Competence. Integrity. Commitment.

GUIDELINES IN ISSUING ELECTRONIC LETTER OF AUTHORITY AND TAX VERIFICATION NOTICE, RMO No. 6-2023,  February 9, 2023

• Transactions where audit is required as a condition to issue tax clearance, processing of claims for tax credit/refund and other cases as may be identified by the CIR as priority target for audit/investigation
  • To be covered by eLAs:
    • Claims for tax credit/refund of the following tax types:
      • Excise Tax; or
      • Income Tax (except income tax claims of job order personnel), including final and creditable income tax withheld
      • Request for tax clearance of taxpayers whose sales/receipts for immediately preceding year exceeds P3M or whose gross assets upon retirement exceeds P8M
      • Due to death of taxpayer; or
      • Taxpayers retirement from business; or
      • Taxpayers undergoing merger/consolidation/split-up/spin-off and other types of corporate reorganization
    • Cases returned to the Investigating Office (IO) where the original group supervisor/revenue officer who conducted the audit are no longer available due to transfer of work assignment or separation from service (e.g. retirement, resignation, AWOL, etc.)
    • For reinvestigation; or
    • For compliance of review findings which resulted to deficiency tax or additional deficiency tax
    • Cases referred by other IO due to taxpayer’s transfer of business registration, where taxpayer agreed to have the audit continued by the new IO, provided the covered period is not yet prescribing
    • One-Time Transactions (ONETT)
    • Cases which review findings resulted to a deficiency tax; or
    • Real property transactions with findings in the Electronic Certificate Authorizing Registration
    • Policy cases/industry issues under the directive of the Commissioner
  •  To be covered by TVN:
    • Persons requesting for tax clearance whose gross sales for the immediately preceding year is P1M but not exceeding P3M or whose total assets upon retirement is P3M but not exceeding P8M
    • Due to death of the taxpayer; or
    • Taxpayers retirement from business; or
    • Taxpayers undergoing merger/consolidation/split-up/spin-off and other types of corporate reorganization
    • Claims for VAT Refund;
    • Income Tax Refund of Job-Order personnel; and
    • Claims for refund/tax credit arising from erroneous payment of taxes, including double payment of taxes due to system error/glitch
• Report of Investigation/verification of cases covered by eLAs/eMOAs/TVNs shall be submitted by the assigned RO within prescribed number of calendar days:

• Replacement of eLA is required when:
  • Original RO cannot continue the audit/investigation for various reasons provided in the RMO as long as the period to assess has no tyet prescribed
    • Transfer of business registration but the transfer of audit will not be allowed if the case is with the assigned RO for more than 120 days or the case is a prescribing case
  • Audit reports have been returned by the reviewing office to the investigating office.
  • Request for reinvestigation of the taxpayer and the original RO is no longer with the IO at the time the case is referred for reinvestigation
• No replacement of eLA will be issued:
  • If both the RO and GS are still assigned in the IO.
    • eMOA is sufficient document in referring back the case to them
    • If only RO is with the IO, original GS need not affix the signature in the revised audit report to the submitted by the original RO
  • RO has been promoted to GS
    • Audit report to be rendered in his capacity as the original RO, without the need the signature of the previous GS

ADDITIONAL SERVICES COVERED BY ONLINE REGISTRATION AND UPDATE SYSTEM (ORUS), RMC No. 36-2023, March 20, 2023

• The BIR announces the availability of other registration-related online transactions, functions and features in the BIR Online Registration and Update System (ORUS)
• Registration-related online transactions, functions and features of ORUS beginning March 17, 2023:
  • Online Payment (e-payment) of Annual Registration Fee (FR) for New Business Registrants
  • Online Inquiry of RF Payments for BIR Internal Users
  • Application for Cancellation of Permit to Use (PTU) Loose-Leaf and Acknowledgment Certificate (AC) of Computerized Accounting System (CAS)
  • Online Verification of Taxpayer Identification Number (TIN)
  • BIR Registered Business Search Facility

BIR RULINGS

• The purchases of goods/articles under the construction/development of NHA’s Socialized Housing Program is exempt from project-related income tax, creditable withholding tax and value-added tax on its income received directly in connection with the mentioned project. However, the purchases of goods/articles of the said company shall be subject to VAT, even if the said purchases are to be used for social housing projects and must issue VAT exempt official receipts on its gross receipts from the said socialized housing project. (BIR Ruling Nos: Certificate of Tax Exemption No:NSH-331-2022, NSH-333-2022)

• Sale of house and lot duly registered with the Department of Human Settlements and Urban Development (DHSUD) is exempt from income tax and creditable withholding tax on its income received directly in connection with the mentioned project. Moreover, sale of house and lot and other residential dwellings with selling price of not more than Php 3,199,200 is VAT exempted. (BIR Ruling Nos: Certificate of Tax Exemption No: PSH-332-2022)

• A sale of parcel of land by private individuals in favor of homeowners association under a Community Mortgage Program (CMP), is not subject to capital gains tax pursuant to Section 32 (b) of Republic Act (RA) No. 7279, as amended by RA No. 10884.
  • The transaction is, however, subject to documentary stamp tax under Section 196 of the National Internal Revenue Code (Tax Code) of 1997, as amended.
  • Registry of Deeds shall transfer the title only if Certificate Authorizing Registration is used by the BIR.(BIR Ruling No: Certificate of Tax Exemption No: CMP-334-2022)

• A Company engaged in telecommunications, is seeking confirmation on whether the loss in useful value is a deductible expense, for income tax purposes. As implemented by Section 98 of Revenue Regulations (RR) No. 2, provides that for a loss to be deductible, the following requisites must be met:
  • The loss must be of the taxpayer;
  • The loss must be actually sustained and charged off within the taxable year;
  • The loss must have been incurred in trade, business, or profession;
  • The loss must be evidenced by a closed and completed transaction; and
  • The loss must not have been compensated for by insurance or other forms of indemnity.
  • Given that such requisites are met, The Company’s loss in useful value of decommissioned data network platform, hardware, and technology equipment in 2017 and in the first two quarters of 2018, is, therefore, deemed as deductible expenses, for income tax purposes. (BIR Ruling No: OT-335-2022)