Weekly Tax Updates[September 25, 2020] - Diaz Murillo Dalupan and Company

BANGKO SENTRAL CAPS CREDIT CARD INTEREST RATES AT 2% PER MONTH + POGO EXODUS SEEN TO EMPTY MORE THAN A 10TH OF METRO MANILA OFFICES CONDO UNITS + SEC ISSUES GUIDELINES ON RIGHT TO INSPECT CORPORATE BOOKS

Other Relevant Tax Updates:

  • Securities and Exchange Commission (SEC) Issues Guidelines on the Filing, Investigation and Resolution of Complaints for Violation of Rights to Inspect  and/or Reproduce Corporate Records
  • Supreme Court (SC) Case Digest
  • Court of Tax Appeals (CTA) Cases Digest
  • Bureau of Internal Revenue (BIR) Amends Policies on Responding to Notice of Discrepancy Assessment
  • BIR Extends the Filing Deadlines on Submission of BIR Form 1709 or the Information Return on Related-Party Transaction (RPT)
  • Tax And Business-Related News [September 19-25]
 
 

I. SEC ISSUES GUIDELINES ON THE FILING, INVESTIGATION AND RESOLUTION OF COMPLAINTS FOR VIOLATION OF RIGHTS TO INSPECT  AND/OR REPRODUCE CORPORATE RECORDS

SEC Memorandum Circular No. 25, Series of 2020, published on September 11, 2020, sets out the guidelines from the filing to resolution of complaints for violation of rights granted under Section 73 of Republic Act (R.A.) No. 11232 or the Revised Corporation Code of the Philippines.

Highlights of the circular include: 

  1. verified complaintcontaining the information of the company and the relevant facts and circumstances on the violation of the right to inspect and/or reproduce corporate records may be filed with Company Registration and Monitoring Division or any of the Extension Offices of SEC, with payment of filing fee;
  2. Summonshall be issued by SEC within five (5) days from filing of the verified complaint; 
  3. Verified Answer must  be filed within ten (10) days from receipt of the summon; 
  4. clarificatory conference or hearing may be conducted not later than thirty (30) days after the filing of verified answer;
  5. An amicable settlement or withdrawal of complaint may be done by the complainant and respondent, which shall be agreed and signed by both parties; 
  6. final order will be issued thirty (30) days after the conclusion of the clarificatory conference; 
  7. verified status accounts(VSA) must be complied within fifteen (15) days after receipt of final order; 
  8. second clarificatory conference may be conducted before the issuance of final Resolution;
  9. resolutionwill be issued within thirty (30) days from receipt of VSA. 

 

II.SC CASE DIGEST

LAW DOES NOT PROHIBIT VERBAL REQUEST FOR ADDITIONAL DOCUMENTS IN SUPPORT OF INPUT VAT REFUND AS LONG AS IT IS DULY MADE BY AUTHORIZED BIR OFFICIALS

Petitioner Zuellig-Pharma Asia Pacific Ltd. Phils. ROHQ filed a Petition for Review on Certiorari seeking reversal of the CTA En Banc’s decision dismissing Petitioner’s claim for refund or issuance of Tax Credit Certificate representing excess and unutilized input VAT for calendar year 2010. The main issue is whether or not the Petitioner’s judicial claim for refund was filed out of time. In ruling, the Court held that the 120-day period should be reckoned from the time the taxpayer submitted complete documents in support of its administrative claim, without prejudice to the BIR’s request for additional documents which did not obtain in this case; thus, with the lapse of 120 days, the taxpayer may file its judicial claim for refund within thirty (30) days. Perusal of the document shows that the Petitioner complied with the BIR official’s written and verbal request for additional documents and the verbal requests were well-documented and all confirmed by the BIR; hence, there is no danger of losing track of when to reckon 120-day period. The 120-day period should, therefore, be reckoned from the April 29, 2014 Petitioner’s letter stating that it already submitted completed documents in support of its refund claim. In turn, the BIR has 120 days form such time (until August 27, 2014) to act on the administrative claim for refund, however, BIR failed to act within such period. Hence, Petitioner had thirty (30) days (until September 26, 2014) to file judicial claim. Thus, its Petition for Review was timely filed on September 25, 2014. Above disquisition only applies to claim for refund made prior to RMC No. 54, 2014 (June 12, 2014) wherein the taxpayer is now required to submit complete documents upon its filing of an administrative claim for VAT refund/tax credit, as no other documents shall be accepted thereafter. Consequently, Petition was GRANTED and earlier decision was REVERSED and SET ASIDE[ZUELLIG-PHARMA ASIA PACIFIC LTD. PHILS. ROHQ VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 244154, JULY 15, 2020]

 III. CTA CASES DIGEST

[ABSENT PRIOR AUTHORITY ON REVENUE OFFICER (RO) WHO CONDUCTED THE AUDIT WILL RENDER THE ASSESSMENT VOID] [ONLY THE COMMISSIONER OF INTERNAL REVENUE (CIR) OR HIS DULY AUTHORIZED REPRESENTATIVES ARE GRANTED THE POWER TO AUTHORIZE AUDIT EXAMINATION OF TAXPAYERS OR TO EFFECT ANY MODIFICATION OR AMENDMENT TO A PREVIOUSLY-ISSUED LETTER OF AUTHORITY (LOA)]

Petitioner Scicindustial Corporation filed a Petition for Review seeking cancellation of the assessment issued by the Respondent Bureau of Internal Revenue. The sole issue is whether or not the Formal Assessment Notice (FAN), dated January 23, 017, is void. In ruling, the Court, citing the landmark case of CIR vs. Sony Philippines, Inc., held, that absent any prior authority on the part of Revenue Officers (RO) who conducted the audit of taxpayer’s books of accounts and other accounting records, the deficiency tax assessment arising therefrom is a nullity. Perusal of the document showed that ROs named in the LOA were different from those who actually examined the Petitioner’s documents. From the testimony of RO Elardo, his authority to continue Petitioner’s audit was based only on the Memorandum of Assignment (MOA) issued by RDO Barroga. RDO Barroga does not have any power to authorize audit examination of taxpayers or to effect any modification or amendment to a previously-issued LOA, since only the CIR or his duly authorized representatives (i.e. Regional Director) are granted such power. Consequently, the Petition was GRANTED resulting in the CANCELLATION of the assessment. [SCICINDUSTIAL CORPORATION VS. BUREAU OF INTERNAL REVENUE, CTA CASE NO. 9616, AUGUST 27, 2020]

[NEW LOA FOR RE-ASSIGNMENT OR TRANSFER OF CASES TO ANOTHER RO IS A MANDATORY REQUIREMENT] [ISSUANCE OF FORMAL ASSESSMENT NOTICE (FAN) PRIOR TO THE LAPSE OF THE 15-DAY PERIOD TO RESPOND TO PRELIMINARY ASSESSMENT NOTICE (PAN) IS A VIOLATION OF TAXPAYER’S RIGHT TO DUE PROCESS]

Petitioner Integrated Solutions Technology Limited filed a Petition for Review seeking cancellation of the assessment issued by Respondent CIR. Petitioner argued that the alleged liability is unsupported by a valid LOA and the denial of its protest is based on Respondent’s gross misapprehension of a material fact. Likewise, FAN was not valid since it was issued even before the expiration of the 15-day period to respond to PAN. In ruling, the Court held that an RO must be authorized, through a LOA, in order that the said officer may validly examine the books of accounts and other accounting records of a taxpayer and that in case of re-assignment or transfer of cases to another RO, it is mandatory that a new LOA shall be issued in favor of the latter. Perusal of the document showed that the Petitioner received the LOA authorizing ROs Gerardo Nuestro and GS Medina Lopez to examine the documents. However, it was RO Sharon S. Zafe and GS Arthur Benjamin T. Padilla who continued the examination through Memorandum of Assignment, and not through an LOA. Moreover, the issuance of FAN prior to the lapse of the 15-day period to respond to PAN is a violation to Petitioner’s right to due process. Consequently, the Petition was GRANTED resulting in the CANCELLATION of the assessment. [INTEGRATED SOLUTIONS TECHNOLOGY LIMITED VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9608, AUGUST 26, 2020]

 IV.BIR AMENDS POLICIES ON RESPONDING TO NOTICE OF DISCREPANCY ASSESSMENT

Revenue Regulations (RR) No. 22-2020, issued on September 16, 2020, amends RR No. 7-2020, which provides the issuance of Notice of Discrepancy (NID), as part of the due process requirement pursuant to RR No. 2-1998.

Under the new rules, the discussion of discrepancy shall in no case extend beyond 30 days from receipt of the NID. In case of partial or total disagreement of the taxpayer on the proposed assessment, the district office shall endorse the tax docket to the Revenue Regional Office within ten (10) days from the conclusion of the discussion for the issuance of Preliminary Assessment Notice.

V. BIR EXTENDS THE FILING DEADLINES ON SUBMISSION OF BIR FORM 1709 OR THE INFORMATION RETURN ON RPT

Revenue Memorandum Circular (RMC) No. 98-2020, issued on September 15, 2020, extends the deadline on the submission of BIR Form 1709 or the Information Return on RPT in consideration of the adverse effect of COVID-19.  This is part of the Bureau’s relief measures and to give taxpayers ample time to accomplish and submit the required documents.

It may be recalled that under Revenue Regulations (RR) No. 19-2020, the Bureau required that BIR Form 1709 should be a part of the required attachments in the submission of the Annual Income Tax Return beginning those with ending period March 31, 2020.

With this circular, the deadlines are now extended as follows:

                                              

 

 

Particulars

Extended Deadline

For Fiscal Year Ended March 31, 2020 and April 30, 2020

December 29, 2020

For Fiscal Year Ended May 31, 2020 and June 30, 2020

January 31, 2021

For Fiscal Year Ended July 31, 2020 and August 31, 2020

March 1, 2021

For Fiscal Year Ending September 30, 2020 and October 31, 2020

March 31, 2021

For Fiscal Year Ending November 30, 2020 and Calendar Year Ending December 31, 2020

April 30, 2021

 

 

 

 

 

VI. TAX AND BUSINESS-RELATED NEWS [SEPTEMBER 19-25]

  • Pagcor revenue plummets as pandemic pummels Pogos
  • Bangko Sentral caps credit card interest rates at 2 percent per month
  • PAGCOR says online gaming revenues drop 50 percent as pandemic shrinks POGO income
  • BSP to impose 24% credit card rate cap starting Nov. 3
  • Postaudit of rice imports yields P1.4B in taxes
  • PH ‘exceeds’ P2.2-T estiated tax revenue this year, says Finance chief
  • POGOs ‘canceling’ lease contracts in PH due to China’s clampdown: Finance chief
  • Recto wants long-time ecozone investors exempted from new tax rates under CREATE
  • ‘No reason’ for EU to withdraw tariff perks, says Trade chief
  • Pogo exodus seen to empty more than a tenth of Metro Manila offices, condo units
  • New taxes loom before Duterte steps down in 2022
  • DTI aiming to tap Australian market for Philippine BPO industry
  • Labor group says at least 200,000 jobs in danger if EU revokes PH tariff perks
  • BSP sees ‘no further extension’ of 60-day loan reprieve under Bayanihan 2

 

Pagcor revenue plummets as pandemic pummels Pogos [Philippine Daily Inquirer, September 24, 2020]

State revenue from online gaming, once a cash cow that helped fund COVID-19 response, has dropped dramatically as the pandemic curtailed the Philippine Online Gaming Operators (Pogo) industry.
Source: https://business.inquirer.net/308069/pagcor-revenue-plummets-as-pandemic-pummels-pogos#ixzz6YybmeBJv 

Bangko Sentral caps credit card interest rates at 2 percent per month [ABS-CBN News, September 24, 2020]

The Bangko Sentral ng Pilipinas said Thursday it is capping the interest rate that banks are allowed to charge for credit cards at 24 percent per annum starting Nov. 3. 

Source: https://news.abs-cbn.com/business/09/24/20/bangko-sentral-caps-credit-card-interest-rates-at-2-percent-per-month

PAGCOR says online gaming revenues drop 50 percent as pandemic shrinks POGO income [ABS-CBN News, September 24, 2020]

Online gaming revenues dropped 50 percent after the COVID-19 pandemic and resulting restrictions limited offshore gaming operations, the country’s gaming regulator said Thursday. 

Source: https://news.abs-cbn.com/business/09/24/20/pagcor-says-online-gaming-revenues-drop-50-percent-as-pandemic-shrinks-pogo-income

BSP to impose 24% credit card rate cap starting Nov. 3 [Philippine Daily Inquirer, September 24, 2020]

Credit card users will soon be required to pay no more than 2 percent a month — or 24 percent annually — on this type of debt after the central bank’s Monetary Board recently approved an interest rate cap.

Source: https://business.inquirer.net/308057/bsp-to-impose-24-credit-card-rate-cap-starting-nov-3#ixzz6YybzRnih 

Postaudit of rice imports yields P1.4B in taxes [Philippine Daily Inquirer, September 24, 2020]

The Bureau of Customs’ (BOC) postaudit of rice imports has yielded at least P1.4 billion worth of previously unpaid duties and other fees as a result of undervaluation.

Source: https://business.inquirer.net/307997/postaudit-of-rice-imports-yields-p1-4b-in-taxes#ixzz6YycEQaSr 

PH ‘exceeds’ P2.2-T estimated tax revenue this year, says Finance chief [ABS-CBN News, September 23, 2020]

We are above that estimate as of end August 31st. We are above it by 8 percent,” Dominguez told senators during the Department of Finance’s (DOF) budget hearing in the Senate.

Source: https://news.abs-cbn.com/business/09/23/20/ph-exceeds-p22-t-estimated-tax-revenue-this-year-says-finance-chief

POGOs ‘canceling’ lease contracts in PH due to China’s clampdown: Finance chief [ABS-CBN News, September 23, 2020]

Several Chinese workers from the Philippine Offshore Gaming Operators (POGO) industry have “started canceling” their leased properties in the capital due to a clampdown in China, Finance Secretary Carlos Dominguez III said Wednesday.

Source: https://news.abs-cbn.com/business/09/23/20/pogos-canceling-lease-contracts-in-ph-due-to-chinas-clampdown-finance-chief

Recto wants long-time ecozone investors exempted from new tax rates under CREATE [ABS-CBN News, September 23, 2020]

Recto pushed for the inclusion of a “grandfather rule” — which allows existing investors in the country to enjoy status quo, while a new rule is applied to future investors — in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

Source: https://news.abs-cbn.com/business/09/23/20/recto-wants-long-time-ecozone-investors-exempted-from-new-tax-rates-under-create

‘No reason’ for EU to withdraw tariff perks, says Trade chief [ABS-CBN News, September 23, 2020]

There is “no reason” for the European Union to revoke tariff incentives awarded to the Philippines since there is an effective monitoring in place to ensure compliance, Trade Secretary Ramon Lopez said Wednesday. 

Source: https://news.abs-cbn.com/business/09/23/20/no-reason-for-eu-to-withdraw-tariff-perks-says-trade-chief

Pogo exodus seen to empty more than a tenth of Metro Manila offices, condo units [Philippine Daily Inquirer, September 23, 2020]  

The exodus of Philippine offshore gaming operators (Pogos) will not only shed tax revenues but also leave behind sizable office and condominium spaces empty, which was last seen during the Asian financial crisis over two decades ago.

Source: https://business.inquirer.net/307986/pogo-exodus-seen-to-empty-more-than-a-tenth-of-metro-manila-offices-condo-units#ixzz6Yyd9JlzQ

New taxes loom before Duterte steps down in 2022 [Philippine Daily Inquirer, September 23, 2020]

Filipinos should brace for possible new or higher taxes before President Rodrigo Duterte steps down in 2022 so that the government can repay the bigger debt it incurred to better respond to the health and socioeconomic crises inflicted by the COVID-19 pandemic.

Source: https://business.inquirer.net/307964/new-taxes-loom-before-duterte-steps-down-in-2022#ixzz6YydKDntS 

DTI aiming to tap Australian market for Philippine BPO industry [ABS-CBN News, September 22, 2020]

The Department of Trade and Industry on Tuesday said it is aiming to promote the Philippines’ business process outsourcing industry in Australia through a webinar this week.

Source: https://news.abs-cbn.com/business/09/22/20/dti-aiming-to-tap-australian-market-for-philippine-bpo-industry

Labor group says at least 200,000 jobs in danger if EU revokes PH tariff perks [ABS-CBN News, September 22, 2020]

A bluff. That’s how an international studies professor called the European Parliament’s threat to revoke the Philippines’ trading privileges over alleged human rights abuses. 

Source: https://news.abs-cbn.com/video/business/09/21/20/labor-group-says-at-least-200000-jobs-in-danger-if-eu-revokes-ph-tariff-perks

 BSP sees ‘no further extension’ of 60-day loan reprieve under Bayanihan 2 [ABS-CBN News, September 21, 2020]

Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said Monday it is unlikely for banks to extend another loan reprieve following the mandatory one-time 60-day grace period under the Bayanihan 2 law.

Source: https://news.abs-cbn.com/business/09/21/20/bsp-sees-no-further-extension-of-60-day-loan-reprieve-under-bayanihan-2

If you wish to get a copy of the complete texts of the above issuances, send us an email thru taxseminars@dmdcpa.com.ph.