TAX & BUSINESS-RELATED NEWS [JULY 27-AUGUST 1] BIR LIFTS THE SUSPENSION OF TAX AUDIT COVERED BY MISSION ORDER BIR RULINGS DIGEST DEPARTMENT OF FINANCE OPINION DIGEST ON ITS JURISDICTION ON BIR DISPUTED ASSESSMENT VIS-A-VIS CTA JURISDICTION SEC LEGAL OPINION DIGEST ON LIQUIDATION PERIOD OF A DISSOLVED CORPORATION CTA CASES DIGEST
| 1. TAX & BUSINESS-RELATED NEWS [JULY 27-AUGUST 1] | | LTFRB pays out P445.66M to SCP drivers Nationwide crypto exchange services rolls out SM Prime back to charging full mall rental fees Speaker vows approval of National Land Use Act by yearend Bria starts pre-selling of Ormoc housing units BBM vetoes tax, transport bills Quishing is latest cyber fraud – PLDT Cost of renting in Cebu, Manila among the highest in Asia — report Marcos vetoes bill expanding Davao Light franchise area BIR loses multi-million peso tax case anew Internet down in parts of Luzon following big earthquake US economy shrinks again sparking recession fears DICT commits improved digital connectivity to remote areas in Q4 Spotify losses widen as costs and subscribers increase World’s largest vertical farm opens in Dubai
| We saw these tax and business-related news on various news sites, and we thought you should see them. DMD is not responsible for the content of these news, and anything written thereon does not necessarily reflect DMD views or opinions. | LTFRB pays out P445.66M to SCP drivers [Manila Bulletin, August 1, 2022] The Land Transportation Franchising and Regulatory Board (LTFRB) has disbursed P445.46M to drivers and operators of Public Utility Bus (PUB) plying the EDSA Busway under the Libreng Sakay of the Service Contracting Program (SCP) one month into the new administration. Nationwide crypto exchange services rolls out [Manila Bulletin, August 1, 2022] Moneybees, a BSP-certified Virtual Asset Service Provider (VASP) and the first Cryptocurrency over-the-counter service in the Philippines, has partnered with ACM Business Solution Inc. to roll out crypto buy and sell services through its GoVIP centers. ACM Business Solution Inc., a web-based business solutions, has been providing the underserved and unserved population access to Financial Services since 2014. In 2021, ACM launched the GoVIPCenter, the backbone of every VIP outlet where drop off points and microinsurances were introduced. SM Prime back to charging full mall rental fees [Philippine Daily Inquirer, July 31, 2022] For the first time since the March 2020 lockdowns, property giant SM Prime Holdings resumed charging full rental fees across its local shopping mall chain in the second quarter, clearing the road toward earnings recovery after paying the hefty price of moratorium and discounts that kept tenants afloat. Speaker vows approval of National Land Use Act by yearend [The Philippine Star, July 31, 2022] Romualdez noted that there is a need to “harmonize and integrate conflicting laws, policies, principles and guidelines on land use and physical planning.” Bria starts pre-selling of Ormoc housing units [Philippine Star, July 31, 2022] Bria Homes, one of the property development units of the Villar Group, has started pre-selling units in its newest project in Ormoc City in Leyte province following groundbreaking rites earlier this month. BBM vetoes tax, transport bills [The Manila Times, July 31, 2022] In his letter, the President told Congress that House Bill 9652 or Senate Bill 2520, known as "An act exempting from income taxation the honoraria, allowances and other financial benefits of persons rendering service during an election period," runs counter to the objective of the government's Comprehensive Tax Reform Program to correct the inequity in the country's tax system and negate the progressivity of the reforms introduced under Republic Act 10963 or the "Train Law." Quishing is latest cyber fraud – PLDT [Manila Bulletin, July 29, 2022] Customers who scan quick response (QR codes) from dubious entities on emails or messaging platforms can fall prey to “quishing”, warned PLDT and Smart’s Cyber Security Operations Group (CSOG). Cost of renting in Cebu, Manila among the highest in Asia — report [The Philippine Star, July 29, 2022] Paying rent in Cebu and Manila has become less affordable since 2017, making them one of Asia’s worst cities for renting. Marcos vetoes bill expanding Davao Light franchise area [The Manila Times, July 29, 2022] Press Secretary Rose Beatrix "Trixie" Cruz-Angeles said the President vetoed the bill "due to, among others, its susceptibility to infringe on the franchise coverage area of the North Davao Electric Cooperative." BIR loses multi-million peso tax case anew [Manila Bulletin, July 28, 2022] In affirming the decision of one of its divisions, the court en banc stated that BIR large taxpayers service (LTS) did not issue letter of authority (LA) to investigate Autostrada Motore, Inc. of Fort Bonifacio, Taguig City when it assessed it’s alleged multi-million tax debts as required by the Tax Code. Internet down in parts of Luzon following big earthquake [Manila Bulletin, July 28, 2022] Converge ICT issued advisories for their subscribers in Narvacan and Tagudin, both in the province of Ilocos Sur for possible connectivity issues as of 10:50 AM. The Internet Service Provider (ISP) assures their clientele that their technical team is working to resolve the issue at the soonest possible time. US economy shrinks again sparking recession fears [BBC, July 28, 2022] The US economy has shrunk for the second quarter in a row, a milestone that in many countries would be considered an economic recession. DICT commits improved digital connectivity to remote areas in Q4 [Manila Bulletin, July 27, 2022] The Philippines will be the first country in Southeast Asia to offer Starlink’s services, which are provided through advanced, low-orbit satellites. The Starlink service is available in more than 30 countries, mainly in North America and Europe. The satellite service will have Speeds between 100 to 200 Megabits per second (Mbps). Spotify losses widen as costs and subscribers increase [Inquirer.Net, July 27, 2022] Between April and June, the Swedish giant suffered a net loss of 125 million euros ($126 million), compared to 20 million euros in the second quarter of 2021. World’s largest vertical farm opens in Dubai [Manila Bulletin, July 27, 2022] Another historical milestone for UAE as Bustanica, which means your garden or orchard in Arabic, has unveiled the 330,000 sqft controlled farm facility making it the world’s largest hydroponic farm. Bustanica is driven by powerful technology – machine learning, artificial intelligence and advanced methods – and a highly specialized in-house team that includes agronomy experts, engineers, horticulturists and plant scientists. | 2. BIR LIFTS THE SUSPENSION OF TAX AUDIT COVERED BY MISSION ORDER | Revenue Memorandum Circular (RMC) No. 115-2022, issued on July 28, 2022, lifts the suspension of the issuance of Mission Orders insofar as authorizing Revenue Officers to conduct Tax Compliance Verification Drive (TCVD). This includes verification of complaints involving alleged violation of the 1997 National Internal Revenue Code (NIRC), as amended. The issuance of Mission Orders other than for TCVD purposes shall remain suspended until further notice. | 3. BIR RULINGS DIGEST ON INSTALLMENT PAYMENTS OF ESTATE TAX, EXEMPTION FROM CAPITAL GAINS TAX ON RETURN OF PROPERTY PURSUANT TO A COURT ORDER & VAT-EXEMPT PURCHASES OF RENEWABLE ENERGY DEVELOPER | ESTATE SETTLEMENT CAN BE PAID IN INSTALLMENTS SUBJECT TO THE APPROVAL OF THE BIR Mrs. O is requesting a reasonable extension to pay the estate tax due on October 8, 2021, through cash installment. In reply, Section 91 (B) of the 1997 Tax Code, as amended, provides that when the Commissioner finds that the payment on the due date of the estate tax or any part thereof would impose an undue hardship upon the estate or any of the heirs, he may extend the time for payment not to exceed five (5) years in case the estate is settled through the courts, or two (2) years in case the estate is settled extrajudicially. However, the amount for which the extension is granted shall be paid on or before the date of the expiration of the period of the extension and the running of the Statute of Limitations for assessment as provided in Section 203 of 1997 Tax Code, as amended, shall be suspended for the period of any such extension. Further, Section 91 (C) of the same Code provides that in case the available cash of the estate is insufficient to pay the total estate tax due, payment by installment shall be allowed within two (2) years from the statutory date for its payment without civil penalty and interest. Hence, the extension to pay the estate tax is granted. Consequently, the executor/administrator or heirs shall pay the estate tax in four (4) installments, without civil penalty and interest. [BIR RULING NO. 277-2022, JUNE 6, 2022] NO CGT SHALL BE IMPOSED ON THE RETURN OF THE PROPERTY TO THE LEGAL OWNER PURSUANT TO A COURT ORDER Ms. R is requesting an exemption from the payment of Capital Gain Tax (CGT) on the reconveyance of a parcel of land pursuant to a Court Order. In reply, the Bureau opined that since the reconveyance of the subject property was in accordance with the Order of the Regional Trial Court and without any monetary consideration and that reconveyance was to return a one-half portion of the subject property to the legal owner, the transfer of the subject property in favor of Ms. R is not subject to the 6% CGT imposed under Section 24(D)(1) of the 1997 Tax Code, as amended. [BIR RULING NO. 247-2022, MAY 24, 2022] RENEWABLE ENERGY DEVELOPER OF BIOMASS RESOURCES IS QUALIFIED FOR 0% VAT ON ITS LOCAL PURCHASES OF GOODS & SERVICES NEEDED FOR ITS RENEWABLE ENERGY PROJECTS R Co., a Renewable Energy Developer of Biomass Resources in Polillo, Quezon Province, is requesting a confirmatory ruling that its local purchases of goods, properties, or services to Value-Added Tax (VAT) registered suppliers are qualified for zero percent (0%) VAT. As further represented, R Co. is registered with the Board of Investments and the Department of Energy. In reply, the Bureau confirmed its position citing Section 15 (g) of Republic Act No. 9513, otherwise known as “Renewable Energy Act of 2008,” which provides for incentives for renewable energy projects and activities. One of the incentives provided by law is the zero percent (0%) VAT on all local purchases of goods, properties, and services of RE developer for the development, construction, and installation of its plant facilities, as well as the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors. [BIR RULING NO. 087-2022, MARCH 3, 2022] | 4. DOF OPINION DIGEST ON ITS JURISDICTION ON BIR DISPUTED ASSESSMENT VIS-A-VIS CTA JURISDICTION | THE CTA & NOT THE DOF HAS JURISDICTION ON BIR ASSESSMENT AGAINST THE CEBU CITY GOVERNMENT Cebu City Government (Cebu) is requesting a review of the Bureau of Internal Revenue (BIR) Final Decision on the Motion for Reconsideration of the Final Decision on Disputed Assessment (FDDA), which held that Cebu is liable to pay the BIR assessment in the aggregate amount of ₱1,278,349,609.52, covering the taxable year 2010. Cebu filed a Protest contending that it is not liable for the BIR assessment as it is engaged in governmental functions and not proprietary functions. Likewise, Cebu anchored its plea for the Department of Finance (DOF) to review the BIR decision under Section 4, paragraph 1 of the 1997 Tax Code, as amended, authorizing the DOF to review the interpretation of the Commissioner of Internal Revenue (CIR) on what is considered essential governmental functions and what are those corporate or proprietary function. In reply, the DOF opined that the matter is within the ambit of Section 4, paragraph 2 of the 1997 Tax Code, as amended, which is properly subject to the exclusive appellate jurisdiction of the Court of Tax Appeals (CTA). Further, Section 7 of Republic Act (R.A.) 9282, otherwise known as “An Act Expanding the Jurisdiction of the CTA” provides that the CTA exercises exclusive appellate jurisdiction to review by appeal decisions of the CIR in cases involving disputed assessments. Hence, the request for review was DENIED for lack of jurisdiction. [DEPARTMENT OF FINANCE OPINION NO. 004.2021, JUNE 16, 2021] | 5. SEC LEGAL OPINION DIGEST ON LIQUIDATION PERIOD OF A DISSOLVED CORPORATION | [A DISSOLVED CORPORATION SHALL REMAIN AS A BODY CORPORATE FOR 3 YEARS FOR THE PURPOSE OF LIQUIDATION & DISPOSITION] [RCC’s 3-YEAR PERIOD PROVISION SHOULD NOT BE CONSTRUED TO PREVENT A CORPORATION FROM LIQUIDATION, WHICH WOULD COMPLETE THE PROCESS OF DISSOLVING CORPORATION] [SEC HAS NO JURISDICTION OVER THE LIQUIDATION OF A CORPORATION; HENCE ITS JURISDICTION SHALL PERTAIN TO RTC] N Co. is seeking an opinion on various issues on the liquidation of its lone asset after the Commission revoked its corporate charter due to its failure to comply with reportorial requirements. As represented, N Co. does not have any creditors, its lone asset is a parcel of land, and only six (6) of its nine (9) directors are alive. In reply, SEC cited Section 139 of the Revised Corporation Code (RCC), which gives a dissolved corporation three (3) years after the effective date of dissolution to continue as a body corporate for liquidation, disposition, and distribution of its assets. In the previous opinion citing Sec 122 of the old Corporation Code, it was clarified that the 3-year period in the provision should not be construed to prevent a corporation from pursuing activities such as liquidation and disposition, which would complete the process of dissolving the corporation. Hence, N Co. may still liquidate and dispose of its lone asset despite the lapse of more than three (3) years since the revocation of its corporate charter. However, in this case, the SEC is constrained to answer other queries regarding liquidation. The SEC emphasized that they may have jurisdiction to order a corporation’s dissolution, but it does not extend to the liquidation of a corporation; thus, jurisdiction over the liquidation now pertains to the appropriate Regional Trial Courts. [SEC OFFICE OF THE GENERAL COUNSEL LEGAL OPINION NO. 22-06, MAY 10, 2022] | 6. CTA CASES DIGEST ON ACQUITTAL OF THE ACCUSED FOR FAILURE OF THE PROSECUTION TO PROVE WILLFUL FAILURE TO PAY TAX, TIMELINE TO PROTEST THE DECISION OF THE COMMISSIONER OF CUSTOMS & REFUND OF INCOME TAX BY AN INTERNATIONAL AIR CARRIER | [TO ATTRIBUTE TO THE ACCUSED A "WILLFUL FAILURE TO PAY" THE TAX, IT MUST BE SHOWN THAT SUCH FAILURE OR OMISSION BY THE ACCUSED WAS DONE KNOWINGLY, INTENTIONALLY & WITH THE SPECIFIC INTENT NOT TO PAY THE TAX] [THE PROSECUTION HAS THE BURDEN TO PROVE THAT ALL THE ELEMENTS OF THE OFFENSE ARE PRESENT & THAT THE ACCUSED COMMITTED THE SAID OFFENSE] Petitioner People of the Philippines filed a Petition for Review seeking nullification of the CTA 1st Division’s earlier Decision acquitting the Respondents Robigie Corporation and Grace G. Sucksuphan of the offense charged. Petitioner claimed that the Accused willfully and unlawfully failed and refused and neglected to pay the deficiency internal revenue tax liabilities despite repeated demands. On the other hand, Respondents challenged the service of the Letter of Authority (LOA) and denied receipt of the assessment notices. In ruling, the Court En Banc agreed with the conclusion reached by the 1st Division that Sucksuphan’s failure to pay Robiegie’s deficiency tax liabilities was not willful since the Petitioner failed to prove Robigie’s receipt of the LOA and the assessment notices. Here, the Respondents denied receipt of the LOA and the assessments notices. Such denial, therefore, shifts the burden to the Petitioner to prove that the LOA and the assessment notices were duly delivered and actually received by Robigie. Considering that the Petitioner was not able to prove beyond reasonable doubt that Sucksuphan was made fully aware of Robigie’s obligation to pay the deficiency taxes and when to pay the same, it could not be established that her failure to pay the tax was willful on her part. Consequently, the Petition was DENIED. [PEOPLE OF THE PHILIPPINES VS. ROBIGIE CORPORATION AND GRACE G. SUCKSUPHAN, CTA EN BANC CRIMINAL CASE NO. 084, JUNE 30, 2022] [THE DECISION ON THE COMMISSIONER OF CUSTOMS, IF NOT TIMELY PROTESTED & APPEALED BY THE IMPORTER TO THE COMMISSIONER OF CUSTOMS, BECOMES FINAL NOT ONLY AS TO THE IMPORTER BUT AGAINST THE GOVERNMENT AS WELL] [NOTICE TO A REGULAR IMPORTER TO LODGE OR FILE, PAY, CLAIM, OR MARK MAY BE DONE VIA ELECTRONIC NOTICE SENT TO THE REGISTERED EMAIL ADDRESS OF CONCERNED ACCREDITED IMPORTERS OR EXPORTERS] Petitioner Victor R. Del Rosario Rice Mill Corporation filed a Petition for Review seeking reversal of the Consolidated Order and Resolution of Respondents Commissioner of Customs, District Collector, Manila International Container Port, and the Bureau of Customs. Petitioner contended that since the assailed Consolidated Order was already the Decision of the Respondent Customs Commissioner on Petitioner’s Letter-Appeals, there is no need to appeal the denial again before him, and the proper recourse is for the Petitioner to file a Petition for Review. On the other hand, Respondents countered that the assailed Consolidated Order has become final and unappealable because the Petitioner failed to appeal the same to the Respondent Customs Commissioner, within 15 days from receipt thereof pursuant to Section 114 of the Customs Modernization and Tariff Act (CMTA). In ruling, the Court agreed with the Respondents. Petitioner should have filed an appeal before the Respondent Customs Commissioner on or before 17 May 2019, which is 15 days from the Petitioner’s receipt of the Consolidated Order on 02 May 2019. Contrary also to the Petitioner’s allegation that it was denied due process of law since there is no proof that it received Respondent District Collector’s “Notice to Pay” sent via email plus the fact that the Decrees of Abandonment were issued two (2) days thereafter, the Court agreed with Respondents’ assertions that: (1) Petitioner was duly notified of its tax deficiencies via electronic service, deemed completed upon successful sending of the email notice to its registered email address and received even without an acknowledgment receipt; and (2) since the Petitioner is a regular rice importer, it falls under the category of a knowledgeable importer, who is presumed to know the arrival of its shipments, and thus, is expected to pay the assessed duties, taxes, and other charges on its rice import shipments, within 15 calendar days from receipt of the Notice of Final Assessment. Consequently, the Petition was DISMISSED for lack of jurisdiction. [VICTOR R. DEL ROSARIO RICE MILL CORPORATION VS. HON. REY LEONARDO B. GUERRERO, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF CUSTOMS, ATTY. ERASTUS SANDINO AUSTRIA, IN HIS OFFICIAL CAPACITY AS DISTRICT COLLECTOR, MANILA INTERNATIONAL CONTAINER PORT, AND THE BUREAU OF CUSTOMS, CTA CASE NO. 10082, JUNE 28, 2022] WHILE EVERY CITIZEN MUST HONESTLY PAY THE RIGHT TAXES, THE GOVERNMENT HAS A COROLLARY DUTY TO JUSTLY RETURN WHAT HAS BEEN ERRONEOUSLY & EXCESSIVELY GIVEN TO IT Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse the earlier Decision and Resolution of the CTA 2nd Division, granting the issuance of a Tax Credit Certificate (TCC) in favor of the Respondent Kuwait Airways Corporation. Petitioner claimed that in an action for refund, the burden of proof is on the taxpayer to establish its right thereto. Respondent countered that it has proven with substantial and concrete documentary and testimonial evidence its entitlement to the issuance of TCC. Respondent also averred that, as confirmed in a BIR Ruling, it is entitled to avail of the preferential income tax rate of 1 ½% on its Gross Philippine Billings earned pursuant to Philippines-Kuwait tax treaty. In ruling, records revealed that the Respondent has offered testimonies of its witnesses, as well as exhibits, to prove that it is entitled to the issuance of TCC. The Court noted that the Petitioner failed to act on the Respondent’s administrative claim, and that he failed to present any evidence during the trial before the Court in Division to support his assertion that the Respondent is not entitled to its claim for a TCC. Based on the evidence on record and the oft-repeated arguments of the parties, the Court found that the Respondent was able to establish its entitlement to the claimed TCC. Thus, the issuance of a TCC in its favor is proper. Consequently, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE V. KUWAIT AIRWAYS CORPORATION, CTA EN BANC CASE NO. 2525, JUNE 16, 2022] | DOWNLOAD OUR PAST EDITIONS & FULL TEXT OF REFERENCES https://weeklytaxupdates.getresponsesite.com/ | |
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