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    Any opinion, information or remark made on this site, including any response to queries or comments posted, should not be regarded as a complete and authoritative statement of the law. There is no warranty as to the completeness or accuracy of the information and the authors will not be liable for any loss or damage relating to the use or reliance thereon. A grain of salt is recommended. No recipient of any information or content from this site should act or refrain from acting on the basis of such information or content. Consult your favorite legal representative. Use of this website does not and will not create any legal relationship between the authors and the receiver/user/reader and any lawyer-client privilege will not apply.

Archive for the ‘Taxation’ Category

BIR’s new abatement program

Posted by lexforiphilippines on September 23, 2010

The Bureau of Internal Revenue has issued Revenue Regulations No. 9-2010 last September 13, 2010 providing for the policies and guidelines on the abatement of surcharges and/or compromise penalties in relation to the filing of tax returns and payment of taxes under certain conditions.

Note that only the surcharges and compromise penalty are abated. The taxpayer should still pay the interest due. The program is also not available to those taxes where a Letter of Authority, Tax Verification Notice, Audit Notice, Letter Notice or discrepancy notices have already been issued or if the tax involved is already a subject of any pending criminal case for tax evasion and other criminal offenses under the Tax Code.

Copy of the  Revenue Regulation is here. RR 9-2010


Posted in Laws and Implementing Rules, Taxation | Tagged: , , , | 3 Comments »

Withholding Agent’s Right to File a Claim for Tax Refund

Posted by lexforiphilippines on September 21, 2010

In Commissioner of Internal Revenue vs. Smart Communications, Inc. (G.R. No. 179045-46; 25 August 2010), the Supreme Court held that the person entitled to claim a tax refund is the taxpayer [Sections 204(c) and 229 of the National Internal Revenue Code (NIRC)], but in case the taxpayer does not file a claim for refund, the withholding agent has the right to file the claim, even when it is unrelated to, or is not a wholly owned subsidiary of, the principal taxpayer.  The High Court cited two reasons: (1) “(the withholding agent) is considered a ‘taxpayer” under the NIRC as he is personally liable for the withholding tax as well as for deficiency assessments, surcharges, and penalties, should the amount of the tax withheld be finally found to be less than the amount that should have been withheld under law,” and (2) “as an agent of the taxpayer, his authority to file the necessary income tax return and to remit the tax withheld to the government impliedly includes the authority to file a claim for refund and to bring an action for recovery of such claim.”  The Supreme Court stressed, however, that as an agent of the taxpayer, it is the duty of the withholding agent to return to the principal taxpayer what he has recovered, otherwise, he would be unjustly enriching himself at the expense of the principal taxpayer from whom the taxes were withheld, and from whom he derives his legal right to file a claim for refund.

To know more about said case and the Supreme Court’s ruling, click on Digested Cases under Tools.

Posted in Cases, Law School, Taxation | Tagged: , , | Leave a Comment »

BIR Lifesytle Check for Individuals

Posted by lexforiphilippines on August 13, 2010

Recently, the Bureau of Internal Revenue (BIR) has been in the news for filing a case against a prominent businessman for failing to file his correct income tax return. Said businessman supposedly filed a zero tax return for the year 2007 but was able to acquire a Lamborghini worth Php26Million in the same year. The deed of sale for the luxurious car was said to have been provided by the Land Transportation Office (LTO) to the Bureau of Internal Revenue.

In his first State of the Nation Address, the President mentioned that the BIR will be filing cases against suspected smugglers and tax evaders on a weekly basis.

With this mandate coming from the highest official of the land, we can expect the BIR to focus its collection efforts against suspected tax cheats and high-profile individual taxpayers suspected of evading taxes.

But how will the Bureau go about this directive?

BIR Lifestyle Check

On March 9, 2010, the Bureau of Internal Revenue issued Revenue Memorandum Order (RMO) No. 19-2010, known as the Taxpayer’s Lifestyle Check System, with the objective to exhaust all means and methodology of determining an individual’s income. Under the RMO, the National Investigation Division (NID) of the BIR shall verify the existence of a taxpayer’s high value assets and/or conspicuous spending by accessing the records of appropriate government and private entities, such as but not limited to the following: the LTO, Bureau of Immigration, airline and shipping companies, Maritime Industry Authority, Civil and Aeronautics Board, Manila Electric Company, Land Registration Authority, Register of Deeds, resorts, membership clubs, or similar establishments, homeowner associations, real estate development authorities, and credit card companies, and Statement of Assets and Liabilities and Networth and/or Amnesty Returns filed under Republic Act No. 9480.

The information gathered from the aforementioned entities shall then be evaluated vis-à-vis the data extracted from the BIR’s Integrated Tax System (ITS) on the concerned taxpayer’s registered business/es, returns filed and amount of taxes paid. The economic use/beneficial ownership of properties shall be considered in the evaluation process. All properties registered under the name of  the taxpayer’s child, whether emancipated or minor, or any relative shall be considered as those of the taxpayer when the property is not proven to have been acquired under any of the means enumerated in the New Civil Code of the Philippines and the tax thereon has been properly paid, and/or the child or relative has no independent means sufficient for the acquisition of the property.

After evaluation, if sufficient evidence so warrants, the investigator shall request a formal issuance of a Letter of Authority to conduct a formal investigation of the subject taxpayer.

What will constitute prima facie evidence of fraud or substantial under-declaration of taxes?

If the taxpayer’s net worth has increased in a given year or if he has acquired substantial assets or incurred substantial spending and it was verified from the ITS that he has not filed an income tax return for the period or the declared income therein is disproportionate to his spending then the BIR will take is as a prima facie evidence of substantial under declaration of taxes.

Posted in Law School, Laws and Implementing Rules, Taxation | Tagged: , , , , , | Leave a Comment »

Expanded Senior Citizens Act of 2010 – Implementing Rules

Posted by lexforiphilippines on July 8, 2010

The Department of Social Welfare and Development signed on June 18,2010 the Implementing Rules with respect to the Expanded Senior Citizens Act of 2010.

Under the Implementing Rules, a qualified senior citizen shall be granted a 20% discount and VAT exemption on his/her purchases, if applicable.

The said privileges shall apply to purchases of medicine, medical supplies and accessories, including medical and dental services, as well as to domestic air and sea travel, public transportation (PUJ, taxi, LRT), hotel accommodation and purchases in restaurants. With respect to food establishments, the discount now also applies to take-outs  and deliveries. The discount shall also apply to recreation centers (for golf cart rentals, yoga classes or badminton courts), and tickets to theaters, cinemas, carnivals, concert halls, museums and parks.

The Implementing Rules also provide for free medical and dental services in all government hospitals, medical facilities, out patient clinics, including professional fees. There is also a grant of a 5% discount on the monthly utilization of water and electricity subject to certain rules and criteria.

A social pension of P500.00 is also granted but such grant is subject to guidelines still to be issued.

For a copy of the Implementing Rules, you may click on the Tools Tab.

Posted in Civil Law, Laws and Implementing Rules, Taxation | Tagged: , , | 2 Comments »

Republic Act No. 10021 – Exchange of Information on Tax Matters Act

Posted by lexforiphilippines on June 29, 2010

Signed into law on 5 March 2010, Republic Act No. 10021 or the Exchange of Information on Tax Matters Act allows the Bureau of Internal Revenue to exchange information on tax matters with foreign tax authorities to comply with the Philippines’ commitments under existing tax treaties and international conventions.  For this purpose, the new law amended Sections 6(F), 71 and 270 of Republic Act No. 8424, as amended, otherwise known as the National Internal Revenue Code of 1997, as amended.

For the salient features of Republic Act No. 10021, click on Laws under Tools.

Posted in Laws and Implementing Rules, Taxation | 1 Comment »

Implementing Rules – Real Estate Investment Trust Act

Posted by lexforiphilippines on June 22, 2010

On 13 May 2010, the Securities and Exchange Commission approved the Implementing Rules and Regulations of Republic Act No. 9856, otherwise known as the Real Estate Investment Trust Act of 2009.

Click on the Tools tab for a copy of the Implementing Rules of the Real Estate Investment Trust Act of 2009.

Posted in Corporate Law, Laws and Implementing Rules, Taxation, Uncategorized | Tagged: , | Leave a Comment »

Statement of Management Responsibility in the ITR

Posted by lexforiphilippines on March 10, 2010

The Bureau of Internal Revenue issued Revenue Regulations No. 3-2010 requiring  taxpayers who will be submitting their annual tax returns to include a Statement of Management Responsibility as attachment. Aside from the usual general statement that the financial statements are prepared in accordance with the generally accepted accounting and auditing principles, the taxpayer shall also make a statement that ” all applicable tax returns, reports and statements required to be filed under Philippine tax laws for the reporting period, and all taxes and other impositions shown thereon to be due and payable have been paid for the reporting period, except those contested in good faith.”

For a copy of Revenue Regulations No. 3-2010, click on the Tools bar under Laws and Implementing Regulations.

Posted in Laws and Implementing Rules, Taxation | Tagged: , | Leave a Comment »

Republic Act No. 9999, “Free Legal Assistance Act of 2010”

Posted by lexforiphilippines on March 8, 2010

Lawyers or law partnerships wishing to render free legal aid are now entitled to claim tax benefits for doing pro bono work.

Last February 23, 2010, the President signed into law the Free Legal Assistance Act of 2010 giving a lawyer or professional partnerships rendering actual free legal services, an allowable deduction from the gross income, the amount that could have been collected for the actual free legal services rendered or up to ten percent (10%) of the gross income derived from the actual performance of the legal profession (service?), whichever is lower. However, the actual free legal services contemplated shall be exclusive of the minimum sixty (60)-hour mandatory legal aid services rendered to indigent litigants as required under the Rule on Mandatory Legal Aid Services for Practicing Lawyers, under BAR Matter No. 2012, issued by the Supreme Court.

The BIR is mandated to formulate within 90 days the necessary revenue regulation to implement the tax benefit envisioned under the Act.

Posted in Laws and Implementing Rules, Taxation | Tagged: , | 2 Comments »

Expanded Senior Citizen’s Act – RA 9994

Posted by lexforiphilippines on March 3, 2010

Last February 15, 2010, the President signed into law Republic Act No. 9994 or the Expanded Senior Citizen’s Act of 2010, amending further Republic Act No. 9257, otherwise known as the “Expanded Senior Citizens Act of 2003”. The new law grants additional benefits to senior citizens apart from the 20% discount already given by the old law.  For the salient features of the new law, see it under the Tools Tab, Laws and Implementing Regulations.

Posted in Laws and Implementing Rules, Taxation | Tagged: , | 1 Comment »

Exemption of Cooperatives from Taxes

Posted by lexforiphilippines on February 18, 2010

The Supreme Court declared that members of cooperatives are exempt from the 20% withholding tax on the interest of their savings and time deposits maintained with the cooperative. See the digest at Tools + Digested Cases Tab.

Posted in Cases, Political Law, Taxation | Tagged: , , | Leave a Comment »