Keeping of Books of Accounts and Subsidiary Books

SEC. 232 and SEC. 233 of Republic Act (RA) 8424 - The National Internal Revenue Code of 1997, as amended refers to the Keeping of Books of Accounts and Subsidiary Books with details as follows:

SEC. 232. Keeping of Books of Accounts. -

(A) Corporations, Companies, Partnerships or Persons Required to Keep Books of Accounts. - All corporations, companies, partnerships or persons required by law to pay internal revenue taxes shall keep a journal and a ledger or their equivalents: Provided, however, That those whose quarterly sales, earnings, receipts, or output do not exceed Fifty thousand pesos (P50,000) shall keep and use simplified set of bookkeeping records duly authorized by the Secretary of Finance where in all transactions and results of operations are shown and from which all taxes due the Government may readily and accurately be ascertained and determined any time of the year: Provided, further, That corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts or output exceed One hundred fifty thousand pesos (P150,000) shall have their books of accounts audited and examined yearly by independent Certified Public Accountants and their income tax returns accompanied with a duly accomplished Account Information Form (AIF) which shall contain, among others, information lifted from certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding income therefrom and other relevant statements.

(B) Independent Certified Public Accountant Defined. - The term 'Independent Certified Public Accountant', as used in the preceding paragraph, means an accountant who possesses the independence as defined in the rules and regulations of the Board of Accountancy promulgated pursuant to Presidential Decree No. 692, otherwise known as the Revised Accountancy Law.

SEC. 233. Subsidiary Books. - All corporations, companies, partnerships or persons keeping the books of accounts mentioned in the preceding Section may, at their option, keep subsidiary books as the needs of their business may require: Provided, That were such subsidiaries are kept, they shall form part of the accounting system of the taxpayer and shall be subject to the same rules and regulations as to their keeping, translation, production and inspection as are applicable to the journal and the ledger.

Grounds For Suspension Or Temporary Closure Of Business

Revenue Memorandum Circular No. 3-2009 refers to the Amendment and Consolidation of the Guidelines in the Conduct of Surveillance and Stock-Taking Activities, and the Implementation of the Administrative Sanction of Suspension and Temporary Closure of Business. 

In the circular, it is stated that Sec. 115 of the National Internal Revenue Code (NIRC), as amended, refers the Power of the Commissioner to Suspend the Business Operations of a Taxpayer. - The Commissioner or his authorized representative is hereby empowered to suspend the business operation and temporarily close the business establishment of any person for any of the following violations:

A. In the case of a VAT-registered Person. - 

1. Failure to issue receipts or invoices;

2. Failure to file a value-added tax return as required under Section 114; or

3. Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter.

B. Failure of any Person to Register as Required under Sec. 236. - 

The temporary closure of the establishment shall be for the duration of not less than five (5) days shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order.

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/43677RMO%203-2009.pdf  of the full text of RMC No. 3-2009.

Increase In SS Funeral Benefit To All SSS Members And The Beneficiaries

The Social Security System has issued Circular No. 2015-009 to inform all SSS members about the increase in SS Funeral Benefit from the Fixed Amount of P20,000.00 to Variable Amount ranging from P20,000 to P40,000 approved by the President of the Philippines, Benigno S. Aquino III.

The amount of funeral benefit shall be computed as follows:

P20,000 + (0.5% x Number of Contributions x Average Monthly Salary Credit) but not to exceed P40,000.

where:

* Number of Contributions is the total number of contributions paid up to the month of contingency; and

* Average Monthly Salary Credit (AMSC) is the higher of:

     - the result obtained by dividing the sum of the last sixty (60) monthly salary credits immediately preceding the semester of contingency by sixty (60); or

     - the result obtained by the dividing the sum of all the monthly salary credits prior to the semester of contingency by the number of monthly contributions paid in the same period.

For a member to qualify for a funeral benefit beyond P20,000, he should have a higher number of contributions and/or Monthly Salary Credit as shown in the attached Annex A on the "Number of Monthly Contributions Required for Varied Funeral Benefit Amounts, given the AMSC of the Member". Also attached is Annex B for the sample computation.

The said increase shall be effective for all funeral benefit claims with date of contingency not earlier than August 01, 2015.

Please refer https://www.sss.gov.ph/sss/DownloadContent?fileName=CI2015_009.pdf of the full text of the circular including Annex A and Annex B.

2015 Implementing Rules and Regulations Of The Securities Regulation Code Or 2015 SRC Rules

In reference with the press release of the Securities and Exchange Commission, announced the approval of the 2015 Implementing Rules and Regulations of the Securities Regulation Code or 2015 SRC Rules.

The 2015 SRC Rules enhances existing requirements including the ability of companies to raise funds in the domestic market, addresses regulatory gaps, strengthens market and regulatory structures, and adopts global best practices to ensure that the players are able to meet the challenges posed by increasing market sophistication and and regional integration.

Among the salient features of the rules are:

Shelf registration is expanded. Under a shelf registration program, securities to be issued in tranches may be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three (3) years.

Commercial paper is now simply defined as evidence of indebtedness of any person with a maturity of three hundred and sixty-five (365) days or less. The new rules ceased using the terms of long term commercial paper and short term commercial paper. Selling commercial papers is also made easier with the requirement of an issuer rating instead of a separate rating for each issuance.

A new category of exempt security is introduced. This involves securities issued or guaranteed by multilateral financial entities (MFEs) established through a treaty or binding agreement to which the Philippines is a party.

Public offerings which have a limited character are also exempt from registration. Such offerings will be exempt as long as the covered securities are available only to the parties or persons named in the application for exemption for a specified period. An example of this are the employee stock option plans (ESOPs) issued by a corporation to its eligible employees.

Underwriters are no longer required to underwrite securities solely on a firm commitment basis. They can agree on a demand plan of distribution with the issuing company subject to the approval by the SEC. However, as a general rule, issuers of registered securities, except issuers of proprietary/non-proprietary membership certificates or shares, are still required to enter into an underwriting agreement with an investment bank or investment house.

Extension of the period to sell securities. The period to sell securities subject of registration statement is extended from two (2) days to ten (10) business days from the date of the effectivity of the registration statement.

Relaxed requirements for qualified buyers. The financial capacity of individuals to qualify as qualified buyer has been reduced from Php 25 million to Php 10 million annual gross income. Any verifiable document may now be submitted to prove financial capacity. Income tax return is optional.

Please refer http://www.sec.gov.ph/docs_home/SEC%20Statement%20-%20SEC%20Approves%202015%20SRC%20Rules%20August%2006%202015.pdf of the full text of the SEC Press Release.

Please refer  http://www.sec.gov.ph/docs_home/2015IRR_SRC.pdf of the copy of the 2015 SRC Rules.

Inclusion Of Bank of Tokyo-Mitsubishi UFJ, Ltd. In the List Of Authorized Agent Banks

Revenue Memorandum Circular No. 44-2015 just recently issued by the bureau to inform all taxpayers enrolled in the Bureau's eFPS that Bank of Tokyo-Mitsubishi UFJ, Ltd. is now authorized to accept on-line payment of internal revenue taxes thru the eFPS effective July 27, 2015.

The bank stated above is included in the List of Authorized Agent Banks Which are Authorized to Accept Payment of Internal Revenue taxes From Taxpayers Enrolled in the Bureau's Electronic filing and Payment System (eFPS).

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2044-2015.pdf of the full text of RMC No. 44-2015.

Falling Under The Definition Of Raw Cane Sugar, Including Muscovado, Are Exempt From VAT, Or From Percentage Tax

Section 2 (a) of Revenue Regulations No. 8-2015 defines Raw Cane Sugar - the natural sugar extracted from sugarcane through simple mechanical process by pressing for the juice; boiled to crystallize; filtered using centrifuge to separate these crystals, and dried, resulting to crystallize brown sugar (brown color due to natural molasses content present in sugar cane): Provided, that is shall never refer to raw cane sugar produced from conducting only one (1) stage of filtering and centrifugal without any other further process applied thereto, such as but not limited to washing, bleaching, etc.: Provided further, that its color is greater than 800 ICU and that its content of sucrose by weight in dry state corresponds to a polarimeter reading of less than 99.5 degree. 

The  above definition includes muscavado which has standard specifications as produced, namely: Powder Class A - polarization of 86 degree minimum; Powder Class B - polarization of 77 degree minimum; and Lump - polarization of 57 degree minimum.

Thus, only those falling under the above-definition of Raw Cane sugar, including muscovado, are exempt from VAT, or from Percentage Tax, pursuant to Section 109 (1)(A) of the Tax Code.

The Sugar Regulatory Authority represents that it collects on a biweekly basis composite sample from mills for routine quality tests. For further verification that the products produce by mills conform to the definition contained herein, the SRA shall provide the BIR with a copy of the results of said test showing the polarimiter and color reading of the Raw Cane Sugar produced, within 15 days from the end of the calendar month. The SRA shall also insure that they have in place rules and regulations requiring the "RAW CANE SUGAR" be clearly placed on quedans issued for products falling under this definition.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%208-2015.pdf of full text of Revenue Regulations No. 8-2015.

Operation Of eLounge Facilities in the RDOs of BIR

The operation of eLounge shall be open from 8am to 5pm or beyond office hours depending on the client's need and upon the approval of the head office (RDO), taking into consideration the requirements of the BIR Citizen's Charter and the provisions of Republic Act No. 9485, otherwise known as the Anti-Red Tape Act of 2007; and no personnel shall install programs or configure the default settings of the computers, unless approved by the eLounge Project Manager.

A Systems Restore of the eLounge PCs from the previous and most current Restoration Point shall be used and encouraged at least every week to sustain the maximum performance of the PCs operationability. 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202015/RMO%20No.%2013-2015%20FT.pdf of the full text of Revenue Memorandum No. (RMO) No. 13-2015.

Establishment Of eLounge Facilities in the RDOs of BIR

The  Establishment of eLounge in the RDo shall be created to provide taxpayers with free electronic or online medium to access the BIR's eServices, including but not limited to the following:

1. eFPS;
2. eBIRForms;
3. eSubmission;
4. eReg;
5. IRSIS
6. eDST;
7. eBROAD;
8. eComplaint
9. eAccreg;
10. eSales;
11. eReportCard;
12. eORB;
13. PAYBIR;
14. eTVCD;
15. Relief Data Entry and Validation Module;
16. Alphalist Data Entry and Validation Module; and
17. Taxpayer Compliance Guide

The eLounge facility shall be established in all Revenue district Offices through the designated eLounge Project Team.

The following are the mandatory requirements for the creation of en eLounge facility;

1. The eLounge shall be set up at or near the client Service Area, (formerly Taxpayer Service Area) at the client Support Section (CSS).
2. The following resources shall provided by the RDOs prior to its implementation:
- modular partition enclosures with table top;
- computer chairs;
- movable printer tables;
- lounge sofas;
- Television (to showcase info media production);
- DVD Player;
- Computers with internet connection;
- Laser Printer; and
- eLounge signage.

For the sustainability of eLounge operations, the RDO shall allocate sufficient funds for Broadband Internet subscription from a third party Internet Service Provider (ISP), office supplies, and materials through their regular funds.

3. Below are the technical specifications required for the Broadband Internet Subscription:
- Unlimited Broadband Internet Connection or Access;
- Downstream Speed of at least 5Mbps; and
- Upstream of at least 1Mbps.

In areas where there are no ISP that can meet the above specifications, the RDO has the option to find available ISP that can provide them the best/fastest connection.

The eLounge shall be part of the "queuing system" in support of the RDO's mandate to provide fast and accurate frontline service to BIR clients.

An established set of Key Performance Indicators (KPIs) (Annex D) shall be use as a basis for monitoring the utilization of the eLounge facility, and shall be the basis for its retention and budget allocation.

A stand-alone electronic logbook (e-logbook) shall be maintained to monitor the number of client availing the eLounge facility.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202015/RMO%20No.%2013-2015%20FT.pdf of the full text of RMO No. 13-2015.

Non-acceptance of Checks/Drawn Checks from Closed Banks by Revenue Collection Officers

Revenue Memorandum Circular (RMC) No. 43-2015 has issued by the bureau for the information and guidance of all concerned. All Revenue Collection Officers (RCOs)/Special Collection Officers (SCOs)/Collection Officers (COs) are hereby advised no to accept checks, as well as taxpayer's checks drawn from the lists of banks that were ordered closed from January, 2014 to June 30, 2015 (please see Annex "A-1)" and Annex "A-2"), as per reports from the Philippine Deposit Insurance Corporation (PDIC), in payment of internal revenue taxes.

Besides, per Monetary Board Resolutions of the Banko Sentral ng Philipinas (BSP), the said banks and their branches are prohibited from doing business in the Philippines and have all been placed under receivership with PDIC as the designated Receiver.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2043-2015.pdf of the full text of RMC No. 43-2015.

Alternative Mode in the filing of Several BIR Tax Returns using eBIRForms eMail Accounts will no longer be available

The bureau just issued an advisory that starting August 1, 2015, the eBIRForms eMail accounts (Alternative Mode in the filing of Several BIR Tax Returns using eBIRForms eMail Accounts)  will no longer be available. 

It was stated in the advisory that it has been observed in the validation of attachments of tax returns submitted through the eBIRForms eMail Accounts that numerous format of BIR Tax Returns were attached by the taxpayers, including eMails with no attachments. 

Taxpayers will received the following email message if they continue using the eBIRForms eMail accounts in submitting their tax returns:

"This tax return submission channel is now unavailable and your submitted tax return will be disregarded. Please download the eBIRForms Package v.5 and follow the procedures per RMC No. 31-2015 to submit your tax returns"

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Advisory/eBIRForms%20memo.pdf of the full text of the BIR advisory.