Month: January 2021

• In filing a claim for refund or credit of creditable withholding tax, compliance with the following must be met:
  • The claim for refund must be filed within the two-year prescriptive period.
    • The administrative and judicial remedy of filing a claim for refund of erroneously or excessively paid tax must be done within two (2) years from the date of payment of the tax both in the administrative and judicial levels. For actions for refund of excess corporate income tax, the Supreme Court ruled that the two-year prescriptive period should be counted from the filing of the Final Adjustment Return, because it is only during that date that the exact tax liability or refundability of the tax can be determined.
    • The CTA shall exercise exclusive jurisdiction to review by appeal the inaction of petitioner CIR provided that the petition for review is filed within the two-year period from the filing of annual ITR.
    • The law prescribes two options to a taxable corporation whose total quarterly income tax payment in a given taxable year exceeds its total income tax due. The taxpayer may either file a tax refund (either in the form of cash or tax credit certificate) or carry over the excess credit. However, once the carry-over option is taken actually or constructively it becomes irrevocable for that taxable period. The phrase "for that taxable period" refers to the taxable year when the excess income tax, subject of the option, was acquired by the taxpayer.
      • In exercising its option, the corporation must signify in its final adjustment return (by marking the option box provided in the BIR form) its intention either to carry over the excess credit or to claim a refund. To facilitate tax collection, these remedies are in the alternative and the choice of one precludes the other.
    • The fact of withholding must be established by a copy of a statement duly issued by the payor (withholding agent) to the payee, showing the amount paid and the amount of tax withheld therefrom.
      • The Court disallows supporting BIR Form no. 2307s, which a) were not signed by the payor, 2) with incorrect TIN of the payor indicated in the certificate, 3) not supported by original 2307s and 4) dated outside the taxable year subject of refund (Arrow Freight Corporation, CTA Case No. 9809, December 7, 2020).
    • The income upon which the taxes were withheld must be included in the return of the recipient.

 

REFUND OF EXCESS INPUT VAT ON ZERO-RATED SALES

 

In order to be entitled to a refund or tax credit of input tax due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied:

• As to the timeliness of the filing of the administrative and judicial claims:
  • The claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;
  • That in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days (now 90 days) from the date of submission of complete documents in support of the application, the judicial claim must be filed with the CTA within 30 days from receipt of the decision or after the expiration of the said period;
    • The taxpayer can file an appeal in one of two ways: (1) file the judicial claim within thirty days after the Commissioner denies the claim within the 120-day (now 90) period, or (2) file the judicial claim within thirty days from the expiration of the 120-day (now 90) period if the Commissioner does not act within the 120-day (now 90) period. The 30-day period always applies, whether there is a denial or inaction on the part of the CIR. The rules did not provide a provision where the taxpayer can wait for the decision of the BIR, unlike in cases of disputed tax assessment. (Lapanday Foods Corporation v. CIR, CTA EB No. 2175, CTA Case No. 9950, December 7, 2020)
    • Letter of Denial received by a taxpayer after the lapse of the 120-day (now 90) period is inconsequential, because the VAT refund/credit claim by this time is already deemed denied which became final and unappealable after the lapse of thirty (30) days (Lead Export and Agro-Development Corporation v. CIR, CTA Case No. 10161, December 11, 2020; Lantro Philippines, Inc. v. CIR, CTA Case No. 9436, December 11, 2020).
    • In case of denial by the BIR, the taxpayer must show that the BIR should not have denied the administrative claim. The taxpayer must specifically assail the reasons or bases why its administrative claim was denied in the first place by the BIR. It should argue or prove that the said reasons or bases of respondent were never justified in law. Thus the petition is denied. (Maxima Machineries, Inc. v. CIR, CTA Case No. 9723, December 3, 2020)
  • With reference to the taxpayer’s registration with the BIR
    • The taxpayer is a VAT-registered person.
  • In relation to the taxpayer’s output VAT:
    • The taxpayer is engaged in zero-rated or effectively zero-rated sales;
      • Sales of goods and services by a VAT-registered taxpayer, to entities located in Ecozones, as well as to BOI-registered entities whose products are 100% exported, are considered "export sales" subject to zero percent (0%) VAT rate.Certifications issued by PEZA, BOI and other agencies confirming the issuance of VAT zero-rating certifications of the claimant’s clients for the period of claim is allowed as proof of VAT zero-rating (Maxima Machineries, Inc. v. CIR, CTA Case No. 9723, December 3, 2020)
    • for zero-rated sales to non-resident foreign corporation:
      • The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules – in the form of Certificate of Inward Remittance (Maxima Machineries, Inc. v. CIR, CTA Case No. 9723, December 3, 2020)
      • The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a nonresident person not engaged in business who is outside the Philippines when the services were performed.
        • In order to be considered as a non- resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both a Certification of Non-Registration of Corporation/Partnership issued by the Philippine Securities and Exchange Commission (SEC), and proof of incorporation/registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate).
        • The CTA cannot give credence or probative value to the printed screenshots of foreign government websites database considering that such can be easily manipulated and none from the said foreign governments attested to the authenticity of the said websites and to the registration of the purported petitioner's foreign clients found therein. (AIG Shared Services Corporation (Philippines) v. CIR, CTA Case No. 9351, December 2, 2020)
      • The services rendered should be other than ''processing, manufacturing or repacking goods.”This may be supported by a professional service agreement (Teleworks Philippines, Incorporated v. CIR, CTA Case No. 9380, December 11, 2020)
      • The services must be performed in the Philippines by a VAT-registered person. The claimant must show that the services were performed in the Philippines (Teleworks Philippines, Incorporated v. CIR, CTA Case No. 9380, December 11, 2020; AIG Shared Services Corporation (Philippines) v. CIR, CTA Case No. 9351, December 2, 2020)
    • Sales of goods or properties between PEZA-registered entities are VAT exempt. The concerned taxpayer cannot be entitled to a refund from the BIR but from the supplier of the goods that charged input VAT in its purchases. BIR rulings cannot be cited as precedent by other taxpayers (Wells Fargo Enterprise Global Services, LLC-Philippines, v. CIR, CTA EB No. 2087, CTA Case No. 9617, December 14, 2020).
    • Invoicing requirements must be complied with.
      • The claimant’s zero-rated sales were disallowed for the following reasons: official receipts not dated within the quarter (out of covered period); official receipts with manually written dates; not supported by invoice or receipts; VAT zero-rated invoice but without VAT zero-rating stamp (Maxima Machineries, Inc. v. CIR, CTA Case No. 9723, December 3, 2020)
    • As regards the taxpayer's input VAT being refunded
      • The input taxes are not transitional input taxes;
        • Transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to  VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer (AIG Shared Services Corporation (Philippines) v. CIR, CTA Case No. 9351, December 2, 2020)
      • The input taxes are due or paid;
      • The input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;
        • For PEZA-registered taxpayer who has export sales, if the claimed input VAT on purchases of goods and services were consumed and rendered outside the PEZA zone and within the customs territory, the purchase transactions are considered not related or attributable to export/zero-rated sales. Hence, claim of input VAT is denied (CIR v. Coral Bay Nickel Corporation, CTA EB No. 173 et. al, December 15, 2020)
      • The input taxes have not been applied against output taxes

 

TAX-FREE MERGER

• In case of tax-free merger, no gain or loss will be recognized on the exchange of property when two (2) conditions are met: first, there must be legal merger, and second, such business restructuring was done for a bonafide business purpose.
  • In the instant case, the company complied with the foregoing requisites because the merger was done in accordance with the provisions of the Corporation Codewith the SEC's duly approved Articles and Plan of Merger as evidenced by the Certificate of Filing of the Articles and Plan of Merger.
  • The concerned taxpayer’s intent to reduce costs in the business operation and improve efficiencies and economies asbona fide business purpose to merge.
• Nowhere in the law requires a prior BIR ruling validating an exchange transaction (pursuant to a merger) as tax-free before the concerned taxpayermay reap the benefits of the foregoing provisions. (Luzviminda Land Holdings, Inc. v. CIR, CTA Case No. 10035, December 3, 2020)

 

ADMINISTRATIVE AND JUDICIAL CLAIM FILED ON THE SAME DAY

• In recovery of tax erroneously or illegally collected, Within two (2) years from the date of payment of tax, the claimant must first file an administrative claim with the CIR, before filing its judicial claim with the courts of law. Both claims however must be filed within a two (2) year reglementary period. The claimant cannot file the administrative and judicial claim on the same day. Thus, the petition should be denied. (Philippine Airlines, Inc. v.CIR, CTA EB No. 2166, CTA Case No. 9435, December 11, 2020)

 

SALARIES OF FILIPINO ADB EMPLOYEES ARE SUBJECT TO INCOME TAX.

• The CTA En Bancaffirmed the CTA Division’s decision denying the claim of refund of income tax paid by the ADB employees.
• Pursuant to the 1965 ADB Charter Agreement, salaries of ADB employees are not subject to tax. However, when the Philippine government ratified the Agreement, it provided for a reservation that it retains the right to tax salaries and emoluments paid by the bank to the Filipino citizens. The BIR issued RMC No. 31-2013 which implements the foregoing rule, which took effect on May 2, 2013.
  • The rules should operate prospectively. Since the tax payments being sought to be refunded pertain to taxable year 2013 and BIR’s RMC took effect on May 2, 2013, the income earned are subject to income tax.
  • Thus, the taxpayer’s claim for refund was denied (Lubag, v. CIR, CTA EB No 2124, CTA Case No. 9306, December 1, 2020).

 

TAX ASSESSMENTS

 

ON LETTER OF AUTHORITY

• Under the prevailing rules (Section 6(A) of the NIRC) and jurisprudence (Medicard Case and Sony Case), an examination of the taxpayer cannot ordinarily be undertaken unless authorized by the CIR himself or by his duly authorized representative through a letter of authority.
  • The revenue officer (RO) must show that he has been granted authority through an LOA to conduct the examination or assessment. Otherwise, the said examination or assessment is void. In one case, the original LOA issued to the taxpayer did not reflect or carry the names of the ROs who conducted the audit and assessment. Even as the audit of the taxpayer was properly reassigned to other ROs, regrettably, no new LOA was issued upon reassignment to such new ROs who were merely identified in the Memorandum of Assignment. Hence the assessment is void (CIR v. Marketing Convergence, Inc., CTA EB No. 2109, CTA Case No. 9301, December 3, 2020)
  • Methods in securing data such as best evidence obtainable, inventory-taking, surveillance among others, are simply methods of examining the taxpayer in order to arrive at the correct amount of taxes which necessarily entail the issuance of a corresponding LOA. RMO 19-2009 which authorizes issuance of Tax Verification Notice instead of LOA is not valid and not legally binding (Salcedo Ristorante Italiano v. CIR, December 15, 2020).
  • An LOA served or presented to the taxpayer beyond the 30-day mandatory period is considered null and void.(People of the Philippines v. Cross Country Oil and Petroleum Corp. v. CTA EB Crim No. 071, CTA Case No. O-633, December 4, 2020, December 4, 2020)
  • A letter of authority must be issued to the revenue officer to continue the tax audit or examination; absence of which renders the tax assessment void. (Golden Brew Marketing v. CIR, CTA Case No. 9538, December 16, 2020).

 

 

ON RECEIPT OF THE ASSESSMENT

• Under the rules, when the taxpayer denies receipt of the mail containing the assessment, it shifts the burden on the BIR to prove that the mail was actually received.
  • In this case, the BIR failed to prove that the taxpayer actually received the PAN. The PAN and transmittal mailing presented by the BIR failed to establish the fact of receipt. Moreover, the BIR never presented the preparer of the transmittal mailing of the PAN.
  • For failure to prove that the PAN was received by the taxpayer, the assessment is considered void for violation of right to due process.
• Therefore, the resulting assessment issued against the taxpayer is cancelled(King, Jr. v. CIR, CTA Case No. 9753, December 4, 2020)

 

 

ON FAILURE TO PROTEST WITHIN THE 30-DAY PERIOD

• Under the rules, the taxpayer must protest the tax assessment within the 30-day period.
• An assessment becomes final, executory and demandable if it remains uncontested after the 30-day period allowed by law to file a protest. Stated differently, the assessment cannot be considered a disputed one upon failure to file the protest. As a necessary consequence, the court will have no authority to take cognizance of the assessment, much less to tackle its merits. In this case, the taxpayer reckoned the 30-day period to file a Petition for Review before the court from its receipt of the Warrant of Distraint and/or Levy. Although it is true that the Court's jurisdiction also encompasses "other matters" arising under the Tax Code, the Court did not entertain the appeal for the simple reason that the taxpayer already lost its chance to contest the assessment. (Loadstar Shipping Co. v. CTA Case No. 9902, December 7, 2020)

 

 

ON PRICE ADJUSTMENT, INVENTORY OBSOLESCENCE, PHOTOCOPIES OF CWT, EXCESS OF CREDITS CARRIED FORWARD TO THE SUCCEEDING YEAR

• Claim of quality/price adjustments in support of erroneous recorder/pricing, must be supported by evidence other than a mere testimony of the finance manager.
• Timing difference in the provision and recovery of allowance for inventory obsolescence does not have an effecton the taxable income.
• Photocopies of  creditable income tax withheld cannot be accepted as secondary evidence if the taxpayer failed to prove that the originals of the CWT certificates were duly executed.
• Disallowance of excess credits carried forward to the succeeding year is improper because any tax benefit derived from the carry-over redounds to the succeeding year, which is not covered by the assessment. (Classic Fine Foods Philippines, Inc. v. CIR, CTA Case No. 9391, December 17, 2020)

 

ON PRICE ADJUSTMENT AND DELIVERY TO THE ECOZONES

• Taxpayers must prove with clear and convincing evidence the real nature of the price adjustments.
• In zero-rated sales to Ecozones, goods must be delivered to the Ecozones, delivery address is not sufficient for the court to presume that the goods were delivered to the address.
• The BIR must explain the basis for the disallowance of excess input VAT; otherwise, the portion of the tax assessment is void. (Pag-asa Steel Works, Inc. v. CIR, CTA Case No. 9506, December 21, 2020)

 

 

“INTEREST WILL BE ADJUSTED”

• A statement that “interest will be adjusted” does not render the amount of tax indefinite. The amount remains the same. Only the interest may be adjusted if the taxpayer fails to pay before or after the due date. The basic deficiency tax liability remains the same. What is important is that there is a duedate contained in the assessment notice (Golden Brew Marketing v. CIR, CTA Case No. 9538, December 16, 2020).

 

ON UNDER-DECLARATION OF PURCHASES/EXPENSES AND THIRD-PARTY INFORMATION.

• Under-declaration of purchases or expense does not by itself result in the imposition of income tax as the following elements were not met: a) there must be gain or profit, b) the gain or profit is realized or received, actually or constructively and c) the gain is not exempted by law or treaty from income tax.
• Third-party information extracted from CAATs needs to be confirmed and verified with the various suppliers/withholding agents/payors in order to sufficiently inform the taxpayer of the assessment and to provide a reliable basis for the assessment, other than as mere extrapolation or presumption. (Marionnaud Philippines, Inc. v. CIR, CTA Case No. 9615, December 10, 2020)

 

BUSINESS LEAGUE’S EXEMPTION FROM INCOME TAX

• Business league, chamber of commerce or board of trade not organized for profit is exempt from income tax. The entity has the burden of proof that it is exempt from income tax. Audited financial statement is not sufficient proof. The taxpayer must prove that its receipts were not sourced from its real or personal properties or from any activity conducted for profit.
• Business leagues are required to withhold tax on its expenses.
• Amounts received from registration and sponsorship to be able to participate in events conducted by the chamber are subject to VAT as they represent payments for services rendered by the taxpayer. It is immaterial whether a taxpayerrealizes profit or not in the conduct of said events for purposes of determining petitioner's liability for VAT on said fees. As long as the entity provides services for a fee, remuneration or consideration, then the service rendered is subject to VAT. (Contact Centers Association of the Philippines v. CIR, CTA Case No. 9666, December 11, 2020)

 

FDDA SIGNED BY THE COMMISSIONER HERSELF

• A party adversely affected by a decision of the BIR may file an appeal with the CTA within 30 days after the receipt of the FDDA, not the Revised FDDA. The FDDA is the very decision appealable to the Court. Furthermore, if the Commissioner herself signed the FDDA, the denial must be appealed to the CTA and motion for reconsideration of the Commissioner’s denial shall not toll the 30-day period. (JG Summit Holdings, Inc. v. CIR, CTA Case No. 9147, December 11, 2020)

 

REQUEST FOR RECONSIDERATION, NOT REINVESTIGATION.

• In case of request of reconsideration, the BIR shall act upon the protest within 180 days from the filing of the protest (not from the date of submission of the required documents within the 60-day period, which is applicable to request for reinvestigation; the court must acquire jurisdiction first before it can rule on the petition, even though there is violation of due process in the tax assessment(Getz Pharma (Phils.) Inc. v. CIR, CTA Case No. 9245, December 18, 2020)

 

SAME CONTENT IN PAN AND FAN

• The BIR is required to perform assessment functions in accordance with the law, procedure and with regard to due process. The BIR must state in writing the law and the facts of which the tax assessment is made. If the PAN and FAN have the same exact findings and the BIR did not provide reason for rejecting the refutations and explanations by the taxpayer, the assessment is considered in clear violation of taxpayer’s right to administrative due process, thereby rendering the subject tax assessments void. (Chun Lang Chan v. CIR, 9758, December 3, 2020)

 

QUESTION OF FACT: EXEMPTION UNDER THE OIL DEREGULATION LAW

• Real Property exemption under the Oil Deregulation Law is a question of fact that should be raised first before the local treasurer and/or assessor, Local Board of Assessment Appeals, and Central Board of Assessment Appeals, since the taxpayer needs to prove whether it meets the criteria provided under the law. (Jetti Petroleum, Inc. v. Tolentino, CTA EB No. 2093, CTA Case No. AC 211, December 17, 2020)

 

CERTIFICATE OF COMPLIANCE IS A MUST

• Renewable Energy law provides that RE developers are entitled to VAT zero-rating of both its sales of electricity generated from renewable energy and local purchases of goods, properties and services. A Certificate of Compliance (COC) from the Energy Regulatory Commission is an indispensable requirement for generation companies to claim input VAT refund. COC is a a proof that a generation facility, or a facility that produces electricity, is authorized by the ERC to engage in the generation electricity. Sales made while the COC will not entitle the taxpayer to VAT zero-rating of its sales to electricity. Subsequent issuance of COC in the following quarter will not cure the defect.(Hedcor Sabangan, Inc. v. CIR, CTA EB No. 2085, CTA Case No. 9276)

 

NO CRIME, NO CIVIL LIABILITY

Accused shall be subject to civil liability only if he is acquitted based on reasonable doubt and/or the court declares that the liability of the accused is civil. If the accused did not commit the crime, no civil liability attaches.(People of the Philippines v. Cross Country Oil and Petroleum Corp. v. CTA EB Crim No. 071, CTA Case No. O-633, December 4, 2020, December 4, 2020)

• The online submission (via MC28_S2020@sec.gov.ph) of the forms/notices must be done on or before the above-mentioned deadline, while the filing of the hard copies of the said forms/notices shall be optional.
• • Filing of hard copies may be done via submission/appointment to ICTD-ERMD Receiving Unit.
• For your easy reference, the Circular may be accessed (SEC Notice, January 18, 2021).

 

CORPORATIONS INTENDING TO RETAIN THEIR SPECIFIC CORPORATE TERM MAY FILE NOTICE TO THE SEC ON OR BEFORE FEBRUARY 23, 2021; CORPORATIONS WHO FAIL TO SUBMIT THE SAID NOTICE ON THE SAID DATE, SHALL BE DEEMED TO HAVE SELECTED A PERPETUAL TERM.

• The SEC notifies the public of the online and manual submission of Notice to Retain Specific Corporate Term (“Notice”).
• The existing corporations who intend to retain their specific corporate term, may file electronically their Notice with attachment of Director’s Certificate on or before February 23, 2021 through SEC’s email (MC22_S2020@sec.gov.ph)
• Hard copies of the said Notice and Director’s Certificate must also be filed through the Company Registration Monitoring Department (CRMD) Receiving Unit, for the issuance of a Certificate of Filing of the said Notice, subject to payment of Certification fees.
• Corporations who fail to submit the said Notice by February 23, 2021, shall be deemed to have selected a perpetual term.
• For your easy reference, the Circular may be accessed HERE(SEC Notice, 13 January 2021).

 

BUREAU OF INTERNAL REVENUE

 

BIR DEADLINES FROM JANUARY 25 TO 31, 2021 . A gentle reminder on the following deadlines, as may be applicable:

 

DATE	FILING/SUBMISSION
January  25, 2021	· Submission of Quarterly Summary List of Sales/Purchases/Importations by a VAT Taxpayers - Non-eFPS Filers - For the Quarter ending December 31, 2020 · Sworn Statements of Manufacturer’s or Importer's Volume of Sales of each particular brand of Alcohol, Tobacco Products & Sweetened Beverage Products - For the Quarter ending December 31, 2020 · e-FILING/FILING & e-PAYMENT/PAYMENT of 2550Q (Quarterly Value-Added Tax Return) - eFPS & Non-eFPS Filers - For the Quarter ending December 31, 2020 · e-FILING/FILING & e-PAYMENT/PAYMENT of 2551Q (Quarterly Percentage Tax Return) - eFPS & Non-eFPS Filers - For the Quarter ending December 31, 2020 · e-FILING & e-PAYMENT of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group A - Month of December 2020 · e-PAYMENT of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group E, D, C & B - Month of December 2020
January  29, 2021	· e-FILING/FILING & e-PAYMENT/PAYMENT of 1702Q (Quarterly Income Tax Return For Corporations, Partnerships and Other Non-Individual Taxpayers) and Summary Alphalist of Withholding Taxes (SAWT) - Fiscal Quarter ending November 30, 2020
January  30, 2021	· Registration of computerized Books of Accounts & Other Accounting Records in Electronic Format - Calendar Year ending December 31, 2020 · Submission of Inventory List - Calendar Year ending December 31, 2020 · Submission of e-Filed 1702-RT/EX/MX with Audited Financial Statement (AFS), 1709 (if applicable), and Other Attachments through Electronic Submission of Audited Financial Statements (eAFS) or Manually - Fiscal Year ending September 30, 2020 · e-Submission of Quarterly Summary List of Sales/Purchases/Importations by a VAT Taxpayers - eFPS Filers - For the Quarter ending December 31, 2020
January  31, 2021	· Submission of Sworn Statement by every lessee/Concessionaire/ Owner/Operator of Mines or Quarry/Processor of Minerals/Producers or Manufacturer of Mineral Products - 2nd Semester of 2020 · Submission of Sworn Declaration of Motels and Other Similar Establishments - Taxable Year 2020 · Submission of Sworn Statement by Senior Citizens whose Annual Taxable Income does not exceed the poverty level as determined by the NEDA thru the NSCB - Taxable Year 2020 · Submission of Sworn Certification from the International Carrier stating that there is no change in the Domestic laws of its Home Country Granting Income Tax Exemption to Philippine Carriers - Calendar Year 2021 For Exemptions issued in 2020 · Submission of Annual Information by all Accredited Tax Agents/Practitioners to be submitted to RNAB/RRAB - Taxable Year 2020 · Submission of Annual Alphabetical List of Professionals/Persons who were issued Professional/Occupational Tax Receipt by LGUs - Calendar Year ending December 31, 2020 · Submission of Contract of Lease and Information on Lessee/Lessors/Sub-Lessors of Commercial Establishments, Buildings or Spaces for Tenants - 2nd Semester of 2020 · Submission of Notarized Income Payor/Withholding Agent's Sworn Declaration with List of Payees - Calendar Year 2021 · e-FILING/FILING  of 1604-C, 1604-F and Related Alphalist - Calendar Year 2020 · e-FILING/FILING & e-PAYMENT/PAYMENT  of 1601-EQ, 1601-FQ and Quarterly Alphalist of Payees (QAP) - eFPS & non-eFPS Filers - For the Quarter ending December 31, 2020 · e-FILING/FILING & e-PAYMENT/PAYMENT  of 1602Q and 1603Q - eFPS & Non-eFPS Filers - For the Quarter ending December 31, 2020 · e-FILING/FILING & e-PAYMENT/PAYMENT  of 1621 (Quarterly Remittance Return of Tax Withheld on the Amount Withdrawn from Decedent's Deposit Account) - eFPS & Non-eFPS Filers - For the Quarter ending December 31, 2020 · e-PAYMENT/PAYMENT  - Annual Registration Fee for Every Head Office and/or Branch of Any Business Establishment - Calendar Year 2021 · DISTRIBUTION of 2304 - Certificate Excluding Compensation Income Not Subject to Withholding Tax - Calendar Year 2020 · DISTRIBUTION of 2316 - Certificate of Compensation Payment With or Without Tax Withheld - Calendar Year 2020

• The SEC provides financial reporting relief for FCs, LCs, and accredited MG-NGOs.
• It allows a staggered booking of provision for credit losses for annual period ending on or after December 31, 2020 (to consider those with fiscal year-end) for a maximum period of five (5) years using straight-line amortization method to be recognized in the profit or loss.
• The said entities should prepare the audited financial statement in accordance with an industry-specific framework. SEC also prescribes the wordings to be provided.
• The said entities should also provide disclosure on the impact of the relief.
• For your easy reference, the Circular may be accessed (SEC Memorandum Circular No. 35, December 28, 2020).

 

THE SEC NOTIFIES THE PUBLIC OF ITS PAYMENT FACILITIES.

• For your easy reference, the Circular may be accessed (SEC Notice, 8 January 2021).

 

BUREAU OF INTERNAL REVENUE

 

BIR DEADLINES FROM JANUARY 18 TO 24, 2021 . A gentle reminder on the following deadlines, as may be applicable:

 

DATE	FILING/SUBMISSION
January  20, 2021	· eFiling/Filing and ePayment of 1600 - WP - eFPS & Non-eFPS Filers - Month of December 2020 · ePayment of 1601-C - eFPS Filers under Group E, D, C, B & A - Month of December 2020 · Submission of Quarterly Information on OCWs or OFWs Remittances which are Exempt from DST to be furnished by the Local Banks and Non-Bank Money Transfer Agents - For the Quarter ending December 31, 2020 · Submission of Quarterly Report of Printer - For the Quarter ending December 31, 2020
January  21, 2021	· eFILING of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group E - Month of December 2020
January  22, 2021	· e-FILING of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group D - Month of December 2020
January  23, 2021	· e-FILING of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group C - Month of December 2020
January  24, 2021	· e-FILING of 2550M (Monthly Value-Added Tax Declaration) - eFPS Filers under Group B - Month of December 2020

 

NET OPERATING LOSS FOR TAXABLE YEARS 2020 AND 2021 SHALL BE ALLOWED TO BE CARRIED OVER AS A DEDUCTION FOR THE NEXT FIVE (5) CONSECUTIVE TAXABLE YEARS IMMEDIATELY FOLLOWING THE YEAR OF SUCH LOSS; A FISCAL YEAR (FY) WILL FALL ON A PARTICULAR TAXABLE YEAR DEPENDING ON THE NUMBER OF MONTHS IT HAS ON THE TWO (2) YEARS INVOLVED; THOSE COMPANIES WITH FISCAL YEARS ENDING BEFORE JULY 31, 2020 AND FISCAL YEARS ENDING AFTER JUNE 30,2022 WHICH INCURRED NET OPERATING LOSS ARE ONLY ALLOWED TO CARRY-OVER THE LOSS FOR THE NEXT THREE (3) CONSECUTIVE TAXABLE YEARS.

• The BIR clarifies Revenue Regulations No. 25-2020 on the availment of NOLCO for taxpayers adopting fiscal year. The said Regulations, in conformity with the law, stated that, "unless otherwise disqualified from claiming the deduction, the business or enterprise which incurred net operating loss for taxable years 2020 and 2021 shall be allowed to carry over the same as a deduction from its gross income for the next five (5) consecutive taxable years immediately following the year of such loss."
• Under existing revenue issuances, a fiscal year (FY) will fall on a particular taxable year depending on the number of months it has on the two (2) years involved. Thus, a FY ending on March 31, 2020 will fall on the taxable year 2019 since it has nine (9) months in 2019 and only three (3) months in2020. In the case of FY ending on June 30,2021, the beginning of which is July 1, 2020, it is considered as taxable year 2020 since it has more days in 2020 (184 days) than in 2021 (181 days).
• Based on the above, the following FY ending on the stated months are counted as:

 

Taxable Year 2020		Taxable Year 2021
FY ending July 31, 2020	FY ending January 31, 2021	FY ending July 31, 2021	FY ending January 31, 2022
FY ending August 31, 2020	FY ending February 28, 2021	FY ending August 31, 2021	FY ending February 28, 2022
FY ending September 30, 2020	FY ending March 31, 2021	FY ending September 30, 2021	FY ending March 31, 2022
FY ending October 31, 2020	FY ending April 30, 2021	FY ending October 31, 2021	FY ending April 30, 2022
FY ending November 30, 2020	FY ending May 31, 2021	FY ending November 30, 2021	FY ending May 31, 2022
	FY ending June 30, 2021		FY ending June 30, 2022

 

• Those companies with fiscal years ending before July 31, 2020 and fiscal years ending after June 30,2022 which incurred net operating loss are only allowed to carry-over the loss as a deduction from its gross income for the next three (3) consecutive taxable years. They cannot avail of the extended period to carry-over the loss for another two (2) years.
• For your reference, a copy of the issuance may be accessed (Revenue Memorandum Circular No. 138-2020, December 22, 2020)

 

THE BIR PRESCRIBES THE GUIDELINES IN THE FILING OF TAX RETURNS, INCLUDING THE REQUIRED ATTACHMENTS, AND PAYMENT OF INTERNAL REVENUE TAXES.

• For your reference, a copy of the issuance may be accessed (Revenue Memorandum Circular No. 4-2021, January 8, 2021).

 

 TAXPAYERS INTENDING TO USE COMPUTERIZED ACCOUNTING SYSTEM (CAS), COMPUTERIZED BOOKS OF ACCOUNTS (CBA) AND/OR ITS COMPONENTS, INCLUDING THE ELECTRONIC STORAGE SYSTEM (ESS), MIDDLEWARE AND OTHER SIMILAR SYSTEMS (COLLECTIVELY KNOWN AS “SYSTEM”) SHALL NOT BE REQUIRED TO SECURE PERMIT TO USE (PTU), BUT SUBJECT TO POST-EVALUATION; BIR FORM 1900 IS NO LONGER REQUIRED.

• The BIR provides simplified policies on the application for registration of Computerized Accounting System, Computerized Books of Accounts and/or its components, including Electronic Storage System, middleware and other similar systems.
• It provides that all taxpayers intending to use CAS, CBA  and/or its Components, including the ESS, Middleware and Other Similar Systems shall not be required to secure PTU instead, shall be registered subject to the following policies:
  • Register the system by submitting the documentary requirements stated on the to the Revenue District Office (RDO) where the taxpayer is registered.
  • BIR Form No. 1900 - Application for Authority to Use Computerized Accounting System or Components thereof/Loose-Leaf Books of Accounts shall no longer be required for the submission of application for registration of the system.
  • The system shall comply with the standards set forth under the circular; otherwise, when discovered to have violated the said standards during post-evaluation or audit, the taxpayer-user shall be subject to penalties provided under RMO No. 7-2015 and other existing revenue issuances.
  • Upon submission of complete documentary requirements, an Acknowledgement Certificate (AC) shall be issued within three (3) working days from the receipt of the complete documents by the RDO where the taxpayer-user of the system is registered. Hence, Permit to Use CAS, CBA and/or Components shall no longer be required for the use and registration of the system upon approval of this circular.
  • System demonstration or pre-evaluation shall not be required prior to the use of the system. However, post-evaluation shall be conducted by the concerned RDO to determine compliance of the system registered with the BIR to the standards set forth in the circular.
  • All taxpayers with existing system shall NOT be required to apply for registration. The approved PTU previously issued by the BIR shall still be valid, except for the following circumstances:
    • PTU was revoked upon discovery of its non-compliance with existing revenue issuances during the conduct of authorized audit activity, Tax Compliance Verification Drive (TCVD) or Post-Evaluation.
    • Existence of major system enhancement or upgrade, which will require the filing of a new application for registration of the system
  • Taxpayer must submit a new application for registration in case of major system enhancement.
    • In case of any minor system enhancement, g., user interface modification, bug fixes, performance improvements, etc., the taxpayer must submit a written notification to their registered RDO/LT Office stating the specific minor enhancements on the system.
  • For your reference, a copy of the issuance may be accessed 

THE BIR ANNOUNCES THE AVAILABILITY OF THE ALPHALIST DATA ENTRY AND VALIDATION MODULE (VERSION 7.0) AND ITS UPDATED FILE STRUCTURES, STANDARD FILE NAMING CONVENTION AND JOB-AIDS.

• The enhanced version now includes the Alphalists for BIR Form Nos. 1600-PT, 1600- V.T, 1604-C, 1604-F, 1604-E, BlR Form No. 1621 (Quarterly Remittance Return of Tax Withheld on the Amount Withdrawn from Decedent's Deposit Account).
• In addition, the generation process of the annual alphalists for 1604-E and 1604-F has been simplified under the Quarterly Alphalists of Payees, thus eliminating the need of manual re-encoding the information.

For your reference, a copy of the issuance may be accessed HERE. (Revenue Memorandum Circular No. 7-2021, January 8, 2021)