effect last January 1, 2012 requiring the Mandatory Submission of Quarterly Summary List of Sales and Purchases (SLSP) by All VAT Registered Taxpayer Thereby Amending Section 4.114-3 of Revenue Regulations No. 16-2005, as amended as follows:

a. Persons Required to Submit Summary Lists of Sales and Purchases. - 

  (1) Persons Required to Submit Summary Lists of Sales. - All persons liable for VAT such as         manufacturers, wholesalers, service-providers, among others are required to submit Summary List of Sales.

  (2) Persons Require to Submit Lists of Purchases. - All persons liable for VAT such as manufacturers, service-providers, among others are required to file Summary List of Purchases.

e. Rules in the Presentation of the Required Information in the Summary Schedules. - XXX

  (7) The Quarterly Summary List of Sales and Purchases shall be submitted through Compact Disk-Recordable (CDR) medium following the format in Subsection (g) hereof."

Section 4.114.3 (f) is hereby repealed, and (g), (h), (i) renumbered as follows:

"f. Required Procedure and Format in the Submission of Quarterly List of Sales and Purchases - XXX

g. Issuance of Certificate of VAT Withheld at Source - XXX

h. Penalty Clause - 

Under these regulations, it is also stated that the provisions of RR 16-2005 and all other issuances inconsistent herewith are hereby repealed, modified or amended accordingly. Likewise, all reference to "magnetic form 3.5-inch floppy diskettes" in RR 16-2005 shall henceforth refer to "Compact Disk-Recordable (CDR)".

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/62304RR%201-2012.pdf of the full text of Revenue Regulations No. 1-2012.

Extension of the Period to Submit the Required Affidavit and Official Appointment Books

The bureau just issued the Revenue Memorandum Circular No. 32-2014 extending the period within which to submit the required affidavit and official appointment books under section 3 of Revenue Regulations (RR) No. 4-2014.

The RR No. 4-2014 was took effect last April 6, 2014, entitled "Guidelines and Policies for the Monitoring of Service Fees of Professionals" that requires all exiting and registered self-employed professionals at the time of the effectivity of the RR to submit an affidavit (indicating the rates, manner of billings and the factors they consider in determining their service fees as well as to register their official appointment books within thirty (30) days from the date of RR's effectivity on April 6, 2014 or until May 6, 2014.

The bureau has extended from May 6, 2014 to May 31, 2014 to give ample time for all the parties concerned to prepare and comply with such a requirement, the period within which to submit said affidavit and to register the official appointment books under Section 3 of RR No. 4-2014.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/rmc_32-2014.pdf the full text of the RMC 32-2014.

http://philippinetaxtalk.blogspot.com/2014/03/guidelines-and-policies-for-monitoring.html

Deadline in the Submission of "Parent" or "Consolidated" General Form for Financial Statements (GFFS) or Special Form for Financial Statements (SFFS)

Pursuant to SRC Rule 68, corporations with subsidiaries are required to submit to the Securities and Exchange Commission (SEC) both their parent and consolidated General Form for Financial Statements (GFFS) or Special Forms for Financial Statements (SFFS), the figures of which shall be based on the audited financial statements. Each FS shall clearly indicate whether it is the "Parent" or "Consolidated" GFFS or SFFS.

Under SEC Memornadum Circular No. 6 s. 2006 the GFFS and SFFS in electronic format shall be submitted within thirty (30) days from the last day of submission of the Annual Audited Financial Statements (AAFS). This is applicable as follows:

1. SEC-registered domestic stock corporations with annual gross sales or gross revenue of at least Five Million Pesos (P5,000,000.00);

2. Investment Companies and Publicly-held Companies enumerated in Section 17.2 of the Securities Regulation Code; 

3. Investment Houses or Underwriters of Securities;

4. Pre-need Plan Companies;

5. Brokers/Dealers in Securities;

6. Financial Companies Advisers;

7. Investments Company Advisers;

8. Government Eligible Securities Dealers (GSED);

9. Transfer Agents;

10. All other market participants and self-regulatory organizations (e. g. Exchanges, Alternative Trading Systems, and Clearing Houses).

The Securities and Exchange Commission (SEC) is receiving hard copies: 3 copies for SEC and 3 copies for Taxpayers. 

In accordance with Section 27 or R. A. 8792 which is also known as the Electronic Commerce Act, and Section 37 of its Implementing Rules and Regulations, the submission of the General Form for Financial Statements (GFFS) in electronic format i.e., on diskette or Compact Disc (CD) is hereby mandated.

Please refer the following SEC links: http://www.sec.gov.ph/download/fs_form.html; http://www.sec.gov.ph/laws/memorandumcircular/CY%202006/sec-memo-6,s2006.pdf and http://www.sec.gov.ph/accountantsinfo/irr/SRCRULE68-Revisedversion2011.pdf 

When is the Issuance of Certificate of Taxes Withheld (BIR Form No. 2307)?

Revenue Regulations No. 30-2003, Section 5 as amended, refers to the persons required to deduct and withhold as follows:

Agents, employees or any person purchasing goods or services/paying for and in behalf of the aforesaid withholding agents shall likewise withhold in their behalf, provided that the official receipts of payment/sales invoice shall be issued in the name of the person whom the former represents and the corresponding certificate of taxes withheld (BIR Form No. 2307) shall immediately be issued upon withholding of the tax.

All income payments which are required to be subjected to withholding tax shall be subject to the corresponding withholding tax rate to be withheld by the person having control over the payment and who, at the same time, claims the expenses, (e. g. payments to utility companies which are required to be subjected to withholding tax shall likewise be subjected to withhold tax even if the meter or billing statements (e. g. electric or water meter or the telephone bill) is not in the name of the payor, as long as valid proof that payment of a particular expense is being shouldered by the aforementioned payor (i.e. contract between the registered user of the meter and the payor); payments made by persons who are sharing portion of the bill which is in the name of another person as long as he is a duly constituted withholding agent and shall only withhold on the portion of the expense being shouldered by him).

Income payments made thru brokers or agents or other person authorized to collect/receive payments for and on behalf of the payee, whether for consideration or otherwise, shall likewise be subjected to the corresponding withhoding tax rates to be withheld by the payor/person having control over the payment with the corresponding issuance of certificate of taxes withheld in the name of the payee whom the agent represents.

The obligation to withhold is imposed upon the buyer-payor of income although the burden of tax is really upon the seller-income earner hence, unjustifiable refusal of the latter to be subjected to withholding shall hence, unjustifiable refusal of the latter to be subjected to withholding shall be a ground for the mandatory audit of his income tax liabilities (including withholding tax) upon verified complaint of the buyer-payor."

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/601rr03_30.pdf of the full text of the Revenue Regulations Nos. 30-2003.

Deadline for the Disclosure of Gross Income for the Current Year to the BIR by Submitting a Notarized Sworn Declaration for every Individual Professional/Talent/Corporate Director to Determine the Applicable Tax Rate (10% or 15%) to be Applied/Withheld by the Withholding Agent

Under Revenue Regulations No. 30-2003, Section 3 (A), in order to determine the applicable tax rate (10% or 15%) to be applied/withheld by the withholding agent, every individual professional/talent/corporate director herein enumerate, shall periodically  disclose his gross income for the current year to the Bureau of Internal Revenue (BIR), by submitting a notarized sworn declaration  attached as Annex "A" hereof in three (3) copies (two (2) copies for the BIR and one (1) copy for the taxpayer), copy furnished all the current payors of the declaration duly stamped received by the BIR (Collection Division of the Regional Office having jurisdiction over the place where the income earner is registered/ Large Taxpayers Collection Division for large taxpayers in Metro Manila/ LTDO for large taxpayers outside Metro-Manila). Sworn declaration may likewise be filed by the income payor on behalf of the professionals/talents/directors whose services were being rendered exclusively to the aforesaid payor. The disclosure should be filed on June 30 of each year or within fifteen (15) days after the end of the month the professionals/talents/director's income reaches P720,000, whichever comes earlier. In case his total gross income is less than P720,000 as of June 30, he/she shall submit a second disclosure within fifteen days after the end of the month that his/her gross income for the current year to date reaches P720,000. The payee - professional/talent/director shall furnish each payor a copy of the BIR duly stamped received sworn declaration not later than (5) days from the date of receipt by the BIR. In case of failure to submit the annual declaration/disclosure to the BIR, the payor shall withhold the tax at the rate of 15%.

The Collection Division/Large Taxpayers Collection Division/LTDO shall transmit one (1) copy of the duly submitted notarized sworn declaration, to the Withholding Tax Division within five (5) days from receipt thereof. The remaining copy shall be the file copy of the concerned Regional Office/Large Taxpayer Services/LTDO for monitoring purposes. 

These requirements shall likewise apply to taxable juridical persons (sworn declaration shall be executed by the president/managing partner of the corporation/company), partners of general professional partnerships and medical practitioners stated under sub-sections (B), (H) and (I) hereof.

Notwithstanding the foregoing, if an individual recipient received professional fees/talent fees/directors fees in addition to salaries from the same payor, the said fees shall be considered as supplemental compensation and, thus be subject to the withholding tax on compensation.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/601rr03_30.pdf of the full text of the Revenue Regulations No. 30-2003.

http://philippinetaxtalk.blogspot.com/2014/03/guidelines-and-policies-for-monitoring.html

SEC Issues a Reminder for Strict Compliance of Financial Reporting Obligations

The Securities and Exchange Commission (SEC) issued last April 14, 2014 a reminder for Strict Compliance of Financial Reporting Obligations to all the Boards of Directors and management of registered corporations over the preparation and submission of their annual financial statements.

It is stated,  that the Securities Regulation Code (SRC) Rule 68, as amended, provides that the corporations' financial statements are primarily the responsibility of their respective management and accordingly, the fairness of the representations made therein is an implicit and integral part of the management's responsibility. The Board of Directors, in discharging its responsibilities, reviews and approves the financial statements before these are submitted to the stockholders. These responsibilities are reflected in the Statement of Management's Responsibility that must be signed by the corporation's Chairman of the Board, Chief Executive Officer and Chief Finance Officer, and that must be attached to the annual financial statements.

Besides, during the independent examination of the corporation's financial statements, the management should provide the external auditor with the complete set of financial statements as prescribed under the financial reporting framework, and if applicable, the schedules and reconciliation forming part of the financial statements that are required under the existing rules of the Commission. In order to have an independent review of the financial statements prepared by the management, the external auditor must not create a template format of financial statements for mere accomplishment by the management. The management should provide the external auditor his review all information, such as records and documentation, and other matter that are relevant to the financial statements prepared by the management. These include schedules, computations, projections, reconciliations, reports, analyses and such additional information that the auditor may request from management and when appropriate, from those tasked to perform governance.

The management shall provide unrestricted access to records and personnel of the entity from whom the auditor deems it necessary to obtain audit evidence. The corporation shall neither allow nor require its independent auditor to prepare its financial statements and/or any of its supporting documents. There should be a clear understanding on the part of the management that the external auditor's duty is to conduct an independent examination of the company's financial statements and supporting documents. There should be a clear understanding on the part of the management that the external auditor's duty is to conduct an independent examination of the company's financial statements and supporting documents pursuant to the prescribed auditing standards and practices. Philippine Standard on Auditing (PSA) 210 (revised) and PSA 580 (revised and redrafted) particularly require that the auditor and the management should agree with the audit engagement terms and conditions before proceeding with the actual audit which include the responsibility of the management to prepare the corporation's financial statements. Thus, the management is expected to have sufficient knowledge of the process followed by the corporation in preparing and presenting the financial statements and the assertions therein on which to base its written representations.

Please refer http://www.sec.gov.ph/notices/notices/strict%20compliance%20of%20financial%20reporting%20obligations.pdf of the full text of the notice issued the SEC.

Waiver of Penalties for Electronic Filing and Payment System (eFPS) Taxpayers

Did you know that the BIR has experienced a system downtime last April 15, 2014 due to the volume of taxpayers filing/paying thrue eFPS?

With this, the bureau has issued the Revenue Memorandum Circular No. 28-2014 on April 16, 2014 to hereby informed all concerned that the penalties attendant to late filing of returns and payment of income tax/es for the taxable year ended December 31, 2013 and quarter ended March 31, 2014, are hereby waived. This waived strictly covers eFPS-registered taxpayers and tax returns filed last April 16, 2014.

Moreover, all those eFPS-enrolled taxpayers who have already manually filed and paid their income tax due for above taxable periods will not be imposed of penalties, and are hereby advised to refile using eFPS until April 25, 2014.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/85582RMC%2028-2014.pdf of the full text of the RMC No. 28-2014.

Contents and Format of Statement of Management's Responsibility for Annual Income Tax Return

Last year 2010, the Revenue Regulation No. 3-2010 was issued by the bureau pursuant to Section 244, in relation to Section 6(H), and Section 275 of the National Internal Revenue Code of 1997, to provide the rationale and guidelines for the submission of the Statement of Management Responsibility that shall accompany the financial statements that shall be submitted with the annual income tax return.

Under Section 2 of these regulations, the Contents and Format of Statement of Management Responsibility is stated as follows:

(a) Since the Annual Income Tax Return is primarily the responsibility of the management of the taxpayer, this shall accompanied by a statement of management's responsibility.

(b) All taxpayers required to file annual income tax return under the National Internal Revenue Code, as amended, shall be required to submit a statement of management's responsibility, as follows:

STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR ANNUAL INCOME TAX RETURN

The Management of (name of taxpayer) is responsible for all information and representations contained in the Annual Income Tax Return for the year ended (date). Management is likewise responsible for all information and representations contained in the financial statements accompanying the (Annual Income Tax Return or Annual Information Return) covering the same reporting period, Furthermore, the Management is responsible for all information and representations contained in all the other tax returns filed for the reporting, including, but not limited, to the value added tax and/or percentage tax returns, withholding tax returns, documentary stamp tax returns, and any and all other tax returns.

In this regard, the Management affirms that the attached audited financial statements for the year ended (date) and the accompanying Annual Income Tax Return are in accordance with the books and records of (name of taxpayer), complete and correct in all material respects. Management likewise affirms that:

     (a) the Annual Income Tax Return has been prepared in accordance with the provisions of the National   Internal Revenue Code, as amended, and pertinent tax regulations and other issuances of the Department of Finance and the Bureau of Internal Revenue;
     (b) any disparity of figures in the submitted reports arising from the preparation of financial statements pursuant to financial accounting standards and the preparation of the income tax return pursuant to tax accounting rules has been reported as reconciling items and maintained in the company's books and records in accordance with the requirements of Revenue Regulations No. 8-2007 and other relevant issuances;
     (c) the (name of taxpayer) has filed all applicable tax returns, reports and statements required
 to be filed under Philippine tax laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the reporting period, except those contested in good faith.


Signature:
(Name of the Individual Taxpayer/President/Managing Partner)

Signature:
(Name of the Chief Executive Office or its equivalent)

Signature:
(Name of the Chief Financial Officer or its equivalent)

(c) Aside from Individual Taxpayer, President and Managing Partner, the chief Executive Officer and the Chief Financial Officer or any officer performing similar functions regardless of their designation are also required to affix their signatures in the afore-mentioned Statement.

(d) In the case of a foreign corporation with branch office in the Philippines, the above Statement shall be signed by its local manager who is in charge of its operations.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/49436RR%203-2010.pdf of the full context of Revenue Regulations No. 3-2010

Taxpayers Who Filed ITRs through BIR eFPS May Still be Filed the Financial Statements, Statement of Management Responsibility (SMR), BIR Form 2307 and Others) with the Concerned LT office/RDO within Fifteen (15) Days After the Electronic Filing of the Return

The bureau has issued the Revenue Memorandum Circular No. 20-2014 related to the guidelines in the Filing, Receiving of Taxable Year 2013 Income Tax Returns (ITRs) BIR Form Nos. 1700, 1701, 1702-RT, 1702-EX and 1702-MX, All June 2013 ENCS version under Revenue Regulations No. 2-2014.

It is stated in the memorandum that for eFPS Taxpayers who have used the offline eBIRForms Package may choose the following:

a. Those who manually filed the return/paid the tax, electronically re-file (efile) the contents of the previously filed ITRs by accomplishing the applicable ITR in the eFPS facility.

b. Those who electronically filed and paid using version 2011, follow the procedures in Annex B within ten (10) days from the availability of the online submission.

With this, for the purpose of determining the date when the returns are filed, it shall be the date the initial eFiling was duly accomplished.

The accompanying schedules and attachments (i.e. Financial Statements, Statement of Management Responsibility (SMR), BIR Form 2307, etc.) may still be filed with the concerned LT office/RDO where they are registered within fifteen (15) days after the electronic filing of the return. Together with the said attachments, the taxpayers shall also submit the duly accomplish signed hard copy of the ITR with Filing Reference Number.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/84889RMC%20No%2020-2014.pdf of the full text of the Revenue Memorandum Circular No. 20-2014.