TAX ALERT
June 30, 2004
THE BUREAU OF INTERNAL REVENUE EXTENDS THE CENTENNIAL
TAXPAYERS RECOGNITION PROGRAM (“CTRP”).
The Commissioner of Internal Revenue (“Commissioner”) has allowed late payments for
CTRP participation up to June 30, 2004. The Commissioner likewise expanded the
CTRP to cover taxpayers using fiscal year reporting ending January 31, 2004. Revenue
Memorandum Order No. 25-2004, dated June 4, 2004.
THE COMMISSIONER ISSUES GUIDELINES AND PROCEDURES IN
GRANTING THE ACCREDITED AGENT BANKS’ (“AABs”) REQUEST FOR
REFUND OF OVER-REMITTANCE OF TAX COLLECTION.
The Commissioner has issued a Revenue Memorandum Order (“RMO”) for the
guidelines and procedures in granting AABs’ request for refund of over-remitted tax
collection due to erroneous reporting and remittance. The refund of the over-remittance
by the AABs as collecting agents should not be construed as refund of tax payments as
taxpayers. The AABs can automatically adjust their remittance, if found erroneous,
provided that it is made within the float period or before actual remittance is made. No
refund shall be granted unless the collection data shown in the Collection and Bank
Reconciliation System of the Integrated Tax System has been corrected. Revenue
Memorandum Order No. 27-2004, dated April 26, 2004.
NEW RMO AMENDS RMO NO. 30-2003 ON LETTER NOTICES ISSUED
UNDER THE RELIEF SYSTEM.
Revenue Memorandum Order No. 24-2004, dated May 3, 2004, has amended certain
provisions of Section IV of RMO No. 30-2003 to minimize processing time and to allow
for timely and accurate delivery of the required data relative to Letter Notices issued
under the RELIEF System.
RMO NO. 22-2004, DATED MAY 24, 2004, MODIFIES RMO NO 81-99 ON THE
VALUE-ADDED TAX (“VAT”) EXEMPTION OF FOREIGN EMBASSIES AND
THEIR PERSONNEL.
New guidelines and procedures have been issued on the processing, issuance as well as
the enjoyment of the VAT Exemption Certificate/Identification Card by qualified foreign
embassies and their qualified personnel and the qualified dependents of the latter on the
basis of reciprocity.
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GOVERNMENT AGENCIES RELEASE THE REVISED RULES AND
REGULATIONS IMPLEMENTING REPUBLIC ACT (“R.A.”) NO. 8502,
OTHERWISE KNOWN AS THE JEWELRY INDUSTRY DEVELOPMENT ACT
OF 1998.
The Joint DTI-DOF-BOC-BIR Administrative Order No. 01, Series of 2004, prescribes
the revised rules and regulations of R.A. No. 8502 to simplify, consolidate and amend the
Implementing Rules and Regulations of R.A. No. 8502, superseding DTI-BOI Rules and
Regulations Implementing R.A. No. 8502, BIR Revenue Regulations No. 1-99, Joint
DOF-BOC Order No. 1-99, and Joint BIR-BOC Order No. 1-99.
Revenue
Memorandum Circular No. 33-2004, dated May 27, 2004.
PURCHASES OF SERVICES BY THE SMBA AND SBF ACCREDITED
ENTERPRISES IN THE CUSTOMS TERRITORY SHALL BE CONSIDERED
EFFECTIVELY ZERO-RATED FOR VAT PURPOSES.
However, the VAT-registered enterprises in the Customs Territory shall apply for
effective zero-rating of their sales of goods and services to SBMA and SBF enterprises in
order that their sales can be entitled to zero-rating, otherwise, the said sale shall only be
exempt from VAT. VAT Ruling No. 057-2003 dated December 15, 2003.
GOVERNMENT PUBLIC WORKS CONTRACTORS UNDERTAKING OECF
FUNDED PROJECTS ARE NOT SUBJECT TO 1% CREDITABLE
WITHHOLDING TAX AND 8.5% CREDITABLE WITHHOLDING VAT.
The fact that the agreement between the government agency and the Consortium provides
that “the contractor’s taxes, licenses, permits, and fees which may be due the local and/or
national government on account of the performance and completion of the work
stipulated herein xxx shall be paid for and obtained by the Contractor on its own account
xxx” will not invalidate the tax-free treatment of the Fund. A Japanese firm
subcontracted by a lead member of a consortium contracted by an executing government
agency for the NAIA-II Development Project is likewise exempt from the said taxes.
VAT Ruling No. 058-2003 dated December 15, 2003.
IMPORTATION OF IODIZED SALT IS SUBJECT TO 10% VAT.
On the basis of the process applied, iodized salt is no longer considered a product in its
original state that is exempt from VAT, as it has already been enriched with iodine.
Neither does it fall under the definition of mineral products which are likewise exempt
from VAT. VAT Ruling No. 059-2003 dated December 15, 2003.
COMMISSION EARNED BY A SALES AGENT IN THE PHILIPPINES FOR
SALES AND MARKETING SERVICES RENDERED TO A NON-RESIDENT
FOREIGN CORPORATION, PAID FOR IN FOREIGN CURRENCY AND
ACCOUNTED FOR IN ACCORDANCE WITH THE RULES AND
REGULATIONS OF THE BSP IS SUBJECT TO 10% VAT.
The services to non-resident foreign corporation are basically and essentially rendered in
the Philippines. The services do not constitute the rendering of project studies,
information services, engineering and architectural designs or other services similar
thereto. Hence the sale of services to such non-resident foreign corporation cannot
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qualify for the benefit of the 0% VAT, even if the services are paid for in foreign
exchange. VAT Ruling No. 060-2003 dated December 15, 2003.
THE TAX CODE PROVIDES ALLOWABLE EXPENSES TO PRIVATE
EDUCATIONAL INSTITUTIONS, WHICH INCLUDES RENTAL EXPENSE.
Only such amount of the prepaid rent which corresponds to the taxable year should be
deductible as ordinary business expense. VAT payments already made on future rentals
are not deductible for lack of legal basis. VAT Ruling No. 62-2003 dated December 15,
2003.
NOTE:
The information provided herein is general and may not be applicable in all situations. It
should not be acted upon without specific legal advice based on particular situations. If
you have any questions, please feel free to contact any of the following at telephone
number (632) 633-9418, facsimile number (632) 633-1911, or at the indicated e-mail
address:
Atty. Carlos G. Baniqued
Atty. Laura Victoria A.S. Yuson-Layug
Atty. Ma. Carlota Christina G. Laiño-Santiago
Atty. Suzette A. Celicious
Atty. Madeline L. Zialcita-Villapando
cgbaniqued@baniquedlaw.com
lvyusonlayug@baniquedlaw.com
cglaino@baniquedlaw.com
sacelicious@baniquedlaw.com
mlzvillapando@baniquedlaw.com