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Month: September 2021

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BIR RULINGS

September 2, 2021

BIR RULINGS

  • Medical, dental, hospital, veterinary and laboratory services (including facilities and medical supplies used in rendering such services) are exempt from VAT, except those rendered by independent professionals. (BIR Ruling No. VAT-073-21, March 18,2021; VAT-074-21, March 18,2021)
  • Taxpayers may be allowed to change its accounting method from FIFO to Moving average method provided that such method conforms to the best accounting practice in its trade or business and will clearly reflect the income of the company. (BIR Ruling No. CT 076 to 078-2021, March 18, 2021)
  • Transfer by Central Bank-Board of Liquidators of undisposed assets to the National Government is subject to tax, unless it is clearly shown that the transaction is exempt from taxes (BIR Ruling No. CT-080-2021, March 18, 2021)
  • Asset Privatization Trust  (now Privatization and Management Office or PMO), as well as corporations and assets held by it, shall be exempt from all taxes, fees, charges, imposts and assessments arising from passing of title from government institutions to the Trust and/or from the Trust to a private acquisitor or buyer imposed by the National Government or any subdivision thereof. Thus, sale of land between the National Government of the Republic of the Philippines through the PMO and the City Government of Makati is exempt from capital gains tax.
    • However, in case of documentary stamp tax, when one party to a taxable document enjoys exemption from the tax, the other party who is not exempt shall be the one directly liable to tax. Since PMO is exempt from DST, the City of Makati is subject to DST. (BIR Ruling CT-081-2021, March 18, 2021)
  • Gross payments to the following contractors are subject to 2% withholding tax, whether individual or corporate: general engineering contractors, general building contractors, specialty contractors (quantity surveyors, cost engineers and construction cost specialists) and other contractors enumerated in Section 2.57.2 (C) (BIR Ruling No. OT-082-2021, March 18,2021)
  • Estate tax return must be filed within one (1) year from the decedent’s death and in meritorious cases, the Commissioner have the authority to grant a reasonable extension for filing of return not exceeding thirty (30) days from the last day of the deadline (i.e.  difficulty for the heirs to process documents and to travel to provinces to obtain copies of tiles and tax declarations) (BIR Ruling No. OT-083-21, March 18, 2021)
  • Entities engaged by the National Housing Authority are exempt from project-related income taxes and creditable withholding tax.
    • The socialized housing units are exempted from VAT provided that the selling price does not exceed Php 3,199,200.00 per house and lot package. Provided further, that beginning January 1, 2021, the exemption from VAT shall only be applicable to house and lot package and other dwellings with selling price not more than Php 2,000,000.000.
    • However, their purchases of goods shall be subject to VAT, even if are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of goods/services.
    • Also, the sale of parcels of land in favor of NHA which will be used for the project is exempted from capital gains tax, documentary stamp tax and VAT.(Certificate of Tax Exemption No. JV-085-21, March 24, 2021)
  • Income derived by the following are exempted from income and withholding tax
    • Foreign governments
    • Financing institutions owned, controlled or enjoying refinancing from foreign government
    • International or regional financial institutions established by foreign governments.
  • Income from their investment in the Philippines in:
    • loans
    • stocks
    • bonds
    • other domestic securities including dividend income
    • Interest on its deposits in banks in the Philippines (BIR Ruling No. 051-2012 CT-084-2021, March 18, 2021) :
  • Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engage in business who is outside the Philippines when services are performed, paid in acceptable foreign currency is subject to zero-rated VAT, without even the necessity of applying for and securing prior approval for VAT zero-rating. Moreover, the taxpayer is entitled to apply for the refund of any excess or unutilized input VAT due or paid attributable to zero-rated services. However, this ruling does not grant/approve claim for refund as it is a separate process subject to requirements. (BIR Ruling No. VAT-075-21, March 18, 2021)

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BIR RULINGS

  • Medical, dental, hospital, veterinary and laboratory services (including facilities and medical supplies used in rendering such services) are exempt from VAT, except those rendered by independent professionals. (BIR Ruling No. VAT-073-21, March 18,2021; VAT-074-21, March 18,2021)
  • Taxpayers may be allowed to change its accounting method from FIFO to Moving average method provided that such method conforms to the best accounting practice in its trade or business and will clearly reflect the income of the company. (BIR Ruling No. CT 076 to 078-2021, March 18, 2021)
  • Transfer by Central Bank-Board of Liquidators of undisposed assets to the National Government is subject to tax, unless it is clearly shown that the transaction is exempt from taxes (BIR Ruling No. CT-080-2021, March 18, 2021)
  • Asset Privatization Trust  (now Privatization and Management Office or PMO), as well as corporations and assets held by it, shall be exempt from all taxes, fees, charges, imposts and assessments arising from passing of title from government institutions to the Trust and/or from the Trust to a private acquisitor or buyer imposed by the National Government or any subdivision thereof. Thus, sale of land between the National Government of the Republic of the Philippines through the PMO and the City Government of Makati is exempt from capital gains tax.
    • However, in case of documentary stamp tax, when one party to a taxable document enjoys exemption from the tax, the other party who is not exempt shall be the one directly liable to tax. Since PMO is exempt from DST, the City of Makati is subject to DST. (BIR Ruling CT-081-2021, March 18, 2021)
  • Gross payments to the following contractors are subject to 2% withholding tax, whether individual or corporate: general engineering contractors, general building contractors, specialty contractors (quantity surveyors, cost engineers and construction cost specialists) and other contractors enumerated in Section 2.57.2 (C) (BIR Ruling No. OT-082-2021, March 18,2021)
  • Estate tax return must be filed within one (1) year from the decedent’s death and in meritorious cases, the Commissioner have the authority to grant a reasonable extension for filing of return not exceeding thirty (30) days from the last day of the deadline (i.e.  difficulty for the heirs to process documents and to travel to provinces to obtain copies of tiles and tax declarations) (BIR Ruling No. OT-083-21, March 18, 2021)
  • Entities engaged by the National Housing Authority are exempt from project-related income taxes and creditable withholding tax.
    • The socialized housing units are exempted from VAT provided that the selling price does not exceed Php 3,199,200.00 per house and lot package. Provided further, that beginning January 1, 2021, the exemption from VAT shall only be applicable to house and lot package and other dwellings with selling price not more than Php 2,000,000.000.
    • However, their purchases of goods shall be subject to VAT, even if are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of goods/services.
    • Also, the sale of parcels of land in favor of NHA which will be used for the project is exempted from capital gains tax, documentary stamp tax and VAT.(Certificate of Tax Exemption No. JV-085-21, March 24, 2021)
  • Income derived by the following are exempted from income and withholding tax
    • Foreign governments
    • Financing institutions owned, controlled or enjoying refinancing from foreign government
    • International or regional financial institutions established by foreign governments.
  • Income from their investment in the Philippines in:
    • loans
    • stocks
    • bonds
    • other domestic securities including dividend income
    • Interest on its deposits in banks in the Philippines (BIR Ruling No. 051-2012 CT-084-2021, March 18, 2021) :
  • Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engage in business who is outside the Philippines when services are performed, paid in acceptable foreign currency is subject to zero-rated VAT, without even the necessity of applying for and securing prior approval for VAT zero-rating. Moreover, the taxpayer is entitled to apply for the refund of any excess or unutilized input VAT due or paid attributable to zero-rated services. However, this ruling does not grant/approve claim for refund as it is a separate process subject to requirements. (BIR Ruling No. VAT-075-21, March 18, 2021)
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BIR RULINGS

September 2, 2021

BIR RULINGS Medical, dental, hospital, veterinary and laboratory services (including facilities and medical supplies used in rendering such services) are exempt from VAT, except those rendered by independent professionals. (BIR Ruling No. VAT-073-21, March 18,2021; VAT-074-21, March 18,2021) Taxpayers may be allowed to change its accounting method from FIFO to

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