Other Relevant Updates
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
JANUARY 6, 2025
BLGF Memorandum Circular No. 003-2025 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:
1. 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.
SSS RELEASES THE NEW CONTRIBUTION RATES FOR 2025
JANUARY 1, 2025
The Social Security System (SSS) has already circularized the updated table of contributions to effect the rate increase effective January 1, 2025, pursuant to Republic Act 11199, otherwise known as the Social Security Act of 2018. Under the said law, it mandates the SSS to increase its contribution rate every two (2) years with the final increase in 2025.
DOLE REMINDS THE PUBLIC ON THE UPCOMING YEAR-END COMPLIANCE REPORT
JANUARY 1, 2025
DOLE has advised the public on the submission of the following year-end reports:
a. 13th Month Pay Report with deadline on or before January 15, 2025, for all companies not otherwise exempted by 13th Month Pay Law
b. Annual Establishment Report on Wages with deadline on or before January 31, 2025
FIRB ISSUES AN INTERIM IRR ON THE AVAILMENT OF INCENTIVES & TRANSFER OF REGISTRATION UNDER CREATE MORE
FIRB ADVISORY
DECEMBER 17, 2024
Fiscal Incentives Review Board (FIRB) Advisory 007-2024, dated December 17, 2024, circularizes the Interim Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 12006, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act. The Interim IRR is issued pending the final IRR to be issued by the Department of Finance (DoF) and the Department of Trade and Industry (DTI) within 90 days from the effectivity of the law (i.e., November 28, 2024), and given the set deadline for PRE-CREATE and CREATE Registered Business Enterprises (RBEs) to transfer and avail of a new set of incentives under the CREATE Act and CREATE MORE Act on or before December 31, 2024.
Highlights include the guidelines and policies on the application for registration of new and qualified expansion projects or activities, as well as transfer of registration and availment of incentives for investment capital exceeding Php 15 billion under CREATE ACT and CREATE MORE.
THE TAX CODE DOES NOT EXPLICITLY CONFIRM RBES' EXEMPTION FROM LBT & CDC LOCATORS CANNOT CLAIM INCENTIVES ABSENT CLEAR & UNEQUIVOCAL LEGAL PROVISIONS
DOJ OPINION NO. 49 SERIES OF 2024
NOVEMBER 20, 2024
CDC is requesting an opinion on whether the locators are ineligible for incentives under Republic Act (R.A.) No. 11534 or Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act) should be liable for Local Business Taxes (LBT) to the Local Government Units (LGU) of Angeles, Mabalacat, Porac, Pampanga, and Capas and Bamban, Tarlac. CDC cites Section 291 of the Tax Code of 1997, as amended by the CREATE Act, which affirms that Investment Promotion Agencies (IPAs), including Clark Development Corporation (CDC), retain their powers under their governing laws, except for administering incentives. Supreme Court rulings further uphold CDC's exclusive jurisdiction and police authority over Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ) locators, regardless of incentive eligibility. CDC further states that the law established the CSEZ and CFZ as separate customs territories to attract foreign investment and spur development in Pampanga and Tarlac. As the administrator and operating arm of BCDA, CDC's dual role as IPA and LGU should remain recognized and upheld. In reply, Section 291 of the Tax Code of 1997, as amended affirms that IPAs retain their powers under their governing laws. On the other hand, it has been modified by Section 292 which limits tax incentives to Registered Business Enterprises (RBEs) for approved projects under the Strategic Investment Priority Plan. The provisions are silent on whether RBEs remain exempt from LBT. As the Supreme Court ruled in BCDA and JHMC v. City of Baguio, tax exemptions must be explicitly stated in clear and unequivocal terms.
HIGHLIGHTS OF CREATE MORE LAW
REPUBLIC ACT NO. 12066
NOVEMBER 11, 2024
President Ferdinand Marcos Jr. signed the law on November 8, 2024. This Act aims to enhance and broaden tax incentives to boost economic recovery, support enterprises, and attract foreign investment.
Significant highlights of the law include the following implications:
A. Income Tax Implications
1. Reduces Corporate Income Tax Rate from 25% to 20% for Registered Business Enterprises (RBEs) under the Enhanced Deductions Regime (EDR).
2. Expands the scope of income exempted from treaty obligations, including agreements entered into by the President with economies and administrative regions, subject to the concurrence of the Senate.
3. Recognizes that input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer.
4. Sets a cap on creditable withholding tax rates at not more than 15% for payments to individuals and corporations residing in the Philippines.
B. Value-Added Tax Implications
1. Expands the VAT zero-rating on purchases in relation to goods or services sold to export-oriented enterprises provided the following requisites are compiled:
1.1 The enterprises exports at least 70% of their annual production from the previous year; and
1.2 Sales are “directly attributable” to the export activity, as certified by the Export Marketing Bureau of the Department of Trade and Industry.
2. Provides VAT exemption on importation and VAT zero-rating on local purchases for goods and services “directly attributable” to the registered project or activity, including incidental expenses, of a registered export enterprise or High-Value Domestic Market Enterprises (DMEs), regardless of the location of these enterprises. High Value DMEs are registered domestic enterprises with an investment capital exceeding Php 15 Billion, and are engaged in import-substituting sectors, or with export sales in the immediately preceding year of at least US$ 100,000,000 or its equivalent in acceptable foreign currency, as may be increased by the Fiscal Incentives Review Board,
3. Adds the definition of “directly attributable” to refer to goods and services that are incidental to and reasonably necessary for the export activity of the export-oriented enterprise, including janitorial, security, financial, consultancy, marketing, promotion services, and services rendered for administrative operations such as human resources, legal, and accounting.
4. Clarifies that the sale of goods or services by a VAT-registered seller to a registered export enterprise is VAT zero-rated, regardless of location of said enterprise. Local sales of goods and services by RBEs, regardless of their income tax incentives regime and location, are generally subject to 12% VAT, unless otherwise exempt or zero-rated under specific provisions of the Tax code. The term “Local Sales” means sales to domestic market enterprises or non-RBEs, regardless of whether the sale is made within freeports or economic zones.
C. Tax Incentives Implications
1. Expands the coverage of Enhanced Deductions Regime for export enterprise and DME to include the following:
1.1 100% additional deductions on power expense incurred in the taxable year
1.2 50% deductions for re-investment allowance to manufacturing and tourism industries in relation to its undistributed profit or surplus within a period of five (5) years from the time of such re-investment
1.3 50% additional deductions on expenses relating to exhibitions, trade missions, or trade fairs.
1.4 Enhance Net Operating Loss Carry-Over (NOLCO). The net operating loss of the registered project or activity during the first three (3) years from the start of commercial operation, which had not been previously offset as a deduction from gross income, may be carried over as a deduction from gross income within the next five (5) consecutive taxable years immediately following the last year of the Income Tax Holiday (ITH) entitlement period of the project.
2. On Local Business Tax
2.1 Introduces the Registered Business Enterprise Local Tax (RBELT) or not more than 2% of the gross income, which is in lieu of all local taxes, fees, and charges, for RBEs under the ITH and Enhanced Deduction Regime
2.2 Exempts RBEs under the 5% Special Corporate Income Tax (SCIT) Rate from all national and local taxes, local fees, and charges.
3. Provides longer incentive periods for qualified RBEs from a maximum of 17 years to a maximum of 27 years.
3.1 For FIRB-approved projects, additional ten (10) years of Special Corporate Income Tax (SCIT)/Enhanced Deduction
3.2 Allows DMEs to enjoy the same incentive periods as REEs.
3.3 Extends the previously granted national and/or local tax incentives for existing RBE’s prior to CREATE Act (2021) until December 31, 2034 or an additional three (3) years from CREATE Act’s 10-year sunset clause.
3.4 Extends the period of availment of VAT and duty incentives to entire registration period as an RBE
4. Allows Work-From-Home Arrangement of up to 50% of the total workforce without adverse impact on incentives
D. Administrative Provisions
1. Simplifies and increases transparency in the VAT and Excise Tax Refund Processes
2. Creates the Registered Business Enterprise Taxpayers Service (RBETS) within the BIR to provide end-to-end tax compliance support to RBEs
3. Requires IPAs to establish One-Stop Action Centers and initial point of contact to foreign investment leads to assist RBEs in setting up and conducting their businesses.
4. Increases the IPAs’s investment capital approval threshold from Php 1 Billion to Php 15 Billion. Projects above Php 15 Billion require FIRB approval
PHILIPPINE MINING ACT OF 1995 QUALIFIES LGU TO ENGAGE IN & CONDUCT INDUSTRIAL SAND & GRAVEL OPERATIONS
ISSUANCE OF INDUSTRIAL SAND & GRAVEL PERMIT BY THE MINES & GEOSCIENCES BUREAU ALLOWS LGUs TO REGULATE MINING ACTIVITIES
LGUs CAN CONDUCT INDUSTRIAL SAND & GRAVEL OPERATIONS AS PART OF ITS PROPRIETARY ACTIVITIES
DOJ OPINION NO. 47 SERIES OF 2024
OCTOBER 29, 2024
The Mines and Geosciences Bureau (MGB) is requesting an opinion on whether the Municipality of Tapaz, Capiz, a Local Government Unit (LGU), may be allowed to engage in and conduct Industrial Sand and Gravel operations through its Economic Enterprise Office. The MGB, under the Department of Environment and Natural Resources (DENR), is responsible for the conservation, management, development, and proper use of the country's mineral resources, including those in reservations and public lands. LGU Tapaz filed with MGB an application for the issuance of an Industrial Sand and Gravel Permit (ISGP). The Department of Justice (DOJ) opined that municipalities, as territorial subdivisions of the Philippines, enjoy local autonomy under Article X of the 1987 Constitution. Also, each LGU can generate revenue, subject to guidelines and limitations. Section 15 of the Local Government Code (LGC) recognizes that LGUs perform both governmental functions (e.g., health, safety, and public welfare) and proprietary functions (aimed at profit or private advantage). However, such proprietary functions are not absolute and are limited by the enumerations of proprietary activities under Sections 17 and 22 of the LGC. In particular, industrial sand and gravel operations are notably absent from the activities a municipality may undertake. While Section 17 of the LGC does not explicitly list these operations, LGUs can still have permits under the Philippine Mining Act of 1995 or the Republic Act (R.A.) No. 7942. It states that qualified persons, including LGUs, authorized to engage in mining, with the technical and financial capability and at least 60% Filipino-owned capital, may be granted an ISGP by the Bureau for sand and gravel extraction using mechanical processing over an area exceeding five (5) hectares. Thus, it allows LGUs to regulate such activities within their jurisdictions, provided they comply with the requirements of the MGB.
IN PURCHASING A GROUP MEAL FOR SHARING, THE 20% DISCOUNT & VAT EXEMPTION APPLY TO THE TOTAL FOOD AMOUNT IF IT IS CLEARLY FOR THE EXCLUSIVE USE OF ONE PWD
DOJ OPINION NO. 45 SERIES OF 2024
OCTOBER 8, 2024
The National Council on Disability Affairs (NCDA) is requesting an opinion on the application of the 20% discount and Value Added Tax (VAT) exemption on food purchases of Persons with Disability (PWDs) in instances when the food purchased is ideally for group sharing. The NCDA states that the 20% discount and VAT exemption should only apply to the personal share of the PWD when dining with a group and purchasing food for group sharing, while the total bill should be discounted when the food is intended for individual consumption. In reply, the Department of Justice (DOJ) confirms that PWDs are entitled to a 20% discount and VAT exemption on food purchases from restaurants for their exclusive use under Section 1 of the Republic Act (R.A.) No. 10754. Specifically, Section 6 of the Implementing Rules and Regulations (IRR) clarifies this entitlement, allowing discounts on various consumable items, including take-out meals, provided they are for the exclusive enjoyment of the PWD. The Department of Tourism (DOT) and the Bureau of Internal Revenue (BIR) have issued respective circulars reiterating these benefits, with the BIR allowing establishments to deduct the sales discount from their gross income, subject to specific conditions. It is emphasized that the term "exclusive" is crucial in determining eligibility for the discount; if a group meal is clearly for the exclusive use of a single PWD, the total amount may qualify for the discount. Revenue Memorandum Circular (RMC) No. 71-2022 clarifies that for group meals purchased online or via phone, the basis for the 20% discount is the most expensive single-serving meal plus beverage which can be adjusted as needed by the restaurant.
FIRB ADVISORY ON THE INTERIM GUIDELINES FOR THE SUBMISSION OF EMPLOYMENT & COMPENSATION DATA IN THE ANNUAL BENEFITS REPORT
FIRB ADVISORY
OCTOBER 7, 2024
Fiscal Incentives Review Board (FIRB) Advisory 006-2024 circularizes the interim guidelines for submitting employment and compensation data in the Annual Benefits Report (ABR) for the taxable year 2024. The mode of submission of the ABR will still be in accordance with the FIRB Memorandum Circular (MC) No. 001-2024. These interim guidelines, in a question-and-answer format (Annex A), apply while awaiting enhancements to the Fiscal Incentives Registration and Monitoring System (FIRMS), and updates will be announced on the FIRB website and through official communications.
The guidelines cover questions about the ABR submission deadline, the period for reporting employment and compensation data, how to report if data is unavailable by the deadline, whether this process applies beyond 2024, the possibility of updating data in 2025, the need for amendments if previous submissions do not meet the guidelines, and how IPAs will assess compliance for 2024 submissions.
PWD EXPRESS OR PRIORITY LANES APPLY TO ALL ESTABLISHMENTS & TRANSACTIONS, NOT JUST FOR ESSENTIAL GOODS OR SERVICES
DOJ OPINION NO. 42 SERIES OF 2024
SEPTEMBER 19, 2024
The National Council on Disability Affairs (NCDA) is requesting an opinion on whether implementation of express lanes or priority for Persons with Disabilities (PWDs), specifically, on whether the same only applies to necessities and not leisure; and whether establishments may bypass express lanes or priority for PWDs for limited-quantity items. The NCDA is of the position that the express lane or priority for PWDs is a privilege, not a right, and should not infringe on the rights of others, as doing so could result in unequal treatment for able-bodied individuals, conflicting with the Equal Protection Clause. In reply, the Department of Justice (DOJ) referred to Section 10 of the Implementing Rules and Regulations (IRR) of R.A. No. 10754, or the Magna Carta for PWD, which mandates that express lanes or priority for PWDs must be provided in all commercial and government establishments, without exception. If express lanes are not available, PWDs should be given priority in all transactions. The use of the word "all" in the law is comprehensive and applies to all establishments and transactions, regardless of the type of goods or services offered. Furthermore, the Supreme Court has emphasized that the Equal Protection Clause allows for valid classifications, such as those for PWDs, which have a rational basis and are not arbitrary. This special treatment for PWDs is justified by the law's purpose of promoting their rehabilitation, self-development, and self-reliance. Thus, Congress may enact laws that provide different treatment to PWDs, which meets the requirements of Equal Protection.
CDC HAS NO AUTHORITY TO MANAGE THE AREAS COVERED BY NATIONAL COMMISSION ON INDIGENOUS PEOPLE
DOJ OPINION NO. 34 SERIES OF 2024
JULY16, 2024
Atty. D is inquiring regarding the authority of the Clark Development Corporation (CDC) to manage the areas covered by the Clark Special Economic Zone (CSEZ), including the area covered by Certificate of Ancestral Domain Title (CADT) issued to the Tribong Ayta, in light of relevant laws and the Joint Management Agreement (JMA) executed by the CDC, Tribong Ayta, and the National Commission on Indigenous People (NCIP). To be specific, Atty. D wish to clarify the specific mandates of NCIP, Department of Environment and Natural Resources (DENR), and CDC over areas already defined by law. In reply, the DENR is the primary government agency responsible for the conservation, management, development and proper use of the country’s environment and natural resources, specifically forest and grazing lands, mineral resources, including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and regulation of all natural resources as may be provided for by law. On the functions of the DENR over lands of the public domain, Section 4(15) of Executive Order (E.O.) No. 292 states that it shall “exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in consultation with appropriate agencies.” However, R.A. No. 8371, or the Indigenous Peoples' Rights Act of 1997 expressly limits the general power of regulatory bodies to issue concessions or licenses on areas that may overlap with any ancestral domain. In conjunction with the function of the NCIP to issue certificates of ancestral land/domain title, both ancestral domain and ancestral land are deemed to have been owned and occupied by Indigenous Cultural Communities/Indigenous People (ICCs/IPs) since time immemorial and are, therefore, no longer part of the public domain. The titles being issued by the NCIP over such areas is mere recognition or formalization of the rights that ICCs/IPs are already enjoying even prior to such issuance. DOJ is the view that there is no conflict between the powers and functions of NCIP and DENR. R.A. No. 8371 is a special law, as it relates specifically to the rights of the ICCs/IPs over their ancestral lands and domain, while E.O. No. 292, in relation to Commonwealth Act No. 141, is the general law, as it relates generally to public lands. CDC’s legal authority to manage and administer the CSEZ, portions of which are covered by CADT, may be treated as a limitation to the Tribong Ayta’s right to use and develop the subject ancestral domain, as provided under R.A. No. 8371 and manifested through the JMA entered into between the relevant parties. Finally, R.A. No. 8371 states that “in case of conflicting interest over lands covered by an ancestral domain, the NCIP shall hear and decide, after notice to the proper parties, the disputes arising from the delineation of such ancestral domains: Provided the dispute is between and/or among ICCs/IPs regarding the traditional boundaries of their respective ancestral domains, customary process shall be followed.
WHILE R.A. NO. 11201 OR THE DHSUD LAW GAVE BOTH THE DHSUD & THE HSAC THE POWER TO IMPOSE & COLLECT FINES, THE DHSUD’S POWER RELATES TO THE EXERCISE OF ITS REGULATORY FUNCTION WHILE THE HSAC’S POWER IS IN THE EXERCISE OF ITS ADJUDICATORY FUNCTION
DOJ OPINION NO. 33 SERIES OF 2024
JULY 12, 2024
Undersecretary G is requesting a clarification regarding the transfer of functions and responsibilities from the Housing and Land Use Regulatory Board (HLURB) to the Department of Human Settlements and Urban Development (DHSUD), as well as the scope of the adjudicatory mandate of the Human Settlement Adjudication Commission (HSAC) under the Republic Act (R.A.) No. 11201 or the “Department of Human Settlements and Urban Development Act.” To be specific, the inquiry seeks to clarify as to which office should the regulatory administrative fines and penalties imposed by the HSAC in the exercise of its original and appellate jurisdiction inure, and will the sanctioned party pay the imposed administrative fine and penalty directly to the DHSUD or the HSAC. In reply, with the enactment of R.A. No. 11201, the DHSUD was created through the consolidation of the HUDCC and the HLURB. The regulatory function of the HLURB, including the formulation, promulgation, and enforcement of rules, standards and guidelines over subdivisions, condominiums and similar real estate developments, are transferred to the DHSUD. Moreover, Section 5 (Powers and Functions) of the said R.A. expressly granted the DHSUD the authority to determine, fix, and collect reasonable amounts to be charged as fees and charges necessary for the effective implementation of all laws, rules and regulations enforced by the DHSUD and impose reasonable fines and penalties for violation thereof. Additionally, Section 12 of the said R.A. reconstituted the HLURB and transferred the adjudicatory function of the HLURB to the HSAC, as attached to the DHSUD for policy, planning, and program coordination only. DOJ further stated that, the DHSUD is correct that administrative fines imposed by the DHSUD in the exercise of its regulatory function shall inure to it as its income and shall be deposited to the National Treasury. However, insofar as the fees, fines and penalties imposed by the HSAC in the exercise of its adjudicatory function are concerned, the same should be paid by the concerned parties directly to the HSAC. Thus, shall inure to the HSAC as its income, and shall be deposited to the National Treasury. While R.A. No. 11201 gave both the DHSUD and the HSAC the power to impose and collect fines, the DHSUD’s power relates to the exercise of its regulatory function while the HSAC’s power is in the exercise of its adjudicatory function.
LOCAL WATER UTILITIES ADMINISTRATION (LWUA) POSSESSES THE MANDATE TO ASSUME TEMPORARY CONTROL OF AILING LOCAL WATER DISTRICTS (LWDs)
LWUA MAY TAKE OVER AN LWD THAT HAS A LOAN OBLIGATION TO THEM & IS LIKEWISE IN DEFAULT
THE RATES OR CHARGES ESTABLISHED BY THE LWD ARE SUBJECT TO REVIEW BY LWUA
DOJ OPINION NO. 27 SERIES OF 2024
JUNE 18, 2024
Administrator S is requesting an opinion in connection with the directive received from President Marcos to study the possible management of the Cagayan de Oro Water District (COWD) and solve the current water supply issue in Cagayan de Oro City and to ascertain the proper water rate for COWD to ensure that it will be able to fulfill its obligations to its consumers and bulk water supplier. COWD and Cagayan de Oro Bulk Water, Inc. (COBI) executed a Bulk Water Supply Agreement (BWSA) in 2017 that provides a scheduled water rate increase for the supply of treated water to COWD. However, COWD paid COBI based on the previous bulk water rate (PhP16.60 per cu.m.) citing financial difficulties, its low collection rate, and its high non-revenue water levels. After sending its final notice to COWD, COBI finally cut its bulk water supply to COWD, but the Regional Trial Court of Cagayan de Oro issued a 72-hour Temporary Restraining Order (TRO) enjoining COBI from cutting off the water supply, thereby prompting COBI to resume its supply of bulk water to COWD. Acting on the President’s directive, the BOT of LWUA unanimously passed a resolution authorizing a full takeover of COWD’s policy-making powers and day-to-day operations for a period of six (6) months. Subsequently, COWD sent a letter to the Office of the Government Corporate Counsel (OGCC) seeking an opinion on the validity of LWUA’s intervention, specifically Section 36 of the Presidential Decree (P.D.) No. 198, as amended, which authorizes intervention in a water district without the need for judicial action in the event of a default by the district in the payment of principal or interest on its outstanding bonds or other obligations. In reply, the DOJ opined that for LWUA to take over COWD within the bounds of the law, the conditions under Sections 36 and 61 (e) of P.D. No. 198, as amended, must be attendant, namely, that COWD has loan obligation incurred from LWUA and COWD has defaulted. The takeover will only be temporary and only for the purpose of aiding the local water district in its efficient operation. In taking over, LWUA may designate its employees or a management committee, to assume both the policy-making authority and the powers of management which may include the establishment of water rates and service charges.
DOJ OPINION ON LEGAL FRAMEWORK ON GRANTING PRIVILEGES & IMMUNITIES TO THE LOSS & DAMAGE FUND BOARD
DOJ OPINION NO. 24 SERIES OF 2024
JUNE 11, 2024
The Department of Finance (DoF) and the Department of Environment and Natural Resources (DENR) are requesting guidance relative to the proposed Philippines’ bid to host the Loss and Damage Fund (LDF or Fund) Board. As represented, the first LDF Board meeting was held in Abu Dhabi, United Arab Emirates, wherein the terms of Reference (TOR) for the selection of the host country were adopted by the Board. In this regard, the DoF and DENR seek the DOJ’s opinion and recommendation on whether national legislation or a treaty is the proper form of granting the Privileges and Immunities of the Board. In reply, the privileges and immunities extended to the UN, its agencies and their officials and staff are generally only those provided by the 1946 Convention on the Privileges and Immunities of the UN (1946 Convention) and the 1947 Convention on the Privileges and Immunities of the Specialized Agencies of the UN 1947 Convention, to which the Philippines is both a State Party thereto. The LDF Board, however, is not among the specialized agencies listed under the 1947 Convention. If it is the intention of the Philippine government that the LDF Board shall have a status “similar to that of a specialized agency,” pursuant to Articles 57 and 63 of the 1947 Convention, the DOJ suggests that this should be clearly stated under Article 3, Legal Status of the draft HCA. Further, the Philippines may be able to confer privileges and immunities to the Board, its fund, assets and other property, provided that there be an enabling legislation, or in the absence thereof, an international agreement or treaty, which will provide the legal basis for the grant of said privileges and immunities. This is in line with the principle of pacta sunt servanda, where the Philippines is bound to comply in good faith with our international obligations and commitments, particularly that provided for in the 1946 Convention on the Privileges and immunities of the Specialized Agencies.
BANGSAMORO LOCAL GOVERNMENT CODE PROVIDES FOR THE POWER OF GENERAL SUPERVISION OF THE BANGSAMORO GOVERNMENT OVER ITS CONSTITUENT LGUs
DOJ OPINION NO. 23 SERIES OF 2024
JUNE 5, 2024
Deputy Secretary of Legal Affairs of the Office of the President is requesting an opinion on the constitutionality of Sections 28 and 29 of the Bangsamoro Autonomy Act No. 49 or the Bangsamoro Local Governance Code (BLGC) which empowers the Chief Minister (CM) of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) to exercise general supervision over Local Government Units (LGUs) within the region. The issue was prompted by the position paper submitted by the Department of Interior and Local Government (DILG) contending that the said sections of the BLGC infringes on the President’s constitutional power of general supervision over local governments. DILG posits that that Section 4, Article X of the Constitution grants the power of general supervision over local governments to the President, that the intent of the law (Republic Act (RA) No. 11054) is to reserve supervisory power over local governments to the President, and that the Secretary of the DILG is the President’s alter ego with respect to LGUs. In reply, the constitutionality of the BLGC, including Sections 28 and 29 thereof, is assailed in the Petition for Certiorari and Prohibition filed before the Supreme Court docketed as G.R. No. 271894 dated 26 February 2024. Petitioners therein seek to declare the BLGC unconstitutional for violation of the 1987 Constitution, RA No. 7160, RA No. 11054, and other laws. The DOJ deferred the rendition of the requested opinion since the matter is sub judice or pending litigation in court, to do so would be improper but also impractical, since the ruling of the DOJ has no binding effect upon the courts. The Secretary of Justice has desisted from ruling and is not inclined to adopt such course of action as it may amount to undue interference in the performance of the functions of the courts.
EXPANDED GOVERNMENT ASSISTANCE TO STUDENTS & TEACHERS IN PRIVATE SCHOOLS ACT DID NOT AMEND THE EXISTING LAW BUT EXPANDED THE COVERAGE TO INCLUDE POST-SECONDARY VOCATIONAL & TECHNICAL EDUCATION & HIGHER EDUCATION
DOJ OPINION NO. 22 SERIES OF 2024
MAY 16, 2024
Congressman R is requesting a legal opinion on whether the Republic Act (R.A.) No. 6728 has been repealed by R.A. No. 8545. This legal opinion was requested in connection with drafting a substitute bill further amending RA No. 8545, known as the “Expanded Government Assistance to Students and Teachers in Private Schools Act (EGASTPE),” which took effect in 1998. It was stated that Section 1 thereof indicates that it is merely amending R.A. No. 6728, known as the “Government Assistance to Students and Teachers in Private Education Act (GASTPE),” the way it presented the provisions essentially omitted all sections of the previous legislation. Stated further, upon comparative examination of the two laws, it becomes apparent that they share similar provisions with nuanced differences, leading a reader to infer that the subsequent law might have repealed the preceding legislation. In reply, R.A. No. 8545 did not repeal R.A. 6728. R.A. No. 8545 explicitly repealed Presidential Decree (P.D.) No’s. 932 and 1371 only. Citing a Jurisprudence by the Supreme Court in Mecano v. Commission on Audit, “The question of whether a particular law has been repealed or not by a subsequent law is a matter of legislative intent. The lawmakers may expressly repeal a law by repealing a provision that expressly and specifically cites the particular law or laws, and portions thereof, that are intended to be repealed. A declaration in a statute, usually in its repealing clause, that a particular law, identified by its number or title, is repealed is an express repeal; all others are implied repeals. R.A. No. 6728 and R.A. No. 8545 were not inconsistent with each other, leading to the conclusion of an implied repeal of R.A. No. 6728. Further, the legislative intent of R.A. No. 8545 is to merely expand the coverage of R.A. No. 6728. RA No. 6728 was enacted to provide government assistance to students and teachers in private basic elementary and secondary education. With the amendments made by R.A. No. 8545, the coverage of government assistance was expanded even to post-secondary vocational and technical education and higher education and provided salary subsidies to teachers in private high schools. Moreover, R.A. No. 8545 added new provisions, deleted one, and renumbered some, but the principles of RA No. 6728 remain.
FILIPINO CITIZEN DOES NOT LOSE HIS PHILIPPINE CITIZENSHIP UPON ACQUISITION OF THE SPANISH CITIZENSHIP PROVIDED THAT THE SAME IS EMBODIED IN A TREATY BETWEEN THE PHILIPPINES & SPAIN
DOJ OPINION NO. 19 SERIES OF 2024
APRIL 30, 2024
The Department of Foreign Affairs (DFA) is seeking an opinion on the draft Agreement on Dual Nationality (“The Agreement”) between the Philippines and Spain. The main objective of the proposed Agreement is to establish a more accessible and efficient procedure by streamlining the process for individuals from both countries to retain citizenship of the other. Under the Agreement, natural-born Filipinos would be considered by the Philippine government as not having lost their Philippine citizenship and, therefore, not required to apply for Retention/Reacquisition of Philippine citizenship under Republic Act (R.A.) 9225, or the Citizenship Retention and Re-acquisition Act of 2003, upon acquisition of Spanish citizenship naturalization or by virtue of marriage to a Spanish citizen. In reply, a natural-born Filipino citizen does not lose or forfeit his Philippine citizenship, as long as: (1) the citizenship acquired is one of the Iberian and any friendly democratic Ibero-American countries or from the United Kingdom; (2) the law of said country grants the same privilege to its citizens; and (3) there is a treaty between the Philippines and the foreign country from which citizenship is acquired. Spain is one of such Iberian country, and its law expressly recognizes that Spaniards de origen who acquire Philippine citizenship will not lose their Spanish nationality. Further, the second paragraph of Article 24(2) of the Spanish Civil Code provides that “acquisition of the nationality of Latin American countries, Andorra, the Philippines, Equatorial Guinea, or Portugal shall not be sufficient to cause the loss of Spanish nationality by birth. An issue, however, is the third element for the non-forfeiture of Philippine citizenship is wanting, which is the treaty between the Philippines and Spain, which makes the provision not yet fully operational. The only way in which a Filipino would retain his citizenship, even if naturalized as a Spanish citizen is, by virtue of R.A. No. 9225, which allows natural-born Filipino citizens, who lost their Philippine citizenship through naturalization in a foreign country, to expeditiously reacquire/retain Philippine citizenship by taking of an oath of allegiance to the Republic of the Philippines. The Supreme Court held that R.A. 9225 amends (Commonwealth Act (CA) 63 by doing away with the provision in the old law which takes away Philippine citizenship from natural-born Filipinos who become naturalized citizens of other countries and allowing dual citizenship and provides for the procedure of re-acquiring and retaining Philippine citizenship. The DOJ, however, is still viewing this ruling as an exception. The DOJ is of the opinion that Section 1 of CA 63 remains and can exist in harmony the ruling of the Supreme Court, the ruling only provides that naturalization in another country is no longer recognized as a manner which Philippine citizenship is lost, as the latter could be retained/reacquired, pursuant to R.A. No. 9225.
WHETHER THE 16TH FLOOR OF SEC HEADQUARTERS, FORMERLY UCPB BUILDING, CAN BE THE SUBJECT OF BIR WARRANT/LEVY
DOJ OPINION NO. 11 SERIES OF 2024
FEBRUARY 20, 2024
The Bureau of Treasury (BTr) is requesting an opinion on whether the 16th Floor of the SEC Headquarters, previously known as the UCPB Building, can be subject to warrant, levy, or auction sale by any taxing authority. The property, owned by L Co., a part of the Coconut Industry Investment Fund-Oil Mills Group, was adjudged by the Supreme Court as belonging to the National Government, making it a non-cash coconut levy asset. This asset falls under the Republic Act (R.A.) No. 11524, otherwise known as the “Coconut Farmers and Industry Trust Fund Act” and is required to be disposed of by the Trust Fund Management Committee (TFMC), with proceeds going to the Coco Levy Trust Fund. Despite its status as a public domain property for the benefit of Filipino coconut farmers and the coconut industry, the BIR issued a Warrant of Levy against the property due to alleged tax deficiencies by L Co. This action is contested through a pending Petition for Adjudication of Dispute. The BTr seeks confirmation that TFMC has sole authority over the disposition of non-cash Coco Levy Assets, that the 16th Floor is such an asset, and that the BIR's levy would unreasonably divert funds authorized by R.A. No. 11524. However, the DOJ declines to provide a confirmatory opinion, citing the ongoing dispute adjudication process under Presidential Decree (P.D.) No. 242, which vests the Secretary of Justice with authority to resolve disputes between government agencies and entities. The DOJ believes that allowing the dispute panel to reach a decision or parties to settle amicably is preferable to pre-empting their actions with an opinion.
FIRB INCREASES THE INVESTMENT CAPITAL THRESHOLD FOR PROJECTS FOR ITS APPROVAL
FIRB ADVISORY
FEBRUARY 19, 2024
Fiscal Incentives Review Board (FIRB) Advisory No. 003-24 circularizes the increased investment capital threshold for projects delegated to the IPAs from Php 1 billion and below to Php 15 billion and below. All tax incentive applications endorsed by the IPAs to the FIRB with investment capital of Php 15 billion and below shall be returned by the FIRB Secretariat to the concerned IPA for the appropriate action and subject to the existing procedures of the IPAs. Specifically, all tax incentive applications with investment capital of more than Php 15 billion shall remain within the jurisdiction of the FIRB. Further, the FIRB together with the IPAs retain their authority to monitor the compliance of Registered Business Enterprises (RBEs) of their performance commitments as conditions for the continued enjoyment of incentives granted, regardless of the amount of investment capital.
NOTHING IN THE CREATE ACT REVOKED BOIs AUTHORITY TO CERTIFY & REGISTER RBEs AS PIONEER OR NON-PIONEER
LBT EXEMPTION GRANTED TO BOI RBEs IS INDEPENDENT OF OTHER INCENTIVES PROVIDED UNDER THE CREATE ACT
DOJ OPINION NO. 9 SERIES OF 2024
FEBRUARY 13, 2024
Department of Trade and Industry (DTI) is requesting an opinion on three issues related to the Local Business Tax (LBT) exemption for Board of Investments (BOI) Registered Business Entities (RBEs) in light of Republic Act (R.A.) No. 11534, also known as the CREATE Act. The issues involve the repeal of the legal basis for LBT exemption, the independence of LBT exemption from other incentives under the CREATE Act, and the legality of BOI Memorandum Circular (MC) No. 2022-005. On the repeal of the legal basis for LBT Exemption, the DOJ clarifies that the BOI's authority to certify enterprises as pioneer or non-pioneer, determining eligibility for LBT exemption under Section 133(g) of R.A. No. 7160 (Local Government Code or LGC), remains intact despite the CREATE Act's repeal of certain provisions of Executive Order (E.O.) No. 226 (Omnibus Investments Code of 1987). The LGC's Section 133(g) continues to serve as the legal basis for the LBT exemption, unaffected by the CREATE Act. On independence of LBT Exemption from other incentives, the DOJ emphasizes that the LBT exemption granted to BOI RBEs is independent of other incentives provided under the CREATE Act. Despite the CREATE Act's aim to streamline the national tax incentive system, the LBT exemption can co-exist with other tax incentives, as it is not expressly repealed by the CREATE Act. Lastly, on the legality of BOI MC No. 2022-005, the DOJ expresses its inability to provide a conclusive opinion on the legal basis of BOI MC No. 2022-005, as the query lacks specific details about the Circular. It notes that the issuance of MC No. 2022-005 would require a thorough understanding of its content and legal foundation, which is not provided in the query.
PAG-IBIG ISSUES GUIDELINES ON THE IMPLEMENTATION OF INCREASE IN THE CONTRIBUTION EFFECTIVE FEBRUARY 1, 2024
PAG-IBIG FUND CIRCULAR
JANUARY 15, 2024
Pag-Ibig Fund Circular No. 460 provides guidelines on the Pag-Ibig Fund’s implementation of increase in the Maximum Fund Salary (MFS) effective February 2024. Highlights include the extent of the coverage, whether mandatory or voluntary, contribution rates based on the salary range, and mechanisms for the resolution of issues.
IT IS OPTIONAL FOR SOCIAL WELFARE ORGANIZATION, AS A DONEE INSTITUTION, TO SECURE PCNC ACCREDITATION, FOR TAX DEDUCTION PURPOSES
DOJ OPINION NO. 4 SERIES OF 2024
JANUARY 10, 2024
The Social Welfare and Development Agencies (SWDA) is seeking guidance on whether the accreditation of social welfare institutions falls exclusively under the Department of Social Work and Development’s (DSWD) role and function, excluding public and private entities. The SWDAs expressed their concern about the double accreditation process for donee institution recognition, involving a P1,000 initial accreditation fee from DSWD and a subsequent fee of P10,000 to P90,000 from PCNC, along with an annual membership fee of P2,000 to P10,000. These significant amounts could have been directed toward the causes supported by SWDAs. In reply, the Department of Justice (DOJ) cannot act on the request for reasons of propriety and official courtesy. Nonetheless, for information and guidance only, Executive Order (EO) No. 720, Sections 1 and 2, specify that the PCNC is designated solely for assessing the eligibility of corporations, associations, or non-government organizations (NGOs) as donee institutions. In addition, PCNC is prohibited from processing accreditations for these mentioned entities unless they have obtained valid registration from the government agency responsible for regulating them. Accordingly, DSWD holds the authority to register, license, and accredit agencies engaged in social welfare and development services. It is suggested that SWDAs may choose not to seek PCNC accreditation as donee institutions, with the implication that they forfeit the right to claim deductions for contributions or gifts in their income calculations.
HIGHLIGHTS OF EASE OF PAYING TAXES LAW
REPUBLIC ACT
JANUARY 5, 2024
President Ferdinand Marcos Jr. signed the Ease of Paying Taxes Act on January 5, 2024. The law aims to modernize the Philippine tax administration and system and strengthen taxpayer rights. It will take effect 15 days after its publication in the Office Gazette.
Highlights include:
1. Classification of taxpayers as to gross sales
1.1 Micro-Less than Php 3 million
1.2 Small-Php 3 million-Php 20 million
1.3 Medium-Php 20 million-Php 1 billion
1.4 Large-Php 1 billion and above
2. Special concessions for small and micro taxpayers
2.1 Reduced civil penalties for certain violations.
2.2 2-page Income Tax Return (ITR)
3. Options on the venue for filing and payment of tax returns
3.1 Any authorized agent bank
3.2 Revenue District Office through Revenue Collection Officer
3.3 Authorized tax software provider
4. Income Tax
4.1 Disallowance of expenses as a result of non-withholding under Section 34K of the Tax Code of 1997, is repealed.
4.2 Timeline on the application and decision on refund of income tax paid in case of dissolution or cessation of business must be made within two (2) years from cessation of business.
4.3 Timing of withholding shall be reckoned at the time the income has become payable.
4.4 Claim of tax credit of any creditable income tax deducted and withheld in a previous period that can still be creditable in the subsequent calendar or fiscal year, provided the same had been declared in the tax return where the corresponding income is reported.
5. Value-Added Tax (VAT) and Other Percentage Taxes
5.1 Uniform basis for VAT, both for the sale of goods and services, to be "gross sales," as distinguished before, where VAT on services is based on gross receipts, while the VAT on the sales of goods is based on gross sales.
5.2 VAT base for sale of service-services have already been rendered; use of lease of properties have already been supplied. For long-term contracts for one (1) year or more, the invoice shall be issued on the month in which the service, use, or lease of properties is rendered.
5.3 Liberalizing VAT invoicing requirements such that VAT shall still be allowed to be used as an input tax credit on the part of the purchaser even if the invoice lacks certain information (other than the amount of sales, amount of VAT, name, and TIN of both the purchaser and issuer/seller, description of goods or nature of services, and the date of the transaction.) Information on business style is no longer required.
5.4 Output VAT credit on uncollected receivables may be deducted from output VAT in the next quarter after the lapse of the agreed period to pay, subject to the condition that the seller has fully paid the VAT on the transaction and the VAT component of the uncollected receivables has not been claimed as deductible bad debts from gross income. In case of recovery of uncollected receivables, VAT shall be remitted during the period of recovery.
5.5 Input VAT on local purchase of goods and services shall be claimed upon accrual and supported by sales invoice.
5.6 VAT-exempt threshold of Php 3 million shall be adjusted to its present values using the Consumer Price Index, as published by the Philippine Statistics Office (PSA) every three (3) years.
5.7 Action on refund of input tax shall be based on the classification of claims, whether low-risk, medium-risk, high-risk vis-à-vis parameters used. Medium and high-risk claims shall be subject to audit by the BIR. The Appeal can be made to the Court of Tax Appeals (CTA) within 30 days from receipt of the decision denying the claim or after the lapse of the 90 days for the BIR to act on the claim. In case of disallowance by the Commission on Audit (COA), only the taxpayer shall be liable for the disallowed amount without prejudice to any administrative liability on the part of any employee of the BIR who may be found to be grossly negligent in the grant of refund.
5.8 Tax base for Other Percentage Taxes shall be based on gross sales.
6. Refund of erroneously paid taxes or penalties under Section 229 of the NIRC shall be processed and decided by the BIR within 180 days from the date of submission of complete documents in support of the application filed. Filing of the claim for refund with the BIR shall be made within two (2) years after the payment of tax or penalty. Filing of an Appeal with the CTA within the two (2)-year period is removed instead the appeal must be filed within 30 days from receipt of denial or lapsed of the 180 days for the BIR to decide.
7. Relaxation of some administrative requirements
7.1 Preservation of book of accounts for a period of five (5) years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the book of accounts.
7.2 The Annual Registration Fee of Php 500 was removed.
7.3 Issuance of invoice is now increased to Php 500 from Php 100 for each sale transaction. If the transaction is below Php 500, the seller will issue one (1) invoice for the aggregate sales amount at the end of the day if the aggregate sales is at least Php 500. VAT-registered taxpayers shall issue registered VAT invoices regardless of the amount.
7.4 Cancellation of VAT registration may be written or through electronic application.
7.5 Transfer or cancellation of registration may be made by the mere filing of the application. If the taxpayer is being audited, the Revenue District Office (RDO) which initiated the audit shall continue the same. The BIR is not precluded from auditing taxpayers canceling the registration by the mere filing of the application.
7.6 Digitization of BIR services
7.7 Publication of information may be done using any electronic means of publication in the Official Gazette, or BIR website.
REGISTERED BUSINESS ENTERPRISES IN ECONOMIC ZONES ADOPTING WORK-FROM-HOME (WFH) ARRANGEMENTS ARE NO LONGER ENTITLED TO TAX INCENTIVES
WORKERS IN ECOZONES MUST WORK ON-SITE
SECTION 309 OF THE CREATE LAW IMPOSES A LOCATIONAL PROHIBITION ON ACTIVITIES CONDUCTED OUTSIDE THE GEOGRAPHICAL BOUNDARIES OF ECONOMIC ZONES OR FREEPORTS, AFFECTING THE ENTITLEMENT TO INCENTIVES
DOJ OPINION NO. 02, SERIES OF 2024
JANUARY 3, 2024
The Presidential Management Staff is requesting a legal opinion on the application of Section 309 of the Republic Act (R.A.) No. 11534, otherwise known as the “Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act” because of the conflicting positions and interpretations of concerned agencies regarding the Work-From-Home (WFH) arrangement of Registered Business Enterprises (RBEs) in economic zones and those registered under the Board of Investments (BOI). In opining, basic is the rule in statutory interpretation that when the law is clear, plain, and free from ambiguity, it must be given its literal meaning without attempted interpretation. Section 309 of the CREATE Law specifically requires registered projects or activities under an Investment Promotion Agency (IPA) administering an economic zone or freeport to be exclusively conducted or operated within the geographical boundaries of the zone or freeport, and any project or activity conducted or performed outside the zone or free port shall not be entitled to the incentives under the CREATE Law. This locational prohibition does not apply to enterprises registered with the BOI as it does not administer an ecozone or freeport. While the Fiscal Incentives Review Board (FIRB), issued Resolutions allowing Registered Business Enterprises (RBEs) of the Information Technology-Business Process Management (IT-BPM) sector to adopt the WFH arrangement, the same was issued as a temporary measure as provided under Rule 23 of the CREATE Implementing Rules and Regulations (IRR) which are tied to exceptional circumstances such as the COVID-19 pandemic. Thus, Section 309 of the CREATE Law still prevails. Until the enactment of new legislation amending the said law, business enterprises located in the economic or freeport zone must continue to conduct their activities within the zone boundaries if they wish to continue availing of their tax incentives under the CREATE Law. Likewise, these enterprises are not prohibited from adopting a WFH arrangement but will no longer be eligible to continue enjoying the tax incentives.
FIRB CIRCULARIZES THE UPDATED TEMPLATES FOR THE ANNUAL TAX INCENTIVES REPORT & ANNUAL BENEFITS REPORT OF COOPERATIVES
FIRB ADVISORY
DECEMBER 20, 2023
Fiscal Incentives Review Board (FIRB) Advisory 019-2023 circularizes the availability of updated templates for the Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) of Cooperatives. Registered cooperatives are required to use these updated templates when submitting their ATIR and ABR (Annexes A and B) to the Cooperative Development Authority (CDA). Additionally, the CDA will use these templates when submitting the consolidated ATIR and ABR and the master list of cooperatives (Annexes C, D, and E) for Taxable Year 2023, as per DOF-DTI JAO No. 001-20231 and FIRB Advisory No. 007-2023.
PEZA FURTHER REVISES THE GUIDELINES ON THE APPLICATION FOR THE ISSUANCE OF THE CERTIFICATE OF VAT ZERO-RATING & CERTIFICATE OF ENTITLEMENT TO TAX INCENTIVES (CETI)
PEZA MEMORANDUM ORDER
NOVEMBER 3, 2023
PEZA Memorandum Order 2023-014 further revises the guidelines on the application for the issuance of the Certificate of Value-Added (VAT) Zero-Rating and Certificate of Entitlement to Tax Incentives (CETI) to qualified Registered Business Enterprises (RBEs). The guidelines are issued in line with the PEZA Memorandum Circular (MC) No. 2023-038 and in compliance with the mandatory implementation of the Electronic Payment and Collection System (EPCS). Highlights include the new checklist of requirements and procedures to be followed.
PEZA DELEGATES THE APPROVAL OF THE LETTER OF AUTHORITY (LOA) ON LOCAL SALES & DROP-OFF EXPORT TO THE ZONE OFFICES CONCERNED
PEZA MEMORANDUM ORDER
SEPTEMBER 20, 2023
PEZA Memorandum Order 2023-11 delegates to the zone offices the approval of the Letter of Authority (LOA) on Local Sales and Drop-off Export Sales of manufactured goods/services by PEZA Registered Export Enterprises (REEs). Highlights include the definition of local sales and drop-off export sales, allowable/prescribed limit, when and who should apply for LOA, procedures on the LOA application, types and determination of local sales rate, documentary requirements, related forms to be accomplished, and processing fees and reports.
FIRB ISSUES ADVISORY ON THE AVAILABILITY OF THE UPDATED TEMPLATES FOR THE ANNUAL TAX INCENTIVES REPORT & ANNUAL BENEFITS REPORT OF COOPERATIVES
FIRB ADVISORY
SEPTEMBER 14, 2023
Fiscal Incentives Review Board (FIRB) Advisory 016-2023 circularizes the availability of updated templates for the Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) of Cooperatives. Registered cooperatives are required to use these updated templates when submitting their ATIR and ABR (Annexes A and B) to the Cooperative Development Authority (CDA). Additionally, the CDA will use these templates when submitting the consolidated ATIR and ABR and the master list of cooperatives (Annexes C, D, and E) for Taxable Year 2023, as per DOF-DTI JAO No. 001-20231 and FIRB Advisory No. 007-2023.
APPEALS TO THE COURT OF APPEALS (CA) DO NOT AUTOMATICALLY STOP THE HUMAN SETTLEMENTS & ADJUDICATION COMMISSION’S DECISIONS UNLESS THE CA ISSUES A SPECIFIC ORDER TO PAUSE THEM
DOJ OPINION NO. 37, SERIES OF 2023
AUGUST 31, 2023
The Human Settlements and Adjudication Commission (HSAC) is requesting an opinion on the proper interpretation of Sections 15 and 18 of the Republic Act (RA) No. 11201, otherwise known as the “Department of Human Settlements and Urban Development Act,” to guide litigants and the Commission in the enforcement of its decisions. The Commission stated that there seems to be a conflict between the two (2) provisions specifically whether the decisions of the Commission En Banc become immediately final and executory after the lapse of fifteen (15) calendar days from receipt thereof by the parties, regardless of whether an appeal is filed with the Court of Appeals (CA), in the absence of a Stay Order from the court. In reply, the Department of Justice (DOJ) clarified that unlike in ordinary cases where the appeal shall stay the judgment or final order unless the CA, the law, or the Rules of Court shall provide otherwise, under R.A. No. 11201, the Decisions of the Commission En Banc become final and executory after the lapse of 15 calendar days after parties receive them, in the absence of a Stay Order from the CA. The right to appeal is not an absolute right but a legal privilege. Those appealing must strictly follow the court rules. Thus, if the rules state decisions are not paused during an appeal unless the CA orders it, the appealing party must follow these rules.
FIRB CIRCULARIZES DOF GUIDELINES ON THE IMPOSITION OF LOCAL TAXES, FEES & CHARGES ON RBEs AVAILING TAX INCENTIVES
FIRB ADVISORY
AUGUST 31, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 014-2023 circulates the Department of Finance (DOF) Department Order (DO) No. 033-2023, on the Guidelines regarding the Imposition of Local Taxes, Fees, and Charges on Registered Business Enterprises (RBEs) Availing of Tax Incentives prior to the effectivity of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
It may be recalled that under Section 311 of the Tax Code, as amended, transitioning RBEs may continue to avail of their respective incentives until the end of the transitory period. Furthermore, it provides rules that shall apply regarding its liability for local taxes, fees, and charges.
PEZA DEFERS THE MANDATORY IMPLEMENTATION OF THE EXPANDED ELECTRONIC ZONE TRANSFER SYSTEM (EZTS-PHASE 2) FOR INTERZONE TRANSFER
PEZA MEMORANDUM CIRCULAR
AUGUST 31, 2023
PEZA Memorandum Circular No. 2023-041 defers for one (1) month the mandatory implementation of the Expanded Electronic Zone Transfer System (EZTS-PHASE 2) for interzone transfer to properly address the recent issues in the requirement of securing the General Transport Surety Bonds (GTSB). However, for the intrazone module, the September 1 mandatory implementation shall proceed as scheduled since the same does not require GTSB.
It may be recalled that under Memorandum Order (M.O.) No. 2023-006, the mandatory implementation of the EZTS-PHASE 2 shall be on September 1, 2023.
FIRB CIRCULARIZES THE AMENDMENTS OF CREATE LAW IRR
FIRB ADVISORY
AUGUST 15, 2023
Fiscal Incentives Review Board (FIRB) circularizes the amendments introduced in Rule 18, Section 5 of the Implementing Rules and Regulations (IRR) of Title XIII of the Republic Act (R.A.) No. 8424, otherwise known as the "National Internal Revenue Code of 1997", as amended by R.A. 11534 or the "Corporate Recovery and Tax Incentives for Enterprises (CREATE ACT)."
Specifically, the amendments provide that the Registered Export Enterprises (REEs) whose income tax-based incentives have expired, may continue to enjoy the VAT-zero rating on local purchases until the electronic sales reporting system of the Bureau is fully operational or until the expiration of the transitory period, whichever comes earlier. Further, a Registered Business Enterprise (RBE) classified as a Domestic Market Enterprise (DME) located inside the economic or freeport zone during the transitory period will be allowed to register as a VAT taxpayer.
The amendment was published in Business World on August 15, 2023.
DOLE ISSUES A LABOR ADVISORY ON THE PAYMENT OF WAGES FOR THE SPECIAL (NON-WORKING) DAY ON AUGUST 21, 2023 & REGULAR HOLIDAY ON AUGUST 28, 2023
DOLE LABOR ADVISORY
AUGUST 10, 2023
Department of Labor and Employment (DOLE) Labor Advisory No. 17 provides guidelines on payment of wages for Special (Non-Working) Holiday on August 21, 2023, and Regular Holiday on August 28, 2023, pursuant to Proclamation No. 42, Series of 2022, as amended by Proclamation No. 90, Series of 2022.
It may be recalled that Proclamation No. 90, Series of 2022 has declared regular holidays and special (non-working) days for the year 2023.
TERMINAL FEES ARE TRUST FUND HELD BY MIAA, THUS, CANNOT BE USED FOR CAPEX
DOJ OPINION NO. 31 SERIES OF 2023, JULY 25, 2023
The Manila International Airport Authority (MIAA) is seeking guidance on whether it can use the unrefunded Passenger Service Charges (PSC) on unused airline tickets, which are being held in trust by the MIAA for the account of passengers, to finance the MIAA’s capital expenditure requirements. In reply, the Department of Justice (DOJ) cannot act on the request for reasons of propriety and official courtesy. Nonetheless, for information and guidance only, Section 3(4) of the Presidential Decree (P.D.) No. 1445, otherwise known as the “Government Auditing Code of the Philippines” defines a trust fund, and under Section 4(3) of said law, trust funds shall be made available and may be spent only for the specific purpose for which the trust was created, or the funds received. Clearly, the unrefunded PSCs in question are funds which, while considered “government funds,” are held by MIAA merely as custodian to address the refund claims to be made by passengers. The MIAA acts as the trustee on behalf of the passengers and is not free to unilaterally utilize such funds. It is suggested that the MIAA seek the opinion of the Department of Budget and Management (DBM) or the Commission on Audit (COA) on this matter.
FIRB CIRCULARIZES DOF-DTI GUIDELINES ON THE DETERMINATION OF NON-LOCAL AVAILABILITY OF MATERIALS TO BE EXEMPT FROM CUSTOMS DUTY & VAT UNDER CREATE LAW
FIRB ADVISORY
JULY 6, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 011-2023 circularizes the Department of Finance and Department of Trade and Industry (DOF-DTI) Joint Memorandum Circular (JMC) No. 001-2023, on the guidelines regarding the determination of non-local availability of capital equipment, raw materials, spare parts, or accessories under the Corporate Recovery Act and Tax Incentives for Enterprises (CREATE) Act.
It may be recalled that under Section 294(D) and 295(C) of the 1997 Tax Code, as amended by the CREATE Act, customs duty exemption on the importation of items directly and exclusively used in the registered project or activity by Registered Business Enterprises (RBEs) may be granted subject to certain conditions. To comply, RBEs shall secure a Certificate of Non-Local Availability (CNLA) from the DTI.
COA CAN AUDIT THE GROSS TAX BASE OF POGO PENDING 3RD PARTY SERVICE PROVIDER
DOJ OPINION NO. 27 SERIES OF 2023, JUNE 30, 2023
The Commission on Audit (COA) is requesting confirmation of its power to audit the Gross Gaming Receipts (GGR) of the Philippine Offshore Gaming Operators (POGO), as per the Philippine Amusements and Gaming Corporation (PAGCOR). In reply, the Department of Justice (DOJ) declined the request for reasons of propriety and official courtesy. Nonetheless, for information and guidance only, Section 8 of Republic Act (R.A.) No. 11590, otherwise known as "POGO Tax," provides that the conduct of an audit of POGO should be done by a third-party platform. The same section also provides that the COA may conduct a post-audit or independent verification of the GGR determined by the third-party auditor. The conduct of the audit of the GGR of the POGO is necessary to ensure the proper gaming tax on services rendered and regulatory fees are levied and collected. Thus, to ensure that the aim and objective of the law are met, there appears to be legal basis and sound fiscal reasons for COA to audit the GGR of the POGO, while PAGCOR is still in the process of procuring the services of a qualified third-party audit platform.
FIRB CLARIFIES THE SUBMISSION OF ANNUAL TAX INCENTIVES REPORT & ANNUAL BENEFITS REPORT
FIRB ADVISORY
MAY 10, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 010A-2023 provides clarifications on the submission of the Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) for the taxable year 2022 in relation to FIRB Memorandum Circular (MC) No. 001-2023 in line with the Republic Act (R.A.) No. 11534, otherwise known as the “Corporate Recovery and Tax Incentives for Enterprises” (CREATE) Act. Highlights include the manner of submission, deadlines, and format.
FIRB ADVISORY ON THE STRICT COMPLIANCE WITH THE PROVISIONS OF CREATE LAW
FIRB ADVISORY
MAY 5, 2023
Fiscal Incentives Review Board (FIRB) Advisory 008-2023 reminded all parties concerned to strictly adhere to all pertinent provisions of the Corporate Recovery and Tax Incentives for Enterprises CREATE Act. To reiterate, only the FIRB has the exclusive power to grant incentives to qualified projects or activities with investment capital of more than Php 1 Billion. Investment Promotion Agencies (IPAs) are only authorized to approve tax incentives to qualified projects or activities with investment capital of Php 1 Billion and below. In several cases, the Supreme Court has declared that ultra vires acts, or those done contrary to law and beyond the scope of one’s authority, are null and void and cannot be given any effect.
FDA HAS REGULATORY JURISDICTION OVER VETERINARY DRUG PRODUCTS & ESTABLISHMENTS
DEPARTMENT OF JUSTICE OPINION NO. 15 SERIES OF 2023
MAY 5, 2023
The Department of Health (DOH) is requesting an opinion on the regulatory jurisdiction of the Food and Drug Administration (FDA) under the DOH and the Bureau of Animal Industry (BAI) of the Department of Agriculture (DA) over veterinary drug products. In reply, the DOJ advised that BAI has no regulatory jurisdiction over veterinary drug products and establishments. The authority to regulate veterinary drug products and establishments falls within the purview of the FDA. BAI’s primary mandate is to ensure food sufficiency by formulating programs to develop, and prescribing standards for quality in the manufacture, importation, labeling, advertising, distribution, and sale of livestock, poultry, and allied industries. The BAI’s regulatory authority covers the animal industry including the production, processing, preservation, and marketing of animals, products, and by-products for human food security as distinguished from the pharmaceutical/health industry that develops and produces veterinary drugs for animal health and human food safety which properly falls under the regulatory authority of the FDA.
FIRB ISSUES GUIDELINES FOR THE SUSPENSION OR WITHDRAWAL OF TAX INCENTIVES
FIRB ADVISORY
MAY 2, 2023
Fiscal Incentives Review Board (FIRB) Administrative Order No. 004-2023 provides the guidelines for the suspension or withdrawal of tax incentives and cancellation of Certificate of Registration (COR) of Registered Business Enterprises (RBEs) pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. It provides that a Show Cause Order shall be issued requiring the RBE to file its justification within fifteen (15) calendar days from receipt of the order and that only one (1) justification to the Show Cause Order shall be allowed. Subsequently, the FIRB shall decide within ninety (90) calendar days counted from the date the case is deemed submitted for decision. Furthermore, it provides the imposition of fines and/or penalties, whenever applicable.
FIRB ADVISORY ON THE NEW GUIDELINES FOR REPORTORIAL COMPLIANCE OF CDA & CDA-REGISTERED COOPERATIVES
FIRB ADVISORY
APRIL 24, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 007-2023 prescribes new guidelines for the submission of reportorial requirements for cooperatives registered with the Cooperative Development Authority (CDA) under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act as implemented by the Department of Finance and Department of Trade and Industry Joint Administrative Order (DOF-DTI JAO) No. 001-2023.
Highlights include:
a. Reports for the taxable years 2022 or prior should use older templates/reports specified in previous JAOs and Circulars.
b. Reports for the taxable year 2023 onwards should use new templates/reports from JAO No. 001-2023, with specific submission deadlines.
c. Cooperatives availing incentives must submit an Annual Tax Incentives and Benefits Report to the CDA by May 15 of the following year, providing detailed information on the availed tax incentives.
d. The CDA must submit a Consolidated Incentives and Benefits report to the FIRB in a machine-readable format by June 14 of the following year.
e. All submissions to the FIRB should be sent to firbmeg@ntrc.gov.ph, on or before the set deadline.
DOLE LABOR ADVISORY ON THE ANNUAL SUBMISSION OF THE WAGE REPORT FOR CY 2022
DOLE LABOR ADVISORY
MARCH 10, 2023
DOLE Labor Advisory No. 04 advises all private establishments to submit an Annual Report on the verified itemized listing of their labor component, specifying the names of the rank-and-file employees, including learners, apprentices, and workers with disabilities, pursuant to Article 124 of the Labor Code, as amended by Republic Act (R.A.) No. 6727, otherwise known as the “Wage Rationalization Act.”
All private establishments are required to register, log-in, and submit their reports as of December 31, 2022, to the Annual Establishment Report on Wages (AERW) online portal.
FIRB MAY ONLY LEGALLY GRANT INCENTIVES IT IS AUTHORIZED BY LAW TO DO, ANYTHING OUTSIDE OF THOSE ARE BEYOND ITS POWER
DEPARTMENT OF JUSTICE OPINION NO. 5, SERIES OF 2023
FEBRUARY 2, 2023
The Department of Budget and Management is seeking an opinion relative to a request for clarification from the Fiscal Incentives Review Board (FIRB) Secretariat in response to the Department of Trade and Industry-Board of Investment’s query on the procedure and requirements to secure FIRB’s approval to grant a Tax Expenditure Subsidy (TES) for the Comprehensive Automotive Resurgence Strategy (CARS) Program. In rendering an opinion, the Department of Justice (DOJ) declined the request for dispute settlement, having been improperly filed. Nonetheless, without prejudice to a Petition that may be properly filed, the DOJ opines that the Tax Payment Certificate (TPC) cannot be granted by the FIRB as a TES under Section 15(c) of the General Appropriations Act (GAA), as it is beyond its power provided by law. Further, the DOJ finds the CARS program to be incompatible with the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Act), both in terms of operations and incentives given. Section 294 of the 1997 Tax Code, as amended by the CREATE Act, provides for only five (5) types of tax incentives that may be granted by the FIRB to registered projects or activities. They are (a) Income Tax Holiday (ITH); (b) Special Corporate Income Tax (SCIT) Rate; (c) Enhanced Deductions; (d) Duty Exemption on importation; and (e) Value-Added Tax (VAT) exemption on importation and VAT zero-rating on local purchases. Meanwhile, registered participants of the CARS program are entitled to two (2) kinds of fiscal support, that is (a) Fixed Investment Support (FIS); and (b) Production Volume Incentive (PVI). Thus, assuming for the sake of argument that the CARS program participants went through FIRB’s procedures and FIRB grants their request for incentives, FIRB may only grant those incentives it is authorized by law to grant, that is those provided by Section 294 of the 1997 Tax Code, as amended, and not the FIS and PVI under the CARS program.
BIR DISCLOSURE OF REGISTERED ADDRESS & E-MAIL ADDRESS OF TELECOM SUBSCRIBERS
NPC ADVISORY OPINION NO. 2023-004
FEBRUARY 2, 2023
National Privacy Commission (NPC) Advisory Opinion No. 2023-004 addresses the request of the Bureau of Internal Revenue (BIR) for the disclosure of the registered address and email address of Telecom subscribers. It was clarified that such information is required in the implementation of the Electronic Invoicing/Receipting and Sales Reporting System (EIS) under Revenue Regulations (RR) No. 9-2022. In rendering an opinion, the NPC reiterated its previous Advisory No. 2021-045 which recognized the authority of the BIR in the conduct of investigation for tax purposes and confirmed that Telecom may disclose the personal data requested subject to proportionality. Thus, the submission of the subscriber's registered address and email address is considered permissible under the Data Privacy Act (DPA) and is necessary for compliance with the Tax Reform for Acceleration and Inclusion (TRAIN) Law and BIR regulations and does not contravene the data privacy principle of proportionality.
BOTH THE NATIONAL HEALTH INSURANCE ACT & UNIVERSAL HEALTH ACT PROVIDE REVOCATION OF ACCREDITATION OF ERRING HEALTHCARE PROVIDER
PHILHEALTH HAS THE DISCRETION TO PERMANENTLY REVOKE THE ACCREDITATION OF A HEALTH CARE PROVIDER OR TO RESTORE ITS ACCREDITATION, DEPENDING ON ITS FINDINGS & ASSESSMENTS
DEPARTMENT OF JUSTICE OPINION NO. 04, SERIES OF 2023
JANUARY 30, 2023
Philippine Health Insurance Corporation (PhilHealth) is requesting an opinion on whether the Republic Act (R.A.) No. 11223 or the Universal Health Care Act be given retroactive application to pending cases if favorable to the respondent health care provider. In ruling, the Department of Justice disagreed with PhilHealth’s view that the penal provisions of R.A. No. 11223 being more favorable to the respondent should be applied retroactively. While at first glance, the law may appear to be more favorable to the respondent health care provider since PhilHealth has the discretion to impose a penalty of fine only or suspension of contract or accreditation whichever is shorter or both, a careful perusal of the entirety of the said law, however, reveals that it provides for a much stiffer penalty. While the law does not expressly provide for the penalty of revocation of accreditation, it does state, however, in its Implementing Rules and Regulations that recidivists may no longer be contracted as participants of the Program, which operates as a revocation of accreditation of the healthcare provider. Both R.A. No. 7875, or the National Health Insurance Act of 1995, as amended, and R.A. No. 11223 explicitly state that recidivists may no longer be accredited or contracted as participants of the Program. However, PhilHealth may lift the penalty of revocation of accreditation if based on its assessment, the erring health care provider has already faithfully complied with all its requirements and guidelines.
FIRB CLARIFIES THE IMPOSABLE PENALTY IN CASE OF VIOLATION OF THE WFH THRESHOLD
JANUARY 27, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 003-2023 clarifies the proper basis of the penalty in case of non-compliance with the Work-From-Home (WFH) threshold for all Investment Promotion Agencies (IPAs) and Registered Business Enterprises (RBEs) in the Information Technology-Business Process Management (IT-BPM) Sector. As advised, non-compliance with the allowable WFH threshold would result in paying the penalty based on 100% or the entirety of the Regular Corporate Income Tax (RCIT) for the month/s of non-compliance and not merely based on the excess of the 30% WFH threshold.
It may be recalled that pursuant to the BIR’s Revenue Memorandum Circular (RMC) No. 23-2022, 39-2022, and 120-22, RBEs that fail to comply with the WFH threshold shall continue to file and pay their income tax due, while the penalty shall be determined by computing the difference between the RCIT and the 5% tax on Gross Income Earned (GIE)/Special Corporate Income Tax (SCIT).
PEZA INQUIRING TO DOJ ON ISSUES ON BIR ISSUANCES ON CREATE LAW IS NOT WITHIN DOJ BUT FIRB
DEPARTMENT OF JUSTICE OPINION NO. 02, SERIES OF 2023
JANUARY 25, 2023
Philippine Economic Zone Authority (PEZA) is requesting a legal opinion on certain issues affecting its Registered Business Enterprises since Republic Act (R.A.) No. 11534, or the “Corporate Recovery and Tax Incentives for Enterprises Act” (CREATE), took effect on April 11, 2021. Specifically, the issue centered on whether BIR Revenue Regulations (RR) No. 21-2021 is an ultra vires issuance that contradicts Sections 294 and 295 of the Tax Code, as amended, and that has no legal effect, and whether PEZA can implement its established Work-From-Home policy despite Section 309 of the Tax Code, as amended. In rendering an opinion, the Department of Justice opined that it is constrained to decline the rendition of an opinion since the resolution of issues involved would require an interpretation of RR No. 21-2021 and Section 309 of the Tax Code, as amended by the CREATE Law. Further, under Section 4 of the Tax Code, it is the Commissioner of Internal Revenue (CIR) who has the exclusive and original jurisdiction to interpret the provisions of the Tax Code and other tax laws, though subject to review by the Secretary of Finance. Also, as a matter of principle, the Secretary of Justice does not render an opinion on matters falling within the jurisdiction of another office over which he possesses no supervisory or revisory authority. In this case, the Fiscal Incentives Review Board (FIRB), which has the power to exercise policymaking and oversight functions on the administration and grant of incentives, should be given the first opportunity to address the second query. Moreover, the BIR has already issued Revenue Memorandum Circular (RMC) No. 24-2022 to clarify certain issues relating to the implementation of RR No. 21-2021.
FIRB ANNOUNCES THE AVAILABILITY OF TEMPLATES FOR THE CERTIFICATE OF ENTITLEMENT TO TAX INCENTIVES (CETIs)
FIRB ADVISORY
JANUARY 19, 2023
Fiscal Incentives Review Board (FIRB) Advisory No. 002-2023 circularizes the availability of templates for the Certificate of Entitlement to Tax Incentive (CETI) covering the following: (1) CREATE Projects; (2) Pre-CREATE Projects; and (3) Renewable Energy Projects. All Investment Promotion Agencies (IPAs) are mandated to use the updated templates beginning March 1, 2023.
All CETIs already issued or to be issued on or before February 28, 2023, using the previous template circulated last March 23, 2022, shall remain valid for the corresponding fiscal or calendar year unless canceled, suspended, or withdrawn by the IPA or FIRB, after due process.
PEZA CIRCULARIZING FIRB 1-2023 ON THE SUPPLEMENTAL GUIDELINES ON BOI REGISTRATION OF IT-BPM ECOZONES & FREEPORT ZONES ADOPTING 100% WORK-FROM-HOME
PEZA MEMORANDUM CIRCULAR
JANUARY 17, 2023
PEZA Memorandum Circular No. 2023-004 circularizes the supplemental guidelines on the registration with the Board of Investments (BOI) of Registered Business Entities (RBEs) in the Information Technology and Business Process Management (IT-BPM) sector.
FIRB ISSUES SUPPLEMENTAL GUIDELINES ON WFH TRANSFER TO BOI
FIRB ADMINISTRATIVE ORDER
JANUARY 16, 2023
Fiscal Incentives Review Board (FIRB) Administrative Order No. 001-2023 provides supplemental guidelines on the registration of existing Registered Business Entities (RBEs) in the Information Technology and Business Process Management (IT-BPM) sector with the Board of Investments (BOI) allowing them to adopt up to 100% Work-From-Home (WFH) arrangements without adversely affecting the enjoyment of their fiscal and non-fiscal incentives. Highlights include the issuance of the BOI Certificate of Registration; application for Certificate of Entitlement to Income Tax Incentives (CETI), Certificate of Authority to Import (CAI), Value-Added Tax (VAT) Zero-Rating Certification which the concerned IPA shall continue to issue; Movement of Capital Equipment and Other Assets within and outside the Economic Zones and/or Freeport Zones within timelines; and step-by-step procedures on securing a Tax Exemption Indorsement (TEI).
PEZA ISSUES GUIDELINES ON THE EXTENDED PERIOD OF IT-BPM RBEs TO TRANSFER REGISTRATION TO BOI UNTIL JANUARY 31, 2023
PEZA MEMORANDUM CIRCULAR
JANUARY 3, 2023
PEZA Memorandum Circular 2023-001 circularizes the guidelines for the registration of Registered Business Entities (RBEs) in the Information Technology and Business Process Management (IT-BPM) sector to the Board of Investments (BOI), until January 31, 2023. The guidelines are in line with the FIRB Resolution No. 026-2022 which allows the transfer of the registration of RBEs in ecozones and freeport zones engaged in the IT-BPM sector to the BOI and adopt up to 100% Work-From-Home (WFH) arrangement without adversely affecting its fiscal incentives. It may be recalled that such RBEs originally have until December 16, 2022, to submit their applications. As clarified, IT-BPM RBEs that will opt to register with the BOI from January 1 to 31, 2023, will not be required to post a bond for all equipment and other assets that will be brought outside the ecozone/freeport zone until they secure the Tax Exemption Indorsement from the DOF Revenue Office or until 31 March 2023, whichever is earlier.
PHILHEALTH REMINDER ON THE 2023 INCREASE IN PREMIUM CONTRIBUTION SCHEDULE
PHILHEALTH CIRCULAR
DECEMBER 28, 2022
Pursuant to PhilHealth Circular 2020-005, the PhilHealth premium increase of 4.5% shall take effect for the Calendar Year 2023, for those with income floor of Php 10,000 and income ceiling of Php 90,000.
It may be recalled that pursuant to the Republic Act (R.A.) No. 11223, or the “Universal Health Care Act,” it aims to provide health insurance coverage for all citizens of the Philippines. Corollary to this is the eventual increase of premium rate of 5% until 2025 for those with monthly basic salary of Php 10,000 to Php 100,000.
RPT EXEMPTION OF NEA & CDA ELECTRIC COOPERATIVES
DEPARTMENT OF JUSTICE OPINION NO. 31, SERIES OF 2022
DECEMBER 13, 2022
This opinion addresses the request of the Secretary of Department of Energy and the Representatives of PHILRECA and APEC Party-Lists to revisit DOJ Opinion No. 55, Series of 2014, relative to the tax exemption afforded to electric cooperatives (ECs) by virtue of Republic Act (RA) No. 10531 or the “National Electrification Administration Reform Act of 2013” (NEA Law). It was argued that an interpretation in the said Opinion requiring ECs to first register with the Cooperative Development Authority (CDA) before they can avail of the preferential rights will render nugatory the Section 13 as well as Section 18(c) of NEA Law’s Implementing Rules and Regulations and in contrast to the policy of NEA Law. Section 13 of the said law merely requires ECs to comply with NEA’s “financial and operational standards” for them to avail the preferential rights granted to cooperatives under the Local Government Code (LGC), among others. In reply, the lawmakers would not have added Section 13 of the NEA Law, specifically the provision therein that made reference to the LGC, for no reason. Had they intended to make prior registration with the CDA a prerequisite to the availment of the preferential rights under the LGC, they would have simply stated so. Without stating any further qualifications clearly shows their intention to extend these preferential rights to ECs. To rule otherwise will render Section 13 meaningless. Hence, all electric cooperatives, whether non-stock cooperative under NEA, stock cooperative under the CDA, or stock corporation registered under the Securities and Exchange Commission (SEC) pursuant to the Corporation Code, may avail of the preferential rights granted under the LGC without the need of prior registration with the CDA, as long as compliant with the financial and operational standards set by the NEA, as clearly stated in RA No. 10531. Consequently, Opinion No. 55, series of 2014, was REVERSED.
NEW SCHEDULE OF SSS CONTRIBUTIONS BY JANUARY 2023
SSS CIRCULAR
DECEMBER 13, 2022
Social Security System (SSS) Circular No. 2022-033 announces the new schedule of SSS contributions effective January 2023 with an increase in the SS contribution rate to 14%, the minimum Monthly Salary Credit (MSC) to Php 4,000, and the maximum MSC to Php 30,000, as per Social Security Commission (SSC) Resolution No. 751, Series of 2022, dated November 25, 2022. The new table reflects the contributions for SS, Employees’ Compensation (EC), and the Workers’ Investment and Savings Program (WISP) administered by SSS.
FIRB SETS THE DEADLINE FOR THE SUBMISSION OF ATIR & ABR FOR THE TAXABLE YEAR 2022 PURSUANT TO CREATE LAW
FIRB ADVISORY
NOVEMBER 23, 2022
Fiscal Incentives Review Board (FIRB) Advisory No. 010-2022 reminds all the Investment Promotion Agencies (IPAs), Registered Business Enterprises (RBEs), and Other Registered Entities (OREs) of the deadline for the submission of the Annual Tax Incentives Report (ATIR) and Annual Benefits Reports (ABR) for the taxable year 2022. The deadline for the RBEs and OREs to submit all annexes of ATIR and ABR shall be on May 17, 2023. Following the deadline for the RBEs and OREs for all annexes of ATIR and ABR, the IPAs and OGAs shall submit the consolidated ATIR and ABR per IPA to the FIRB and Bureau of Internal Revenue (BIR) on June 16, 2023.
It may be recalled that under CREATE Law Implementing Rules and Regulations (IRR) Part IV, Rule 11, Section 2, all RBEs and OREs availing of tax incentives shall, within thirty (30) calendar days from the statutory deadline for filing of tax returns and payment of taxes, are required to submit to the IPAs or OGAs administering tax incentives the ATIR and ABR, and copy furnish the FIRB.
PEZA ISSUES SUPPLEMENTAL GUIDELINES ON THE REGISTRATION WITH THE BOI OF EXISTING RBEs IN THE IT-BPM SECTOR
PEZA MEMORANDUM CIRCULAR
OCTOBER 24, 2022
PEZA Memorandum Circular 2022-070 provides supplementary guidelines for the efficient processing of registration of Registered Business Enterprises (RBE) in the Information Technology-Business Process Management (IT-BPM) with the Board of Investments (BOI). Highlights include the revised forms to accomplish, instructions to follow, the timeline of submission, and reporting requirements.
RENEWABLE ENERGY DEVELOPMENT IS ALLOWED TO BE 100% FOREIGN OWNERSHIP
KINETIC ENERGY IS NOT WITHIN THE AMBIT OF CONSTITUTIONAL RESTRICTION
DEPARTMENT OF JUSTICE OPINION
OCTOBER 23, 2022
The Department of Trade and Industry (DTI) is requesting an opinion on whether 100% foreign ownership is allowed for Renewable Energy (RE) development under the Constitution. The DTI explained that it could not have been the intention of the framers of the Constitution to impose foreign investment limitations on the exploration, development, and utilization (EDU) of resources that are not capable of appropriation and are considered inexhaustible. In this regard, the DTI proposes to amend the Implementing Rules and Regulations (IRR) of the Republic Act No. 9513, or the Renewable Energy (RE) Law to fully achieve its objectives to accelerate the exploration and development of RE development strategies to reduce the country’s dependence on fossil fuels and thereby minimize the country’s exposure to price fluctuations in the international markets. In opining, the Department of Justice (DOJ) reiterated their previous Opinion No. 21 which provides that the EDU of solar, wind, hydro and ocean or tidal energy should not be subject to the 40% foreign equity limitation because kinetic energy sources are beyond the ambit of the term “natural resources.” With respect to the proposal that Section 19 of the RE Law be amended to clarify that kinetic energy sources are not covered by the constitutional prohibition and could therefore be fully liberalized, Opinion No. 21 stated that it is imperative to amend the said IRR to give meaning and purpose to this Opinion. Hence, the proposed amendment of the IRR of RE Law can be considered consistent with the Constitution.
PEZA ISSUES GUIDELINES ON THE REGISTRATION WITH THE BOI OF EXISTING RBES IN THE IT-BPM SECTOR
PEZA MEMORANDUM CIRCULAR
OCTOBER 21, 2022
PEZA Memorandum Circular 2022-067 provides the guidelines for the transfer of Registered Business Entities (RBEs) in the Information Technology and Business Process Management (IT-BPM) sector to the Board of Investments (BOI), until December 31, 2022. The guidelines are issued in line with the Department of Trade and Industry (DTI) Memorandum Circular No. 22-19, to adopt up to 100% work-from-home arrangements without adversely affecting their tax incentives. Highlights include the forms to accomplish, required attachments, as well as PEZA administration of incentives. Further, the transferee RBEs must maintain an office inside PEZA-registered IT Centers/Buildings. Failure to comply will result in the cancellation of its PEZA registration as an IT Enterprise and subsequently, its registration with BOI.
FIRB RESOLUTION GRANTING AUTHORITY TO IMPLEMENT 70:30 WFH ARRANGEMENT FOR IT-BPM RBEs UNTIL DECEMBER 31, 2022 & ALLOWING THEIR TRANSFER TO THE BOI
FIRB RESOLUTION
OCTOBER 4, 2022
Fiscal Incentives Review Board (FIRB) Resolution No. 026-22 allows respective Investment Promotion Agencies (IPAs) to continue implementing 70:30 Work-From-Home (WFH) Arrangements without adversely affecting their fiscal incentives under the CREATE Act from September 12, 2022, until December 31, 2022. Likewise, it allows affected Registered Business Enterprises (RBEs) in the IT-BPM sector to transfer their registration to the Board of Investments (BOI) from the IPA administering an economic zone or freeport zone where their project is located until 31 December 2022, and adopt up to a 100% WFH arrangement; Provided that the monitoring of these “transferee” RBEs’ compliance and the availment of their remaining incentives shall remain with the concerned IPA administering such economic zone or freeport zone where they are located.
PEZA CLARIFIES ISSUANCE OF CERTIFICATE OF ENTITLEMENT TO INCENTIVES (CETI) UNDER CREATE LAW
PEZA MEMORANDUM CIRCULAR
AUGUST 3, 2022
PEZA Memorandum Circular (MC) No. 2022-054 further clarifies the guidelines in MC No. 2022-025 which provides that PEZA shall no longer issue Certificates of Incentives and 5% GIT. Instead, the Certificate of Entitlement to Incentives (CETI) will be issued in accordance with CREATE Law.
Highlights include:
a. RBEs shall apply for a CETI before filing the Income Tax Return (ITR). The CETI confirms that an RBE’s registered project is entitled to either the Income Tax Holiday (ITH) or the 5% Special Corporate Income Tax (5% SCIT). Each registered activity shall be issued a separate CETI containing the activity's income tax incentive.
b. PEZA will issue the CETI upon verification of the RBE's compliance with the terms and conditions of its registration. The performance data for the year covered by the CETI being requested must be complete, and entitlement to ITH of RBE’s project/s still under ITH must have been validated/confirmed for the request for CETI to be processed.
c. Request for a CETI should be filed within ninety (90) days before the statutory deadline for filing the Annual ITR.
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FIRB RESOLUTION GRANTING AUTHORITY TO IMPLEMENT 70:30 WFH ARRANGEMENT FOR IT-BPM RBEs
FIRB RESOLUTION NO. 017-22, JUNE 21, 2022
Fiscal Incentives Review Board (FIRB) has allowed respective Investment Promotion Agencies (IPAs) to continue implementing 70:30 Work-From-Home (WFH) Arrangements without adversely affecting their fiscal incentives under the CREATE Act from April 1 to September 12, 2022, only. IT-BPM Sector violating this temporary measure, specifically exceeding the 30% threshold, shall not be entitled to avail of fiscal and non-fiscal incentives for the said month/s of non-compliance.
FIRB LATEST ADVISORY ON FISCAL INCENTIVES REGISTRATION & MONITORING SYSTEM, ANNUAL TAX INCENTIVES REPORT & ANNUAL BENEFITS REPORTS
FIRB ADVISORY
MAY 13, 2022
The Fiscal Incentives Review Board (FIRB) has advised all Investment Promotion Agencies (IPAs), Registered Business Enterprises (RBEs), and Other Registered Entities (OREs) on the following areas of concern relative to the Fiscal Incentives Registration and Monitoring System (FIRMS), Annual Tax Incentives Report, and Annual Benefits Reports (ABR):
1. FIRMS observes a one-to-one relationship between a user account and the corresponding TIN.
2. For the purpose of filling-out Form B in FIRMS, the start date of tax incentives for projects/activities shall refer to the date when the RBE first availed of the specific tax incentive based on its initial and original registration with the IPA.
3. If the address of the locator is not found in the drop-down list in Form A, indicate the nearest local government unit having jurisdiction over the RBE.
4. Locators entitled to and will be availing of tax incentives for the year are required to apply for the CETI from the IPA.
5. FIRMS will serve as a centralized portal for approving and monitoring tax incentives and will be used to enroll existing and prospective RBEs. FIRB encourages everyone to create their user accounts already.
6. If the Company disclosed that it has a Parent Company in its General Information Sheet (GIS), then accomplish the Parent Company information.
7. As the FIRMS module only allows one account registered per RBE, the entity should designate a permanent email that will be used.
8. The registration date of the Certificate of Registration and Tax Exemption (CRTE) refers to the first and original registration date for the project and should not be confused with the renewal dates of the CRTE.
9. The list of shareholders to be disclosed in FIRMS shall be updated annually.
10. Form B shall be accomplished for each registered project/activity.
11. BOI-registered companies which are only entitled to local tax exemption still need to register under FIRMS.
12. TIMTA is no longer required for registered projects or activities whose tax incentives have already expired and did not avail of any tax incentive during the taxable year.
13. The ATIR and ABR to be submitted this May 2022 shall include those under the calendar year ending December 31, 2021, and those under the fiscal year with an annual closing date earlier than December 31, 2021 (January 1, 2021 to December 30, 2021).
14. Projects that suffered a net loss or gross loss are still required to submit the templates.
15. If the RBEs already submitted their ATIR and ABR using the older version, they are still required to submit the reports using the new templates.
16. Tentative ATIRs and ABRs shall be accepted this May 18, 2022. The final and amended templates shall be accepted until June 15, 2022.
17. Even if the project is not yet operational, it is still required to comply with the requirement, with a notation that it is not yet operational.
18. The ATIR and ABR will be submitted as a spreadsheet to the IPAs and the FIRB Secretariat. Notarization is not required.
19. CREATE incentives can be availed by new and existing enterprises, as long as the project or activity to be registered is listed in the Strategic Investment Priority Plan (SIPP). However, for existing enterprises, incentives may be granted only to qualified expansions or entirely new projects.
20. If there are differences in tax incentives of multiple sites, it would be best to report per location so that the various tax incentives per location will be captured.
21. When encoding, encode the full numerical value.
22. If RBEs have multiple projects/activities registered, they shall use an allocation method that best suits the distribution of assets or loans.
23. The total count of employees to be reported in Annex B.3 shall include employees hired and who were terminated or who resigned during the year.
24. The PSIC code can be found on the Philippine Statistics Authority (PSA) website.
FIRB SETS THE DEADLINE FOR THE FILING OF ANNUAL TAX INCENTIVES REPORT & ANNUAL BUSINESS REPORTS PURSUANT TO CREATE LAW
FIRB ADVISORY
MAY 12, 2022
The Fiscal Incentives Review Board (FIRB) has advised all Investment Promotion Agencies (IPAs), Registered Business Enterprises (RBEs), and Other Registered Entities (OREs) that the deadline to submit the Annual Tax Incentives Report (ATIR) and Annual Benefits Report (ABR) shall be on or before May 18, 2022, subject to adjustments or amendments (if applicable), to be resubmitted on or before June 15, 2022. RBEs and OREs are advised to electronically submit their ATIR and ABR to their respective IPAs, copy furnishing the FIRB Secretariat at firbmeg@ntrc.gov.ph.
It may be recalled that CREATE Law has expanded the functions of FIRB to include policymaking and oversight functions. Under Section 305 of the Tax Code, as amended by the CREATE Law, the ATIR and ABR shall be submitted within thirty (30) calendar days from the statutory deadline for filing of tax returns and payment of taxes to the concerned IPA and simultaneously to the FIRB
Secretariat.
PHILHEALTH ADVISORY ON THE INCREASE IN PREMIUM CONTRIBUTIONS
PHILHEALTH ADVISORY
MAY 11, 2022
In an Advisory pursuant to PhilHealth Advisory No. 2022-0010, PhilHealth has advised all Direct Contributors that the premium rate for Calendar Year 2022 is 4.0%, with an income floor of Php 10,000 and income ceiling of Php 80,000 effective January 2022. The said increase is pursuant to the provisions of Section 10 of Republic Act (R.A.) No. 11223 or the Universal Health Care (UHC) Act, and in accordance with PhilHealth Circular No. 2020-0005 on the "Premium Contribution Schedule in the National Health Insurance Program (Revision 1).
The adjusted premium rate shall take effect in the Electronic Premium Remittance System (EPRS) and the PhilHealth Member Portal starting June 2022. Members and employers who have already paid their contributions at 3% are advised to generate the corresponding Statement of Premium Account for the paid periods so they can settle the 1% differential payments/ remittances until December 31, 2022.
POGO TAX LAW
REPUBLIC ACT
SEPTEMBER 22, 2021
President Duterte signed into law Republic Act (R.A.) No. 11590 or the “Act Taxing Philippine Offshore Gaming Operations.” The law amends Sections 22, 25, 27, 28, 106, 108, and adds new Sections 125-A and 288(G) of the 1997 Tax Code, as amended.
Highlights include:
1. Offshore Gaming Licensee - shall refer to the offshore gaming operator, whether organized abroad or in the Philippines, duly licensed and authorized, through a gaming license, by the Philippine Amusement and Gaming Corporation (PAGCOR) or any special economic zone authority or tourism zone authority or freeport authority to conduct offshore gaming operation, including the acceptance of bets from offshore customers, as provided for in their respective charters.
2. Service provider refers to any juridical person, duly created or organized within or outside the Philippines, or natural person, regardless of citizenship or residence, which provides ancillary services to an offshore gaming licensee, or any gaming licensee or operator with licenses from other jurisdictions. The ancillary services may include customer and technical relations and support, information technology, gaming software, data provision, payment solutions, and live studio and streaming services.
3. Alien individuals employed and assigned to the Philippines by an offshore gaming licensee or its service providers must pay a Final Withholding Tax (FWT) of 25% on gross income. However, minimum FWT due for any taxable month from said persons shall not be lower than Php 12,500.
4. All foreign employees of offshore gaming licensees and their service providers, regardless of the nature of employment, shall have a Tax Identification Number (TIN). Otherwise, a penalty of Php 20,000 shall be imposed for each foreign employee, and in proper instances, revocation of their primary and other licenses obtained from government agencies and/or perpetual or temporary ban in employing or engaging foreign nationals for their operations.
5. Non-gaming revenue of the Philippine-based POGOs is subject to 25% regular income tax.
6. POGOs are required to withhold, and remit expanded withholding tax on their payments to domestic service providers.
7. Sale of goods to POGOs and the sale of services rendered in the Philippines by VAT-registered taxpayers to POGOs and their accredited service providers are included in the list of transactions subject to VAT zero-rating.
8. Disposition of taxes collected from POGOs:
a. 60% - implementation of Universal Health Care Act
b. 20% - Health Facilities Enhancement Program of the Department of Health
c. 20% - to help attain Sustainable Development Goals determined by the National Economic and Development Authority
9. The entire gross gaming revenue or receipts are subject to a Percentage Tax of 5%, in lieu of all other direct and indirect internal revenue and local taxes.
10. “Gross gaming revenue or receipts” defined as gross wagers received less payouts made.
11. PAGCOR to engage the services of a third-party audit platform to determine the amount of gross gaming revenue or receipts that will be subject to tax.
12. Taking of wagers made in the Philippines and failure to cooperate with the third-party auditor will lead to the revocation of their offshore gaming license.
WORK-FROM-HOME ARRANGEMENT FOR RBEs OF IT-BPM SECTOR UNDER CREATE LAW & PRESIDENTIAL PROCLAMATION NO. 1218 ON EXTENSION OF STATE OF NATIONAL CALAMITY
FIRB RESOLUTION
AUGUST 2, 2021
Fiscal Incentives Review Board (FIRB) Resolution No. 19-21 allows Registered Business Enterprises (RBEs) of the Information Technology-Business Process Management (IT-BPM) Sector providing services in line with the transitional Strategic Investment Priority Plan (SIPP), to continue implementing Work-From-Home (WFH) arrangements until March 31, 2022, without adversely affecting their fiscal incentives under CREATE Law, as a temporary measure under Rule 23 of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Implementing Rules and Regulations.
The following conditions must be satisfied to maintain their incentives and/or the period of availment:
1. The number of employees under a WFH arrangement shall not exceed 90% of the total workforce of the RBE
a. Beginning January 1, 2022, the ceiling shall be reduced to 75% for the remainder of the period of this temporary measure.
b. The ceiling shall be maintained at 90% until March 31, 2022, if the State of Calamity due to COVID-19 is extended to any date beyond January 1, 2022.
2. The number of laptops/other equipment of the RBE outside the ecozone should not exceed the number of its employees who are under WFH arrangement.
3. Bonds shall be posted for all equipment deployed by the RBE to their employees’ homes, to ensure payment of taxes and duties if any such equipment is not returned to the site of the RBE after the WFH arrangement.
4. Revenues from export as required shall be maintained regardless of the allowed ratio of employees who will be under WFH arrangement.
5. The current number of employees shall not be reduced, notwithstanding if most of their employees are under WFH arrangement.
6. The RBE shall comply with reportorial requirements and site inspections, as may be required by the FIRB or Investment Promotion Agencies (IPAs).
With the declaration of the President on extended State of National Calamity due to COVID-19 pursuant to Proclamation No. 1218, the ceiling of the WFH arrangement shall be maintained at 90%.
DOF ISSUES THE IRR ON THE INCENTIVES PROVISIONS OF CREATE LAW
IRR
JUNE 21, 2021
The Secretary of Finance and the Secretary of Trade and Industry, after consultations with the Commissioner of Internal Revenue (CIR), the Board of Investments (BOI), and other Investment Promotion Agencies (IPAs), signed the Implementing Rules and Regulations (IRR) of Title XIII-Tax Incentives of the 1997 Tax Code, as amended by Republic Act (R.A.) No. 11534, or the “Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.”
Highlights include:
1. The Income Tax Holiday (ITH) shall be limited to the income generated from a registered project or activity.
2. The 5% Special Corporate Income Tax (SCIT) in lieu of all national and local taxes shall not include fees and charges as defined under Section 131(l) and (g) of the Local Government Code of 1991.
3. Existing rules on the allocation of the 5% SCIT shall be observed.
4. For export enterprises governed by special laws which do not provide for the allocation of the 5% SCIT, 3% shall be remitted to the National Government, while the remaining 2% shall be remitted to the municipality or city where the enterprise is located.
5. Only the following shall be considered as direct costs for purposes of computing the gross income subject to the 5% SCIT:
a. Direct salaries, wages, or labor expenses
b. Production supervision salaries
c. Raw materials used in the manufacture of products
d. Goods in process
e. Finished goods
f. Supplies and fuels used in production
g. Depreciation of properties related in the rendition of the registered activity
h. Rent and utility charges associated with properties used directly and exclusively to the rendition of registered activity
i. Financing charges, not previously capitalized, associated with fixed assets used directly and exclusively in the registered activity
j. Service supervision salaries
k. Direct materials and supplies used
6. Export enterprises may, at their option, avail of the enhanced deductions or the SCIT, but in no case shall both be granted simultaneously.
7. Enhanced deductions are the following:
a. Additional depreciation allowance of 10% for buildings that are directly related to the registered enterprise’s production of goods and performance of services
b. Additional depreciation allowance of 20% for machinery and equipment that are directly related to the registered enterprise’s production of goods and performance of services
c. Additional deduction of 50% of total labor expense excluding salaries, wages, benefits, and other personnel costs incurred for managerial, administrative, indirect labor, and support services
d. Additional deduction of 100% of the research and development expenses that are directly related to the registered project or activity but shall be limited to local expenditures incurred for salaries of Filipino employees, consumables and payments to local research and development organizations
e. Additional deduction of 100% of the total training expense given to Filipino employees engaged directly in the registered business enterprise’s production of goods and services
f. Additional deduction of 50% of domestic inputs that are directly related to and used in the registered project or activity
g. Additional deduction of 50% of the total power costs utilized for the registered project or activity
h. Deduction for reinvestment allowance to manufacturing industry limited to a maximum of 50%
i. Net operating loss of the registered project or activity for the first three (3) years of commercial operation can be carried over as a deduction within the next five (5) consecutive years immediately following the year of loss.
8. Importation of capital equipment, raw materials, spare parts, or accessories shall be exempt from customs duties, provided that the conditions are complied.
9. Value-Added Tax (VAT) exemption on importation and VAT zero-rating on local purchases shall only apply to goods and services directly and exclusively used in the registered project or activity.
10. Excess input taxes attributable to zero-rated sales by VAT-registered Registered Business Enterprises (RBEs), may at their option, be refunded or applied for a tax credit.
11. Importation of COVID-19 vaccines not intended for resale or for other commercial use by RBEs shall be exempt from import duties, taxes, and other fees, subject to the approval or licenses issued by the Department of Health or the Food and Drug Administration.
12. All RBEs shall pay all applicable taxes at the regular rates after the expiration of the period of incentives of their registered project or activity.
13. Importation of petroleum products by any person, including RBEs, shall be subject to the payment of applicable duties and taxes.
14. Importers who subsequently export fuel may apply for a refund of duties and taxes.
15. Sales receipts and other income derived from a non-registered project or activity shall be subject to appropriate taxes.
16. Period of availment
● Export enterprises-ITH of four (4) to seven (7) years, depending on the location and industry priorities, followed by the SCIT rate or the Enhanced Deductions for ten (10) years
● Domestic market enterprise-ITH of four (4) to seven (7) years followed by the Enhanced Deductions for five (5) years
17. The option to avail of either SCIT or Enhanced Deductions after the ITH period shall be exercised by the RBE at the time of the application for registration of the project. Such option shall be irrevocable for the entire duration of entitlement to such incentives.
18. A qualified expansion, entirely new project, or existing registered projects or activities may register and avail of the incentives for the prescribed period, subject to the conditions set in the Strategic Investments Priority Plan (SIPP) and performance review by the Fiscal Incentives Review Board (FIRB).
19. After the expiration of the transitory period, export enterprises registered prior to the effectivity of the CREATE Law shall have the option to reapply and avail of the incentives for the same period.
20. RBEs that avail of the transitory provision and incentives on reapplication will not be eligible to apply for new incentives for their existing activities unless there is a qualified expansion, entirely new project, or additional investments.
21. The period of availment of the income tax-based incentives shall commence from the actual start of commercial operations with the RBE availing of the tax incentives within three (3) years from the date of registration unless otherwise provided in the SIPP.
22. The determination of the category shall be based on both the location and industry of the registered project or activity, and other relevant factors as may be defined in the SIPP.
23. The location of the registered project or activity shall be prioritized according to the level of development.
24. The industry of the registered project or activity shall be prioritized according to the national industrial strategy specified in the SIPP.
25. Subject to the conditions, projects, or activities of RBEs located in areas recovering from armed conflict or a major disaster shall be entitled to two (2) additional years of ITH.
26. An additional three (3) years of ITH shall be granted to a project or activity relocating from the National Capital Region (NCR).
27. FIRB has the power to grant tax incentives. However, for investments equal to Php 1 Billion or below, it shall delegate the power to the concerned IPA.
28. Regardless of the amount of investments, the concerned IPA has the exclusive jurisdiction to register projects and activities.
29. Every applicant must comply with the following:
a. The project or activity is included in the SIPP
b. Ownership requirement, if any
c. Minimum required percentage of Filipino directors, if any
d. The project or activity must be within the enterprise’s corporate powers and is not otherwise prohibited by law.
30. Application for registration shall be filed electronically.
31. Application shall be considered withdrawn upon failure to submit the complete documents or information within seven (7) working days from the receipt of notification that the requirements submitted are incomplete.
32. For imports of capital equipment, raw materials, spare parts or accessories, the concerned IPA must issue a Certificate of Authority to Import (CAI) or Admission Entry.
33. Application for CAI/Admission Entry shall be filed through a system prescribed by the FIRB or through the system of an IPA provided such is interoperable with and can be linked with the FIRB. In the event that either of the systems becomes unavailable, the application may be made manually by submitting two (2) copies and sworn to before a notary public or in any manner prescribed by the concerned IPA.
34. Approval or disapproval will be communicated in writing. A copy will be sent to the Bureau of Customs if CAI is issued.
35. CAI is non-transferable and valid for only one (1) year from the issuance date. If it remains unutilized during its validity period, the applicant shall surrender the Certificate to the concerned IPA within fifteen (15) days from its expiration.
36. Posting by the Government Service Insurance System (GSIS) of performance bond constituting duties waived on the imported raw materials, spare parts, or accessories shall be pre-condition to the 0% duty importation by RBEs. In lieu of the bond, the concerned IPA may require any form of guarantee from the principal stockholders to ensure performance. Violation of terms and conditions for importation entails solidary liability of the principal stockholders with the RBE.
37. The posted performance bond may be lifted for domestic enterprises upon installation and utilization of the imported capital equipment for the registered activity. However, for export enterprises, it may be lifted after a period of one (1) year of exportation. Further, the concerned IPA may waive the performance bond on imports of RBEs with a good track record.
38. For monitoring purposes, RBE shall submit to the concerned IPA every 5th day of the month a list of tax and duty-free importation released from the customs’ custody, together with copies of Single Administrative Document (SAD), information on the installation date, and pertinent documents from the previous month.
39. Tax and duty-free imports may be inspected by the concerned IPA at any reasonable time to verify actual installation and usage by the RBE in its registered activity.
40. The President may, in the interest of national economic development and upon recommendation of the FIRB, modify the availment of tax incentives or craft appropriate financial support for a highly desirable project or industrial activity based on defined development strategies subject to maximum incentive levels recommended by the FIRB.
41. The total period of incentives availment granted shall not exceed forty (40) years; ITH-8 years; the remaining period-5% SCIT.
42. FIRB shall directly grant tax incentives subject to the following conditions:
a. The project is innovative and has a comprehensive sustainable development plan; and
b. Minimum investment capital of Php 50 Billion, or a minimum of 10,000 direct local employment generations within three (3) years from the issuance of the Certificate of Registration.
43. FIRB shall conduct a periodic review of thresholds every three (3) years, taking into consideration international standards or other economic indicators.
44. If the project fails to meet the projected impact on the economy and agreed performance targets, the FIRB may recommend the cancellation of tax incentives after a due hearing.
45. The power of the President to grant incentives is suspended when there is an unmanageable fiscal deficit declared on the advice of the Development Budget Coordination Committee (DBCC).
46. Role of the IPAs and OGAs, BIR, BOC, FIRB, and FIRB Secretariat, DoF, DBM, and third-party government institution in the peer review of the impact evaluation.
47. Penalty associated to any RBE or ORE for misrepresentation as well as failure to comply with filing and reportorial requirements with the appropriate IPAs or OGAs administering tax incentives.
48. Transitory and Miscellaneous Provisions
a. Projects granted only an ITH-continue for the remaining period, those that have approved ITH but not yet exercised may use the period specified on their registration
b. Projects granted an ITH and 5% on GI earned-allowed to use the ITH for a period specified, then 5% tax on GI earned but with the limit of 10 years for both incentives
c. RBE availing 5% tax on GI earned-continue for 10 years
d. All RBEs engaged in exports that will continue to avail of their existing tax incentives may continue to enjoy the duty exemption until the expiration of the CAI/Admission Entry or until the expiration of the transitory period
49. An RBE may have more than one qualified registered project conducted within geographical boundaries. Further, any project conducted outside geographical boundaries shall not be entitled to incentives unless registered under another IPA outside the said zone.
50. Temporary Measures for Exceptional Circumstances
a. Includes a pandemic, epidemic, war, armed conflict, state of national emergency, outbreak, financial crisis, major disasters
b. Shall cover a specific time period from the declaration until the same has ceased to exist
c. Affected RBE shall apply to the concerned IPA together with the relevant documents.
51. Temporary measures include:
a. Suspension of export requirements
b. Deferment of income tax incentive availment period
c. Movement of the start of commercial operations with full entitlement to incentives
d. Adaption of any other measure to recover
HIGHLIGHTS OF CREATE LAW WITH VETO LINE ITEMS
REPUBLIC ACT
MARCH 26, 2021
The President signed the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE Law) last March 26, 2021, with several veto line items. It was published in the Business Mirror last March 27, 2021; thus, the effectivity date is April 11, 2021.
Highlights of the law with veto line items include:
1. The law was enacted with the following objectives: (a) to improve the efficiency of the corporate tax system by lowering the corporate tax rate; (b) to develop a globally competitive tax incentives regime which is performance-based, targeted, time-bound, transparent, and more-inclusive growth across the region; and (3) to provide support to businesses affected by the pandemic and strengthen preparedness for future similar circumstances. (Sec. 2)
2. Reporting requirement of the Commissioner of Internal Revenue to the Department of Finance and Oversight Committee of Congress (Sec. 3)
3. For tax purposes, the term “corporation” shall now include One Person Corporation. (Sec. 4)
4. Winnings from PCSO of non-resident alien individuals are exempt to the extent of Php 10,000. (Sec. 5)
5. Summary of tax rates, temporary changes, and effectivity (Sections 6 and 7)
6. Changes on rates on certain passive income (Sections 6 and 7)
7. Improperly Accumulated Earnings Tax is repealed. (Sec. 8)
8. Additional 50% deduction on labor training expenses incurred for skills development of enterprise-based trainees enrolled in certain schools/institutions and duly covered by an Apprenticeship Agreement, in which deductions cannot exceed 10% of direct labor wage and provided the needed certification from the Department of Education (DepEd), Commission on Higher Education (CHED), or Technical Education and Skills Development Authority (TESDA) is secured. (Sec. 8)
9. Deductible interest expense, for income tax purposes, shall be allowed net of a reduction rate of 20% from the previous 33%. (Sec. 9)
10. Prior BIR confirmation or tax ruling shall not be required for purposes of availing tax-free exchanges under Section 40 (C) of the 1997 Tax Code, as amended. Value-Added Tax (VAT) shall not be imposed on tax-free exchanges. Tax-free exchanges or disposition of property pursuant to corporate restructuring include merger or consolidation, property for share (including de facto merger), stock acquisition, asset acquisition, recapitalization, and reincorporation. (Sec. 10)
11. Redefinition of control for purposes of tax-free exchange. Ownership of stocks in a corporation after the transfer of property possessing at least 51% of the total voting power of all classes of stocks entitled to vote: provided, that the collective and not the individual ownership of all classes of stocks entitled to vote of the transferor or transferors shall be used in determining the presence of control. (Sec. 10)
12. Review of the withholding tax by the Department of Finance at least every three (3) years. (Sec. 11)
13. VAT exemptions shall include:
• Increase in VAT-exempt threshold on sale of residential lot valued at Php 1.5 Million to Php 2.5 Million, while house and lot and other residential dwellings from Php 2.5 Million to Php 4.2 Million (Vetoed by the President)
• Sale, importation, printing, or publication of any educational material covered by the UNESCO Agreement including digital and electronic format
• Sale of prescription drugs and medicines for diabetes, high cholesterol, hypertension, cancer, mental illness, tuberculosis, and kidney disease beginning January 1, 2021, instead of January 1, 2023
• Capital equipment, its spare parts, and raw materials to produce personal protective equipment for COVID-19 prevention
• All drugs, vaccines, and medical devices used for the treatment of COVID-19
• Drugs for the treatment of COVID-19 approved by the Food and Drugs Administration (FDA) for use in clinical trials, including raw materials directly necessary for the production of such drugs (Sec. 12)
14. Reduction of the percentage tax from 3% to 1% effective July 1, 2020, until July 30, 2023 (Sec. 13)
15. Inclusion of the 90-day period for the BIR to act on a claim for refund of taxes erroneously or illegally paid, or penalties imposed without authority, reckoned from the complete submission of documents (Vetoed by the President) (Sec. 14)
16. Congressional Oversight Committee to review the performance of the Fiscal Incentives Review Board in aid of legislation (Sec. 15)
17. Introduction of general provisions on tax incentives, which include scope, coverage, and extent of the authority of the Fiscal Incentives Review Board and/or Investment Promotion Agencies to grant incentives. (Sections 291 and 292)
18. Incentives include:
• Income Tax Holiday (ITH)
• Special Corporate Income Tax (SCIT) of 5% for activities classified as critical and tier levels (Vetoed by the President)
• Enhanced deductions
• Duty exemption on the importation of capital equipment, raw materials, spare parts, or accessories
• VAT exemption on importation and VAT zero-rating on local purchases (Sec. 294 and 296 on the period of availment-partly vetoed by the President)
19. Enhanced deductions are as follows:
• Depreciation allowance of the assets acquired for the entity’s production of goods and services (qualified capital expenditure)-10% for buildings and 20% for machineries and equipment
• 50% additional deduction on the labor expense due to an increase of direct local employment
• 100% additional deduction on the increment of research and development incurred provided that it is directly related to the registered activity
• 100% additional deduction on trainings incurred given to employees engaged directly in the entity’s production
• 50% additional deduction on the increment of the domestic input expense provided that it is directly related to the registered activity
• 50% deduction to power expense
• 50% deduction for reinvestment allowance to manufacturing industry within five (5) years from re-investment
• Enhanced net operating loss carry-over (NOLCO)-may be carried over as a deduction from gross income within the next five (5) consecutive taxable years (Sec. 294)
20. Conditions for the availment of incentives under 18 and 19 above:
• ITH shall be followed by SCIT or Enhanced Deductions
• Export market enterprise and domestic enterprise classified as “critical” has the option to avail 5% SCIT or Enhanced Deductions for ten (10) years
• Domestic market enterprise not classified as “critical” and with an investment capital of not less than Php 500 Million has the option to avail 5% SCIT or Enhanced Deductions for five (5) years.
• Domestic market enterprise not classified as “critical” and with an investment capital of less than Php 500 Million has no option to avail 5% SCIT but instead under Enhanced Deductions for five (5) years.
• Claim of enhanced deductions shall be subject to the qualifications that these will be directly related to the registered activity
• Duty exemption on imported capital equipment, raw materials, spare parts, or accessories applies only to registered activity, unless otherwise permitted by Investment Promotion Agencies for non-registered activity, and subject to the payment of corresponding duties. If sold, disposed, or transferred within five (5) years without approval, the corresponding duty exemption shall be paid twice. If sold after five (5) years with notice but committed a violation, the corresponding duties on the net book value of capital equipment shall be paid.
• VAT exemption on importation and VAT zero-rating on local purchases shall apply only to goods and services directly and exclusively used in the registered project or activity.
• Importation of the Covid-19 vaccine shall be exempt from duties, taxes, and other fees subject to the approval of the DOH or FDA
• Crude oil intended to be refined in a local refinery shall be exempt from the payment of applicable duties and taxes upon importation. Those for resale, whether in customs territory or Freeport, will not qualify under the exemption. (Sec. 295)
21. Introduction of the Fiscal Incentives and Review Board (FIRB) with its expanded functions (Sec. 297)
22. Formulation of a Strategic Investment Priority Plan (SIPP) for qualified projects and activities for tax incentives availment to consider investment, employment generation, exports, use of modern technology, processes, and innovation, among others, and aligned with priorities set by the Philippine Development Plan. (Sec. 300)
23. Inclusion of the power of the President to grant incentives, modify the mix, period, or manner of availment of incentives, subject to the recommendation of FIRB. (Sec. 301) (Vetoed by the President)
24. SIPP may be amended subject to the publication requirements. (Sections 301 and 302)
25. Setting of qualifications of the registered business enterprise for tax incentives to include meeting performance metrics, installation of an adequate accounting system that is capable to separate registered from non-registered activities, e-receipting, and e-sales requirements, and disclosure of beneficial ownership and related parties (Sec. 304)
26. Inclusion of provisions on Tax Incentives Management and Transparency specifically on the filing of tax returns and reports, monitoring and evaluation, and associated penalties for non-compliance. (Sections 305-309)
27. Transitory and miscellaneous provisions on the prohibition on registered activities, the establishment of a One-Stop Action Center, and Sunset Provisions or Transitioning of Investments Registered prior to CREATE (Sections 309-311)
28. On Sunset Provisions or Transitioning of Investments Registered prior to CREATE, the following rules shall apply:
• ITH incentives granted prior to the effectivity of CREATE shall be allowed to continue with ITH for the remaining period
• Those entitled to ITH and 5% Gross Income Tax shall be allowed to continue with ITH for the remaining period and avail of the 5% Gross Income Tax for ten (10) years
• Those currently enjoying 5% Gross Income Tax shall continue with 5% GIT for ten (10) years.
PEZA ADVISORY ON FARM-OUT PERMIT UNDER WFH ARRANGEMENT
PEZA ADVISORY
FEBRUARY 22, 2021
Philippine Economic Zone Authority (PEZA) Zone Office NCR Advisory No. 2021-005, dated February 22, 2021, reminds all PEZA enterprises under the supervision of Zone Office National Capital Region (ZONCR) to file PEZA Form 8106 (Farm-Out) for Information Technology (I.T.) equipment and assets for Work-from-Home (WFH).
Highlights include:
1. Filing of form prior to deployment of equipment and assets for the WFH starting November 16, 2020, to September 12, 2021.
2. Three (3) documentary requirements to be submitted to the Office of the Zone Manager of the PEZA I.T. Center.
3. ZONCR will allow the advance filing of one (1) PEZA Form 8106 (Farm-Out) Permit to cover the movement and withdrawal of I.T.
4. No prior LOA is required for the movement from their PEZA-registered IT Center facilities to proceed with WFH arrangement until September 12, 2021, or until PEZA issues WFH Guidelines and Application Forms.
5. All surety bonds should be approved first by the Bureau of Customs (BOC) officer.
6. All equipment and other assets, with duties and taxes (if imported) or the VAT, if locally sourced have been paid, are no longer required to post Surety Bond.
PEZA CIRCULARIZES THE UPDATED RULES ON THE RELEASE OF THE VAT ZERO-RATING CERTIFICATE
FEBRUARY 3, 2021
PEZA Memorandum Circular No. 2021-011 circularizes the immediate issuance of Certificate of Value-Added Tax (VAT) Zero-Rating to registered enterprises for the calendar year 2021 upon the filing of the request, subject to the following procedures:
1. Issuance of the certificate that is valid for the entire year for fully compliant enterprises.
2. Issuance of the certificate that is valid from January to June 2021 for enterprises with incomplete reportorial requirements.
3. Issuance of the second (2nd) certificate that is valid from July to December 2021, upon satisfactory compliance with the reportorial requirements.
SPECIFIC HIGHLIGHTS OF THE CREATE BILL
SENATE BILL
NOVEMBER 26, 2020
The Senate approved on the third and final reading the “Corporate Recovery and Tax Incentives for Enterprises Act,” otherwise known as the “CREATE Bill” to boost government efforts to improve the country’s investment climate. The bill aims to encourage investments by bringing down the corporate income tax rate, ensuring the fairness and transparency of fiscal incentives, and enhancing the accountability of taxpayers through the refinement of tax administration. The bill is intended to be part of the administration’s fiscal reform package.
Highlights include:
1. Effective July 1, 2020, the Corporate Income Tax (CIT) rate for both domestic and foreign corporations will be reduced to 25%. However, domestic corporations with net taxable income not exceeding Php 5 Million and with total assets not exceeding Php 100 Million (excluding land on which the business entity’s office, plant, and equipment are situated), may be qualified to a reduced rate of 20%.
2. Effective July 1, 2020, until June 30, 2023, the Minimum Corporate Income Tax (MCIT) rate shall be reduced from 2% to 1%.
3. The imposition of Improperly Accumulated Earnings Tax is repealed.
4. Effective July 1, 2020, until June 30, 2023, Non-Profit Proprietary Educational Institutions and Hospitals shall be taxed at the reduced rate of 1% from 10%.
5. The preferential tax rates/exemption for Offshore Banking Units is repealed.
6. Effective December 31, 2021, Regional Operating Headquarters (ROHQ) shall be subject to a regular CIT.
7. Foreign-sourced dividends received by domestic corporations may be exempt from income tax provided the following conditions are met:
a. Dividends are reinvested in the business operations of the domestic corporation in the Philippines within the next taxable year from the date of receipt.
b. Dividends shall be used to fund the working capital requirements, capital expenditures, dividend payments, investment in domestic subsidiaries, and infrastructure projects.
c. The domestic corporation holds directly at least 20% of the outstanding shares of the foreign corporation for a minimum of two (2) years at the time of dividends distribution.
8. Interest income derived by a Resident Foreign Corporation (RFC) from a depository bank under the expanded foreign currency deposit system shall be subject to a 15% final tax.
9. Capital gains from the sale of shares of stocks not traded in the stock exchange earned by Resident Foreign Corporations and Non-Resident Foreign Corporations (NRFC) shall be subject to a 15% final tax.
10. An additional deduction equal to 1/2 of the value of labor training expenses incurred for skills development of enterprise-based trainees enrolled in public senior high schools, public higher education institutions, or public technical and vocational institutions duly covered by an Apprenticeship Agreement, and for which a proper certification must be secured from THE Department of Education (DepEd), Technical Education and Skills Development Authority (TESDA), or Commission on Higher Education (CHED) shall be allowed, provided that such deduction shall not exceed 10% of direct labor wage.
11. Allowed interest expense shall be reduced by 20% of the interest income subjected to final tax.
12. The following reorganizations involving corporations will be covered by tax-free exchange:
a. Merger or consolidation
b. Acquisition by a corporation of stock of another corporation in exchange for shares, if, immediately after the acquisition, the acquiring corporation has control of the acquired corporation
c. Acquisition by a corporation in exchange for shares, of substantially all the properties of another corporation
d. Recapitalization
e. Reincorporation
13. Prior BIR confirmation or tax ruling shall not be required for purposes of availing the tax exemption of exchange of property.
14. Effective July 1, 2020, until June 30, 2023, the rate of Percentage Tax shall be 1% from 3%.
15. Adjustment of the threshold for VAT-exempt sale of residential real property:
a. Residential lot-Php 2.5 Million from Php 1.5 Million
b. House and lot and other residential dwellings-Php 4.2 Million from Php 2.5 Million
16. VAT exemption for the following transactions:
a. Sale, importation of any books, newspaper or any educational reading material covered by the UNESCO agreement on the importation of educational, scientific, and cultural materials, including the digital or electronic format thereof (requirement to appear at regular intervals shall be removed)
b. Sale or importation of the following goods from January 1, 2021, to December 31, 2023:
i. capital equipment, its spare parts, and raw materials, necessary to produce personal protective equipment component
ii. all drugs, vaccines, and medical devices specifically prescribed and directly used for the treatment of COVID-19
iii. drugs, including raw materials, for the treatment of COVID-19 approved by the Food and Drug Administration (FDA) for use in clinical trials
17. Instead of January 1, 2023, the VAT exemption for the sale or importation of prescription drugs and medicines for cancer, mental illness, tuberculosis, and kidney diseases will start on January 1, 2021.
18. The Fiscal Incentives Review Board (FIRB) or the Investment Promotion Agencies (IPA), under a delegated authority from the FIRB, shall grant incentives pursuant to the Tax Code only to the extent of their approved registered project or activity under a Strategic Investment Priority Plan.
19. Income tax incentives under CREATE are as follows:
a. Income Tax Holiday (ITH) for four (4) to seven (7) years followed by Special Corporate Income Tax (SCIT) of 5% based on the gross income earned, in lieu of all taxes for ten (10) years; or
b. Regular Corporate Income Tax (RCIT) with enhanced deductions for 14 to 17 years. Enhanced deductions shall in no case be granted simultaneously with the SCIT. The enhanced deductions include additional deductions for depreciation, labor, training, research and development, domestic input expense, power expense, investment allowance, and claim of Net Operating Loss Carry-Over (NOLCO) for the next five (5) years.
20. Fiscal incentives are also available to projects or activities that were registered prior to the effectivity of CREATE Bill. Firms enjoying ITH may continue to enjoy the same within the remaining ITH period. On the other hand, firms enjoying ITH and 5% GIT after the ITH, or enjoying 5% GIT only, may continue to enjoy these for ten (10) years. Qualified expansions or entirely new projects or activities may also qualify for a new set of incentives.
21. The duration of income tax incentives depends on the category, which in turn is based on location and industry priorities.
a. Basic-14 years
b. Enhanced-15 years
c. Advanced-16 years
d. Superior-17 years
22. Other fiscal incentives include:
a. exemption from customs duties on imports of capital equipment, raw materials, spare parts or accessories directly and exclusively used in the registered project or activity, which are not produced or manufactured domestically in sufficient quantity at reasonable prices
b. VAT exemption on imports and VAT zero-rating on local purchases of goods and services directly and exclusively used in the registered project or activity by a registered enterprise located inside an Ecozone or Freeport
23. President may modify and mix the period or manner of availment of incentives for a highly desirable project subject to certain conditions and recommendations of the FIRB. The grant of ITH shall not exceed eight (8) years and thereafter, 5% Special CIT may be granted, provided that the total period of availment shall not exceed 40 years.
DTI GUIDELINES ON 30-DAY GRACE PERIOD CONCESSION FOR RESIDENTIAL & COMMERCIAL RENT
DTI MEMORANDUM CIRCULAR
APRIL 4, 2020
DTI Memorandum Circular No. 20-12 provides guidelines on the concessions of residential and commercial rents of Micro, Small and Medium Enterprises (MSMEs). A minimum of thirty (30) days grace period shall be granted without incurring interests, penalties, fees, and other charges on residential rents and commercial rents of MSMEs falling due within the Enhanced Community Quarantine (ECQ). Lessors who shall refuse to provide 30-day grace period to lessees affected by ECQ shall be penalized with imprisonment of not less than two (2) months or a fine of not less than Php 10,000, or both.
PEZA EXTENDS VALIDITY OF LOA OF PEZA-ACCREDITED SERVICE ENTERPRISES
PEZA MEMORANDUM CIRCULAR
MARCH 25, 2020
PEZA Memorandum Circular No. 2020-017 extends the validity of the Letter of Authority (LOA) of PEZA-accredited service enterprises such as customs brokers and freight forwarders, truckers, haulers, and security agencies until June 30, 2020, provided that their licenses are valid within the period of Enhanced Community Quarantine (ECQ).
PHILHEALTH EXTENDS THE DEADLINE OF PREMIUM PAYMENT
PHILHEALTH ADVISORY
MARCH 25, 2020
Philhealth Advisory No. 2020-21 extends the deadline of payment of premium contributions for the first quarter of 2020 for Self-Earning Individuals, Professional Practitioners, and Members under the Group Enrolment Schemes from March 31, 2020, to April 30, 2020, in view of the currently implemented Enhanced Community Quarantine (ECQ).
BIR MEDIA RELEASE ON OPENING OF BIR OFFICES FROM MARCH 16, 2020, TO APRIL 14, 2020 DURING THE 30-DAY PERIOD COMMUNITY QUARANTINE
BIR MEDIA RELEASE
MARCH 18, 2020
The BIR National Office informs the public that all revenue offices will be open continuously even during the 30-day period Community Quarantine in the NCR from March 16, 2020, to April 14, 2020. Likewise, the BIR encourages everyone to file the tax returns online and use online payment platforms such as GCash, PayMaya, LandBank, DBP, Visa and Mastercard in the payment. Further, the BIR will establish eFiling Centers in the regional and district offices in time for the April 15, 2020, deadline. It may be recalled that the Department of Finance has earlier pronounced that April 15, 2020, deadline is non-extendible, as provided for under the law.
DOLE GUIDELINES ON ONE-TIME FINANCIAL ASSISTANCE OF PHP 5,000 TO BE PROVIDED TO AFFECTED WORKERS DUE TO LUZON-WIDE ECQ
DOLE DEPARTMENT ORDER
MARCH 17, 2020
Department of Labor and Employment (DOLE) has issued Department Order No. 209, Series of 2020 which provides guidelines on the adjustment measures program for affected workers due to Coronavirus Disease 2019.
Highlights include:
1. DOLE to roll out Php 1.3 Billion financial assistance program for affected Filipino workers in private establishments which have adapted Flexible Working Arrangements (FWAs) or temporary closure during the COVID-19 pandemic.
2. To cover workers in private establishments affected by the pandemic from its onset in January 2020 until April 14, 2020, unless extended. Government employees are excluded.
3. One-time financial assistance of Php 5,000 to be provided in lump sum, non-conditional, regardless of employment status.
4. Submission of requirements to avail such as Establishment Report on the COVID-19 pursuant to Labor Advisory No. 9 Series of 2020, company payroll for the month prior to the implementation of FWA or temporary closure.
5. Detailed procedures of application as well as notification of approval and denial and procedures on release of funds.
PEZA EASES LOA COMPLIANCE OF ECOZONE I.T. ENTERPRISES IN RESPONSE TO COVID-19
PEZA MEMORANDUM CIRCULAR
MARCH 5, 2020
PEZA Memorandum Circular No. 2020-011 eases the Letter of Authority (LOA) documentary compliance of Ecozone I.T. enterprises by allowing work-from-home option to certain employees without the need of securing LOA, as a prevention and response mechanism to COVID-19. It also allows reassignment and redistribution of employees to other PEZA-registered facilities of the I.T. Enterprise in other PEZA and non-PEZA registered IT Parks and Centers.
BIR SOUTH NCR FILES CHARGES VS. 6 DELINQUENT TAXPAYERS FOR WILLFUL FAILURE TO PAY TAXES
BIR MEDIA RELEASE
MARCH 5, 2020
In a Media Release, the BIR Revenue Region (RR) No. 8B-South NCR has filed six (6) separate criminal complaints to five (5) corporations and one (1) proprietor for willful failure to pay taxes for taxable years 2006, 2008, 2007, 2009, and 2012 despite repeated demands. The BIR served the corresponding Letter of Authority, Preliminary Assessment Notice, Formal Assessment Notice, Formal Letter of Demand, and Final Decision on Disputed Assessment but the subject taxpayers failed to either pay or protest and submit relevant supporting documents and substantiate their claims or to refute said assessments or to file an appeal with the CTA, hence, making the said assessments final, executory, and demandable.
BIR SOUTH NCR FILES TAX EVASION, PERJURY RAPS AGAINST BUILDING CONTRACTOR
BIR MEDIA RELEASE
MARCH 5, 2020
In a Media Release, the BIR Revenue Region (RR) No. 8B-South NCR has filed tax evasion, perjury raps against a construction company for four (4) counts of willful failure to supply correct and accurate information in its quarterly Value-Added Tax (VAT) returns and four (4) counts of perjury for the taxable year 2017 amounting to Php 2.8 Million.
BIR SHUTS DOWN OFFSITE COCKPIT BETTING MACHINES IN QUEZON CITY
BIR MEDIA RELEASE
MARCH 5, 2020
In a Media Release, the BIR Revenue Region (RR) No. 8B-South NCR has filed a tax evasion case and perjury raps against a construction company for four (4) counts of willful failure to supply correct and accurate information in its quarterly Value-Added Tax (VAT) returns and four (4) counts of perjury for the taxable year 2017 amounting to Php 2.8 Million.
BIR TASK FORCE CLOSES FIRST POGO LICENSEE/OPERATOR FOR FAILURE TO PAY 5% FRANCHISE TAX
BIR MEDIA RELEASE
FEBRUARY 21, 2020
In a Media Release, the BIR Task Force closes the 1st POGO Licensee/Operator for failure to pay 5% Franchise Tax on its gross gaming receipts for the taxable year 2019 amounting to over ₱ 114 Million, inclusive of incremental penalties, as provided under Presidential Decree No. 1869 and circularized through Revenue Memorandum Circular (RMC) No. 102-2017.