Volume 6, Series 35
TAX DIGEST
In this issue:
SEC Financial Statement for a License to Transact Business in
the Philippines of Foreign Corporation
CRM/POS Machine Identification Number Registration on Behalf
of User/Buyer
Tax Treatment of the Sale of Jewelry, Gold and Other Metallic
Menirals
Fair Market Valuation on Sale of the Shares of Stock
Withholding Tax on Licensed Real Estate Brokers as
Professionals
BIR Filing of BIR Form 2316 under Substituted Filing
Information and Publicity On Programs, Projects, Activities of
the Government Agencies
Priority Measures of Boc under Department Order No. 17-2013
Legal Implications of Petition Notices on BIR Assessments
Procedures on the Accreditation of Printers for Official
Receipts, Sales Invoices with other Commercial Receipts and
Invoices
Warning on Tax Evaders
Tax Digest - Volume 6, Series 35
SEC FINANCIAL STATEMENT FOR
A LICENSE TO TRANSACT
BUSINESS IN THE PHILIPPINES
OF FOREIGN CORPORATIONS
In connection with Administrative Order No. 38 on Ease
of Doing Business Reforms, last May 30, 2013, the
Securities and Exchange Commission (SEC) had a
meeting and resolved the revised requirements on
financial statements and supporting documents that
will be submitted with an application of a foreign
corporation for a license to transact business in the
Philippines.
• For those whose home country requires audited
financial statements, the application shall submit
the Audited Financial Statement (AFS) as of date not
exceeding one (1) year immediately prior to the filing
of the application. If the date of AFS exceeds the
one-year requirement, the following shall be
submitted: AFS that are available as date of filing of
the application and Unaudited Financial Statement
(UFS) as of date not exceeding one (1) year
immediately prior to the filing of the application.
• For those whose home country does not require
financial statements, the applicant shall submit the
UFS and of date not exceeding one (1) year
immediately prior to the filing of the application
provided that the UFS shall be accompanied by a
Certification signed under oath by an officer or a
responsible regulatory institution or by applicant’s
legal counsel that the applicant is not required to
prepare and submit audited financial statements,
with a citation of the law or regulation on which it is
based.
The AFS and UFS must be signed under oath by the
president or any other person authorized by the
corporation. No authentication shall be necessary of
the signatory to the said FS is the same with the
corporation’s application.
Pursuant to Section 125 of the Corporation Code, the
applicants financial statement must show that it is
solvent and in sound financial condition.
This Memorandum Circular shall be effective
immediately, 6th of June 2013.
SEC MEMORANDUM CIRCULAR No. 11 Series of 2013
CRM/POS MACHINE
IDENTIFICATION NUMBER
REGISTRATION ON BEHALF OF
USER/BUYER
Revenue Regulations No. 4-2013 issued on March 2, 2013
amends certain provision of Revenue Regulations (RR)
No. 11-2004, which prescribes the Machine Identification
Number (MIN) stickers for the use of Cash Register
Machines (CRM), Point of Sales (POS) System machines
and
business/sale
machines
generating
receipts/invoices.
Section 9.0 of RR 11-2004, as last amended by
RR-5-2005, the Registration of Cash Registers, POS
Machines and Business/Sales Machines.
A
manufacturer/vendor/dealer/distributor
must
register on behalf of the user/buyer- the Cash
Register/POS Machines to be sold/distributed not later
than five (5) days from the date of sale of the machine,
and before it is actually used by the user/buyer.
Such registration shall be done manually with the
RDO/LTAD II and II/LTDO, or electronically through the
Bureau’s Electronic Mail (e-mail) or website). In regards
to the CRM/POS/Business/Sale Machine generating
receipt/invoices, the following are the information
required:
a. Taxpayers Identification Number (TIN) of the buyer
(12 years);
b. Serial number, brand and model of the machine
sold;
c. Present reading and date of reading;
d. VAT or non-VAT number of taxpayers-buyer.
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Tax Digest - Volume 6, Series 35
If the application of Permit to Use (PTU)
CRM/POS/Business/Sale
Machines
generating
receipts/invoices is filed through the Bureau’s
email/website
facilities,
the
applicant
manufacturer/distributor/dealer/vendor will be issued a
system-generated Permit and MIN which may be printer
from the applicant’s computer. The applicant
manufacturer/distributor/dealer/vendor shall provide a
MIN sticker in the strict compliance with the standard
design, format, size and paper quality prescribed in a
separate revenue issuance to be issued by the
Commissioner of Internal Revenue in a separate with a
eAccReg system requirements wherein the system
generated MIN information shall be printed per Permit
per machine.
The permit and the MIN sticker shall be forwarded to
the buyer of the machine. And shall serve as taxpayer’s
authorization to use the machine. The PTU must be kept
by the use/buyer in the place of business, head office or
branch, where the machine is located and authorized to
be used, and must be readily available for the
verification by the Revenue Officers during Tax
Compliance Verification Drive (TCVD) activities and
during audit investigation.
The MIN sticker shall be a security void sticker with
reveals a warning message once removed, opened,
tampered or released. The MIN sticker must be surely
attached to the back of the machine to which it refers
and must be conspicuously visible to the public. To
facilitate the verification the MIN sticker shall contain
the following:
If the warranted, a criminal case may also be filed
against the offender, where the criminal penalty
imposed is a fine of not less than P1,000 but not more
than P50,000 and imprisonment of not less than two (2)
years but not more than four (4) years.
For purposes of the regulations, the failure the post or
attach the MIN sticker to the POS/CRM and to
business/sale machine generating receipts or invoices
shall be subject to a penalty fee of P1,000 per machine
or institution of a criminal case against the offended
where the imposable penalty shall be a fine not more
than P1,000 or imprisonment not more than six (6)
months, or both pursuant to Section 275 of the National
Revenue Code, as amended, as implemented by
Revenue Memorandum Order No. 19-2007.
Revenue Regulations No. 4-2013
TAX TREATMENT OF THE SALE
OF JEWELRY, GOLD AND OTHER
METALLIC MINERALS
Revenue Regulations No. 5-2013 issued on April 22, 2013
prescribes the tax treatment of sale of jewelry, gold
and other metallic minerals to a non-resident alien
individual not engaged on trade of business within the
Philippines or to a non-resident foreign corporation.
The following taxes are imposed:
A. On the sale of gold and other metallic minerals as
a. Machine Identification Number;
prescribed under Revenue Regulations No. 6-2012.
b. Name and TIN of the buyer/user (12 digits) and the
Branch;
a. Excise Tax – Two Percent (2%) Excise Tax rate
c. Permit to Use Number;
based on either the actual market value of the
d. Machine Serial Number;
gross output at the time of removal, in the case of
e. Barcode
those locally extracted or produced; or the value
of the used by the Bureau of Customs (BOC) in the
Failure of the taxpayers to register POS/CRM and
computing tariff and duties, in the case of
subject to business/sale machine generating receipts
Possessors of gold and other metallic minerals
and invoices shall be subject to a penalty:
must show proof that the Excise Tax has been
paid. Gold and other metallic minerals discovered
a. P25,000 - 1st Offense
in the possession of the persons who cannot show
b. P50,000 - 2nd Offense
proof of payment of Excise Taxes thereon are
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Tax Digest - Volume 6, Series 35
presumed to have been removed on the day of the
discovery. Possessors of gold and other metallic
minerals, whether imported or local, must be able
to show certifies true copy of the following:
(RCO) of the Revenue District Office (RDO) having
jurisdiction over the place where the subject
transaction occurs regardless of whether the said
sellers are registered with the BIR.
i. Authority to Release Import Entry and Internal
Revenue Declaration and Official Receipt,
issued by BOC, for imported goods;
Excise tax Return (BIR Form No. 2200M) and
machine validation deposit slip of the
bankwhere the payment and filing has been
made, for locally bought gold and other
metallic minerals.
a. Advance payment of VAT at the rate 12% on the
gross selling price of Percentage Tax at the rate of
3% on the gross sales.
b. Advance payment of Income Tax at the rate of 5% in
the gross payment.
c. Actual payment of Excise Tax at the rate of 2%
based on the actual market value of the
grossoutput at the time of removal, in the case of
those locally extracted of produced; or the value
used by the BOC computing tariff and duties, in the
case of importations. The actual market value shall
refer to the actual consideration paid by the buyers
of the seller.
b. Value Added Tax Percentage Tax – Sales of gold and
other metallic minerals to persons and entities,
except sale of gold to the Bangko Sentral ng
Pilipinas, is subject to 12% VAT if the gross selling
price exceeds the threshold set by the Tax Code
and existing issuances, currently in amount of
P1,919,500 pursuant to RR No. 3-2012. Otherwise, it
shall be subject to 3% Percentage Tax.
c. Income Tax – Sellers are subject to Income Tax at
the rate prescribed under Sections 24 and 25, in
case of individual taxpayers, and Sections 27 and
28 of the Tax Code, in case of corporations. Sellers
of said gold and other metallic minerals are
required to pay the Income Tax in advance
(creditable) to the government.
B. On the sale of the jewelry
a. Value Added Tax/Percentage Tax – Sales of jewelry
to persons and entities is subject to
12% VAT
if the gross selling price exceeds the threshold set
by the Tax Code and existing
issuances,
currently in the amount of P1,919,500 pursuant to
RR No. 3-2012.
b. Income Tax - Sellers are subject to Income Tax at
the rate prescribed under Sections 24
and 25,
in case of corporations. Sellers of the jewelry are
required to pay the Income Tax in advance
(creditable) to the government.
Sellers of jewelry, gold and other metallic minerals are
required to pay business tax (VAT or Percentage Tax),
Income Tax and Excise Tax, if applicable in advance
through the assigned Revenue Collections Officers
Existing issuances to the contrary notwithstanding,
RCOs are authorized to receive advance payments of
business (VAT or Percentage Tax) and Income Taxes and
actual payment of Excise Tax due from subject sellers
and to issue corresponding Revenue Official Receipt
(ROR) regardless of whether the said sellers are
registered with the respective RDOs.
The advantage payments shall be credited against the
business tax (VAT or Percentage Tax) and Income Tax
due from such persons for the taxable period of which
payments were remitted to the BIR.
If the seller of jewelry, gold and other metallic minerals
is non-VAT taxpayer whose sales/receipts does not
exceed the threshold amount P1,919,500 in any
12-month period, is liable to 3% Percentage Tax
imposed under Section 116 of the Tax Code.
The amount of advance Income Tax paid shall be
credited against the Income Tax due from the seller
when for his files his quarterly and annual Income tax
Return. The advance payment of business tax and
Income Tax shall be evidenced by duly validated copy of
BIR Form 0605 and ROR issued by the RCOs, which shall
constitute as the proof of credit of the advance
payment of taxes. Without such proof attached to the
tax returns, any claim on account thereof shall be
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Tax Digest - Volume 6, Series 35
disallowed and assessment of taxes shall be
correspondingly be made.
The implementing guidelines relative to the conduct of
tax enforcement as well as the duties and obligations
of non-resident alien individual not engaged in trade or
business within the Philippines or non-resident foreign
corporation; and of owners and operators of hotels,
inns, or establishments where the alien individuals or
foreign corporation buyers conduct the subject
transactions are specified in the Regulations
Revenue Regulations No. 5-2013
FAIR MARKET VALUATION ON
SALE OF THE SHARES OF STOCK
REVENUE REGULATIONS No. 6-2013 issued on April 22,
2013 amends a certain provision of Revenue
Regulations No. 6-2008 entitle “Consolidated
Regulations Prescribing the Rules on Taxation of Sale,
Barter, Exchange of Other Disposition of Shares of
Stock Held as Capital Assets.”
The share of stock not listed and traded in the local
stock exchange, the value of the shares of the stock at
the same time of the sale shall be the fair market value.
In determining the value of the shares, the Adjusted Net
Asset Method shall be used, whereby all assets and
liabilities are adjusted to their market value.
The appraised value of real property at the time of sale
shall be the higher of as the fair market:
a. Value as determined by the Commissioner or
b. Value as shown in the schedule of valued fixed by
the Provincial and City Assessors or
c. Value as determined by Independent Appraiser.
Revenue Regulations No. 6-2013
WITHHOLDING TAX ON LICENSED
REAL ESTATE BROKERS AS
PROFESSIONALS
Revenue Regulations No. 10-2013 amends further
pertinent provisions of Revenue Regulations (RR) No.
2-98, as last amended by RR No. 30-2003, which
provides for the inclusion of real estate service
practitioners who passed the licensure examination
given by the real estate service under the Professional
Regulations Commission.
Licensed real estate brokers are subject to Fifteen
percent (15%) creditable withholding tax (CWT), if the
gross income for the current year exceeds P720,000
and Ten percent (10%).
Real estate service practitioners (RESPs) who failed or
did not take up the licensure examination given by and
not registered with the Real Estate Service under the
Professional Regulations Commission are subject to
Ten Percent (10%) CWT.
Revenue Regulations No. 10-2013
BIR FILING OF BIR FORM 2316
UNDER SUBSTITUTED FILING
Every employer of other person who is required to
deduct and withhold the tax compensation including
fringe benefits given to rank & file employees, shall
finish every employee whose compensation taxes have
been withheld the Certificate of Compensation
Payment/Tax Withheld (BIR Form No. 2316) on or before
January 31 of the succeeding year.
In cases covered by substituted filing, the employer
shall furnish each employee with the original copy of
BIR Form No. 2316 and needs to be stamped received by
the BIR with the duplicate copy not later than February
28 following the close of the calendar year.
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Tax Digest - Volume 6, Series 35
Any employer who fails to comply the said filling of BIR
2316 within the time required by the Regulations, may
be held liable under Section 250 of Tax Code. Failure to
comply with the submission within the required time
for two consecutive years shall be dealt with in
accordance with Section 255 of the Tax Code.
The regulations shall take effect beginning with the
calendar year of 2013.
criminal action, if warranted by existing laws.
Revenue Memorandum Circular No. 36-2013
PRIORITY MEASURES OF BoC
UNDER DEPARTMENT ORDER NO.
17-2013
Revenue Regulations No. 11-2013
INFORMATION AND PUBLICITY
ON PROGRAMS, PROJECTS,
ACTIVITIES OF THE
GOVERNMENT AGENCIES
Revenue Memorandum Circular No. issued on May 2,
2013 publishes the full text of Commission on Audit
(COA) Circular No. 2013-004, entitled “Information and
Publicity
on
Programs/Projects/Activities
of
Government Agencies”.
Notification to the public and other forms of
announcement to the Programs/Projects/Activities
shall be made at the least possible cost, taking into
account that the nature of and purposes of such
notification, announcement is to inform the public of
the essential features of the PPA.
The updated general guidelines, as well as the
reporting and monitoring requirements relative to the
said public notifications are specified in the Circular.
The public is encouraged to report any violation of the
Circular by sending a text message to the COA Citizen’s
Desk at mobile number 0915-5391957 or email at
citizensdesk@coa.gov.ph.
All expenses incurred in violation of the Circular shall
be disallowed in audit. Failure of the concerned agency
officials to comply with any of the provisions of the
Circular shall be subject of administrative disciplinary
action provided under Section 127 of Presidential
Decree No. 1445 without prejudice to the filing of a
Revenue Memorandum Circular No. 37-2013 issued on
May 3, 2013 publishes the full text of Department Order
No. 17-2013 issued by the Department of Finance
relative to the priority measures for implementation by
the Bureau of Customs (BOC).
The BOC shall immediately work towards the
implementation of the following:
a. Port Accreditation
b. Submission of a Rolling Import Plan
c. Trade Statistics Reconciliation
d. Other Matters
d. 1 Strict implementation of Revenue Regulation
No. 2-2012 which requires importers to pay
Value-Added Tax and Exercise Tax on all oil
imports upon arrival in the Philippines.
d.2 Submission of Income Tax return as received by
BIR as one of the requirements for
accreditation of importers with the BOC.
d3. Conduct of post-audit examinations of
sensitive commodities.
d.4 Work closely with the BIR and the respective
local government unit, subject to existing laws
on exchange of information with regard to
importers of sensitive commodities.
d.5 Improve reporting forms and administrative
support to the BOC Statistics Office and the
Management Information System and
Technology Group to capture data required.
e. Regular monitoring of cases filed against oil
smugglers.
Revenue Memorandum Circular No. 37-2013
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Tax Digest - Volume 6, Series 35
LEGAL IMPLICATIONS OF
PETITION NOTICES ON BIR
ASSESSMENTS
Revenue Memorandum Circular No. 38-2013 issued in
May 3, 2013 clarifies the implication of Legal Petitions
Notices (LPN) and similar documents on the
assessment process. The normal process and
procedures related to investigations arising from
electronic Letter of Authority (eLA) issued will not be
suspended notwithstanding the receipt of LPN
pertaining to the case. The Bureau of Internal Revenue
national office shall no longer entertain any LPN
questioning the validity and enforceability of the eLA
duly issued by the concerned Regional Director for the
audit of taxpayer within the region in as much as the
issue has already been clarifies under RMC No. 6-2013.
Upon receipt of the Preliminary Assessment Notice or
Formal Letter of Demand and Final Assessment Notice,
the taxpayer is given 15 or 30 days, as the case maybe,
to rebut the assessment upon his compliance with
requirements of filing a protest pursuant to Revenue
Regulations No. 12-99. Any declaration protesting the
assessment addressed to the commissioner or any
official in the National Office without issuance of a
Final Decision on Disputed Assessment from the
Regional Office shall be considered premature and
invalid.
Taxpayers should ensure that the tax agents whom
they choose to engage are accredited with the BIR.
Taxpayers are also forewarned to be more circumspect
in scrutinizing the credibility and competence of the
consultants and the veracity of the contents of the LPN
before affixing their signatures therein since these
documents will not gain merit and may lead to adverse
consequences.
Revenue Memorandum Circular No. 38-2013
PROCEDURES
ON
THE
ACCREDITATION OF PRINTERS
FOR OFFICIAL RECEIPTS, SALES
INVOICES
WITH
OTHER
COMMERCIAL RECEIPTS AND
INVOICES
REVENUE MEMORANDUM ORDER NO. 13-2013 on May 3,
2013 prescribes the work-around procedures in the
accreditation of printers as a prerequisite to the
printing of official receipts (ORs), sales invoices (SIs)
and other commercial receipts and/or invoices.
All registered printers in the Integrated tax Systems
(ITS) that applied and were initially evaluated by the
Revenue District Offices (RDOs) under Large Taxpayers
Service (LTS) as to the completeness of the
documentary
requirements,
per
Operations
Memorandum dated January 24, 2013, shall be
published in the BIR website as "Deemed Accredited
Printers". A Provisional Accreditation Number valid for
six (6) months from posting in thru BIR website shall be
issued to all “Deemed Accredited Printers”.
A Certificate of Accreditation with Permanent
Accreditation Number shall be issued to the printer
only after National/Regional Accreditation Board
(N/RAB) evaluation and approval. The Accredited
Printers with Certificate of Accreditation shall cease
using the assigned Provisional Accreditation Number.
The Permanent Accreditation shall be used in the
printing of Official Receipts, Sales Invoices and
Commercial Receipts and other Invoices.
The “Deemed Accredited Printers”, which were issued
Revocation Notices upon notification, shall not allowed
to apply for Authority to Print Invoices and Receipts. All
invoices and receipts printed by these printers shall
remain valid until its expiration or until on its full
utilization, whichever comes first.
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Tax Digest - Volume 6, Series 35
All printers issued with the letter of Denial/Revocation
Notice that is accredited shall observe the same
procedures as new application for accreditation and
shall undergo the same accreditation process.
The initial candidates for accreditation will come from
the list of registered printers from ITS and tagged as TP
ENGAGED IN PRTG for at least three (3) years as of
December 31, 2012.
Revenue Memorandum Order No. 13-2013
WARNING ON TAX EVADERS
Bureau of Internal Revenue (BIR) Commissioner Kim
Jacinto-Henares and Finance Secretary Cesar Purisma
declared war on small business owners, self-employed
and professionals who cheat on their tax filings to pay
lower taxes.
Across regions and across professions, it is common to
see extremely low payments. There are lawyers in
Mindoro who paid only P121, a Radio & TV practitioner in
Quezon City paid only P400 and a businessman in
Cagayan de Oro, paid P1,000. This implies that these
professionals earn even less than minimum wage
earners. These numbers were ridiculous, Purisma,
reiterated.
Purisma added that during a visit to a revenue region,
the Department of Finance (DOF) discovered that the
Top 10 lawyers in the region had income tax payments
P20,000, while a newly hired public school teacher pays
only more than that.
Data also showed that currently, there are 402,934
self-employed, business professionals (SEP) tax payers
who pay an average of P33,441 annually.
BIR and DOF look forward to expand the number of
taxpayers to 1.8 million and improve the average
payment to P200,000, which will result into a 2-percent
increase in the country’s tax effort by 2016.
For her part, Henares said, “It is imperative that we
broadened the tax base. In our survey with the
prominent business association, we discovered
23percent of their members does not have TIN
(Taxpayers Identification Number), and 50percent did
not file returns. There is still slot of room for
improvement.”
The registration the Professional Regulatory
Commission (PRC) showed that two million active
professionals, while in the Department of Trade and
Industry’s (DTI) database, there are 816,759 registered
micro, small and medium enterprise.
The 1.8 million taxpayers target is conservative,”
Henares said.
While Purisma added that, “We have to drastically
increase average payment. The current average annual
payment of P33,441 implies a monthly income of
P23,647. This is unbelievable considering the lifestyle of
most entrepreneurs and professionals. It is reasonable
to expect the average to reach P200,000.”
Tax as blessing
Henares explains, “There’s no more excuse not to pay
taxes. Taxes now redound to blessings, no longer a
burden.” Under President Benigno Aquino III, we have
shown that blessings come from taxes.
Since the beginning of the Aquino administration, the
country’s fiscal performance has greatly improved.
With tax and revenue effort increasing and borrowing
cost decreasing, Budget department data showed that
the budget of the key agencies have gained increase:
a. Education Department - 45%
b. Health Department - 77%
c. Public Works & Highways - 25%
d. Social Welfare - 267%
Purisma advised on citizens to pay their taxes. “As the
President said, we are his bosses. Good bosses don’t
just complain, they do their share of work. We are
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Tax Digest - Volume 6, Series 35
referred as his bosses to share the responsibility of
moving our country forward by paying the correct
taxes. We will all benefit from improved tax compliance.
Do not be an accomplice to tax evasion, it is not the
government or your fellow Filipino that you cheat but
ultimately yourself, Purisma insisted.
Henares gives a serious warning: ”We are comparing
list of self-employed and professionals, thru LGU (Local
Government Units), DTI (Department of Trade and
Industry) and PRC (Professional Regulations
Committee), we are prioritizing the audit of those who
ridiculously low income payments. Don’t wait for BIR to
catch you, pay correct taxes now so you can spare from
criminal charges and be part of our country’s
progress.”
Henares and Purisma visited over 11 of 19 revenues
regions of BIR, for past 2 months to discuss tax
administration priorities, and to emphasize the use of
information to drive tax collection performance.
Sausa, RS (2013 March 19) Purisma, Henares warn tax
evaders, Manila Times.
Tax Digest by:
The Corporate Communication and Tax Team
For clarification, tax queries or if you need our assistance in securing BIR ruling, you may call us
at telephone number (632)759-5090 or email us at aocheadoffice@alasoplascpas.com or visit us
at our website www.alasoplascpas.com
This publication should not be used or treated as professional advice. The information in this
publication should not be relied to replace professional advice on specific matters and its
contents must not be used as basis for formulating decisions under any circumstances.
Readers for this material are advised to seek professional advise before making any
business decision or you may call and ask for the full text.
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