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EXCISE TAX ON REMOVAL OF SWEETENED BEVERAGES PRODUCTS FOR EXPORT (Revenue Regulations No. 10-2021, June 17, 2021)

EXCISE TAX ON REMOVAL OF SWEETENED BEVERAGES PRODUCTS FOR EXPORT (Revenue Regulations No. 10-2021, June 17, 2021)

  • The BIR amends pertinent provisions of Section 10 under RR No. 20-2018 relative to the outright exemption granted to the exportation of Sweetened Beverages products.
  • Manufacturer shall pay the excise tax on every removal from the place of production.
  • After payment of tax, manufacturers at its option may file a claim for excise tax credit/refund; or avail of a claim for product replenishment scheme, subject to terms and conditions:
    • Permit shall be per shipment secured from the BIR Office before the product is removed from the place of production;
    • Removed products shall be directly transported, loaded aboard the international shipping vessel or carrier, and shipped directly to the foreign country of destination without returning to the Philippines;
    • Proof of exportation shall be submitted within 30 days from the date of actual date of exportation, subject to one time maximum 30-day extension to submit documents for meritorious reasons;
    • “Exported from the Philippines” is printed on each label that is attached/affixed on the primary container in a recognizable and readable manner.
Effect of failure to submit proof of exportation within the prescribed period
  • Non-exportation of the particular article subjected to applicable taxes, inclusive of penalties;
  • Subsequent issuance of export permits shall not be allowed, unless the assessed tax due on unliquidated export and penalties have been paid;
  • Proof of payment shall accompany subsequent application permit.

 

CLARIFICATIONS ON  TAX TREATY RELIEF APPLICATION/REQUEST FOR CONFIRMATION (RMC No. 77-2021, June 15,2021)

 

The BIR clarifies certain provisions of Revenue Memorandum Order No. 14-2021 related to tax treaty relief application/request for confirmation.

 

 

Who may avail of treaty benefits

  • Natural or juridical persons
  • Residents of one or both of the contracting states
    • Non-resident income recipient should submit a Tax Residency Certificate (TRC) duly issued by the tax authority of the country of residence for purposes of establishing fact of residency in a contracting state
Failure to submit TRC Non-resident’s claim shall be denied.
Where to apply International Tax Affairs Division
 

When provisions of the applicable treaty shall be applied

  • When nonresident submitted to the income payor
    • TRC; and
    • Appropriate BIR Form 0901
  • Prior to the payment of income
  • Provided that all conditions for the availment have been present
 

Mandatory requirement to file a Request for Confirmation (RFC)

  • To be filed by the withholding agent/income payor, domestic or foreign (for nonresident income payor-withholding agent, it is mandatory to appoint a authorized representative in the Philippines)
  • To confirm that the tax treatment of such income is proper
  • Income payor may authorize the nonresident or any other person to file such request for an on its behalf, provided that the latter is required with special power of attorney.
 

Deadlines

 

 

Capital Gains

  • At any time after the transaction
  • But shall not be later than the last day of the 4th month following the taxable year when the income is paid or when the transaction is consummated
 

Other types of income

  • At any time after the close of the taxable year
  • But not later than the last day of the 4th month following the close of such taxable year when the income is paid or becomes payable, or when the expense/asset is accrued or recorded in the books, whichever comes first
Consolidated request for confirmation per nonresident income recipient Case folder shall be pre-arranged per type of income following the sequence of documents in the list of requirements.
 

Number of TRC in case of multiple income for the year

  • 1 original and authenticated TRC to be submitted to each income payor/withholding agent per year.
  • Alternatively, a certified true copy of the original may be submitted to other payors if the original copy is no longer available, with a notation as to whom the original copy was previously submitted.
  • Same rule applies to the following:
    • Proof of establishment or incorporation
    • Certificate of Non-registration or License to Do Business in PH by SEC
    • Certificate of Business Registration/Presence by DTI
When regular rate was applied instead of treaty rate Nonresident or authorized representative, should file a TTRA with complete documentary requirements and a claim for refund at any time after the payment of the withholding tax
 

When annual updating is/not mandatory

 

In case of long term contracts involving payment of interest and royalties and other types of income where condition for entitlement to treaty benefits is not dependent on time threshold

 

 

  • Not mandatory.
  • BIR will issue a one-time Certificate of Entitlement to Treaty Benefit (COE) that is presumably valid for the whole duration of the contract as long as there is no relevant and significant change in the facts or circumstances on which the ruling is based; new request for confirmation to be filed in case of material changes in the facts or circumstances.

 

In case of long term contracts where the existence of permanent establishment is dependent on the time threshold

 

  • Annual updating is mandatory;
  • COE is limited to a particular period of engagement.
 

Proof that income is not effectively connected with  permanent establishment of the nonresident foreign enterprise

  • AFS of the foreign enterprise; if not available, sworn certification signed by the principal officer of the PE, containing material facts that may lead the BIR to believe that the income is not effectively connected with the PE and that the PE is not material to the realization of such income.
  • ITAD may also require AFS of the PE if the same is already available
 

Proof that interest on loan or debt-claims is arm’s length in case of related parties debtor and creditor

  • Transfer pricing documentation of the nonresident creditor;
  •  If unavailable, transfer pricing policy for intercompany loans or any equivalent transfer pricing study
 

Audited interim FS for capital gains transactions

  • Not mandatory; only preferred for purposes of computing the real property interest of the issuing domestic corporation at the time of the transaction.
  • Alternative documents:
    • Unaudited interim FS; and
    • Lapsing schedule as of the date of transfer or alienation of the property
No automatic denial for failure to file the RFC within the prescribed period Denials will purely be based on the merits of the case; only penalty for late filing shall be imposed
Extension of time within which to submit additional documents Not exceeding 30 days
 

Pending TTRAs within Notice to Submit Additional Documents

  • Final Notice to Submit Additional Documents shall be issued within 3 months period to comply
  • Archived applications: Final Notice will no longer be issued but taxpayer is given 4 months to comply
COE instead of usual BIR ruling COE will still contain the material facts of the case and a ruling confirming entitlement to treaty benefit
No TTRA or CORTT Form filed for income payments in 2020 and prior years Withholding agent has until the last working day of this year to file the RFC with complete requirements

 

AFS as requirement for dividends AFS as of the taxable year immediately preceding the date of declaration, which was duly filed with the BIR and SEC
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