The Bureau of Internal Revenue (BIR) said today the instruction to
revenue regional directors and other tax enforcement officials to list
down all assets of individuals and businesses did not include bank
deposits
The Bureau of Internal Revenue (BIR) said today the instruction to
revenue regional directors and other tax enforcement officials to list
down all assets of individuals and businesses did not include bank
deposits.
BIR Deputy Commissioner for Operations Arnel Guballa issued the
clarification as the agency finally implemented the old Revenue
Memorandum Order (RMO) 26-2010 which was questioned by lawyers and
accountants as violation of the bank secrecy law.
The RMO signed by then BIR Commissioner Joel Tan-Torres included the
listing of the name of the taxpayer’s depository bank, the amount and
account number including foreign currency.
Guballa explained the RMO has been modified to exclude bank deposits,
stressing the secrecy of bank deposits which was even affirmed when
Congress approved the Tax Reform for Acceleration and Inclusion Law.
However, Guballa said they will continue to issue warrant of
garnishment on the bank accounts of delinquent taxpayer when the
assessment becomes final and executory.
He explained the listing of assets is necessary to speed up the
collection of back accounts in instances that a business collapses, or
the taxpayer had gone abroad or died.
This way, Guballa said tax collection officers can easily collect tax debts when such information is readily available.
Records showed delinquent accounts have been piling up through the
years involving tens of billions of pesos as many delinquent taxpayers
can no longer be located.
source: Manila Bulletin By Jun Ramirez
Monday, July 23, 2018
Sunday, July 22, 2018
For BIR's benefit
Every taxpayer wants to have peace of mind, free from unreasonable
examination, investigation, or assessment. As such, we commonly
encounter queries from taxpayers seeking assurance that a particular tax
assessment has been settled, and that local tax authorities will no
longer run after them.
Some mention the Bureau of Internal Revenue’s (BIR) practice of issuing Authority to Cancel Assessment (ATCA) for tax deficiency and/or tax delinquency assessment that are paid. As a result, the question of whether a taxpayer is entitled to the issuance of an ATCA persists.
With its renewed efforts to account for clean, and determine collectivity of its Accounts Receivables/Delinquent Accounts (ARs/DAs) as part of its concerted tax collection activities, the BIR recently issued Revenue Memorandum Order (RMO) No. 33-2018. The RMO aims to implement an improved system for managing BIR’s ARs/Das while simultaneously setting an objective write-off mechanism to purge its database of tax arrears longer collectible.
Under RMO No. 33-2018, the issuance of ATCA as proof of cancellation of the applicable tax assessments pursuant to a Final Assessment Notice/Formal Letter of Demands (FAN/FLD) is mandatory. Accordingly, issuance of ATCA shall be made on the following:
The difference between the amounts of the original tax assessment and the reduced tax assessment after the originally issued FAN/FLD has been modified, amended, or declared null and void pursuant to final administrative decision by the BIR commissioner or his duly authorized representative.
A final approval of the applications for compromise settlement and abatement or cancellation of penalties has been secured.
A court of competent authority has decided to modify, amend, or declare with finality the nullity of a tax assessment, as shown in the entry of judgement.
A court of competent authority has declared that the AR/DA is uncollectible due to the insolvency of the taxpayer.
The taxpayer availed of tax amnesty as indicated by the taxpayer’s inclusion in the List of Tax Amnesty Availers provided by the Office of the BIR commissioner or the BIR deputy commissioner for Operations.
Condonation of the assessment by virtue of law as duly approved by the BIR commissioner or his authorized representative.
When the right of the government to assess/collect the deficiency/delinquent taxes has prescribed and such cancellation due to the aforesaid reason has been approved by the commissioner based on the recommendation of the National Committee on Prescribed Cases.
ARs/DAs recommended for write-off and approved by the BIR Commissioner or his authorized representative on grounds such as but not limited to the following:
• Individual taxpayer is deceased and no distrainable or leviable asset can be found
• Permanent cessation of business
• Dissolution
• Taxpayer is a general partnership and the individual partners are already deceased
• AR/DA cases with a total amount due of P20,000 and below, provided that all collection enforcement summary remedies have been fully exhausted.
Other meritorious cases deemed necessary by the BIR commissioner to be covered by ATCA.
The issuance of an ATCA is not mandatory after the payment of tax deficiency and tax discrepancy assessments. The non-inclusion of payment of tax assessments in the above list bolsters the claim of tax officers that the best evidence for the conclusion of a particular assessment are the payment forms used in the settlement of assessed amounts.
While it may be argued that tax assessment cases can be included in the category “Other meritorious cases”, it seems otherwise. If there was actual intent on the part of the BIR to include paid tax assessments on the list, then it would have specifically provided for it in RMO No. 33-2018, in the same vein that the difference between the original assessment indicated in the FAN/FLD and the assessment indicated in the FDDA is provided in the aforementioned list.
Further, there was no discussion of any participation from the taxpayer in the procedure for issuing an ATCA. While RMO 33-2018 provides that the ATCA shall be prepared in quadruplicates, the taxpayer is not entitled to receive a copy of such since each copy of the ATCA is allotted to the docket of the case and the relevant divisions of the BIR.
Obviously, the ATCA is an internal document of the BIR and serves the purpose of tracking and accounting receivables, collections, delinquent, and uncollectible BIR accounts. In other words, the ATCA is a tool by the BIR to manage its accounts and is not meant to be issued for the convenience or security of taxpayers.
The author is a Senior Manager with the Tax & Corporate Services division of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd. – a member firm of Deloitte Touche Tohmatsu Limited – comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
source: Manila Times
Some mention the Bureau of Internal Revenue’s (BIR) practice of issuing Authority to Cancel Assessment (ATCA) for tax deficiency and/or tax delinquency assessment that are paid. As a result, the question of whether a taxpayer is entitled to the issuance of an ATCA persists.
With its renewed efforts to account for clean, and determine collectivity of its Accounts Receivables/Delinquent Accounts (ARs/DAs) as part of its concerted tax collection activities, the BIR recently issued Revenue Memorandum Order (RMO) No. 33-2018. The RMO aims to implement an improved system for managing BIR’s ARs/Das while simultaneously setting an objective write-off mechanism to purge its database of tax arrears longer collectible.
Under RMO No. 33-2018, the issuance of ATCA as proof of cancellation of the applicable tax assessments pursuant to a Final Assessment Notice/Formal Letter of Demands (FAN/FLD) is mandatory. Accordingly, issuance of ATCA shall be made on the following:
The difference between the amounts of the original tax assessment and the reduced tax assessment after the originally issued FAN/FLD has been modified, amended, or declared null and void pursuant to final administrative decision by the BIR commissioner or his duly authorized representative.
A final approval of the applications for compromise settlement and abatement or cancellation of penalties has been secured.
A court of competent authority has decided to modify, amend, or declare with finality the nullity of a tax assessment, as shown in the entry of judgement.
A court of competent authority has declared that the AR/DA is uncollectible due to the insolvency of the taxpayer.
The taxpayer availed of tax amnesty as indicated by the taxpayer’s inclusion in the List of Tax Amnesty Availers provided by the Office of the BIR commissioner or the BIR deputy commissioner for Operations.
Condonation of the assessment by virtue of law as duly approved by the BIR commissioner or his authorized representative.
When the right of the government to assess/collect the deficiency/delinquent taxes has prescribed and such cancellation due to the aforesaid reason has been approved by the commissioner based on the recommendation of the National Committee on Prescribed Cases.
ARs/DAs recommended for write-off and approved by the BIR Commissioner or his authorized representative on grounds such as but not limited to the following:
• Individual taxpayer is deceased and no distrainable or leviable asset can be found
• Permanent cessation of business
• Dissolution
• Taxpayer is a general partnership and the individual partners are already deceased
• AR/DA cases with a total amount due of P20,000 and below, provided that all collection enforcement summary remedies have been fully exhausted.
Other meritorious cases deemed necessary by the BIR commissioner to be covered by ATCA.
The issuance of an ATCA is not mandatory after the payment of tax deficiency and tax discrepancy assessments. The non-inclusion of payment of tax assessments in the above list bolsters the claim of tax officers that the best evidence for the conclusion of a particular assessment are the payment forms used in the settlement of assessed amounts.
While it may be argued that tax assessment cases can be included in the category “Other meritorious cases”, it seems otherwise. If there was actual intent on the part of the BIR to include paid tax assessments on the list, then it would have specifically provided for it in RMO No. 33-2018, in the same vein that the difference between the original assessment indicated in the FAN/FLD and the assessment indicated in the FDDA is provided in the aforementioned list.
Further, there was no discussion of any participation from the taxpayer in the procedure for issuing an ATCA. While RMO 33-2018 provides that the ATCA shall be prepared in quadruplicates, the taxpayer is not entitled to receive a copy of such since each copy of the ATCA is allotted to the docket of the case and the relevant divisions of the BIR.
Obviously, the ATCA is an internal document of the BIR and serves the purpose of tracking and accounting receivables, collections, delinquent, and uncollectible BIR accounts. In other words, the ATCA is a tool by the BIR to manage its accounts and is not meant to be issued for the convenience or security of taxpayers.
The author is a Senior Manager with the Tax & Corporate Services division of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd. – a member firm of Deloitte Touche Tohmatsu Limited – comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
source: Manila Times
A look at the BIR’s audit of ‘small’ taxpayers
Small taxpayers, beware; the Bureau of Internal Revenue (BIR) has you
in its sights. The BIR has issued Revenue Memorandum Order (RMO) No.
32-2018, dated July 6, 2018, prescribing the audit/investigation of
individual and non-individual taxpayers by the Assessment Divisions of
the BIR Regional Offices.
But what exactly is a “small” taxpayer? Under RMO No. 32-2018, to be considered a “small” taxpayer would depend largely on a person’s gross sales/receipts, which amount varies depending on the particular BIR Revenue Region a taxpayer belongs to:
–For those belonging to Regions5, 6, 7 and 8 and with gross sales/receipts amounting to P10,000,000 and below;
–For those belonging to Regions 1, 4, 9A, 9B, 11, 12, 13,16 and 19 and with gross sales/receipts amounting to P5,000,000 and below; and
–For those belonging to Regions 2, 3, 10, 14, 15, 17 and 18 and with gross sales/receipts amounting to P2,000,000 and below.
With the identification of small taxpayers, the BIR shall issue electronic Letters of Authority (eLA) to cover the audit/investigation of taxpayers for tax returns for taxable year 2017, which shall include all internal revenue tax liabilities, except when a specific tax type has been previously examined. Note that a Letter of Authority is an official document that contains the mandate of a BIR revenue officer (ROs) to examine a taxpayer’s books of accounts and other accounting records for a particular taxable year.
The audit of cases issued under the RMO shall be conducted by the ROs of the Office Audit Section (OAS) of the Assessment Divisions in the Regional Offices, and shall be performed without the benefit of a “field audit”. Generally, a “field audit” will entail scheduled visits by ROs to a taxpayer’s business address, where the examination of the taxpayer’s books of accounts and other accounting records will be made. By dispensing with the field audit, the BIR will instead retrieve copies of manually filed and electronically submitted tax returns for taxable year 2017from the BIR Document Processing Division and BIR Revenue Data Center. From these tax returns, the BIR shall select the “small” taxpayers who fall under the prescribed thresholds as explained above.
The eLA, together with the “Notice for the Presentation/Submission of Documents/Records” (Notice) may be delivered personally to the taxpayer by:
–The RO assigned to the case.
–Any other BIR employee with a written authorization to deliver the eLA.
–A courier company.
The concerned taxpayer shall be given 10 days from receipt of the Notice to submit to the ROs the required documents and records. If the taxpayer does not comply with the Notice, a reminder letter shall be sent immediately after the lapse of the 10-day period. If the requested documents are not submitted within 5 days from receipt of the reminder letter, a memorandum report shall be prepared recommending the issuance of a Subpoena Duces Tecum (SDT). For this purpose, an SDT is a process directed to a taxpayer requiring him to bring before a competent authority the books, documents, and other records required under the Notice. Failure to abide by the SDT may result in the imposition of stiff penalties and/or possible imprisonment.
With the issuance of the RMO, the BIR hopes for an increase in the voluntary compliance with the timely payment of taxes, as well as to generate additional tax revenues from small taxpayers.
source: Manila Times Column By ATTY. PEACHES ARANAS
But what exactly is a “small” taxpayer? Under RMO No. 32-2018, to be considered a “small” taxpayer would depend largely on a person’s gross sales/receipts, which amount varies depending on the particular BIR Revenue Region a taxpayer belongs to:
–For those belonging to Regions5, 6, 7 and 8 and with gross sales/receipts amounting to P10,000,000 and below;
–For those belonging to Regions 1, 4, 9A, 9B, 11, 12, 13,16 and 19 and with gross sales/receipts amounting to P5,000,000 and below; and
–For those belonging to Regions 2, 3, 10, 14, 15, 17 and 18 and with gross sales/receipts amounting to P2,000,000 and below.
With the identification of small taxpayers, the BIR shall issue electronic Letters of Authority (eLA) to cover the audit/investigation of taxpayers for tax returns for taxable year 2017, which shall include all internal revenue tax liabilities, except when a specific tax type has been previously examined. Note that a Letter of Authority is an official document that contains the mandate of a BIR revenue officer (ROs) to examine a taxpayer’s books of accounts and other accounting records for a particular taxable year.
The audit of cases issued under the RMO shall be conducted by the ROs of the Office Audit Section (OAS) of the Assessment Divisions in the Regional Offices, and shall be performed without the benefit of a “field audit”. Generally, a “field audit” will entail scheduled visits by ROs to a taxpayer’s business address, where the examination of the taxpayer’s books of accounts and other accounting records will be made. By dispensing with the field audit, the BIR will instead retrieve copies of manually filed and electronically submitted tax returns for taxable year 2017from the BIR Document Processing Division and BIR Revenue Data Center. From these tax returns, the BIR shall select the “small” taxpayers who fall under the prescribed thresholds as explained above.
The eLA, together with the “Notice for the Presentation/Submission of Documents/Records” (Notice) may be delivered personally to the taxpayer by:
–The RO assigned to the case.
–Any other BIR employee with a written authorization to deliver the eLA.
–A courier company.
The concerned taxpayer shall be given 10 days from receipt of the Notice to submit to the ROs the required documents and records. If the taxpayer does not comply with the Notice, a reminder letter shall be sent immediately after the lapse of the 10-day period. If the requested documents are not submitted within 5 days from receipt of the reminder letter, a memorandum report shall be prepared recommending the issuance of a Subpoena Duces Tecum (SDT). For this purpose, an SDT is a process directed to a taxpayer requiring him to bring before a competent authority the books, documents, and other records required under the Notice. Failure to abide by the SDT may result in the imposition of stiff penalties and/or possible imprisonment.
With the issuance of the RMO, the BIR hopes for an increase in the voluntary compliance with the timely payment of taxes, as well as to generate additional tax revenues from small taxpayers.
source: Manila Times Column By ATTY. PEACHES ARANAS
A look at the BIR’s audit of ‘small’ taxpayers
Small taxpayers, beware; the Bureau of Internal Revenue (BIR) has you
in its sights. The BIR has issued Revenue Memorandum Order (RMO) No.
32-2018, dated July 6, 2018, prescribing the audit/investigation of
individual and non-individual taxpayers by the Assessment Divisions of
the BIR Regional Offices.
But what exactly is a “small” taxpayer? Under RMO No. 32-2018, to be considered a “small” taxpayer would depend largely on a person’s gross sales/receipts, which amount varies depending on the particular BIR Revenue Region a taxpayer belongs to:
–For those belonging to Regions5, 6, 7 and 8 and with gross sales/receipts amounting to P10,000,000 and below;
–For those belonging to Regions 1, 4, 9A, 9B, 11, 12, 13,16 and 19 and with gross sales/receipts amounting to P5,000,000 and below; and
–For those belonging to Regions 2, 3, 10, 14, 15, 17 and 18 and with gross sales/receipts amounting to P2,000,000 and below.
With the identification of small taxpayers, the BIR shall issue electronic Letters of Authority (eLA) to cover the audit/investigation of taxpayers for tax returns for taxable year 2017, which shall include all internal revenue tax liabilities, except when a specific tax type has been previously examined. Note that a Letter of Authority is an official document that contains the mandate of a BIR revenue officer (ROs) to examine a taxpayer’s books of accounts and other accounting records for a particular taxable year.
The audit of cases issued under the RMO shall be conducted by the ROs of the Office Audit Section (OAS) of the Assessment Divisions in the Regional Offices, and shall be performed without the benefit of a “field audit”. Generally, a “field audit” will entail scheduled visits by ROs to a taxpayer’s business address, where the examination of the taxpayer’s books of accounts and other accounting records will be made. By dispensing with the field audit, the BIR will instead retrieve copies of manually filed and electronically submitted tax returns for taxable year 2017from the BIR Document Processing Division and BIR Revenue Data Center. From these tax returns, the BIR shall select the “small” taxpayers who fall under the prescribed thresholds as explained above.
The eLA, together with the “Notice for the Presentation/Submission of Documents/Records” (Notice) may be delivered personally to the taxpayer by:
–The RO assigned to the case.
–Any other BIR employee with a written authorization to deliver the eLA.
–A courier company.
The concerned taxpayer shall be given 10 days from receipt of the Notice to submit to the ROs the required documents and records. If the taxpayer does not comply with the Notice, a reminder letter shall be sent immediately after the lapse of the 10-day period. If the requested documents are not submitted within 5 days from receipt of the reminder letter, a memorandum report shall be prepared recommending the issuance of a Subpoena Duces Tecum (SDT). For this purpose, an SDT is a process directed to a taxpayer requiring him to bring before a competent authority the books, documents, and other records required under the Notice. Failure to abide by the SDT may result in the imposition of stiff penalties and/or possible imprisonment.
With the issuance of the RMO, the BIR hopes for an increase in the voluntary compliance with the timely payment of taxes, as well as to generate additional tax revenues from small taxpayers.
source: Manila Times Column of Atty. PEACHES ARANAS
But what exactly is a “small” taxpayer? Under RMO No. 32-2018, to be considered a “small” taxpayer would depend largely on a person’s gross sales/receipts, which amount varies depending on the particular BIR Revenue Region a taxpayer belongs to:
–For those belonging to Regions5, 6, 7 and 8 and with gross sales/receipts amounting to P10,000,000 and below;
–For those belonging to Regions 1, 4, 9A, 9B, 11, 12, 13,16 and 19 and with gross sales/receipts amounting to P5,000,000 and below; and
–For those belonging to Regions 2, 3, 10, 14, 15, 17 and 18 and with gross sales/receipts amounting to P2,000,000 and below.
With the identification of small taxpayers, the BIR shall issue electronic Letters of Authority (eLA) to cover the audit/investigation of taxpayers for tax returns for taxable year 2017, which shall include all internal revenue tax liabilities, except when a specific tax type has been previously examined. Note that a Letter of Authority is an official document that contains the mandate of a BIR revenue officer (ROs) to examine a taxpayer’s books of accounts and other accounting records for a particular taxable year.
The audit of cases issued under the RMO shall be conducted by the ROs of the Office Audit Section (OAS) of the Assessment Divisions in the Regional Offices, and shall be performed without the benefit of a “field audit”. Generally, a “field audit” will entail scheduled visits by ROs to a taxpayer’s business address, where the examination of the taxpayer’s books of accounts and other accounting records will be made. By dispensing with the field audit, the BIR will instead retrieve copies of manually filed and electronically submitted tax returns for taxable year 2017from the BIR Document Processing Division and BIR Revenue Data Center. From these tax returns, the BIR shall select the “small” taxpayers who fall under the prescribed thresholds as explained above.
The eLA, together with the “Notice for the Presentation/Submission of Documents/Records” (Notice) may be delivered personally to the taxpayer by:
–The RO assigned to the case.
–Any other BIR employee with a written authorization to deliver the eLA.
–A courier company.
The concerned taxpayer shall be given 10 days from receipt of the Notice to submit to the ROs the required documents and records. If the taxpayer does not comply with the Notice, a reminder letter shall be sent immediately after the lapse of the 10-day period. If the requested documents are not submitted within 5 days from receipt of the reminder letter, a memorandum report shall be prepared recommending the issuance of a Subpoena Duces Tecum (SDT). For this purpose, an SDT is a process directed to a taxpayer requiring him to bring before a competent authority the books, documents, and other records required under the Notice. Failure to abide by the SDT may result in the imposition of stiff penalties and/or possible imprisonment.
With the issuance of the RMO, the BIR hopes for an increase in the voluntary compliance with the timely payment of taxes, as well as to generate additional tax revenues from small taxpayers.
source: Manila Times Column of Atty. PEACHES ARANAS
Tuesday, July 17, 2018
BIR releases rules on deposit of deceased
The Bureau of Internal Revenue (BIR) has issued a circular clarifying
the requirements on the withdrawal of bank deposits of a deceased
without the need of a clearance or the electronic certificate
authorizing registration (eCAR).
Previously, the BIR did not allow such withdrawal without eCAR, regardless of the amount involved.
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, however, waived such requirement on certain conditions.
In signing Revenue Memorandum Order 62-2018, BIR Commissioner Caesar R. Dulay stated that the legal heir or administrator of the decedent maybe allowed to withdraw the decedent’s bank deposits within one year from death provided the bank subject to six percent final withholding tax the amount withdrawn.
For joint account, the final withholding tax shall be based on the share of the decedent in the joint bank deposit.
Prior to withdrawal, the bank shall require the administrator or any of the legal heir to present the Tax Identification Number (TIN) of the estate of the deceased together with the BIR Form 1904 of the estate duly stamped by the concerned revenue district office (RDO).
The bank shall issue the corresponding BIR Form 2306 certifying the withholding of six percent final tax.
The BIR chief said all withdrawal slips shall include a sworn statement by the joint depositor that he is still living at the time of withdrawal.
Deposits already declared for estate tax purposes are no longer subject to the six percent final withholding tax.
source: Manila Bulletin by Jun Ramirez
Previously, the BIR did not allow such withdrawal without eCAR, regardless of the amount involved.
The Tax Reform for Acceleration and Inclusion (TRAIN) Law, however, waived such requirement on certain conditions.
In signing Revenue Memorandum Order 62-2018, BIR Commissioner Caesar R. Dulay stated that the legal heir or administrator of the decedent maybe allowed to withdraw the decedent’s bank deposits within one year from death provided the bank subject to six percent final withholding tax the amount withdrawn.
For joint account, the final withholding tax shall be based on the share of the decedent in the joint bank deposit.
Prior to withdrawal, the bank shall require the administrator or any of the legal heir to present the Tax Identification Number (TIN) of the estate of the deceased together with the BIR Form 1904 of the estate duly stamped by the concerned revenue district office (RDO).
The bank shall issue the corresponding BIR Form 2306 certifying the withholding of six percent final tax.
The BIR chief said all withdrawal slips shall include a sworn statement by the joint depositor that he is still living at the time of withdrawal.
Deposits already declared for estate tax purposes are no longer subject to the six percent final withholding tax.
source: Manila Bulletin by Jun Ramirez
Sunday, July 15, 2018
DoF lines up more tax reforms
THE DEPARTMENT of Finance (DoF) plans to submit to Congress this
month the tax reform packages on property valuation and passive income.
“By the end of the month, we will submit package three and four sabay (simultaneously),” Finance Secretary Carlos G. Dominguez III told reporters late Thursday.
Mr. Dominguez said that the two reform packages are “mostly revenue neutral.”
The third package seeks to provide a harmonized valuation scheme for national and local taxes.
“For the real estate — hindi naman samin mapupunta yung pera (collections will not go to the national government) — we just want to make sure that the appraisal is done in an internationally accepted way and is done regularly,” Mr. Dominguez.
“Now the local government, they will have the right to tax to set the rate. We just want the valuation [standardized] because the valuation now is really crazy.”
Currently, the government has two valuation schemes for real property: zonal values prepared by the Bureau of Internal Revenue to serve as basis for estate and capital gains taxes and fair market values used by local governments to compute annual real property taxes.
The DoF’s Bureau of Local Government Finance has said that the proposed reform should ease pressure on local officials — who are elected every three years — from their constituents to keep real property assessments low, resulting in delayed review of property values despite the requirement to do so every three years.
DoF said that the reform will also supplement the unitary six percent estate and donors tax provided by the Tax Reform for Acceleration and Inclusion law.
“And then the other thing also is the higher tax on real estate, you will remove the speculative aspect of it. Because you know, it’s going to cost you too much to hold undeveloped idle real estate. So you want to force them to develop it,” Mr. Dominguez explained.
The fourth package, meanwhile, seeks to streamline taxes on financial investments.
“In the financial taxes, the goal is to simplify it. We have 80 different types of tax in financial products and instruments. We’re working very hard we were able to reduce it to about 42. Ang dami palang batas diyan,” said Mr. Dominguez.
The DoF earlier said that the package includes reduction of interest income tax earned from peso-denominated deposits to 12% from 20% and at the same time increase capital income tax rate for dollar deposits, investments, dividends, equity and fixed income, among others, to the same rate. This move would take out the arbitrage among financial products.
The DoF has also said that it would make them more inclusive by taking out the interest income tax for deposits with a minimum deposit period of five years.
The department targets Congress to approve all packages this year, including the Package 1B on general and estate tax amnesty; the second package on corporate income tax and fiscal incentives; and the Package 2+ on further hikes in tobacco and alcohol taxes, as well giving the government a bigger share of mining revenues. Packages 1B and 2, and the tobacco part of Package 2+ are now in Congress.
source: Businessworld
“By the end of the month, we will submit package three and four sabay (simultaneously),” Finance Secretary Carlos G. Dominguez III told reporters late Thursday.
Mr. Dominguez said that the two reform packages are “mostly revenue neutral.”
The third package seeks to provide a harmonized valuation scheme for national and local taxes.
“For the real estate — hindi naman samin mapupunta yung pera (collections will not go to the national government) — we just want to make sure that the appraisal is done in an internationally accepted way and is done regularly,” Mr. Dominguez.
“Now the local government, they will have the right to tax to set the rate. We just want the valuation [standardized] because the valuation now is really crazy.”
Currently, the government has two valuation schemes for real property: zonal values prepared by the Bureau of Internal Revenue to serve as basis for estate and capital gains taxes and fair market values used by local governments to compute annual real property taxes.
The DoF’s Bureau of Local Government Finance has said that the proposed reform should ease pressure on local officials — who are elected every three years — from their constituents to keep real property assessments low, resulting in delayed review of property values despite the requirement to do so every three years.
DoF said that the reform will also supplement the unitary six percent estate and donors tax provided by the Tax Reform for Acceleration and Inclusion law.
“And then the other thing also is the higher tax on real estate, you will remove the speculative aspect of it. Because you know, it’s going to cost you too much to hold undeveloped idle real estate. So you want to force them to develop it,” Mr. Dominguez explained.
The fourth package, meanwhile, seeks to streamline taxes on financial investments.
“In the financial taxes, the goal is to simplify it. We have 80 different types of tax in financial products and instruments. We’re working very hard we were able to reduce it to about 42. Ang dami palang batas diyan,” said Mr. Dominguez.
The DoF earlier said that the package includes reduction of interest income tax earned from peso-denominated deposits to 12% from 20% and at the same time increase capital income tax rate for dollar deposits, investments, dividends, equity and fixed income, among others, to the same rate. This move would take out the arbitrage among financial products.
The DoF has also said that it would make them more inclusive by taking out the interest income tax for deposits with a minimum deposit period of five years.
The department targets Congress to approve all packages this year, including the Package 1B on general and estate tax amnesty; the second package on corporate income tax and fiscal incentives; and the Package 2+ on further hikes in tobacco and alcohol taxes, as well giving the government a bigger share of mining revenues. Packages 1B and 2, and the tobacco part of Package 2+ are now in Congress.
source: Businessworld
Tuesday, July 10, 2018
PEZA banking on LGU support for exemptions from TRAIN 2
THE Philippine Economic Zone Authority (PEZA) said it hopes to
attract more new investment this year, citing support from local
government units (LGUs) to exempt the investment-promotion agency from
the effects of the second round of tax reform.
“I am still very optimistic,” PEZA Director-General Charito B. Plaza told reporters on Friday when asked on her outlook for investment this year.
Investment pledges received by PEZA stood at P30.72 billion in the six months to June, down 40.2% year-on-year.
“I am happy that the local authorities, the Union of Local Authorities of the Philippines (ULAP)… passed a resolution, a strongly worded resolution which says they are appealing to the president and congress to exempt PEZA from the TRAIN 2,” Ms. Plaza added, referring to the second round of tax reform, known by the acronym TRAIN for Tax Reform for Inclusion and Acceleration.
“[T]his is the first time that the LGUs have learned about the program of PEZA. That we are giving incentives. They want to have a share of this spreading of jobs so they can also be ready to be federal states,” she added.
TRAIN, which took effect this year, reduced income taxes but imposed new excise taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation.
TRAIN 2 seeks to reduce corporate income tax rate, while rationalizing the fiscal incentives system, creating uncertainty over the status of privileges enjoyed by economic zone locators.
The measure will cut the preferential corporate income tax rate to 15% from 30% but will replace the 5% perpetual gross income earned tax enjoyed by enterprises inside the PEZA ecozones.
Ms. Plaza, however, noted that locators have not shut down due to these uncertainties and have been taking a wait-and-see approach.
source: Businessworld
“I am still very optimistic,” PEZA Director-General Charito B. Plaza told reporters on Friday when asked on her outlook for investment this year.
Investment pledges received by PEZA stood at P30.72 billion in the six months to June, down 40.2% year-on-year.
“I am happy that the local authorities, the Union of Local Authorities of the Philippines (ULAP)… passed a resolution, a strongly worded resolution which says they are appealing to the president and congress to exempt PEZA from the TRAIN 2,” Ms. Plaza added, referring to the second round of tax reform, known by the acronym TRAIN for Tax Reform for Inclusion and Acceleration.
“[T]his is the first time that the LGUs have learned about the program of PEZA. That we are giving incentives. They want to have a share of this spreading of jobs so they can also be ready to be federal states,” she added.
TRAIN, which took effect this year, reduced income taxes but imposed new excise taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation.
TRAIN 2 seeks to reduce corporate income tax rate, while rationalizing the fiscal incentives system, creating uncertainty over the status of privileges enjoyed by economic zone locators.
The measure will cut the preferential corporate income tax rate to 15% from 30% but will replace the 5% perpetual gross income earned tax enjoyed by enterprises inside the PEZA ecozones.
Ms. Plaza, however, noted that locators have not shut down due to these uncertainties and have been taking a wait-and-see approach.
source: Businessworld
Thursday, July 5, 2018
Dominguez unveils details of proposed tax amnesty program
Finance Secretary Carlos G. Dominguez III on Thursday unveiled
details of the planned and much-awaited tax amnesty program aimed at
shoring up revenues to fund the massive infrastructure projects to be
rolled out by the Duterte administration.
“This year, we hope to improve further our revenue collections with a proposed tax amnesty program. The program will help clear the dockets as well as enable the transfer of stranded real properties so that they can be made economically useful,” Dominguez said in a speech before the Rotary Club of Manila.
“In particular, we propose an estate tax amnesty where the government collects only 6 percent of the net undeclared estate tax for those who died prior to January 1, 2018,” Dominguez said.
He noted that estate tax used to be a higher 20 percent.
Also, the Department of Finance was “proposing a general tax amnesty on all unpaid internal revenue taxes excluding internal revenue taxes arising from importation and customs duties,” Dominguez added.
The Finance chief said that they also wanted to offer amnesty on tax delinquencies, at a rate of 50 percent on the basic tax, excluding interest charges and surcharges.
“For those already facing criminal cases in court, we are proposing a rate of 80 percent of the basic tax only,” he added.
Dominguez earlier said that the government was eyeing to implement the much-awaited tax amnesty by April next year to coincide with the deadline of filing income tax returns.
Tax amnesty forms part of tax reform package “1B,” an off-shoot of the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed by President Duterte last December.
Besides general tax amnesty, package 1B also includes estate tax amnesty, higher motor vehicle user’s charge, bank secrecy relaxation and automatic exchange of information.
Tax package 1B was a result of the Senate’s removal of the tax administration measures from the original first tax reform package passed by the Lower House last year under House Bill No. 5636.
Once package 1B is passed, it will add about P40 billion in revenues.
The DOF was optimistic that the tax reform package 1B will be passed by Congress in the third quarter.
Dominguez said that another reform that the DOF proposes was to treat value-added tax (VAT) as “purely a consumption tax.”
“As such, it will be collected at the point of consumption or sale, and it will be refunded when the consumption is done outside the Philippines. VAT exemptions should not be granted as investments incentives,” he said.
In general, “the tax reform program will assure us of sufficient revenues to fund the infrastructure modernization and expand social services,” Dominguez said.
“Thirty percent of incremental revenues generated from the tax reform law will go to pay for social services. There will be larger allotments for improving public health, upgrading our educational system and providing conditional cash assistance for the poorest of the poor. This, after all, is what modern governments are about: looking after the welfare of its people and providing them effective protection. Meanwhile, about 70 percent of the revenues raised from the new law will be directed to infrastructure modernization,” the Finance chief said.
Besides the TRAIN Law, up to five more tax packages, including pending legislation on corporate income taxation reform coupled with the rationalization of fiscal incentives, will be pursued by the Duterte administration.
source: Philippine Daily Inquirer
“This year, we hope to improve further our revenue collections with a proposed tax amnesty program. The program will help clear the dockets as well as enable the transfer of stranded real properties so that they can be made economically useful,” Dominguez said in a speech before the Rotary Club of Manila.
“In particular, we propose an estate tax amnesty where the government collects only 6 percent of the net undeclared estate tax for those who died prior to January 1, 2018,” Dominguez said.
He noted that estate tax used to be a higher 20 percent.
Also, the Department of Finance was “proposing a general tax amnesty on all unpaid internal revenue taxes excluding internal revenue taxes arising from importation and customs duties,” Dominguez added.
The Finance chief said that they also wanted to offer amnesty on tax delinquencies, at a rate of 50 percent on the basic tax, excluding interest charges and surcharges.
“For those already facing criminal cases in court, we are proposing a rate of 80 percent of the basic tax only,” he added.
Dominguez earlier said that the government was eyeing to implement the much-awaited tax amnesty by April next year to coincide with the deadline of filing income tax returns.
Tax amnesty forms part of tax reform package “1B,” an off-shoot of the Tax Reform for Acceleration and Inclusion (TRAIN) Act signed by President Duterte last December.
Besides general tax amnesty, package 1B also includes estate tax amnesty, higher motor vehicle user’s charge, bank secrecy relaxation and automatic exchange of information.
Tax package 1B was a result of the Senate’s removal of the tax administration measures from the original first tax reform package passed by the Lower House last year under House Bill No. 5636.
Once package 1B is passed, it will add about P40 billion in revenues.
The DOF was optimistic that the tax reform package 1B will be passed by Congress in the third quarter.
Dominguez said that another reform that the DOF proposes was to treat value-added tax (VAT) as “purely a consumption tax.”
“As such, it will be collected at the point of consumption or sale, and it will be refunded when the consumption is done outside the Philippines. VAT exemptions should not be granted as investments incentives,” he said.
In general, “the tax reform program will assure us of sufficient revenues to fund the infrastructure modernization and expand social services,” Dominguez said.
“Thirty percent of incremental revenues generated from the tax reform law will go to pay for social services. There will be larger allotments for improving public health, upgrading our educational system and providing conditional cash assistance for the poorest of the poor. This, after all, is what modern governments are about: looking after the welfare of its people and providing them effective protection. Meanwhile, about 70 percent of the revenues raised from the new law will be directed to infrastructure modernization,” the Finance chief said.
Besides the TRAIN Law, up to five more tax packages, including pending legislation on corporate income taxation reform coupled with the rationalization of fiscal incentives, will be pursued by the Duterte administration.
source: Philippine Daily Inquirer
Tuesday, July 3, 2018
Tax amnesty: A losing proposition?
There’s no point having high tax rates when enforcement is the real
problem. That’s why the comprehensive tax reform program of the Duterte
administration is a necessary evil to make our tax system simpler,
fairer and more efficient.
There’s no reform without pain. We cannot change without having to sacrifice our old ways and maybe even our personal budget.
TRAIN package 1 has taught us that.
Based on the 2016 Annual Report of the Bureau of Internal Revenue (BIR), most of the country’s income tax collections from individuals are shouldered by employees whose income taxes are withheld at source. Their contribution amounts to more than P280 billion of the P340 billion in tax revenues from this sector
On the other hand, the collection from self-employed and professionals (SEPs), despite the increase in taxpayer base by 12.31 percent and 6.86 percent, respectively, decreased by 1.18 percent from P16.012 million in 2015 to P15.82 million in 2016.
Policy reforms must be supported by administrative reforms, and the taxpaying public must be properly informed, guided and assisted to encourage voluntary compliance. Tax rates can easily be increased or decreased through legislation, same as adding new taxes. However, broadening the taxpayer base and increasing voluntary compliance require strategy, budget and collaboration. These are critical to making our tax system efficient.
If the BIR were to improve its enforcement, then it needs an increased budget to hire more technocrats and legal experts, and to invest in technology to catch up with e-commerce and prosecute big- time tax evaders.
As much as we need to intensify the audit of taxpayers, we also need to investigate and remove corrupt BIR examiners who continue to leverage on the ignorance of taxpayers and inefficiency of our tax system. How come the same companies are still being audited for three or more consecutive years despite their improving tax compliance? What’s the real reason and why burden the few taxpayers (being audited) with the increasing collection goal of the BIR?
BIR audit imposes 25 percent surcharge, interest and compromise penalty on top of the basic tax due. Businesses end up having to pay more than if they had simply complied. So, does the BIR audit improve compliance of taxpayers being audited?
Not all those who have to pay these fines and penalties for noncompliance did so intentionally.
Business owners don’t need to have malicious intent to forget filing a return, miss a deadline, or report an incorrect taxable income. They might have just thought they had paid the right dues.
With all the provisions, revenue regulations, memorandum circulars, and other legislation, it is often difficult to keep track of which taxes to pay, how to pay them, and when to pay them.
If you have an educational background dealing with taxes, good for you. Otherwise, you’d have to either start learning, or pay others to understand the laws for you.
These businesses, once found noncompliant, are subjected to heavy fines, penalties, and compromises. Their lack of intent does not excuse them, of course. After all, ignorance of the law excuses no one. Even so, something needs to be done to address this issue.
The general tax amnesty currently being reviewed in Congress can help with that problem.
TRAIN’s package 1B will provide not only businesses, but every taxpayer, a fresh start.
It is expected to generate about P40 billion for the government for the year, which only goes to show the expansiveness of the reform.
However, that again poses the problem that the corrupt taxpayers can just start over with their misdeeds.
So, is the tax amnesty a losing proposition? It does not have to be. That’s why requisite to an effective amnesty program is the lifting of the Bank Secrecy Law to force erring taxpayers or violators to do self-assessment and tax planning before filing for tax amnesty.
The amnesty addresses an end result, not a root cause.
Of course, that is not to say it is not a good solution—because it is—just that it should not be seen as the answer to the country’s tax woes.
What the country needs is a system that encourages honesty and integrity for both taxpayers and tax collectors.
With coming tax reforms intended to lower taxes, the government exhibits its trust in the Filipino people. In turn, as citizens, we need to do our part.
Voluntary compliance will be the key to a better system.
At the Asian Consulting Group (ACG), we are committed to helping taxpayers pay the right taxes.
But paying the right taxes does not have to mean paying more taxes.
Unnecessary penalties, interest and compromises are the main cause of a taxpayer’s headache, and if taxpayers choose to be more compliant (and honest), then they can get rid of all these problems.
This is where knowledge and professional help can play a significant part.
Just because a taxpayer wishes to comply with taxes voluntarily does not mean they would be free from the burdens of taxes immediately.
With the right assistance, taxpayers can save millions of pesos while helping the government collect the right taxes without unnecessary penalties and compromises.
Taxpayers who are frequently audited will now have options, either they wait and prepare for the implementation of general tax amnesty or apply their companies to the Seal of Honesty (SOH) Certification Program.
Visit www.sealofhonesty.ph for more information.
If you’re interested, you may want to know about Citizen Tax Planning (CTP) to stop a BIR audit.
CTP is a game-changing strategy to help taxpayers pay the right taxes without the unnecessary penalties and compromises.
E-mail us at consult@acg.ph, for more details. You may also visit www.acg.ph.
source: Inquirer
As we always say, if we want a better Philippines, we need to be good citizens and better taxpayers.
There’s no reform without pain. We cannot change without having to sacrifice our old ways and maybe even our personal budget.
TRAIN package 1 has taught us that.
Based on the 2016 Annual Report of the Bureau of Internal Revenue (BIR), most of the country’s income tax collections from individuals are shouldered by employees whose income taxes are withheld at source. Their contribution amounts to more than P280 billion of the P340 billion in tax revenues from this sector
On the other hand, the collection from self-employed and professionals (SEPs), despite the increase in taxpayer base by 12.31 percent and 6.86 percent, respectively, decreased by 1.18 percent from P16.012 million in 2015 to P15.82 million in 2016.
Policy reforms must be supported by administrative reforms, and the taxpaying public must be properly informed, guided and assisted to encourage voluntary compliance. Tax rates can easily be increased or decreased through legislation, same as adding new taxes. However, broadening the taxpayer base and increasing voluntary compliance require strategy, budget and collaboration. These are critical to making our tax system efficient.
If the BIR were to improve its enforcement, then it needs an increased budget to hire more technocrats and legal experts, and to invest in technology to catch up with e-commerce and prosecute big- time tax evaders.
As much as we need to intensify the audit of taxpayers, we also need to investigate and remove corrupt BIR examiners who continue to leverage on the ignorance of taxpayers and inefficiency of our tax system. How come the same companies are still being audited for three or more consecutive years despite their improving tax compliance? What’s the real reason and why burden the few taxpayers (being audited) with the increasing collection goal of the BIR?
BIR audit imposes 25 percent surcharge, interest and compromise penalty on top of the basic tax due. Businesses end up having to pay more than if they had simply complied. So, does the BIR audit improve compliance of taxpayers being audited?
Not all those who have to pay these fines and penalties for noncompliance did so intentionally.
Business owners don’t need to have malicious intent to forget filing a return, miss a deadline, or report an incorrect taxable income. They might have just thought they had paid the right dues.
With all the provisions, revenue regulations, memorandum circulars, and other legislation, it is often difficult to keep track of which taxes to pay, how to pay them, and when to pay them.
If you have an educational background dealing with taxes, good for you. Otherwise, you’d have to either start learning, or pay others to understand the laws for you.
These businesses, once found noncompliant, are subjected to heavy fines, penalties, and compromises. Their lack of intent does not excuse them, of course. After all, ignorance of the law excuses no one. Even so, something needs to be done to address this issue.
The general tax amnesty currently being reviewed in Congress can help with that problem.
TRAIN’s package 1B will provide not only businesses, but every taxpayer, a fresh start.
It is expected to generate about P40 billion for the government for the year, which only goes to show the expansiveness of the reform.
However, that again poses the problem that the corrupt taxpayers can just start over with their misdeeds.
So, is the tax amnesty a losing proposition? It does not have to be. That’s why requisite to an effective amnesty program is the lifting of the Bank Secrecy Law to force erring taxpayers or violators to do self-assessment and tax planning before filing for tax amnesty.
The amnesty addresses an end result, not a root cause.
Of course, that is not to say it is not a good solution—because it is—just that it should not be seen as the answer to the country’s tax woes.
What the country needs is a system that encourages honesty and integrity for both taxpayers and tax collectors.
With coming tax reforms intended to lower taxes, the government exhibits its trust in the Filipino people. In turn, as citizens, we need to do our part.
Voluntary compliance will be the key to a better system.
At the Asian Consulting Group (ACG), we are committed to helping taxpayers pay the right taxes.
But paying the right taxes does not have to mean paying more taxes.
Unnecessary penalties, interest and compromises are the main cause of a taxpayer’s headache, and if taxpayers choose to be more compliant (and honest), then they can get rid of all these problems.
This is where knowledge and professional help can play a significant part.
Just because a taxpayer wishes to comply with taxes voluntarily does not mean they would be free from the burdens of taxes immediately.
With the right assistance, taxpayers can save millions of pesos while helping the government collect the right taxes without unnecessary penalties and compromises.
Taxpayers who are frequently audited will now have options, either they wait and prepare for the implementation of general tax amnesty or apply their companies to the Seal of Honesty (SOH) Certification Program.
Visit www.sealofhonesty.ph for more information.
If you’re interested, you may want to know about Citizen Tax Planning (CTP) to stop a BIR audit.
CTP is a game-changing strategy to help taxpayers pay the right taxes without the unnecessary penalties and compromises.
E-mail us at consult@acg.ph, for more details. You may also visit www.acg.ph.
source: Inquirer
As we always say, if we want a better Philippines, we need to be good citizens and better taxpayers.
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