Nothing new with questioned alphalist requirements, BIR chief reiterates

THE COUNTRY’s tax chief on Friday stood pat on a rule imposing stricter requirements on stricter withholding tax reporting amid a move from business groups to question its constitutionality before the Supreme Court.

Bureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto-Henares said the six organizations that questioned Revenue Regulation (RR) 4-2014 and its related issuances before the high court had the right to do so.

However, she reiterated there was nothing new in the questioned issuances.

“How can you question the constitutionality of something that has been there since 1998?” Ms. Henares said in a phone interview.

The Philippine Stock Exchange, Inc.; the Bankers Association of the Philippines; the Philippine Association of Securities Brokers and Dealers, Inc.; the Fund Managers Association of the Philippines; the Trust Officers Association of the Philippines; and Marmon Holdings, Inc. filed on Thursday a 58-page petition for review and prohibition questioning the validity of RR 4-2014, Revenue Memorandum Circular (RMC) 5-2014 and Securities and Exchange Commission (SEC) Memorandum Circular (MC) No. 10, series of 2014.

The petition sought to stop and eventually declare as unconstitutional the issuances which prohibit listed companies from lumping payments in stock trading through PCD Nominee Corp., the designated payee of the dividend payments made by firms trading in the bourse.

RR 1-2014 requires withholding agents to submit an alphabetical list (alphalist) of employees and list of payees baring income subject to creditable and final withholding taxes.

It likewise prohibits lumping such amounts into a single total labeled as “various” accounts.

RMC 5-2014, on the other hand, requires withholding agents to indicate taxpayers identification numbers (TINs), complete names, income amounts and tax withheld from payees.

Lastly, the SEC’s MC 10-2014 sets guidelines to help issuers of securities comply with RR 1-2014.

The petitioners said Finance Secretary Cesar V. Purisima, the BIR’s Ms. Jacinto-Henares and SEC Chairperson Teresita J. Herbosa acted with grave abuse of their discretion with their respective issuances, saying these violated their and their customers’ right to due process.

“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 stated.

The questioned regulations likewise violate their right to privacy, saying it entails disclosure of “sensitive personal information” and the rules do not provide a mechanism to safeguard the identity of investors. The rules likewise violate bank secrecy law provisions, they said.

Petitioners also asked the high court to issue a temporary restraining order to protect their rights while the lawsuit is pending and to avoid liabilities that may arise from the questioned regulations.

The industry and business groups said they could face violations of the Data Privacy Act and the Bank Secrecy Law if they comply with the issuances since the orders require disclosure of confidential information.

Non-compliance, on the other hand, would mean violating provisions of the National Internal Revenue Code and the Securities Regulation Code, the petitioners said. -- Mikhail Franz E. Flores


source:  Businessworld