What input VAT is allowed for VAT refund or tax credit in Philippines?

---

By: Garry S. Pagaspas Under Section 1, Article III – Bill of Rights of the Philippine Constitution and hereunder quoted: “No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied equal protection of the laws” The above provision could have been the source of input value added tax (VAT) rules under the National Internal Revenue Code or Republic Act No. 8424, as amended. Input VAT in the Philippines is passed on by value added tax suppliers to its buyers and in the books of accounts of VAT registered buyer, the same is normally accounted for as an “asset “or simply a “property” in the context of the above provision in the Constitution. In effect, input VAT as a property could not simply be forfeited by the government through the Bureau of Internal Revenue (BIR) without the requisite due process.

Read More

Mandatory TIN of Foreigners on SEC Papers in Philippines

---

By: Garry S. Pagaspas, CPA Securities and Exchange Commission (SEC) in the Philippines issued Memorandum Circular No. 1-2013 (SEC MC 1-2013) dated January 7, 2013 entitled “Mandatory Incorporation of the Tax Identification Number (TIN) of Foreign Investors in All Forms, Papers and Documents Filed with the SEC”. This SEC MC. No. 1-2013 is intended to take effect immediately from its issuance last January 2013. SEC MC 1-2013 in relation to BIR Revenue Regulations No. 7-2012 Said SEC MC. 1-2013 was issued in relation to Revenue Regulations No.  7-2012 (RR No. 7-2012) dated April 2, 2012 entitled “Amended Consolidated  Revenue Regulations on Primary Registration, Updates and Cancellation” where Section 4(1)(V) provides as quoted below: “Section 4(1)(v) – Non-resident Aliens not engaged in Trade or Business (NRANETB) or non-resident foreign corporation (NRFC) shall be issued TIN’s for purposes of withholding taxes on their income from sources within the Philippines. The withholding agent

Read More

How to apply Excess Input VAT Refund or Credits in Philippines?

---

By: Garry S. Pagaspas, CPA Value added tax (VAT) rules in the Philippines allows recovery of excess input VAT of taxpayers engaged on certain transactions specified in the National Internal Revenue Code (NIRC or Tax Code), as amended. In this article, let us take up the process of application for excess input VAT refund or tax credit certificate in the Philippines and the related considerations. What are input VAT allowed for VAT refund or tax credit Philippines? Under the National Internal Revenue Code o 1997 or Republic Act No. 8424 (NIRC or RA 8424 or Tax Code), as amended, the following could be applied for input VAT refund or tax credit certificate: Excess input VAT on zero-rated transactions under Section 112 (A) of the Tax Code Excess input VAT upon dissolution under Section 112 (B) of the Tax Code Excessive or erroneous VAT payments under Section 229 of the Tax

Read More

Accounting and Withholding Taxes on Philhealth Fees

---

By: Tax and Accounting Center Philippines This is a sequel to our first article on Withholding Tax Obligations of Philhealth. In this article, we would wish to provide sample illustration on Philhealth withholding taxes, and sample accounting entries on the books of the hospital or clinic. Illustration of Philhealth withholding of taxes To illustrate the application of the above, let us assume that the Philhealth member-patient, Juan de la Cruz was confined with Hospital A. He was billed and paid his other dues and the following benefits were billed to Philhealth based on duly accomplished Philhealth forms and submissions: Professional fees plus 12% VAT of P600.00           –              P 5,600.00 Facility fees plus 12% VAT of P1,200.00                   –              11,200.00 How much will be the withholding taxes of Philhealth? Withholding tax on professional fees – P500 (P5,000 multiplied by 10% assuming the medical doctor has an affidavit of declaration for not

Read More

Withholding Tax Obligations of Philhealth or PHIC

---

By: Tax and Accounting Center Philippines This article is tribute to one of our certified public accountant participants in the past seminar who come all the way from Cabanatuan City to participate and enhance her knowledge on withholding tax and value added tax in the Philippines. By this article, we summed up the salient points of how withholding taxes apply to Philippine Health Insurance Corporation (PHIC or Philhealth) as most of us commonly refer to it. Under the Philhealth rules, members are allowed certain pre-approved benefits on health and hospitalization such as on the rates of professional fees of medical practitioners, amount for medical facility fees to include medical procedures, room and board, pharmacy, and other related medical services. Procedurally, patients billing from the hospitals and clinics include all other charges from medical facility and professional fees. Philhealth benefits are deducted from such billings and the hospital will forward the

Read More

Changes to 2012 VAT Audit Program in Philippines

---

By: Tax and Accounting Center Philippines Under Revenue Memorandum Order No. 20-2012 (RMO 20-2012) the Bureau of Internal Revenue (BIR) has created a VAT Audit Program for 2012 VAT returns where they would concentrate in the examination of quarterly VAT returns starting 2012. Seeing the potential revenue to be generated from the 2012 VAT audit program, Revenue Memorandum Order No. 27-2013 (RMO 27-2013) dated 26 September 2013 had been issued to take effect immediately with the following new rules: Increase of VAT audit case to 30 cases First paragraph of Item IV.A.9 of RMO 20-2012 has been amended as follows: “The initial workload of each Revenue Officer (RO) under this program shall be thirty (30) cases. In no case shall the number of cases handled by an RO exceed thirty (30) cases, subject to replenishment every after submission of the report of investigation/closure of each case” From the initial case

Read More

Tax Compliance under Functional Currency in Philippines

---

By: Tax and Accounting Center Philippines Under Revenue Regulations No. 6 – 2006 dated March 16, 2006, the use of functional currency other than Philippine Peso in Financial Statements in the Philippines that will be submitted and in the books of accounts that will be maintained for tax compliance purposes with the Bureau of Internal Revenue (BIR) had been defined and regulated. This has been issued in relation to Securities and Exchange Commission (SEC) Memorandum Circular No. 1 – 2006 dated January 11, 2006 providing for guidelines on the filing of functional currency financial statements in the Philippines. Functional Currency in the Philippines is the currency of the primary economic environment in which the reporting entity operates; that is the currency of the environment in which an entity primarily generates and expends cash. Examples of functional currencies normally adopted in the Philippines are as follows: US Dollars Japanese Yen Australian

Read More

2013 Minimum Wage Increase in Philippines

---

By: Tax and Accounting Center Philippines The Regional Tripartite Wages and Productivity Board of the National Capital Regions (RTWPB-NCR) issued Wage Order No. 18 dated September 6, 2013 providing for an increase of the 2013 minimum wage increase in the Philippines, and restructuring of cost of living allowance (COLA) for 2014. This had been a product of public consultations, discussions with the labor groups in the Philippines and deliberations within the Department Of Labor and Employment (DOLE). P10 increase of 2013 minimum wage in Philippines Under NCR  RTWPB Wage Order No. 18 – 2013, all minimum wage earners in the National Capital Region shall receive an increase in the existing Basic Wage of Ten Pesos (PhP10.00) per day of eight-hour work. Accordingly, the following are the new 2013 minimum wage rates in the National Capital Region under Wage order No. 18: Non-agriculture – P466.00 a day Agriculture (plantation and non-plantation)

Read More

BIR Tax Compliance of Privilege Stores in Philippines

---

By: Tax and Accounting Center Philippines Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 16 – 2013 dated August 22, 2013 (RR No. 16-2013) revoking Revenue Regulations Nos. 16-2003 and 24-2003 relating to taxation of privilege stores in the Philippines. Under RR No. 16-2013, privilege stores in the Philippines refer to a stall or outlet which is not permanently fixed to the ground and is normally set-up in places like shopping malls, hospitals, office buildings, hotels, villages or subdivisions, churches, parks, streets and other public places for the purpose of selling a variety of goods and/or services for short durations of time or during special events for not more than fifteen (15) days. RR No. 16-2013 imposes upon the privilege store operators the following BIR tax compliance obligations: Register and Secure Tax Identification Number Privilege store operators are required to register with the BIR and secure tax identification number

Read More

Preservation of Books of Accounts and Accounting Records in Philippines

---

By: Tax and Accounting Center Philippines The Bureau  of Internal Revenue (BIR) issued Revenue Regulations No. 17 – 2013 dated September 27, 2013 (RR No. 17-2013) prescribing the guidelines on the preservation of books of accounts and other accounting records in the Philippines. Preservation within ten (10) years from last entry Under RR No. 17-2013, taxpayers are required to preserve their books of accounts as follows: “All taxpayers are required to preserve their books of accounts, including subsidiary books and other accounting records, for a period of ten (10) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of filing of the return, for the taxable year when the last entry was made on the books of accounts” In the past, the requirement is to preserve books of accounts and other accounting records in the Philippines for a

Read More