THE BIR REMINDS online sellerS TO Register business activities and settle taxes

The BIR prescribes all persons doing business and earning income, specifically those who are into digital transactions through the use of any electronic platforms and media, to ensure that their businesses are registered and that they are tax compliant. It provides:

• All those who will register their business activity and/or update their registration status not later than July 31, 2020 shall not be imposed with penalty for late registration.
• The  business entities are likewise advised to comply with the issuance of sales invoice or receipts, keeping of registered books of accounts and other accounting records of business transactions, withholding taxes, filing of tax returns, and payment of correct taxes (RMC No. 60-2020, June 10, 2020).

For your easy reference, the registration guidelines may be accessed HERE.

TAX AMNESTY ON DELINQUENCIES MAY BE AVAILED OF UNTIL DECEMBER 31, 2020. The BIR further amends RR No. 4-2019, relative to the period and manner of availment of Tax Amnesty on Delinquencies. It provides:

• Any person, whether natural or juridical, with internal tax liabilities covering taxable year 2017 and prior years, may avail of tax amnesty on delinquencies within 1 year from the effectivity of these regulations or until December 31, 2020 (“New Period”). However, the said date may be extended if the circumstances warrant an extension such as in case of country-wide or economic reasons.
• The submission of the Tax Amnesty Return made under oath with complete documentary requirements and proof of payment shall be submitted within the New Period. The availment of Tax Amnesty on Delinquencies shall be considered fully complied with upon completion of the steps within the New Period.
• The concerned BIR Office receiving the request for Certificate of Delinquencies/Tax Liabilities shall issue said Certificate of Delinquencies/Tax Liabilities to the taxpayer within three (3) working days from the date of the request. Should the concerned BIR office find that the said Certificate of Delinquencies/Tax Liabilities cannot be issued, said BIR Office must state in writing the legal and factual basis for its denial.
• The concerned BIR Office is also required to endorse said duly accomplished TAR and APF within one (1) working day from receipt of the document. (Revenue Regulations No. 15-2020, June 19, 2020). For your easy reference, the issuance may be accessed HERE.

MAYOR’S PERMIT IS NO LONGER REQUIRED IN BUSINESS REGISTRATION WITH THE BIR. The BIR prescribes a revised checklist of documentary requirements of business registration and other types of applications. The requirements are streamlined by removing the Mayor’s Permit as one of the mandatory requirements. It also reminds taxpayers that it shall not process deficient or incomplete applications or requests. (Revenue Memorandum Circular No. 57-2020, June 9, 2020) For your easy reference, the issuance may be accessed HERE.

Tax credit certificate that remains unutilized for more than one (1) year at any given AN interval of time during its validity shall be converted into cash.  This requires prior notice by the BIR, subject to the availability of funds in accordance with the procedural requirements that will be issued by the BIR. (Revenue Regulations No. 14-2020, May 28, 2020) For your easy reference, the issuance may be accessed HERE.

LIST OF ACCREDITED MICROFINANCE UPDATED. The BIR published an updated list of microfinance NGOs accredited by the Microfinance NGO Regulatory Council (RMC No. 58-2020, June 9, 2020). For your easy reference, the issuance may be accessed HERE.

SUMMARY OF TEMPORARY RECEIPTS OR INVOICE SHOULD BE SUBMITTED WITHIN 90 DAYS FROM LIFTING OF COMMUNITY QUARANTINE. All taxpayers who adopted workaround procedures/temporary measures on the issuance of receipts/invoices during the period of ECQ and MCQ are required to submit their Summary of Temporary Receipts/Invoices Issued within ninety (90) days from the lifting of the ECQ and/or MECQ (RMC 59-2020, June 9, 2020). For your easy reference, the issuance may be accessed HERE.

LIST OF DRUGS EXEMPTED FROM VAT UPDATE. The BIR publishes the list of Prescription Drugs and Medicines for Diabetes, High-Cholesterol and Hypertension Exempt from VAT Beginning January 27, 2020 provided by the Food and Drug Administration of the Department of Health (RMC No. 62-2020, June 23, 2020). The list may be accessed HERE.

Securities and Exchange Commission

AUTHENTICATION/NOTARIZATION OF ARTICLES OF INCORPORATION IS NO LONGER MANDATORY IN LIEU OF CERTIFICATE OF AUTHENTICATION. The SEC prescribes the guidelines on authentication of articles of incorporation in applications for registration of new domestic corporations.

• Both the Articles of Incorporation and the Certificate of Authentication need not be notarized nor consularized. In lieu of the authentication, the SEC will accept registration of Articles of Incorporation that are accompanied by a Certificate of Authentication signed by all incorporators.
• The incorporators, if they so choose, may acknowledge the Articles of Incorporation before a notary public and the same will likewise be accepted by the Commission.
• If executed outside the Philippines, the Articles of Incorporation may be: (1) apostilled or (2) notarized or authenticated by a Philippine diplomatic or consular officer, as the case may be.
• The application for registration of a new domestic corporation with more than forty percent (40%) foreign equity shall be accompanied by an application for registration of investments of non-Philippine nationals using SEC Form F-100, if applicable. The SEC Form F-100 must be authenticated only if the same is executed outside the Philippines. Otherwise, no further authentication of said form is required (MC. No. 16 s.200, April 29, 2020). For your easy reference, the issuance may be accessed 

submission of aUDITED FINANCIAL STATEMENTS AND GENERAL INFORMATION SHEET via courier/mail is allowed; the date of submission is extended. The SEC prescribes the procedure in the filing of audited financial statements and general information sheets to the SEC after the community quarantine. It provides:

• All filers of GIS and AFS, regardless of the number of reports to be filed at SEC, may choose to avail of any of the following options:
  • SEC Nationwide Submission (SENS), where the filer proceeds to the nearest courier area for his offsite submission
  • Any courier/regular mail with no return copy of reports submitted
• The date of mailing of reports such as the GIS and AFS, as shown by the registry receipt of the courier, shall be considered as the date of submission of the GIS and AFS. For reports filed through registered mail in the Philippine Postal Corp., the reckoning date of receipt shall be the date of receipt by the PhilPost.
• For reports filed through email during the CQ, the reckoning date of receipt shall be the date stated in the Acknowledgment Confirmation (AC) stated in the email as attached to the hard copy of the reports submitted.
• To maintain an organized and orderly filing of Audited Financial Statements, all corporations, including branch offices, representative offices, regional headquarters and regional operating headquarters of foreign corporations shall file their AFS through SEC Express Nationwide Submission (SENS) using Courier or Philippine Postal Corp., depending on the last numerical digit of their SEC registration or license number in accordance with the following schedule:

(MC. No. 18 s.200, May 11, 2020).  For your easy reference, the issuance may be accessed HERE.

extended deadline for submission of annual reports and/or afs for companies with fiscal period ending january 31 2020 to march 31, 2020. The SEC extends the deadline for the submission of 2020 Annual Reports and/or Audited Financial Statements of Companies with Fiscal year ending 31 January 2020 to 31 March 2020, including the applicable quarterly reports for a period of sixty (60) calendar days from the regular filing deadlines; while for the companies with fiscal year ending 30 April 2020, an extension of the deadline for the submission of the following reports is for a period of 45 calendar days from the regular filing deadline. The report includes:

(i)             Annual Report (SEC Form 17-A) and Audited Financial Statements (AFS) of publicly-listed companies (PLC);

(ii)            Annual reports and AFS of issuers of registered securities (other than publicly-listed companies); and

(iii)           AFS of all other companies other than items (i) and (ii)

Likewise, the deadline for the submission of the quarterly reports (SEC 17-Q) for the first quarter of the covered companies is hereby extended for a period of 45 days from the regular filing deadline (MC. No. 17 s.200, May 7, 2020). For your easy reference, the issuance may be accessed HERE.

SUPREME COURT/Court of Tax Appeals Decisions

UNDERDECLARATION OF EXPENSE/PURCHASE DOES NOT RESULT IN THE IMPOSITION OF INCOME TAX.  The three (3) elements in the imposition of income tax are: (i) there must be gain or profit; (2) that the gain or profit is realized or received, actually or constructively; and (3) it is not exempted by law or treaty from income tax. Income tax is assessed on income received from any property, activity or service. Where the BIR’s imposition of tax is based on alleged discrepancies on income payments on goods per its financial statements vis-a-vis the Alphalist, the deficiency income tax assessment corresponding to the alleged unaccounted income payments should be cancelled, since the elements are not present. Further, it was held that while all presumptions are in favor of the correctness of tax assessments, the assessment itself should not be based on presumptions no matter how logical the presumption might be. In order to stand the test of judicial scrutiny, the assessment must be based on actual facts. (Marionhaud Philippines, Inc., CTA Case No. 9615, May 29, 2020).

THE BIR CANNOT USE INFORMATION FROM THIRD PARTY AS A BASIS OF ITS ASSESSMENT WITHOUT CERTIFICATION THEREFROM. The BIR compared the taxpayer’s Summary List of Withholding Taxes (SAWT) with information from third parties generated from its Computer Audit Tools and Techniques Laboratory. The differences were treated as unrecorded sales. CTA ruled that the discrepancy was not verified with the relevant suppliers and thus, the assessment is without foundation for being arbitrary and capricious. CTA also agreed with the taxpayer that the BIR must secure the Sworn Declaration of the third-party, in this case, the specific clients/ customers of the Company that such amounts were indeed sales by the Company to them. Otherwise, the BIR’s data are mere hearsay evidence that will not stand the scrutiny of the Court. Thus, the supposed third-party information compared to petitioner’s SAWT or any other information are mere naked assessments absent the sworn statements/declarations. Thus, the assessment must be cancelled and set aside. (Id.)