Competence. Integrity. Commitment.

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

• 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)