RMC 111-2020: Clarifications on Certain Issues Relative to VAPP

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This Circular is issued to provide clarifications on the implementation of the Voluntary Assessment and Payment Program (VAPP) under Revenue Regulations (RR) No. 21-2020, to wit: Q1.        Who are qualified to avail of the VAPP? A1.         In general, all persons, natural and juridical, including estates and trusts, are  qualified to avail of the VAPP. Q2.        What is the covered period? A2.         The VAPP covers calendar year 2018 and fiscal year 2018 ending in July, August,September, October, and November 2018, as well as those ending in January, February, March, April, May and June 2019, for availments on the registered tax types of the taxpayer. For one-time transactions (ONETT) of individuals and taxpayers on a calendar year basis, the VAPP covers all transactions from January to December 2018. For taxpayers on a fiscal year basis, the covered ONETT are those within their fiscal year 2018. For example, if the fiscal

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How to Convert the 5-Person Corporation to One Person Corporation?

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By: Cecile S. Maglunob, CPA The Revised Corporation Code of the Philippines or Republic Act No. 11232 Title XIII of Chapter III allowing the conversion of the Ordinary Stock Corporation (OSC) to One Person Corporation (OPC) has sparked the interest of many business entities wanting to simplify corporate matters by adopting the OPC set-up. SEC has finally issued the guidelines on the conversion process through SEC Memorandum Circular 27-2020.  There could be a number of advantages to justify conversion of your regular 5-person corporation to OPC in the Philippines, such as simplified management having a single stockholder who is at the same time the director and the President, lesser corporate documentation as there is no need for By-laws, and could be faster decision making process as compared to a regular corporation which has to undergo a Board Meeting and in some instance, stockholders confirmation.   Below are sample steps on how

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RR No. 26-2020: Donations to Public Schools During the Pandemic

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The COVID-19 Pandemic undoubtedly affects every aspect of our daily lives – family, work, and especially the students’ means of learning. With the school opening suspended last June, there has been a significant delay in their studies. Finally, this October, classes reopened but in a different setting and mode – the classes went virtual or online. The online classes, I might say, is not for everyone especially to those who cannot afford to purchase the necessary gadgets for this platform. Another thing is not every school is fully equipped with the proper learning materials and technology. Good thing that there are kindhearted individuals and institutions who are donating for the schools. But how can the government repay for this generosity? BIR issued Revenue Regulations (RR) No. 26-2020 to implement Section 4 (zzz) of Republic Act (RA) No. 11494 or the Bayanihan to Recover as One Act. Under the RR,  all

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How to File BIR Form 2550Q (Quarterly VAT Return)?

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VAT Compliance includes filing the monthly and quarterly using BIR Form 2550M and 2550Q, respectively.

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How to File BIR Form 1709?

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By: Hergie Ann De Guzman, CPA With the release of the Revenue Regulations No. 19-2020, prescribing the use of the BIR Form 1709 or the Information Return on Transactions with Related Party, taxpayers are now faced with an additional report to their list of annual compliance requirements. To guide you with the filing of the said return, we have summarized below the details needed which may help you with filling-out the return. How to File? The following details are needed in filing the BIR Form 1709: Accounting Year-end (Calendar or Fiscal) Year ended – the reporting year (e.g. 2020) Number of Sheets Attached – number of pages of the attachments Part I – Background Information Tax Identification Number (TIN) RDO Code Taxpayer’s Name Registered Address Contact Number Email Address Part II – Summary of Related Party Transactions A. Foreign Related Party Transactions Particulars Remarks Required Attachments Nature of Transaction/Related Account

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RMC 98-20: Extension of BIR Form 1709

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By: Hergie Ann De Guzman, CPA Bureau of Internal Revenue (BIR) issued on September 15, 2020 Revenue Memorandum Circular (RMC) No. 98-2020 to extend the deadline for compliance of the filing of BIR Form 1709 or the Related Party Transaction (RPT) Form, together with its attachments. The compliance is hereby extended as follows: Fiscal Year End Extended Deadline For Fiscal Year Ending March 31, 2020 and April 30, 2020 December 29, 2020 For Fiscal Year Ending May 31, 2020 and June 30, 2020 January 31, 2021 For Fiscal Year Ending July 31, 2020 and August 31, 2020 March 1, 2021 For Fiscal Year Ending September 30, 2020 and October 31 March 31, 2021 For Fiscal Year Ending November 30, 2020 and Calendar Year Ending December 31, 2020  April 30, 2021 To know more about BIR Form 1709 compliance, you may check our previous articles as follows: Revenue Regulations No. 19-2020:

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RR 21-20: Voluntary Assessment and Payment Program (VAPP)

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By: Hergie Ann De Guzman, CPA The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 21-2020 on September 4, 2020 to prescribe the guidelines on the implementation of the Voluntary Assessment and Payment Program (VAPP). What is VAPP? VAPP is one of the programs implemented by the BIR to provide funding for the needs of the Government during the current COVID-19 Pandemic. With the name itself, it is a scheme where taxpayers are encouraged to voluntarily pay taxes. The program is crafted to benefit both the taxpayers and the BIR. Taxpayers who will avail of the VAPP will be given the privilege of “no audit” for the year whereas the BIR will significantly reduce its administrative costs due to decrease in audit. BIR is expecting for a successful implementation and outcome of this program as it can significantly help our Government cope up with the negative economic effects

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How to File BIR Form 1601-EQ in Philippines?

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By: Hergie Anne C. De Guzman, CPA After the filing of the monthly Expanded Withholding Tax (EWT) returns for the first two month of the quarter, taxpayers should also prepare for the quarterly filing of the BIR Form 1601-EQ covering the entire quarter or 3 months. The return is also known as the Quarterly Remittance Return of Creditable Income Taxes Withheld which was introduced last 2018 through RMC No. 27-2018 dated December 18, 2019. It is a declaration of the quarterly withheld taxes from each income payment subject to EWT.  What are the covered transactions? In order to know if a certain transaction is subject to EWT, we need to identify the nature of the expense. Common transactions subject to EWT with the applicable tax rates and Alphanumeric Tax Codes are as follows: Income Payment EWT Rate ATC Rent 5% WI100 – for individualWC100 – for non-individual Professional Fees 5%/10%/15%

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How to File BIR Form 1604-E in Philippines?

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By: Hergie Anne C. De Guzman, CPA The compliance for the filing of expanded withholding taxes does not end with the monthly and quarterly filings. At year end, an Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax or the BIR Form 1604-E should be filed by the taxpayers.  What are the covered transactions for BIR Form 1604-E? Basically, the return is a summary of the expanded withholding taxes for the year, the amount of remittance made, including penalties, if any, and the date of remittance. It is only an information return, hence, no tax due is computed for this.  The information return covers the transactions relating to the expanded withholding taxes on certain income payments specified in Section 2.57.2 of Revenue Regulations (RR) No. 2-1998: Rental payments, professional fees, contractors, payments to regular suppliers, etc. reported in BIR Forms Nos. 0619-E and 1601-EQ; and, 

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Extended Deadline on Tax Amnesty on Delinquency

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The Bureau of Internal Revenue issued RR 4-2019 on April 5, 2019 allowing natural and juridical persons with internal revenue tax liabilities covering taxable year 2017 and prior years to avail  Tax Amnesty on Delinquencies within one year from the effectivity date of the regulation. The deadline for availment however, has been further extended by RR 15-2020 to December 31, 2020 or may be extended further if the circumstances warrant an extension such as in case of country-wide economic or health reasons. Who can avail the Tax Amnesty? Delinquent Accounts as of the effectivity of RR 4-2019 including those with application for compromise settlement either on the basis of doubtful validity of assessment or financial incapacity of the taxpayer. This is regardless of whether those were denied by or still pending with the Regional or National Evaluation Board on or before the effectivity of the regulation. It also includes the

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