Donald Trump Issues Major Threat to Nearly 90,000 IRS Agents
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [JANUARY 22-27]
- BIR ITAD RULINGS
- BIR ISSUES IRR IMPLEMENTING THE LAW IMPOSING VAT ON DIGITAL SERVICES
- BLGF ISSUES MEMORANDUM CIRCULAR PROVIDING GUIDANCE ON THE IMPLEMENTATION OF TAX AMNESTY ON REAL PROPERTY TAXES PURSUANT TO RPVARAH
I. TAX & BUSINESS-RELATED NEWS [JANUARY 22-27]
- NEDA sees ‘indirect impact’ on PH of US freeze on foreign aid
- New Zealand loosens visitor visa rules to welcome digital nomads
- Megawide’s PH1 to unveil low-cost mid-rise housing
- San Miguel to build 3 energy projects in Pangasinan
- ‘Attrition law must be implemented based on BIR’s downgraded goal’
- Donald Trump Issues Major Threat to Nearly 90,000 IRS Agents
- ‘We’re pushing them away’: Solon worried by large number of Pinoy nurses taking US licensure exams
- QC to unveil ‘new’ Chinatown
- ‘Condo prices in NCR need correction’
- BOI eyes release of new SIPP within H1
- After Blacklist, RSG also bids goodbye to MPL Philippines
- Malabon grants 100% tax exemption to small businesses
- Peza, BI sign data sharing agreement to boost visa service
- Tryke Gutierrez explains decision on selling franchise slot as Blacklist exits MPL
- FATF checks on Philippines efforts to exit gray list
- CSC exec: Not so fast on new gov’t work sked
- SteelAsia invests P30 billion in Candelaria plant, boosting local steel production
- SC junks Ilecos petition vs MORE
- Marcos wants to develop PH semiconductor industry
II. BIR ITAD RULINGS
[NONRESIDENT CITIZENS ARE TAXED ONLY ON INCOME FROM PHILIPPINE SOURCES] [THE “SOURCE” OF INCOME IS DETERMINED BY THE PLACE WHERE THE SERVICE IS PERFORMED, NOT BY THE PAYOR’S RESIDENCE OR PAYMENT LOCATION] [REMUNERATION PAID & BORNE BY THE PERMANENT ESTABLISHMENT SHALL BE TAXED UNDER ARTICLE 14 OF THE PH-SG TAX TREATY FOR SERVICES RENDERED IN THE PHILIPPINES]
C Co. is seeking confirmation that the income payment for services rendered partly within the Philippines in 2023 is exempt from income tax pursuant to the Philippines-Singapore Tax Treaty. As represented, a Filipino citizen established residence in Singapore on December 31, 2020, and was classified as a tax resident of Singapore for the years 2021 to 2023. Notwithstanding her relocation, she retained her position as General Manager of C Co. a domestic corporation, rendering the majority of her services from Singapore in 2021 and partially from the Philippines in 2022 and 2023. In reply, under Sections 23(B) and 42(C) of the Tax Code, nonresident citizens are taxed only on income from Philippine sources, with services performed locally considered Philippine-sourced and those performed abroad deemed foreign-sourced. In relation, citing the Supreme Court case of Commissioner of Internal Revenue (CIR) v. Baier-Nickel, the Court clarified its ruling in CIR v. BOAC, emphasizing that the “source” of income is determined by the location where the activity or service generating the income is performed, rather than by the payor’s residence or the place of payment. In addition, according to Article 14 of the PH-SG Tax Treaty, income from personal services by a resident of one Contracting State is taxable only in that State unless the services are performed in the other State. However, such income remains taxable only in the first State if the recipient’s stay in the other State is limited to 90 days for professionals and 183 days otherwise, the payment is from a resident of the first State, and it is not charged to a permanent establishment in the other State. A perusal of documents submitted appears that the name is listed in C Co.’s “Alphalist of Employees”, submitted to the BIR with the Annual Information Return (BIR Form No. 1604-CF) and received a Certificate of Compensation Payment/Tax Withheld (BIR Form No. 2316) as proof of withholding taxes deducted from her salary. Thus, the individual’s remuneration, paid and borne by C Co. shall be taxed under Article 14 of the PH-SG Tax Treaty for services rendered in the Philippines. [BIR ITAD RULING NO. 020-24, NOVEMBER 20, 2024]
THE ABSENCE OF THE APPLICABLE TAX TREATY NECESSITATES THE IMPOSITION OF FINAL WITHHOLDING TAX OF 25% ON DIVIDENDS PAYMENT
TISI is requesting confirmation that the dividends paid to TUNII, a resident of the Netherlands, are subject to the preferential tax rate of 10% pursuant to the Philippines-Netherlands Tax Treaty. As represented, TUNII executed a Deed of Assignment with TML, a resident of Mauritius, transferring all its rights to common shares in TISI to TML in exchange for new ordinary shares. These shares represented 80% of TISI’s outstanding shares. In reply, Section 28 (B)(1) of the 1997 Tax Code, as amended, provides that dividends derived by a non-resident foreign corporation from a domestic corporation are generally subject to income tax at the rate of 25%. However, under Section 32 (B) (5) of the same Code, such income is exempt to the extent required by any treaty obligation binding upon the Philippine government. In this relation, Article 10 of the PH-Netherlands Tax Treaty provides that the lower rate of 10% shall be applied only when the recipient is the beneficial owner, a company with share capital, and holds at least 10% of the paying company’s capital directly. Although TUNII is a resident of the Netherlands, it is not the beneficial owner of the dividends, as it holds them in trust for TML. By transferring the shares to TML, TUNII also ceded its right to the dividends, making Article 10 of the PH-Netherlands Tax Treaty inapplicable. Due to the absence of a double tax treaty between the Philippines and Mauritius, dividends paid by TISI to TML through TUNII are subject to a 25% Philippine income tax. [BIR ITAD RULING NO. 015-24, OCTOBER 18, 2024]
III. BIR ISSUES IRR IMPLEMENTING THE LAW IMPOSING VAT ON DIGITAL SERVICES
Revenue Regulations (RR) No. 003-2025, issued on January 17, 2025, prescribes the policies and guidelines for the implementation of Republic Act (R.A.) No. 12023, otherwise known as Value-Added Tax (VAT) on Digital Services, which aims to impose a 12% VAT on digital services consumed in the Philippines, whether provided by resident or nonresident digital service providers (DSPs).
Highlights include the following:
- Coverage as to person, subject matter (digital services and digital goods), transactions involved, as well as exclusions
- The extent of taxability and exemption of resident and non-resident DSPs, and factors to consider whether the supply or delivery of digital services by DSPs is consumed in the Philippines.
- DSP’s registration compliance specifically the appointment of local representative/service provider for non-resident DSPs
- Administrative requirements such as tax reporting for gross sales using foreign currency, issuance of invoices, accounting and bookkeeping requirements, filing of tax returns and payment and remittance of VAT, and penalties for non-compliance
- Registration timeline in the VAT on Digital Services (VDS) Portal
IV. BLGF ISSUES MEMORANDUM CIRCULAR PROVIDING GUIDANCE ON THE IMPLEMENTATION OF TAX AMNESTY ON REAL PROPERTY TAXES UNDER THE REAL PROPERTY VALUATION & ASSESSMENT REFORM ACT
BLGF Memorandum Circular No. 003-2025, dated January 6, 2025, provides guidance to all Local Government Unit (LGU) Treasurers on the implementation of the Tax Amnesty on Real Property Taxes and Special Levies pursuant to the Republic Act (R.A.) No. 12001, or the “Real Property Valuation and Assessment Reform Act,” or RPVARA.
Highlights include:
- Amnesty covers real property taxes and special levies on real property, specifically on penalties, surcharges, and interests from all unpaid Real Property Taxes, including the Special Education Fund, Idle Land Tax, and other Special Levy Taxes, that were incurred prior to the effectivity of RPVARA (i.e., July 5, 2024)
2. Real property tax amnesty can only be granted within two (2) years after the effectivity of the Act (i.e., July 5, 2026)
3. Tax amnesty relief may be availed of by a delinquent real property owner with the option of a one-time payment or installment payment of the delinquent real property taxes within two (2) years from the effectivity of the Act or until July 5, 2026.
4. LGUs may issue an ordinance to determine the means and method of payment only. In no way shall the non-issuance of such an ordinance prevent the implementation of the grant of tax amnesty.
5. The amnesty shall not extend to the following real properties:
5.1 Delinquent real properties which have been disposed of at public auction to satisfy the real property tax delinquencies;
5.2 Real properties with tax delinquencies which are being paid pursuant to a compromise agreement; and
5.3 Real properties subject of pending cases in court for real property tax delinquencies.
NEDA sees ‘indirect impact’ on PH of US freeze on foreign aid [GMA News Online, January 27, 2025]
Balisacan said the country’s flagship projects are being funded by Japan, South Korea, the World Bank, and the Asian Development Bank.
New Zealand loosens visitor visa rules to welcome digital nomads [The Manila Times, January 27, 2025]
New Zealand will introduce looser visa rules to allow holiday makers to work remotely while visiting the country, to boost its tourism sector and economy, it said on Monday.
Megawide’s PH1 to unveil low-cost mid-rise housing [The Philippine Star, January 27, 2025]
PH1 World Developers, the real estate arm of Megawide Construction Corp., targets to introduce this year a low-cost mid-rise project to further address the gaps in the Philippine housing market.
https://www.philstar.com/business/2025/01/27/2417049/megawides-ph1-unveil-low-cost-mid-rise-housing
San Miguel to build 3 energy projects in Pangasinan [The Manila Times, January 27, 2025]
The San Roque Hydropower Inc. (SRHI), a subsidiary of San Miguel Global Power Holdings Inc., has unveiled its plans to build three renewable energy projects in Pangasinan aimed at bolstering the national energy supply and supporting the country’s renewable energy goals.
‘Attrition law must be implemented based on BIR’s downgraded goal’ [The Philippine Star, January 26, 2025]
A source told The STAR that the implementation of the Republic Act 9335 or the Attrition Act, that incentivizes and penalizes the BIR’s revenue collection performance, would be based on the last collection target approved by the DBCC.
Donald Trump Issues Major Threat to Nearly 90,000 IRS Agents [Newsweek, January 26, 2025]
On Saturday, Trump told the crowd that he vowed to “get it for you—’no tax on tips.'” While talking about taxes, he made the threat to terminate thousands of IRS agents’ jobs or move them to the U.S.-Mexico border.
https://www.newsweek.com/donald-trump-issues-major-threat-nearly-90000-irs-agents-2020959
‘We’re pushing them away’: Solon worried by large number of Pinoy nurses taking US licensure exams [Manila Bulletin, January 26, 2025]
According to the majority congressman, 28,258 Bachelor of Science in Nursing (BSN) graduates from the Philippines took the exam for the first time last year, mostl likely in their search for higher pay in their profession.
QC to unveil ‘new’ Chinatown [The Manila Times, January 26, 2025]
Quezon City Mayor Joy Belmonte will unveil a “newly redecorated” Chinatown in the Banawe area in time for the celebration of the Chinese New Year.
https://www.manilatimes.net/2025/01/26/news/qc-to-unveil-new-chinatown/2044688
‘Condo prices in NCR need correction’ [The Philippine Star, January 25, 2025]
Currently, condo prices in Metro Manila average P217,000 per square meter (sqm), and they are highest in Makati (P364,000), Parañaque (P286,000) and Taguig (P275,000).
https://qa.philstar.com/business/2025/01/25/2416610/condo-prices-ncr-need-correction
BOI rationalizing tiering system in govt’s investment priority plan [Philippine Daily Inquirer, January 24, 2025]
Trade undersecretary and Board of Investments (BOI) Managing head Ceferino Rodolfo said that they are finalizing a revised version of the Strategic Investment Promotion Plan which will cover the years 2025 to 2028.
After Blacklist, RSG also bids goodbye to MPL Philippines [GMA News Online, January 24, 2025]
RSG Philippines announced its departure from the Mobile Legends: Bang Bang Professional League (MPL) Philippines, just days after fellow multi-titled team Blacklist International also exited the league.
Malabon grants 100% tax exemption to small businesses [The Philippine Star, January 24, 2025]
Mayor Jeannie Sandoval said the city council approved Ordinance No. 01-2025 to give tax relief to small business owners.
https://www.philstar.com/nation/2025/01/24/2416406/malabon-grants-100-tax-exemption-small-businesses
Peza, BI sign data sharing agreement to boost visa service [Philippine Daily Inquirer, January 24, 2025]
“This collaboration is essential in facilitating trade and investments as it is anchored not just in the inefficient cross-border movement of goods or capital, but equally important is the movement of people,” PEZA Director General Tereso Panga said in a statement.
https://business.inquirer.net/503060/peza-bi-sign-data-sharing-agreement-to-boost-visa-service
Tryke Gutierrez explains decision on selling franchise slot as Blacklist exits MPL [ABS-CBN News, January 23, 2025]
Tryke Gutierrez, co-founder of Tier One Entertainment, explained Thursday the business rationale that led to Blacklist International leaving MPL Philippines and transferring their spot to a new entity.
FATF checks on Philippines efforts to exit gray list [The Philippine Star, January 23, 2025]
The meetings aim to verify the sustainability of reforms toward addressing the 18 action plan items as well as the high-level political commitment of the government to continue improving the country’s measures against money laundering, terrorist financing and other related financial crimes.
https://www.philstar.com/business/2025/01/23/2416133/fatf-checks-philippines-efforts-exit-gray-list
CSC exec: Not so fast on new gov’t work sked [Inquirer Plus, January 22, 2025]
Should government operations be the one to make adjustments just because of the notorious traffic situation in Metro Manila?
https://plus.inquirer.net/news/csc-exec-not-so-fast-on-new-govt-work-sked/
SteelAsia invests P30 billion in Candelaria plant, boosting local steel production [Manila Bulletin, January 22, 2025]
SteelAsia has awarded the Engineering, Procurement, and Construction Management (EPCM) contract for the plant to MCC Huatian Engineering & Technology Co., Ltd., a global leader in steel plant construction with over 230 projects in 14 countries.
https://mb.com.ph/2025/01/22/steel-asia-s-p30-b-plant-to-save-p1-2-b-annually
SC junks Ilecos petition vs MORE [The Manila Times, January 22, 2025]
The Supreme Court has dismissed a petition for certiorari filed by the Iloilo Electric Cooperatives Inc. (Ilecos), challenging the constitutionality of the law that allowed Razon-led MORE Electric and Power Corp. (MORE Power) to expand its franchise areas.
https://www.manilatimes.net/2025/01/22/regions/sc-junks-ilecos-petition-vs-more/2042203
Marcos wants to develop PH semiconductor industry [GMA News Online, January 22, 2025]
He said that in terms of CREATE MORE Act, there is no specific incentive for the semiconductor industry while other industries were given incentives such as car manufacturing.
PhilHealth: Hospitals unable to refile P4.49-B return-to-hospital claims in 2024 [The Philippine Star, January 22, 2025]
In a presentation, he explained that the top reasons for RTH claims include missing documents and clerical errors, which led to no reimbursements to hospitals.
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