UNVEILING THE CHANGES IN THE STOCKHOLDERS’ MEETING UNDER THE REVISED CORPORATION CODE

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Change is inevitable, and in the corporate world, change is necessary to adapt to this fast-paced world. The Revised Corporation Code of the Philippines, also known as RA No. 11232, brought significant adjustments in the corporate landscape in 2019. With the evolving needs of the stockholders, the Revised Corporation Code aims to bring efficiency and enhance stockholders’ participation, transparency, and corporate governance. As a transformative step forward, the Revised Corporation Code brings a host of new features that modernize and enhance the corporate landscape. Here are some of the notable changes in conducting Stockholders’ Meetings under the Revised Corporation Code: Remote Participation and Electronic Communication While face-to-face meetings remain the traditional way of conducting meetings, the Revised Corporation Code introduced new ways to conduct meetings to enable the full participation of Shareholders and for them to conveniently cast their votes through electronic means. The Securities and Exchange Commission (SEC) issued

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Understanding the Payroll Register in the Philippines 

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A payroll register is a report filled with employee information and payroll figures for a specific payroll cut-off and payout period. A payroll register is composed of the following:  In every country, there are different labor rules and regulations that need to be followed. In the Philippines, to get the net pay of employees, employees’ basic rates should be identified initially using the factor suggested and determined in the Handbook on Workers’ Statutory Monetary Benefits (WSMB). The following are the common equivalent number of days per year:  First, identify the factor to be used in calculating the daily and hourly rates. Second, compute the employee’s daily and hourly basic rates by multiplying the monthly salary by 12 to get the annual salary, then divide it by the factor. Then, divide the daily rate by 8 regular working hours to get the hourly rate.  For example, A works from Monday to

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SEC AMNESTY PROGRAM DEADLINE EXTENDED!

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By: Farida B. Honrado, CPA The Securities and Exchange Commission (SEC) has extended the deadline for applications for amnesty for late and non-filing of annual financial statements (AFS), general information sheets (GIS), as well as non-compliance with SEC Memorandum Circular No. 28, series of 2020 (Requirement for Corporations, Partnerships, Associations, and Individuals to Create and/or Designate E-mail Account Address and Cellphone Number for Transactions with the Commission) (MC28).  Eligible companies have until June 30 to finish their amnesty applications and we encourage all eligible companies to not miss the chance to avail lower fines and penalties.   Below are the reduced rates for non-compliant and suspended/revoked corporations:  To check who is eligible to avail the amnesty program, go to http://amnesty.sec.gov.ph/ and input your company name or SEC registration number.  This extension was granted through SEC Memorandum Circular No. 6, Series of 2023, entitled “Amendment of SEC Memorandum Circular No. 2, Series

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QAR, ISQM, and BIR’s RUN AFTER FAKE TRANSACTIONS (RAFT) Campaign: A Recall of Quality Audits = Playing a Sustainable Future

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The public has a high regard for accountants. In this profession, the public and the stakeholders look up to and show respect for accountants for making a difference in terms of handling business operations, management, financial matters, consultancy, advisory, and compliance services which in the end results in wise business decision making. We are in awe when the Bureau of Internal Revenue in the Philippines started its new campaign regarding the collection of taxes that should otherwise accrue to the government revenue. This BIR’s campaign is considered a bit scandalous and alarmingly affecting the public practice and we do not need to be mum on it, to say at least: Why were the professional title (as a CPA) and accreditation (as Tax Practitioners) included in the campaign? What is RAFT, the BIR Newest Campaign? BIR’s recent campaign RUN AFTER FAKE TRANSACTIONS (abbrev. “RAFT”; RMC No. 38-2023) is to investigate and

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VAT CHRONICLES: ZERO-RATING ON SALES TO PEZA REGISTERED ENTITIES PHILIPPINES

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With the enactment of the Republic Act. No. 10963, otherwise known as Tax Reform and Inclusion Law (TRAIN), and Republic Act No. 11534 otherwise known as Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) amending Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997 (Tax Code), particularly on the imposition and treatment of Value-Added Tax on local purchase of Registered Business Enterprise (RBE) such as those with Philippine Economic Zone (PEZA), VAT zero-rating on sales to PEZA registered entities in the Philippines have drawn so much attention and debates, if not confusion. Let’s take a quick walkthrough of the significant events relative to the VAT Zero-rating of a PEZA Registered Business Enterprise to better appreciate these rules. 1. 0% VAT INCENTIVE ON EXPORT ENTERPRISES Prior to CREATE, VAT zero-rating incentive in the Philippines for purchases from local suppliers was applicable to PEZA-registered entities without

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Ways to Avoid the 3 Common Payroll Errors

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Making mistakes is normal, but making the same mistake repeatedly is unreasonable. Most payroll and HR personnel experience these common errors when preparing their company’s payroll register. Even tenured payroll and HR personnel may tend to be complacent due to the repetitive work and overlook some items when doing the payroll of employees. They may forget to check the timesheet of every employee, excluding overtime, or include undertime. They may forget the treatment of de minimis benefits or the excess of the Php 90,000 limit of the other benefits. They may incorrectly compute the net pay of employees. Payroll registers are easy to prepare, but intricate in terms of the principles or basis used to produce an accurate payroll report. Payroll-related technical knowledge from government agencies should be updated once in a while to avoid common errors in payroll preparation. In this article, we will tackle three of the most

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Helpful Tips on the Philippines  Audit of Salaries and Wages

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Perhaps, one part of the audit that needs close scrutiny is the Salaries and Wages. Why say so? As this account is material to the Income Statement, it is more than merely testing and validating the recording in the books with the payroll register when there is an accrual of wages payable or cash is paid when employee salaries are incurred. An auditor’s consideration on his audit is to look also at the tax compliance side of the payroll preparation if risks of material misstatements are present and thus, affecting the audit procedures done by the auditor. In the Philippines, various returns /information are prepared related to Salaries and Wages to be submitted to the tax authority (BIR) monthly and annually.  Aside from that, certain components of the Salaries and Wages should be identified whether it is a part of a taxable compensation or not. Since the employer is an

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HOW DO YOU SAFEGUARD YOUR CASH?

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Whatever type of financial resource your company owns—cash, money, currency, coins —must be protected from any unscrupulous activities.  Cash fraudsters have always been attracted to it, which has led to corporate losses and, in the worst cases, bankruptcy throughout history. If internal cash control is lacking or inadequate, this minor issue will cause a cascade of problems for your company. Building trust on mediocrity will not help your business grow and flourish.  As no trust issues are put on this writing, a cash misappropriation or errors are inevitable.  But if trust issues rings a bell in your company, then the following general internal cash control measures must be considered: The nature of internal control over cash in a small business set-up varies as that of a corporate business. In support of this, having the business owner with overseeing responsibilities on cash transaction cycles suffices. As a business owner or in-charge

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CASH AUDIT 101: Cash says, “DON’T MISS A CHECK ON ME!”

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By: Joelex L. Cortes, CPA Have you ever wondered why auditors review supporting documentation relating to cash accounts at every audit engagement? And, on occasion, bank confirmation and inquiries are made in order to execute their cash audit? As you read on, you will discover how cash accounts are a critical component of the balance sheet of your company’s financial statements. As cash is one of the most liquid assets, it is reported first on any company’s balance sheet since the latter are presented in the order of highest liquidity. When it comes to paying for any business debts or payables, cash serves as the primary asset. Since cash accounts are highly liquid, the auditor must take this into account when performing the audit because it carries inherent risks and the determination of such risk does not matter with the size of your business.  COMMON CASH FRAUD OR ERRORS Cash

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2022 Annual Income Tax Return Filing Reminders in the Philippines

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By: Kenneth Lanoy, CPA Filing tax returns and payment of tax due, if any, is a recurring obligation of every taxpayer to support the coffers of the government. In the Philippines, accountants, auditors, and staffs are equipped with time, energy, and knowledge for the preparation of the financial statements of the operations during the previous year and of course, the Annual Income Tax Returns (Annual ITR) in the Philippines. Let me share with you some pointers to consider for your 2022 Annual ITR preparation. 1. APPROPRIATE INCOME TAX RATE TO BE USED For individual taxpayers, the income tax rate until December 31, 2022, are shown as follows: For corporate taxpayers, the regular income tax rate in the Philippines of 25% or 20% for the 2022 annual ITR depends on the classification as follows: DOMESTIC CORPORATION In general, Domestic Corporations (DC) are taxed at a rate of twenty-five percent (25%) on

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