NGCP says it pays franchise taxes

National Grid Corporation of the Philippines, operator of the country’s power transmission network, said Wednesday it is exempted from income tax payment but dutifully pays franchise taxes to the government.

NGCP, a privately-owned company led by businessman Henry Sy Jr. and with a 25-year concession and 50-year franchise to operate the power grid, said it was paying franchise taxes as a part of its contribution to nation-building.

The grid operator made the statement after the Finance Department published a Tax Watch print ad stating that only 39 of the top 100 corporations ranked by the Securities and Exchange Commission landed on the Bureau of Internal Revenue’s list of 500 top corporate/non-individual taxpayers.
NGCP ranked 25th in the SEC’s list, based on revenues, but the BIR’s list, which was based on income tax returns, did not include the transmission company.

“NGCP’s franchise granted through Republic Act 9511 mandates that it pay a franchise tax equivalent to 3 percent of all gross receipts, in lieu of income tax and any and all taxes, duties, fees and charges of any kind, nature of description levied, established or collected by any local or national authority on its franchise, rights, privileges, receipts, revenues and profits, and on properties used in connection with its franchise,” NGCP spokesman Cynthia Alabanza said.

The law, signed on Dec. 1, 2008, grants the NGCP the franchise to operate, manage, and expand the electric transmission business of the country.

The Franchise Law authorizes NGCP to handle the transmission grid for 25 years, renewable for another 25 years, - for a total of 50-year franchise.

The franchise only covers the operations and management of the transmission facilities but the assets, including lines, substations, land, and structures, will remain with the government through the National Transmission Corporation or TransCo.

source:  Manila Standard Today

IBP seeks TRO vs new BIR regulation

MANILA, Philippines – Saying the Bureau of Internal Revenue was encroaching on the Supreme Court’s jurisdiction, the Integrated Bar of the Philippines has asked the high court to void a new tax regulation requiring self-employed professionals like them to disclose their service fees and client information.

In a petition asking for a temporary restraining order filed April 8, the Integrated Bar of the Philippines, an association of all lawyers in the country, assailed Revenue Regulation 4-2014 titled “Guidelines and Policies for the Monitoring of Services Fees of Professionals” as unconstitutional.
RR 4-2014, dated March 3, requires all self-employed professionals to submit an “affidavit indicating the rates, manner of billings, and the factors they consider in determining their service fees upon registration and every year thereafter on or before Jan. 31.”

They were also required to submit their books of accounts and official appointment books, containing the names of their clients and the dates and time of the meetings.

Even in pro bono cases when no fee is charged, RR 4-2014 also requires lawyers to issue a BIR-registered receipt showing that a 100 per cent discount was given.

The IBP said the regulation issued by the BIR and the Department of Finance “encroaches upon the court’s exclusive authority and jurisdiction to regulate and prescribe rules” for the legal profession.
“The power to promulgate rules on the protection and enforcement of constitutional rights, pleadings and practice and the law profession is lodged exclusively in the Supreme Court, not in any other agency of government, least of all the Department of Finance and the Bureau of Internal Revenue,” the IBP said.

The IBP also said that both the Code of Professional Responsibility and the Rules of Court state that the lawyer-client relationship should be “strictly personal, fiduciary and highly confidential.”

“One rule adopted to serve this purpose is the rule on attorney-client privilege. Under the operation of this privilege, an attorney is mandated to keep inviolate his client’s secrets or confidences,” the IBP said.

source:  Philippine Daily Inquirer


Rules on self-employed tightened
The Bureau of Internal Revenue will now require self-employed professionals to submit an affidavit stating their service fees as directed by a new revenue order.

In a one-page advertisement in one broadsheet, the BIR said the affidavit must contain the manner of payments and the factors considered in charging the rates.

“Self-employed professionals are obligated to register the book of accounts and official appointment books of their practice and profession,” the BIR said.

The advertisement said the official accountant book should contain names of the clients and date and time of meeting.

“They are likewise obliged to register their sales invoice and official receipts,” the agency said.
In cases no professional fees were charged, the taxpayer must issue a receipt showing 100 percent discount as proof of the rendered pro-bono service.

Earlier, the BIR required professionals to hang signs of professional fees in their offices for transparency purposes.

Meanwhile, the Tax Managers Association of the Philippines, a group of professionals that manages the obligations of corporations, said the public must be properly informed of the new set of rules.
“Sometimes, the taxpayers are not informed. So they do not know their obligations or responsibilities,” TMAP president Rina Manuel said.

TMAP also criticized a new revenue regulation asking taxpayers to confirm or protest the assessment of the BIR on individual or corporate obligations. The new directive shortened the period to reply to or contest the BIR assessment from the original 30 days to 15 days.

Manuel said the amended evenue regulation violated the right of taxpayers to due process.
She said some taxpayers might need more than 15 days to settle the issue on tax  assessment.
“It depends on the complexity of the circumstance of the taxpayer. In the case of the big taxpayer, the documents may be voluminous,” she said.

The BIR is intensifying its tax collection from 1.8 million self-employed individuals, saying professionals were paying an average of only P33,000 in taxes annually, lower than the industry salary grade they were receiving.

Finance Secretary Cesar Purisima said the average tax collection from professionals should be increased to P200,000. “This will increase our revenues significantly by P300 billion more,” he said.
The agency is also monitoring the tax payments of government suppliers as a part of  efforts to collect more revenues.

BIR Commissioner Kim Henares said the agency would soon run after government suppliers that did not pay their duties correctly.

Henares said the monitoring on government suppliers would involve “verification, cross verification of data on value-added tax and withholding tax.”

source:  Manila Standard Today, March 22 2014

Bookkeeping bodies lament hasty adoption of new tax-return documents

Even as the April 15 deadline for the filing of income-tax returns (ITRs) nears, tax practitioners continue to lament the new ITR forms mandated by the Bureau of Internal Revenue’s (BIR) Revenue Regulations (RR) 2-2014 to be used starting this tax-filing season.

At the general membership meeting of the Tax Management Association of the Philippines (TMAP) last week, tax practitioners said the limited time given by the BIR for taxpayers to comply with the new ITR forms has added to the confusion over the use of these forms.

Ramon Garcia, past president of the Association of Certified Public Accountants in Public Practice, said the shift toward the new ITR forms should have been gradual, and should not have been imposed at the height of the tax-filing season.

“There’s already a feeling among the taxpayers that they’re reaching a certain tipping point wherein the BIR is already putting so much burden upon the taxpayer to comply,” Garcia said.

Another accountant, Tina Ocampo, who represented the Philippine Institute of Certified Public Accountants, also lamented the hasty manner new regulations are issued by the BIR in recent months. She said a lot of the regulations are issued at the last minute, even as the taxpayers are expected to comply with them right away.

Another criticism that the members of TMAP expressed is the lack of public consultations before the regulation mandating the use of the new ITR forms was issued.

“Now, there are no genuine consultations. It used to be that the public consultations happen before any circular is issued, now it’s the other way around,” said lawyer Vicente Joyas, president of the Integrated Bar of the Philippines.

TMAP had already submitted its position paper regarding the new ITR forms to the House of Representatives’s Ways and Means Committee, raising these issues against the use of the new forms.

Another aspect of RR 2-2014 which the TMAP opposes is the use of the mandatory itemized deduction system for corporate and individual taxpayers which are either tax exempt, or with income subject to preferential tax rates, or with mixed income. TMAP’s position is that the National Internal Revenue Code explicitly allows the optional standard-deduction scheme for those subject to the regular income tax.

Meanwhile, Internal Revenue Deputy Commissioner Nelson Aspe assured that the BIR is conducting the information drive to inform taxpayers on how to use the new ITR forms. He also thanked groups such as TMAP for their efforts to hold seminars and information drives on the new ITR forms.  

source:  Business Mirror