Sale, Importation or Lease of Passenger or Cargo Vessels and Aircraft, including Engine, Equipment and Spare Parts thereof for Domestic or International Transport Operations are Not Subject to VAT

Revenue Regulations No. 15-2015 has recently issued by the BIR amending Sections 4.109-1 (B)(1)(s), (t) and (u) of Revenue Regulations (RR) No. 16-2005, as amended with details as follows:

SECTION 4.109-1. VAT-Exempt Transactions. - 

(B) Exempt transactions. - 

(1) Subject to the provisions of Sebsection (2) hereof, the following transactions shall be exempt from VAT:

(s) The transport of passengers by international carriers doing business in the Philippines shall be exempt from value-added tax (VAT) pursuant to Sections 109(1)(s) of the NIRC, as amended by RA No. 10378. The transport of cargo by international carriers doing business in the Philippines shall be exempt from VAT pursuant to Sections 109(1)(E) of the NIRC, as amended by RA No. 10378, as the same is subject to Common Carrier's Tax (Percentage Tax on International Carriers) under Section 118 of the NIRC, as amended. International carriers exempt under Sections 109(1)(S) and 109(1)(E) of the NIRC, as amended, shall not be allowed to register for VAT purposes.

(t) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations; Provided, however, that the exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of MARINA.

(u) Importation of fuel, goods and supplies by persons engaged in international shipping or air transport operations; Provided, that the said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%) VAT starting February 1, 2006;

(v) Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, such as money changers and pawnshops, subject to percentage tax under Secs. 121 and 122, respectively, of the Tax Code; and

(w) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One Million Nine Hundred Nineteen Thousand Five Hundred Pesos (P1,919,500.00); Provided, every three (3) years thereafter, the amount shall be adjusted to its present value using the Consumer Price Index, as published by the NSO; Provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of each year;

For purposes of the threshold of P1,919,500.00, the husband and the wife shall be considered separate taxpayers. However, the aggregation rule for each taxpayer shall apply. For instance, if a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT, the same shall be combined for purposes of determining whether the threshold has been exceeded. Thus, the VAT-exempt sales shall not be included in determining the threshold.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%2015-2015.pdf of the full text of RR No. 15-2015.

Alphalist Data Entry and Validation Module Version 5.0 (New) is Now Available

The Bureau of Internal Revenue (BIR) just updated their downloadables particularly the Alphalist data Entry and Validation Module Version 5.0 (New)

To download the Alphalist data Entry and Validation Module Version 5.0 (New) just click the following:

HTML: http://www.bir.gov.ph/images/bir_files/downloadables/alphalist/alphalist_full_setup_v5.exe

ATC PATCH: http://www.bir.gov.ph/images/bir_files/old_files/zip/atc_patch.zip

To download the Alphalist data Entry and Validation Module Version 5.1 (New) just click the following:

HTML: http://www.bir.gov.ph/images/bir_files/downloadables/alphalist/alphalist_full_setup_v5.1.exe

 

The Alphalist is updated in relation to the issuance of Revenue Regulations (RR) No. 3-2015 and other existing Revenue Regulations.

Income Payment or Expense/Cost not Subject to Withholding of Tax and Income Tax

In Section 2 of Revenue Regulations No. 12-2013 - Amendment. - Section 2.58.5 of RR 2-98, is hereby further amended to read as follows:

"Sec. 2.58.5. Requirements for Deductibility. - Any income payment which is otherwise deductible under the Code shall be allowed as a deduction from the payor's gross income only if it is shown that the income tax required to be withheld has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.

No deduction will also be allowed notwithstanding payments of withholding tax at the time of the audit of investigation or reinvestigation/reconsideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code."

However, Revenue Memorandum Circular no. 63-2013 was issued to clarify RR No. 12-2013 (dated 11 July 2013), which amends the requirements of deductibility of certain income payments under Section 2.58.5 of RR 2-98 as amended. As stated in RR No. 12-2013, no deduction will be allowed notwithstanding payments of withholding tax at the time of the audit investigation or reinvestigation/consideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code. In this regard, it is hereby clarified that the provisions of RR No. 12-2013 shall apply to audit investigation for taxable year 2013.

REIMBURSEMENT OF EXPENSES OR COST

Payments made by the Company to their Officer and Employees as reimbursement of expenses/cost or liquidation of advances are not considered as income payment. The ordinary, necessary, business transactions related to the operations of the Corporation are considered as REIMBURSEMENT OF COST AND NOT INCOME but just a RETURN OF CAPITAL, and thus, is not subject to Withholding Tax and Income Tax in the Philippines. 

CASUAL PURCHASE INVOLVING A SINGLE TRANSACTION OF LESS THAN TEN THOUSAND PESOS (PHP10,000.00); NON-REGULAR SUPPLIER OF GOODS & SERVICES AND OTHER EXPENSES

In general, income payment made by Top twenty thousand (20,000) private corporations, as determined by the Commissioner under Revenue Regulations No. 14-2008 to their regular purchases to its local/resident suppliers of goods and services are subject to Expanded Withholding Tax [Services-2% & Goods-1%]. But, casual purchase of goods and services, that are, purchased made from a non-regular supplier and oftentimes involving a single purchase of less than Ten thousand pesos (P10,000.00) and has not transacted at least six (6) transactions, either in the previous year or current year, are not subject to withholding tax.

In general, the following payments made by Top 20,000 corporations are exempt from withholding tax in the Philippines: Payments that does not constitute income on the part of the payee (ex. Reimbursable expenses), Payments to government agencies, payments to income tax exempt entities.

PROFESSIONAL FEES

Under existing Revenue Regulations, stated that Professional fees of services rendered by Individuals and Corporations on the Gross Professional Fees are subject to Creditable Withholding Tax of Fifteen percent (15%), if the gross income for the current year exceeds P720,000; and Ten percent (10%), if the gross income for the current year is P720,000 and below. However, Income payments made to General Professional Partnerships (GPP) are not subject to Withholding Tax. [Revenue Memorandum Circular No. 3-2012 – “SECTION 2.57.5 (4)]; Section 26 of the National Internal Revenue Code (NIRC) of 1997, as amended.

Those taxpayers who are not among of the top 20,000 corporations or mentioned in RR No. 14-2008 are not required to comply as stated in the regulations. However, taxpayers are required to comply with the requirements of deductibility of income payment mentioned in the National Internal Revenue Code as amended and other existing revenue regulations.

Imposition of Penalties for Failure to file Returns Under the Electronic Systems of the BIR by Taxpayers Mandatorily Covererd by eFPS or eBIRForms

Revenue Regulations (RR) No. 5-2015 was issued by the bureau for the amendment of RR No. 6-2014 and Imposition of Penalties for Failure to File Returns Under the Electronic Systems of the BIR by Taxpayers Mandatorily Covered by eFPS or eBIRForms.

 

In Section of the said RR, it mentioned the amendment to RR 6-2014 - The use of the e-BIRForms facility is mandatory for those covered by RR No. 6-2014, in order to clarify this, Section 3 paragraph 2 of RR No. 6-2014 is hereby amended to read as follows:

 

"X X X

2. Non-eFPS filers, covered by Section 4 herein, shall mandatorily use the eBIR Forms facility in electronically submitting and filing all their tax returns.

 

Upon successful validation of the accomplished tax return, taxpayers shall receive a system-generated notification e-mail which acknowledges that the tax return has been successfully filed. Taxpayer should print the Filing Reference (FRN) page generated by the system and the same shall be submitted to the Authorized Agent Banks (AABs) for the payment of the taxes due thereon. Sample printed FRN page is herein attached as Annex "A".

 

XXX"

 

Moreover, all taxpayers, under existing issuances, who are mandatorily covered to file their returns using eFPS or eBIRForms, who fail to do so, shall be imposed a penalty of One Thousand Pesos (P1,000) per return to Section 250 of the NIRC of 1997, as amended.

 

Please refer the following links of the Revenue Relations No. 5-2015: http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%205-2015/RR%205-2015.pdf and Annex "A" http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%205-2015/Annex%20A.pdf.

 

Philippines Makes Doing Business Easier In Starting A Business

Did you know that you can now start your business easier in the Philippines with the simplified 6 steps of about 8 days? Paying Taxes (Social Service Contributions / Payments) reduce to 13 payments from 36.

Starting a business is now simple due to reforms that organized steps and the cooperation of the government agencies.

Please check the diagram below: (http://www.bir.gov.ph/images/bir_files/internal_communications_1/Posters/00.%20MOA%20Signing%20poster%20Edit8.jpg)

This project was made possible by different government agencies above stated. In fact, the implementation of this project will be successful with the cooperation of both the taxpayers, investors and government agencies.

Presentation of Tax Exemption Certificate or Ruling by Exempt Individuals and Entities

Revenue Memorandum Circular (RMC) No. 8-2014 was issued by the bureau with regards to the presentation of Tax Exemption Certificate or Ruling by Exempt Individuals and Entities.

 

The BIR cited that under the provisions of existing tax laws and administrative issuances, however, some individuals, entities and transactions are considered exempt from imposition of taxes on income and, consequently, from withholding taxes.

 

With this, the concerned withholding agents, the RMC require all individuals and entities claiming such exemption to provide a copy of a valid, current and subsisting tax exemption certificate or ruling, as  per existing administrative issuances and any issuance that may be issued from time to time, before payment of the related income. The tax exemption certificate or ruling must explicitly recognize the grant of tax exemption, as well as the corresponding exemption from imposition of withholding tax.

 

Failure on the part of the taxpayer to present the said tax exemption certificate or ruling herein required shall subject him to the payment of appropriate withholding taxes due on the transaction. On the other hand, the withholding agent's failure to withhold notwithstanding the lack of tax exemption certificate or ruling shall cause the imposition of penalties under Section 251 and other pertinent Sections of the Tax Code.

 

Pursuant to Sections 57 to 59 and Sections 78 to 83 of the Tax Code, in relation to Revenue Regulations (RR) No. 02-1998, as amended, certain items of income are made subject to the payment of withholding taxes (final tax, creditable/expanded withholding tax, withholding tax on compensation) at the rates prescribed therein.

 

It was also mentioned that the Circular revokes all other circulars or issuances inconsistent with it

 

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/82437RMC%20No%208-2014.pdf of the full text RMC No. 8-2014.

Who Else Wants To Avoid Tax Penalties?

Most taxpayers wants to avoid in paying tax penalties with the bureau. In fact, this burden can be avoided by any type or classification of taxpayers by paying the right taxes on time and doing or following the tax obligations with diligence as required by revenue regulations, national internal revenue code and other tax laws.

As a taxpayer, to avoid this tax burdens, I usually keep myself updated with the revenue regulations, national internal revenue code and other tax laws. Tax planning and compliance are one of the measures in avoiding tax penalties. Mastery of these revenue regulations and national internal revenue code can truly help us taxpayers in avoiding tax penalties. 

Businessmen and entrepreneurs usually hires good tax consultants with regards to tax planning, compliance reporting and other services. 

For me, quality service begins with wisdom, perseverance, actions and compliance.    

Offline eBIRForms Package v5.2

The bureau has issued a new version of eBIRForms Package, the Offline eBIRForms Package v5.2 and you can download in the following site(s):

1. http://ftp.pregi.net/bir/ebirforms_package_v5.2.zip

The Electronic Bureau of Internal Revenue Forms (eBIRForms) was developed primarily to provide taxpayers with an alternative mode of preparing and filing tax returns that is easier and more convenient.

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 eBIRForms is a package application covering thirty-six (36) BIR Forms comprised of Income Tax Returns; Excise Tax Forms; VAT Forms; Withholding Tax Forms; Documentary Stamp Tax Forms; Percentage Tax Forms; ONETT Forms and Payment Form.

Updates: http://philippinetaxtalk.blogspot.com/2016/05/ebirforms-package-v61-new-is-now.html


To download the Offline eBIRForms Package v6.1, just click the following link:

http://ftp.pregi.net/bir/ebirforms_package_v6.1.zip

Income Payments On Sugar

Revenue Regulations No. 13-2015 has issued by the CIR of the BIR amending further the provisions of Section 2.57.2 of Revenue Regulations (RR) No. 2-98, as Amended by RR No. 7-2015 dated October 12, 2015.

 

The amendments is stated in the RR with details as follows:

 

SEC. 2. AMENDMENTS. - The pertinent provisions of Section 2.57.2 of RR No. 2-98, as amended by RR No. 7-2015, are hereby further amended to read as follows:

 

"(AA) Income payments on sugar. - On gross payments on purchases of sugar - One percent (1%)

 

1. Proprietors or operators of sugar mills/refineries on their mill share, xxx:

 

1.1 For locally produced raw cane sugar and raw sugar - the composite price, in metric tons, governing the specified crop year of raw cane sugar and raw sugar as reflected in one of the reports (Annex "A") under the weekly Final Sugar Production Bulletin duly issued by the Sugar Regulatory Administration (SRA) on the date of sale, or actual selling price, whichever is higher.

 

It shall be ensured that a copy of the weekly Final Sugar Production Bulletin be officially transmitted by the SRA to the Commissioner of Internal Revenue within twenty four (24) hours from the date of issuance thereof.

 

          XXX          XXX          XXX

 

All existing rules and regulations or parts thereof which are inconsistent with the provisions of these Regulations are hereby modified, amended, revoked or repealed accordingly.

 

The Regulations took effect fifteen (15) days immediately following publication in a newspaper of general circulation.

 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202015/RR%20No.%2013-2015.pdf of the full text of RR No. 13-2015.

 

Tax Treatment of Certain Persons Engaged in the Business of Land Transportation

Revenue Memorandum Circular No. 70-2015 has recently issued by the bureau to reiterate the Tax Treatment of Certain Persons Engaged in the Business of Land Transportation.

This Circular deals with the tax incidence of the business of land transportation, specifically transport network companies (TNCs), such as but not limited to the likes of UBER, GRAB TAXI, their Partners/suppliers and similar arrangements. A TNC is a pool of land transportation vehicles whose accessibility to the riding public is facilitated through the use of a common point of contract which maybe in the form of text, telephone and/or cellular calls, email, mobile applications or by other means.

The TNC may or may not have been granted a Certificate of Public Convenience (CPC). If it is a holder of a valid and current CPC, it is known as a common carrier and its gross receipts are subject to the Three Percent (3%) common carriers tax under Section 117 of the National Internal Revenue Code of 1997 as amended (NIRC). Otherwise, it is classified as a land transportation service contractor and is subject to the Twelve Percent (12%) Value Added Tax (VAT) under the NIRC.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2070-2015.pdf of the full text of RMC No. 70-2015.