List of 2014 Philippines Holidays Under Proclamation No. 655

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By: Tax and Accounting Center Philippines The President of the Philippines issued Proclamation No. 655 dated September 25, 2013 declaring the regular holidays, special (non-working) days, and special holidays for calendar year 2014 as follows: 2014 Regular Holidays Philippines    January 1, 2014 (Wednesday) – New Year’s Day  April 9, 2014 (Wednesday) – Araw ng Kagitingan April 17, 2014 (Thursday) – Maundy Thursday April 18, 2014 (Friday) – Good friday May 1, 2014 (Thursday) – Labor Day June 12, 2014 (Thursday) – Philippine Independence Day August 25, 2014 (Last Monday of August) – National Heroes Day November 30, 2014 (Sunday) – Bonifacio Day December 25, 2014 (Thursday) – Christmas Day December 30, 2014 (Tuesday) – Rizal Day 2014 Special Non-working Days Philippines January 31, 2014 (Friday) – Chinese New Year April 19, 2014 (Saturday) – Black Saturday August 21, 2014 (Thursday) – Ninoy Aquino Day November 1, 2014 (Saturday) –

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Tax Incentives of Tourism Economic Zone Enterprise in Philippines

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By: Tax and Accounting Center Philippines Under Philippine Economic Zone Authority (PEZA) rules, a Tourism Economic Zone Locator Enterprise is an establishment and operation within PEZA Tourism Special Economic Zone of sports and recreation centers, accommodation, convention, and cultural facilities and their special interest attraction activities / establishments, with foreign tourists as primary clientele. Tax Incentives of Tourism Economic Zone Locator Enterprise in the Philippines based on qualifications and registration are as follows: Income tax holiday where no income taxes shall be imposed on such number of years for pioneer or non-pioneer enterprise, 5% Gross Income Tax, in lieu of all national internal revenue and local taxes, Tax and duty-free importation, and Zero-VAT rating on local purchases of capital equipment. Philippine Economic Zone Authority (PEZA) Board issued Board Resolution No. 12-610 dated November 13, 2012 (PEZA Board Reso. No. 2012-610) on the tax incentives of Tourism Economic Zones developers and

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Withholding Tax on Professional Fees of Doctors in Philippines

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By: Tax and Accounting Center Philippines Revenue Regulations (RR) No. 14-2013 (RR No. 14-2013) dated September 20, 2013 was issued to further amend the provisions of RR 2-1998, as last amended by Revenue Regulations No. 30-2003 and Revenue Regulations No. 17-2003, relative to the application of the following expanded withholding tax on professional fees of medical practitioners or doctors in the Philippines: 10% if annual gross income does not exceed P720,000; or 15% if annual gross income exceeds P720,000 Medical practitioners or doctors refers to those accredited by the hospitals, clinics, and health maintenance organizations (HMOs) as independent parties practicing their medical profession and not under employer-employee of the hospital, clinic, HMO or similar establishment. As such, they are subject to expanded withholding tax in the Philippines and not to withholding tax on compensation. Notably, RR No. 14-2013 provides for the following rules: Responsibility of hospitals,  clinics, HMOs and others  to withhold It

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Value Added Tax on Raw Sugar in Philippines

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By: Tax and Accounting Center Philippines Revenue Regulations No. 13-2013 (RR 13-2013) dated September 20, 2013 entitled “Amending Section 2(b) of Revenue Regulations No. 13-08, Relative to the Definition of Raw Sugar for Value Added Tax Purposes” was issued by the Bureau of Internal Revenue (BIR) to take effect within fifteen days from publication in newspaper of general circulation (Manila Bulletin) last September 24, 2013. Old Raw Sugar definition under RR 13-2008 Under RR 13-2008 dated September 19, 2008, raw sugar was defined as follows: “Raw Sugar” – refers to sugar whose content of sucrose by weight in dry state, corresponds to a polarimeter reading of less than 99.5 degrees. Cane sugar produced each production year shall be classified, for internal revenue purposes, as follows: “A” is raw sugar which is intended for export to the United States market; “B” is raw sugar which is intended for the Domestic Market; “C”

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Features of Real Property Taxation in the Philippines

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By: Tax and Accounting Center Philippines Under the Local Government Code of the Philippines of Republic Act. No. 7260 (RA No. 7160), a province or city or municipality within Metropolitan Area may levy a real property tax in the Philippines on such real property as land, building, machinery, and other improvement.   Real property tax extends to machineries and improvements Real property tax in the Philippines is not imposed on the literal meaning of real properties (e.g. land and building) alone because it extends to machineries and improvements. Real property tax on machinery in the Philippines embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached, permanently or temporarily, to the real property. It includes the physical facilities for production, the installations and appurtenant service facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are

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Provisional Tax Clearance for Government Bidding in Philippines

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By: Tax and Accounting Center Philippines Under Executive No. 398 dated 12 January 2005, taxpayers desiring to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, government owned or controlled corporations and other public institutions are required to be tax compliant that the government must have enough sources of revenue to finance government projects. Accordingly, these taxpayers are required to submit the following: Copy of latest income tax return stamped received by the Bureau of Internal Revenue (BIR) and duly validated with tax payment, if any. Copy of latest business tax returns stamped received by the Bureau of Internal Revenue (BIR) and duly validated with tax payment, if any Copy of BIR tax clearance to prove full and timely payment of taxes. To implement the above, BIR issued Operations Memorandum (OM) No. 12-07-001 dated July 12, 2012 (Operations manual No. 12-2007) on the

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Valuation of Philippine Shares for Capital Gains Tax

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By: Tax and Accounting Center Philippines REVENUE REGULATIONS No. 6-2013 dated April 22, 2013 (RR No. 6-2013) entitled “Amending Certain Provision of Revenue Regulations No. 6-2008 (RR 6-2008) entitled “Consolidated Regulations Prescribing the Rules on Taxation of Sale, Barter, Exchange of Other Disposition of Shares of Stock Held as Capital Assets.” RR 6-2013 amended Section 7 of RR 6-2008 to read as follows: “SEC. 7. Sale, Barter or Exchange of Shares of Stock Not Traded Through a Local Stock Exchange Pursuant to Secs. 24 (C), 25 (A)(3), 25 (B), 27 (D) (2), 28(A) (7) (C), 28 (B) (5) (C) of The Tax Code, as Amended. — xxx xxx xxx (c.2) Definition of “fair market value” of the Shares of Stock. — For purposes of this Section, “fair market value” of the shares of stock sold shall be: (c.2.1) x x x (c.2.2) In the case of shares of stock not

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Disallowance of expenses for failure to withhold taxes in Philippines

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By: Tax and Accounting Center Philippines Update under Republic Act No. 11976 or Ease of Paying Taxes Act: Section 34(K) of the Tax Code, as amended, as discussed below has already been repealed. This would mean that an expense subject to withholding tax could still be deducted from gross income even if the taxpayer failed to withhold on them. However, BIR could still make an assessment of withholding taxes that the taxpayer failed. Revenue Regulations No. 12-2013 dated July 12, 2013 (RR No. 12-2013) entitled “Amending Section 2.58.5 of Revenue Regulations No. 2 – 1998 (RR 2-98), as amended, Relative to the Requirements for Deductibility of Certain Income Payments” has been issued by the Bureau of Internal Revenue (BIR) implementing Section 34(k) of the Tax Code, as amended, in relation to Section 245 of the Tax Code, as amended. Under Revenue Regulations No. 12-2013, Section 2.58.5 of Revenue Regulations No.

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Withholding Tax on Philippine Real Estate Service Practitioners

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By: Tax and Accounting Center Philippines In the past, real estate brokerage has been to have a notable contribution to the boom of real estate industry from the buying and selling of residential and commercial lots, residential subdivisions, and condominium units. Real estate brokers earned through commissions and the same was subject to 10% creditable withholding tax by the income payor – the real estate sellers. Recognizing the contribution of the real estate brokers in the social political, economic development and progress of the country, Republic Act No. 9646 dated June 29, 2009 (RA No. 9646) has been enacted to law. Under RA No. 9646, real estate service practitioners had been institutionalized by creating a Professional Regulatory Board of Real Estate Service under the supervision and administration control of Professional Regulation Commission (PRC) who would administer the professional examination and licensing of real estate service practitioners. Real estate service practitioners

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Input Value Added Tax expense in the Philippines

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By: Tax and Accounting Center Philippines As a rule, a 12% value added tax is imposed on every sale of goods or services by business establishments and every importation whether for business or for personal use. However, for some transactions subject to value added tax in the Philippines, the rate is zero percent (0%) and not 12% referred to as zero-rated sale in the Philippines such as the following: Export sales of goods Foreign currency denominate sales of goods Sale of goods to persons with indirect tax exemptions such as to ecozones or PEZA Sales of services under Section 108(B) of the Tax Code, as amended For a zero-rate sale of goods and services, they do not impose 12% value added tax to their buyers so their sale produces not output VAT but are being passed on 12% value added tax in the Philippines from their suppliers of good or

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