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PICPA National Convention Tax
Update
16 November 2013
Line up
Supreme
Court
Decisions
Revenue
Regulations
Revenue
Memorandum
Circulars
Other
Issuances
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
BIR Rulings
16 November 2013
Slide 2
16 October 2013
Supreme
Court
Decisions
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 4
16 October 2013
Facts:
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 5
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 6
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 7
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 8
16 October 2013
16 November 2013
Slide 9
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 10
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 11
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 12
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 13
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 14
16 October 2013
Magsaysay
(GR No. 146984)
28 July 2006
CS Garments
CTA EB Case No. 287
(CTA Case No. 6520)
14 January 2008
Subject to
VAT?
No.
The sale was not in the
course of business of
NDC as it was
involuntary, and made
in compliance with the
Governments policy
for privatization.
Hence, the sale could
no longer be repeated
or carried on with
regularity.
Yes.
The sale of vehicle was
made in the course of
business because the
same had been
purchased and used in
furtherance of the
business of CS
Garments.
Yes.
The sale was made
in the course of
business.
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 15
Revenue Regulations
Lopez Group
Revenue
Regulations
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 17
Salient features
1.
2.
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 18
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 19
Organizational Structure
Nature of the business/industry and market conditions
Controlled transactions
Assumptions, strategies, policies
Cost contribution arrangements (CCA)
Comparability, functional and risk analysis
Selection of transfer pricing method
Application of the transfer pricing method
Background documents
Index to documents
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 20
10
16 October 2013
Other concerns:
TP Adjustments
Covered Transactions
Materiality Threshold
Updates when needed
Penalty
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 21
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
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16 November 2013
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PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
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12
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 25
3.
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 26
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16 October 2013
Revenue Memorandum
Circulars
RMCs
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 28
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16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 29
Lopez Group
16 November 2013
Slide 30
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16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 31
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
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PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
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16 October 2013
Other Issuances
Other
Issunces
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 36
18
16 October 2013
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
37
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 38
19
16 October 2013
Facts:
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 39
Lopez Group
16 November 2013
Slide 40
20
16 October 2013
BIR Rulings
BIR Rulings
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 42
21
16 October 2013
Facts illustrated:
First Scenario:
ABC
XYZ
ZNT
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 43
Second Scenario:
Parent
Subsidiary
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
Company A is a domestic
corporation. It has a wholly-owned
subsidiary, Company B, also a
domestic corporation
The respective boards of directors of
Companies A and B have effected a
merger with Company A as the
surviving corporation.
16 November 2013
Slide 44
22
16 October 2013
Facts
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 45
Ruling
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 46
23
16 October 2013
Section 40(C)(2)
SECTION 40. Determination of Amount and Recognition of Gain or
Loss.
(C) Exchange of Property.
xxx
(2) Exception. No gain or loss shall be recognized if in pursuance of a plan of
merger or consolidation
(a) A corporation, which is a party to a merger or consolidation, exchanges
property solely for stock in a corporation, which is a party to the
merger or consolidation; or
(b) A shareholder exchanges stock in a corporation, which is a party to
the merger or consolidation, solely for the stock of another
corporation also a party to the merger or consolidation; or
(c) A security holder of a corporation, which is a party to the merger or
consolidation, exchanges his securities in such corporation, solely
for stock or securities in another corporation, a party to the merger or
consolidation.
PICPA
Isla Lipana & Co., PwC member firm
16 November 2013
Slide 47
Section 40(C)(6)(b)
(6) Definitions.
xxx
(b) The term 'merger' or 'consolidation', when used in this Section, shall be
understood to mean:
(i) the ordinary merger or consolidation, or
(ii) the acquisition by one corporation of all or substantially all the
properties of another corporation solely for stock: Provided, That
for a transaction to be regarded as a merger or consolidation within
the purview of this Section, it must be undertaken for a bona fide
business purpose and not solely for the purpose of escaping the
burden of taxation: Provided, further, That in determining whether a
bona fide business purpose exists, each and every step of the
transaction shall be considered and the whole transaction or series of
transactions shall be treated as a single unit: Provided, finally, That in
determining whether the property transferred constitutes a substantial
portion of the property of the transferor, the term 'property' shall be
taken to include the cash assets of the transferor.
16 November 2013
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
Slide 48
24
16 October 2013
Thank you!
2013 Isla Lipana & Co. All rights reserved. Isla Lipana & Co. is a Philippine
member firm of the PricewaterhouseCoopers global network. In this document,
PwC refers to the network of member firms of PricewaterhouseCoopers
International Limited, each of which is a separate and independent legal entity.
PICPA
Isla Lipana & Co., PwC member firm
Lopez Group
16 November 2013
Slide 49
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