Month: August 2021

SOCIAL MEDIA INFLUENCERS ARE SUBJECT TO INCOME TAX, VALUE-ADDED TAX (OR PERCENTAGE TAX); SHALL REGISTER WITH THE BIR AND FILE TAX RETURNS; SUBJECT TO ROYALTY TAX AND FOREIGN TAX CREDIT; BIR MAY OBTAIN INFORMATION FROM FOREIGN COUNTRY (Revenue Memorandum Circular No.  97-2021, August 16, 2021)

 BIR FORMS 2307 AND 2316 SHALL BE STORED AND SUBMITTED TO THE BIR (Revenue Regulations No. 16-2021, August3, 2021)

• Submission of BIR Form 2307 as an attachment to SAWT
  • Scan the original copies of the BIR Form 2307 through a scanning machine or device
  • Store the soft copies of BIR Form 2307,using the file format and naming conventions prescribed under the available Modes or submission facilities of the BIR; and
  • Submit the soft copies of the said BIR Form in accordance with the revenue issuances governing the selected modes or submission facilities of the BIR.
• Submission of BIR Form 2316
  • Scan the original copies of the BIR Form 2316 through a scanning machine or device
  • Store the soft copies of BIR Form2316, using the file format and naming conventions prescribed under the available Modes or submission facilities of the BIR; and
  • Submit the soft copies of the said BIR Form in accordance with the revenue issuances governing the selected modes or submission facilities of the BIR.

AVAILMENT OF ESTATE TAX AMNESTY IS EXTENDED UNTIL JUNE 14, 2023; PROOF OF SETTLEMENT OF ESTATE (JUDICIAL OR EXTRA-JUDICIAL) NEED NOT ACCOMPANY THE RETURN AT THE TIME OF FILING BUT REQUIRED BEFORE E-CAR IS ISSUED. (Revenue Regulations No. 17-2021, August 3, 2021)

BIR RULINGS

• Joint venture or consortium formed for the purpose of undertaking construction projects is not taxable as a corporation, provided the joint venture should be:
  • For the undertaking of a construction project
  • Should involve jointing or pooling of resources by licensed local contractors registered with PCAD
  • Local contractors are engaged in construction business;
  •   Joint venture must also be registered with PCAB
•  Furthermore, the joint venture is exempt from income and withholding tax and is not required to file quarterly and final adjustment returns. However, the net income of the co-venturers derived  from the Joint Venture Project  is subject to creditable withholding tax and  the same shall be remitted to BIR by the latter before the distribution of net income  as the co-venturers are separately subject to regular corporate income tax. (BIR Ruling No. JV-056-21, March 2, 2021)
• A non-stock and non-profit corporation with primary purpose of being an educational institution is exempted from income tax and VAT only on revenues or receipts generated from:
  • Tuition fee and other school fees: and
  • Income derived from the operation of cafeterias/canteen, dormitories, and bookstores located within its premises, owned and operated by the corporation to be actually, directly and exclusively used for educational purposes.
• However, the corporation is liable to all other taxes. (Certificate of Tax Exemption No. SH30-054-21, March 1, 2021; SH30-055-21, March 1, 2021; SH30-059-21, March 3, 2021; SH30-060-21, March 3, 2021; SH30-061-21, March 3, 2021)
•  The classification of a particular real property as being capital or ordinary asset does not depend upon its actual use or the purpose for its acquisition, but on the nature of the business of its registered owner. To be considered as habitually engaged in the real estate business, the taxpayer must consummate during the preceding year at least 6 taxable real estate sale transaction (OT- 065-2021, March 10, 2021)

FILING AND PAYMENT OF TAXES FALLING DUE FROM AUGUST 6 TO 20, 2021 IS EXTENDED FOR 15 CALENDAR DAYS. (Revenue Memorandum Circular No. 91-2021, August 3,2021)

• Deadline of filing of returns and payment of the corresponding taxes due thereon, and submission of reports and attachments, falling within the period from August 6, 2021 to August 20, 2021 for taxpayers under ECQ and MECQ is extended.
• The deadline is extended for a period of fifteen (15) days from August 20, 2021.
• If the ECQ and/or MECQ will be extended, then filing of returns and payment of the corresponding taxes due thereon and submission of reports and attachments shall be extended by 15 days from the lifting of the ECQ and/or MECQ.
• Taxpayer during the period may:
  •  Pay the taxes in the nearest Authorized Agent Banks (AABs), notwithstanding RDO jurisdiction; and
  • File and pay the corresponding tax due to the concerned Revenue Collection Officers of the nearest RDO even in areas where there are AABs.

DEADLINE FOR FILING OF PAPERS, LETTERS, AND DOCUMENTS IN ECQ AND MECQ COVERED AREAS IS EXTENDED. (Revenue Memorandum Circular No. 92-2021, August 9, 2021)

• Face to face meetings of BIR officials and employees with taxpayers/authorized representatives are declared deferred and rescheduled until the lifting of the ECQ and MECQ.
  • Deadline for filing of papers, letter and documents falling on August 6, 2021, during the ECQ and MECQ period and for RDOs and BIR Offices located in ECQ and MECQ covered areas is hereby extended as follows:

• Future declarations of ECQ and/or MCQ will extend the deadline of the submission of the above documents for the same period and will reschedule the face to face meetings of BIR officials and employees.

THE RUNNING OF THE STATUTE OF LIMITATIONS ON ASSESSMENT AND COLLECTIONS OF TAXES IN NATIONAL CAPITAL REGION AND OTHER AREAS IN THE COUNTRY COVERED BY ENHANCED COMMUNITY QUARANTINE (ECQ) AND MODIFIED ECQ (MECQ) IS SUSPENDED. (Revenue Memorandum Circular 93-2021, August 9, 2021)

• The running of the statute of limitations for assessment and collection of deficiency taxes is suspended in the affected jurisdictions while ECQ and/or MECQ is in effect, including any extension/s thereof, and for sixty (60) days thereafter.
• The suspension of the running of the Statute of Limitations shall apply with respect to the issuance and service of assessment notices, warrants and enforcement, and/or collection of deficiency taxes.
•  Future declarations of ECQ and/or MCQ will also suspend the running of the statute of limitations for assessment and collection of deficiency taxes and for 60 days thereafter.

CLARIFICATIONS IN COMPUTATIONS OF DONOR’S TAX IN CASE OF PARTIAL RENUNCIATION OF INHERITANCE (Revenue Memorandum Circular 94-2021, August 10, 2021)

•  General renunciation of an heir on his share from the inheritance is not subject to Donor's Tax.
• Partial renunciation of inheritance is when an heir renounces his share to a specified property but not to the entire properties of the decedent.
• Donor’s tax shall be imposed on the value forgone as a result of such waiver/renunciation.
• Where the value of the property received as a result of the partial renunciation is lower than the total value of the supposed share, the difference is subject to donor’s tax.

ALPHANUMERIC TAX CODE (ATC) FOR EXCISE TAXES ON EXPORTS OF SWEETENED BEVERAGES PRODUCTS PAID THROUGH PAYMENT FORM - BIR FORM NO. 0605 (Revenue Memorandum Order No. 24-202, August 13, 2021)

BIR RULINGS

• Retirement benefits received by officials and employees of private firms with a “reasonable benefit plan” shall be exempt from income and withholding tax. Provided, that the employee had been in the service of the same private firm for at least 10 years and he is at least 50 years old at the time of retirement. In the absence of the retirement plan or agreement regarding the retirement benefits of the employees in the company, an employee who has reached the age of sixty (60) years or more, but not beyond sixty-five (65) years (Compulsory Retirement Age), and rendered the least five (5) years of service in the company may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service and will be likewise exempt from income and withholding tax. Provided, further, that in both case, the benefits granted shall be availed by an official or employee only once. Prohibition against double availment does not apply to separation by reason of retrenchment. (BIR Ruling No. OT-038-21, February 26,2021)
• Importation of a cargo vessel destined for domestic transport operations shall be exempt from VAT. Provided, that the VAT exemptions shall be subject to the requirements on restriction vessel importation and mandatory vessel retirement program of MARINA. (BIR Ruling No. VAT-041-21)
• Sale of land by a corporation to homeowner’s association under Community Mortgage Program (CMP) is exempted from capital gains tax under the Urban Development and Housing Act of 1992. However, the transaction is subject to documentary stamp tax. (Certificate of Tax Exemption No. CMP-043-21, February 26, 2021; CMP-044-21, February 26, 2021; CMP-048-21, March 1, 2021; CMP-049-21, March 1, 2021; CMP-050-21, March 1, 2021)

• A final withholding tax of 15% is imposed on cash dividends received by a non-resident foreign corporation (NRFC) from domestic corporation, subject to the condition that the country in which the NRFC allows credit against the tax due from NRFC taxes deemed to have been paid in the Philippines equivalent to 15% (Tax Sparing Rule). Further, exemption from taxes by the country of domicile of the non-resident corporate stockholder on the dividends received is sufficient basis for the applicability of 15%. Thus, dividends paid by a domestic corporation to a non-resident foreign corporation based in the Island of Nevis, West Indies, are subject to 15% since Nevis Island does not impose any income tax on the NRFC. (BIR Ruling No. OT-027-2021, February 18, 2021)
• Sale of land in favor of National Housing Authority for purposes of socialized housing project is not subject to capital gains tax/income tax/creditable withholding tax, VAT, and documentary stamp tax. Certificate Authorizing Registration is still required. (Certificate of Tax Exemption No. NSH-028-21, February 26, 2021; NSH-029-21, February 26, 2021; NSH-030-21, February 26, 2021; NSH-033-21, February 26, 2021; NSH-034-21, February 26, 2021; NSH-035-21, February 26, 2021; NSH-036-21, February 26, 2021)
• Non-stock savings and loan association (NSSLA)  organized and operated exclusively for the mutual benefit of its members is not subject to gross receipts tax (GRT). NSSLA is a non-stock non-profit corporation engaged in the business of accumulating the savings of its members and using such accumulations for loans to members to service the needs of households by providing long term financing for home building and development and for personal finance. NSSLA shall confine its membership to a well-defined group of persons and shall not transact business with the general public. Thus, it is exempt from GRT as long as its transactions do not fall under the contemplated activities of a non-bank financial intermediaries engaged in lending of funds or purchasing of receivables or other obligations with funds obtained from the public. (BIR Ruling No. OT-037-21, February 26, 2021)

The BIR defers the implementation of RR No. 9-2021 implementing the imposition of 12 VAT on the following transactions:

Transactions considered as export sales:

Sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer's goods and paid for in acceptable foreign currency, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)

Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production

Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special law

The sale of sale of services and use or lease of properties:

Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)

Services performed by subcontractors and/or contractors in processing, converting or manufacturing goods for an enterprise whose export sales exceed 70% of the total annual production

• The BIR suspends the implementation of certain provisions of Revenue Regulations No. 5-2021 dated April 8, 2021
• Suspended provisions:
  • Definition of proprietary educational institutions in so far as it includes the phrase “which are non-profit”
  • Definition of non-profit as it applies to proprietary educational institutions;
  • Illustration on the tax treatment of proprietary educational institutions that are non-profit