BIR Tax Exemption of Non-stock, Non-Profit Corporations Philippines

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By: Garry S. Pagaspas Once again, the Bureau of Internal Revenue (BIR) has been under fire lately with the issuance of the  Revenue Memorandum Order No. 20-2013 (RMO 20-2013) dated July 22, 2013 entitled “Prescribing the Policies and Guidelines in the Issuance of Tax Exemption Rulings to Qualified Non-Stock, Non-profit Corporations and Associations under Section 30 of the National Internal Revenue Code of 1997, as amended”. Let us try to discuss the features of this new Revenue Memorandum Order No. 20-2013 (RMO 20-2013) and see for ourselves the new rules for BIR tax exemption of non-stock, non-profit corporations in the Philippines. Only qualified corporations or associations will be exempted  Under RMO 20-2013, only corporations or corporations that are duly qualified under Section 30 of the tax Code, as amended, shall be issued Tax Exemption Rulings. Corporations or associations which apply for tax exemption ruling under Section 30(E) of the Tax Code,

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Value Added Tax Zero Rating on Goods and Properties Philippines

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By: Tax and Accounting Center Philippines As a rule, sale of goods or properties in the Philippines by a value added tax (VAT) registered or registrable seller is subject to 12% value added tax (VAT).  Such 12% value added tax in the Philippines is passed on by the seller to the buyer on every sale of goods or properties. On the part of the VAT registered buyer, such passed on 12% value added tax could be treated as creditable input tax that it could deduct its value added tax on its monthly and quarterly sales made. However, the value added tax system in the Philippines provides for the zero-rated sales of goods or properties. Under zero-rated (0% VAT) sales rule, the seller does not impose the 12% value added tax in the Philippines  to the buyer who is within the Philippines or abroad. On the part of the VAT-registered seller,

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2014 AFA-PICPA Accountancy and Tax Conference – Cebu Philippines

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By: Tax and Accounting Center In an effort to harmonize with internationalized accounting practice, the Philippine Institute of Certified Public Accountants (PICPA) joined hands with ASEAN Federation of Accountants (AFA) for the “2014 AFA-PICPA Accountancy and Tax Conference” under theme, “ASEAN Integration 2015:Rising the Challenge” held in last January 24-25, 2014 at Cebu City, Philippines and hosted by PICPA-Cebu City Chapter. Tax and Accounting Center Philippines has supported and participated such event by sending its executive, Jobelle Mendoza, CPA along with its resource speakers and partners with Gimena Pagaspas Partners & Co. CPAs – Garry S. Pagaspas, CPA and Wilson John Gimena, CPA. The two-day event was a success for local and foreign participants participants and the AFA-PICPA for it clearly sent its message on the ASEAN integration, the challenges on the practice of profession in the ASEAN region, and the opportunities within the ASEAN region. The first day concentrated on

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Electronic Alphalist of Employees and Payees in Philippines

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By: Garry S. Pagaspas In another effort to enhance tax compliance in the Philippines, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 1-2014 dated December 17, 2013 on submission of alphabetical list or alphalist of employees and list of payees on income payments subject to withholding taxes in the Philippines. Amendment to Revenue Regulations No. 2-98 Revenue Regulations No. 1-2014 (RR No. 1-2014) was issued to amend Revenue Regulations No. 2-98, as last amended by Revenue Regulations No. 10-2008 on submission of alphabetical list or alphalist of employees and list of payees on income payments subject to withholding taxes in the Philippines. Specifically, RR No. 1-2014 amended Section 2.83.3 of Revenue Regulations No. 2-98 on requirements for the list of payees. Mandatory Electronic Submission  Under RR No. 1-2014, all withholding agents (regardless of the number of employees and payees, and whether employees or payees are exempt or not) are

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Components of Audited Financial Statements in Philippines

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By: Garry Pagaspas, CPA For a simple layman or average entrepreneur, financial statement is just a simple document that needs to be signed by a certified public accountant in the Philippines and needs to be attached to the annual income tax return. On a technical sense, they, are not just simple documents, but a sacred report or statement about the business that is being looked upon by related government authorities as a serious requirement upon business establishment. Under the present rules, audited financial statement in the Philippines is something that business owners, entrepreneurs, company officers, and corporate board members or trustees should give due regard. Securities and Exchange Commission (SEC) is now looking into the details of the audited financial statements in the Philippines to determine extent of compliance with accounting rules, e.g. Philippine Financial Reporting Standards (PFRS). Bureau of Internal Revenue (BIR) is likewise looking at the audited financial

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Accreditations of Independent CPA Auditors in the Philippines

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By: Tax and Accounting Center Philippines Under the present rules applicable to registered and licensed certified public accountants in the Philippines, not all of them can just conduct an audit and sign in the audited financial statements. Before one could conduct an audit of the financial statements in the Philippines , the independent CPA must be qualified and must duly accredited. Here are some of the registrations and/or accreditations a certified public accountant in the Philippines normally required prior to the conduct of an audit on the financial statements for filing with the Securities and Exchange Commission (SEC), Bureau of Internal Revenue (BIR), and other government agencies: 1. Board of Accountancy (BOA) Accreditation of CPAs Philippines Board of Accountancy (BOA) is the professional board of Certified Public Accountants in the Philippines under Professional Regulation Commission (PRC), a government agency administered to register and regulate professionals in the Philippines.  BOA accreditation is

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SEC Rules on Deposit for Future Subscription in the Philippines

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By: Garry S. Pagaspas, CPA Fore registration of a corporation in the Philippines, capitalization is regulated as to minimum amount and is affected by nature of operations, extent of foreign ownership, targeted export market, and other factors. On top of the minimum amount, corporation should be aware of the funding for the operational needs of the company in order to set the healthy level of capitalization that would support the pre-operational financial requirements. At times, the minimum capitalization requirements of the Securities and Exchange Commission (SEC) may not be sufficient to cover operational financing requirements. Corporations then, ends up securing financing from the stockholders and related parties to meet the financing needs. Such amounts secured is sometimes recorded in the books of accounts as follows: Advances from stockholders; Advances from officers; Advances from affiliates; Deposit for future stock subscriptions; or Any other similar account The choice of account titles in

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Mandatory Audited Financial Statement with SEC Accredited CPA

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By: Tax and Accounting Center Philippines An independent certified public accountant (CPA) in the Philippines may not be able to conduct an audit on any and all entities, corporations, and organizations. This would mean that an independent CPA auditor in the Philippines should be qualified and accredited in order for it to conduct an audit and sign on an audited financial statements. Under Rule No. 68, as amended, financial statements required to be submitted with the Securities and Exchange Commission (SEC) shall be accompanied by an auditor’s report who is accredited by Board of Accountancy (BOA). Moreover, the following entities are required to be audited by an independent CPA with corresponding accreditation before the Securities and Exchange Commission (SEC) in addition to their accreditation with the Board of Accountancy (BOA): Group A SEC Accredited CPA in Philippines Issuers of registered securities which have sold a class of shares under Section

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AD.HOC Shirts Phils Yolanda Victims Fund Raising

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By: Ad.Hoc Philippines Shirts AD.HOC: For this advocacy. Youth on the Move. Blasting in the news, Typhoon Yolanda’s unimaginable strength struck the Philippines, Nov. 8, 2013. The strongest typhoon in the whole world for this year, and one of the deadliest ever recorded in the history, has brought drastic damages to our country. As the fading gust of winds unveiled the aftermath scenario, we, as were safe in our comfortable places, couldn’t think, “What if I were there, struggling to live. “ As burdened by different stories of survival, heartbreaks, trauma, evident crimes, struggle for the scarcity of necessities, we realized, “We cannot just watch the news and cry. We must do something.” It was November 14, Thursday, almost a week after the storm struck, the idea of putting up a fund raising project for the benefit of the Typhoon victims just came out of our Facebook conversation tackling about

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My Relief to Guiuan Samar Victims of Typhoon Yolanda Haiyan

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By: Garry S. Pagaspas, CPA I had been hearing about the strength of Super Typhoon Yolanda (international name – Haiyan) and was confident as Eastern Samar and Leyte are favorite routes of 19 to 20 typhoons a year so people are used to it based on experiences of past years. After the storm has passed last Friday (9 November 8, 2013), we lost contact with our family members and relatives and maintain such confidence until a news feed of Ted Failon from ABS-CBN News on the worst impact of Super typhoon Yolanda on Tacloban City, Leyte alarmed us. Without wasting much time, I along with some sisters and brothers decided to go home Eastern Samar (Lawa-an and Guiuan), and Tacloban CIty, Leyte to check on our family members, relatives, and friends. We drove last Saturday night (11PM, November 9, 2013) for 25 hours to Guiuan, E. Samar to check on

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