TAX AND BUSINESS-RELATED NEWS [NOVEMBER 11-18] BIR ON MONITORING OF COMPLIANCE OF ONLINE SELLERS & SOCIAL MEDIA INFLUENCERS BIR RULINGS DIGEST COURT OF TAX APPEALS CASES DIGEST
| | | 1. TAX AND BUSINESS-RELATED NEWS | Las Casas Filipinas de Acuzar named best historic hotel in Asia Pacific BPO industry seen outpacing PH economy, growing up to 13 pct this year First interest rate hike by Bangko Sentral likely in June 2022: BPI economist Megaworld's MREIT to acquire 4 PEZA-accredited properties BSP eyeing central bank digital currency use in 'near future', Diokno says ABS-CBN awarded $21 million in lawsuit vs 21 websites illegally streaming content PSE net profit rises 43.7% on pandemic capital raising Suspending fuel taxes 'inequitable and detrimental' to economic recovery: DOF DOF: Oil excise suspension to benefit rich more Portugal makes it illegal for bosses to contact employees outside working hours SSS funeral claims up over threefold SC affirms CA ruling to refund or replace purchased car with ‘product imperfection’ CHED allows medical, nursing students to be COVID-19 vaccinators Tax Bureau to tighten regulations as fintech usage grows, says DOF After Singapore, BSP eyes cross-border payment pact with Malaysia, Thailand House panel OKs bill suspending excise tax on diesel, LPG, kerosene for 6 months
| Las Casas Filipinas de Acuzar named best historic hotel in Asia Pacific [ABS-CBN News, November 17, 2021] Las Casas Filipinas de Acuzar in Bagac, Bataan has been named the best historic hotel in Asia-Pacific by Historic Hotels Worldwide. BPO industry seen outpacing PH economy, growing up to 13 pct this year [ABS-CBN News, November 16, 2021] The IT and Business Process Association of the Philippines said it expects the sector to once again outpace the Philippine economy this year. First interest rate hike by Bangko Sentral likely in June 2022: BPI economist [ABS-CBN News, November 16, 2021] The Bangko Sentral ng Pilipinas is unlikely to hike interest rates in its monetary policy meeting on Nov. 18, BPI lead economist Jun Neri said Tuesday. Megaworld's MREIT to acquire 4 PEZA-accredited properties [ABS-CBN News, November 16, 2021] Megaworld's MREIT Inc said Tuesday it would acquire 4 properties that are accredited by the Philippine Economic Zone Authority (PEZA) by December. BSP eyeing central bank digital currency use in 'near future', Diokno says [ABS-CBN News, November 16, 2021] The Bangko Sentral ng Pilipinas is eyeing the use of central bank digital currencies (CBDC) but for wholesale transactions and not retail in the "near future," Governor Benjamin Diokno said Tuesday. ABS-CBN awarded $21 million in lawsuit vs 21 websites illegally streaming content [ABS-CBN News, November 16, 2021] A US court has ruled in favor of Filipino media and entertainment company ABS-CBN in its lawsuit against 21 websites illegally streaming ABS-CBN content. PSE net profit rises 43.7% on pandemic capital raising [Manila Bulletin, November 16, 2021] The Philippine Stock Exchange (PSE) reported that its net income rose 43.7 percent to P541.53 million in the first three quarters of 2021 from P376.84 million in the same period last year on higher operating revenues. Suspending fuel taxes 'inequitable and detrimental' to economic recovery: DOF [ABS-CBN News, November 15, 2021] The proposed suspension of excise taxes on fuel to cushion the impact of rising gas prices is inequitable and detrimental to the country's economic recovery, the Department of Finance said Monday. DOF: Oil excise suspension to benefit rich more [Philippine Daily Inquirer, November 15, 2021] The Department of Finance (DOF) on Monday (Nov. 15) reiterated that the move in Congress to suspend the collection of oil excise would deprive the government of up to P147.1 billion in revenues in 2022, which should have been spent on projects to sustain economic recovery from the pandemic-induced slump. Portugal makes it illegal for bosses to contact employees outside working hours [CNBC November 15, 2021] Portugal has passed new labor laws which include a ban on bosses contacting employees outside of working hours. SSS funeral claims up over threefold [Manila Bulletin, November 14, 2021] State-run Social Security System (SSS) said that funeral claims increased more than threefold in the first semester of the year driven by various online service facilities introduced by the pension fund. SC affirms CA ruling to refund or replace purchased car with ‘product imperfection’ [ABS-CBN News, November 14, 2021] The Supreme Court (SC) has ruled that dealers of motor vehicles are liable to refund or replace the unit sold to a buyer if the defects complained of and admitted by the seller could not be fixed within the warranty period due to “product imperfection.”. CHED allows medical, nursing students to be COVID-19 vaccinators [Manila Bulletin, November 13, 2021] The Commission on Higher Education (CHED) on Saturday, Nov. 13, formally announced that post-graduate/undergraduate interns, clinical clerks, and fourth-year medicine and nursing students can now become vaccinators and participate in the National COVID-19 Vaccine Deployment and Vaccination Program. Tax Bureau to tighten regulations as fintech usage grows, says DOF [ABS-CBN News, November 12, 2021] The Bureau of Internal Revenue will strengthen tax regulations for the financial technology (fintech) industry as online transactions continue to gain traction during the COVID-19 pandemic, the Department of Finance said Friday. After Singapore, BSP eyes cross-border payment pact with Malaysia, Thailand [ABS-CBN News, November 12, 2021] The Philippine central bank is looking to make it easier for Filipinos to transact with businesses and individuals across the ASEAN region through a region-wide payment network, it said Friday. House panel OKs bill suspending excise tax on diesel, LPG, kerosene for 6 months [Philippine Daily Inquirer, November 11, 2021] The House of Representatives Committee on Ways and Means on Thursday approved a substitute bill suspending excise tax on diesel, kerosene, and liquified petroleum gas—and reducing the rate for other oil products—for six months. | 2. BIR ON MONITORING OF COMPLIANCE OF ONLINE SELLERS & | Revenue Memorandum Order (RMO) No. 29-2021, issued on October 29, 2021, directs all Revenue District Offices (RDOs) and Large Taxpayers Divisions to monitor and verify the tax compliance of online merchants, social media influencers, and other businesses operating in digital platforms. Highlights include the creation of special tax force, verification of voluntary declarations by taxpayers through exchange of information mechanism, issuance of Letter of Authority, and reporting requirements. | 3. BIR RULINGS DIGEST ON TAXABILITY & EXEMPTION OF FRANCHISE GRANTED TO OPERATE AN AIRPORT, PATENTED PRODUCTS & REASONABLE PRIVATE BENEFIT PLAN | EXTENT OF TAXABILITY AND EXEMPTION PURSUANT TO THE GRANT OF FRANCHISE TO OPERATE AN AIRPORT S Co. is seeking clarifications on the implementation of the tax exemptions of Republic Act (R.A.) No. 11506 (Aerocity Franchise or Bulacan Airport City), which became effective on January 15, 2021. In ruling, Section 16 of the Aerocity Franchise provides that during the Ten-Year Construction Period, S Co. shall be exempt from any and all direct and indirect taxes and fees of any kind, nature, or description, which emanate exclusively from the construction, development, establishment, and operation of the Airport and Airport City, including income tax, value added tax, percentage tax, excise tax, documentary stamp tax, customs duties and tariffs, taxes on real estate, building and personal property, business taxes, franchise taxes, supervision fees, and permit fees levied, established or collected, or may be levied, established or collected, by any city, municipal, provincial, or national authority. The internal revenue taxes shall be implemented in two (2) phases such as (I) the Ten-Year Construction Period; and (II) after the Ten-Year Construction Period and during the remaining term of the Aerocity Franchise. The second phase, however, shall have two (2) sub-phases, such as (a) period of recovery; and (b) period after S Co. has fully recovered its Investment Cost on the Airport and on the Airport City.
A. Period of recovery B. Period after full recovery of Investment cost In the event of sale/transfer/assignment of rights and privileges including the tax exemptions, S Co. is required to officially notify the BIR in writing of the same within 60 days from the execution thereof and attaching copies of the Deeds of Sale/Transfer/Assignment, as the case maybe. An updated Certificate of Registration and General Information Sheet shall also be submitted showing the relationship of the successor/transferee/assignee to S Co. and reflecting the rights, privileges, and tax exemptions subject of the sale/transfer/assignment and granted under the Aerocity Franchise. [BIR RULING NO. 324-2021, AUGUST 21, 2021] | EXTENT OF TAX EXEMPTION OF PATENTED PRODUCTS APC, COE, FVE, MJE, and RV, as the inventors, and FAS Inc., as their assignee, are seeking tax exemption of their patented product. Relying on Republic Act (R.A.) No. 7459, otherwise known as the Inventors and Inventions Incentives Act of the Philippines, the Technology Application and Promotion Institute (TAPI) Screening Committee has evaluated and recommended that the patented invention is eligible for the tax incentives, which includes exemption from all kinds of taxes during the first ten (10) years from the date of the first sale, subject to the rules and regulations of the Department of Finance (DoF). However, in the evaluation, the BIR considered the Final Resolution of the Office of the President (OP) under OP Case No. 03-G-422, in which the DoF denied the appeal of an inventor relative to his tax exemption privileges, clarifying that the tax exemption granted by the law refers to income tax only. In effect, the inventors are still subject to the following taxes: Final withholding tax Capital gains tax Income tax on revenues not arising from inventor’s registered invention, such as interest, royalties, prizes, winnings, and dividends Value-added tax on gross receipts/revenues derived from the sale of the said invention products Other percentage tax Excise tax directly payable in connection with the sale of invention products; and Documentary stamp tax. [BIR RULING NO. 292-21, AUGUST 12, 2021]
| EXEMPTION FROM INCOME TAX OF REASONABLE PRIVATE RETIREMENT BENEFIT PLAN DOES NOT INCLUDE DST AND STT ON THE SUBSEQUENT SALE OF INVESTMENT SHARES A Co. is requesting a confirmatory ruling that the sale of shares of stock owned by the Company is not subject to capital gains tax (CGT) pursuant to Section 60(B) of the 1997 Tax Code, as amended. A Co. is a non-stock, non-profit corporation which was incorporated to provide and manage a retirement fund for AA Co. employees. In reply, Section 60(B) of the 1997 Tax Code provides for the two (2) conditions in order that the earnings of a retirement fund may be exempt from income tax, to wit: (1) contributions are made for distribution to such employees in accordance with such plan; and (2) at any time prior the satisfaction of all liabilities with respect to the employees, no part of the income shall be used for purposes other than for the exclusive benefit of the employees. In reference to the previous favorable ruling dated August 4, 2003, the Bureau opined that the Company’s retirement fund is considered a reasonable retirement benefit plan. Thus, the sale of shares of stocks is exempt from income tax and CGT. However, it is subject to other applicable taxes such as documentary stamp tax (DST) pursuant to Section 175 of the Tax Code and stock transaction tax (STT) for listed and traded shares of stock in the local stock exchange imposed under Section 127(A) of the same Code. [BIR RULING NO. OT-282-2021, AUGUST 2, 2021] | 4. CTA CASES DIGEST ON BIR ESTIMATION IN THE ABSENCE OF TAXPAYER'S RECORDS & VOID ASSESSMENT DUE TO FAILURE TO ESTABLISH THE FACT OF RECEIPT OF LOA & ASSESSMENT | IN THE ABSENCE OF THE ACCOUNTING RECORDS OF A TAXPAYER, HIS TAX LIABILITY MAY BE DETERMINED BY ESTIMATION Petitioner Bureau of Internal Revenue filed a Petition for Certiorari praying that a resolution be issued, directing Public Respondent Secretary of Justice and his State Prosecutors to file an Information indicting Private Respondent Ferdinand Santos in his capacity as President of Camp John Hay Hotel Corp., for failure to obey summons, a violation of Section 266 1997 Tax Code. Petitioner argued that the Court has jurisdiction to look into whether Public Respondent committed grave abuse of discretion by way of dismissing the criminal complaint, and the Private Respondent neglected to appear and produce documents required of him. In ruling, the Court first resolved that the Court has original jurisdiction over a Petition for Certiorari assailing Department of Justice resolution in a preliminary investigation involving tax and tariff offenses. Nevertheless, the instant case should not prosper because the remedy of appeal was available to Petitioner. Section 1 of Rule 65 of the Rules of Court provides that Petition for Certiorari is proper only when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. In this case, upon receipt of Public Respondent’s Resolution, no Appeal was filed by the Petitioner. Thus, when an Appeal is available, Certiorari will not prosper especially if the Appeal was lost because of one's own negligence or error in the choice of remedy, even if the ground is grave abuse of discretion. Furthermore, the Court found no grave abuse of discretion on the part of Public Respondent. Petitioner has not given sufficient proof to warrant the filing of an Information against Private Respondent. Petitioner likewise failed to identify which of the documents subpoenaed are still not furnished by Private Respondent. This failure of Petitioner casts doubts as to its assertion that there are still unsubmitted documents. Such being the case, Public Respondent has not committed grave abuse of discretion. As to the contention of the Petitioner that it cannot properly conduct its assessment if few documents were only given is belied by the Supreme Court’s jurisprudential pronouncement that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. Based on the foregoing, Petition for Certiorari was dismissed. [BUREAU OF INTERNAL REVENUE VS. HON. MENARDO I. GUEVARRA IN HIS CAPACITY AS SECRETARY OF JUSTICE AND FERDINAND SANTOS IN HIS CAPACITY AS PRESIDENT OF CAMP JOHN HAY HOTEL CORPORATION, CTA CASE NO. 10298, OCTOBER 15, 2021] | [TAXPAYERS SHALL BE INFORMED IN WRITING OF THE LAW AND THE FACTS ON WHICH THE ASSESSMENT IS MADE; OTHERWISE, ASSESSMENT SHALL BE VOID] [RECEIPT OF THE PAN IS AN IMPORTANT ELEMENT OF DUE PROCESS] Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to nullify the assailed Decision and subsequent Resolution of the Court Special First Division cancelling the assessment issued against Respondent Clark Water Corporation. Petitioner argued that due process was observed and that the Court Special First Division has no jurisdiction since the Respondent failed to timely protest the Final Assessment Notice (FAN). As the records show, the Respondent still protested the Preliminary Collection Letter (PCL) and the certified machine copy of the FAN that was served thereafter within thirty (30) days; and even brought up the issue of its non-receipt of the Preliminary Assessment Notice (PAN) and the FAN in its earliest protest to the PCL. In ruling, the Court cited Section 228 of the Tax Code and CIR vs. Metro Star Superama, Inc. which both emphasize that the receipt of the PAN is an important element of due process. While the Petitioner may have been able to prove the fact of mailing of the PAN through the registry receipt, with Respondent's denial, the burden of proof accordingly shifted to the former. All told, the CTA En Banc finds no reversible error in the assailed Decision and Resolution that would warrant modification. Therefore, Petition was DENIED for lack of merit. [COMMISSIONER OF INTERNAL REVENUE VS. CLARK WATER CORPORATION, CTA EN BANC CASE NO. 2218, OCTOBER 12, 2021] | ANY TAX ASSESSMENT SUBSEQUENTLY ISSUED WITHOUT A VALID LOA IS ABSOLUTELY NULL AND VOID Petitioner Huey Commercial, Inc. filed a Petition for Review seeking cancellation of the Warrant of Distraint and/or Levy (WDL) and that the 2010 tax assessment on the said WDL be declared null and void. Petitioner argued that the Letter of Authority (LOA) issued against it is invalid because it was not duly served. Thus, the Final Assessment Notices (FLD/FAN) and WDL subsequently issued are likewise invalid since there is no valid LOA preceding its issuances. On the other hand, Respondent Commissioner of Internal Revenue countered that the Court has no jurisdiction to try the present case since the Petitioner immediately filed the present Petition without exhausting its administrative remedies before Respondent, hence, making the same dismissible. In ruling, the Court held that it has jurisdiction over a Respondent's decision on a "disputed assessment." However, in many cases, the Court has taken cognizance of cases falling under the category of "other matters," such as determining the validity of a WDL, pursuant to the Revised Rules of the Court of Tax Appeals (RRCTA). The Court further ruled that the LOA was not properly served to the Petitioner. The failure of the Revenue Officer (RO) to properly verify whether the recipient of the LOA was an authorized representative of the Petitioner deprived the latter of its right to due process in the tax assessment proceedings. Petitioner was denied the opportunity to participate in the tax audit and present its books of accounts and other accounting records to support its position, following non-receipt of the LOA. Furthermore, a taxpayer who is the subject of a tax investigation is entitled to receive a Notice of Informal Conference under Section 3.1.1 of Revenue Regulations (RR) No. 12-99, as amended, the purpose of which is to give the taxpayer the opportunity to contest the preliminary audit findings of the examining RO prior to the issuance of formal deficiency tax assessments. Respondent failed to show proof that the Notices of Informal Conference were received by the Petitioner, thus, leading to the conclusion that they were not properly served. As a result, the Respondent violated the fundamental right to due process guaranteed to taxpayers in deficiency tax assessment proceedings. Consequently, the Petition was GRANTED and the FDL/FAN and WDL were CANCELLED and SET ASIDE. [HUEY COMMERCIAL, INC., VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 8985, SEPTEMBER 30, 2021] | Thank you and best regards, WILLIE B. SANTIAGO Lawyer & Certified Public Accountant Tax & Corporate Services Division TL : (+632) 8 894-5892 Loc. 703 Website: www.dmdcpa.com.ph Don Jacinto Building De la Rosa corner Salcedo Streets Legaspi Village, Makati City 1229 Philippines | |
|
|
|
