THE SUPREME COURT has indefinitely halted the implementation of a Bureau of Internal Revenue (BIR) regulation -- as well as two related issuances -- imposing stricter withholding tax reporting for companies.
The Court en banc issued a temporary restraining order (TRO), “effective immediately and until further orders,” stopping the BIR, the Finance department, and the Securities and Exchange Commission from further enforcing Revenue Regulations (RR) 1-2014, Revenue Memorandum Circular (RMC) 5-2014, and SEC Memorandum Circular (MC) 10-14, it said in an e-mail to reporters yesterday.
The three regulations essentially require companies to disclose personal information of investors, prohibiting them from lumping payments made in stock trading through the PCD Nominee Corp., designated payee of dividend payments by SEC-listed firms.
The implementation of RR 1-2014 and RMC 5-2014 were halted “where these prohibit the naming of the PCD Nominee (or any other securities intermediary designated and allowed under section 43.1 of the Securities Regulation Code) as the payee for the dividend payments made by listed companies,” the Supreme Court said.
Enforcement of SEC MC 10-14, meanwhile, was halted “in its entirety.”
The full copy of the TRO was not available as of press time.
RR-1 2014, which was issued last Jan. 13 and took effect last Jan. 28, requires withholding agents to submit an alphabetical list (alphalist) of employees and list of payees whose income are subject to creditable and final withholding taxes.
It also prohibits the aggregation of such amounts into and labeled as “various accounts.”
RMC 5-2014, meanwhile, dated Jan. 29, clarifies provisions of RR 1-2014 and mandates withholding agents to declare taxpayers’ identification numbers, complete names, income amounts, and tax withheld from payees.
Lastly, SEC MC 10-2014, which was issued on May 22 and took effect last June 6, sets guidelines to help issuers of securities comply with RR 1-2014. Among others, the SEC circular mandates market participants like brokers and other depository account holders to provide firms with information required by the BIR under RR 1-2014 and RMC 5-2014, as these are not readily available.
The TRO came after six business groups -- The Philippine Stock Exchange, Inc.; Bankers Association of the Philippines; Philippine Association of Securities Brokers and Dealers, Inc.; Fund Managers Association of the Philippines; Trust Officers Association of the Philippines; and Marmon Holdings, Inc. -- lodged a 58-page petition before the Supreme Court on Sept. 4, questioning the validity of said issuances and asking the high court to declare the orders void and unconstitutional.
Named respondents to the case were Finance Secretary Cesar V. Purisima, BIR Commissioner Kim S. Jacinto-Henares, and SEC Chairperson Teresita J. Herbosa.
In their petition, the petitioners argued that listed companies themselves do not have the capability to provide the information required. “The requirement under RR 01-14 and RMC 05-14 for listed companies to disclose the payee of dividend payments and the prohibition of the identification of the PCD Nominee as the payee is unreasonable since listed companies, by themselves, are not capable of accurately providing the required information,” the petition read.
They also raised questions on data privacy, saying the orders require disclosure of sensitive personal information and do not provide safeguards against misuse. To comply with the said issuances would also put firms in danger of violating the Data Privacy Act and the Bank Secrecy Law, the groups said in their petition.
The groups also warned of the orders’ potential impact on the Philippine capital markets, noting that these “[risk] the security of various investors.” They said such an effect would likewise spill over to the broader economy.
Sought for comment, BIR’s Ms. Jacinto-Henares said the TRO won’t stop the bureau from pursuing its mandate, but admitted that the stop order could be a “challenge” to the agency.
“Well, it will make the job of the BIR harder,” she said in a phone interview, adding that while she had not yet received a copy of the TRO, BIR is ready to “counter” the order.
“We will continue running after them (companies). I will ask my people to investigate those people who are complaining and see if they pay the proper amount of taxes,” she said.
It will be recalled that the BIR, in an effort to improve revenue collections, has been clarifying specific provisions of tax laws -- at times in ways that have raised questions from affected parties.
Other recent BIR issuances that were also slapped TROs by the Supreme Court include RR 4-2014, which requires self-employed professionals to execute an affidavit specifying rates, manner of billing and factors they consider in determining their fees upon registration with the BIR every year, as well as similar regulations for lawyers (in April), doctors and accountants (June) and dentists (July). -- R. D. Madrid
source: Businessworld
No comments:
Post a Comment