Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos

The bureau has issued Revenue Memorandum Circular (RMC) No. 106-2016 publishing the Full Tex of Memorandum Circular No. 06, Entitled "Enjoining All Government Officials and Employees to Strictly Observe and Comply with the Prohibition Against Going to Gambling Casinos".

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20106-2016.pdf of the full text of  Memorandum Circular No. 06 dated September 20, 2016.

Procedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners

Revenue Memorandum Order (RMO) No. 27-2016 was issued by the bureau relative to the Procedure for Claiming Tax Treaty Benefits for Dividend, Interest and Royalty Income of Nonresident Income Earners from sources with the Philippines.

This Order seeks to provide for the new procedures in claiming preferential tax treaty benefits on dividend, interest and royalty income of nonresidents pursuant to effective tax treaties, thereby amending for this purpose, RMO No. 72-2010.

The foregoing objectives are achieved through:

a. Full disclosure of withholding tax agents on income derived by nonresidents by filing accurate and timely BIR Forms1601-F and1604-CF;

b. Mandatory audit investigation for final withholding tax payments on income of nonresidents deriving dividends, interest and royalty income in the Philippines; and

c. Enhancing BIR Forms 1601-F and 1604-CF.

Nonresidents - are not residents of the Philippines and not citizens thereof. For purposes of this Order they are classified into:

a. Nonresident Alien not engaged in trade or business (NANETB) -The aggregate period of stay in the Philippines does not exceed 180 days during any calendar year.

b. Nonresident foreign corporations (NRFC) - are corporations organized under foreign laws and not engaged in trade or business in the Philippines.

Beneficial Owner - refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. lt also includes those persons who exercise ultimate effective control over a legal person or arrangement.3

The preferential treaty rated for dividends, interests and royalties are granted outright by withholding final taxes at applicable treaty rates as shown in Annex A http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2027-2016%20Annex%20A.PDF of this RMO.

Guidelines for the Availment of Preferential Treaty Rates 

1. A duly accomplished BIR Form No. 1601-F and 1604-CF 1904-shall be filed before the appropriate RDO where the domestic withholding agents of nonresidents are registered. All particulars in the form must be properly filled up and timely filed in accordance with the provisions of the National lnternal Revenue Code (NIRC) of 1997, as amended. 

2. Payment of pertinent final taxes due shall be made to Authorized Agent Banks.

3. ln the event of audit investigation, withholding agents shall keep the following supporting documents in the records of the office pursuant to Revenue Regulations (RR) No. 5-20144 for substantiation of the claim for preferential treaty rates: 

a. Consularized Proof of Residency; 

b. For Dividends - 

1. Certification from Corporate Secretary. original copy of a duly notarized certificate executed by the corporate secretary of the domestic corporation showing all the following information: 

i. Details of dividend declaration (with attached related Board Resolution); 

ii. Nurnber, value and type of shares of the nonresident income earner as of the date of record/transaction, and as of the date of payment of the subject dividends; 

iii. Percentage of ownership of the nonresident income earner as of the date of record/transaction, and as of the date of the payment of subject dividends; 

iv. Acquisition date(s) of the subject shares; and 

v. Mode of acquisition of the subject shares.  

2. Board of lnvestments (BOl) Registration, if applicable 

Certified copy of Board of Investments registration of the payor of the interest, including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

c. For lnterest - original or certified copy of the notarized contract of loan or loan agreement. Board of lnvestments (BOl) Registration, if applicable certified copy of Board of lnvestments registration of the payor of the interest, including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

d. For Royalties - 

1. original or certified copy of the duly notarized Royalty Agreement, Technology Transfer Agreement, or Licensing Agreement; 

2. When applicable, 

i. Certified copy of Board of lnvestments registration of the payor of the royalties, including a Sworn Statement that such registration has not been cancelled at the time of the transaction; 

ii. A certified copy of the registration of the payor of the income or withholding agent with the Philippine Economic Zone Authority (PEZA) of the payor of the royalties including a Sworn Statement that such registration has not been cancelled at the time of the transaction. 

iii. Certified copy of lntellectual Property Office (IPO) registration. 

The BIR reserves the right to request other additional documents in the the course of audit. 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2027-2016.pdf of the full text of RMO No. 27-2016.

Procedures Relative to Issuance of Subpoena Duces Tecum, and Submission of Reports of Investigation/Verification on Tax Cases/Dockets

Recently, the bureau has issued Revenue Memorandum Circular (RMC) No. 111-2016 to clarify clarify and accordingly reiterate the procedures relative issuance of Subpoena Duces Tecum (SDT), and submission of reports of investigation/verification on tax cases/dockets to the reviewing Office.

It is stated in the circular:

One of the powers of the Commissioner under Section 6 of title National Internal Revenue Code of 1997 ("Tax Code"), as amended, is to authorize the examination of any taxpayer for the purpose of assessing the taxpayer's correct internal revenue tax liabilities. However, the issuance of an assessment must be made, generally, within the three (3)-year prescriptive period or, exceptionally, within the ten (10)-year' prescriptive period pursuant to Sections 203 and 222, respectively, of the Tax Code, as amended.

In this statutory context of prescription, when the taxpayer fails to present or submit his books of accounts and/or pertinent records, or to account for all sales/receipts/invoices and to substantiate all or any of the deductions, exemptions or credits claimed in his return, there are instances when jeopardy assessments, issued basically to comply with the prescriptive period, are resorted to by our Revenue Officers. To prevent the issuance of such assessments, the procedures for the issuance and enforcement of SDTs, as prescribed under Revenue Memorandum Order No. 10-2013, as amended by RMO No.8-2014, must best strictly observed by all concerned to compel taxpayers to submit or otherwise present the required books, records and documents.

Likewise, to ensure that the Bureau is not deprived of its right to assess and collect the correct amount of tax or any deficiency taxes so assessed, a tax docket with deficiency tax collections/assessments shall be transmitted by the investigating office to the reviewing/approving official not later than sixth months prior to prescription date (e. g., if the income tax case will prescribe on April 15, 2017, the docket should have been transmitted on October 15, 2016). The reviewing/approving official shall not accept any tax docket alter the aforesaid period, unless a duly accomplished "waiver form" is attached thereto.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20111-2016.pdf of the full text of RMC No. 111-2016.

Amending Certain Provision of RMO No. 19-2015 Pertaining to Audit Policies

Revenue Memorandum Order (RMO) No. 64-2016 was recently issued by the bureau  to amend the policies and procedures requiring the approval of the Commissioner of Internal Revenue before a taxpayer may be audited for the (3rd) time and the removal of the fifty (50%) surcharge.

AMENDMENT

For purposes of auditing a taxpayer for the three succeeding years, the policy stated in Sec. lll No.4 of RMO NO. 19-2015 is hereby amended to read as follows: 

"lf the taxpayer has been audited for the last two (2) years and has been selected for audit an the current or third (3rd ) year, the RDO/LTD/LTAD shall encode right away the requested audit of the subject taxpayer in eLAMS/ eTIS-CMS which shall be approved by the Regional Director/ Assistant Commissioner who heads the investigating office. The Selection Code shall depend on the reason why the taxpayer has been selected." 

"Then deficiency assessment on these cases shall only be imposed with twenty-five percent (25%) surcharge unless the under declaration of income or overstatement oi expenses/ deductions reaches 30% or more which shall be imposed with fifty percent (50%) surcharge." 

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_3/Full%20Text%20of%20RMO%202016/RMO%20No.%2064-2016.pdf of RMO No. 64-2016

Rules and Regulations Implementing the Tax Incentives Available to Tourism Enterprises Duly Registered with the Tourism Enterprises

The bureau recently issued Revenue Regulations (RR) No. 7-2016 dated November 15, 2016 implementing the Tax Incentives Available to Tourism Enterprises Duly Registered with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) under Republic Act No. 9593 otherwise known as the Tourism Act of 2009.

In the regulations, it also stated the Terms,  Fiscal Incentives of Tourism Enterprises Within TEs, Fiscal Incentives of Tourism Enterprises outside TEZs, Availment of Tax Incentives, Withholding Taxes, TEZs not Treated as Separate Customs Territories, Maintenance of Separate Books of Account for each TIEZA-registered Activity, Compliance with RA No. 10708, No Double Availment of Incentives Schemes, Period of Availment and Payment of Back Taxes.

These regulations shall take effect after fifteen (15) days following publication in the Official Gazette or a newspaper of general circulation, whichever comes first.

Please refer http://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202016/RR%20No.%207-2016.pdf of the full text of RR No. 7-2016.

Non-Suspension of All Audit and other Field Operations of the BIR During Christmas Season

In connection with the thrust of the Bureau of Internal Revenue (BIR) to intensify taxpayer compliance and increase revenue collections, all field audit and other field operations including all enforcement activities shall continue during this holiday season.

 

The CIR is also reminded that all efforts should be directed to ensure maximum revenue collection throughout the year.

 

The Revenue Memorandum Circular (RMC) No. 109-2016 shall take effect immediately.

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20109-2016.pdf of the full text of RMC No. 109-2016.

Streamlining the Business Registration Process and Documentary Requirements for the Registration of Each Type of Application

The bureau has issued Revenue Memorandum Circular (RMC) No. 93-2016  to streamline the Business Registration Process and Documentary Requirements by further Amending the List of Documentary Requirements for the Registration of Each Type of Application under "Annex A" of Revenue Regulations (RR) No. 7-2012, as Clarified Under RMC No. 70-2013 and RMC No. 37-2016.

 

The revised checklist of documentary requirements herein attached as Annexes "A1-A11" included the acknowledgement of the applicant on the identified lacking documents for completion to facilitate the processing of application.

 

Steps for the registration of business in the Bureau of Internal Revenue to be implemented as follows:

 

STEP/PROCESS

 

1. Apply for Registration [with complete documentary requirements (Annexes "A1-A11")]

2. Pay Annual Registration Fee [thru Mobile Revenue Collection Officers System (mRCOs), Authorized Agent Banks, Revenue Collection Officer or GCash]

3. Get Certificate of Registration with auto-approved Authority to Print (ATP) for initial principal receipts/invoices.

 

The auto-approved ATP for initial principal receipts/invoices is only applicable to newly registered business taxpayer. However, subsequent application for receipts/invoices shall be processed in accordance with the procedures specified under existing issuances.

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%2093-2016.pdf 

Proper Due Dates for Filing of Returns and Payment of Taxes for the Purpose of Imposition of Penalties for Late Filing and/or Late Payment

Revenue Memorandum Circular (RMC) No. 65-2016 was issued by the bureau to clarify the rules on appropriate due date of filing of return and payment of taxes when the exact due dates fall on a Saturday, Sunday, or a holiday both for electronic and manual filers and payers of taxes., for the purpose of imposition of penalties for Late Filing and/or Late Payment.

A. For Taxpayers under the Electronic Filing and Payment Svstem (EFPS)

For taxpayers mandatorily covered by the EFPS rules and those taxpayers registered and enrolled under the EFPS, the due date of , filing of return and the payment of taxes shall be the exact dates stated in the law or regulations for filing or payment. However, if the' deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing and payment shall fall on the next business day.

Transmission of electronic returns and electronic payment must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for the filing and payment of the relevant return. Otherwise, the same shall be considered to have been filed late or paid late, and thus shall be subject to the appropriate penalty for late filing/late payment.

In case of dispute, the taxpayer shall present the written advice of the BIR that its electronic system for filing and payment of taxes is down or unavailable, which shall be issued by the BIR everytime its electronic system for filing and payment of taxes is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns and/or pay the taxes on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns and/or pay the taxes, or for late filing/late payment whichever is applicable.

B. For Taxpayers under the Online eBlR Form System

For those taxpayers covered by eFiling of Return under the Online eBlR Forms System and those taxpayers registered and enrolled under the Online eBlR Forms System, the due date of filing of return shall be the exact dates stated in the law or regulations for filing of said return. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the electronic filing shall fall on the next business day.

Transmission of electronic returns must be completed/made on and actually received by the Bureau of Internal Revenue on or before 12 midnight of the defined statutory or regulatory due date for'the filing of the relevant return. Otherwise, the same shall be considered to have been filed late and thus shall be subject to the appropriate penalty for late filing.

In case of dispute, the taxpayer shall present the written advice of the BIR that its online eBlR Forms System ' is down or unavailable, which shall be issued by the BIR everytime its Online eBlR Forms System is down or unavailable. Said advice will also include instruction of appropriate deadline for manual filing and ' thereafter an instruction for the due date of electronic filing of tax returns initially filed manually. Failure to file the returns on or before the deadline stated in the said written advice shall warrant the imposition of penalties for failure to file the returns or for late filing whichever is applicable.

The due date for the payment of taxes due for the returns filed under the Online eBlR Forms System shall be made on the exact dates stated in the law or regulations for payment thereof. However, if the deadline falls on a Saturday, Sunday or a holiday, the appropriate deadline for the payment thereof shall fall on the next business day, or on the same deadline for the filing of the returns under the Online eBlR Forms System.

C. For Taxpayers who are Manual Filers or are using the Offline eBlR Forms Package

Taxpayers not mandatorily covered or enrolled under either the EFPS or the Online eBlR Form System or are users of the Offline eBlR Form Package are classified as Manual Filers. Manual filers are required to file and pay on or before the due date stated in the law or regulation for filing returns and/or payment of taxes due thereon, however, if such due date falls on a Saturday, Sunday or a holiday the act of filing and payment shall be done on the next business day. Any returns filed and/or tax paid beyond the dates stated in this paragraph, shall be subject to the appropriate penalty for none filing/payment, or late filing/payment, whichever is applicable.

SOURCE: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No.%2065-2016.pdf 

Clarification on the Requirement of Taxpayer Identification Number (TIN) for Members of Cooperatives Applying for Certificate of Tax Exemption (CTE)

Did you know that the bureau has issued Revenue Memorandum Circular (RMC) No. 102-2016 to clarify the Requirement of Taxpayer Identification Number (TIN) for Members of Cooperatives Applying for Certificate of Tax Exemption (CTE)?

This is relative to Revenue Memorandum Order (RMO) No. 76-2010 and RMC No. 81-2010. RMO No. 076-2010 (Prescribing the Policies and Guidelines in the Issuance of Certificate of Tax Exemption of Cooperatives and the Monitoring Thereof) requires, for the issuance of the Certificate of Tax Exemption (CTE), that cooperatives submit, among others, an Original Copy of Certification under Oath of the List of Cooperative Members with their respective Taxpayer Identification Number (TIN) and their capital contributions, prepared by authorized official of the Cooperative. The above requirement has been relaxed by RMC No. 81-2010 which allowed, in lieu thereof, the submission of Certified Photocopy of the List of Cooperative Members with their Respective Capital Contributions.

Click: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/Annex%20A_RMC%20102-2016.pdf to download the BIR Form No. 1945 Application for Certificate of Tax Exemption for Cooperatives.

Click: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/Annex%20B_RMC%20102-2016.pdf to download BIR Form No. 1904 Application for Registration.

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%20102-2016.pdf of the full text of RMC No. 102-2016.

Submission of Mandatory Documentary Requirements for One-time Transactions Involving Transfer of Real Property

The bureau recently issued Revenue Memorandum Circular (RMC) No. 105-2016 amending certain provisions of RMC No. 76-2007, in relation to the Submission of Mandatory Documentary Requirements for One-time Transactions Involving Transfer of Real Property.

 

Item No. 2 of RMC No. 76-2007 shall no longer be required in the processing of one-time transactions involving transfer of real property and the issuance of electronic Certificate Authorizing Registration (eCAR):

 

"2. Certified true copy of the original CAR (copy of the Registry of Deeds) pertaining to the transfer of property prior to the issuance of Original/Transfer Certificate of Title (OCT/TCT) or Condominium Certificate of Title (CCT) which is the subject of the current sale/transfer, or certification issued by the Registry of Deeds indicating the serial number of the CAR, date of issuance of CAR, the Revenue District Office Number of the district office that issued of the CAR, the name of the Revenue District Officer who signed the CAR, the type of taxes paid and the amount of payment per tax type.

 

The aforementioned document shall be submitted for OCT/TCT/CCT issued starting 2007, in case the Register of Deeds fails to annotate the information contained in the CAR as prescribed under Section 5 of Revenue Regulations No. 24-2002 dated November 15, 2002 and Section 1 of Memorandum Order No. 233 dated December 11, 2006 issued by President Gloria Macapagal-Arroyo, as circularized in Revenue Memorandum Circular No. 3-2007."

 

Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMC%20No.%20105-2016.pdf of the full text of RMC No. 105-2016.