WEEKLY TAX UPDATES [JUNE 4] SC nullifies BIR regulation over privacy rights
Relevant Highlights:
- TAX & BUSINESS-RELATED NEWS [MAY 28-JUNE 3]
- SEC LEGAL OPINION ON PERPETUAL TERM OF OFFICERS OF A RELIGIOUS ORGANIZATION
- BIR MODIFIES ATC FOR CWT ON CERTAIN INCOME PAYMENTS ON JOINT VENTURES/CONSORTIUMS
- BIR ITAD RULING ON HEAD OFFICE & BRANCH TRANSACTIONS IN THE PHILIPPINES
1. TAX & BUSINESS-RELATED NEWS [MAY 28-JUNE 3]
- SSS eyes investing more in REITS
- DTI issues show cause order vs. Dali over alleged sanitary issues
- PAOCC eyes tax evasion and other charges vs Guo
- SC nullifies BIR regulation over privacy rights
- Panay-Guimaras bridge construction to start in 2025
- Big-ticket investments under CREATE hit P1.14 trillion
- ‘Harsh’ penalties for cable operators hit
- ABS-CBN Board of Directors appoints Charo Santos-Concio as director
- No Guo at address Alice’s father declared to BIR
- Baguio execs in a quandary over SC ruling on John Hay
- SBMA eyes ₱39.36-B Subic port expansion projects
- BIR urged to step up info drive on invoices replacing receipts
- Government OKs entry of 1st foreign satellite operator
- Philippine contact center industry sees declining attrition rates
- Holidays declared in 3 Visayas Mindanao areas
- Seoul govt finds high levels of toxic chemicals in Shein products
- BSP: Monetary Board functioned as ‘normal’ amid ‘ghost employees’ issue
- SEC LEGAL OPINION ON PERPETUAL TERM OF OFFICERS OF A RELIGIOUS ORGANIZATION
PERPETUAL TERM OF OFFICERS OF A RELIGIOUS ORGANIZATION
M Church of God International (M Church) is requesting an opinion on whether its Articles of Incorporation (AOI) or By-Laws may be amended to indicate a perpetual term of its key elders as officers. Specifically, M Church wishes to clarify whether or not they can amend their by-laws or their AOI, to indicate that its key elders can maintain and hold their position/office permanently during their lifetime. In reply, the policy of the Commission to not allow perpetual term is well justified by Section 24 of the Revised Corporation Code (RCC), which provides that immediately after their election, the directors of a corporation must formally organize and elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) other officers as may be provided in the by-laws. If the corporation is vested with public interest, the board shall also elect a compliance officer. The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in this Code. In determining the qualifications of the corporate officers, reference must be made to the pertinent provisions of the law, and the corporation’s By Laws. However, while the term of trustees of non-stock corporations may vary under the By-Laws, a provision therein which provides for a lifetime or unlimited term of the board of trustees is not allowable. Indefinite period of officers and other key personnel are generally invalid because they bind the hands of future board of directors. This is precisely to avoid possible abuse of persons in power. A lifetime term of office absolutely deprives other members of the corporation of the opportunity to become officers of the corporation. The relationship existing between the corporation and its board of trustees, and the duly authorized corporate officers, is that of principal-agent, which is fiduciary in character, and essentially revocable; hence, corporate officers serve at the pleasure of the Board. Since the corporate officers are elected by the trustees, it necessarily follows that the officers cannot have a perpetual or lifetime term while the trustees serve for a limited period as this deprives the succeeding board of its power to elect new officers of the corporation. [SEC OFFICE OF THE GENERAL COUNSEL OPINION NO. 24-10, APRIL 25, 2024]
3. BIR MODIFIES ATC FOR CWT ON CERTAIN INCOME PAYMENTS ON JOINT VENTURES/CONSORTIUMS
Revenue Memorandum Order (RMO) No. 18-2024 issued on April 30, 2024, modifies the Alphanumeric Tax Codes (ATC) for Creditable Withholding tax on Certain Income Payments made by Joint Ventures/Consortiums pursuant to Revenue Regulation (RR) No. 14-2023.
4. BIR ITAD RULING ON HEAD OFFICE & BRANCH TRANSACTIONS IN THE PHILIPPINES
[IF THE BUSINESS OF A FOREIGN CORPORATION IS CONDUCTED THROUGH THE BRANCH OFFICE, THE INCOME BECOMES ATTRIBUTABLE TO THE BRANCH] [THE PHILIPPINE BRANCH OF A FOREIGN CORPORATION POSSESSES A PERSONALITY SEPARATE & DISTINCT FROM THAT OF ITS HEAD OFFICE FOR INCOME TAX PURPOSES] [THE INCOME CANNOT BE ATTRIBUTED TO THE BRANCH OFFICE WHEN A FOREIGN CORPORATION TRANSACTS BUSINESS IN THE PHILIPPINES DIRECTLY & INDEPENDENTLY OF ITS BRANCH]
Co. is seeking confirmation that the income derived by Daewoo E&C, a non-resident foreign corporation (NRFC), from its transaction with the National Irrigation Administration (NIA), is exempt from income tax pursuant to the Philippine-Korea Tax Treaty. As represented, Daewoo E&C was issued a License to establish a Branch Office in the Philippines known as Daewoo E&C Manila Branch Office. In an agreement entered into by NIA and Daewoo E&C, the latter undertook the construction of various projects under the Jalaur River Multipurpose Project. In reply, the Bureau cited the Supreme Court case of Marubeni Corporation vs. Commissioner of Internal Revenue, G.R. No. 76573, dated September 4, 1989, which provides that a Philippine Branch of an NRFC possesses a personality separate and distinct from that of its head office for income tax purposes. Thus, when the NRFC transacts business in the Philippines directly and independently of its Branch, the transaction becomes that of the NRFC, and not of its Philippine Branch. In this case, Daewoo E&C conducted its business through the Daewoo E&C Manila Branch Office. Hence, any income derived from the project becomes attributable to the Branch and is liable to pay income tax equivalent to 30% [now 25% under CREATE Law) of its taxable income. In addition, the gross receipts derived by the Branch from the sale of services to NIA are also subject to a 12% Value-Added Tax. However, the loan agreement contains a tax assumption provision whereby the Government of the Philippines, through NIA, assumed the payment of all fiscal levies and taxes imposed in the Philippines on Korean suppliers, like Daewoo E&C in this case. Therefore, it is the Government of the Philippines, through the NIA, which should shoulder the payment of the Income Tax and VAT imposed on the profits and gross receipts attributable to the Branch. [BIR ITAD RULING NO. 002-24, FEBRUARY 23, 2024]
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SSS eyes investing more in REITS [ABS-CBN News, June 3, 2024]
Out of the P6 billion, more than 75 percent were purchased this year, and yield around 8 percent. The SSS currently invests 5 percent of its equity funds in REITs, said its investments sector concurrent acting head Ernesto Francisco.
https://news.abs-cbn.com/business/2024/6/3/sss-eyes-investing-more-in-reits-1215
DTI issues show cause order vs. Dali over alleged sanitary issues [GMA News Online, June 3, 2024]
Assistant Secretary Amanda Nograles said the DTI had issued the show cause order to Dali on May 29, 2024, which covers 13 instances of complaints by Malayang Konsyumer, a consumer group protecting buyers’ rights.
PAOCC eyes tax evasion and other charges vs Guo [ABS-CBN News, June 3, 2024]
The Presidential Anti-Organized Crime Commission said tax evasion raps as well as for violation of securities laws are also being readied against Bamban, Tarlac Mayor Alice Guo, whom the Office of the Ombudsman has put on preventive suspension.
https://news.abs-cbn.com/news/2024/6/3/paocc-eyes-tax-evasion-and-other-charges-vs-guo-1736
SC nullifies BIR regulation over privacy rights [Philippine Daily Inquirer, June 2, 2024]
The Supreme Court has invalidated a Bureau of Internal Revenue (BIR) regulation requiring self-employed professionals, like lawyers, doctors, accountants and dentists, to submit their rates and register appointment books for tax compliance monitoring.
https://newsinfo.inquirer.net/1947336/sc-nullifies-bir-regulation-over-privacy-rights
Panay-Guimaras bridge construction to start in 2025 [Philippine Daily Inquirer, June 1, 2024]
A P2.671-billion study is being undertaken by a joint venture of Yooshin Engineering Corp. with Kyong-Ho Engineering and Architects Co. Ltd., Dohwa Engineering Co. Ltd., Soosung Engineering Co. Ltd. and Dasan Consultants Co. Ltd. The budget is part of the funding loaned by the South Korean government’s Export-Import Bank of Korea.
https://newsinfo.inquirer.net/1947116/panay-guimaras-bridge-construction-to-start-in-2025
Big-ticket investments under CREATE hit P1.14 trillion [The Philippine Star, June 1, 2024]
Broken down, the bulk or 76.8 percent of the investment capital worth P873.9 billion was approved by the Cabinet-level Fiscal Incentives Review Board (FIRB). This consists of 56 big-ticket tax incentive projects.
‘Harsh’ penalties for cable operators hit [The Manila Times, June 1, 2024]
THE Federation of International Cable TV Associations of the Philippines (Fictap) has opposed the proposed “harsh” penalties from the National Telecommunications Commission (NTC) for cable television and internet operators.
https://www.manilatimes.net/2024/06/01/news/national/harsh-penalties-for-cable-operators-hit/1949392
ABS-CBN Board of Directors appoints Charo Santos-Concio as director [Manila Bulletin, May 31, 2024]
In a disclosure to the stock exchange on May 30, ABS-CBN said the company’s Board of Directors elected Charo as a director, filling the board vacancy left by the passing of Atty. Augusto Almeda-Lopez.
https://mb.com.ph/2024/05/31/abs-cbn-board-of-directors-appoints-charo-santos-concio-as-director
No Guo at address Alice’s father declared to BIR [GMA News Online, May 31, 2024]
The exact lot number of the declared address of Mayor Guo’s father to the BIR was nowhere to be found, while only bodegas and warehouses were found in the same Barangay.
Baguio execs in a quandary over SC ruling on John Hay [Philippine Daily Inquirer, May 30, 2024]
Mayor Benjamin Magalong, the city council and Baguio Rep. Marquez Go on Monday discussed the impact of the high court’s en banc decision on the city’s stake in Camp John Hay, particularly its 25-percent annual share from rent that a Camp John Hay consortium had been paying to the Bases Conversion and Development Authority (BCDA) since 1997.
https://newsinfo.inquirer.net/1946353/baguio-execs-in-a-quandary-over-sc-ruling-on-john-hay
SBMA eyes ₱39.36-B Subic port expansion projects [BusinessMirror, May 30, 2024]
These include five major development projects designed to expand existing facilities at the Boton Wharf, New Container Terminal 3, and piers at the San Bernardo, Redondo, and Lower Mau areas.
https://businessmirror.com.ph/2024/05/30/sbma-eyes-%e2%82%b139-36-b-subic-port-expansion-projects/
BIR urged to step up info drive on invoices replacing receipts [ABS-CBN News, May 29, 2024]
Senate Ways and Means Committee Chair Sherwin Gatchalian urged the Bureau of Internal Revenue (BIR) to clarify its rules on using invoices instead of official receipts.
Government OKs entry of 1st foreign satellite operator [The Philippine Star, May 29, 2024]
Intelsat was granted a satellite service providers and operators (SPPO) license by the Department of Information and Communications Technology, allowing it to provide network-from-space and backhaul solutions to telcos across the archipelago.
Philippine contact center industry sees declining attrition rates [Philippine Daily Inquirer, May 28, 2024]
The Philippines’ call center industry has seen falling attrition rates in the last few years, with the sector optimistic that the number of agents resigning will further decline.
Holidays declared in 3 Visayas Mindanao areas [The Philippine Star, May 28, 2024]
Malacañang has declared special non-working holidays in three areas in the Visayas and Mindanao for the commemoration of their founding anniversaries and local festivals next month.
https://qa.philstar.com/nation/2024/05/28/2358390/holidays-declared-3-visayas-mindanao-areas
Seoul govt finds high levels of toxic chemicals in Shein products [ABS-CBN News, May 28, 2024]
Children’s products sold by the Chinese-founded online shopping giant Shein contained toxic substances in amounts hundreds of times above acceptable levels, the government of South Korea’s capital Seoul said Tuesday.
BSP: Monetary Board functioned as ‘normal’ amid ‘ghost employees’ issue [The Philippine Star, May 28, 2024]
A report of The STAR published on Monday stated that there are four “ghost employees” in BSP, according to its source. Three “ghost staff” work for one member of the MB while one works for the other.
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