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No. 11976 or Ease of Paying Taxes Act: Section 34(K) of the Tax Code, as amended, as discussed below has already been repealed.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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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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