TAX & BUSINESS-RELATED NEWS [SEPTEMBER 11-19] BIR LIFTS THE SUSPENSION OF ENFORCEMENT ACTIVITIES COVERED BY MISSION ORDERS DOF OPINIONS ON TAXABILITY OF GOODWILL AS A RESULT OF SALE OF BUSINESS, TAX ASSUMPTION OF GOVERNMENT FOR INTERNATIONAL PROJECTS & WAIVER OF TAXES UNDER FRIA ACT SUPREME COURT CASE ON VAT ON CONDOMINIUM DUES CTA CASES ON GENERAL PROFESSIONAL PARTNERSHIPS EXEMPTION FROM LOCAL BUSINESS TAX, VALIDITY OF SURCHARGE AS A RESULT OF LATE FILING OF TAX RETURNS & VAT ZERO-RATE SALE OF ELECTRICITY & GENERATION SERVICES
| 1. TAX & BUSINESS-RELATED NEWS [SEPTEMBER 11-19] | | Industry group lauds approval of BPO transfer to BOI for remote, hybrid setup House panel OKs bill allowing students to take exams despite unpaid school fees DTI frowns on tax-exempt ‘lifestyle’ double-cab pickup trucks Labor dep't bats for wider adoption of remote work schemes GSIS retakes Pasay site; Gloria Maris evicted Bongbong Marcos transfers Tesda from DTI to DOLE AboitizPower assumes control of Mindanao coal plant operator Provisional thresholds for M&A notices set as Bayanihan 2 ends Gov’t ends impasse on BPOs’ WFH appeal Birth pains: Debut of Manny Villar’s AllTV fails to excite netizens Bezos Loses Spot as World’s Second-Richest Person to Adani DOH backs extension of work-from-home arrangements LTO eyes online registration of motor vehicles Japan’s No. 1: Tenya opens first express store at SM Megamall Tax collectors, justice officials argue over proposed creation of national taxpayer advocate office Lucio Co's The Keepers to acquire 50% of 'Alfonso' brandy maker Multinational consortium bags $11 billion Sangley Point International Airport Project Bataan bounces back: Check these 5 must-visit places Marcos on his family’s alleged unpaid estate tax case: Open it, let us argue DOF: Service contractors with workers in WFH setup not liable to pay mayor’s permit fee Creator and Influencer Council of the Philippines launches first face-to-face general membership meeting Manny Villar, Ernest Cu exploring partnership: AllTV to invade your mobile phone through Globe
| 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. | Industry group lauds approval of BPO transfer to BOI for remote, hybrid setup [ABS-CBN News, September 19, 2022] The approval of the transfer of business process outsourcing (BPO) firms to the Bureau of Investments, which does not have geographical limits in conducting businesses, is a sign that the government recognized the sector's economic contribution, an industry group said Monday. House panel OKs bill allowing students to take exams despite unpaid school fees [ABS-CBN News, September 19, 2022] The House Committee on Higher and Technical Education on Monday approved a bill that would allow students to take their exams despite having unpaid school fees. DTI frowns on tax-exempt ‘lifestyle’ double-cab pickup trucks [Manila Bulletin, September 19, 2022] Trade and Industry Secretary Alfredo E. Pascual is seeking review of the excise tax exemption on double cab pickup trucks to limit this privilege to the real utility workhorse vehicle — the regular single-cab & chassis pickup — and not the fully accessorized double cab that is far from the reach and need of the micro, small and medium entrepreneurs (MSMEs). Labor dep't bats for wider adoption of remote work schemes [ABS-CBN News, September 18, 2022] In a statement, the DOLE said Secretary Bienvenido Laguesma signed last Friday Order No. 237, which revises the IRR of Republic Act 11165 or the Telecommuting Law. GSIS retakes Pasay site; Gloria Maris evicted [Inquirer Mobile, September 17, 2022] The state pension fund said in a statement this happened upon the orderly and peaceful implementation of an eviction process carried out over three days from Sept. 14 to Sept. 16. The property in question occupies 2,592 square meters at the CCP Complex in Pasay City. Bongbong Marcos transfers Tesda from DTI to DOLE [The Philippine Star, September 17, 2022] Under EO5, TESDA becomes attached to DOLE for policy and program coordination, as “it is the policy of the national government to rationalize the functional structures of agencies with complementary mandates and promote coordination, efficiency and organizational coherence in the bureaucracy.” AboitizPower assumes control of Mindanao coal plant operator [Inquirer Mobile, September 17, 2022] Aboitiz Power Corp. is cornering a significant stake in the local subsidiary of German company STEAG GmbH, which runs a coal-fired power plant in Mindanao. Provisional thresholds for M&A notices set as Bayanihan 2 ends [The Philippine Star, September 17, 2022] The Philippine Competition Commission (PCC) has set a provisional threshold for compulsory notification of mergers and acquisitions (M&As) as the two-year temporary thresholds under the Bayanihan to Recover as One Act (Bayanihan 2) already lapsed. Gov’t ends impasse on BPOs’ WFH appeal [Inquirer Mobile, September 17, 2022] Business process outsourcing (BPO) firms located in ecozones may carry on with the work-from-home (WFH) arrangement for up to 30 percent of their workforce until the end of this year while they work on the transfer of their registration to the Board of Investments (BOI) from the Philippine Economic Zone Authority (Peza). Birth pains: Debut of Manny Villar’s AllTV fails to excite netizens [Bilyonaryo, September 16, 2022] Select shows and performances are now streaming via the Advanced Media Broadcasting System (AMBS), which now occupies frequencies taken away from ABS-CBN since it lost its franchise. Bezos Loses Spot as World’s Second-Richest Person to Adani [Bloomberg, September 16, 2022] Gautam Adani, the Indian tycoon who has climbed the wealth rankings at breakneck speed this year, surpassed Jeff Bezos to become the world’s second-richest person. DOH backs extension of work-from-home arrangements [ABS-CBN News, September 16, 2022] The Department of Health on Friday expressed support in allowing employees to continue to work remotely, saying the arrangement has proven beneficial. LTO eyes online registration of motor vehicles [Inquirer.Net, September 16, 2022] At present, vehicle owners must visit an LTO office to submit the registration requirements, pay the required fees, and then receive their registration stickers or license plates, among others. Japan’s No. 1: Tenya opens first express store at SM Megamall [Inquirer.Net, September 16, 2022] After making a name in Japan as the country’s No. 1 Tempura Tendon, Tenya has also been gaining traction in the Philippines, fueling its expansion to eight megacities across the capital region. Tax collectors, justice officials argue over proposed creation of national taxpayer advocate office [ABS-CBN News, September 15, 2022] Philippine tax collectors and justice officials squared off over a proposal to create a national taxpayer advocate office. Lucio Co's The Keepers to acquire 50% of 'Alfonso' brandy maker [The Philippine Star, September 15, 2022] Lucio Co’s imported liquor distribution company The Keepers Holdings Inc. said Thursday it sealed the 50% equity purchase of a 140-year-old Spanish winery of ‘Alfonso’ brandy fame. Multinational consortium bags $11 billion Sangley Point International Airport Project [ABS-CBN News, September 15, 2022] The SPIA Development Consortium is led by infrastructure developer Cavitex Holdings Inc, financial firm House of Investments Inc and Samsung C & T Corp, with other members including LT Group's aviation service arm MacroAsia Corp, Munich Airport International GmbH, and Ove Arup & Partners Hong kong Limited. Bataan bounces back: Check these 5 must-visit places [Manila Bulletin, September 14, 2022] A living monument of valor, gallantry, and heroism. This is how the Department of Tourism (DOT) describes the province of Bataan. Just a two-and-a-half-hour drive away from Manila via North Luzon Expressway (NLEX), this province is popular since it is home to significant historical moments. Marcos on his family’s alleged unpaid estate tax case: Open it, let us argue [Manila Bulletin, September 13, 2022] “We are actually encouraging that this is finally be resolved because I don’t want to make a legal opinion for which I am not qualified. But rather to say, that we were never allowed to argue because when this case came out we were all in the United States,” the President said. DOF: Service contractors with workers in WFH setup not liable to pay mayor’s permit fee [GMA News Online, September 13, 2022] Finance Secretary Benjamin Diokno issued Local Finance Circular (LFC) No. 001.2022 on September 1, 2022, which states that “service contractors that provide temporary or outsourced personnel, including those in a work from home (WFH) arrangement, for clients in local government units (LGUs) where it does not maintain any office, are not liable to pay a mayor’s or business permit fee.” Creator and Influencer Council of the Philippines launches first face-to-face general membership meeting [Manila Bulletin, September 12, 2022] The Creator and Influencer Council of the Philippines (CICP) launched its first face-to-face general membership meeting with the theme, “From Memes to Videos: The Story of Trendjacking by PGAG.” Manny Villar, Ernest Cu exploring partnership: AllTV to invade your mobile phone through Globe [Bilyonaryo, September 11, 2022] A Babbler revealed Villar has been in talks with bilyonaryo Ernest Cu, president and chief executive officer of Globe Telecom, in recent weeks for a potential tie-up with AllTV Channel 2, the former Senate president’s boldest investment in media (Villar owns a radio station). | 2. BIR LIFTS THE SUSPENSION OF ENFORCEMENT ACTIVITIES COVERED BY MISSION ORDERS | Revenue Memorandum Circular (RMC) No. 127-2022, issued on September 7, 2022, lifts and removes the suspension and prohibition of all field audits and other field operations of the BIR covered by outstanding Mission Orders (MOs) authorizing the conduct of enforcement activities and operations of any kind, such as but not limited to ocular inspection, surveillance activities, stock-taking activities, and the implementation of the administrative sanction of suspension and temporary closure of business, and the issuance of new MOs authorizing such activities and operations. | 3. DOF OPINIONS ON TAXABILITY OF GOODWILL AS A RESULT OF SALE OF BUSINESS, TAX ASSUMPTION OF GOVERNMENT FOR INTERNATIONAL PROJECTS & WAIVER OF TAXES UNDER FRIA ACT | [GOODWILL IS NECESSARILY ATTACHED TO THE TRADE-RELATED PROPERTY] [TAXES IMPOSED ON THE SALE OF BUSINESS AS THE MAIN TRANSACTION IS ALSO IMPOSED ON THE TRANSFER OF THE ATTACHED GOODWILL] T Co. is requesting a review of BIR’s earlier ruling on the imposition of Value-Added Tax (VAT) on the amount representing the transfer of goodwill in the aggregate sale price on the transfer of trade-related properties. In reply, trade-related properties are defined as individual properties such as fuel stations, where these assets also include business components made up of intangible assets, including transferrable goodwill. T Co. claimed that its transfer of goodwill is a transfer of a capital asset not subject to VAT, citing cases where goodwill was properly classified as a capital asset subject to Capital Gains Tax (CGT) since the sale of the main business, was considered a sale of a capital asset subject to CGT, and the same was applied to the attached transfer of goodwill. However, T Co. contends that the transfer of goodwill is a separate transaction from the sale of service gas stations, to which it agreed that such sale is subject to VAT. In ruling, while goodwill was recognized and valued, the same cannot be sold or purchased independently, which implies that goodwill necessarily attaches to trade-related property. Consequently, whatever tax was imposed on the sale of the business as the main transaction, is also imposed on the transfer of the attached goodwill valued by the seller to be paid by the buyer. Hence, the DOF agreed that the assignment of goodwill, which was included in the aggregate sales price, is also subject to VAT as the main transaction of the sale of service gas stations is subjected to VAT. [DEPARTMENT OF FINANCE OPINION NO. 14.2022, AUGUST 12, 2022] TAX ASSUMPTION IS DIFFERENT FROM TAX EXEMPTION GIZ is requesting the review of a BIR Ruling, which denied for lack of basis the request of GIZ for exemption from Value-Added Tax (VAT) and ad valorem on its local purchases of motor vehicles. GIZ alleged that the purchase by GIZ of motor vehicles for use in the implementation of the Philippine and German Government Projects are exempt from VAT. In reply, the Exchange of Notes (E/Ns) of the Projects provide for a tax assumption mechanism for the purchases of GIZ. The Philippine Government, through its implementing agencies, at the request of GIZ, commits to assume VAT or similar indirect taxes imposed by the Republic of the Philippines solely on goods and services procured in connection with the conclusion and fulfillment of the implementation and financing agreements. As a necessary consequence, GIZ is not exempt from VAT in its purchases of vehicles for the projects, as the liability to pay still exists. However, pursuant to the tax assumption clause in the relevant E/Ns, the Philippine Government shall shoulder the burden of such tax liability. The clear and unmistakable language of the E/Ns shows that the party’s intention was a tax assumption instead of an exemption. Thus, the BIR acted prudently when it ruled that the purchase by GIZ of the motor vehicles was not exempt from VAT. [DEPARTMENT OF FINANCE OPINION NO. 004.2022, APRIL 4, 2022] WAIVER OF TAXES UNDER FRIA ACT OF 2010 M Co. is requesting a review of the BIR’s earlier ruling, which denied its request for waiver of Income Tax, Value-Added Tax (VAT), and Documentary Stamp Tax (DST) pertaining to the sale of M Co.’s properties in furtherance of its corporate rehabilitation pursuant to Section 19 of Republic Act (R.A.) No. 10142 or the “Financial Rehabilitation and Insolvency Act (FRIA) of 2010.” In ruling, the DOF did not agree with the BIR’s position that Section 19 of the law, when viewed in connection with Section 4(c) of the same Act, connotes that the waiver of taxes, tariffs, and customs duties refers to such claims already due to the government at the time of the issuance of the Commencement Order. Section 19 of the law does not touch upon nor has any relation to “Claims” as set out under the law. The DOF sees no point in connecting the definition of “Claim” with the waiver of taxes and fees provision of the same law. Waiver of taxes and fees under the law refers to those that are imposed upon the issuance of the Commencement Order by the court, and until the approval of the Rehabilitation plan or dismissal of the Petition. Thus, the taxes and fees imposed upon the issuance of the Commencement Order and until the approval of the Rehabilitation Plan or dismissal of the Petition, whichever is earlier, shall be considered waived, subject to the condition that it is made in furtherance of the objectives of rehabilitation. [DEPARTMENT OF FINANCE OPINION NO. 012.2020] | 4. SUPREME COURT CASE ON VAT ON CONDOMINIUM DUES | [VAT EXEMPTION OF CONDOMINIUM DUES ISSUE IS RENDERED MOOT & ACADEMIC GIVEN PRIOR SUPREME COURT DECISIONS] [SUPREME COURT CANNOT RENDER JUDGMENT AFTER THE ISSUE HAS ALREADY BEEN RESOLVED BY OR THROUGH EXTERNAL DEVELOPMENTS & NO RELIEF PRAYED FOR CAN BE GRANTED OR DENIED] Petitioner Fritz Bryn Anthony M. Delos Santos filed a Petition for Certiorari assailing the validity of Revenue Memorandum Circular No. 65-2012. The Circular clarifies the taxability of association dues, membership fees, and other assessments or charges collected by condominium corporations. Petitioner contended that even if the revocation by the Tax Reform for Acceleration and Inclusion (TRAIN) Law mooted the Petition, this Court should still consider since there is a need: (1) to curb the Circular’s effects on erroneously collected Value-Added Tax (VAT); (2) to fix the nature of activities that should be subjected to VAT; and (3) to prevent a similar Circular from being enacted in the future. In ruling, the Court already held in previous Decisions that the Respondent Commissioner of Internal Revenue (CIR) gravely abused his authority in issuing the Circular, and in declaring that association dues, membership fees, and other assessments or charges are subject to income tax, VAT, and withholding tax. The Circular unduly expanded and modified several provisions of the Tax Code. The very nature of a condominium corporation negates the application of the Tax Code provisions on VAT. Thus, the promulgation of the previous Decisions of the Supreme Court declaring the Circular invalid has mooted the Petition. Consequently, the Petition was DISMISSED for being moot and academic. [FRITZ BRYN ANTHONY M. DELOS SANTOS VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 222548, JUNE 22, 2022, UPLOADED JULY 29, 2022] | 5. CTA CASES ON GENERAL PROFESSIONAL PARTNERSHIPS EXEMPTION FROM LOCAL BUSINESS TAX, VALIDITY OF SURCHARGE AS A RESULT OF LATE FILING OF TAX RETURNS & VAT ZERO-RATE SALE OF ELECTRICITY & GENERATION SERVICES | GENERAL PROFESSIONAL PARTNERSHIP IS EXEMPT FROM LOCAL BUSINESS TAX Petitioners OIC-City Treasurer of Makati and the City of Makati filed a Petition for Review assailing the Regional Trial Court (RTC)’s earlier Decision ordering the cancellation of the Notice of Assessment and declared Respondent GF & Partners, Architects, Co. not liable to Local Business Tax (LBT) for being a General Professional Partnership (GPP). Petitioners argued that the Respondent is not purely a GPP. Further, the Respondent was assessed based on Section 3A.02(g) of the Revised Makati Revenue Code not as a GPP but as a “Contractor” or as an owner or operator of a business establishment rendering or offering the services enumerated in the said section. In ruling, persons who are subject to Professional Tax are not included in the term “Contractor.” Hence, they are not subject to the LBT. The Court found that the partners of Respondent have been paying their Professional Tax with the Petitioners in their individual capacity. In absence of any convincing evidence that Respondent is engaged in any trade or business other than the general practice of architecture as a profession, the Court ruled that Respondent is not liable to pay the subject LBT. Consequently, the Petition was DENIED. [NELIA A. BARLIS, IN HER CAPACITY AS THE OIC-CITY TREASURER OF THE CITY OF MAKATI & THE CITY OF MAKATI VS. GF & PARTNERS, ARCHITECTS, CO., CTA AC NO. 247, SEPTEMBER 16, 2022] [SURCHARGE IS MANDATORY & AUTOMATICALLY DUE, ONCE THE TAX IS NOT PAID ON TIME] [SURCHARGE & INTEREST IMPOSED AS A RESULT OF LATE PAYMENT OF TAX DO NOT REQUIRE AN LOA NOR A PAN] [IMPOSITION OF COMPROMISE PENALTIES WITHOUT THE CONFORMITY OF THE TAXPAYER IS CONSIDERED ILLEGAL & UNAUTHORIZED] Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review assailing the CTA 3rd Division’s earlier Decision and Resolution holding the Respondent Tann Philippines, Incorporated not liable for the surcharge, interest, and compromise penalty for the one-day late payment. Petitioner claimed that the collection of the Respondents’ deficiency surcharge, interest, and compromise penalty for late payment was anchored on Sections 205 and 207, in relation to Sections 248(A)(4) and 249(A) of the 1997 Tax Code, as amended. Hence, no Letter of Authority (LOA) is needed to collect the same. In ruling, the Court held that the Respondent is liable to pay the “one-day late payment” penalties. The imposition of late payment surcharge and interest is mandatory and automatic; hence, the Collection Notice is valid even if issued and served without a Letter of Authority (LOA) and a Preliminary Assessment Notice (PAN). Contrary to the Respondent’s argument that the surcharge sought to be imposed is excessive and unjustly assessed, the Court ruled otherwise, hence, cannot be abated. The issuance of the Warrant of Garnishment to enforce the collection of surcharge and interest is proper. However, the Respondent is not liable to pay the compromise penalty since compromise, by its nature, is mutual. Consequently, the Petition was PARTIALLY GRANTED. Having collected the whole amount, Petitioner was ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of the Respondent of the erroneously collected compromise penalty. [COMMISSIONER OF INTERNAL REVENUE VS. TANN PHILIPPINES, INCORPORATED, CTA EN BANC CASE NO. 2415, SEPTEMBER 14, 2022] FOR SALES OF ELECTRICITY & GENERATION SERVICES TO ENTITIES OTHER THAN THE NATIONAL POWER CORPORATION TO QUALIFY FOR VAT ZERO-RATING, THE VAT-REGISTERED TAXPAYER MUST SUBMIT ITS CERTIFICATE OF COMPLIANCE ISSUED BY THE ENERGY REGULATION COMMISSION Petitioner First Gen Hydro Power Corporation filed a Petition for Review appealing the CTA 2nd Division’s earlier Decision and Resolution denying its Motion for Reconsideration and alternative prayer to allow the presentation of supplemental evidence. Petitioner contended that it proved, by preponderance of evidence, that its excess and unutilized input VAT attributable to zero-rated sales should be refunded. Likewise, it is erroneous for the Court in Division to not allow the Petitioner to present supplemental evidence. In ruling, Section 6 of the Republic Act (R.A.) No. 9136 or the “Electric Power Industry Reform Act of 2001” (EPIRA) requires the issuance of a Certificate of Compliance (COC) by the Energy Regulation Commission (ERC) before the generation company may commence its commercial operations. Thus, the Court found no reversible error in the Court in Division’s finding that Petitioner’s sales are disqualified for VAT zero-rating for the period covering January 1, 2016 to February 29, 2016, when it has yet to be issued a COC by the ERC. Said sales cannot qualify for VAT zero-rating without the submission of a COC as these sales were made to entities other than National Power Corporation. The Court also held that there is no compelling reason to allow the presentation of supplemental evidence. The Court agreed with the Court in Division’s pronouncement that Petitioner’s attempt to recall its witness to elaborate on matters presented in evidence or working papers contained in the BIR Records, and to offer additional documentary evidence to refute the findings thereto constitutes “forgotten evidence”. Consequently, the Petition was DENIED, and the earlier Decision and Resolution were AFFIRMED. [FIRST GEN HYDRO POWER CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2456, AUGUST 18, 2022] | DOWNLOAD OUR PAST EDITIONS & FULL TEXT OF REFERENCES https://weeklytaxupdates.getresponsesite.com/ | |
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