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ESTATE TAX AMNESTY: COVERAGE – MAY 31, 2022; DEADLINE – JUNE 14, 2025 Revenue Regulations No. 10-2023, September 8, 2023

• The BIR amends certain provisions of RR No. 6-2019, as amended, to implement the extension on the period of availment of the Estate Tax Amnesty pursuant to RA No. 11956, further amending RA No. 11213 (Tax Amnesty Act), as amended by RA No. 11569
• Coverage – death on or before May 31, 2022, with or without assessments, whose estate taxes have remained unpaid or have accrued as of May 31, 2022.
• Deadline June 14, 2025
• Estate Tax Amnesty Return shall be filed and paid, either electronically or manually; may also be paid via authorized tax software provider
• ETAR with Acceptance payment form and complete documents to be submitted to the BIR. List of requirements may be accessed HERE.
• In the absence of documents, the BIR may request for alternative documents, as may be deemed appropriate
• Installment payment shall be allowed within 2 years from the date of payment without civil penalty and interest

WARRANT OF GARNISHMENT MAY BE SERVED VIA EMAIL; GUIDELINES. Revenue Regulations No. 11-2023, September 14, 2023

• The BIR prescribes the use of electronic mail (e-mail) and electronic signature as additional mode of service of the Warrant of Garnishment pursuant to Section 208 in relation to Section 244 of the National Internal Revenue Code of 1997, as amended
• BIR officers who shall issue and electronically sign the WGs against the deposits of the delinquent taxpayer:
  • Regional Director
  • Assistant Commissioner-Collection Service (CS)
  • Assistant Commissioner-Large Taxpayers Service (LTS)
  • Large Taxpayers District Offices (LTDOs)
• BIR officers to transmit and serve signed WG (to use BIR’s official email):
  • Collection Division concerned
  • Accounts Receivable Monitoring Division (ARMD),
  • LT-Collection Enforcement Division (LTCED), and the
  • LTDO
• Bank Head Offices and Bank Branches are required to provide their official email addresses, if not yet available, to the concerned BIR office where they are registered.
• Completion of service: at the time the email is made, or, when available, at the time the email notification of the service is sent. The concerned offices may request to acknowledgement receipt
• BIR official or employee who sent the email shall execute Affidavit of Services, with a printed proof of transmittal; to be attached to the records with the signed WG.
• BIR to request the bank for a reply. Thereafter, a copy of WG with acknowledgement receipt, will be sent to taxpayer via email, if applicable, and thru registered mail in the registered address
• BIR to send a claim letter via email to the bank and issue authorization letter to the BIR officer to collect the garnishable amount and claim the manager’s check; revenue officer to remit the check in payment of the tax liability of the taxpayer to the AAB where the taxpayer’s business is located.

AMENDMENT TO CREATE LAW ON REGISTERED BUSINESS EXPORT ENTERPRISE AND DOMESTIC MARKET ENTERPRISE. Revenue Memorandum Circular No. 91-2023, September 11, 2023

• The BIR circularizes the amendment to Rule 18, Section 5 of the Implementing Rules and Regulations (IRR) of RA No. 11534 (Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act)
• All registered export and domestic enterprises that will continue to avail of their existing tax incentives, may continue to enjoy the duty exemption, VAT exemption on importation, and VAT zero-rating on local purchases provided in their IPA registrations, provided that Registered Export Enterprises (RBE) under Section 293(e)whose income tax-based incentives have expired, may continue to enjoy VAT zero-rating on local purchases until the electronic sales reporting system of the BIR is fully operational or until the expiration of the transitory period referred to in Section 311 (c), whichever comes earlier;
• provided further, that an RBE classified as Domestic Market Enterprise (DME), which is located inside the Economic or Freeport Zone during the transitory period, shall be allowed to register as a VAT Taxpayer.

BIR RULINGS

• 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;
  • Scholarship grants;
  • Donations; 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 including those below:
  • Income derived from any of its properties, real or personal, or any activity conducted for profit, which income should be returned for taxation unless they are actually, directly and exclusively used for educational purposes;
  • If engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto, its revenues derived therefrom shall be subject to the 12% VAT, in case the gross receipts from such sales exceed Three Million Pesos (Php3,000.000.00), or the 3% percentage tax, if the gross receipts do not exceed Php3,000.000.00; Acts as an employer and its employees receive compensation income subject to the withholding tax; (BIR Ruling No: Certificate of Tax Exemption No: S30H-405-2022)

• The Indemnification cannot be regarded as an actual sale of goods, the insurance proceeds derived/ will be derived by the Company due to the destruction of its insured assets shall not form its gross sales for VAT and shall not be subject to the 12% VAT.  BIR Ruling No: OT-406-2022)

• In the absence of reasonable private benefit plan, the Retirement Benefits that will be received by the employees shall be exempt from income tax, provided that the two (2) conditions are met:
  • The employee had been in the service for at least five (5) years; and
  • he is at least sixty (60) years old but not beyond sixty-five (65) years old at that time of retirement. BIR Ruling No: OT-407-2022)

• 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 matriculation fees;
  • Student activities and laboratory 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 including those below:
  • Income derived from any of its properties, real or personal, or any activity conducted for profit, which income should be returned for taxation unless they are actually, directly and exclusively used for educational purposes;
  • If engaged in the sale of goods or services in the course of a business pursuit, including transactions incidental thereto, its revenues derived therefrom shall be subject to the 12% VAT, in case the gross receipts from such sales exceed Three Million Pesos (Php3,000.000.00), or the 3% percentage tax, if the gross receipts do not exceed Php3,000.000.00;
  • Acts as an employer and its employees receive compensation income subject to the withholding tax; (BIR Ruling No: Certificate of Tax Exemption No: S30H-408-2022)

• The Transfer of title over the property by the Trustee, in favor of the Trustors, who are the actual owners thereof is not subject to CGT. Considering that the transfer and re-conveyance is not motivated by a valuable consideration and merely acknowledges, and confirms and consolidates the legal title and actual ownership over the Property in the name of the Trustor.
  • The Conveyance by the Trustee in favor of the Trustors of the Property which the former acquired by virtue of the Trust Agreement is not to be treated as another transfer separate and distinct from the sale between the original owners and the Trustee.
  • The conveyance is merely to be treated as a continuation and confirmation of title in favor of the ultimate and real beneficiaries of the property.
  • The Transfer of the property to the Trustors is not subject to the 12% VAT because the property is not held primarily for sale to customers or for lease in the ordinary course of trade or business.
  • The Transfer of re-conveyance of the property to the Trustors without monetary consideration is not subject to gift tax. Since there is no donative intent on the part of the Trustee.
  • The Deed of Conveyance executed to terminate the trust relationship between the Trustors and the Trustee, and the consolidation of the legal title and actual ownership over the property is a transfer and re-conveyance without monetary consideration, and as such not subject to DST. However, the notarial acknowledgment to such deed is subject to the DST of P30.00. (BIR Ruling No: OT-409-2022)

• The Transfer of the Subject Shares as a result of the change of trustee from the former trustee, to the newly designated trustee bank, by virtue of the Retirement Plan Trust Agreement is not a taxable event subject to their income tax or CGT considering that:
  • the shares are actually owned by the Retirement Plan and the successor trustee is merely a trustee of the Retirement Fund;
  • there is no actual transfer of ownership and beneficial title; and
  • no monetary consideration is involved and no gain or profit resulted in the transfer of the Subject Shares which is by virtue of an assignment as evidenced by the Deed of Assignment of Shares.
• The Transfer of Subject Shares is not subject to donor’s tax as there is no intention to donate since the change of trustee of the Company’s Retirement Plan is merely for the purpose of consolidating the administration of the Retirement Fund to the newly designated trustee bank.
• The Transfer of Subject Shares is not subject to VAT since there is no sale, exchange or disposition of goods or properties involved in the transaction.
• The assignment of shares of stock of a domestic corporation is subject to DST upon execution of the deed transferring ownership or rights thereto, or upon delivery, assignment or indorsement of such shares in favor of another. (BIR Ruling No: OT-410-2022)