An ecozone registered enterprise in the Philippines refers to any person, firm, association, partnership, corporation, or any other form of business organization, registered with the Philippine Economic Zone Authority as such based on its qualifications. In simple and plain language, the ecozone registered enterprise in the Philippines is the PEZA registered entity – by activity and by location. PEZA registered entity are classified based on the nature of the registered activity as follows: Ecozone Export Enterprise in the Philippines Ecozone export enterprise refers to an individual, association, partnership, corporation or other form of business organization which has been registered with the PEZA to engaged in manufacturing, assembling or processing activity falling within the purview of the Act and resulting in the exportation of 100% of its production, unless a lower percentage of its production for exportation is prescribed by the PEZA Board subject to such terms and conditions as the
Under Republic Act No. 7916, as amended, otherwise known as “The Special Economic Zone Act 0f 1995” administered by the Philippine Economic Zone Authority (PEZA), ECOZONES or “special economic zones” (SEZ) are established as a separate customs territory to promote flow of local and foreign investments that would generate employment opportunities, simulate the repatriation of Filipino capital by providing attractive climate and incentives for business activity, and for other purposes. What are Ecozones in the Philippines or “special economic zones” (SEZ)? Ecozones in the Philippines or “special economic zones” (SEZ) are selected areas of highly developed or which have the potential to be developed into agri-industrial, tourist, recreational, commercial, banking, investment and financial centers whose metes and bounds are fixed or delimited by Presidential Proclamation. How are ecozones in the Philippines classified? Ecozones in the Philippines or “special economic zones” (SEZ) may contain any or all of the following classifications
By: Tax and Accounting Center Philippines Under Republic Act No. 10165 (RA No. 10165) and otherwise known as Foster Care Act of 2012, it has been a declared policy of the State to provide every child who is neglected, abused, surrendered, dependent, abandoned, under sociocultural difficulties, or with special needs with an alternative family that will provide love and care as well as opportunities for growth and development. Under said RA No. 10165, a child may be placed under foster care for the provision of planned temporary substitute parental care to a child by a foster parent under certain condition and upon approval the Foster Family Care License of the Department of Social Welfare and Development (DSWD). Apart from the regulations on foster child care in the Philippines, RA No. 10165 or Foster Care Act of 2012 in the Philippines provides for the following tax incentives and as such, the
By: Tax and Accounting Center Philippines For quite some time, tax evaders had happily succeeded with their utmost objective to pay least taxes (or none at all) by all means and in varied faces of tax evasion. Name it, they came in various ways such as the following: arbitrary non-reporting of income, over-declaration of expenses, fictitious expenses, claiming personal expenses as business expense borrowing of invoices and receipts, non-filing of returns, and more. Philippine tax system is on a pay-as-you-file system under voluntary compliance where taxpayers learn for themselves how, what and when to pay taxes. Unfortunately, tax evaders look at it as PAY-AS-YOU-LIKE. Philippines tax system employs a check-and-balance mechanism over the voluntary compliance through the exercise of the power to conduct tax examination of tax returns within certain period (say, 3 years or 10 years), but with the large number of taxpayers, some tax evaders get lucky in
By: Tax and Accounting Center Philippines The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order No. 4-2013 dated 8 March 2013 (RMO No. 4-2013) and entitled “Audit of Tax Returns by Revenue District Offices” with the following objectives: To prescribe uniform criteria in the continuing audit tax returns by the Revenue District Offices (RDOs), and, To enhance taxpayer’s voluntary compliance by encouraging payment of correct amount of internal revenue taxes through the exercise of he enforcement function of the Bureau. Under RMO No. 4-2013, certain policies and guidelines are required to be observed in the continuing audit of tax returns by Revenue District Offices. ALL TAXPAYERS are considered as possible candidates for audit, while the following taxpayers are under PRIORITY for tax examination: Professionals and sole proprietorship’s Professionals (e.g. doctors, lawyers, accountants, engineers, architects, etc.) and sole proprietorships in the Philippines under PRIORITY examination are those whose: income tax
By: Tax and Accounting Center Philippines Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 21-2013 dated 28 February 2013 (RMC No. 21-2013) entitled “Amending Revenue Memorandum Circular No. 57-2011” regarding the completion of the supplemental information for 2012 individual income tax returns due for filing not later than 15 April 2013. Under the November 2011 version of BIR Form No. 1700 for individuals with pure compensation income, and BIR Form No. 1701 for individual taxpayers engaged in trade or business or practice of profession ins the Philippines, a SUPPLEMENTAL INFORMATION at the back of sch forms requires details of such other income items not subject to normal income tax of 5-32% such as but not limited to the following: Tax exempt income in the Philippines; Income subject to capital gains tax in the Philippines; and, Income subjected to final withholding tax in the Philippines; Hereunder are the details
By: Tax and Accounting Center Philippines According to the BIR, it has been a common practice for general professional partnerships (GPP or Firms (e.g. accounting firms in the Philippines and law firms in the Philippines) to require client – taxpayers the following: Deposit a sum of money to them to be used to cover necessary expenses and liquidate the same later, or Firms to pay in advance the necessary expenses in behalf of client and secure re-imbursement from clients as “out-of-pocket” expenses. In most cases however, official receipts and invoices for the necessary expenses incurred by the Firm in behalf of the client are issued under the name of the Firm. Upon seeking re-imbursement of the advances to clients or upon liquidation of the deposits of clients, clients would claim said expenses as deductible expense while at the same time being claimed by the Firms as their very own deductible
By: Tax and Accounting Center Philippines As we are all aware, employees are being subjected to withholding tax on compensation in the Philippines every payday. Withholding of payroll taxes in the Philippines is the liability of the employer (individual engaged in trade or business, of a juridical entity like corporation) because the employer is automatically appointed by tax rules as withholding agent for the withholding tax on compensation in the Philippines. The following are the Tax Code provisions imposing such obligations: Section 80(A) of the National Internal Revenue Code (Tax Code), as amended, provides that the employer shall be liable for the withholding and remittance of the correct amount of tax required to be deducted and withheld. Section 79(H) of the Tax Code, provides that on or before the end of the calendar year but prior to the payment of the compensation for the last payroll period, the employer shall
By: Tax and Accounting Center Philippines In the Philippines, tax examiners could conduct examination without necessarily and directly dealing with the records of the taxpayers. The tax examination could be made through the tax returns, reports, and submissions of other taxpayers whom the subject taxpayers had transacted with. This manner of tax examination in the Philippines seems to be a new area the tax authorities are resorting to lately. This normally covers allegations for deficiency income tax liabilities, value added tax or percentage tax liabilities. Revenue Memorandum Order No. 13-2012 dated 29 March 2012 (RMC 13-2012) has been issued to simplify guidelines, procedures and minimize processing time in handling Letter Notices (LNs) generated through the following third-party information (TPI) data matching programs: Reconciliation of Listing for Enforcement System – Summary List of Sales and Purchases (TRS – RELIEF) under RMO No. 30-2003; Bureau of Customs Data Program (TRS-BOC) under RMO 34-2004;
By: Tax and Accounting Center Philippines Under Section 34(F) of the Tax Code of the Philippines, there shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, wear and tear (including reasonable allowance for obsolescence) of property used in trade or business. To implement this provision, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 12-2012 dated 12 October 2012 (RR 12-2012) to define depreciation expenses relating to taxpayer’s purchase of Vehicles of all types (defined herein as passenger vehicles of all type, whether by land, water, or air) providing for limits on the deductibility thereof and all expenses related thereto, and the disallowance of input taxes for disallowed expenses. Under Section 3 of RR 12-2012, the following guidelines shall be observed in determining whether depreciation expense can be claimed or not on account of Vehicles capitalized by the taxpayer, or in claiming other expenses and
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