AS the April 15 filing deadline of income
tax returns (ITRs) for taxable year 2013 draws near, taxpayers are
advised to prepare as early as now rather than suffer the inconveniences
encountered when trying to beat the deadline.
The tax season is the busiest time of the
year, not only for accountants who prepare the ITRs, but also for all
taxpayers (individual and corporate) who are obliged to file with the
Bureau of Internal Revenue (BIR) on or before April 15 every year for
income earned during the calendar year ending Dec. 31.
This is also the best time for us taxpayers to do our share in paying
the right taxes. The BIR’s 2014 tax campaign theme sums up the basic
steps that a taxpayer needs to follow to be able to comply with his/her
obligation of paying correct taxes for our nation: “I LOVE THE
PHILIPPINES, I Pay My Taxes Right. It’s as Easy as RFP (Register, File
and Pay).”
Filing ITRs need not be a daunting task as long as you have your records in order and you follow the filing guidelines below:
1. Use of the new ITR forms. For this filing season, taxpayers
are required to use the June 2013 enhanced version of the ITR as
prescribed by Revenue Regulations No. (RR) 2-2014.
Except for some enhancements, the ITR forms remain the same for
individuals earning purely compensation income (BIR Form 1700) and for
self-employed individuals, estates and trusts (BIR Form 1701).
For corporations, partnerships, and other non-individual taxpayers, the
forms to be used shall be BIR Form 1702-RT if taxable income for the
year is subject only to the regular income tax rate; BIR Form 1702-EX if
taxpayer is exempt under the Tax Code and other special laws, with no
other taxable income; or BIR Form 1702-MX for taxpayers with mixed
income subject to multiple income tax rates or with income subject to
special/preferential rate.
2. Modes of preparation and filing. The continuous enhancement
and development of electronic services (e-Services) by the BIR has
brought about the use of Electronic BIR Forms (eBIRForms) as an
additional mode of filing for non-eFPS (non-Electronic Filing and
Payment System) taxpayers pursuant to Revenue Memorandum Order No. (RMO)
24-2013 in relation to Revenue Memorandum Circular No. (RMC) 61-2012.
Non-eFPS taxpayers now have the option to either prepare the ITRs
manually through pre-printed forms/printed downloadable PDF/Excel forms
available at the BIR Web site, or electronically through the eBIRForms
Offline Package v4.1 (with Annual ITRs v2013 ENCS).
The advantage of using the eBIRForms Offline Package is its capability
to automatically compute the taxes due as well as validate the
information provided by the taxpayers. Thus, ITR preparation becomes a
breeze for those who opt to do it electronically. Upon downloading the
eBIRForms package from the BIR Web site, taxpayers are guided through
the process by the detailed instructions that come with it.
After filling up the electronic ITR form, the taxpayer can validate,
edit, submit, save, print and produce a final copy of the form.
Submission of these forms will only be allowed after the form has been
completed and validated. Once validated, the taxpayer may now submit
online either through the e-Submission or eFPS facility of the BIR.
However, for the time being, online submission is not yet available for
ITRs generated from the eBIRForms offline package. Hence, non-eFPS
taxpayers are required to submit manually to the BIR the printed copy of
the computer-generated ITR with the following specifications: folio
size bondpaper (8.5” x 13”), portrait orientation/layout with the
following margins: left, 0.146 inches; right, 0.148 inches; top, 0.14
inches; and bottom, 0.14 inches. The printed ITR forms should be
originally signed by the taxpayer or his/her authorized representative
pursuant to Bank Bulletin No. (BB) 2014-08 in relation to RMC 61-2012.
3. Modes of payment. Payment of the income tax may either be
manual or electronic for non-eFPS taxpayers. Manual payment will be made
through any Authorized Agent Bank (AAB) within the jurisdiction of
their registered Revenue District Office (RDO) or the Revenue Collection
Officers (RCOs), as applicable. On the other hand, electronic payment
can be made via mobile phone through G-Cash for tax returns not
exceeding P10,000 as prescribed by RMO 20-2005.
Payments with the AABs will be accepted until 5:00 p.m., April 1-15, to
better serve the needs of the taxpayers during this income tax filing
season. Two or more checks and/or a combination of cash and checks in
paying for a single tax liability will be allowed pursuant to RR
16-2002.
For ITRs without payment, it shall be filed at the respective RDO having jurisdiction over the taxpayer.
4. Receiving rules of the ITR. Only three copies of the returns
are allowed to be stamped “received” with the official BIR seal by all
AABs. However, for those filing with BIR Revenue Region No. 2
(Cordillera Administrative Region), Revenue Region No. 7 (Quezon City)
and Revenue Region No. 9 (San Pablo City), only two copies of the ITRs
shall be received.
In the case of corporations and other juridical persons who are required
to file with the Securities and Exchange Commission (SEC), two extra
copies of the audited financial statements for filing with the SEC shall
be stamped “received”. The BIR seal shall only be stamped on the page
of the Audit Certificate, Balance Sheet and the Income Statement. Other
pages of the financial statement and its attachments shall not be
stamped.
To fully appreciate the filing process, early preparation is an
advantage. As Alexander Graham Bell once said: “Before anything else,
preparation is the key to success.”
The author is a senior at the Cebu branch of Punongbayan &
Araullo’s tax advisory and compliance division. P&A is a member firm
within Grant Thornton International Ltd.
source: Businessworld
Monday, March 31, 2014
Monday, March 24, 2014
The guiding hand of due process in tax audit
The Bureau of Internal Revenue (BIR) has evidently illustrated
zealousness in tax collection over the years. In fact, it has come out
with numerous issuances aimed at the strict implementation of tax laws
and rules and regulations. As equally important is the bureau’s ardent
collection of taxes with dispatch. Thus, the BIR has introduced
amendments to Revenue Regulations No. (RR) 12-99, by issuing RR 18-13,
relative to the due process requirement in deficiency tax assessment. In
this connection, the BIR clarified some issues regarding the due
process requirement in tax audit pursuant to RR 12-99, as amended by RR
18-13 through Revenue Memorandum Circular No. (RMC) 11-14 dated Feb. 18,
2014.
Under RR 18-13, as further elucidated in RMC 39-13, taxpayers should file their responses to PAN and protests or request for reconsideration/ reinvestigation to the FLD/ FAN with the duly authorized representatives of the commissioner. RMC 11-14 has identified the “duly authorized representatives” of the commissioner of Internal Revenue refers to the revenue regional directors, assistant commissioner – Large Taxpayers Service, and assistant commissioner – Enforcement and Advocacy Service, as the case may be. Consequently, the taxpayers must submit their responses to Preliminary Assessment Notice (PAN) and protests or request for reconsideration/reinvestigation to the Final Letter of Demand/Final Assessment Notice (FLD/FAN) and Final Decision on Disputed Assessment (FDDA) with the duly authorized representative of the commissioner who issued the PAN and FLD/FAN. Considering the foregoing, the response or protest filed with the wrong office or person is considered not filed at all, resulting in the issuance of FAN, or non-appealable assessment.
Another point stressed in RMC 11-14 is that the issuance of FLD/FAN reiterating the immediate payment of deficiency taxes and penalties previously made in the PAN or is a denial of the response to a PAN. In the same vein, an FLD for payment of delinquent taxes may be considered as decision on a disputed assessment or disputed PAN. The requirements of due process are complied with so long as the parties are able to exercise their right to be heard. This reiteration in RMC 11-14 is predicated on the various Supreme Court decisions.
As introduced in RR 18-13, an FLD/FAN shall be issued within 15 days from filing/submission of the taxpayer’s response to the PAN. To avoid an interpretation that an FLD/FAN issued beyond the 15-day period may be considered invalid, RMC 11-14 explained that the non-conformity to the reglementary period for the issuance of the FAN should not affect its validity, however, the revenue officer who caused the delay should be subject to administrative sanctions.
In addition, RMC 11-14 made clear that the failure of the taxpayer who requested for the reinvestigation to submit all relevant supporting documents within the 60-day period shall render the FLD/FAN final by operation of law. This effectively bars the taxpayer from disputing the correctness of the FLD/FAN by the introduction of newly discovered evidence.
Finally, RMC 11-14 explicated that the PAN/FLD/FAN/FDDA should be served first to the taxpayer’s registered address before the same may be served to the taxpayer’s known address, or in the alternative, may be served to the taxpayer’s registered address and known address simultaneously.
It is an oft repeated dictum that “The power to tax is the power to
destroy.” As equally well-recognized is the aphorism that “The power to
tax shall not be the power to destroy” for as long as the court sits.
Accordingly, the government could not exercise its taxing power any
which way it wants if the same will run afoul of the guarantee of
substantive and procedural due process of law.
Arianne C. Artugue is a supervisor from the tax group of R.G. Manabat & Co. (RGM&Co.), the Philippine member firm of KPMG International.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
The view and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or RGM&Co. For comments or inquiries, please email ph-kpmgmla@kpmg.com or rgmanabat@kpmg.com.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
source: Philippine Star
Under RR 18-13, as further elucidated in RMC 39-13, taxpayers should file their responses to PAN and protests or request for reconsideration/ reinvestigation to the FLD/ FAN with the duly authorized representatives of the commissioner. RMC 11-14 has identified the “duly authorized representatives” of the commissioner of Internal Revenue refers to the revenue regional directors, assistant commissioner – Large Taxpayers Service, and assistant commissioner – Enforcement and Advocacy Service, as the case may be. Consequently, the taxpayers must submit their responses to Preliminary Assessment Notice (PAN) and protests or request for reconsideration/reinvestigation to the Final Letter of Demand/Final Assessment Notice (FLD/FAN) and Final Decision on Disputed Assessment (FDDA) with the duly authorized representative of the commissioner who issued the PAN and FLD/FAN. Considering the foregoing, the response or protest filed with the wrong office or person is considered not filed at all, resulting in the issuance of FAN, or non-appealable assessment.
Another point stressed in RMC 11-14 is that the issuance of FLD/FAN reiterating the immediate payment of deficiency taxes and penalties previously made in the PAN or is a denial of the response to a PAN. In the same vein, an FLD for payment of delinquent taxes may be considered as decision on a disputed assessment or disputed PAN. The requirements of due process are complied with so long as the parties are able to exercise their right to be heard. This reiteration in RMC 11-14 is predicated on the various Supreme Court decisions.
As introduced in RR 18-13, an FLD/FAN shall be issued within 15 days from filing/submission of the taxpayer’s response to the PAN. To avoid an interpretation that an FLD/FAN issued beyond the 15-day period may be considered invalid, RMC 11-14 explained that the non-conformity to the reglementary period for the issuance of the FAN should not affect its validity, however, the revenue officer who caused the delay should be subject to administrative sanctions.
In addition, RMC 11-14 made clear that the failure of the taxpayer who requested for the reinvestigation to submit all relevant supporting documents within the 60-day period shall render the FLD/FAN final by operation of law. This effectively bars the taxpayer from disputing the correctness of the FLD/FAN by the introduction of newly discovered evidence.
Finally, RMC 11-14 explicated that the PAN/FLD/FAN/FDDA should be served first to the taxpayer’s registered address before the same may be served to the taxpayer’s known address, or in the alternative, may be served to the taxpayer’s registered address and known address simultaneously.
Arianne C. Artugue is a supervisor from the tax group of R.G. Manabat & Co. (RGM&Co.), the Philippine member firm of KPMG International.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
The view and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or RGM&Co. For comments or inquiries, please email ph-kpmgmla@kpmg.com or rgmanabat@kpmg.com.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
source: Philippine Star
Exempt or not exempt: this is the question
STRICTISSIMI juris. Of the strictest
right or law, exemption from taxation is never favored, never presumed.
Tax exemption is always construed against the taxpayer and liberally in
favor of the taxing authority. It must be justified with words that are
too plain to be mistaken and too conclusive to be misinterpreted.
Revenue Memorandum Circular No. (RMC) 8-2014 is an embodiment of this primordial but universal rule of tax exemption through the requirement of providing a valid, current and subsisting tax exemption certificate or ruling.
Before the issuance of RMC 8-2014, Revenue Regulations No. (RR) 2-98, as amended, of the National Internal Revenue Code (NIRC) of 1997 granted exemption from creditable withholding tax for the (1) national, provincial, city and municipal government, including its instrumentalities, and (2) persons enjoying exemption from payment of income taxes, such as entities registered with the Board of Investments (BoI), Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA), non-stock and non-profit corporations, general professional partnerships, and joint ventures under an energy service contract with the government, without much question to the claim.
That was the case until a mandate in 2013 was promulgated, requiring non-stock and non-profit corporations to secure confirmatory rulings or certificates of tax exemption from the Bureau of Internal Revenue (BIR), highlighting the fact that tax exemptions granted under the tax code are neither automatic nor absolute.
So, what happens now? Does this mean that those entities specifically classified by the NIRC and RR 2-98 as exempt from creditable withholding tax are no longer exempt? Does this show that RMC 8-2014 inconspicuously contravenes with the long-established right of exemption for such entities? Does the BIR reify just and appropriate tax treatment in subjecting the now disputable exempt entities to creditable withholding tax?
In probing the circular, it seems as though in order to avail of the exemption from creditable withholding tax, taxpayers need to secure a certificate of exemption or a confirmatory ruling with the BIR. But, how long will it take for the application for a certification to be granted or the ruling to be released? Given that the circular mandates immediate compliance, will the entity retain its exempt status while waiting for the BIR’s approval? Will a mere application for a certification or ruling serve as sufficient and acceptable proof for the withholding tax agent to exempt the entity in question from creditable withholding tax? Will the possible tax exposure from non-withholding be treated retrospectively when after a long wait, the application for a certificate of exemption or a ruling is, for some reason, denied? Will the certificate of entitlement to incentives issued by special governing agencies like the BoI, PEZA and the SBMA have the same bearing with or be honored by the BIR as a valid, current and subsisting proof of tax exemption?
These confounding issues place the affected taxpayers in a precarious situation. With the lack of clarificatory issuances from the BIR to date, it is best to take prudent measures. How? For taxpayers claiming exemptions from creditable withholding tax, obtain a BIR-approved ruling at the earliest opportunity possible. While certificates of exemption have defined expiration dates, rulings, on the other hand, are valid and enforceable until a new law or opposing interpretation revokes the opinion of the previously issued rulings. Nevertheless, the option to secure either a certificate of exemption or a BIR ruling is up to the taxpayer.
For withholding agents, exercise proactivity in requiring every income recipient claiming exemption from creditable withholding tax to present an indispensable proof of exemption during the process of settling income payments.
Failure to present a legitimate proof will nullify the taxpayer’s assertion of exemption from creditable withholding tax; hence, subject to the applicable withholding tax rates. Likewise, failure of the withholding agents to withhold in lieu of the lack of tax exemption certificate or ruling will exact a penalty equivalent to the total amount of tax not withheld, plus compromise penalties of up to P25,000.
Questions are piling up. Interpretations are multifarious. Will the circular hold true and valid amid the controversy of its scope and intent?
One thing is clear, though: a comprehensive guideline is highly essential to explicate the letter and spirit of RMC 8-2014 with words that are too plain to be mistaken and too conclusive to be misinterpreted. Then, and only then, can the BIR effectuate the fundamental substance of the circular for compliance to the presently critical thinking public.
The author is a senior at the Cebu branch of Punongbayan & Araullo’s tax advisory and compliance division. P&A is a member firm within Grant Thornton International Ltd.
source: Businessworld
Revenue Memorandum Circular No. (RMC) 8-2014 is an embodiment of this primordial but universal rule of tax exemption through the requirement of providing a valid, current and subsisting tax exemption certificate or ruling.
Before the issuance of RMC 8-2014, Revenue Regulations No. (RR) 2-98, as amended, of the National Internal Revenue Code (NIRC) of 1997 granted exemption from creditable withholding tax for the (1) national, provincial, city and municipal government, including its instrumentalities, and (2) persons enjoying exemption from payment of income taxes, such as entities registered with the Board of Investments (BoI), Philippine Economic Zone Authority (PEZA) and Subic Bay Metropolitan Authority (SBMA), non-stock and non-profit corporations, general professional partnerships, and joint ventures under an energy service contract with the government, without much question to the claim.
That was the case until a mandate in 2013 was promulgated, requiring non-stock and non-profit corporations to secure confirmatory rulings or certificates of tax exemption from the Bureau of Internal Revenue (BIR), highlighting the fact that tax exemptions granted under the tax code are neither automatic nor absolute.
So, what happens now? Does this mean that those entities specifically classified by the NIRC and RR 2-98 as exempt from creditable withholding tax are no longer exempt? Does this show that RMC 8-2014 inconspicuously contravenes with the long-established right of exemption for such entities? Does the BIR reify just and appropriate tax treatment in subjecting the now disputable exempt entities to creditable withholding tax?
In probing the circular, it seems as though in order to avail of the exemption from creditable withholding tax, taxpayers need to secure a certificate of exemption or a confirmatory ruling with the BIR. But, how long will it take for the application for a certification to be granted or the ruling to be released? Given that the circular mandates immediate compliance, will the entity retain its exempt status while waiting for the BIR’s approval? Will a mere application for a certification or ruling serve as sufficient and acceptable proof for the withholding tax agent to exempt the entity in question from creditable withholding tax? Will the possible tax exposure from non-withholding be treated retrospectively when after a long wait, the application for a certificate of exemption or a ruling is, for some reason, denied? Will the certificate of entitlement to incentives issued by special governing agencies like the BoI, PEZA and the SBMA have the same bearing with or be honored by the BIR as a valid, current and subsisting proof of tax exemption?
These confounding issues place the affected taxpayers in a precarious situation. With the lack of clarificatory issuances from the BIR to date, it is best to take prudent measures. How? For taxpayers claiming exemptions from creditable withholding tax, obtain a BIR-approved ruling at the earliest opportunity possible. While certificates of exemption have defined expiration dates, rulings, on the other hand, are valid and enforceable until a new law or opposing interpretation revokes the opinion of the previously issued rulings. Nevertheless, the option to secure either a certificate of exemption or a BIR ruling is up to the taxpayer.
For withholding agents, exercise proactivity in requiring every income recipient claiming exemption from creditable withholding tax to present an indispensable proof of exemption during the process of settling income payments.
Failure to present a legitimate proof will nullify the taxpayer’s assertion of exemption from creditable withholding tax; hence, subject to the applicable withholding tax rates. Likewise, failure of the withholding agents to withhold in lieu of the lack of tax exemption certificate or ruling will exact a penalty equivalent to the total amount of tax not withheld, plus compromise penalties of up to P25,000.
Questions are piling up. Interpretations are multifarious. Will the circular hold true and valid amid the controversy of its scope and intent?
One thing is clear, though: a comprehensive guideline is highly essential to explicate the letter and spirit of RMC 8-2014 with words that are too plain to be mistaken and too conclusive to be misinterpreted. Then, and only then, can the BIR effectuate the fundamental substance of the circular for compliance to the presently critical thinking public.
The author is a senior at the Cebu branch of Punongbayan & Araullo’s tax advisory and compliance division. P&A is a member firm within Grant Thornton International Ltd.
source: Businessworld
BIR targets P10-B taxes in Pampanga, P21B in CL
CITY
OF SAN FERNANDO —Gov. Lilia Pineda has underscored the sustained
improvement of businesses in Pampanga, and described it as a major
contributor to the target collection of the Bureau of Internal Revenue
(BIR) of P21 billion in taxes in Central Luzon this year.
Pineda said, “Pampanga is continuously growing in business and other areas crucial to nation-building.”
The governor was a guest at the annual district tax kick-off campaign at the SM City Pampanga here on Wednesday afternoon.
She joined
the BIR Revenue Region 4 (RR4) during the launch of the 2014 tax
campaign and information drive a month after a similar campaign was held
in nearby Angeles City.
Pineda
lauded the small and big businesses in the province and her 2 million
constituents for “the successes we have both in the public and private
sectors.”
Pineda
said, “Pampanga’s significant role in generating taxes is most evident,
as the BIR is seen to collect some P10 billion from Pampanga.”
“It’s almost half of the target of the BIR in the whole Central Luzon region,” Pineda said.
The
two-term governor cited the recent report of the National Statistical
Coordination Board (NSCB) that said Pampanga is among the 10
most-developed provinces in the country. She added that total
investment in the province was pegged at P95 billion in 2012.
The total investment in Pampanga is at least 76 percent of investments in Central Luzon, the report said.
BIR
Regional Director Araceli L. Francisco urged taxpayers “to register,
file and pay” (RFP) their tax obligations on or before the deadline on
April 15.
The
BIR recently released its new campaign jingle and theme “I Love the
Philippines, I Pay My Taxes Right, It’s As Easy as R(egister), F(ile),
P(ay).”
Earlier,
the BIR-RR4 also presented the Electronic Certificate Authorizing
Registration (eCAR), a Web-based system that automates the generation of
barcoded Certificate Authorizing Registration (CAR), which aims to
reduce losses arising from spurious CARs for all kinds of one-time
transactions, the Electronic Tax Information Systems (eTIS), the
Implementation of Internal Revenue Stamps Integrated System (IRSIS) on
the use of secured stamps for cigarettes, the Invigorated Run After Tax
Evaders (RATE) program, Oplan Kandado; The Integrity Management Program
(IMP), the Re-engineering of other Business Processes, Electronic
Official Registry Book (eORB), e-Linkage with the Bureau of Treasury;
The Automated Revenue Allotment Computation, the Forfeited Asset
Management System, the Automated Issuance of Tax Clearance for Bidding
Purposes, Online Accreditation of Importers and Brokers, the Online
System for Accreditation of Printers, which is part of the Taxpayer
Registration Information Update, the Electronic BIR Forms (eBIR Forms),
the Strategic Performance Management System, the Workflow Management
System, the Exchange of Information Program, the Procurement, Payment,
Inventory and Distribution Monitoring System and the Career Pathing.
On February 19 the BIR-RR4 also launched its Regional Tax Campaign Program at the Marquee Mall in Angeles City.
source: Business Mirror
Thursday, March 20, 2014
Cudia a leper? Bar passers
Recently, Pope Francis accidentally uttered an Italian swear word
(the F-word kuno) during his weekly blessing ceremony in St. Peter’s
Square.
Mistakes and accident happen. A very human mistake, one said, and the world moved on.
The Philippine Military Academy (PMA) should give dismissed cadet Jeff Aldrin Cudia his diploma and transcript of records so he could start a new life in the civilian world, according to Muntinlupa Rep. Rodolfo Biazon, a former AFP chief of staff who headed the PMA at one time. But, would-have-been salutatorian Cudia should forget about serving in the military given the circumstances, Pong Biazon said. Cudia had been dismissed from the PMA after an honor committee found him guilty of violating the academy’s Honor Code.
“I would agree to him being given the diploma so that he can start anew, but I would advise he should not anymore stay in the service, complete his resignation, because he will be a leper out there, Biazon told a press briefing yesterday.” (PDI, Mar. 19, 2014, p. A9, col. 1). Why not let him graduate and then assign him to Scarborough or Ayungin. I believe in Second Chances even for potential Dirty Dozen types. And in the Cudia case, was there really proportionality in degrading and destroying him in his youth?
Now, what may (Pong Biazon and) BIR Chief Kim Henares be in violation of in our own Constitution in her scare and shame campaign? Sec. 11 of Art. II of the Constitution says: “The state values the dignity of every human person and guarantees full respect for human rights.” The Bill of Rights has language against “degrading punishment.” The Universal Declaration of Human Rights stresses respect for “human dignity,” in its Preamble and elsewhere.
In the Court of Appeals (CA) Spray Paint case decision of January 26, 2000, in CA G.R. No. SP No. 47946, the 25-page decision in ringing tones found against Hizzoner in spray-painting the homes of suspected substance abusers. Narohomsalic v. Lim did not get to the Supreme Court which refused to review it on a flimsy technicality (his lawyer did not give a copy of the petition to the CA, which probably would not have read it with all it had to do; anyway, respondents’ lawyers would be there. Maybe the erring lawyer could have been chided, fined or suspended, but take on the case).
MABINI was one of the 15 petitioners-appellants in Marohomsalic.
Cong. Pong, I see nothing wrong with being a leper. In our youth, in Pasig, we had Bertong Ketong, living in the kabukiran. He made for our barkada exquisite bamboo swords. He had a wife and daughter, who did not contract leprosy. When in the Senate, a constituent called my attention to my thoughtless use of “like a leper.” I considered myself told and vowed not to degrade sick people again.
But now, I have another headache. US accessing our military bases. I voted NO on September 16, 1991, removing foreign troops from our soil after more than 400 years. But, this is a 9/11 world and before commenting on it in light of our contemporary national interests I’d like to see the text of the agreement but better to involve sana some of the twelve Malevolent/Magnificent Senators who voted NO on September 16, 1991. Certainly, Pong Biazon should be consulted, along with Senator Miriam, among others.
I note that hundreds of South Korean soldiers have been here for some time and will stay up to the end of the year, to help deal with the damage Yolanda has wrought in Eastern Visayas. No static at all.
And, given 9/11, I no longer look before sleeping under the bed for Americans, who may be busy looking for Osama Bin Laden Jrs.
The Executive should not stop with Pong. Never mind Paos and Laos me with my HurryCane but nariyan po sina Butz Aquino, Manong JPE, Hizzoner Erap, Tito Guingona, Manong Ernie, Orly Mercado, Nene Pimentel, Bobby Tañada and Vic Ziga, nabubuhay. Kuya Teroy Laurel is gone. The ancient fire may be gone but there could be occasional old sparks even from smoldering embers. Last I saw Erap he sounded like his hormones are still raging, like those of the new bar passers.
Kudos to all of them but while this is a free country, I hope some of them will remain true to the driving dream that sent them to law school in the first place, to help give our people a better life.
It may well be that a lawyer’s first need is to make a living. “Of course,” as Judge Wyzanski noted, “when Dr. Johnson was told that a man must live, he replied that he did not see the necessity.” In any case, “because a man must live, of course it does not follow that he must, or indeed should be permitted, to do everything which will enhance his economic standard of living.” The new lawyers may note and take to heart this exhortation of Judge Wyzanski.
The cynics may however prefer Justice Brown: “It is the desire to earn money which lies at the bottom of the greatest effort of genius. The man who writes books, paints picture, moulds statues, builds houses, pleads causes, preaches sermons, or heals the sick, does it for the money there is in it; and if, in so doing, he acquires a reputation as an author, painter, sculptor, architect, jurist or physician, it is only an incident to his success as a money-getter. The motive which prompted Angelo to plan the dome of St. Peter, or paint the frescoes of the Sistine Chapel, was essentially the same as that which induces a common laborer to lay brick or dig sewers.”
The new lawyers must however do themselves the justice to try to recall the hopes and dreams that inspired them to train in the law in the first place. Some of the new lawyers may wonder about the things they will now learn in the profession that they never learned in law school. They may ask why. Some of them may wonder if the situation and atmosphere must be accepted and lived with or if these can be improved, if not removed and replaced with something better. They may ask why not.
As the Shavian epigram puts it, some men see things that are and ask – WHY? – while others see things that never were and ask – WHY NOT?
WHY NOT, INDEED?
source: Manila Times by RENE SAGUISAG
Mistakes and accident happen. A very human mistake, one said, and the world moved on.
The Philippine Military Academy (PMA) should give dismissed cadet Jeff Aldrin Cudia his diploma and transcript of records so he could start a new life in the civilian world, according to Muntinlupa Rep. Rodolfo Biazon, a former AFP chief of staff who headed the PMA at one time. But, would-have-been salutatorian Cudia should forget about serving in the military given the circumstances, Pong Biazon said. Cudia had been dismissed from the PMA after an honor committee found him guilty of violating the academy’s Honor Code.
“I would agree to him being given the diploma so that he can start anew, but I would advise he should not anymore stay in the service, complete his resignation, because he will be a leper out there, Biazon told a press briefing yesterday.” (PDI, Mar. 19, 2014, p. A9, col. 1). Why not let him graduate and then assign him to Scarborough or Ayungin. I believe in Second Chances even for potential Dirty Dozen types. And in the Cudia case, was there really proportionality in degrading and destroying him in his youth?
Now, what may (Pong Biazon and) BIR Chief Kim Henares be in violation of in our own Constitution in her scare and shame campaign? Sec. 11 of Art. II of the Constitution says: “The state values the dignity of every human person and guarantees full respect for human rights.” The Bill of Rights has language against “degrading punishment.” The Universal Declaration of Human Rights stresses respect for “human dignity,” in its Preamble and elsewhere.
In the Court of Appeals (CA) Spray Paint case decision of January 26, 2000, in CA G.R. No. SP No. 47946, the 25-page decision in ringing tones found against Hizzoner in spray-painting the homes of suspected substance abusers. Narohomsalic v. Lim did not get to the Supreme Court which refused to review it on a flimsy technicality (his lawyer did not give a copy of the petition to the CA, which probably would not have read it with all it had to do; anyway, respondents’ lawyers would be there. Maybe the erring lawyer could have been chided, fined or suspended, but take on the case).
MABINI was one of the 15 petitioners-appellants in Marohomsalic.
Cong. Pong, I see nothing wrong with being a leper. In our youth, in Pasig, we had Bertong Ketong, living in the kabukiran. He made for our barkada exquisite bamboo swords. He had a wife and daughter, who did not contract leprosy. When in the Senate, a constituent called my attention to my thoughtless use of “like a leper.” I considered myself told and vowed not to degrade sick people again.
But now, I have another headache. US accessing our military bases. I voted NO on September 16, 1991, removing foreign troops from our soil after more than 400 years. But, this is a 9/11 world and before commenting on it in light of our contemporary national interests I’d like to see the text of the agreement but better to involve sana some of the twelve Malevolent/Magnificent Senators who voted NO on September 16, 1991. Certainly, Pong Biazon should be consulted, along with Senator Miriam, among others.
I note that hundreds of South Korean soldiers have been here for some time and will stay up to the end of the year, to help deal with the damage Yolanda has wrought in Eastern Visayas. No static at all.
And, given 9/11, I no longer look before sleeping under the bed for Americans, who may be busy looking for Osama Bin Laden Jrs.
The Executive should not stop with Pong. Never mind Paos and Laos me with my HurryCane but nariyan po sina Butz Aquino, Manong JPE, Hizzoner Erap, Tito Guingona, Manong Ernie, Orly Mercado, Nene Pimentel, Bobby Tañada and Vic Ziga, nabubuhay. Kuya Teroy Laurel is gone. The ancient fire may be gone but there could be occasional old sparks even from smoldering embers. Last I saw Erap he sounded like his hormones are still raging, like those of the new bar passers.
Kudos to all of them but while this is a free country, I hope some of them will remain true to the driving dream that sent them to law school in the first place, to help give our people a better life.
It may well be that a lawyer’s first need is to make a living. “Of course,” as Judge Wyzanski noted, “when Dr. Johnson was told that a man must live, he replied that he did not see the necessity.” In any case, “because a man must live, of course it does not follow that he must, or indeed should be permitted, to do everything which will enhance his economic standard of living.” The new lawyers may note and take to heart this exhortation of Judge Wyzanski.
The cynics may however prefer Justice Brown: “It is the desire to earn money which lies at the bottom of the greatest effort of genius. The man who writes books, paints picture, moulds statues, builds houses, pleads causes, preaches sermons, or heals the sick, does it for the money there is in it; and if, in so doing, he acquires a reputation as an author, painter, sculptor, architect, jurist or physician, it is only an incident to his success as a money-getter. The motive which prompted Angelo to plan the dome of St. Peter, or paint the frescoes of the Sistine Chapel, was essentially the same as that which induces a common laborer to lay brick or dig sewers.”
The new lawyers must however do themselves the justice to try to recall the hopes and dreams that inspired them to train in the law in the first place. Some of the new lawyers may wonder about the things they will now learn in the profession that they never learned in law school. They may ask why. Some of them may wonder if the situation and atmosphere must be accepted and lived with or if these can be improved, if not removed and replaced with something better. They may ask why not.
As the Shavian epigram puts it, some men see things that are and ask – WHY? – while others see things that never were and ask – WHY NOT?
WHY NOT, INDEED?
source: Manila Times by RENE SAGUISAG
Right timing
THERE is great truth in the biblical
passage about there being a time for everything, and a season for every
activity under the heavens. This also applies to tax refund claims in
the Philippines.
Tax refunds are based on the general premise that taxes have either been erroneously or excessively paid. Though the Tax Code recognizes the right of taxpayers to request the return of such excess/erroneous payments from the government, they must do so within a prescribed period.
Not a few have expressed the sentiment that obtaining tax refunds from the Philippine government is a difficult and drawn-out process. Often, it leads to failure due to confusion in terms of the prescriptive period for filing such claims.
Take, for instance, the claim for refund of excessively paid input value-added taxes (input VAT). Cursorily, the relevant provision under Section 112(A) of the Tax Code seems simple enough. It states that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales."
The above is supplemented by Section 112(C) of the same Code, which provides that "the Commissioner shall grant a refund or issue the tax credit certificate within one hundred twenty (120) days from the date of submission of complete documents. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application, the taxpayer affected may, within thirty (30) days, appeal the decision or the unacted claim with the Court of Tax Appeals."
Easily, taxpayers can discern from reading Section 112 that the claim for excess input VAT should be filed within two years from the close of the taxable quarter when the sales were made; otherwise, the right to claim for refund becomes invalid. In the past, however, the two-year period was interpreted by the courts to cover both administrative and judicial claims. The evolution of case law, particularly Supreme Court decisions, in interpreting the prescriptive period has, in large part, added to the confusion on when and where to file the claim for refund.
To clarify the fundamental question of when to reckon the two-year prescriptive period, in a decision promulgated early last year, the Supreme Court already drew a distinction between claims for refund under Section 112(A) and Section 229 of the Tax Code. Generally, claims for excess input VAT would fall under Section 112(A). The input VAT covered under that section is the correct and proper amount. However, it contemplates a situation where the input VAT available as credit exceeds the output VAT payable. Thus, Section 112(A) applies in the case of a taxpayer who is engaged in zero-rated or effectively zero-rated sales. By contrast, Section 229 may still apply to a refund of input VAT, but only in cases where the amount is excessively or wrongfully collected. This means that the taxpayer paid more than what is legally due.
Proceeding from the foregoing discussion, the prescriptive period for filing a judicial claim for refund for erroneously paid tax (including erroneously paid input VAT, if applicable) under Section 229 is two years from the date of the erroneous payment. In contrast, the two-year period under Section 112(A) covers only the administrative claim filed with the BIR; it excludes the judicial claim. This two-year period is reckoned from the close of the taxable quarter when the zero-rated sales were made. Consequently, an appeal or judicial claim before the Court of Tax Appeals ("CTA") may still be filed outside of the two-year period.
For judicial claims filed under Section 112(A), the taxpayer may file an appeal to the CTA under two scenarios, i.e., in case of a denial of the claim for refund or due to inaction by the BIR Commissioner. The Supreme Court also explained the remedies of a taxpayer as consisting of: 1) filing a judicial claim with the CTA within 30 days from receipt of the denial by the BIR Commissioner, or (2) filing the judicial claim within 30 days from the expiration of the 120-day period in case of inaction by the BIR Commissioner.
The 30-day period mentioned under the two scenarios is mandatory and jurisdictional; this means that the filing of the appeal with the CTA beyond this prescribed period is fatal to the claim. In the same manner, filing of an appeal before the expiration of the 120-day period in the second scenario is likewise prejudicial to the claim.
The above doctrine was reiterated by the Supreme Court in another decision promulgated early this year.
Hopefully, the consistency of these last two decisions can be taken as a sign of stability in the application of the prescriptive periods in claiming input VAT refunds. Consistency in interpreting Tax Code provisions is an important attribute inherent in the right to claim tax refunds. Otherwise, it would just negate the fundamental principle of fairness in taxation.
The author is a senior manager at the tax services department of Isla Lipana & Co., the Philippine member firm of the PwC network. Readers may call (02) 845-2728 or e-mail the author at susan.m.aquino@ph.pwc.com for questions or feedback. The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.
Tax refunds are based on the general premise that taxes have either been erroneously or excessively paid. Though the Tax Code recognizes the right of taxpayers to request the return of such excess/erroneous payments from the government, they must do so within a prescribed period.
Not a few have expressed the sentiment that obtaining tax refunds from the Philippine government is a difficult and drawn-out process. Often, it leads to failure due to confusion in terms of the prescriptive period for filing such claims.
Take, for instance, the claim for refund of excessively paid input value-added taxes (input VAT). Cursorily, the relevant provision under Section 112(A) of the Tax Code seems simple enough. It states that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales."
The above is supplemented by Section 112(C) of the same Code, which provides that "the Commissioner shall grant a refund or issue the tax credit certificate within one hundred twenty (120) days from the date of submission of complete documents. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application, the taxpayer affected may, within thirty (30) days, appeal the decision or the unacted claim with the Court of Tax Appeals."
Easily, taxpayers can discern from reading Section 112 that the claim for excess input VAT should be filed within two years from the close of the taxable quarter when the sales were made; otherwise, the right to claim for refund becomes invalid. In the past, however, the two-year period was interpreted by the courts to cover both administrative and judicial claims. The evolution of case law, particularly Supreme Court decisions, in interpreting the prescriptive period has, in large part, added to the confusion on when and where to file the claim for refund.
To clarify the fundamental question of when to reckon the two-year prescriptive period, in a decision promulgated early last year, the Supreme Court already drew a distinction between claims for refund under Section 112(A) and Section 229 of the Tax Code. Generally, claims for excess input VAT would fall under Section 112(A). The input VAT covered under that section is the correct and proper amount. However, it contemplates a situation where the input VAT available as credit exceeds the output VAT payable. Thus, Section 112(A) applies in the case of a taxpayer who is engaged in zero-rated or effectively zero-rated sales. By contrast, Section 229 may still apply to a refund of input VAT, but only in cases where the amount is excessively or wrongfully collected. This means that the taxpayer paid more than what is legally due.
Proceeding from the foregoing discussion, the prescriptive period for filing a judicial claim for refund for erroneously paid tax (including erroneously paid input VAT, if applicable) under Section 229 is two years from the date of the erroneous payment. In contrast, the two-year period under Section 112(A) covers only the administrative claim filed with the BIR; it excludes the judicial claim. This two-year period is reckoned from the close of the taxable quarter when the zero-rated sales were made. Consequently, an appeal or judicial claim before the Court of Tax Appeals ("CTA") may still be filed outside of the two-year period.
For judicial claims filed under Section 112(A), the taxpayer may file an appeal to the CTA under two scenarios, i.e., in case of a denial of the claim for refund or due to inaction by the BIR Commissioner. The Supreme Court also explained the remedies of a taxpayer as consisting of: 1) filing a judicial claim with the CTA within 30 days from receipt of the denial by the BIR Commissioner, or (2) filing the judicial claim within 30 days from the expiration of the 120-day period in case of inaction by the BIR Commissioner.
The 30-day period mentioned under the two scenarios is mandatory and jurisdictional; this means that the filing of the appeal with the CTA beyond this prescribed period is fatal to the claim. In the same manner, filing of an appeal before the expiration of the 120-day period in the second scenario is likewise prejudicial to the claim.
The above doctrine was reiterated by the Supreme Court in another decision promulgated early this year.
Hopefully, the consistency of these last two decisions can be taken as a sign of stability in the application of the prescriptive periods in claiming input VAT refunds. Consistency in interpreting Tax Code provisions is an important attribute inherent in the right to claim tax refunds. Otherwise, it would just negate the fundamental principle of fairness in taxation.
The author is a senior manager at the tax services department of Isla Lipana & Co., the Philippine member firm of the PwC network. Readers may call (02) 845-2728 or e-mail the author at susan.m.aquino@ph.pwc.com for questions or feedback. The views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The firm will not accept any liability arising from the article.
Monday, March 17, 2014
A tax campaign that cures, not ails
YOU MUST HAVE heard or read about the
controversial tax campaign of the Bureau of Internal Revenue (BIR) aimed
at professionals, particularly medical doctors who are not properly
reporting their taxes.
A doctor is liable for two major taxes, income tax and business tax, which is either the 12% value-added tax (VAT) or the 3% percentage tax for those considered small taxpayers. These taxes are dependent on the amount of gross receipts that doctors report.
Professionals with annual gross receipts exceeding P1,919,500 are mandated to register under the VAT system. As VAT taxpayers, they are liable for 12% output tax on their gross receipts after deducting the 12% input VAT passed-on to them by their VAT suppliers -- e.g., rent, electricity, medical and office supplies and equipment, landline and mobile phone charges, motor vehicles, car repair and maintenance, representation expenses, domestic travel and other business expenses.
What kind of practice would make a doctor a VAT taxpayer? Assuming 50 working weeks in a year and six clinic days in a week, or 300 clinic days in a year, it would require professional fees totalling P6,399 per day to reach the P1,919,500 VAT threshold. As consultation fee of doctors in Metro Manila and most urban areas nowadays averages P500, the doctor needs about 13 patients a day to become a VAT taxpayer. Of course, this sample computation excludes higher fees charged for medical procedures.
Given the threshold, we may really encounter doctors who are not VAT-registered. For instance, rural doctors’ annual gross receipts do not exceed the VAT threshold because of their lower consultation fees and are therefore not subject to VAT. As such, they are just paying the 3% percentage tax on their gross receipt. At the P1,919,500 threshold, such percentage tax could amount to a maximum of P57,585. Unlike VAT, the percentage tax is considered a business expense and can be deducted in computing the doctor’s taxable income.
Even the amount of income tax that a doctor should pay is dependent upon the amount of gross receipts.
Hence, to be subject to the correct tax, doctors must voluntarily declare their correct gross receipts, which can only be monitored if they issue official receipts.
Doctors are required to issue official receipts without the patient requesting for the same. Section 237 of the Tax Code, as amended, mandates that an official receipt be issued for each sale or services rendered valued at P25 or more. Further, Section 264 of the same Code penalizes non-issuance of an official receipt, upon conviction, with a fine set at a maximum of P50,000 and imprisonment of up to four years.
Moreover, official receipts are not just pieces of paper or prescription pads where the doctor acknowledges that he "received the amount of Pxxx from patient xxx". Valid official receipts are serially printed receipts that are registered with the BIR.
The misdeed of some doctors of not issuing official receipts is perpetuated by their patients’ lack of interest in obtaining official receipts whenever the latter make payments.
Most patients are individuals. For individual taxpayers, personal medical expenses are not among those expenses that may be deducted from their gross income subject to tax since these are "personal" in nature and not in any way connected to the conduct of business.
If you’re an employee of a company that provides reimbursable medical benefits, maybe these receipts would be useful to you.
While some patients are conscious to demand official receipts when paying for the professional fees, they are sometimes discouraged. In certain cases, professional fees are higher when patients ask for official receipts because the tax that the doctor is supposed to pay is shifted to the patient. There are also instances when patients will be asked to come back some other day to get the official receipts since the receipts are not available in clinics other than the doctor’s main clinic. Note that under the Tax Code, as amended, official receipts are required to be kept in the place of business, including branches where business is conducted.
Whether these official receipts maybe of use to us, or not, and despite some difficulties encountered when demanding for official receipts, let us just think that, as citizens of this country, we need to do our part in helping the BIR collect the correct amount of taxes from our fellow taxpayers.
For the part of the BIR, let’s hope that future tax campaigns will be focused more on educating specific industries on their tax obligations, rather than making a mockery of those professionals who are allegedly not paying correct amount of taxes. It is also internationally recognized that there are hard-to-tax sectors, and special tax regimes are actually being implemented in other countries for such taxpayers.
Sometimes, the reality is, taxpayers, including doctors, are willing to pay taxes; it is just that they are not knowledgeable on what taxes to pay, how much tax they should pay and how to comply with the requirements.
The author is a manager with Punongbayan & Araullo’s tax advisory and compliance division. P&A is a member firm within Grant Thornton International Ltd.
source: Businessworld
A doctor is liable for two major taxes, income tax and business tax, which is either the 12% value-added tax (VAT) or the 3% percentage tax for those considered small taxpayers. These taxes are dependent on the amount of gross receipts that doctors report.
Professionals with annual gross receipts exceeding P1,919,500 are mandated to register under the VAT system. As VAT taxpayers, they are liable for 12% output tax on their gross receipts after deducting the 12% input VAT passed-on to them by their VAT suppliers -- e.g., rent, electricity, medical and office supplies and equipment, landline and mobile phone charges, motor vehicles, car repair and maintenance, representation expenses, domestic travel and other business expenses.
What kind of practice would make a doctor a VAT taxpayer? Assuming 50 working weeks in a year and six clinic days in a week, or 300 clinic days in a year, it would require professional fees totalling P6,399 per day to reach the P1,919,500 VAT threshold. As consultation fee of doctors in Metro Manila and most urban areas nowadays averages P500, the doctor needs about 13 patients a day to become a VAT taxpayer. Of course, this sample computation excludes higher fees charged for medical procedures.
Given the threshold, we may really encounter doctors who are not VAT-registered. For instance, rural doctors’ annual gross receipts do not exceed the VAT threshold because of their lower consultation fees and are therefore not subject to VAT. As such, they are just paying the 3% percentage tax on their gross receipt. At the P1,919,500 threshold, such percentage tax could amount to a maximum of P57,585. Unlike VAT, the percentage tax is considered a business expense and can be deducted in computing the doctor’s taxable income.
Even the amount of income tax that a doctor should pay is dependent upon the amount of gross receipts.
Hence, to be subject to the correct tax, doctors must voluntarily declare their correct gross receipts, which can only be monitored if they issue official receipts.
Doctors are required to issue official receipts without the patient requesting for the same. Section 237 of the Tax Code, as amended, mandates that an official receipt be issued for each sale or services rendered valued at P25 or more. Further, Section 264 of the same Code penalizes non-issuance of an official receipt, upon conviction, with a fine set at a maximum of P50,000 and imprisonment of up to four years.
Moreover, official receipts are not just pieces of paper or prescription pads where the doctor acknowledges that he "received the amount of Pxxx from patient xxx". Valid official receipts are serially printed receipts that are registered with the BIR.
The misdeed of some doctors of not issuing official receipts is perpetuated by their patients’ lack of interest in obtaining official receipts whenever the latter make payments.
Most patients are individuals. For individual taxpayers, personal medical expenses are not among those expenses that may be deducted from their gross income subject to tax since these are "personal" in nature and not in any way connected to the conduct of business.
If you’re an employee of a company that provides reimbursable medical benefits, maybe these receipts would be useful to you.
While some patients are conscious to demand official receipts when paying for the professional fees, they are sometimes discouraged. In certain cases, professional fees are higher when patients ask for official receipts because the tax that the doctor is supposed to pay is shifted to the patient. There are also instances when patients will be asked to come back some other day to get the official receipts since the receipts are not available in clinics other than the doctor’s main clinic. Note that under the Tax Code, as amended, official receipts are required to be kept in the place of business, including branches where business is conducted.
Whether these official receipts maybe of use to us, or not, and despite some difficulties encountered when demanding for official receipts, let us just think that, as citizens of this country, we need to do our part in helping the BIR collect the correct amount of taxes from our fellow taxpayers.
For the part of the BIR, let’s hope that future tax campaigns will be focused more on educating specific industries on their tax obligations, rather than making a mockery of those professionals who are allegedly not paying correct amount of taxes. It is also internationally recognized that there are hard-to-tax sectors, and special tax regimes are actually being implemented in other countries for such taxpayers.
Sometimes, the reality is, taxpayers, including doctors, are willing to pay taxes; it is just that they are not knowledgeable on what taxes to pay, how much tax they should pay and how to comply with the requirements.
The author is a manager with Punongbayan & Araullo’s tax advisory and compliance division. P&A is a member firm within Grant Thornton International Ltd.
source: Businessworld
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