Tax Savings on Foundations

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By: Garry S. Pagaspas Foundation as an entity is not new to each of us. During calamities, donations and grants from and to foundations and charitable institutions are common. Big companies are now becoming more active in corporate social responsibilities and most of these are coursed through foundations and charitable institutions. In line with this, let us determine the tax side of this entity( or simply – How to tax foundations?) to have some clue on how this became popular now. As Section 1 of SEC Memorandum Circular No. 1, Series of 2006 puts it, and hereunder quoted: “A Foundations is a non-stock, non-profit corporation established for the purpose of extending grants endowments to support its goals or raining funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific, social welfare or other similar objectives.” Further Section 87 of the Corporation Code defines non-stock as follows, and hereunder we quote:

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Taxation of Joint Venture or Consortium for Construction

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Revenue Regulations No. 10-2012 dated June 1, 2012 (RR 10-12) entitled “Joint Venture or Consortium Formed For The Purpose of Undertaking Construction Projects and Mandatory Enrollment of Local Contractors in the Electronic Filing and Payment System (EFPS) was issued to define the tax exemptions of contractors for construction projects. This will be effective within 15 days after publication and all existing rules and regulations and other issuances or parts thereof which are inconsistent with the provisions of RR 10-12 are hereby modified, amended or revoked accordingly. Under Section 22 (B) of the Tax Code, as amended, a taxable corporation is defined as follows: “Corporation shall include partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), association, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal,

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5 Advantages of Corporation over Sole Proprietorship

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In business, the use of a proper business entity or structure could bring about more business success, and the wrong choice could prove to be a failure. In most of our seminars on basic business accounting and tax compliance or basic bookkeeping for entrepreneurs, the following question is almost always raised: “Which is better, a SOLE PROPRIETORSHIP or a CORPORATION?” There are a number of ways where we could evaluate the two and no fast rule could answer the question because advantage in one aspect could be coupled with a disadvantage in other aspects so the choice would depend on which aspect gives more weight. Nevertheless, we feel that using a corporate set-up could best be beneficial in the following ways: 1. Limited liability in a corporation. In an instance where corporate assets fell short to pay its obligations and eventually shuts down, stockholders cannot be made liable to the extent

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Tax on Non-redemption of Properties under Involuntary Sale

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Revenue Regulations No. 9-2012 dated June 1, 2012 (RR 9-2012) is entitled as “Implementing Sections 24(D)(1), 27(D)(5), 57, 106 and 196 of the National Internal Revenue Code of 1997 on Non-redemption of Properties Sold During Involuntary Sale.” RR 9-2012 is issued to take immediately in order to guide the buyers and sellers of properties under involuntary sales (e.g. mortgage foreclosure). In case of non-redemption of properties sold during involuntary sales, regardless of the type of proceedings and the personality of the mortgagees/selling persons or entities, hereunder are the rules: Subject property is CAPITAL ASSET: Capital Gains Tax (CGT) within thirty (30) days from the expiration of the applicable statutory redemption period; Documentary Stamp Tax (DST) within five (5) days after the close of the month after the lapse of the applicable statutory redemption period; Subject property is ORDINARY ASSET: Creditable Withholding Tax (CWT) return within ten (10) days after the

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Commonwealth Act No. 613: The Philippine Immigration Act of 1940

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Section 1. This Act shall be known as “The Philippine Immigration Act of 1940.” BUREAU OF IMMIGRATION  Sec. 2. Officials. – A Bureau of Immigration [now Commission on Immigration and Deportation] is established under a Commissioner of Immigration, who shall have two assistants, a First Deputy Commissioner of Immigration [now Associate Commissioner of Immigration] and a Second Deputy Commissioner of Immigration [ now Associate Commissioner of Immigration]. For administrative purposes, the Bureau of Immigration [now Commission on Immigration and Deportation] shall be under the supervision and control of the Department of Labor [now Department of Justice] or of any other executive department which the President may subsequently determine. COMMISSIONER OF IMMIGRATION Sec. 3.  Appointment; term of office; compensation.- The Commissioner of Immigration shall be appointed by the President, with the consent of the Commission on Appointments of the National Assembly, and shall hold office at the pleasure of the President. He

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REPUBLIC ACT 562: ALIEN REGISTRATION ACT OF 1950

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Section 1. Aliens residing in the Philippines shall, within thirty days after the approval of this Act, apply for registration, in the case of those residing in the city of Manila, at Bureau of Immigration, and in the case of those residing in other localities, at the offices of the city or municipal treasurers, or at any other office designated by the President. The parent or legal guardian of an alien who is less than fourteen years of age, shall have the duty of registering such alien: Provided, That whenever any such alien attains his fourteenth birthday in the Philippines he shall, within fifteen days thereafter, apply in person for registration. No accredited official of a foreign government recognized by the Republic of the Philippines, or member of his official staff and family, shall be required to be registered. Sec. 2. The Commissioner of Immigration, with the approval of the

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TACI conducts In-house Seminar at ANC Halili Group

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 Tax and Accounting Center, Inc. (TACI) stands firm in its advocacy to educate taxpayers on tax compliance and tax management to ensure compliance, avoid unnecessary penalties, and accordingly, bring about tax savings. On June 6, 2012 TACI was requested by ANC Halili Group of Companies in Brgy. San Roque, Quezon City to deliver a one-day in-house Comprehensive Tax Seminar at ANC Halili’s conference room.  Seminar had been facilitated by our Resource Speaker, Mr. Garry S. Pagaspas, CPA, who shared his wisdom and expertise on the following topics developed from being a member of the academe and as active tax practitioner, to wit: Tax savings and minimization Corporate income taxation Withholding tax compliance Value-added taxation Documentary stamp tax compliance BIR tax examination Tax Management tips and insights The seminar was participated by eleven (11) company representatives from accounting,  finance, and executive department. Participants listen attentively as Garry rolls the presentation and lively

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More Independent CPAs in tax evasion charges

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As a profession clothed with a level of ethical standards and a degree of professionalism, independent certified public accountants (CPA) are required and as such expected by the government and the public to exert much effort in the upkeep of such professional obligation. Independent CPAs are at a risk if it runs remiss of its duty and its professional license is at stake. Worst, it may end up in prison, and this is no joke! With the present aggressive tax compliance drives and collection programs (e.g. Run After Tax Evaders – RATE, etc.) geared towards strict implementation of the provisions of the National Internal Revenue Code, as amended (Tax Code), and attainment of the Bureau of Internal Revenue (BIR) collection targets, the indispensable professional services and cooperation of independent CPAs are of notable contribution. The BIR recognizes that the close partnership with the independent CPAs or those who conducts the

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VAT TCC Five-year Monetization Program

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Revenue Memorandum Circular No. 21-2012 dated May 3, 2012 circularizes the full text of Executive order No. 68 dated March 27, 2012 (E.O. 68 – 2012) entitled “Monetization Program of Outstanding Value-added tax (VAT) tax Credits Certificates (TCs)” For easy reference, hereunder are the summary of rules laid down in EO 68 – 2012: Five-year (2012-2016) VAT TCC monetization program is a mechanism to give the cash equivalent of outstanding VAT TCC for the government to promote conducive business environment and raise business credibility both locally and abroad; VAT TCCs covered are those TCCs secured under Section 112 (A) of republic Act No. 8424 (Tax reform Act), as amended, and drawback TCCs under Section 106 (e) of the Tariff and Customs Code of the Philippines (TCCP), as amended. Qualified VAT TCC holders shall have the following monetization options: Collect from a trustee bank a discounted value of their TCCs. Government

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Abatement of Penalties and Interest, When applicable?

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Revenue Regulations No. 4-2012 dated March 28, 2012 (RR 4-12)  and entitled “Amending Revenue Regulations No. 13-2001, Regarding Abatement or Cancellation of Internal Revenue Tax Liabilities” now provides an updated list of instances of abatement on the ground that the imposition thereof is unjust or excessive. Under RR 4-12, Section 2.6.1 of Revenue Regulations No. 13-2001 providing for abatement or cancellation of penalties and/or interest on the ground of one day late filing and remittance due to failure to beat the bank cut-off time  has been deleted. This in effect is saying that a one-day late payment because the taxpayer failed to catch up with the  bank’s cut-off time is not subject for cancellation of 25% surcharge, 20% interest and compromise penalties ranging from P200 to P25,000 depending on the amount of basic tax due. Section 2 of Revenue Regulations No. 13-2001 shall now read as follows: Section 2. Instances

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