Month: July 2021

• The BIR circularizes the lists of withholding agents required to deduct and remit the 1% or 2% Creditable Withholding Tax (CWT) for the Purchase of Goods and Services under Revenue Regulations No. 3l-2020.
• Top Withholding Agents (TWAs) are required to deduct and remit either 1% or 2% creditable withholding tax from the income payments to their suppliers of goods and services, respectively.
• Obligation to deduct and remit 1% or 2% CWT shall continue, commence or cease, as the case may be, effective August 1, 2021. Any taxpayer not found in the published list of TWA is deemed excluded and therefore not required to deduct and remit the 1% or 2% CWT.
• Any written request by the taxpayers as a separate documentary proof for being identified as TWA, despite the publication in the newspaper of general circulation being deemed sufficient, shall be filed with the RDO and the corresponding certification shall be issued by the RDO where the concerned withholding agent is duly registered.
• On local resident suppliers of goods/suppliers of services pursuant to RR 31-2020:
  • General rule: not to include casual purchase of goods/services made from non-regular supplier (regular supplier involves at least 6 transactions, regardless of the amount per transaction either in the previous or current year)
  • Exception: single purchase involving P10,000 or more is subject to withholding.

BIR RULINGS

• No transfer of shares of stocks, by way of inheritance, to any new owner shall be made in the books of any corporation unless a certification from the BIR that the estate taxes due have been paid is shown. In case of scripless shares where there are no certificate of shares as the same is electronically traded, certification issued by the stock broker is sufficient to process the issuance of eCertificate Authorizing Registration (eCAR)/Tax Clearance Certificate (TCL) (BIR Ruling No. OT-017-2021, February 4, 2021)
• Income received directly in connection with sale of socialized housing units, a project duly registered with the Housing and Land Use Regulatory Board (HLURB), to qualified is not subject to creditable withholding tax and VAT. (Certificate of Tax Exemption No. PSH-019-21, February 4, 2021)
• Professional fees paid to specialty contractors, whose line of business requires special skills such as feasibility study, planning and structural design, are subject to 2% withholding tax (BIR Ruling No. OT-024-21, February 17, 2021)
• In the absence of a retirement plan or other agreement providing for the retirement benefits of employees, the retirement under the Labor Code shall apply, where at least ½ month salary for every year of service of an employee who has reached the age of 60 but not more than 65, and rendered at least 5 years of service in the company. Such retirement benefits of employees who meet the foregoing criteria shall be exempt from withholding tax. (BIR Ruling No. OT 025-21, February 17, 2021)
• Income received from the sale of electricity directly in connection with the registered project related to renewable energy duly registered with the Board of Investments within the approved period is exempt from income tax and creditable withholding tax. However, the exemption does not cover revenues from the sale of electricity generated from non-renewable energy sources as well as revenues of electricity sourced from the wholesale electricity spot market (Certificate of Tax Exemption No. BOI-OP-026-2021)

THE SEC EXTENDS DEADLINE FOR THE SUBMISSION OF FORMS/NOTICES PURSUANT TO MEMORANDUM CIRCULAR NO. 28, SERIES OF 2020 WITHOUT PENALTY UNTIL AUGUST 31, 20201(SEC Notice, July 15, 2021)

CLARIFICATION ON SUSPENSION OF THE STATUTE OF LIMITATIONS ON ASSESSMENT AND COLLECTION OF TAXES DUE TO THE DECLARATION OF QUARANTINE IN NCR PLUS (RMC No. 80-2021)

LIST OF VAT-EXEMPT PRODUCTS (Revenue Memorandum Circular No. 81-2021, July6, 2021)

BIR RULINGS

• Deed of conveyance to be used for socialized housing projects is not subject to creditable withholding tax/capital gains tax, documentary stamp tax and VAT. Certificate Authorizing Registration is required to be issued. (Certificate of Tax Exemption No. NSH-011-21, February 2, 2021)
• When assets are abandoned or discarded because the continued use is no longer beneficial to the business, the related loss may be claimed as a deduction. Thus, where the power plant had become obsolete and which will eventually be dismantled, the remaining book value shall be allowed as deduction for income tax purposes when the facility is demolished. (BIR Ruling No. OT-008-21, January 21, 2021)
• Services performed in the Philippines by a VAT-registered person to non-resident foreign corporation is subject to zero-rated VAT provided that (a) the services must be rendered to persons engaged in business outside the Philippines, or to non-resident foreign clients not engaged in business who are outside the Philippines when services are performed; and (b) fees must be paid to the domestic corporation in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP (BIR Ruling No. VAT 014-21, February 3, 2021)
• The importation and distribution/sale of agricultural products in its original state for human consumption are considered exempt from 12% VAT. Agricultural products are considered in its original state even if these have undergone the simple process of preparation or preservation for the market such as freezing, drying, salting, broiling, roasting, or stripping. The type of processing is limited to the aforementioned simple process. Otherwise, the same may no longer be considered agricultural products in its original state. Moreover, the VAT exemption is limited in application- it refers only to food products intended for human consumption. Roasted coffee beans and ground coffee are considered agricultural products in its original state, the importation and distribution/.sale thereof are exempt from VAT (BIR Ruling No. VAT-016-21, February 4, 2021)