BIR Issuances Revenue Regulations (RR) No. 3-21 March 23, 2016 1016, Payment of Internal Revenue Taxes by Credit/Debit/Prepaid Card By virtue of this new revenue issuance, taxes and other fees payable to the Bureau of Internal Revenue (BIR) may now be paid thru credit, debit or prepaid cards. In case of erroneous tax payment through credit, debit or prepaid card, there shall be no automatic “charge back" to the taxpayer- cardholder's account of the erroneously paid tax. Rather, the taxpayer shall apply for refund/tax credit with the BIR in accordance with existing revenue issuances. =" Issue No. 21 ea Reyes TacanponG & Co. WHAT'S INSIDI aaa BLGF Opinion SCI SSI e) Revenue Memorandum Circular (RMC) No. 31-2016, March 16, 2016 Philippines - Turkey Tax Treaty The double taxation agreement or tax treaty between the Philippines and Turkey has entered into force on January 11, 2016. The treaty covers income payments made on or after January 1, 2017. Revenue Memorandum Circular (RMC) No. 32-2016, March 17, 2016 Protocol Amending the Philippines - New Zealand Tax Treaty The protocol amending the tax treaty between the Philippines and New Zealand entered into force on October 2, 2008. The provisions of the Protocol shall have effect in respect of taxes covered by said Protocol, including taxes withheld at source, for any taxable period beginning on or after the first day of January 2009,Tacannonc & Co. BIR RULINGS BIR Ruling No. 087-16 dated 14 March 2016 Fund served as loan facility for its members is exempt from income tax, including final tax and withholding tax, subject to conditions ‘The Bureau of Fisheries and Aquatic Resources (BFAR) Provident Fund serves as a loan facility to encourage productivity and —_ provides supplementary welfare benefits to its members. The fund's main source is the members’ monthly monetary contribution. The BFAR sought the issuance of a Certificate of Tax Exemption for income earned by the members from the fund. The BIR ruled that the BFAR Provident Fund is exempt from income tax, including final tax and withholding tax, subject to the following requirements: 1. The contributions are made to the trust fund by the employer or by the employees or by both; 2. Such contributions are made for the purpose of distributing to the employees the earnings and principal of the fund: 3. Under the trust instrument covering the fund, it is impossible for any part of the corpus or income to be used for or diverted to, purposes other than for the exclusive benefit of the employees. BIR Ruling No. 091-16 dated 14 March 2016 BO!-registered enterprise enjoying income tax holiday is exempt from creditable withholding tax on income payments directly attributable to its rogk Jee Communities Tarlac, Inc., a domestic corporation duly registered with the SEC and BO! as a New Developer of Low-Cost Mass Housing Project, was granted Income Tax Holiday (ITH) for 4 years. Communities Tarlac sought exemption from the creditable withholding tax (CWT) on income payments received during the period covered by its ITH. The BIR held that income payments received by Communities Tarlac directly attributable to its registered activity and arising from the sale of housing Units that are solely used for family home or dwelling purposes are exempt from creditable withholding tax. ‘The exemption does not cover revenue from the sale of residential units with selling price exceeding PHP 3 milion. BIR adcitionally emphasized that BOl-registered enterprises do not, however, enjoy exemption from other business taxes such as Value-Added Tax (VAT) and Documentary Stamp tax (DST). BIR Ruling No. 094-16 dated 16 March 2016 Sale of land or properties to NHA for socialized ‘housing project is exempt from capital gains tax, other project-related income tax and documentary stamp tax On December 18, 2013, Hausland Construction offered its services to qualified members of Olive Heights Ville Homeowners’ Association, Inc, to deliver developed home lots and completed housing units under a Rehabilitation Plan. The said project was financed via the Community Initiative Approach Program of the National Housing Authority (NHA). On August 6, 2014, Hausland Construction and NHA entered into a Deed of Absolute Sale whereby Hausiand transferred and conveyed 1,000 developed lots to the NHA. Hausiand sought the issuance of a Tax Exemption Certificate to cover capital gains tax, project-related income taxes and documentary stamp tax arising from the transfer/conveyance. The BIR ruled that under R.A. No. 7279 a landowner developer of properties who sells properties for use in a socialized housing project is exempt from the payment of capital gains tax and other project-related income taxes. The exemption from documentary stamp tax of NHA in connection with any of its socialized housing projects extends to the other party (cither seller or buyer) to the transaction.Reyes Tacanpone & Co. Court of Tax Appeals (CTA) Decisions SS E. E. BLACK LTD. — PHILIPPINE BRANCH vs. COMMISSIONER OF INTERNAL REVENUE, (CTA Case No. 8719 dated 8 March 2016) Intercompany advances to affiliates, evidenced by cash or journal vouches are subject to documentary stamp tax The decision of the Srd Division of The Court of Tax Appeals (CTA) in this case is a reiteration of the Supreme Court (SC) decision in the case of Commissioner of Internal Revenue vs. Filinvest Development Corporation, where the SC ruled that instructional letters, as well as journal and cash vouchers evidencing advances to affiliates qualified as loan agreements upon which DST may be imposed as these are instruments representing borrowing and lending transactions. The CTA reiterated that the enumeration of debt instruments in Revenue Regulations No. 13-04 is not exhaustive as the phrase “including but not limited to” preceded such enumeration. COMMISSIONER OF INTERNAL REVENUE vs. ELRIC AUXILLIARY SERVICES CORPORATION/ SACRED HEART GAS STATION (CTA EB Case No. 1174 dated 3 March 2016) Notice of surveillance and 5-day VAT Compliance Notice issued pursuant to “Oplan Kandado” The Court of Appeals En Banc ruled that its power to review is not limited to decisions rendered by the Commissioner on assessment and refund cases, but extends to other cases decided by the Commissioner involving the interpretation of the Tax Code or other laws administered by the BIR, including the notice of surveillance and the 5-day VAT Compliance Notice issued under the “Oplan Kandado” Program. The remedy of the taxpayer upon receipt of the denial of the protest to the 5-day VAT Compliance Notice is to elevate the case to the CTA within 30 days. Bureau of Local Government Finance (BLGF) Opinion BLGF Opi n dated 24 February 2016 Taxabillity of electric poles of electric cooperatives The BLGF ruled that electric poles of local cooperatives are subject to real property tax. The BLGF maintained its previous opinion that electric poles and steel towers are not exempt from real property taxes they constitute “machinery” which are unequivocally subjected to real property taxes under the Local Government Code (LGC) ‘The BLGF explained that “machinery” need not be permanently attached to real property in order to be subject to real property tax. As long as the machinery is actually, directly and exclusively used to meet the needs of the particular business or industry and is specifically designed for, or is necessary for the business, the “machinery” will be deemed as real property subject to real property tax.Reyes Tacanpone & Co. Securities and Exchange Commission (SEC) Issuance SS Submission of Annual Corporate Governance Report (ACGR) together with the Annual Report The SEC directs all publicly-listed companies to submit their 2015 ACGR together with their 2015 Annual Report to the SEC and to the Philippine Stock Exchange. The ACGR is intended to take the place of the Corporate Governance section of the Annual Report, Non- inclusion of the ACGR shall render the company's fling of its Annual Report as incomplete. PU iAG