BIR urged to address concerns on issuing invoices
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [MAY 20-28]
- BIR AMENDS VAT AUDIT PRIORITY PROGRAMS & PROCEDURES
- DOF REVERSES THE BIR ON THE VAT IMPOSITION ON SSS PROPOSED AUCTION OF PROMISSORY NOTE
- SEC OPINION ON VOTING THROUGH REMOTE COMMUNICATION & AMENDMENT OF BY-LAWS
- BIR RULINGS ON CHANGE IN ACCOUNTING METHOD & TAX TREATY RATE ON DIVIDENDS
I. TAX & BUSINESS-RELATED NEWS [MAY 20-28]
1. BIR open to extending deadline for submission of inventory of unused ORs
2. Philippine launches ambitious railway development plan
3. BIR urged to address concerns on issuing invoices
4. Bill filed to outlaw POGOs
5. Red Planet spending P2 billion for expansion
6. New round of NLEx, SLEx toll hikes coming
7. Filinvest winds down venture platform for MSMEs
8. Villar proposes amendments to benefit Filipino car buyer
9. Metro Pacific Tollways starts two Calabarzon toll roads in June
10. SteelAsia exported P1.5 B worth of rebars to Canada
11. AIIB approves P64-billion loan for Bataan-Cavite Interlink Bridge Project
12. Citicore IPO at P 2.70, offering 30% discount from maximum target
13. Phinma gets P4.5B in fresh capital from global investors
14. Old Tagbilaran airport to be transformed into call center
15. IRRs for ITA, Tatak Pinoy Act signed
16. Mitsui bares six new cruises
17. Maharlika Investment Corp to invest in Palawan power grid
18. PHINMA Corp. to acquire Petra Cement for P500 million
19. AppleOne bullish on VisMin tourism prospects
20. San Jose del Monte LGU seeks MRT-7 route realignment
21. Pharma firm files cyberlibel complaint vs. Dr. Tony Leachon
22. Ivana Alawi reveals earning at least P10 million in few hours through live selling
23. Citi awaiting Maharlika Fund investment opportunities
24. Metro Pacific’s P2-billion Laguna dairy farm secures BoI approval
II. BIR AMENDS VAT AUDIT PRIORITY PROGRAMS & PROCEDURES
Revenue Memorandum Order (RMO) No. 17-2024 issued on May 13, 2024, amends certain provisions of RMO No. 6-2023, or the Updated and Consolidated Policies, Guidelines, and Procedures for BIR Audit Program. Specifically, taxpayers who are manually selected for audit under “Priority Audit Cases” shall no longer require prior approval of the Commissioner. However, a copy of the lists of taxpayers manually selected for audit and approved by the Regional Director shall be furnished to the Assessment Programs Division (APD), within five (5) days from approval for post-evaluation. In the case of taxpayers to be audited under the VAT Audit Program, APD shall provide the VAT Audit Section (VATAS) under the Regional Assessment Divisions the list of taxpayers electronically selected by the Internal Revenue Integrated System (IRIS)-Audit module based on the risk criteria embedded in the said module, on a quarterly basis (every 15th day of the month), following the due date for the filing of the Quarterly VAT returns (BIR Form No. 2550Q). These lists shall be used as a reference in the selection of VAT-registered taxpayers to be audited to determine their VAT compliance.
III. DOF REVERSES THE BIR ON THE VAT IMPOSITION ON SSS PROPOSED AUCTION OF PROMISSORY NOTE
The Social Security System (SSS) is requesting a review of the earlier BIR ruling that the proposed auction of a Promissory Note (PN) issued to the Social Security System (SSS) is subject to Value-Added Tax (VAT). In reply, the DOJ cited Section 16 of the Republic Act (R.A) No. 11199, or the “Social Security Act of 2018, which repealed R.A. No. 8282 (old Social Security Law, as amended), which restored the exemption of SSS from VAT. Specifically, it provides that SSS and all its assets and properties, all contributions collected and all accruals thereto and income or investment earnings therefrom as well as all supplies, equipment, papers or documents shall be exempt from any tax, assessment, fee, charges or customs or import duty. In the earlier BIR ruling, the Bureau opined that the proposed auction of the PN is subject to VAT due to the explicit revocation of the VAT exemption of the SSS in R.A. No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law in reference to its repealing clause (i.e., Section 86). SSS is a government-owned and controlled corporation created by R.A. 1161 which was subsequently amended by R.A. No. 8282 and R.A. No. 11199. Both R.A. No. 1161 and R.A. No 8282 contains provisions exempting SSS from all kinds of taxes, fees, and charges. The VAT exemption of SSS was however, explicitly removed by the TRAIN law which took effect on 01 January 2018. Then more recently, its VAT exemption was restored with the enactment of R.A. No. 11199 which took effect on 05 March 2019. The DOF notes that Section 16 of R.A. No. 11199 is an exact restatement of Section 16 of R.A. No. 8282. Thus, the enactment of R.A. No. 11199, specifically the inclusion of Section 16 thereof. This demonstrates the clear legislative intent to restore the VAT exemption of SSS. Section 33 of R.A. No. 11199 is explicit that “Republic Act No. 1161, Republic Act No. 8282, and all other laws, proclamations, executive orders and regulations and parts thereof” inconsistent with R.A. No. 11199 are repealed, modified, or amended accordingly. In view of the above statement, the DOF resolved to REVERSE BIR Ruling No. M-046-2024 and held that the proposed auction of the PN issued to the SSS is not subject to VAT. [DEPARTMENT OF FINANCE OPINION NO. 002.2024, MAY 14, 2024]
IV. SEC OPINION ON VOTING THROUGH REMOTE COMMUNICATION & AMENDMENT OF BY-LAWS
[STOCKHOLDERS OR MEMBERS MAY ALSO VOTE THROUGH REMOTE COMMUNICATION OR IN ABSENTIA WHEN SO AUTHORIZED IN THE BY-LAWS OR BY A MAJORITY OF THE BOARD OF DIRECTORS] [VOTING BY REMOTE COMMUNICATION IS ONLY APPLICABLE FOR A PARTICULAR MEETING STATED IN THE RESOLUTION]
The issue raised is whether the Philippine Society of Mechanical Engineers Inc. (PSME) can conduct the election of its National Board of Directors via online on the sole basis of a duly passed Board Resolution authorizing voting via remote communication when its By-Laws only provide for the manual voting system. In reply, the SEC confirmed that both the conduct of the meeting and election of the Board of Directors may be done through remote communication upon the issuance of a Board Resolution authorizing the same, subject to the condition that such Resolution shall only be applicable for that meeting/election and that internal procedure, or controls are adopted for the conduct of the same. However, as emphasized in the earlier SEC-OGC Opinion No. 09-21, the SEC still highly encourages corporations to amend their By-Laws, if attendance and voting via remote communication are not yet specifically provided therein, to allow corporations to be more adaptive to technological changes, and more importantly, to ensure that the right of stockholders/members to participate in meetings and to vote on matters presented therein are recognized and protected. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 24-12, MAY 8, 2024]
AMENDING BY-LAWS IS HIGHLY ENCOURAGED, IF ATTENDANCE & VOTING VIA REMOTE COMMUNICATION ARE NOT YET SPECIFICALLY PROVIDED
P Co. is seeking an opinion on the following: (1) Whether it can conduct its annual meeting via remote communication and allow voting in absentia notwithstanding the silence of its By-Laws on the matter and without having to amend its By-Laws, provided that the approval of at least majority of the Board of Directors is obtained; and (2) whether it can only conduct a membership meeting via remote communication and allow voting in absentia for the sole purpose of approving the amendment to its By-Laws to allow remote communication and voting in absentia under Section 16 of the Revised Corporation Code. In reply, when the By-Laws expressly provide or allow meeting and/or voting via remote communication or in absentia, the same can be done without limitations. On the other hand, when the By-Laws do not have a provision that allows voting through remote communication, the members may still validly vote through remote communication based on a Resolution issued by the majority of the Board of Trustees of P Co. authorizing such mode of voting. However, it should be noted that, in this case, voting through remote communication is only applicable for the meeting stated in the said Resolution, as clarified by Section 12 of SEC Memorandum Circular No. 6 Series of 2020. For the second query, Section 16 is merely a Transitory Provision and does not in any way prohibit or restrict the tackling of other agenda in meetings conducted during normal times. Corporations desiring to adopt meetings via remote communication should have already adopted internal guidelines for remote communications or should have already amended their By-Laws for remote communications. Otherwise, they must make such amendment or adoption following the existing procedure/manner in their By-Laws. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 24-11, APRIL 26, 2024]
IV. BIR RULINGS
A CHANGE IN INVENTORY VALUATION METHOD IS PERMISSIBLE WITH THE APPROVAL OF BIR, AS SUCH CHANGE IS NEEDED FOR THE ADOPTION OF A NEW CAS
N Co., a company engaged in the development of agricultural lands, production, and sale of farm and animal products, is requesting approval to change its accounting method of inventory costing from the First-In-First-Out (FIFO) method to the Moving Average method effective January 1, 2022. The company has adapted the FIFO method since its incorporation for its agriculture supplies, construction supplies, spare parts, fuel, oil and lubricants, office supplies, livestock supplies, manufacturing supplies, and other supplies. The reason for such a decision was to facilitate its cost accounting and optimize the use of its computerized system. In reply, the request was granted considering that the change in accounting method is needed due to the adoption of the new CAS, pursuant to the provision of Section 41 of the 1997 Tax Code, as amended, and Section 145 of Revenue Regulations (RR) No. 2-40. Consequently, such a change is subject to the BIR’s post-audit to check whether the new method indeed conforms to the best accounting practice, and accurately reflects the company’s income. [BIR RULING NO. OT 011-2024, FEBRUARY 22, 2024]
[CASH DISTRIBUTION RECEIVED BY A NON-RESIDENT FOREIGN CORPORATION ARISING FROM PDRS ISSUED BY A HOLDING COMPANY OF A MASS MEDIA ENTITY IS NOT CONSIDERED DIVIDEND SUBJECT TO A LOWER TREATY TAX RATE OF 15% INSTEAD THE SAME IS IN THE NATURE OF INTEREST SUBJECT TO RCIT OF 25%]
S Law Center is seeking confirmation that cash distributions received by Mercury Media arising from Philippine Depository Receipts (PDRs) issued by ABS Holdings over shares of stock in ABS-CBN are cash dividends for Philippine income tax purposes and subject to the tax-sparing rate of 15%. Citing Section 28(B)(5)(b) of the 1997 Tax Code, as amended, S Law Center is of the position that dividends paid by a domestic corporation to a Non-Resident Foreign Corporation (NRFC) shall allow a tax credit against the tax due from the NFRC taxes deemed to have been paid in the Philippines equivalent to 15%. Furthermore, under Section 73(A) and 28(M) of the Tax Code, a PDR holder may be considered a shareholder and a recipient of dividends if he/she/it has the option to purchase the shares underlying the PDR. In reply, the Bureau opined that Mercury Media cannot be considered a shareholder entitled to receive dividends, considering that it is not a corporation wholly owned and managed by Filipino citizens and does not have the legal right or option under the PDR instrument to purchase the underlying ABS-CBN share. Moreover, the PDRs issued to Mercury Media are unsubordinated and unsecured obligations of ABS Holdings, and any amount received from Mercury Media upon the issuance of PDRs is considered by ABS Holdings as a deposit, secured by its shares in ABS-CBN. Consequently, the cash distributions made by ABS Holdings to Mercury Media are not cash dividends subject to a lower tax rate of 15%, instead, it is interest income subject to a regular tax of 30%. (now 25% under CREATE law) [BIR RULING NO. OT 009-2024, FEBRUARY 21, 2024]
BIR open to extending deadline for submission of inventory of unused ORs [ABS-CBN News, May 28, 2024]
The Bureau of Internal Revenue is open to extending the May 27 deadline for the submission of inventory for unused official receipts of value-added tax-registered persons and businesses, pursuant to the implementation of the Ease of Paying Taxes Act.
Philippine launches ambitious railway development plan [The Philippine Star, May 28, 2024]
One of the two major railway flagship projects to be unveiled soon is the North Luzon Railway Project, also known as The Amianan Express, with an approximately 1,300-kilometer high-speed and commuter lines connecting the Clark Freeport Zone in Pampanga to Cagayan Export Zone in Cagayan Valley to other 12 provinces in the region.
BIR urged to address concerns on issuing invoices [ABS-CBN News, May 27, 2024]
(The intention is good–this is under the Ease of Paying Taxes Law, which only requires an invoice regardless of whether you sold goods or services. The old law differentiated between official receipts and invoices. But we are in the transition period, so I guess the public is still a bit confused.)
Source: https://news.abs-cbn.com/business/2024/5/27/bir-urged-to-address-concerns-on-issuing-invoices-1629
Bill filed to outlaw POGOs [The Philippine Star, May 26, 2024]
“Republic Act No. 11590, otherwise known as ‘An Act Taxing Philippine Offshore Gaming Operations… is hereby repealed,” Senate Bill 2689 filed by Sen. Sherwin Gatchalian read.
Source: https://www.philstar.com/headlines/2024/05/26/2357961/bill-filed-outlaw-pogos
Red Planet spending P2 billion for expansion [The Philippine Star, May 26, 2024]
Red Planet Hotels is spending P2 billion to build four more hotels in the Philippines in the next five years.
Source: https://www.philstar.com/business/2024/05/26/2357868/red-planet-spending-p2-billion-expansion
New round of NLEx, SLEx toll hikes coming [Philippine Daily Inquirer, May 25, 2024]
Based on the toll fee matrix, motorists traveling within the NLEx open system will pay an additional P7 to P19 while those passing through the closed system will be charged P33 to P98 more.
https://business.inquirer.net/460346/new-round-of-nlex-slex-toll-hikes-coming
Filinvest winds down venture platform for MSMEs [Inquirer Mobile, May 25, 2024]
Investree, which has an existing permanent license from the Securities and Exchange Commission (SEC), will likewise apply for the shortening of its corporate term to Sept. 30, 2025.
Source: https://inqm.news/qpamq
Villar proposes amendments to benefit Filipino car buyer [BusinessMirror, May 25, 2024]
LAS Piñas Rep. Camille Villar has proposed amendments to the almost decade-old RA 10642, or the Philippine Lemon Law, to address growing complaints from consumers who have been having difficulties in running after manufacturers, distributors, dealers or retailers engaged in deceptive business and trade practices.
Source: https://businessmirror.com.ph/2024/05/25/villar-proposes-amendments-to-benefit-filipino-car-buyer/
BPI-Tokyo Century venture completes acquisition of Diamond vehicle leasing group [Inquirer Mobile, May 25, 2024]
The car leasing arm of Ayala-led Bank of the Philippine Islands (BPI) has completed its acquisition of Diamond IGB Inc. in a move seen to push its fleet past the 8,000 mark and meet the growing demand for vehicle rentals.
Source: https://inqm.news/qpamu
Metro Pacific Tollways starts two Calabarzon toll roads in June [Philippine Daily Inquirer, May 24, 2024]
Metro Pacific Tollways Corp. (MPTC) intends to start building a toll road that links Manila-Cavite Expressway (Cavitex) and Cavite-Laguna Expressway (Calax) as well as Segment 3B of the Cavitex C5 Link project by June, with target completion set in 2025.
Source: https://business.inquirer.net/460270/metro-pacific-tollways-starts-two-calabarzon-toll-roads-in-june
SteelAsia exported P1.5 B worth of rebars to Canada [Manila Bulletin, May 24, 2024]
SteelAsia Chairman and Chief Executive Officer (CEO) Benjamin Yao explained that his company’s existing partnership with global infrastructure firm Acciona has paved the way for the exports to Canada.
Source: https://mb.com.ph/2024/5/24/p1-5-b-worth-of-steel-asia-s-rebars-exported-to-canada
AIIB approves P64-billion loan for Bataan-Cavite Interlink Bridge Project [Manila Standard, May 24, 2024]
The Asian Infrastructure Investment Bank (AIIB) said Friday it approved a loan of up to P64 billion for the construction of the Bataan-Cavite Interlink Bridge (BCIB) project in Manila Bay.
Citicore IPO at P 2.70, offering 30% discount from maximum target [Inquirer Mobile, May 24, 2024]
Tycoon Edgar Saavedra’s Citicore Renewable Energy Corp. (CREC), the second company to go public this year, has priced its initial public offering (IPO) at P2.70 per share, an amount that analysts say may attract more investors to a sector with significant growth potential despite risks.
Source: https://inqm.news/qpamo
Maharlika Investment Corp to invest in Palawan power grid [ABS-CBN News, May 24, 2024]
MIC announced its partnership with the National Electrification Administration on Friday to help the Palawan Electric Cooperative (PALECO).
Source: https://news.abs-cbn.com/business/2024/5/24/maharlika-to-invest-in-palawan-power-grid-1750
Phinma gets P4.5B in fresh capital from global investors [The Philippine Star, May 23, 2024]
Phinma Education, one of the biggest private education groups in the Philippines and the education arm of Phinma Corp., has secured P4.5 billion in fresh capital for its planned expansion of education offerings in the region.
Source: https://www.philstar.com/business/2024/05/23/2357316/phinma-gets-p45b-fresh-capital-global-investors
Old Tagbilaran airport to be transformed into call center [Inquirer Visayas, May 23, 2024]
The Bohol Business Park will utilize the 2-kilometer runway which was not used when the Bohol Panglao International Airport in Panglao was completed in 2017.
Source: https://newsinfo.inquirer.net/1943973/old-tagbilaran-airport-to-be-transformed-into-call-center
IRRs for ITA, Tatak Pinoy Act signed [Inquirer Mobile, May 23, 2024]
The implementing rules and regulations (IRR) for the Internet Transactions Act (ITA) and the Tatak Pinoy Act were signed on Wednesday, paving the way for the full execution of these two priority laws of the Marcos administration.
Source: https://inqm.news/qpama
Mitsui bares six new cruises [The Manila Times, May 22, 2024]
MOL Cruises Ltd., a group company of Mitsui O.S.K. Lines Ltd. (MOL), set sail for a new chapter with the announcement of six inaugural cruises for the Mitsui Ocean Fuji.
Source: https://www.manilatimes.net/2024/05/22/business/maritime/mitsui-bares-six-new-cruises/1947735
PHINMA Corp. to acquire Petra Cement for P500 million [BusinessWorld, May 22, 2024]
“Philcement Mindanao Corp., a subsidiary of Philcement, will pay a consideration of P500 million in exchange for 100% of the outstanding shares of Petra Cement,” PHINMA Corp. said.
AppleOne bullish on VisMin tourism prospects [The Philippine Star, May 22, 2024]
While AppleOne already operates the Sheraton Cebu Mactan Resort and Residences and the Mahi Center in Cebu, it sees potential in expanding its presence across Visayas and Mindanao.
Source: https://www.philstar.com/business/2024/05/22/2356875/appleone-bullish-vismin-tourism-prospects
San Jose del Monte LGU seeks MRT-7 route realignment [GMA News Online, May 22, 2024]
The entire MRT-7 projects spans 22 kilometers, consisting of 14 stations: Quezon North Avenue Joint Station, Quezon Memorial Circle, University Avenue, Tandang Sora, Don Antonio, Batasan, Manggahan, Doña Carmen, Regalado, Mindanao Avenue, Quirino, Sacred Heart, Tala, and San Jose del Monte.
Pharma firm files cyberlibel complaint vs. Dr. Tony Leachon [GMA News Online, May 21, 2024]
According to Mark Makalalad’s report on Super Radyo dzBB, Bell-Kenz Pharma Inc. officials filed a complaint against Leachon over his allegations that the pharmaceutical company hands out luxury items to doctors for them to prescribe its products.
Source: https://www.gmanetwork.com/news/topstories/nation/907483/bell-kenz-cyberliber-tony-leachon/story/
Ivana Alawi reveals earning at least P10 million in few hours through live selling [The Philippine Star, May 21, 2024]
Ivana disclosed that she and her family were supposed to earn even more than “eight digits” — they just ran out of stock.
Source: https://www.philstar.com/lifestyle/business-life/2024/05/21/2356807/ivana-alawi-reveals-earning-least-p10-million-few-hours-through-live-selling
Citi awaiting Maharlika Fund investment opportunities [GMA News Online, May 21, 2024]
American banking giant Citi expressed interest in exploring potential investment opportunities in the Maharlika Investment Corp. (MIC) —the state-run firm managing the Philippines’ very first sovereign wealth fund.
Metro Pacific’s P2-billion Laguna dairy farm secures BoI approval [BusinessWorld, May 20, 2024]
THE Board of Investments (BoI) said on Monday that it approved the application for registration of Metro Pacific Dairy Farms, Inc., which plans to start operations in March 2025 at a site in Laguna.
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