WEEKLY TAX UPDATES [APRIL 29, 2021]

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Subject: WEEKLY TAX UPDATES [APRIL 29, 2021]

Dear Clients & Friends,

We are sending the following relevant tax updates for this week, for your reference and information:

A. BUREAU OF INTERNAL REVENUE (BIR) TAX ADVISORY ON THE FILING OF AMENDED INCOME TAX RETURN (ITR) AND REQUIRED ATTACHMENTS

B. BIR TAX ADVISORY ON FILING AND PAYMENT OF FINAL TAX UNDER CREATE LAW

C. BIR CLARIFIES CERTAIN PROVISIONS OF REVENUE REGULATIONS (RR) NO. 34-2020 ON SUBMISSION OF BIR FORM 1709 AND TRANSFER PRICING DOCUMENTATION (TPD)

D. BIR CIRCULARIZES THE UPDATED LIST OF BIR FORMS AND AVAILABLE PLATFORMS

E. BIR RULING DIGEST

F. SUPREME COURT (SC) CASE DIGEST

G. TAX AND BUSINESS-RELATED NEWS [APRIL 22-29]

A. BIR TAX ADVISORY ON THE FILING OF AMENDED ITR AND REQUIRED ATTACHMENTS

In a Tax Advisory released on April 28, 2021, the BIR has advised the taxpayers on the following areas of concerns relative to the filing of amended ITR and required attachments:

a. Amendment of Annual ITR covering the year ended December 31, 2020 shall be filed on or before May 15, 2021.

b. Submission of required attachments to electronically filed amended Annual ITR shall be submitted on or before May 30, 2021 to the RDO where the taxpayer is registered or through the use of Electronic Audited Financial Statements (eAFS) system.

c. No penalty shall be imposed for non-submission of attachments to earlier filed ITR but later amended on or before May 15, 2021.

d. Taxpayers who electronically filed tentative ITR on or before April 15, 2021 without the attachment are given until May 30, 2021 to submit the required attachments to the amended ITR.

e. Taxpayers who electronically filed tentative ITR on or before April 15, 2021 with the attachment but later decide to amend as a result of correction of tax rates used need not resubmit the same documents. If the reason is other than correction of tax rates and it has resulted in revisions of previously-submitted documents, attachments shall be submitted on or before May 30, 2021.

B. BIR TAX ADVISORY ON FILING AND PAYMENT OF FINAL TAX UNDER CREATE LAW

In an Advisory issued by the BIR on April 29, 2021, BIR has advised the public that the corresponding adjustments to the Quarterly Remittance Return of Final Income Taxes Withheld (BIR Form No. 1601-FQ) in eBIRForms Package v7.9 cannot be completed in time for the coming deadline for its filing and payment of the tax on April 30, 2021. Thus, all mandated users of eBIRForms whose nature of income were affected by such amendments brought about by CREAE Law shall use the Payment Form No. 0605 in paying the final tax due.

C. BIR CLARIFIES CERTAIN PROVISIONS OF RR NO. 34-2020 ON SUBMISSION OF BIR FORM 1709 AND TPD

Revenue Memorandum Circular (RMC) No. 54-2021, issued on April 27, 20201, clarifies certain provisions of Revenue Regulations (RR) No. 34-2020 regarding the submission of BIR Form No. 1709 (RPT Form) and the preparation of TPD. Among others, the following were clarified: (1) who are required to accomplish and file an RPT Form; (2) are tax exempt corporations required to file an RPT Form; (3) is there a materiality threshold for reportable related party transactions; and (4) what are required to be attached when filing the RPT Form. The BIR clarified that a taxpayer is required to file an RPT Form if the following conditions are present: (1) taxpayer is required to file an Annual Income Tax Return (AITR); (2) taxpayer has transactions with a domestic or foreign related party during the covered taxable period; and (3) taxpayer falls under any of the categories enumerated in Section 2 of RR No. 34-2020. On whether tax exempt corporations are required to file an RPT Form, the BIR elucidated that tax exempt corporations are required only if they fall under Section 2(a), 2(c), or 2(d) of RR No. 34-2020. The BIR also clarified that the materiality thresholds are only relevant in determining those who are required to prepare a TPD. Lastly, on what are the required attachments to the RPT Form, the BIR, citing the last paragraph of RR No. 34-2020, clarified that the TPD and other supporting documents shall no longer be attached to the RPT Form but shall instead be made available during future audit.

D. BIR CIRCULARIZES THE UPDATED LIST OF BIR FORMS AND AVAILABLE PLATFORMS

Revenue Memorandum Circular (RMC) 51-2021 issued on April 27, 2021 circularizes the updated list of BIR Forms and available platforms to access.

E. BIR RULING DIGEST

BACKWAGES AND ATTORNEY’S LIEN ARE SUBJECT TO INCOME TAX AND WITHHOLDING TAX

N Co. is requesting legal opinion on the applicable tax rates on the backwages awarded to its former employees and on the ten (10%) attorney’s lien that were awarded in a case. As represented, the Supreme Court declared null and without effect the National Power Board Resolutions thereby giving N Co. employees, who were illegally terminated on January 31, 2003, the right to (1) reinstatement, or (2) separation pay in lieu of reinstatement, plus backwages, wage adjustments, and other benefits accruing from January 31, 2003 to the date of reinstatement. In ruling, the BIR opined that the backwages and the amount representing the unpaid salaries are remuneration for services which are subject to income tax, and, consequently, to withholding tax on wages pursuant to the Tax Code of 1997, as amended. N Co. shall apply the withholding tax rate as provided for the years 2003 to 2007. The amount of 13^th month pay received for the years 2003 to 2007, on the other hand, is exempt from income tax, the same being treated as an exclusion from the gross income. As regards the 10% attorney’s lien, the same shall also be subject to income tax, and, consequently, to the applicable creditable withholding tax, based on the prevailing rates at the time when such lien was paid to them. [BIR RULING NO. OT-005-21, JANUARY 14, 2021]

F. SC CASE DIGEST

[COURT OF TAX APPEALS (CTA) HAS JURISDICTION TO PASS ON THE CONSTITUTIONALITY OR VALIDITY OF TAX LAW, REGULATION OR ADMINISTRATIVE ISSUANCE, NOT THE REGIONAL TRIAL COURT (RTC)] [CTA HAS EXLCUSIVE JURISDICTION TO RESOLVE TAX PROBLEMS EXCEPT IN CASES QUESTIONING THE LEGALITY OR VALIDITY OF ASSESSMENT OF LOCAL TAXES WHERE THE RTC HAS JURISDICTION]

Petitioners Games and Amusement Board and BIR filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision and Resolution of the Court of Appeals. Respondent Klub Don Juan asserted that the GAB and the BIR should be restrained from enforcing the provision of the TRAIN Law on the increased Documentary Stamp Tax (DST) rate. Instead, the franchise rates should continue to apply since it was not specifically amended by the TRAIN Law. In ruling, the Court held that since the issue in this case is the validity of the provision of the TRAIN Law on the higher DST rate, the RTC is still devoid of jurisdiction. In Banco de Oro vs. Republic of the Philippines, the Court settled the question of which Court has the jurisdiction to determine the constitutionality or validity of tax laws, rules and regulations, and other administrative issuances of the BIR. The case of Banco De Oro made it clear that the CTA not only has jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund, but also, it has jurisdiction on cases directly challenging the constitutionality or validity of a tax law, or regulation or administrative issuance such as revenue orders, revenue memorandum circulars, revenue regulations and rulings. The same case intends the CTA to have exclusive jurisdiction to resolve all tax problems except in cases questioning the legality or validity of assessment of local taxes where the RTC has jurisdiction. Thus, the Petition was GRANTED. [GAMES AND AMUSEMENT BOARD AND BUREAU OF INTERNAL REVENUE VS. KLUB DON JUAN DE MANILA, INC., AND CESAR A VILA, JR., MANILA JOCKEY CLUB, INC. PHILIPPINE RACING CLUB, INC., AND METRO MANILA TURF CLUB, INC., GR NO. 252189, FEBRUARY 18, 2021]

G. TAX AND BUSINESS-RELATED NEWS [APRIL 22-29]

1. IMF says PH economy could grow by 6.9 percent but warns of COVID-19 risks

2. COVID-19 now considered 'compensable' work-related disease: DOLE

3. Wilcon Depot says to proceed with expansion plans; Q1 net income jumps 84 percent

4. Samsung posts 46.3 percent jump in profit on strong smartphone sales

5. US gov't, industry push bitcoin regulation to fight ransomware scourge

6. San Miguel deploys own doctors, nurses to aid gov't vaccination drive, says Ramon Ang

7. ‘Better days ahead’: Apple profit doubles in quarter to $23.6 billion

8. Facebook profit nearly doubles as user ranks grow

9. LGUs banned from collecting illegal transport fees, taxes

10. ADB: Bigger LGU share in national revenue in 2022 could slow spending

11. Samsung’s Lee family to pay more than 12 trillion won inheritance taxes

12. DOF wants 75% dividend from GOCCs

13. House panel says P12.3-B shortfall found in excise tax collections on sweet drinks

14. Govt to push 2 more tax reform measures

15. BSP to keep interest rates low as long as possible to aid economy

16. SSS extends deadline for Feb. contributions

17. Wall Street shrugs off tax talk, Europe sputters

18. DTI: P3.3B released to MSMEs under COVID-19 Assistance to Restart Enterprises

19. DTI urges LGUs to cut business permit fees

20. US offers business tax credits for COVID-19 vaccinations

IMF says PH economy could grow by 6.9 percent but warns of COVID-19 risks [ABS-CBN News, April 29, 2021]

The International Monetary Fund has upgraded its Philippine economic growth forecast this year to 6.9 percent from 6.6 percent but warned of downside risks due to uncertainties brought by the pandemic.

Source: https://news.abs-cbn.com/business/04/29/21/imf-philippine-economy-forecast-68-percent-covid-19

COVID-19 now considered 'compensable' work-related disease: DOLE [ABS-CBN News, April 29, 2021]

Filipino workers who test positive for COVID-19 will be eligible to receive compensation from the government after the disease was included in the list of occupational and work-related diseases, the Labor Department said Thursday.

Source: https://news.abs-cbn.com/business/04/29/21/covid-19-now-considered-compensable-work-related-disease-dole

Wilcon Depot says to proceed with expansion plans; Q1 net income jumps 84 percent [ABS-CBN News, April 29, 2020]

Wilcon Depot Inc said Thursday it would open 7 more branches this year following the robust first quarter net income at P604 million or 84 percent higher compared to the same period last year.

Source: https://news.abs-cbn.com/business/04/29/21/wilcon-depot-expansion-plans-q1-net-income-84-percent

Samsung posts 46.3 percent jump in profit on strong smartphone sales [ABS-CBN News, April 29, 2021]

South Korean tech giant Samsung Electronics posted a 46.3 percent rise in first-quarter net profits on Thursday, largely driven by robust sales of its smartphones.

Source: https://news.abs-cbn.com/business/04/29/21/samsung-463-percent-profit-smartphone-sales

US gov't, industry push bitcoin regulation to fight ransomware scourge [ABS-CBN News, April 29, 2021]

Government and industry officials confronting an epidemic of ransomware, where hackers freeze the computers of a target and demand a payoff, are zeroing in on cryptocurrency regulation as the key to combating the scourge, sources familiar with the work of a public-private task force said.

Source: https://news.abs-cbn.com/business/04/29/21/us-bitcoin-regulation-ransomware

San Miguel deploys own doctors, nurses to aid gov't vaccination drive, says Ramon Ang [ABS-CBN News, April 29, 2021]

San Miguel Corp is mobilizing its own healthcare personnel to assist in COVID-19 vaccinations starting in Mandaluyong, its president Ramon Ang said Wednesday.

Source: https://news.abs-cbn.com/business/04/29/21/san-miguel-doctors-nurses-vaccination-drive-ramon-ang

‘Better days ahead’: Apple profit doubles in quarter to $23.6 billion [ABS-CBN News, April 29, 2021]

Apple said Wednesday profits more than doubled in the past quarter to $23.6 billion amid a surge in iPhone sales and robust growth in other products and services purchased by pandemic-hit consumers.

Source: https://news.abs-cbn.com/business/04/29/21/better-days-ahead-apple-profit-doubles-in-quarter-to-236-billion

Facebook profit nearly doubles as user ranks grow [ABS-CBN News, April 29, 2021]

Facebook on Wednesday reported that its profit in the recently ended quarter nearly doubled to $9.5 billion on sharp gains in digital advertising as the pandemic kept more people glued to the internet.

Source: https://news.abs-cbn.com/business/04/29/21/facebook-profit-nearly-doubles-as-user-ranks-grow

LGUs banned from collecting illegal transport fees, taxes [Manila Bulletin, April 29, 2021]

Enforcement of local ordinances that allow the collection of illegal fees and taxes for the transport of goods is prohibited, an inter-agency directive reiterated.

Source: https://mb.com.ph/2021/04/29/lgus-banned-from-collecting-illegal-transport-fees-taxes/

ADB: Bigger LGU share in national revenue in 2022 could slow spending [Philippine Daily Inquirer, April 28, 2021]

The bigger budget share and responsibilities to be bestowed on local government units (LGUs) in 2022 may slow public spending and was flagged by the Manila-based Asian Development Bank (ADB) as a downside risk to the Philippines’ economic recovery.

Source: https://business.inquirer.net/321933/adb-bigger-lgu-share-in-national-revenue-in-2022-could-slow-spending#ixzz6tOvfhaGT

Samsung’s Lee family to pay more than 12 trillion won inheritance taxes [Philippine Daily Inquirer, April 28, 2021]

The family of deceased Samsung Electronics chairman Lee Kun-hee said on Wednesday it will pay more than 12 trillion won ($10.78 billion) in inheritance taxes for the estate of the late patriarch.
Source: https://business.inquirer.net/321885/samsungs-lee-family-to-pay-more-than-12-trillion-won-inheritance-taxes#ixzz6tOw2v6cb

DOF wants 75% dividend from GOCCs [Manila Bulletin, April 27, 2021]

The Department of Finance (DOF) has proposed to increase to 75 percent from 50 percent the minimum dividend remittances of state-owned companies as one of measures to raise revenues for the government’s additional economic stimulus spending.

Source: https://mb.com.ph/2021/04/27/dof-wants-75-dividend-from-goccs/

House panel says P12.3-B shortfall found in excise tax collections on sweet drinks [ABS-CBN News, April 26, 2021]

The House Ways and Means Committee said Monday it found a P12.3 billion shortfall in excise tax collections on sweetened beverages.

Source: https://news.abs-cbn.com/business/04/26/21/house-panel-says-p123-b-shortfall-found-in-excise-tax-collections-on-sweet-drinks

Govt to push 2 more tax reform measures [ABS-CBN News, April 26, 2021]

Dominguez said the 2 new measures under the Comprehensive Tax Reform Program (CTRP) will revamp the country's property valuation system, and simplify the taxation of passive income, financial services and transactions.

Source: https://news.abs-cbn.com/business/04/26/21/govt-push-2-more-tax-reform-measures

BSP to keep interest rates low as long as possible to aid economy [Philippine Daily Inquirer, April 26, 2021]

The central bank will keep interest rates low for as long as possible to support the country’s economic recovery from the COVID-19 pandemic, the head of the central bank said on Monday.
Source: https://business.inquirer.net/321692/bsp-to-keep-interest-rates-low-as-long-as-possible-to-aid-economy#ixzz6tOwCYnco

SSS extends deadline for Feb. contributions [Manila Bulletin, April 25, 2021]

In a statement, Aurora C. Ignacio, SSS president and chief executive said regular employers in Metro, Bulacan, Cavite, Laguna, and Rizal may pay their February contributions until April 30 this year.

Source: https://mb.com.ph/2021/04/25/sss-extends-deadline-for-feb-contributions/

Wall Street shrugs off tax talk, Europe sputters [Philippine Daily Inquirer, April 24, 2021]

Wall Street rebounded Friday from earlier losses on reports that US President Joe Biden will seek a huge tax hike, but Europe remained on the back foot despite bright economic data.
Source: https://business.inquirer.net/321632/wall-street-shrugs-off-tax-talk-europe-sputters#ixzz6tOwLwnag

DTI: P3.3B released to MSMEs under COVID-19 Assistance to Restart Enterprises [Philippine Daily Inquirer, April 23, 2021]

Only P3.3 billion of the P10-billion COVID-19 Assistance to Restart Enterprises has so far been released to pandemic-hit micro, small and medium enterprises (MSMEs) loan applicants under the Bayanihan to Recover as One Act or Bayanihan 2, the Department of Trade and Industry (DTI) said Friday.

Source: https://business.inquirer.net/321588/dti-p3-3b-released-to-msmes-under-covid-19-assistance-to-restart-enterprises#ixzz6tOwYTgZp

DTI urges LGUs to cut business permit fees [Manila Bulletin, April 23, 2021]

Trade and Industry Secretary Ramon M. Lopez has called for the reduction of business permit fees by local government units (LGUs) to help micro, small and medium enterprises (MSMEs) and ensure they continue to thrive, especially in this pandemic period.

Source: https://mb.com.ph/2021/04/23/dti-urges-lgus-to-cut-business-permit-fees/

US offers business tax credits for COVID-19 vaccinations [Philippine Daily Inquirer, April 22, 2021]

he United States will offer tax credits to businesses that grant their employees time off to receive a Covid-19 vaccine or recover from its side effects, the Treasury Department said on Wednesday.
Source: https://business.inquirer.net/321550/us-offers-business-tax-credits-for-covid-19-vaccinations#ixzz6tOwiQ5N0

Best regards,

Willie B. Santiago

Lawyer & Certified Public Accountant

Tax & Corporate Services Division

Diaz Murllo Dalupan & Company

TL : (+632) 8 894-5892

Website: www.dmdcpa.com.ph

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Subject: WEEKLY TAX UPDATES [APRIL 29, 2021]