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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Classification of PEZA Registered Enterprises in the Philippines

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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

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Classifications of Economic Zones in the Philippines

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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

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Tax Incentives under RA 10165 or Philippine Foster Care Act of 2012

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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

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BIR Tax Programs for Tax Evaders in the Philippines

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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

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Tax Audit by BIR District Offices in the Philippines

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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

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Supplementary Information on Individual Tax Returns in Philippines

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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

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Tax on Deposits and Advances to Firms in Philippines

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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

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