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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Compromise of BIR Tax Liability in the Philippines

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By: Tax and Accounting Center Philippines If you are issued a deficiency tax assessment by the BIR, you do not lose hope for their could still be some remedies. Under Section 204 of the Tax Code, the Commissioner of Internal Revenue (CIR) is authorized to compromise taxes in the Philippines or to allow payment of taxes at minimal amounts in certain instances. Revenue Regulations No. 30-2002 dated December 16, 2002 (RR 30-2002) has been issued to supersede the provisions of Revenue Regulations Nos. 6-20001 and 7-2001. RR 30-2002 has been further amended by the following: Revenue Regulations No. 8-2004 dated May 19, 2004, and Revenue Regulations 9-2013 dated May 10, 2013. Instances of compromise RR No. 30-2002, as amended, provided for specific instances where tax liability in the Philippines could be compromised based on certain conditions and requirements, to wit: Delinquent accounts; Cases under administrative protest after issuance of the

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BIR Official Receipts and Sales Invoices in the Philippines

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By: Tax and Accounting Center Philippines As a rule under Section 237 of the Tax Code, as amended by Republic Act No. 11976 or Ease of Paying Taxes Act , taxpayers engaged in trade or business are required to issue official receipts and/or sales invoices for each sale and transfer of goods and services. Hereunder we quote for easy reference: “SEC. 237.            Issuance of Receipts or Sales or Commercial Invoices. — All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Five Hundred Pesos or more, issue duly registered sale or commercial invoices, showing the name, taxpayer identification number, date of transaction, quantity, unit cost and description of merchandise or nature of service: X x x. Provided, further, That the seller shall issue sale or commercial invoices when the buyer so requires regardless of the amount of transaction: Provided,

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Tax Compliance Obligation of Online Sellers in Philippines

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By: Tax and Accounting Center Philippines With the technological advancement and improvement of internet connectivity in the Philippines, the world of internet has become a huge market place of variety of goods and services. Social media like (e.g. facebook), online stores, buy and sell web sites, online malls offer a variety of goods for sale and services. As to BIR tax compliance, online sellers are treated in like manner as regular taxpayers doing manual transactions. To reiterate online taxpayer’s obligation in relation to online transactions in the Philippines, Revenue Memorandum Circular No. 55-2013 dated August 5, 2013 (RMC No. 55-2013) has been issued.  The following are the BIR tax compliance of online sellers of goods and services in the Philippines: 1. Register with the Bureau of Internal Revenue (BIR) Online sellers in the Philippines Register the business at the Revenue District Office (RDO) having jurisdiction over the principal place of

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