Extending The Deadline For Submission Of Inventory List And Other Supporting Requirements

The CIR of the Bureau has recently issued Revenue Memorandum Circular (RMC) No. 61-2015 to extend the deadline, initially set on or before September 30, 2015 per Revenue Memorandum Circular (RMC) No. 57-2015 to on or before October 31, 2015, for the submission of the Inventory Lists and other supporting requirements covering ending inventory as of December 31, 2014, and thereafter every 30th day following the close of the taxable year, depending on the accounting period being adopted by the taxpayer.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC_61-2015_Extension_InventoryList.pdf of the full text of RMC No. 61-2015.

Clarification Of The Provisions On The Submission Of Monthly eSales

Revenue Memorandum Circular (RMC) No. 56-2015 has issued by the bureau to clarify the provisions on the Submission of Monthly eSales Report via the Electronic Sales (eSales) Reporting System Prescribed under Revenue Reulations (RR) No. 5-2005 and Revenue Memorandum Order (RMO) No. 12-2012.

eSales is a real time reporting online of actual sales transactions recorded by Cash Register Machine (CRM)/Point-of-Sales (POS) machine, or other sales machines and/or software.

In the course of implementation of RR No. 5-2005 and RMO No. 12-2012, it was ascertained that several adjustments/amendments were made on the amount of monthly eSales as reported resulting in the reconstitution of sales as recorded in CRM/POS machines.

In view thereof, any amendment in the amount of monthly sales reported, shall require a written justification addressed to the concerned LTS Investigating Office/Revenue District Office (RDO) with the corresponding adjusting entries properly recorded in the Books of Accounts.

Taxpayers who failed to comply with the foregoing requirements shall be included in the priority audit program of the concerned investigating offices.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2056-2015.pdf of the full text of RMC No. 56-2015.

Documents that are Subject to Documentary Stamp Tax of Fifteen Pesos (P15.00)

Revenue Memorandum Circular No. 36-2012 was issued by the Bureau for the clarification on whether documents mentioned in Section 199 of the Tax Code of 1997, as amended by Republic Act (RA) No. 9243, are subject to the documentary stamp tax of P15.00 as prescribed in Section 188 of the said Code.

Documentary stamp tax is a tax upon documents, instruments, loan agreements and papers, and upon acceptances, assignments, sales, and transfers of the obligation, right or property incident thereto.

Only instruments, documents and papers of transactions expressly enumerated in Section 199 of the Tax Code, as amended, are exempt from the documentary stamp tax. Consequently, certificates and other necessary documents issued by the Construction Industry Authority of the Philippines, as hereunder enumerated, are not among those mentioned in Section 199 of the Tax Code of 1997, as amended, viz:

1. Certificate of Registration of Overseas Contractors;

2. Certificate of Renewal of Registration of Overseas Contractors;

3. Contractor's License (Original);

4. Certificate of whether a certain contractor is licensed;

5. Certified true copies of license certificates;

6. Certified true copies of documents such as Affidavit of Undertaking of Sustaining Technical Employee (STE) and Curriculum Vitae of STE;

7. Certificate of Accreditation of Arbitrators; and

8. Case documents to be used to support petition to appeal in Court of Appeals.

These documents are clearly subject to documentary stamp tax of Fifteen pesos (P15.00) as prescribed under Section 188 of the Tax Code of 1997, as amended, to wit:

"Section 188. Stamp Tax on Certificates-On each certificate of damage or otherwise and on every certificate or document issued by any customs officer, marines surveyors, or other person acting as such, and on each certificate issued by a notary public, and on each certificate of any description required by law or by rules or regulations of a public office, or which is issued for the purpose of giving information, or establishing proof of a fact, and not otherwise specified herein, there shall be collected a documentary stamp tax of Fifteen Pesos (P15.00)." (Underscoring ours)

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/64650RMC%20No%2036-2012.pdf of the full text of RMC No. 36-2012

Requirements for Deductibility of Certain Income Payments

The CIR has issued Revenue Regulations No. 12-2013 amending Section 2.58.5 of Revenue Regulations No. 2-98, as amended, relative to the Requirements for Deductibility of Certain Income Payments:

SECTION 2. Amendment. - Section 2.58.5 of RR 2.98, as amended, 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 investigation or reinvestigation/reconsideration in cases where no withholding of tax was made in accordance with Secs. 57 and 58 of the Code."

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/73009RR%2012-2013.pdf of the full text of RR No. 12-2013.

Tax Implications Of General Professional Partnership (GPP)

Revenue Memorandum Circular (RMC) No. 3-2012 was issued by CIR of the bureau to clarify the Tax Implications of General Professional Partnership.

Under Sec 26 of the National Internal Revenue Code (NIRC) of 1997, as amended, a general professional partnership as such shall not be subject to income tax. However, persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities, thus:

"SEC. 26. Tax Liability of Members of General Professional Partnerships. - A general professional partnership as such shall not be subject to the income tax imposed under this Chapter. Persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities.

For purposes of computing the distributive share of the partners, the net income of the partnership shall be computed in the same manner as a corporation.

Each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership."

In relation thereto, Section 2.57.5 of Revenue Regulations No. 2-98, as amended, provides that:

"SECTION 2.57.5. Exemption from Withholding. - The withholding of creditable withholding tax prescribed in these Regulations shall not apply to income payments made to the following:

(A) . . . 

(B) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:

(1) . . .

(4) General Professional Partnerships

XXX          XXX          XXX"

Tax implications_General Professional Partnership

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Clearly, a general professional partnership shall not be subject to income tax since it is the individual partners who shall be subject to income tax in their separate and individual capacities. A general professional partnership is defined in Section 22 (B) of the 1997 Tax Code, as amended, as follows:

"SEC. 22. Definitions. - When used in this Title:

(A) . . . 

(B) The term 'corporation' shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participation), associations, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating or consortium agreement under a service contract with the Government. 'General professional partnerships' are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.

XXX          XXX          XXX"

Relative thereto, income payments made to a General Professional Partnership in consideration for its professional services are not subject to income tax and consequently to withholding tax prescribed in Revenue Regulations No. 2-98, as amended.

It is the individual partners who shall be subject to income tax, and consequently, to withholding tax, in their separate and individual capacities pursuant to Section 26 of the 1997 Tax Code, as amended. Furthermore, each partner shall report as gross income his distributive share, actually or constructively received, in the net income of the partnership.

However, it is worth mentioning that income payments made periodically or at the end of the axable year by a general professional partnership to the partners, such as drawings, advances, sharings, allowances, stipend and the like, are subject to the Fifteen percent (15%), if the payments to the partner for the current year exceeds P720,000.00; and Ten percent (10%) creditable withholding tax, if otherwise, pursuant to Section 2.57.2 (H) of Revenue Regulations No. 2-98, as amended by Revenue Regulations No. 30-03.

Please refer http://www.bir.gov.ph/images/bir_files/old_files/pdf/61821RMC%20No%203-2012.pdf of the full text of RMC No. 3-2012.

Power To Extend Or Shorten Corporate Term

A private corporation may extend or shorten corporate term as stated in SEC. 37 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines as follows:

SEC. 37. Power to extend or shorten corporate term. - A private corporation may extend or shorten its term as stated in the articles of incorporation when approved by a majority vote of the board of directors or trustees and ratified at a meeting by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of the members in case of non-stock corporations. Written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place or residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, That in case of extension of corporate term, any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code.

Powers And Capacity Of Corporations

What are the Powers and Capacity of Corporations?

In SEC. 36 of Batas Pambamsa Blg. 68 "The Corporation Code of the Philippines" refers to the Powers of Corporations with details as follows:

SEC. 36. Corporate powers and capacity. - Every corporation incorporated under this Code has the power and capacity:

1. To sue and be sued in its corporate name;

2. Of succession by its corporate name for the period of time stated in the articles of incorporation and the certificate of incorporation;

3. To adopt and use a corporate seal;

4. To amend its articles of incorporation in accordance with the provisions of this Code;

5. To adopt by-laws, not contrary to law, morals, or public policy, and to amend or repeal the same in accordance with this Code;

6. In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks in accordance with the provisions of this Code; and to admit members to the corporation if it be a non-stock corporation

7. To purchase, received, take or grant, hold, convey, sell, lease, pledge, mortgage and otherwise deal with such real other corporations, as the transaction of the lawful business of the corporation may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution;

8. To enter into merger or consolidation with other corporations as provided in this Code;

9, To make reasonable donations, including those for the public welfare or for hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, That no corporation, domestic or foreign, shall give donations in aid of any political party or candidate or for purposes of partisan political activity;

10. To establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees; and

11. To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in its articles of incorporation.

Executive Committee Of A Corporation

It is stated in SEC. 35 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines", about the creation of Executive of committee as follows:

SEC. 35. Executive committee. - The by-laws of a corporation may create an executive committee, composed of not less than three member of the board, to be appointed by the board. Said committee may act, by majority vote of all its members, on such specific matters within the competence of the board, as may be delegated to it in the by-laws or on a majority vote of the board, except with respect to: (1) approval of any action for which shareholders' approval is also required; (2) the filling of vacancies in the board; (3) the amendment or repeal of by-laws or the adoption of new by-laws; (4) the amendment or repeal of any resolution of the board which by its express terms is not so amendable or repealable; and (5) a distribution of cash dividends to the shareholders.

What Is The Effect Of Disloyalty Of A Director In A Corporation?

What is the effect of the disloyalty of a director in a corporation?

In SEC. 34 of Batas Pambansa Blg. 68 "The Corporation Code of the Philippines" refers to the Disloyalty of a director with details as follows:

SEC. 34. Disloyalty of a director. - Where a director, by virtue of his office, acquires for himself a business opportunity which should belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits by refunding the same, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture.

Availability Of The Update Of Exemption Of Employees (UEE) Data Entry Module In Filing Of The BIR Form No. 2305 and 2305 Batch File Validation Module

The CIR of the bureau has issued Revenue Memorandum Circular No. 59-2015 in relation to RR 7-2012 to circularize the availability of Updated of Exemption Of Employees (UEE) (BIR Form No. 2305) Data Entry Module and 2305 Batch File Validation Module which shall be used for the following:

 

1. Updating of Employee's Additional Exemption for Dependents;

2. Change of Status; and

3. Execution of the "Waiver to Claim the Additional Exemption" by the husband; or revocation of the previously executed "Waiver to Claim the Additional Exemption by the Husband". 

 

The filing of BIR Form No. 2305 shall be coursed through the employer and shall be electronically filed containing all the required information in the prescribed electronic format using any of the following:

 

Option 1 Microsoft Excel CSV format;

Option 2 Taxpayer's own extract program; or

Option 3 BIR's UEE Data Entry Module.

 

For those who will be using Option 1 or Option 2 are required to use the 2305 Batch File Validation Module. The UEE Data Entry Module and 2305 Batch File Validation Module are available at http://www.bir.gov.ph/index.php/downloadables.html

 

For the Submission of Report, Submission of Supporting Documents, Venue of Submission and Other Concerns, please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No%2059-2015_copy.pdf of the full text of RMC No. 59-2015.