Definition of Corporation and Classes of Corporations

SEC. 1 of Republic Act No. (Batas Pambasa Blg.) 68 refers to the Title of the Code. This Code shall be known as "The Corporation Code of the Philippines."

SEC. 2. and SEC. 3. of Republic Act No. 68, The Corporation Code Of  The Philippines, describes the definition of Corporation and Classes of Corporation as follows:

SEC. 2. Corporation defined. - A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

SEC. 3. Classes of corporations. - Corporations formed or organized under this Code may be stock or non-stock corporations. Corporations which have a capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held are stock corporations. All other corporations are non-stock corporations.

Please refer http://www.sec.gov.ph/laws/pdf/Corporation%20Code%20of%20the%20Philippines.pdf of the full text of The Corporation Code of the Philippines.

Requirements for Renewal of Accreditation of Tax Practitioners/Agents As A Prerequisite To Their Practice and Representation Before The BIR

Section 7 of Revenue Regulations No. 14-2010 amends Section 10 of RR No. 10-2006 as follows:

"Section 10. Renewal of Accreditation - Within sixty (60) days prior to the expiration of the accreditation, Tax Agents/Practitioners as defined under Section 2(e) hereof may apply for renewal of their accreditation.

In addition to the requirements provided under Section 4, submit the certified true copies of the following documents:

A. PRC ID for CPAs/Integrated Bar of the Philippines (IBP) ID for lawyers;

B. Current Certificate of Registration with the Board of Accountancy (BOA)/IBP;

C. Current Professional Tax Receipt (PTR) for individuals or Business Permit/Municipal License for non-individuals issued by the local government where registered;

D. Certificate of Membership in Good Standing with his/her/its PICPA Chapter or ACCPA (for CPAs) or Integrated Bar of the Philippines (for lawyers);

E. Certificate of Training at least six (6) hours per year or a total of eighteen (18) hours for the three (3) years of continuing professional education (CPE) in taxation from training/seminars conducted by the BIR (e.g. Revenue Regions, RDOs, etc.) or from private institutions (e. g. tax/auditing firms, educational or training institutions, professional organizations, etc.) where the number of training hours earned are printed on the certificates and obtained not more than a year prior to the renewal for accreditation;

F. Expired Certificate of Accreditation issued by the BIR;

G. Annual Registration Fee of P500 per year (current year and past three years);

H. Alphalist of Taxpayers Audited for the past three (3) years showing the Registered Name, TIN, engagement period, Letter of Authority (LOA)/Tax Verification Number (TVN), if any;

I. Sworn Statement that the individual/partnership/firm has observed the conditions and provisions prescribed on accreditation with affixed documentary stamp tax;

J. Income Tax Return (ITR) of the previous two (2) years.

The RNAB/RRAB shall make a random review of the financial statements audited by the accredited external auditor and their compliance with the above. Non-compliance with any of the provisions on accreditation shall be a ground for the revocation  / cancellation of his/her/its accreditation.

An external auditor whose accreditation has been cancelled may re-apply for accreditation after two years. Provided, that no further re-accreditation shall be granted after two (2) cancellations. In the re-application, the procedures and requirements for renewal shall be observed."

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/55026RR%2014-2010%20ACCREDITATION.pdf of the full text of RR No. 14-2010.

Procedures and Requirements For The Accreditation of Tax Practitioners/Agents As A Prerequisite To Their Practice and Representation Before The BIR

Section 6 of the Revenue Regulations 14-2010 refers to the Effects of Accreditation - Only those Tax Agents/Practitioners, Partners or Officers of General Professional Partnerships, or Officers or Directors of Corporate entities engaged in tax practice who have been issued certificate of Accreditation or ID card shall be allowed to represent a taxpayer or transact business with the Bureau of Internal Revenue in representation of a taxpayer for the purposed(s) defined in these regulations.

The Commissioner of his authorized representative shall only consider as valid document/attachments to tax returns, information returns or other statements or reports required by the Code of Regulations, the financial statements prepared, signed and certified by duly accredited tax practitioners. The BIR can refuse to transact official business with tax practitioners who are not accredited before it and shall require that certain official statements such as returns, financial statements, reports, protest, request for ruling, official correspondence and others statements, paper or documents filed on behalf of a taxpayer be signed or certified to by accredited persons which shall bear the following information below the signature of the latter.

A. For individual's (CPA's, members of GPPs, and others)
a.1 Tax Identification Number (TIN); and
a.2 BIR Accreditation Number, Date of Issue, and Date of Expiry

B. For members of the Philippine Bar (Lawyers)
b.1 Tax Identification Number (TIN)
b.2 Attorney's Roll Number;
b.3 Mandatory Continuing Legal Education (MCLE) Compliance Number; and
b.4 BIR Accreditation Number, Date of Issue, and Date of Expiry

The Procedures and Requirements For The Accreditation of Tax Practitioners/Agents As A Prerequisite To Their Practice and Representation Before the Bureau of Internal Revenue (BIR) are as follows:

1. All applicants shall accomplish their application for accreditation in the form to be prescribed by the Commissioner of Internal Revenue (BIR Form 1916). The duly-accomplished application form shall be submitted, together with all documentary requirements, whichever is applicable with the RRAB of the place where the individual applicant or general professional partnership has his/its residence or principal place of business.

2. For Individual Applicants:

a. Certified True Copy of Certificate of Registration with the Board of Accountancy (BOA) and current license with the Professional Regulations Commission, if a CPA [Certified True Copy of Professional Regulation Commission (PRC) Identification Card (ID)], or Attorney's Roll Number and Mandatory Continuing Legal Education (MCLE) Compliance Number, if a Lawyer;

b. Certificate of Membership in Good Standing with his/her/its PICPA Chapter or ACCPA (for CPAs) or Integrated Bar of the Philippines (for lawyers);

c. Certificate of Good Moral character issued by two (2) disinterested persons, who are either member of the BAR or CPA in good standing;

d. If not a Certified Public Accountant:

d.1 Certified copy of transcript of records from the university or college showing compliance with at least eighteen (18) units in accounting or taxation as prescribed in Section 4(A)(2).

d.2 Written certification of continuing professional education (CPE) units of at least six (6) hours per year or a total of eighteen (18) hours for three years in taxation conducted by the BIR (e.g. Revenue Regions, Revenue District Offices, etc.) or from private institutions (e.g tax/auditing firms, educational or training institutions, professional organizations, etc), where the number of training hours earned are printed on the certificates and obtained not more than a year prior to the application/renewal for accreditation.

e. A written undertaking under oath (Notarized) to preserve working papers within the period prescribe under Section 235 o the NIRC of 1997, as amended, and making them available to the Bureau's authorized representative/s when required or directed to do so.

3. Processing Fee - Each applicant shall pay a non-refundable processing fee of Five hundred pesos (P1000.00) upon filing of his application for accreditation. If the applicant is a general professional partnership, the fee shall be paid each partner and authorized representative thereof. In the case of incorporated entities engaged in accounting and tax consultancy services, the fee shall be paid by each of the applicant officers or designated representatives thereof.

4. Additional Requirements (if applicable) - Accredited tax agents shall likewise be required to submit the following documents as an attachment to the initial filing of reports, protests, request for ruling, official correspondence and other statements, papers or documents filed on behalf of a particular taxpayer as proof of their authority to represent the concerned taxpayer:

a. Copy of current Engagement Letter with clients.

b. Special Power of Attorney executed by the client authorizing the practitioner to represent him before the BIR.

5. For CPAs, Photocopy of Professional Tax Receipt (PTR)

6. Photocopy of BIR 0605 Annual Registration Fee of P500.00

7. Photocopy of BIR Certificate of Registration (COR)

8. Certificate of Training at least six (6) hours per year or a total of eighteen (18) hours for the three (3) years of continuing professional education (CPE) in taxation from trainings/seminars conducted by the BIR (e.g. Revenue regions, RDOs, etc.) of from private institutions (e.g. tax/auditing firms, educational or training institutions, professional organizations, etc.) where the number of training hours earned are printed on the certificates.

9. Photocopies of Income Tax Return (ITR) of  the previous two (2) years.

10. If employed, Certificate of Employment of Proof of Meaningful Experience with duties and responsibilities.

Please refer ftp://ftp.bir.gov.ph/webadmin1/pdf/55026RR%2014-2010%20ACCREDITATION.pdf

and http://www.bir.gov.ph/images/bir_files/old_files/pdf/30669rr%20no.%2011-2006.pdf of the full text of RR No. 14-2010 and RR No. 11-2006, respectively.

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.