WEEKLY TAX UPDATES [JUNE 28] NCR wage hike order expected in July
Relevant Highlights:
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TAX & BUSINESS-RELATED NEWS [JUNE 18-27]
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BIR CLARIFIES CERTAIN ISSUES RELATIVE TO THE IMPLEMENTATION OF OUTPUT VAT CREDIT ON UNCOLLECTED RECEIVABLES INTRODUCED UNDER EOPT LAW
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BIR RULING
I. TAX & BUSINESS-RELATED NEWS [JUNE 18-27]
- NALEX and SALEX Set to Begin Construction Phase Soon
- Bill imposing VAT on non-resident digital service providers approved by bicam —Salceda
- Baguio Mayor: BCDA eyeing multiple developers for Camp John Hay
- Andrew Tan hands over reins of Megaworld to COO Alfonso
- BIR removes 5-year expiration of Ecar
- Marcos inaugurates Philippines biggest hotel
- Japan’s Zip to study cable car system in Baguio’s Camp John Hay
- Subic-Clark-Manila-Batangas railway construction to start in 2027
- SunAsia secures all 10 contracts to develop 1.3GW floating solar on Laguna Lake
- Batangas guv ‘behind firm that planned to profit’ from natural gas boom
- DTI agencies endorsed only 20,000 special visas since 1988
- NCR wage hike order expected in July
- SSS pension booster lets kin get dead member’s retirement savings
- Phinma Group bets big on hospitality industry
- NEDA, ARTA launch implementing guidelines to streamline gov’t flagship infra projects
II. BIR CLARIFIES CERTAIN ISSUES RELATIVE TO THE IMPLEMENTATION OF OUTPUT VAT CREDIT ON UNCOLLECTED RECEIVABLES INTRODUCED UNDER EOPT LAW
Revenue Memorandum Circular (RMC) No. 65-2024 issued on June 14, 2024, clarifies certain issues relative to the implementation of Section 19 of the Republic Act (R.A.) No. 11976 (Ease of Paying Taxes Act), which added Section 110(D) of the 1997 Tax Code, as amended, that introduced the Output Value-Added Tax (VAT) Credit on uncollected receivables.
Highlights include the conditions for the entitlement, timing of claim, work-around procedures on bad debts subsequently collected, return of goods, and the specific impact on the part of the buyer and seller on the preparation of Quarterly VAT Returns (BIR Form 2550Q).
III. BIR RULING
[WHILE PSALM IS AUTHORIZED UNDER THE EPIRA TO RECEIVE CHARGES, THE UNIVERSAL CHARGE IS NOT COMPENSATION FOR SERVICES PERFORMED BY THEM] [UNIVERSAL CHARGE SHALL NOT BE DEEMED PART OF THE GROSS RECEIPTS OF PSALM FOR VAT PURPOSES]
National Power Corporation is seeking confirmation whether the Universal Charge for Missionary Electrification (UCME) subsidy remitted by the Power Assets and Liabilities Management Corporation (PSALM) to them is not subject to 12% Value-Added Tax (VAT). In ruling, the BIR referred to BIR Ruling No. 020-02 which held that the Universal Charges to be collected by the distribution utilities do not belong to PSALM and since they would not redound to its benefit, the same would not be considered in the nature of income. Additionally, the distribution utilities will collect the Universal Charges from all end-users. These charges will be remitted to PSALM and used exclusively for liquidating the stranded debts and stranded costs of NPC, as well as the qualified stranded contract costs of distribution utilities resulting from the restructuring of the industry. The Electric Power Industry Reform Act of 2001 (EPIRA) stipulates that the Universal Charge is non-bypassable. Furthermore, The Universal Charge received by PSALM will not be subject to income tax, as it does not constitute income under Section 32(A) of the Tax Code of 1997. This section defines income as gains, profits, and income derived from various sources, including salaries, wages, business transactions, and property dealings. Instead, the Universal Charge is directed to a Special Trust Fund as stipulated by the EPIRA, with PSALM acting merely as an administrator, ensuring the funds are disbursed to the respective beneficiaries. Additionally, the Universal Charge is not part of PSALM’s gross receipts for VAT purposes, as it is not compensation for services but is earmarked for specific uses. Given this, since the UCME subsidy fund collected by the distribution utilities and/or electric cooperatives from consumers are eventually remitted in trust to PSALM for transfer to NPC, they are not considered a flow of wealth for PSALM and/or NPC and cannot be part of their gross receipts. Hence, these funds are not subject to VAT. For New Power Providers (NPPs) and Qualified Third Parties (QTPs) operating in remote off-grid areas, payments from the Universal Charge for Missionary Electrification fund are subject to zero-rated VAT under Section 6 of Republic Act No. 9136. However, if these NPPs or QTPs are registered with the Cooperative Development Authority and considered electric cooperatives, they are VAT-exempt under Republic Act No. 9520. [BIR RULING NO. 013-2024, FEBRUARY 22, 2024]
NALEX and SALEX Set to Begin Construction Phase Soon [Spot.PH, June 27, 2024]
NALEX and SALEX are part of San Miguel Corporation’s (SMC) larger efforts to enhance the expressway network in the Greater Capital Region. Both were approved in 2022.
https://www.spot.ph/newsfeatures/mobility/109308/nalex-and-salex-expressways-a5229-20240626
Bill imposing VAT on non-resident digital service providers approved by bicam —Salceda [GMA News Online, June 27, 2024]
The bicameral conference committee on Thursday approved the bill imposing a 12% value-added tax (VAT) on non-resident digital service providers, according to Albay Representative Joey Salceda.
Baguio Mayor: BCDA eyeing multiple developers for Camp John Hay [Philippine Daily Inquirer, June 25, 2024]
Camp John Hay, a former American military rest and recreation base in this city, has been converted into a golf and tourist destination by a consortium led by businessman Robert John Sobrepeña. Under a 1996 lease agreement with BCDA covering 247 hectares of built-up land, the consortium is converting Camp John Hay into a golf and tourist destination.
https://newsinfo.inquirer.net/1954483/baguio-mayor-bcda-eyeing-multiple-developers-for-camp-john-hay
Andrew Tan hands over reins of Megaworld to COO Alfonso [Manila Bulletin, June 25, 2024]
Tycoon Dr. Andrew Tan has handed over the reins of Megaworld Corporation, which he founded more than 30 years ago, to Lourdes T. Gutierrez-Alfonso who will serve as the company’s new president effective immediately.
https://mb.com.ph/2024/06/25/andrew-tan-hands-over-reins-of-megaworld-to-coo-alfonso
BIR removes 5-year expiration of eCAR [GMA News Online, June 25, 2024]
The Bureau of Internal Revenue (BIR) has removed the five-year validity period of Electronic Certificate Authorizing Registration (eCAR) to ease the burden of taxpayers in the sale, donation, or transfer of properties.
https://www.gmanetwork.com/news/money/economy/911135/bir-removes-5-year-expiration-of-ecar/story/
Marcos inaugurates Philippines biggest hotel [The Philippine Star, June 23, 2024]
President Marcos inaugurated Megaworld’s 1,530-room Grand Westside Hotel in Parañaque City yesterday, touted as the biggest hotel development in the country.
https://qa.philstar.com/headlines/2024/06/23/2364899/marcos-inaugurates-philippines-biggest-hotel
Japan’s Zip to study cable car system in Baguio’s Camp John Hay [GMA News Online, June 23, 2024]
Under a memorandum of understanding (MOU) inked with Zip Infrastructure, the Japanese firm will prepare a feasibility study for the operations and maintenance of its self-driven cable car system Zippar in Camp John Hay.
Subic-Clark-Manila-Batangas railway construction to start in 2027 [The Philippine Star, June 22, 2024]
Speaking during the Philippine Economic Briefing Roadshow in Tokyo, Japan, Trade Secretary Alfredo Pascual said the $3.2-billion Subic-Clark-Manila-Batangas railway is among the projects to be undertaken to boost economic activities across the Luzon Economic Corridor.
SunAsia secures all 10 contracts to develop 1.3GW floating solar on Laguna Lake [GMA News Online, June 21, 2024]
The companies will build 10 blocks of floating solar facilities at 100 hundred hectares each on Laguna Lake, spanning the towns of Cabuyao, Sta. Rosa, Calamba, Victoria, and Bay.
Batangas guv ‘behind firm that planned to profit’ from natural gas boom [Sunstar, June 21, 2024]
Governor Hermilando Mandanas of Batangas province and his late wife stood to profit from a build-out of liquified natural gas power — he owned the largest share in a real estate firm that soared in value as energy companies moved in, while he promoted the expansion in media interviews and public events. The firm also launched its own natural gas project.
DTI agencies endorsed only 20,000 special visas since 1988 [Philippine Daily Inquirer, June 21, 2024]
The disclosure followed calls for a review of the processes involved in the issuance of special visas that lawmakers believed were being abused by unscrupulous foreigners to be able to engage in illegal activities in the Philippines.
NCR wage hike order expected in July [GMA News Online, June 20, 2024]
The Regional Tripartite Wages and Productivity Board in the National Capital Region (RTWPB-NCR) is expected to release its decision on the petitions to increase the daily minimum wage in the capital region before July 16.
https://www.gmanetwork.com/news/topstories/metro/910733/ncr-wage-hike-order-expected-in-july/story/
SSS pension booster lets kin get dead member’s retirement savings [GMA News Online, June 18, 2024]
The Social Security System (SSS) on Tuesday said that relatives can get in full the retirement savings of a dead member under its reintroduced savings program which can yield an annual return rate of 7.2%.
Phinma Group bets big on hospitality industry [The Philippine Star, June 18, 2024]
The group is targeting to grow its portfolio to 2,000 room keys by 2030, said Jose Mari del Rosario, Phinma Hospitality Inc. and Phinma Microtel Hotels Inc. president and CEO.
https://www.philstar.com/business/2024/06/18/2363545/phinma-group-bets-big-hospitality-industry
NEDA, ARTA launch implementing guidelines to streamline gov’t flagship infra projects [GMA News Online, June 18, 2024]
EO 59 on “Streamlining the Permitting Process for Infrastructure Flagship Projects” aims to eliminate unnecessary delays in the issuance of licenses, clearances, permits, certifications, or authorizations, ensuring the timely completion of IFPs.
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