BIR RULINGS ON CGT IMPOSITION ON EXCHANGE OF PROPERTY, EXTENT OF VAT EXEMPTION OF RENEWABLE ENERGY DEVELOPER, TAXABILITY & EXEMPTION OF RHQ & FWT EXEMPTION OF INTEREST INCOME OF NON-STOCK SAVINGS & LOANS ASSOCIATIONS
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [NOVEMBER 7-14]
- BIR RULINGS ON CGT IMPOSITION ON EXCHANGE OF PROPERTY, EXTENT OF VAT EXEMPTION OF RENEWABLE ENERGY DEVELOPER, TAXABILITY & EXEMPTION OF RHQ & FWT EXEMPTION OF INTEREST INCOME OF NON-STOCK SAVINGS & LOANS ASSOCIATIONS
1. TAX & BUSINESS-RELATED NEWS [NOVEMBER 7-14]
- Exclusive: At least $1 billion of client funds missing at failed crypto firm FTX
- VAT on Netflix, Spotify other digital services approved by House on final reading
- Bloodbath: Lance Gokongwei loses nearly P4 billion in 3 months from JG Summit’s petrochemical business
- Cryptocurrency platform FTX goes bankrupt in US, boss resigns
- LRMC arbitration seen to dent on gov’t plan for railways PPP
- CHED lauds 16 PH universities in the 2023 QS Asia University Rankings list
- Cebu City moves to demolish parts of Mango Ave. hotel, restaurant
- LIST: Top 10 law schools in PH with most bar passers from 2011-2020
- Salceda: PBBM asked me to study proposed removal of VAT from electricity
- Grab delivery drivers protest pay cuts in Cebu City
- Baguio tourist spot closed over violations
- Jollibee Group among Forbes’ World’s Best Employers for third straight year
- Wawa Bulk Water Project now supplying 80-M liters to Manila Water, MWSS: Prime Infra
- Japan-inspired Mitsukoshi mall to open in BGC in November
- Bulacan airport civil works 42% complete
- KFC Germany apologizes for tying chicken promo to commemoration of Kristallnacht
- Facebook’s Mark Zuckerberg Firing 11,000 After Company Spends $15B On Metaverse
- Jollibee earns P2B, terminates Dunkin’ Donuts deal in China
- These are the top 10 airlines in the world for 2022—and not one U.S. carrier made the list
- Nokia scores Patent suit win over OPPO in the UK now
- Canada to hire hundreds of Filipino healthcare workers for Saskatchewan
- Gokongwei conglomerate suffers P859M loss as forex losses weigh
- DOLE orders wage review amid rising prices but adds hike will have to wait until 2023
- Palawan recognized as ‘most desirable island’ by UK-based travel magazine
- ECC offers assistance to govt workers injured, got sick, died, in line of duty
- Data privacy concerns raised after Davao Oriental resort calls out guests online
- Here’s what laid-off Meta employees in the US are being offered as severance packages
- Nailed It: Amazon Becomes the First Company Ever to Lose $1 Trillion in Stock Value
- Japan to lend ¥377B for North-South rail
- Building BGC clones: Big Boy Sy taps long-time executive Glenn Ang to lead SM’s smart city projects
Exclusive: At least $1 billion of client funds missing at failed crypto firm FTX [Reuters, November 14, 2022]
The exchange’s founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried’s trading company Alameda Research, the people told Reuters.
VAT on Netflix, Spotify other digital services approved by House on final reading [ABS-CBN News, November 14, 2022]
The House of Representatives on Monday voted 253-4-1, to approve on third and final reading House Bill 4122, imposing VAT on nonresident digital service providers (DSPs).
https://news.abs-cbn.com/business/11/14/22/vat-on-netflix-and-other-digital-services-okd-by-house
Bloodbath: Lance Gokongwei loses nearly P4 billion in 3 months from JG Summit’s petrochemical business [Bilyonaryo, November 13, 2022]
JG Summit Olefins Corp. (JGSOC) led by bilyonaryo Lance Gokongwei sank deeper in red ink in the last three months due to surging costs and a tanking peso.
Cryptocurrency platform FTX goes bankrupt in US, boss resigns [ABS-CBN News, November 12, 2022]
Binance, meanwhile, axed its FTX takeover deal late on Wednesday and cited recent press reports about mismanagement of client funds, and investigations by US regulators.
https://news.abs-cbn.com/business/11/12/22/cryptocurrency-platform-ftx-goes-bankrupt-in-us
LRMC arbitration seen to dent on gov’t plan for railways PPP [BusinessWorld, November 11, 2022]
LIGHT Rail Manila Corp. (LRMC), the private operator of Light Rail Transit Line 1 (LRT-1), is hopeful that the arbitration case it filed against the Transportation department and the Light Rail Transit Authority (LRTA) will be resolved soon, as the company bleeds despite the easing of mobility restrictions.
CHED lauds 16 PH universities in the 2023 QS Asia University Rankings list [Manila Bulletin, November 10, 2022]
The QS is considered the world’s largest international higher education network. It releases its ranking of top universities in Asia every year.
Cebu City moves to demolish parts of Mango Ave. hotel, restaurant [SunStar, November 10, 2022]
THE Cebu City Government will issue a notice of violation to two big establishments on Gen. Maxilom Ave. (old name Mango Ave.) for violating the three-meter easement, paving the way for the demolition of the portions of these establishments that encroach on the Lahug-Kamputhaw-Tejero River.
https://ph.news.yahoo.com/cebu-city-moves-demolish-parts-152100314.html
LIST: Top 10 law schools in PH with most bar passers from 2011-2020 [Inquirer.Net, November 10, 2022]
The Legal Education Board (LEB) has announced the results of a 10-year study evaluating the quality of legal education provided by 119 LEIs around the country. Since the 2020 and 2021 Bar Exams were held simultaneously this year due to the COVID-19 epidemic, the board claimed its research contained data from both years.
Salceda: PBBM asked me to study proposed removal of VAT from electricity [Manila Bulletin, November 10, 2022]
Pressed for more details, the economist-solon revealed to reporters the possible trade-off: “The Committee on Ways and Means will seriously study removing the VAT on utilities provided that we will increase the franchise tax [of utility companies].”
https://mb.com.ph/2022/11/10/salceda-pbbm-asked-me-to-study-removing-vat-from-public-utilities/
Grab delivery drivers protest pay cuts in Cebu City [Rappler, November 10, 2022]
Nearly 100 Grab delivery drivers held a “unity ride” along Fuente Osmeña Circle in Cebu City on Thursday, November 10, to protest reductions in delivery pay and incentives.
https://www.rappler.com/nation/grab-delivery-drivers-protest-pay-cuts-cebu-city/
Baguio tourist spot closed over violations [The Philippine Star, November 10, 2022]
Igorot Stone Kingdom, a theme park in this city, has been ordered closed over safety issues and for operating without a business permit.
https://www.philstar.com/nation/2022/11/10/2222726/baguio-tourist-spot-closed-over-violations
Jollibee Group among Forbes’ World’s Best Employers for third straight year [Rappler, November 10, 2022]
For the third straight year, Jollibee Group is named among the World’s Best Employers by Forbes this 2022. Jollibee Group is the highest-ranking restaurant company in the said global listing, as well as the highest-ranking Philippine-based company.
https://www.rappler.com/brandrap/jollibee-group-among-forbes-world-best-employers-2022/
Wawa Bulk Water Project now supplying 80-M liters to Manila Water, MWSS: Prime Infra [ABS-CBN News, November 10, 2022]
WawaJVCo, a joint venture of Prime Infra and San Lorenzo Ruiz Builders and Developers Group, Inc said its Wawa Bulk Water Supply Project started commercial operations last Oct. 25, Prime Infra said.
https://news.abs-cbn.com/business/11/10/22/new-dam-in-rizal-now-delivering-water-prime-infra
Japan-inspired Mitsukoshi mall to open in BGC in November [Rappler, November 10, 2022]
Mitsukoshi is a popular department store chain in Japan. Its BGC branch will be its 56th outlet globally.
https://www.rappler.com/life-and-style/style/japan-inspired-mitsukoshi-mall-open-bgc-november-2022/
Bulacan airport civil works 42% complete [The Philippine Star, November 10, 2022]
The DOTr said San Miguel Aerocity Inc. (SMAI) expects to finish the development works for the 1,693-hectare site by the end of 2024 and plans to proceed with the construction of the airport with the goal of operating it by 2027.
https://www.philstar.com/business/2022/11/10/2222652/bulacan-airport-civil-works-42-complete
KFC Germany apologizes for tying chicken promo to commemoration of Kristallnacht [ABS-CBN News, November 10, 2022]
KFC has been forced to apologize after sending a notification to German customers encouraging them to commemorate the Kristallnacht anti-Jewish pogrom with fried chicken and cheese.
https://news.abs-cbn.com/business/11/10/22/kfc-germany-sorry-for-kristallnacht-chicken-promo
Facebook’s Mark Zuckerberg Firing 11,000 After Company Spends $15B On Metaverse [Insider, November 10, 2022]
Rumors have swirled this week, and now it’s confirmed: Meta, the owner of Facebook, WhatsApp, Instagram and Oculus VR, is sacking 13 percent of its workforce, a total of around 11,000 employees out of work. This comes in the wake of the company having spent an extraordinary $15 billion on its so-called “metaverse” project.
https://kotaku.com/meta-facebook-mark-zuckerberg-layoff-vr-metaverse-1849761588
Jollibee earns P2B, terminates Dunkin’ Donuts deal in China [BusinessWorld, November 10, 2022]
At present, JFC has 486 stores in China: 418 Yonghe King stores, 55 Hong Zhuang Yuan stores, and 13 Tim Ho Wan stores.
These are the top 10 airlines in the world for 2022—and not one U.S. carrier made the list [CNBC, November 10, 2022]
Airline-ranking company Skytrax ranked the world’s best carriers, and not a single U.S. airline made it to the top 10.
https://www.cnbc.com/2022/11/10/best-airlines-in-the-world-skytrax-ranking.html
Nokia scores Patent suit win over OPPO in the UK now [Nokia Power User, November 10, 2022]
Coming to details now, Nokia has been handed over a win by UK High Court. In a ruling, a UK High Court judge found Chinese vendor OPPO in infringement of a Nokia patent. This judgment may well lead to ban of OPPO smartphone sales in the UK too.
https://nokiapoweruser.com/nokia-scores-patent-suit-win-over-oppo-in-the-uk-now/
Canada to hire hundreds of Filipino healthcare workers for Saskatchewan [Manila Bulletin, November 10, 2022]
According to the embassy, starting Nov. 28, a series of workshops and information sessions will be hosted over five days in Manila by Saskatchewan’s delegation which includes Saskatchewan Health Authority (SHA) representatives.
Gokongwei conglomerate suffers P859M loss as forex losses weigh [Bilyonaryo, November 10, 2022]
The significant depreciation of the peso from P51 to a dollar in December 2021 to P58.63 in September this year resulted in foreign exchange translation losses on the group’s US dollar-denominated debt.
DOLE orders wage review amid rising prices but adds hike will have to wait until 2023 [ABS-CBN, News, November 10, 2022]
According to Labor Secretary Bienvenido Laguesma, the Regional Tripartite Wage and Productivity Boards are obligated to conduct a review to “keep pace with whatever developments in the work sector”.
https://news.abs-cbn.com/business/11/10/22/labor-dept-orders-wage-review-amid-rising-prices
Palawan recognized as ‘most desirable island’ by UK-based travel magazine [Manila Bulletin, November 10, 2022]
The travel magazine also cited Kayangan as one of the most photographed sites in Palawan, as well as Puerto Princesa river for being one of the world’s longest underground rivers.
ECC offers assistance to govt workers injured, got sick, died, in line of duty [ABS-CBN News, November 10, 2022]
Government workers, self-employed individuals, house helpers, and sea-based overseas workers can seek additional financial aid from the Employee’s Compensation Commission through its Employee’s Compensation Program.
Data privacy concerns raised after Davao Oriental resort calls out guests online [Interaksyon, The Philippine Star, November 9, 2022]
Jakka Beach Resort, a private beach resort in Davao Oriental, last November 6 called out two vloggers for seemingly leaving the rooms that they stayed in in “chaos.”
Here’s what laid-off Meta employees in the US are being offered as severance packages [Insider, November 9, 2022]
Meta’s announcement that it is laying off 11,000 employees – or 13% of its workforce – included details of the severance package being offered to US staff.
Nailed It: Amazon Becomes the First Company Ever to Lose $1 Trillion in Stock Value [Gizmodo, November 9, 2022]
Amazon, one of the first companies to join the prestigious $1 trillion dollar valuation club, just passed another, admittedly less desirable milestone. This week, Jeff Bezos’ Everything Store became the first publicly traded company to lose $1 tillion in market valuation.
https://gizmodo.com/amazon-market-cap-amazon-prime-e-commerce-1849764529
Japan to lend ¥377B for North-South rail [BusinessWorld, November 8, 2022]
JAPAN will lend the Philippines ¥377 billion to build the North-South Commuter Railway (NSCR), a 147-kilometer line between Clark in Central Luzon and Calamba, Laguna.
Building BGC clones: Big Boy Sy taps long-time executive Glenn Ang to lead SM’s smart city projects [Bilyonaryo, November 7, 2022]
Dubbed Carmona Smart City, the project will have a new municipal hall, a farmer’s market, and a sizeable SM Mall to serve the residents of Carmona as well as surrounding towns and cities.
2. BIR RULINGS ON CGT IMPOSITION ON EXCHANGE OF PROPERTY, EXTENT OF VAT EXEMPTION OF RENEWABLE ENERGY DEVELOPER, TAXABILITY & EXEMPTION OF RHQ & FWT EXEMPTION OF INTEREST INCOME OF NON-STOCK SAVINGS & LOANS ASSOCIATIONS
[DEED OF EXCHANGE UNDER OTHER DISPOSITION IS SUBJECT TO CGT] [DEED OF EXCHANGE DUE TO ADMINISTRATIVE ERROR IN THE REGISTRATION OF TITLES CANNOT BE EXEMPT FROM CGT IN THE ABSENCE OF STATUTORY PROVISION EXEMPTING IT]
Ms. L is requesting an exemption from the payment of Capital Gains Tax (CGT) on the Deed of Exchange covering residential properties which was executed to correct material discrepancies encoded in the respective titles. As represented, a Deed of Exchange was executed between Ms. L and Mr. F to rectify the error in the registration of the wrong portions in the parties’ respective names and the registration of the portions that correctly belong to each other. In reply, the Bureau cited Salud vs. CIR wherein the Court of Tax Appeals had occasion to rule that the 1997 Tax Code, as amended does not define nor qualify the phrase “other disposition.” Section 24(D)(1) of the 1997 Tax Code, as amended, includes all kinds of dispositions of real property unless specifically excluded therefrom or subject to another tax treatment pursuant to other provisions of the Tax Code or other special tax laws. Further, an administrative error was committed in the process of registering the titles of the parties which clouded their proof and tight of ownership on their respective lots. However, the remedy resorted to by the parties cannot be construed as an exemption from the application of the prevailing tax laws. Consequently, absence of an express statutory provision exempting the subject transaction from CGT prompts the inevitable application of Section 24(D)(1) of the 1997 Tax Code, as amended, thus, the Deed of Exchange is subject to CGT, and Documentary Stamp Tax (DST). [BIR RULING NO. 399-2022, SEPTEMBER 23, 2022]
EXTENT OF VAT EXEMPTION OF A RENEWABLE ENERGY DEVELOPER OF GEOTHERMAL PRODUCTION
P Co., a Renewable Energy (RE) Developer of Geothermal Energy Resources, is requesting a confirmatory ruling on whether its local purchases of goods, properties, and services are entitled to a 0% Value-Added Tax (VAT). Accordingly, P Co. is registered with the Board of Investments (BOI) and the Department of Energy (DOE). In reply, Section 15 (g) of Republic Act No. 9513, otherwise known as the “Renewable Energy Act of 2008,” provides that all RE Developers shall be entitled to zero-rated VAT on its purchases of local supply of goods, properties, and services needed for the development, construction, and installation of its plant facilities, as well as the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors. Simply, since P Co. is a DOE-certified RE Developer, its suppliers/sellers of goods and services should not pass on the 12% VAT on its local purchases needed for its RE projects. [BIR RULING NO. 392-2022, SEPTEMBER 22, 2022]
REGIONAL AREA HEADQUARTER IS EXEMPT FROM INCOME TAX & VAT IF IT IS ACTED EXCLUSIVELY AS SUPERVISORY, COMMUNICATIONS & COORDINATING CENTER FOR ITS AFFILIATES IN THE REGION
G Co., a Regional Area Headquarter of a multinational corporation organized and existing under the laws of the Commonwealth of Northern Mariana Islands, is requesting an Income Tax and Value-Added Tax (VAT) exemption. At present, it is acting as a supervisory, communications, and coordinating center for its affiliates, subsidiaries, or branches in the region. It does not derive any income from the Philippines, nor will participate in any matter in the management of the company’s subsidiaries or branch offices operating in the country. In ruling, Section 28 (A)(5)(a) of the 1997 Tax Code, as amended, provides that a Regional or Area Headquarter shall not be subject to Income Tax, provided it is a branch established in the Philippines by a multinational company acting as a supervisory, communications, or coordinating center for its affiliates, subsidiaries, and branches in the Asia-Pacific Regional and other foreign markets, and it does not earn or derive income from the Philippines, under Section 22 (DD) of the 1997 Tax Code, as amended. Likewise, its services rendered, based on the foregoing qualifications, shall be exempt from VAT under Section 109 (1) (J) of the 1997 Tax Code, as amended. [BIR RULING NO. 379.2022, AUGUST 31, 2022]
INTEREST INCOME DERIVED FROM DEPOSITS OF NON-STOCK SAVINGS & LOANS ASSOCIATIONS ARE EXEMPT FROM FINAL WITHHOLDING TAX
S Association is requesting a revalidation of its certificate of exemption from the 20% Final Withholding Tax (FWT) on its interest income derived from its deposits and deposit substitutes pursuant to the Republic Act (R.A.) No. 8367, otherwise known as the “Revised Non-Stock Savings and Loan Association Act of 1997.” In reply, Section 5 of the law provides that an association shall be exempt from payment of tax in respect to income it receives, including interest on its deposits with any bank and interest earnings on deposits of members with an association, as well as shares of its members from the net income of the association shall be exempt from income tax. However, income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, is subject to the corresponding internal revenue taxes imposed under the 1997 Tax Code. In view of the foregoing, and as held in BIR Ruling No. 519-2011, S Association shall be exempt from income tax, with respect to the income it receives. Likewise, interest income derived by it from deposit and deposit substitutes are exempt from 20% FWT. [BIR RULING NO. 364-2022, AUGUST 12, 2022]
TAX-EXEMPT RETIREMENT BENEFITS UPON MEETING THE AGE & YEARS OF SERVICE REQUIREMENT UNDER RA 7641
B Co. is requesting the income tax exemption of the retirement benefits of their retiring employee, who turned 60 years of age and has served them for 15 years. In reply, the Republic Act (RA) No. 7641, otherwise known as “The Retirement Pay Law” provides that the in absence of any retirement plan, employees shall receive the equivalent of at least 1/2 month’s salary for every year of their service, and a fraction of at least six (6) months is being considered as a whole year, upon reaching the age of 60 but not beyond 65, and has served the business for at least five (5) years. For meeting the qualifications, the retirement benefits provided by B Co., to its employee shall be exempt from income tax, and consequently to withholding tax, pursuant to Section 32 (B)(6)(a) of the 1997 Tax Code, as amended. For terminal pay, such as commutation and any monetized unused vacation leaves, not exceeding 10 days during the year, the same shall be exempted from income and withholding tax, under Section 2.78.2 (A)(7) of Revenue Regulations (RR) 2-98, as amended. However, this principle does not apply to sick leaves. Further, the Php 90,000 threshold of 13-month pay, and other benefits shall still apply, in which, any excess shall be subject to income and withholding tax. [BIR RULING NO. 362-2022, AUGUST 12, 2022]
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