Boi Bir Ruling

TAX UPDATES 2017
Atty. Maria Theresa C. San Pablo-Llamado

Tax Partner, CAZLA Law
PICPA Seminar
15 February 2017
BIR ISSUANCES [2017]
REVENUE REGULATIONS
RR 1-2016 as amended by RR 8-2016: - Amends RR 3-2005
on requirement of timely payment of taxes as a
precondition for government contracts.
 Adds a requirement that government contractors must

file through EFPS.
 Before the amendment, Tax Clearance is issued only to
an applicant who has no delinquent account (i.e., no
pending case for disputed assessment).
 Tax Clearance, with a validity period of one (1) year from the date of
issuance shall be issued to any applicant who has satisfied the following
criteria:
1. No unpaid registration fee;
2. No open valid “stop-filer” cases;
3. A regular user of the BIR’s Electronic Filing and Payment System
(eFPS) for at least two (2) consecutive months prior to the
application for Tax Clearance;
The required two (2) consecutive months usage of eFPS shall only apply to new applicants.
For those which were previously issued Tax Clearance for bidding purposes, the requested
Tax Clearance shall only be issued if they are found to be regular eFPS users from the time
of enrollment up to the time of application.
4. Not tagged as “Cannot Be Located” taxpayer;
5. No pending criminal information has been filed in any court of
competent jurisdiction arising from any tax or tax related cases; and
6. No delinquent account.
 Delinquent account shall refer to the outstanding tax

liabilities arising from either self-assessed taxes (i.e.,
unpaid second installment of income tax due per income
tax return filed, unredeemed dishonored check, tax
payments using expired Tax Debit Memo and any unpaid
tax due as declared in the tax return filed) or a result of
an audit or third party information thru the issuance of an
assessment notice which was not validly protested within
the prescribed period.
 If a tax delinquency arises within one year of issuance of

tax clearance, the taxpayer shall be notified and may
settle the liability within 30 days, otherwise the tax
clearance will cease to be valid.
 Verification of tax clearance

 A Tax Clearance obtained must be verified for authenticity
through the BIR website (www.bir.gov.ph) , by accessing Tax
Clearance under “announcement”, then choose the applicable
period for issuance.
 Those Tax Clearances which have been revoked for valid
reasons are also posted in the BIR website.
RR 8-2016 Amends RR 1-2016, adds additional
requirements on Tax Clearance for government
contractors
 Tax assessments timely protested administratively and/or
elevated to CTA or to higher court within the prescribed
period, and where the collection of the assessments are
not yet considered final, executory and demandable, shall
not be considered delinquent account.
 Timeliness in the filing of the administrative protest
and/or the elevation of the case to the competent court
must be certified by the handling office and this
certification shall form part of the documentary
requirements in the filing of an application for Tax
Clearance.
[Removed under RR 8-2016]
RR 2-2016: ATRIG issuance for imported
vehicles
 Reiterates the strict requirement of ATRIG (authority to
release imported goods) and gives the presumption
that without ATRIG, taxes on imported vehicles
have not been paid properly.
 The vehicle may be detained by any revenue officer, and if
warranted, subsequently forfeited. The person/s
responsible for the same shall be held liable for unlawful
possession or removal without payment of tax pursuant
to Section 263.
 All imported automobiles found to have been released
from customs custody after March 31, 2016 without the
required ATRIG shall be subject to seizure.
RR 3-2016: Prescribes policies in adoption
of credit/debit/prepaid card payments
 General Policies
1. Payment of taxes by credit/debit/prepaid card shall be
voluntary or optional on the part of the taxpayer. As such,
the taxpayer shall bear the convenience fee and other fees
being charged by banks and/or credit card companies for the
use of this payment facility; and, that such fees, including the
"Merchant Discount Rate" (MDR), shall, in no case, be
deducted from any amount of tax due to the BIR.
2. In the payment of taxes, thru credit/debit/prepaid card, the
taxpayer has the option to choose from the available online
payment facilities provided by the EPSP for the processing of
its/his/her tax payments.
3. The authority to accept tax payments, thru
credit/debit/prepaid cards, and act as Acquirers shall be
limited to AABs only.
RR 3-2016: Prescribes policies in adoption
of credit/debit/prepaid card payments
4. The BIR shall neither have any responsibility nor liability on
any issues concerning the taxpayer-cardholder and the card
issuer, including, but not limited to, "charge back", erroneous
posting or charging, non-payment of the taxpayer-cardholder
to the issuer, and other issues.
5. In case the taxpayer-cardholder made erroneous tax
payment transactions through this prescribed payment
mode, the same shall not give rise to any automatic "charge
back" to the taxpayer-cardholder's account. In meritorious
cases, the taxpayer shall apply for refund/tax credit with the
BIR in accordance with existing revenue issuances.
6. Only the Philippine-issued credit/debit/prepaid cards under
the name of the taxpayer-cardholder shall be used in
payment of its/his/her tax liabilities.
RR 2-2017 amending RR 3-2016: Payment
deemed made on date and time in confirmation
receipt
 When Payment is Deemed Made. — The payment of taxes through
credit/debit/prepaid card, shall be deemed made on the date
and time appearing in the system-generated payment
confirmation receipt issued to the taxpayer-cardholder by the
AAB-Acquirer. provided that payment is actually received by the
BIR pursuant to these Regulations.
 However, in case of late remittance or non-remittance of taxes to
the BIR, despite the timely issuance of a valid confirmation receipt
by the AAB-Acquirer to the taxpayer-cardholder, the liability to
pay the tax rests upon the AAB-Acquirer considering that
from the time of issuance of valid confirmation receipt to the
taxpayer-cardholder, the AAB-Acquirer becomes the trustee of the
government with the obligation to remit the payment on time to the
BIR.
RR 5-2016: Additional criteria for accreditation of
printers of ORs, OSIs, etc., amending RR 5-2012
1. Added criteria that it has no record of any

criminal complaint with the BIR for tax
offenses
2. Printer has not been indicated as cannot be
located taxpayer in the BIR system
3. Not tagged as inactive taxpayer
4. Accreditation shall have a validity of five years
from the date of issuance of certificate of
accreditation
RR 7-2016: Tax incentives available for Tourism Enterprises
duly registered with the Tourism Infra and Enterprise Zone
Authority (TIEZA) under RA 9593
 Fiscal incentives for RTEs within TEZs.
 Income Tax Holiday
 Grant of six years Income Tax Holiday to Greenfield and Brownfield
TEZs
 Greenfield: Six years, extendible once for another six
 Brownfield: Non-extendible six years if there is a substantial expansion,
meaning substantial CAPEX actually spent to upgrade physical assets /
upgrade rooms and classification (ex: 3-star to 5-star)
 Alternatively, in lieu of ITH, can be taxed at 5% of Gross Income (GI),
remitted 1/3 each to the LGU, national government and TIEZA
 GI – similar definition as GI for PEZA enterprises in RR 11-05
 Allowable deductions – direct costs with similar enumeration to RR
11-05 for PEZA. But see CTA East Asia Utilities v. CIR (2014), not
exclusive
Fiscal incentives for RTEs within TEZs.
 Net Loss Carry Over – allowed as a deduction for 6
consecutive years after incurring the loss; covering
NOL incurred after start of business operations and
TIEZA registration. Registered and non-registered
activities to be accounted for separately for NOLCO
deduction computation.
 Exemption from taxes on importation of capital
investment and equipment, transportation equipment
and spare parts, subject to certain conditions.
 Note: Requires prior TIEZA approval for importation
and subsequent disposition. Subsequent disposition, if
made within 5 years, to be granted only:
 To another RTE enjoying similar exemption
 For reasons of proven technical obsolescence
 For replacement to improve and/or expand RTE operations
 In cases of withdrawal or cessation from operations
 Goods and Service Incentives
 Exemption from VAT and excise tax on importation of
goods necessary to carry out registered activities,
provided it is not for the purpose of operating a
wholesale or retail establishment in competition with
Duty Free Philippines
 Tax credit on national internal revenue taxes paid on all
locally source goods and services used by the RTE for
services pursuant to its registered activity which are
actually rendered within the TEZ.
 Social Incentive: Entitlement to a tax deduction of up to
50% of amounts spent for the following activities
performed in surrounding areas with prior TIEZA
approval:
 Environmental activities
 Cultural heritage preservation activities
 Sustainable livelihood programs for local communities in
the surrounding areas of the enterprise or the TEZ
 Other similar activities as may be determined by the
TIEZA Board.
 Activities should have prior approval of TIEZA and do not
comprise and are not ancillary to the registered activities of
the RTE
Fiscal incentives for RTEs not within TEZs.
 Income Tax Holiday (same)
 Exemption from taxes on importation of capital
investment and equipment
 Net loss carry over.
RR 7-2016: Tax incentives available for Tourism Enterprises
duly registered with the Tourism Infra and Enterprise Zone
Authority (TIEZA) under RA 9593
 Other Provisions
 Required to obtain from TIEZA a Certificate of Entitlement
(CE) of incentives on an annual basis.
 TEZs are not considered separate customs territories.
RR 10-2016: Amends RR 17-2011, Implementing
the Early Withdrawal Penalty of RA 9505 or the
PERA Act
 Modifies early withdrawal penalties which had included all
income taxes in addition to the 5% tax credit availed by
the Contributor, to a single flat rate of 20% based on the
total income earned from time of opening to withdrawal
RR 1-2017: Prescribing Regulations for VAT
Refund under Sec 112 prior to RMC 54-2014
 RMC 54-2014: Provides that the Commissioner shall have
120 days from date of submission of complete documents
to grant or deny claim for refund. Inaction shall be
deemed a denial.
 RMC 54-2014 was being given retroactive effect because

pending claims were deemed denied upon the expiration
of the 120-day period from the date the claims were filed
even though the taxpayer-claimants are still in the process
of submitting the complete documents which was allowed
in the previous RMC [RMC 49-2003].
 Administrative claim must be made within 2 years
after the close of the taxable quarter when sales
were made
 Documents must be completed within the 2-year
period
 Pending administrative claims prior to the effectivity
of RMC 54-2014 shall be processed by the concerned
offices based on available documents submitted
within the 2-year period.
Claims not covered:
1. Those claims filed beyond the 2-year prescriptive
period
2. Those denied in writing by approving authority
3. Those approved/granted fully or partially by the
approving authority
4. Those already appealed to and pending with the
CTA unless there is proof of withdrawal of the case
filed with the CTA.
REVENUE MEMORANDUM
ORDERS
Compromise Settlement and Abatement
 RMO 04-2016
 All applications for compromise settlement,
abatement or cancellation of internal revenue
tax liabilities that have been reviewed by the
Regional Evaluation Board, Large Taxpayer
Service (LTS) Sub-Technical Working Committee
or the LTS Evaluation Board, resulting in a
recommendation for denial shall be
considered FINAL
 The outstanding tax liabilities and/or penalties
shall be immediately collected.
Compromise Settlement and Abatement
 RMO 04-2016
 Previously, there was a chance that the
Commissioner could review or evaluate the
substantive aspects of the case even if the
recommendation was a denial.
 The LTS Sub-TWC/EB and all regional
TWGs/REBs shall evaluate and release their
respective board’s decision within fifteen (15)
calendar days from receipt of any application for
compromise settlement or abatement.
Decentralization of receiving and processing
certifications of internal revenue tax payments
 RMO 07-2016
 From the Revenue Accounting Division (RAD)
– reassigned as follows:
a) RAD – for all TPs for tax payments 1999 and
prior years (for payments thru AABs) and
1989 prior year (for payments thru RCOs)
b) LTS – for large TPs for tax payments 2000
and thereafter
c) RDO – Collection – for TPs under RDO
jurisdiction for tax payments not falling under
a or b.
Waiver of Statute of Limitations
 RMO 14-2016
The waiver may not necessarily be in the form prescribed
by RMO 20-90 or RDAO 05-01 provided that the following
conditions are complied with:
1. Must be executed before the expiration of the period to assess
or to collect taxes. The date of execution shall be specifically
indicated in the waiver.
2. The waiver shall be signed by the taxpayer himself or his duly
authorized representative. In the case of a corporation, the
waiver must be signed by any of its responsible officials;
3. The expiry date of the period agreed upon to assess/collect the
tax after the regular three-year period of prescription should be
indicated.
 RMO 14-2016
 Except for waiver of collection of taxes which shall
indicate the particular taxes assessed, the waiver
need not specify the particular taxes to be assessed
nor the amount thereof, and it may simply state "all
internal revenue taxes“
 The taxpayer is charged with the burden of
ensuring that the waivers of statute of limitation are
validly executed by its authorized representative.
 RMO 14-2016
 The waiver may be notarized. However, it is sufficient that
the waiver is in writing.
 lt shall be the duty of the taxpayer to submit its duly
executed waiver to the BIR.
 The waiver can be accepted by the Commissioner’s
authorized representative as prescribed in existing
regulations, the revenue district officer, or the group
supervisor designated in the Letter of Authority for the
audit.
 The two material dates that need to be present on the
waiver are the date of execution of the waiver by the
taxpayer or its authorized representative; and the expiry
date of the period the taxpayer waives the statute of
limitations.
Old requisites Under RMO 14-2016
Form As prescribed by RDAO No. May or may not be in the form
05-01 prescribed under RMO 20-90 or
RDAO 05-01
Notarized Notarization optional
Person authorized Signed by taxpayer or his duly-authorized representative. For the
to sign for taxpayer corporations, it must be signed by any of its responsible officials
Note: Authority of representative cannot be contested to invalidate the
waiver under new rules.
BIR Officers The CIR or authorized The CIR or officials previously
authorized to revenue official indicating date designated in existing issuances
accept of acceptance. or concerned RDO or group of
supervisors designated in the
LOA/MOA.
Time of Execution Date of execution and acceptance must be before expiration of
by the taxpayer the prescriptive period or lapse of the period previously agreed
and Acceptance by upon.
the BIR
Material dates a) Execution by the a) Execution

taxpayer; b) Expiry date of the period the
b) Notarization; taxpayer waives the statute
c) Acceptance by BIR of limitations
d) Expiry date of the period
the taxpayer waives the
statute of limitations
Number of copies The waiver must be executed Number of copies not indicated.
and receipt of a in three (3) copies, the
copy by the original copy to be attached The taxpayer shall have the duty
Taxpayer to the docket of the case, the to retain a copy of the accepted
second copy for the taxpayer waiver.
and the third copy for the
Office accepting the waiver.
The fact of receipt by the

taxpayer of his/her file copy
shall be indicated in the
original copy.
Tax-Free Exchange under Sec. 40(C)(2) in
relation to Sec. 40(C)(6)(c)
 RMO 17-2016
 Specifically, this deals with the number of
shares to be issued by the transferee
corporation in exchange for the property
received from the transferor.
 The value of shares to be issued by reason of
exchange should be equal to the fair market
value of the property transferred.
 Does not allow recognition of APIC.
Procedure for eCAR
 RMO 22-2016
 All manually-issued CARs that are outstanding and
not yet presented to the Registry of Deeds and
other manually-issued expired CARs that are due
for revalidation are no longer valid and shall be
cancelled and replaced with an eCAR.
 eCARs shall have a validity of one (1) year
reckoned from the date of issuance. eCARs may be
re-issued by the RDO in case of expiration.
 Under RMO 55-2016, validity of eCARs is 3
years from date of issuance.
Procedure for eCAR
 RMO 22-2016
 Titled real properties:
 One eCAR per property covered by
OCT/TCT/CCT.
 Untitled real properties:
 one eCAR shall be issued for each tax
declaration, including the improvements thereon.
 Personal properties:
 One separate (single) eCAR shall be issued for all
personal properties per transfer document
Procedure for Handling Disputed
Assessments
 RMO 26-2016
 Protest against PAN is optional
 FLD / FAN will issue 15 days from date of
receipt of taxpayer of PAN regardless
whether the same was protested or not.
 Within 30 days from receipt of FAN, TP
either –
a) Pay assessment
b) File Protest
Assessments
 RMO 26-2016
- If TP opts to File Protest, protest WITHIN 30 DAYS
FROM RECEIPT OF FAN in the form of either –
a) Request for reconsideration – no additional
evidence
o Unless stated otherwise, all protests deemed as requests for
reconsideration.
b) Request for reinvestigation – with additional
evidence
o TP given 60 days to submit evidence from filing of
protest.
o Only available for issued FAN/FLD. Not available if
FDDA is issued.
Assessments
 RMO 26-2016
- If protest not acted upon by CIR’s authorized
representative –
a) If protest is by way of request for
reconsideration
o Appeal to CTA within 30 days from lapse of 180
day period from filing of protest; or
o File request for recon with the CIR, appeal to CTA
within 30 days from lapse of 180 days (in case of
inaction), or from receipt of the CIR’s decision.
Assessments
 RMO 26-2016
- If protest not acted upon by CIR’s authorized
representative –
b) If protest by way of request for reinvestigation
o Appeal to CTA within 30 days from lapse of the
180 day period from end of 60 days to submit
documents.
o Or appeal by request for RECON to CIR
Assessments
 RMO 26-2016
- If FDDA is issued by CIR’s authorized
representative, TP within 30 days from receipt
either –
a) File request for reconsideration to CIR
o If FDDA is issued by CIR, you may file a request for
reconsideration but it will NOT TOLL the running
of the 30 day period to appeal to the CTA.
b) Appeal to the CTA
Procedure for Claiming Tax Treaty Benefits for
Dividends, Interest and Royalty Income of
Nonresident Income Earners
 RMO 27-2016
 In lieu of the mandatory tax relief applications (TTRA),
preferential treaty rates for dividends, interests and
royalties are granted outright by withholding final taxes at
applicable treaty rates.
 Withholding agents shall file the appropriate BIR Form
1601-F and 1604-F in accordance with existing
regulations. Incomplete information provided on the form
shall lead to the penalties as provided under Section 8 of
this Order.
Procedure for Claiming Tax Treaty Benefits for
Dividends, Interest and Royalty Income of
Nonresident Income Earners
 RMO 27-2016
 Supporting documents to avail of the reduced rate of 15%
on intercorporate dividends received by Non-Resident
Foreign Corporation:
 Application letter;
 Authenticated proof of residency;
 A consularized copy of the law of the country of the
NRFC expressly stating that the country in which the
NRFC is domiciled allows a credit against the tax due
from the NRFC taxes deemed to have been paid in a
foreign country (Philippines) equivalent to 15%;
 Certification from the Corporate Secretary of the
domestic corporation stating the important details of the
dividend declaration; and
 Special Power of Attorney, if applicable.
PERA Law
 RMO 42-2016
 Applications for Accreditation of PERA
Administrator need to have a "Qualification
Certificate" issued by the regulatory concerned -
BSP, IC or SEC.
 The accreditation of a PERA Administrator shall be
valid from the date of issuance of the Certificate of
Accreditation until it is suspended or revoked
 Tax credits arising from PERA contributions can be
used as payment for delinquent accounts but in no
case will it be refundable or convertible into cash
or transferrable to any other party
Importer's Clearance Certificate (ICC) and
Broker's Clearance Certificate (BCC)
 RMO 56-2016
o Amends policies, guidelines and
procedure in applying for ICC and
BCCs.
Issue-based Audit under VAT audit program
 RMO 59-2016
 Taxpayers with VAT returns reflecting erroneous
input tax carry-over are mandatory cases for
issue-based audit.
 The priority cases for issue-based audit are the
following:
 Taxpayers whose VAT compliance is below the
established industry benchmarks;
 Taxpayers with zero-rated and/or exempt sales due
to availment of tax incentives or exemptions;
Issue-based audit under VAT audit program
 RMO 59-2016
following:
 Taxpayers engaged in business where 80%, more or less,
of their transactions are on a cash basis and whose
purchases of goods and services do not generate
substantial amount of input tax, such as restaurants,
remittance/payment centers, etc.;
 Taxpayers with VATable transactions which were
subjected to expanded Withholding Tax but with no VAT
remittance;
 RMO 59-2016
following:
 Taxpayers who failed to remit/declare VAT due from
purchase of services from nonresident aliens
 Taxpayers who fail to declare gross sales/receipts
subjected to VAT withholding on purchases of
goods/services with waiver of privilege to claim input tax
credit [creditable];
 RMO 59-2016
following:
 Taxpayers whose gross sales/receipts per Income Tax
returns are greater than gross sales/receipts declared per
VAT returns; and
 Taxpayers filing Percentage Tax returns whose gross
sales/receipts exceed the VAT threshold
Audit Policies
 RMO 64-2016
 Amends the requirement of securing approval from
CIR before TP is audited for the 3rd consecutive
year.
 If the taxpayer has been audited for the last
two years and has been selected for audit on
the current or 3rd year, the RDO/LTS shall
encode the requested audit, and it shall be
approved by the Regional Director/Assistant
Commissioner who heads the investigating
office.
Audit Policies
 RMO 64-2016
 The deficiency assessment on said cases shall only be
imposed with two 5% surcharge unless the under-
declaration of income or overstatement of
expenses/deductions reaches 30% or more, which shall be
imposed with 50% surcharge.
Separation Benefits for Causes Beyond
Control of Employees
 RMO 66-2016
 Devolves to RDO or applicable LT office
where ER is registered the processing of
requests for tax exemption of separation
benefits received by EE as consequence of
separation due to causes beyond its control,
such as, but not limited to,
RETRENCHMENT, REDUNDANCY,
INSTALLATION OF LABOR-SAVING
DEVICES and CLOSURE OF BUSINESS.
Separation Benefits
 RMO 66-2016
 Requirements:
 Letter request from the official/employee (or by his heirs)
or the employer for the exemption of separation benefits
from income tax and withholding tax;
 If Death:
 Certified true copy of Death Certificate
 If Sickness
 Sworn affidavits to be executed by the employer's physician or the
employee's attending physician and the head of office/entity or his
representative
 Clinical record of the official/employee
 Laboratory examination confirming the illness suffered
REVENUE MEMORANDUM
CIRCULARS
Renegotiated Philippines-Germany Tax
Treaty
 RMC 15-2016
 The renegotiated Philippines-Germany Tax
Treaty entered into force on 18 December
2015 and shall have effect in respect of
taxes covered by said treaty, including taxes
withheld at source, for any taxable period
beginning on or the first day of January
2016.
Treaty
Expanded definition of resident - Article 4

 A partnership is deemed to be a resident of
Germany if the place of effective management is
situated in Germany.
Treaty
PE definition – Article 5
 The Revised Treaty includes a PE provision in which
the furnishing of services, including consultancy
services, by an enterprise through employees or
other personnel engaged by the enterprise for such
purpose, would create a PE if the service activities
continue for the same or a connected project within
a Contracting State for period or periods aggregating
more than 6 months within any 12-month period.
Treaty
Dividends, Interest and Royalties – Articles 10, 11 and 12
 Adds a new 5% preferential tax rate on dividends if
the beneficial owner is a company (other than a
partnership) which holds directly at least 70% of the
capital of the company paying the dividends.
 Generally applies a 10% withholding tax on interest.
Provides a fixed 10% withholding tax on royalties.
 Allows both countries to impose a 10% tax on
branch profit remittances.
Treaty
Capital gains – Article 13
 Contracting State may tax gains from the disposition of
shares only if the assets of the company consist, directly
or indirectly, principally of immovable property situated in
that State.
Treaty
Elimination of double taxation – Article 24
 German Tax payable on income will be allowed as tax credit
against Phil. Tax payable.
 Germany generally applies the exemption method on income
derived in the Phil.
- Dividends paid by a PH resident company to German resident company
holding directly at least 10% of the PH company.
Board of Accountancy Resolution No. 3
applicability
 RMC 36-2016
 BOA Resolution No. 3 entitled “Requiring
the submission of Certificate by the
Responsible Certified Public Accountants on
the Compilation Services for the Preparation
of Financial Statements and Notes Thereto”
is not applicable for ITRs covering the
calendar year 2015, but becomes effective
only for FS to be submitted for the FY ending
30 June 2016 and subsequent periods.
Policies for Accounting and Recording
Transactions involving "netting" or "offsetting”
 RMC 61-2016
 The practice of offsetting due to/due
from and/or payable/receivable
transactions of taxpayers and
consequently the accounting and
recording of the same and its related
transactions in the books of the parties
is strictly prohibited for taxation
purposes.
 RMC 61-2016
 At all times, the accrued receivables or
payables arising from sale or lease of
goods or properties or the
performance of service shall be
recognized at gross for Income and
Value-Added Tax or Percentage Tax
purposes.
 RMC 61-2016
 Income payments subject to Creditable or
FWT shall be recorded at gross, regardless
of whether the transactions are actually
offset or the same provide for net
settlement of cash flows.
 Any amount offset against the income
payments by the payor not subjected to
Creditable or FWT shall not be allowed as
deductible expense of the payor.
Passed-on Gross Receipts Tax
 RMC 62-2016
 All banks, non-bank financial intermediaries
performing quasi-banking functions, financing
companies and other financial intermediaries
not performing quasi-banking functions doing
business in the Philippines are directly liable
for GRT.
 RMC 62-2016
 GRT passed-on to customers / clients /
borrowers should form part of the tax base
upon which the GRT is computed.
 The "passed-on" GRT shall be considered as
receipt of gross income specified under
Section 32(A) of the Tax Code.
 RMC 62-2016
 The “passed-on” GRT is considered as other
fees and charges.
 Banks and non-bank financial intermediaries
can claim the GRT paid as a deductible
expense, for income tax purposes, subject to
the actual remittance of the GRT.
Exemption on Certification
 RMC 84-2016
 Exempts all taxpayers applying for issuance of
tax credit/refund based on Writ of
Execution issued by the Court of Tax
Appeals and Supreme Court from the
requirement of Certifications on Outstanding
Tax Liabilities/Delinquency Verification Slips.
Requirement of TIN for Certificate of Tax
Exemption (cooperatives)
 RMC 102-2016
 RDOs may process and evaluate the certificate of
Tax Exemption of cooperatives that have not yet
submitted the TIN of its members
 In lieu thereof, a certification under oath of the
list of members and their capital contribution
must be submitted
 However, cooperatives are still required to
complete and submit to the concerned RDO
the TINs of its members within six months
from the issuance of the CTE.
One Time Transactions involving real
property
 RMC 105-2016
 NO LONGER REQUIRED: Certified true
copies of the original CAR pertaining to
transfer of property prior to issuance of
OCT/TCT or CCT which is subject of the
current sale/transfer.
BIR RULINGS
Separation benefits
 BIR Ruling No. 231-16 dated June 1, 2016
 Separation benefits received by displaced teaching and non-teaching
personnel of HEIs brought about by the implementation of the K to
12 program are not subjected to income tax & withholding tax.
 Facts:
 Teaching and non-teaching personnel of higher educational
institutions (HEIs) were displaced brought about by the
implementation of the K to 12 Program.
 Department of Labor and Employment (DOLE) is requesting
exemption from income tax, and consequently from
withholding tax, on the early retirement benefits/separation
benefits to be received by the affected employees.
Separation benefits
 Ruling:
 The retrenchment/separation from employment of
the personnel by reason of the implementation of
the K to 12 Program falls within the meaning of the
phrase "for any cause beyond the control of the
said official or employee” considering that the
implementation of the said Program was neither
asked for nor initiated by the employees.
 Retrenchment/separation benefits shall not be
subject to income tax, and consequently to the
withholding tax.
Socialized Housing Projects
Sale by landowner to NHA of real properties to be utilized for
low-cost and socialized housing are exempt from the VAT and
CGT. No DST is also due since NHA is exempt from payment of
DST in connection with socialized housing projects pursuant to
RMC No. 42-01.
 Facts:
 A construction company is engaged by NHA to
undertake construction of 1,000 Housing Units
with its necessary construction components for its
Yolanda Housing Project.
 Ruling:
 Urban Development and Housing Act of 1992
(“RA 7279”) provides for the incentives for private
sector participating in socialized housing, such as,
exemption from the payment of project-related
income taxes, CGT and VAT. Thus, the landowner
who sells their properties for use in a socialized
housing project is exempt from the payment of the
capital gains tax.
 Ruling:
 The income directly realized by the construction
company from the land development and housing
construction shall be exempt from project-related
income taxes and VAT.
 However, the purchases of goods/articles by the
project contractor shall be subject to VAT, even if
the said purchases are to be used for the socialized
housing project, since VAT is an indirect tax which
can be passed on by the seller of the
goods/services.
 Ruling:
 NHA is exempted from the payment of DST in
connection with socialized housing projects. (RMC
No. 42-01 dated October 5, 2001)
 The exemption from documentary stamp tax of
NHA in connection with any of its socialized
housing project extends to the other party (either
seller or buyer) that deals or transacts with the
NHA.
 Consequently, since NHA is a party to the sale, no
documentary stamp tax shall be due on such sale.
 BIR Ruling No. 234-16 dated June 3, 2016 (similar
ruling as BIR Ruling No. 232-16)
The owner of the raw land is exempt from the payment of capital
gains tax or the withholding tax on the sale of a parcel of land which
shall be utilized in a socialized housing project. No DST is also due
since NHA is a party to the sale.
Facts:
 NHA acquired a parcel of land to be developed into a residential
project under the Community Initiative Approach Program
(CIAP) of the NHA. On various dates, Deeds of Absolute of Sale
(DOAS) were executed by and between the co-owners and the
NHA whereby the former sold to the latter the above described
property to be utilized by the NHA for its socialized housing
project.
 Ruling:
 The owner of the raw land is exempt from the payment
of capital gains tax or the withholding tax under
Revenue Regulations No. 2-98, as amended, on the sale
of a parcel of land which shall be utilized in a socialized
housing project. (BIR Ruling No. 066-2011 dated March
9, 2011)
 Thus, the sale by the landowners to LHA of the area on
which the 365 socialized housing units shall be
constructed is exempt from the payment of CGT or
CWT.
 No DST is also due since NHA is a party to the sale.
 Ruling:
 Under Section 20 (d) (3) of RA 7279, the sale of a socialized
housing as defined therein shall also be exempt from the
payment of value-added tax (VAT).
 Thus, the sale by the developer to NHA of the 365
developed lots or parcels of land shall be exempt from VAT.
 However, its purchases of goods/articles shall be subject to
VAT, even if the said purchases are to be used for the
socialized housing project, since VAT is an indirect tax which
can be passed on by the seller of the goods/services.
The landowner who sold its property under CMP for use in a
socialized housing project are exempt from the payment of
capital gains tax. DST still payable.
 Facts:
 The landowner transferred and conveyed 17,770 sq.m. portion
of the subject properties to a homeowners association.
Pursuant to the certification issued by Social Housing
Finance Corporation (SHFC), 17,770 sq.m. out of 19,704
sq.m. covered actually comprises a Community Mortgage
Program (CMP) Project and shall be proportionately
distributed to the association's qualified member-beneficiaries.
 Ruling:
 Pursuant to Section 32 of RA No. 7279, the landowner who
sold its property under CMP for use in a socialized housing
project are exempt from the payment of capital gains tax.
 However, the documentary stamp tax is not one of the taxes
covered by the tax exemption clause in Sec. 32 of RA 7279.
Accordingly, the landowners are liable to pay the documentary
stamp tax on the document conveying the afore-stated
property imposed under Section 196 of the Tax Code of 1997,
based on the consideration contracted to be paid for such
realties or their fair market values determined in accordance
with Section 6 (E) of the said Code, whichever is higher.
Income Tax Holiday of BOI-registered
enterprises
 BIR Ruling No. 347-16 dated August 11, 2016
ITH entitlement for BOI registered projects shall be vested upon
compliance with the provisions of the specific terms and conditions of
the corporation’s BOI registration
 Facts:
 A company is registered with the Board of Investments
(BOI) as a New Developer of Low-Cost Mass Housing
Project on a Non-Pioneer status. It has been granted Income
Tax Holiday (ITH) by the BOI for a period of four (4) years
from date of BOI certification or actual start of commercial
operations/selling, whichever is earlier but in no case earlier
than the date of registration.
 Under the specific terms and conditions of its BOI
registration, it shall construct and sell 415 units of low-cost
mass housing for its housing project in Laguna.
enterprises
 Ruling:
 Income payments received by a corporation for a BOI
registered project is exempt from creditable withholding tax
(CWT) during the period under which it is granted ITH.
 The above exemption from CWT covers only revenues
from its registered activity.
 Exemption does not cover revenues from units with selling
price exceeding PhP2,500,000.00.
 Exemptions shall be vested upon compliance with the
provisions of the specific terms and conditions of the
corporation’s BOI registration.
enterprises
 Ruling:
 BOI-registered enterprises enjoy no tax
exemption/privileges other than those granted under EO
226. It is clearly granted a 4-year ITH but it remains to be
subject to VAT and DST on its sales of house and lot
units pursuant to Sections 106(A0(1)(a) and 196 of the
Tax Code of 1997, as amended.
 Sale of housing units with selling price of not more than
PhP1,919,500.00 shall be exempt from VAT pursuant to
Section 109(1)(P) of the Tax Code.
Separation pay due to retrenchment
 BIR Ruling No. 353- 16 dated October 18, 2016
Separation pay received due to retrenchment exempt from tax
 Facts:
 The company is engaged in business process
outsourcing (BPO). Three of its employees had to
be separated as a result of the termination of the
company’s contract with one of its clients. The
workers have been duly notified of their
termination.
 Ruling:
 Section 32(B)(6)(b) of the Tax Code of 1997, as
amended, excludes from the computation of gross
income any amount received by an employee from his
employer as a consequence of separation from service
due to death, sickness or other physical disability or for
any cause beyond the control of the said employee.
 The separation pay that will be received by

retrenched employees shall be exempt from income tax
and, consequently, from withholding tax.
 Ruling:
 The terminal pay shall likewise not be subject to
income tax and consequently to withholding tax,
i.e., commutation and payment of monetized
unused vacation leave credits not exceeding 10
days. This however is not applicable to sick leave
credits.
 This exemption does not include payment of

salaries, and 13th month pay and other benefits in
excess of Php 82,000.
Donation to religious corporation
 BIR Ruling No. 358-16 dated October 19, 2016
Donation to religious corporation exempt from donor’s tax and
DST
 Facts:
 An individual donated a parcel of land in favor of a religious
corporation.
 Ruling:
 Any donation in favor of a religious corporation is exempt from
donor’s tax pursuant to Section 101 (A) (3) of the National Internal
Revenue Code (NIRC) of 1997. The exemption, however, requires
that not more than 30% of the said gift shall be used by the donee
for administrative purposes.
Donation to religious corporation
 BIR Ruling No. 358-16 dated October 19, 2016
 Ruling:
 For donation of land, the Register of Deeds shall
annotate the 30% condition at the back of the
titles because failure to comply with this condition will
subject the donation to donor’s tax. In addition,
conveyance of realties without consideration such as
through donation is likewise not subject to DST as
prescribed under Section 196 of the NIRC. Only Php
15.00 DST under Sec. 188 shall be imposed.
Sale of principal residence
 BIR Ruling No. 369-16 dated November 3, 2016
Execution of the deed of absolute sale and not the date of
notarization constitutes consent for sale of property for purposes of
availing CGT exemption under Section 24(d)(2) of the NIRC. Other
documentary requirements can also be considered by BIR.
 Facts:
 Deed of Absolute Sale was executed between the seller and
the buyer wherein the principal residence of the seller was
sold to the buyer.
 Date of execution – 2 September 2013
 Date of notarization – 10 September 2013
 Acquisition of new principal residence – September 2, 2013 as
date of execution and notarization of the Deed of Absolute
Sale.
 Ruling:
 Sale of a principal residence by a natural person may be
exempted from capital gains tax under Section 24(D)(2) of the
Tax Code of 1997, provided that all the requirements in the
said law as implemented by RR 13-99 as amended by RR 14-
2000 have been complied with.
 The sale or disposition of the principal residence must
precede the acquisition of a new principal residence.
 The acquisition or construction of a new principal residence
must be done within eighteen (18) calendar months from the
date of the disposition to be exempt from capital gains tax.
 Ruling:
 It is provided under RR 13-99 that, in general, the “date of sale
or disposition of a property refers to the date of notarization
of the document evidencing the transfer of said property.”
 Art. 1315 of the Civil Code provides that “Contracts are
perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith,
usage and law”
 The consent of both parties was manifested upon the date of
execution of the Deed of Absolute Sale and thereupon became
valid and not on the date of notarization.
 Ruling:
 In this query, it appears that acquisition of the seller’s new
residence came after the sale of its old residence as shown by
other documents submitted such as Cashier’s Checks (dated in
August 2013) and CARs for both transactions (October for
the sale and December 2013 for the acquisition of new
residence). These documents show that the date of sale of the
principal residence was actually made prior to the acquisition
of the new residence.
 Therefore, the sale shall not be subject to 6% CGT under
Section 24 (d) (2) of the NIRC of 1997.
When will an alien be considered a resident
of the Philippines
Indefinite stay within the Philippines renders a foreigner a resident. A
resident alien is subject to income tax in the same manner as a
Filipino citizen
 Facts:
 A domestic corporation’s President is a French citizen who
owns approx.. 99.9% of the outstanding stock of the
corporation. He had ben its President since its incorporation in
1989 and he is married to a Filipina since 2000, owns and
maintains residence in the Philippines.
 This ruling seeks confirmation that the President of the said
Company is a resident alien for Philippine income tax purposes,
as defined in Section 22(F) of the Tax Code as amended.
of the Philippines
 Ruling:
 An alien may be considered a resident of the
Philippines for income tax purposes if:
1. He/she is not a mere transient or sojourner,
2. He/ she has no definite intention as to his stay, or
3. His/her purpose is of such nature that an extended stay
may be necessary for its accomplishment, and to that
end the alien makes his or he home temporarily in the
Philippines. (Section 5 RR No. 2)
of the Philippines
 Ruling:
 The alien, in this ruling, has shown that there is an intention on
his part to stay in the Philippines indefinitely given the fact that:
 a) he invested in the Philippines and served as the company’s
President;
 b) he acquired real property and is actually present most of the time
in the Philippines since 1989; and
 c) he registered as a taxpayer with the BIR. All of these circumstances
show that he is not a mere transient or sojourner.
 Accordingly, it is clear that the alien has acquired residency in
the Philippines.
of the Philippines
 Ruling:
 Thus, he is a resident alien and is taxable as a
resident alien for income tax purposes for the
duration of his stay in the Philippines. He is subject
to income tax in the same manner as a Filipino
citizen. He can also avail of the personal tax
deductions and tax exemptions allowed to Filipino
citizens under the Tax Code.
 BIR did not confirm that cash dividends that will be
receive by TP in the future is subject to 10% FT,
being a hypothetical issue.
Importations of denatured ethyl alcohol not
covered by the exemption of excise tax
Importations of denatured ethyl alcohol are not covered by the
exemption of excise tax per Section 134 of the Tax Code, and
not subject to zero percent (0%) VAT on account of the
Company’s registration with PEZA.
 Facts:
 The Company is duly registered with PEZA as an Ecozone
Export Enterprise. It uses denatured ethyl alcohol in its
PEZA-registered activity. However, its request that its
importation of denatured ethyl alcohol be exempt from
excise tax and VAT.
 Ruling:
 The request for exemption from VAT and excise tax is
denied for the ff. reasons:
 There is no provision under Section 134 of the Tax Code
for exemption covering importations. Section 134 covers
only domestic denatured alcohol. Importations of
denatured alcohol is subject to excise tax under Section
141 of the NIRC.
 The Company’s PEZA certification only mentions VAT-zero
rating in its transactions with its local suppliers of goods,
properties, and services in connection with its PEZA-
registered activities. Thus, the Company cannot invoke said
certification in claiming VAT zero-rating on its importations
of the denatured ethyl alcohol.
 Its Permit to Buy/Use Denatured Alcohol only allows the
Company to use/buy denatured ethyl alcohol from local
suppliers that are duly registered with the BIR. Non-
compliance with or violation of any of the conditions for the
grant of the Permit to Buy/Use Denatured Alcohol shall be a
valid ground for the revocation of the same.
Transfer of real property based on a court-
approved compromise agreement
 BIR Ruling No. 423-2016 dated 07 December 2016
A reconveyance of real property based on a compromise
agreement duly approved by a court is still subject to payment of
capital gains tax (CGT) and documentary stamp tax (DST).
 The transfer of property pursuant to a compromise agreement
is covered by the clause “other disposition of real
property” under Section 24(D)(1) of the Tax Code of
1997 on capital gains tax. The phrase “other disposition”
includes all kinds of dispositions of real property unless
specifically excluded therefrom or subject to another tax
treatment.
 The reconveyance of the subject real property is subject to
DST under Section 196 of the Tax Code.
Reversion of property to trustor
The termination, liquidation and reversion of the property (real or
personal) back to the trustor is not subject to income tax, capital gains
tax and withholding tax on the ground that there is no sale or transfer
of property involved in said transaction.
 Facts:
 An individual (“Trustor”) entered into a Trust Agreement with a bank
(“Trustee”), by virtue of which a Trust Account was established
where the Trustor conveyed to the Trustee PhP1.7M in cash, to be
held in trust, managed, invested, reinvested and for other purposes
for the benefit of the beneficiaries. Another Trust Account was
opened with initial investment of PhP195,000. With the cash
investment, the Trustee purchased two condominium units and
registered the same in the name of the Trustee.
Reversion of property to trustor
 Facts:
 The trustee bank merged with another bank with the latter being the
surviving entity and the Trust Accounts had new account numbers.
The Trustor now wants the properties covered by the trust to be
transferred back to his name.
 Ruling:
 The transfer of title of the properties by the trustee in favor of the
trustor, who is the beneficial owner thereof is not subject to capital
gains tax nor to the creditable withholding tax. The conveyance is
merely to be treated as a continuation and confirmation of title in
favor of the ultimate and real beneficiaries of the properties. The
transfer of the properties to the trustor is not also subject to the
12% VAT because the said property is not held primarily for sale to
customers or for lease in the ordinary course of business. No gift tax
is also due.
Non-stock non-profit educational institution
 BIR Ruling No. 001-2017 dated 05 January 2017
 Facts:
 A non-stock and non-profit educational institution with SEC
registration dated 7 February 2014 requested for the issuance
of a certificate of tax exemption enjoyed by non-stock and
non-profit educational institution under Section 30(H) of the
Tax Code of 1997.
 In reply, the BIR said that it cannot as yet issue the requested
ruling/certificate of tax exemption because the school has to
be proved by actual operation for at least 3 years that it is
really a corporation/association exempt from income tax
under Section 30(H) of the Tax Code.
Non-stock non-profit educational institution
 Ruling:
 In the meantime, it can file the necessary annual information
return instead of an income tax return on or before the 15th
day of the fourth month following the end of its taxable year.
Based on this return, the BIR shall conduct the necessary
investigation and the letter of exemption shall be issued
thereafter. For purposes of securing a certificate of exemption
after the three-year period, it is required to submit the
documentary requirements enumerated in Section 2 of RMO
44-2016.
Separation pay subject to withholding tax if
separated with cause
Separation pay of an employee who was separated for cause is
subject to withholding tax
 Facts:
 An employee in a pharmacy was separated from
employment on the ground of Serious Dishonesty
and Willful Disobedience. This ruling seeks to
exempt the separation pay given to her from
withholding tax pursuant to Sec 32 (B)(6)(b) of the
Tax Code.
Separation pay subject to withholding tax if
separated with cause
 Ruling:
 The separation of the employee in the case at bar cannot be
considered an involuntary separation within the contemplation
of Sec 32 (B)(6)(b) since her separation is for cause, i.e. “on the
ground of Serious Dishonesty and Willful Disobedience.”
Sale of socialized housing units to qualified
beneficiaries
The sale of socialized housing units to qualified beneficiaries
shall be exempt from income tax, and consequently from
creditable expanded withholding tax. A project contractor of a
socialized housing project shall also be exempt from the
payment of VAT on the project concerned where the price ceiling
per unit is P450,000.00 for house and lots and P180,000.00 for
lots only.
 Facts:
 This ruling refers to a request for a Certificate of Tax
Exemption on the sale of socialized housing units pursuant to
RA 7229 or the Urban Development and Housing Act of 1992.
beneficiaries
 Ruling:
 Only the sale of socialized housing units to qualified
beneficiaries shall be exempt from income tax, and
consequently from creditable expanded withholding tax.
beneficiaries
 Ruling:
 Developer of socialized housing shall be exempt from VAT.
But purchases of goods/articles by project contractor shall
be subject to VAT, even if used for socialized housing
projects.
 The owner/project developer/seller shall be liable to pay
DST on the documents conveying the properties under Sec
196 of the Tax Code.
Sale of house and lot packages from a
landowner/developer to the NHA
The sale of house and lot packages from a landowner/developer to
the NHA under the Urban Development and Housing Act of 1992 is
exempt from the payment of the capital gains tax, project-related
income taxes, and consequently from withholding tax pursuant to
Sec20 of RA 7279. The sale is also exempt from VAT.
 Facts:
 The landowner/developer of properties sold 312 developed lots to
NHA at an agreed price of around Php34M. The purchased
developed lots and completed housing units shall be financed
through the Community Initiative Approach of the NHA for
Php220,000.00 for every developed lot and completed housing unit
per family.
Sale of house and lot packages from a
landowner/developer to the NHA
 Ruling:
 The sale of 312 house and lot packages by the
landowner/developer t are exempt from the payment of the
capital gains tax, project-related income taxes, and
consequently from withholding tax pursuant to Sec20 of RA
7279. The sale from landowner to NHA of the house and lot
packages are likewise exempt from DST imposed under
Sec196 of the Tax Code pursuant to RMC No. 42-01. The
exemption from DST of NHA in connection with any of its
socialized housing project extends to the other party that
deals or transacts with the NHA.
 Moreover, the sale of the 312 house and lot packages shall be
exempt from VAT. However, purchases of goods/articles by the
project contractor shall be subject to VAT, even if the said
purchases are to be used for the socialized housing project.
Donation to LGU
 Facts:
 UNICEF donated a locally-purchased vehicle to the
Municipality of Burauen, Leyte, one of the towns
which was badly hit by Yolanda.
Donation to LGU
 Ruling:
 Donations made in favor of the Government or any of its
agencies which are not conducted for profit, or to any of
its political subdivisions are exempt from the payment of
donor’s tax pursuant to the provisions of Sections 101
(A)(2) and Section 101 (B0(1) of the Tax Code of 1997.
Since the Municipality of Burauen, Leyte is a political
subdivision of the National Government, the donation
made by UNICEF in its favor is exempt from the payment
of donor’s tax.
 The Deed of Donation is subject to DST of P15.00
imposed under Section 188 of the Tax Code.
SEC ISSUANCES
SEC OPINIONS
Corporate Term
 SEC Opinion No. 16-24
 Max term of educational institutions:
Corporation Law Corporation
Code
No term prescribed 50 years
= perpetual
 Corp Code requires indication of a term

Corporate Term
 Failure to comply with the requisite to
indicate a term results in the term being
deemed to have begun on 01 May 1980.
 Consequently, the term of an educational
institution incorporated under the
Corporation Law but that did not amend its
AOI pursuant to the Corporation Code will
be until 01 May 2030.
Corporate Term
 Stock corporations incorporated under the
Corporation Law follow the 50 year term
and cannot be deemed to have a new 50
years starting 01 May 1980.
 The 50 year term requirement is not new
to stock corporations, unlike with
educational institutions
Stockholder Meetings
 Teleconferencing and videoconferencing are
not allowed in stockholder’s meetings.
 Under Section 51 of the Corporation Code,
all of the stockholders must be in the same
physical place during the meeting.
Quorum in Meetings
 Quorum in board meetings cannot be
decreased to lower than “a majority of the
number of directors or trustees as fixed in
the articles of incorporation.”
 This number may be increased in the
articles of incorporation or the by-laws, but
it cannot be reduced.
Quorum in Meetings
 Stockholders or members in a stock
corporation and non-stock corporation,
respectively, who are entitled to vote, must
be present or represented by another
person in order to constitute a quorum.
Directors/Corporate Officers
 Corporations cannot have alien
presidents/chairmen when the corporation
is involved in real estate.
Directors/Corporate Officers
 Non-stock non-profit organizations are
entitled to have alien trustees in its board,
and a foreigner as its President/Chairman
provided that the organization is not
involved in any nationalized or partly
nationalized business or industry.
Calls for Payment
 A call for payment for the balance of
subscriptions may be made by installments.
 Stock certificates cannot be issued for the
equivalent of the shares partially paid in a
subscription. Subscriptions are one, entire, and
indivisible contract.
 Cash dividends cannot be directly applied to
the balance of a non-delinquent subscription.
Neither can stock dividends.
Delinquency Sale
 In a delinquency sale, certificates of stock
will be issued only upon full amount of the
bid price, together with the interest and
expenses
Treasury Shares
 Treasury shares may be treated as part of
the issued shares as long as they are not
cancelled or retired.
 The 25% of the 25% requirement is
mandatory only during the pre-
incorporation period and when the
corporation undertakes to increase its
authorized capital stock.
Foreign Equity
 Foreign equity participation cannot be
allowed in the registration of corporations
that intend to engage in the practice of
interior design
Freight Forwarder
 An international forwarding company with
more than 40% foreign equity can provide
trucking service to its clients through sub-
contracting to local trucking companies as
it is an activity that is necessary included in,
or implied by, its business as an
international freight forwarder.
Nationalized Industries
 No foreign participation is allowed in
corporations, such as a real estate
brokerage company, that will engage in the
practice of real estate service.
 Advertising agencies that lease out billboard
spaces are mass media companies that must
be wholly owned by Filipinos.
 An online English school, which will provide
formal training courses or programs for a
fee and shall provide Diplomas or
Certificates of Program Completion, must
comply with the 60-40 Filipino-Foreign
equity requirement.
 All educational institutes, other than those
established by religious orders and mission
boards, and those established for foreign
diplomatic personnel and their dependents,
and for other foreign temporary residents,
is subject to 40% foreign ownership
limitation.
 Business process outsourcing is not a
nationalized industry. Therefore, foreign
nationals may be appointed as directors of
companies that engage in business process
outsourcing.
 Renewable energy companies are engaged
in a nationalized industry, therefore foreign
nationals cannot be elected as President.
Control Test
 Absent any doubt, the Control Test is used
in determining the nationality of a
corporation specially in cases where foreign
ownership restrictions apply.
Joint Ventures
 Corporations may enter into joint ventures
provided that it is line with the business
authorized by their charters.
Representative Offices
 Representative offices may engage in
information dissemination and other
support activities to the main office, but it
must strictly adhere to the restrictions
imposed upon it.
Retail
 Service centers are not engaged in retail;
purchases of replacement parts are merely
incidental to the repair
 Sales to the general public, through a single
outlet owned by a manufacturer of
products manufactured, processed or
assembled in the Philippines is not
considered as retail.
Retail
 The sale of motorbikes to industrial users on a
wholesale basis is not retail since it involves
producer goods, not consumer goods for
household purposes.
 By producer goods, the IRR of the Retail Trade
Law means that the consumers of these
products render service to the general public
and/or produce or manufacture goods which
are then sold by them.
Retail
 Sales to the government, its agencies and
GOCCs are not retail.
Retail
 Restaurant operations by a hotel owner are
not considered as retail as long as the same
is incidental to the hotel business. This
principle holds true even if the restaurant
engages in catering services.
 Gift stores in hotels are not considered as
engaging in the retail trade as this is merely
incidental to hotel operations.
SEC Memorandum Circulars
Submission to Credit Information
Cooperation
 SEC Memorandum Circular No. 3
 Financing companies are required to submit
to the Credit Information Corporation
their basic credit data namely:
 (1) their 5-year historical data and
 (2) their current data on or before 31
August 2016, and are enjoined from
attending orientations/road shows.
Judicial Affidavit Rule
 The Judicial Affidavit Rule is applicable in
hearings before the SEC.
 The JAR will apply in all actions,
proceedings and incidents requiring the
reception of evidence.
Address in AOI/GIS
 Specific addresses must be given for the
principal office of the corporation, and of
each incorporator, director, trustee or
partner.
 (Building Unit, Name of Building, Street No.,
Street Name, Barangay, City)
Certificate of Nationality of Non-
Stock Corporations

 A certification on the nationality of non-
stock corporations shall be issued upon
request to the Commission’s Company
Registration and Monitoring Department
for a fee in the amount of Five Thousand
(Php5,000.00) pesos.
Special Audit Report
 Amends Item 2 of Memorandum 06-2012
regarding the submission of a Special Audit
Report for increases in authorized capital
stock.
 Special Audit Reports are not needed
where the payment to the subscription to
the increase is less than Fifty Million
Pesos (P50,000.00)
Special Audit Report
 If a special audit report is not needed, then
a notarized Subscription Contract among
the stockholder/s, treasurer and
president for the corporation stating the
number of additional shares subscribed to
and paid for shall be submitted by the
corporation.
Certificate of Paid Up Capital
 To secure a Certification of Paid Up Capital,
the following must be submitted by the
corporation:
 a. Duly Accomplished Request Form stating
the basis of certification
 b. Audited F/S as of the last fiscal year
 c. Audited Interim Financial Statements
 d. Notarized Sec Cert of No Pending Intra-
Corporate Dispute; and
 e. Monitoring Clearance
New GIS Forms
 New GIS forms to be used starting January
2017.
 Addition of TIN page at the end of the GIS,
which will not be uploaded for the privacy
of the corporate officers and stockholders.
Payment of Annual Fees of Capital
Market Participants
 Guidelines on the applications for Payment of
Annual Fees of Capital Market Participants.
Payment made Consequence
November Payment Due
December 50% Surcharge
Subsequent Months 100% Surcharge
Not at all Suspension or revocation of
the registration/license after
due notice and hearing.
Payment of Annual Fees of Capital
Market Participants
 Guidelines are applicable to SEC-registered/licenses
Capital Market Participants, namely:
 Brokers Dealers in Securities,  Mutual Fund
Securities,  Underwriters of Distributors, and
 Brokers in Securities Engaged their respective
Securities, in Dealing Associated Persons,
 Dealers in Government  Compliance
Securities, Securities, Officers,
 Brokers in  Government  Salesmen,
Proprietary Shares, Securities Eligible  Fixed Income
 Voice Brokers, Dealers, Market Salesmen,
 Investment Houses,  Investment and
Company Advisers,  Certified
 Investment Houses Investment
Engaged in Dealing Solicitors
Government
Requirements for Financing and
Lending Companies
 Streamlines the documentary requirements
for financing and lending companies, by no
longer requiring the submission of:
 SEC Form Q-EPS;
 Certification of the Corporate Secretary on the
attendance of Directors to Board Meetings; and
 Corporate Governance Scorecard.
Code of Corporate Governance
 Revised Code of Corporate Governance for
Publicly-Listed Companies (the ”Code”).
 The Code provides guidelines and
recommendations to raise corporate
governance standards.
 Companies are not required to comply but
will be required to explain in their Annual
Corporate Governance Report why it was
unable to comply with certain provisions.
Code of Corporate Governance
 All Publicly Listed Companies must submit their
2016 Annual Corporate Governance Report
(“ACGR”) must be submitted to the SEC on or
before 30 May 2017.
 Five days from submission to the SEC, the ACGR
must be uploaded on the company’s website.
 Future ACGR submissions will be based on the
Code of Corporate Governance (SEC
Memorandum Circular No. 19).
Auditing Standards
 The SEC has adopted revised guidelines for
auditing standards and standards on assurance
engagements and other related services.
 All of the new and revised auditing standards have
been adopted by the Auditing and Assurance
Standards Council and approved by the Board of
Accountancy and Professional Regulations
Commission and published in the Official Gazette.
PROPOSED BILLS ON TAX
TAX REFORM BILL
HB 4774
Income Tax Rates
 Tax Schedule effective July 1, 2017 and taxable years 2018
and 2019:
Not over P250,000 Exempt
Over P250,000 but not over P400,000 20% of excess over
P250,000
Over P400,000 but not over P800,000 P30,000 + 25% of excess

over P400,000
Over P800,000 but not over P2M P130,000 + P30% of excess

over P800,000
Over P2M but not over P5M P490,000 + 32% of excess

over P2M
Over P5M P1,450,500 + 35% of

excess over P5M
Income Tax Rates
 For 2020 onwards, the proposed tax brackets are:
Not over P250,000 Exempt

Over P250,000 but not over P400,000 15% of excess over
P250,000
Over P400,000 but not over P800,000 P22,500 + 20% of excess

over P400,000
Over P800,000 but not over P2M P102,500 + P325% of

excess over P800,000
Over P2M but not over P5M P402,500 + 30% of excess

over P2M
Over P5M P1,302,500 + 35% of

excess over P5M
Income Tax Rates
 Under proposed bill after 2020, the taxable income levels
in the above schedules shall be adjusted once every five
years through rules and regulations issued by the DOF,
upon recommendation of the Commissioner of BIR.
Excise Tax on Petroleum Products
 Under the bill, the excise tax on petroleum products will
increase every year starting 2017 to 2019.
 Lubricating oils and greases - from P4.50 to P7 in 2017, P9 in
2018 and P10 in 2019
 Processed gas, per liter of volume capacity - from P0.05 to P3
in 2017, P5 in 2018 and P6 in 2019
 Waxes and petrolatum, per kilogram - from P3.50 to P7 in
2017, P9 in 2018 and P10 in 2019
 Denatured alcohol to be used for motive power, per liter of
volume capacity - from P0.05 to P3 in 2017, P5 in 2018 and P6
in 2019
Reduce estate and donor’s tax to 6%
 The bill provided that there shall be levied, assessed and
collected and paid upon the transfer of the net estate,
whether resident or non-resident of the Philippines, a six
percent (6%) tax based on the value of such net estate.
 The bill added that the donor’s tax for each calendar year
shall be six percent (6%) and shall be computed on the
basis of the total net gifts made during the calendar year,
provided that annual net gifts not exceeding P100,000
shall be exempt.
ESTATE TAX AMENSTY
HB 3010/ HB 4814
Estate Tax Amnesty
 Per HB 3010:
 Cover all unpaid estate taxes as of the time the Act shall have
taken effect and those due within (3) years henceforth.
 Proposed tax table is as follows per HB 3010:
Over But Not Tax Plus Excess
Over Over
3,000,000 0
3,000,000 6,000,000 20,000 5% 3,000,000
6,000,000 12,000,000 200,000 8% 6,000,000
12,000,000 650,000 11% 12,000,000
 Update: HB 4814 passed 13 February 2017

 Estate tax amnesty within (2) years from the issuance of IRR
 Fixed rate of 6 % of the decedent’s net estate
NATIONAL REVENUE
AUTHORITY BILL
HB 695
National Revenue Authority Bill
 Creates a public organization known as National Revenue
Authority
 Attached to the DOF
 Responsible for the implementation of internal revenue laws
 Primary responsibility and objective is to raise revenues to
finance government operations.
 It shall give effect to and administer the supervisory and police
powers conferred to the BIR by the Code and other laws.
 Employees of the Authority shall be hired on a fixed term
performance-based contracts.
The End

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TAX UPDATES 2017

Atty. Maria Theresa C. San Pablo-Llamado

 Adds a requirement that government contractors must

 Delinquent account shall refer to the outstanding tax

 If a tax delinquency arises within one year of issuance of

 Verification of tax clearance

1. Added criteria that it has no record of any

 RMC 54-2014 was being given retroactive effect because

Material dates a) Execution by the a) Execution

The fact of receipt by the

Expanded definition of resident - Article 4

 The separation pay that will be received by

 This exemption does not include payment of

 Corp Code requires indication of a term

 SEC Memorandum Circular No. 10

Over P400,000 but not over P800,000 P30,000 + 25% of excess

Over P800,000 but not over P2M P130,000 + P30% of excess

Over P2M but not over P5M P490,000 + 32% of excess

Over P5M P1,450,500 + 35% of

Not over P250,000 Exempt

Over P400,000 but not over P800,000 P22,500 + 20% of excess

Over P800,000 but not over P2M P102,500 + P325% of

Over P2M but not over P5M P402,500 + 30% of excess

Over P5M P1,302,500 + 35% of

 Update: HB 4814 passed 13 February 2017

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