08/08/2018

Impact of the TRAIN Law

On Income Taxation, Business Presentation Outline
Taxation and Withholding Taxes
A. REVIEW OF THE BASICS ON COOPERATIVES
B. IMPACT OF TRAIN LAW ON
1. Income Taxation
2. Business Taxation
3. Withholding Taxes
C. Other Updates
1. New Rules on Invoicing Requirements
2. Penalties and Interest on Amended Return
3. Ease of Doing Business
Of Cooperatives

As the Latin saying goes. . . . . .

“Ignorance of the law excuses no one” The law is harsh, but it is the law.

1
 08/08/2018

REASON WHY YOU ARE HERE REASON WHY YOU ARE HERE

To learn more about the TRAIN To earn CPD Units

REASON WHY YOU ARE HERE PROFILE OF COOPERATIVES

Registered with CDA?

Registered with NEA?
Registered with BIR?
With approved CTE from BIR?
Who experienced audit of BIR?
To develop competence and build
up confidence in facing BIR audit.

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 08/08/2018

Audit Experience Nervous

Asian Institute of Taxation Asian Institute of Taxation

Confident!!! Let’s go. . .

Asian Institute of Taxation Asian Institute of Taxation

3
 08/08/2018

Legal References Legal Statutes on Coops

Philippine Constitution
RA No. 9520
Republic Acts (Tax Laws) (The Philippine Cooperative Code of 2008)
Asian
Asian Institute
Institute of
ofTaxation
Taxation
Revenue Regulations February 17, 2009

RMCs/RMOs

BIR Rulings
Amended and renumbered the old Law
CTA Decisions RA 6938
(Cooperative Code of the Philippines)
(March 10, 1990
Supreme Court Decisions

National Internal Revenue Code

Legal Statutes on Coops
As amended by RA 10963

Section 109 (L)

Asian
RAInstitute
Asian Instituteof
ofTaxation
No. No. 10963Taxation Asian
AsianInstitute
Instituteof
ofTaxation
Taxation
(The Tax Reform for Acceleration & Inclusion) Sales by agricultural cooperatives duly registered with
January 1, 2018 the Cooperative Development Authority to their
members as well as sale of their produce, whether in its
original state or processed form, to non-members; their
importation of direct farm inputs, machineries and
equipment, including spare parts thereof, to be used
directly and exclusively in the production and/or
processing of their produce;

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 08/08/2018

National Internal Revenue Code National Internal Revenue Code

As amended by RA 10963 As amended by RA 10963

Section 109(N)
Asian
Asian Institute
109 of
Institute
Section ofTaxation
(M) Taxation Asian
AsianInstitute
Instituteof
ofTaxation
Taxation
Sales by non-agricultural, non-electric and non-credit
Gross receipts from lending activities by credit or multi- cooperatives duly registered with the Cooperative
purpose cooperatives duly registered with the Development Authority: Provided, That the share capital
Cooperative Development Authority; contribution of each member does not exceed Fifteen
thousand pesos (P15,000) and regardless of the
aggregate capital and net surplus ratably distributed
among the members;

National Internal Revenue Code National Internal Revenue Code

As amended by RA 10963 As amended by RA 10963

SECTION 116. Tax on Persons Exempt from Value-

added Tax (VAT). — Any person whose sales or
receipts are Asian
exempt Institute
Asianunder Sectionof
Institute of Taxation
109Taxation
(BB) of this Code SECTION 116. Asian
TaxInstitute
Asian Institute
on of
ofTaxation
Persons ExemptTaxation
from Value-
from the payment of value-added tax and who is not a added Tax (VAT). — Any person whose sales or
VAT-registered person shall pay a tax equivalent to three receipts are exempt under Section 109 (BB) of this Code
percent (3%) of his gross quarterly sales or receipts: from the payment of value-added tax and who is not a
Provided, That cooperatives, and beginning January 1, VAT-registered person shall pay a tax equivalent to three
2019, self-employed and professionals with total annual percent (3%) of his gross quarterly sales or receipts:
gross sales and/or gross receipts not exceeding Five Provided, That cooperatives shall be exempt from the
hundred thousand pesos (P500,000) shall be exempt three percent (3%) gross receipts tax herein imposed."
from the three percent (3%) gross receipts tax herein
imposed."

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 08/08/2018

RMC 12-2010 - Feb 11, 2010

FOCUS : COOPERATIVES
Joint RR for Articles 60, 61 & 144

Kinds of Cooperatives under Articles 60 & 61 RA 9520

Asian
AsianInstitute
Instituteof
ofTaxation
Taxation Asian
AsianInstitute
Instituteof
ofTaxation
Taxation
1. Those transacting with members only
2. Those transacting with members and of non-
members whose ARUNS more than 10 M
Review of the Basics 3. Those transacting with members and non-members
with ARUNS of more than 10M

Article 60 Article 61A

Coops which transacts with Members only.

Asian
AsianInstitute
Instituteof
ofTaxation
Taxation Asian
Asian
Coops which Institute
with of
Institute
transacts ofTaxation
Taxation
Members and Non-
Duly registered cooperatives which do not Members with ARUNS of not more than P10M.
transact business with non-members or the
general public shall not be subject to any taxes Exempt from all national internal revenue taxes as
and fees imposed under the internal revenue Coops in Art 60.
laws and other tax laws.

6

Article 61B
Asian
Asian
Coops which Institute
transacts withof
Institute ofTaxation
Taxation
Members and
Non-Members with ARUNS more than P10M.
Exempt from all national internal revenue taxes
as Coops in Art 60 with respect to transactions
with Members but subject to NIRC Taxes with
respect to transactions with non-members
Tax
Joint RR for Articles 60, 61 & 144
6. DST provided the other party who is not exempt
shall be the one directly liable
7. Annual Registration fee of P500.00
8. All taxes on transactions with insurance companies
and banks, including but not limited to 20% final
tax on interest deposits and 7.5% final income tax
on interest income derived from a depository bank
under the EFCDS
08/08/2018
Joint RR for Articles 60, 61 & 144
Section 7 of RMC 12-10 :
Exemption of Coops under Art 60
1. Income tax
2. VAT
3. Percentage Tax
4. Donor’s Tax on donations to duly accredited
charitable, research and educational institutions
re-investment to socio-economic projects within
the area of operation of the Coops
5. Excise tax for which it is directly liable
Taxability of all Cooperatives,
regardless of classification
1.Capital gains from sale of shares of stocks and other
disposition of real property classified as capital assets;
2. DST on transactions of coops dealing with non-members,
except transactions with banks and insurance cos,Provi-
ded that whenever one party to the taxable document
enjoys the exemption from DST, the other party who
who is not exempt shall be the one directly liable for DST;
3. VAT billed on purchases of goods and services, except
VAT on the importation of agri coops of direct farm
inputs, machineries and equipt, including spare parts
thereof, to be used exclusively and directly in the
production of their produce under Sec 109(L) NIRC;
7

Taxability of all Cooperatives,
regardless of classification
4. W-tax on compensation of employees;
5. Income and business taxes on unrelated income to the
main/principal business under its Articles of
Cooperation;
6. All other taxes for which coops are directly liable and
not otherwise exempted by any law.
RMC 12-2010 - Feb 11, 2010
Joint RR for Articles 60, 61 & 144
Liabilities of Coops under Art 61B:
2. VAT on transactions with non-members, except:
i. sales by agri coop to their members as well
as non-members ; importation of direct
farm inputs, machineries and equipment
and spare parts directly used in the
production or processing of their produce.
08/08/2018
RMC 12-2010 - Feb 11, 2010
Sect Joint RR for Articles 60, 61 & 144
Liabilities of Coops under Art 61B:
1. Income tax – on the amount allocated for interest
on capital ; Provided That the same tax is not
consequently imposed on interest individually
received by the members. Tax base is net surplus
arising from the business transactions with non-
members after deducting the amounts from the
statutory reserve funds
RMC 12-2010 - Feb 11, 2010
Joint RR for Articles 60, 61 & 144
Liabilities of Coops under Art 61B (Cont’d):
2. ii. Gross receipts from lending activities by
credit or multi-purpose coops
iii. Sales by non-agri, non-electric and non-
credit coops, provided that the share
capital contributions of each member
does not exceed P15,000, regardless of
the aggregate capital and net surplus
ratably distributed among members.
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 08/08/2018

RMC 12-2010 - Feb 11, 2010

Joint RR for Articles 60, 61 & 144

Section 9 Unrelated Income of Coops

Asian
AsianInstitute
Instituteof
ofTaxation
Taxation Asian
AsianInstitute
Instituteof
ofTaxation
Taxation
All income of cooperatives not related to the
main/ principal business/es shall be subject to all
appropriate taxes under the NIRC. Other Income of Coops
And Coop Members
This is applicable to all types of cooperatives
whether dealing purely with members or both
members and non-members.

RMC 12-2010 Investment in Government Bonds

Taxability of Members of Coops BIR Ruling 169-12

Sec 11. Taxability of Members/Share Holders of Coops Though cooperatives are exempts from certain taxes,
All members of coops shall be liable to pay NIRC taxes nevertheless exemption from final tax of the Coliling Farmer's
Asian
except for the Asian
Institute
following:Instituteof ofTaxation
Taxation Asian
Asian
Savings and Credit
Institute
Institute
Cooperative's
of
ofTaxation
Taxation
investment in government
a. Any tax and fee, including but not limited to final tax on bonds is not among those exemptions granted by law as the
members deposits or fixed deposits (otherwise investment is not related to the cooperative's principal
known as share capital) with cooperatives and business.
documentary tax on transactions of members with
the Coop; and In view of the foregoing, the request for exemption from
b. Patronage Refund which includes all refunds, returns final tax relative to its investment in government bonds is
or rebates of the net savings generated from the hereby denied for lack of legal basis.
operation of the coop.

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 08/08/2018

RMC 47-2011 dated Oct 5, 2011 CTE of Cooperatives

Interest on Deposits of Members

Asian
Asian
Circularized theInstitute
Institute of Taxation
ofSupreme
decision of the Taxation
Court
that the petitioner, Dumaguete Cathedral Credit
Cooperative is not liable to pay the assessed
deficiency withholding taxes on interest
income from the savings and time deposits of
its members.

RMO 76-2010 RMO 76-2010

Application for CTE Application for CTE

General Guidelines:
Asian
AsianInstitute
Instituteof
ofTaxation
Taxation  All Coops Asian
AsianInstitute
previously Institute of
registered with Taxation
ofCDA
Taxation
under RA 6938
are deemed registered under RA 9520, and a new
certificate of registration shall be issued by CDA.
Prescribing the Policies and Guidelines in the Issuance
 It is only after a coop has secured a new certificate of
of Certificate of Tax Exemption of Cooperatives and the
registration that it becomes eligible to apply for a CTE
Monitoring Thereof
with the BIR.
 All coops registered with CDA are mandated to update
their registration information with the BIR

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 08/08/2018

RMO 76-2010 RMO 76-2010

Application for CTE Application for CTE

General Guidelines:
General Guidelines:
Asian
Asian
 A cooperative Institute
Institute
applying of
ofTaxation
Taxation
for tax exemption shall be Asian Institute of Taxation
 The Updated Asian Institute
Certificate of Taxation
of Registration shall be
required, as a condition for the issuance of Certificate of
issued and released to the cooperative together
Tax Exemption, to update its BIR Registration with the
with the Certificate of Tax Exemption. The concerned
Revenue District Office (RDO) having jurisdiction over the
RDO shall endeavour to release the
cooperative's principal place of business.
Certificate of Tax Exemption within ten (10)
 The cooperative's application for Registration Update may
working days from submission of complete documents
be processed simultaneously with the cooperative's
by the cooperative.
application for tax exemption.

RMO 76-2010 RMO 76-2010

Application for CTE Application for CTE

Asian
AsianInstitute
General Guidelines: Instituteof ofTaxation
Taxation AsianIssuance
A. For the Original Institute of(Cont’d)
of CTE Taxation
Applications for Certificate of Tax Exemptions and its 4.Certified True Copy of the BIR Certificate of
subsequent renewals shall comply with documentary Registration of the Cooperative.
requirements prescribed in Section. 5 of RMO 76-2010. The 5.Original Copy of Certification under Oath of the
RDO shall refuse to accept the cooperative's application when List of Cooperative Members with their
it is not properly supported by the documents required respective Taxpayer Identification Number (TIN)
herein. and their capital contributions prepared by
authorized official of the Cooperative.

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 08/08/2018

RMO 76-2010 RMO 76-2010

Application for CTE Renewal of CTE
B. For the Renewal of CTE
A. For the Original Issuance of CTE (Cont’d)
A cooperative shall likewise submit a duly
For theAsian Institute of
ofTaxation Asian Institute of
ofTaxation
initial submission of this list of cooperative
members, those Asian
withoutInstitute
TIN may temporarilyTaxation
use NSO Asian
accomplished Institute
Application BIR Form Taxation
No. 1945, with
“Annex "A", together with the ff documents
number or other government issued ID number or
to the concerned RDO:
Community Tax Certificate Number.
1. Certified True Copy of the COR issued by the CDA
Subsequently, however, the cooperative should
under the new Cooperative Code;
require all their members to secure a TIN with the BIR for
2. Certified True Copy of the Latest Articles of
the updated list of members to be submitted together with
Cooperation and the Latest By-Laws of the
the regular filing of the cooperative's annual income tax
Cooperative;
return.

RMO 76-2010 RMO 76-2010

Renewal of CTE Processing of CTE

B. For the Renewal of CTE (Cont’d)

Processing of Request for Issuance of CTE
3.
Asian
CertifiedAsian
Institute
Institute
True Copy
of
of the current
Taxation
ofCertificate
Taxation of
A. Asian
Asian
Application and Institute
Instituteof
Pre-Evaluation by Taxation
of Taxation
the RDO
1. The cooperatives are required to surrender their Old
Good Standing from CDA, effective on the date of
BIR Certificate of Registration and submit an Application
application. No application for exemption will be
of Update of BIR Registration with the RDO where they
processed in the absence thereof or submission of
are originally registered.
an expired Certificate of Good Standing; and
2. The cooperative must submit also to the RDO
4. Certified True Copy of Latest financial statements of
where they are registered a duly accomplished BIR
the immediately preceding year duly audited by a BIR
Form No. 1945 with all the requisite documents.
accredited independent CPA.

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 08/08/2018

RMO 76-2010 RMO 76-2010

Processing of CTE Processing of CTE

Application and Pre-Evaluation by the RDO (Cont’d)

Processing of Request for Issuance of CTE
Asian
B. Application Asian
Institute
Institute
and Pre-Evaluation
of
ofTaxation
by the Taxation
RDO (Cont’d)
Asian Institute of Taxation
Asian
If the cooperative's Institute
submissions are inof Taxation
order and in
compliance with this RMO, the RO of the Day shall prepare a
3. The RDO or his designated Revenue Officer of the Day Memo Indorsement Form to the Reg Director recommending
must pre-evaluate the cooperative's submission using Pre- issuance of CTE. The entire docket, with the necessary pre-
evaluation Sheet of Revenue Officer. evaluation sheet and endorsement letter report, shall be
transmitted within 5 working days from the filing of the duly
4. Endorsement to the Regional Director: accomplished BIR Form No. 1945 accompanied by the
required documentary requirements to the Office of the Reg
Director, through The Chief, Legal Division.

RMO 76-2010 RMO 76-2010

Processing of CTE Application for CTE

Review and Approval of Certificates by the Reg Director For the Original Issuance of CTE
A cooperative shall submit duly accomplished BIR Form No.
Asian Institute of Taxation
Asian
1. The Chief, Legal Institute
Division ofand
shall review Taxation
evaluate the 1945 togetherAsian
with theInstitute
Asian Institute
ff of
ofTaxation
Taxation
to the concerned RDO:
RDO's report, and if in order, prepare the appropriate CTE 1.Certified True Copies of the Articles of
(For Cooperatives registered under RA No. 9520) Cooperation and By-Laws, as certified by CDA;
2.Certified True Copy of the new Certificate of
2. The CTE shall be forwarded to the Reg Director for Registration issued by the CDA under the new
his signature. Cooperative Code, as certified by the CDA;
3.Certified True Copy of the current Certificate of
Good Standing issued by the CDA effective on date
of application; and

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 08/08/2018

RMC 81-2010 RMC 81-2010

Application for CTE Application for CTE
RMO No. 76-2010 dated Sept 28, 2010 was issued to
prescribe the policies and guidelines for the issuance of
Clarification Asian
Asian
on Institute of
ofTaxation
InstituteRequirements
the Documentary Taxation for the Asian Institute
AsianCooperatives
CTE for registered of
InstituteunderofTaxation
Taxation
RA No. 9520.
Application for Certificate of Tax Exemption for .
Cooperatives (BIR Form No. 1945) Pursuant to Revenue In compliance with the submission of the additional
Memorandum Order No. 76-2010 Dated September 28, requirement mentioned in Section 5 (A) of RMO. 76-
2010 2010, this Circular is issued to allow the submission of
the Certified Photocopy of the List of Cooperative
Members with their Respective Capital Contributions
submitted by the cooperatives in obtaining their
Certificate of Confirmation of New Registration and CGS
with the CDA.

RMC 54-2016 RMC 54-2016

CDA Certificate of Compliance CDA Certificate of Compliance

Per CDA Memo No. 2015- 08

Asian
Asian Institute
Institute of
ofTaxation
Taxation Asian
AsianInstitute
Instituteof
ofTaxation
Taxation
Circularizing the Guidelines Governing the Issuance of
Certificate of Compliance refers to the certificate, in lieu
Certificate of Compliance, in lieu of Certificate of Good
of the then Certificate of Good Standing, issued to all
Standing, Pursuant to Cooperative Development
types of cooperatives after compliance with the rules of
Authority (CDA) Memorandum Circular (MC) No. 2015-
the Authority.
08 Series of 2015

14
 08/08/2018

RMC 54-2016 RMC 102-2016

CDA Certificate of Compliance On TIN Requirement
A COC shall be issued once a year for ff purposes:
1. To affirm the cooperative's compliance with the
Asian
Asian Institute
Institute of
ofTaxation
Taxation
Clarification Asian Instituteofof
on the Requirement
ofTaxation
Taxpayer
Identification Asian
Number Institute Taxation
CAPR and its attachments as prescribed by RA 9520, its
(TIN) for Members of
Revised IRR, and other related issuances;
Cooperatives Applying for Certificate of Tax Exemption
2. To avail of the incentives and privileges set forth by
(CTE) under Revenue Memorandum Order (RMO) No.
the CDA-BIR Joint RR Implementing Articles 60 and 61
76-2010 and Revenue Memorandum Circular (RMC) No.
of RA 9520 in relation to RA 8424;
81-2010
3. To secure permits and licenses prescribed under
the provisions of the Local Government Code of 1991;
4. To comply with the documentary requirements
prescribed by the financial institution in availing financial
assistance;

RMC 102-2016 RMC 102-2016

On TIN Requirement On TIN Requirement
Processing and Issuance of CTE
RMO 076-2010 requires, for the issuance of the CTE,
The concerned (RDOs shall allow the processing and
Asian
AsianInstitute
that cooperatives of Taxation
submit, among others,
Institute
an Original Asian
AsianInstitute of
ofTaxation
Oath ofof
theTaxation Institute Taxation
issuance/revalidation of CTEs of qualified cooperatives
Copy of Certification under List of
which do not have yet the TIN of members, provided that
Cooperative Members with their respective TIN and their
they submit, in lieu thereof, an original copy of
capital contributions, prepared by authorized official of
Certification under oath of the list of cooperative
the Cooperative.
members, with their full name and capital contribution.
Cooperatives shall file the application for CTE using the
The above requirement has been relaxed by RMC No.
duly accomplished BIR Form 1945 (revised Oct 2016
81-2010 which allowed, in lieu thereof, the submission
attached hereto as Annex "A", and submit other
of Certified Photocopy of the List of Cooperative
documentary requirements set forth under Section 5 (A)
Members with their Respective Capital Contributions.
or (B) of RMO No. 76-2010, as the case may be.

15
 08/08/2018

RMC 102-2016 RMC 102-2016

On TIN Requirement On TIN Requirement
Processing and Issuance of TIN
Processing and Issuance of CTE The documentary requirements for the application of TIN
Asian
AsianInstitute
Instituteof
ofTaxation
Taxation have alreadyAsian
Asian Institute
underof
Institute
been reduced ofTaxation
RMC Taxation
No. 93-2016 in
The concerned RDOs shall not deny or put on hold the order to facilitate the issuance of TIN to those in
processing and issuance of the CTE solely on the basis marginalized sectors, including members of
of the non-submission of the TIN of the cooperative cooperatives. A person who is not employed or engaged
members. It is clarified, however, that cooperatives, in business or practice of profession, may apply for a
which have been granted with CTE under the preceding TIN by filing the duly accomplished BIR Form 1904
paragraph, are still required to complete and submit to (attached hereto as Annex "B"), together with a
the concerned RDO the required TINs of their members photocopy of any identification issued by an authorized
within six (6) months from the issuance of the CTE. government body which shows the name, address and
birthdate of the person.

RMC 102-2016 RMC 102-2016

On TIN Requirement On TIN Requirement

Processing and Issuance of TIN

Asian
AsianInstitute
Instituteof
ofTaxation
Taxation Revocation Asian
CTE Institute
Asian
of Instituteof
ofTaxation
Taxation
In order to assist its members in securing TIN, the
cooperative, with proper authorization from the The non-submission by the cooperatives of the
members, may apply for the issuance of TIN in behalf of members' TIN requirement within six (6) months from
its members, by collating the duly accomplished BIR the issuance of the CTE shall be a ground for the
Form 1904 of the members and valid identifications in revocation of the CTE, in addition to those set forth
support thereof, which shall be submitted to the under Section 8 of RMO No. 76-2010.
concerned RDO for the processing and issuance of the
TIN.

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 08/08/2018

RMC 18-2017 BIR Memo 8-2017

On Service Cooperatives Signed by DCIR Jesus Clint Aranas

Asian Institute
Asianand
For the information Institute of
ofallTaxation
guidance of Taxation
internal revenue Asian
This has reference
Asian
toInstitute
Instituteof
the Memorandum Taxation
dated Feb 24,
ofdirecting
Taxation
2015 by CIR Kim S. Jacinto-Henares all RDs,
officials, employees and others concerned, attached as
Regional Legal Divisions, RDOs and other Revenue
Annex "A" hereof is the copy of Memorandum No. 008-
Officials, Employees and others concerned to refrain
2017 dated February 24, 2017 regarding the issuance of
from issuing CTE to cooperatives not specifically
Certificate of Tax Exemption (CTE) to Service
identified under RA No. 9520 such as labor contracting,
Cooperatives.
professionals, construction, mining and other
cooperatives similarly created.

BIR Memo 8-2017 BIR Memo 8-2017

Signed by DCIR Jesus Clint Aranas Signed by DCIR Jesus Clint Aranas
The affected cooperatives, however, posit that Article 23
The Bureau also issued RMC No. 12-2012 which
of RA No. 9520, specifically includes a definition of
Asian
circularized the Institute
instruction
Asian of Taxation
of the CDA
Institute
to its Regional Asian
AsianasInstitute
follows: of ofTaxation
registeringof
theTaxation Institute Taxation
service cooperative
Directors to refrain from cooperatives
"Art. 23. Type and Categories of Cooperatives. —
(i.e., as labor contracting, professional, construction,
Types of Cooperatives — Cooperatives may fall under
mining and other cooperatives similarly created) and
any of the following types:
conduct inspection/examination and/or investigation and
(a) x x x
to verify complaints that the cooperatives previously
xxx xxx xxx
registered were used as tax shield which could be
(e) Service Cooperative is one which engages in
considered as fraudulently registered, one of the
medical and dental care, hospitalization, transportation,
grounds for cancellation and revocation of Certificate of
insurance, housing, labor, electric light and power,
Registration.
communication, professional and other services;

17
 08/08/2018

BIR Memo 8-2017 BIR Memo 8-2017

Signed by DCIR Jesus Clint Aranas Signed by DCIR Jesus Clint Aranas
Aside from the service cooperatives, other cooperatives
not specifically defined under the afore-quoted provision
may also be Asian
AsianInstitute of
ofTaxation Asian Institute of Taxation
It is our position that service cooperatives must not be
registeredInstitute
as determined Taxation
by the CDA. Asian
totally prohibited from Institute oftax
availing of the Taxation
incentives
Moreover, RA 9520 expressly provides that any doubt in
provided under RA 9520 provided that they are duly
the interpretation and construction of said law should be
registered with the CDA and have been issued
resolved liberally in favor of the cooperatives, thus:
Certificates of Good Standing to show that they are bona
fide cooperatives falling under RA 9520. Provided,
"ART. 142. Interpretation and Construction. — In case of
however, that these cooperatives will be subject to post
doubt as to the meaning of any provision of his Code or
audit verification to check on whether they are just being
the regulations issued in pursuance thereof, the same
used as a tax shield to avoid or evade payment of taxes.
shall be resolved liberally in favor of the cooperatives
and their members."

BIR Memo 8-2017 The TRAIN Law

Signed by DCIR Jesus Clint Aranas

Accordingly, Asian
service Institute
Instituteof
Asiancooperatives ofTaxation
that Taxation
fully comply with
the guidelines of the CDA may be given tax exemption
certificates provided that they also submit the
documents required by the BIR under Revenue
Memorandum Order (RMO) No. 76-2010 (Prescribing
the Policies and Guidelines in the Issuance of Certificate
of Tax Exemption of Cooperatives and the Monitoring
Thereof) dated September 27, 2010.

18
 08/08/2018

GOOD OR BAD GOOD OR BAD

1. Lowering of graduated income rates for individuals 6. Increase of the VAT Threshold to P3,000,000

2. Option of 8% in lieu of graduated income tax and 7. Exempting Condo and HA Association dues fr VAT
percentage tax under Section 116 for Non-VAT TP
8. Exempting hypertension/diabetes medicines fr. VAT
3. Repeal of Section on personal/additional exemptions
9. Increase of exempt residential rental to P15,000
4. Exemption from tax of 1st
P250,000 compensation
income and purely self-employed income 10. Residential lot reduced from P1,919,200 to P1.5M

5. Gross Benefits Exclusions from P82,000 to P90,000 11. Residential H & L reduced from P3,919,200 to P2.5M

GOOD OR BAD GOOD OR BAD

15. EWT for Professionals with P3M or less Gross PF

12. Excise Tax on Sweetened Beverages
reduced to 5% or 10% as the case may be
13. Excise Tax on Invasive Procedure
16. Reduction of Estate Tax from graduated to 6%
14. Quarterly payment of Percentage Taxes
17. Reduction of Donor’s Tax from graduated to 6%
15. Change filing of 1st Quarterly ITR fr Apr 15 to May 15
18. Increase of Standard Deduction for estate to P5M
16. Interest at double the legal interest rate for loans
19. Increase of family home for estate tax to P10M
17. Increasing of Threshold for audit to P3,000,000
20. 12-page ITR has been reduced to only 4 pages.

19
 08/08/2018

Income Taxation Income Tax System

in the Philippines
Income
Tax
System

Global Schedular
Business Income Tax Tax
System System Interest Income
Professional Income Sale of Shares of Stocks
Rental of properties Sale of Real properties
Compensation Income Dividend Income
Commission Royalties
Transportation Allowance Prizes
Representation Allowance Winnings
Director’s Fees Pensions
All income subject to Fringe Benefits
Creditable Withholding Tax
All income not subjected All Income subject to Final
to CWT and FWT Withholding Tax(FWT)

Classification of Individuals Classification of Employees

For Income Tax Purposes For Income tax Purposes
1. Employee 2. Self-Employed

Under an employer-employee Purely in business/ private

relationship practice

Minimum Wage Rank & File Supervisor,

Earners Employees Manager & Up.

3. Mixed Income

Employee and self-employed

business/ private practice at
the same time

20
 08/08/2018

Classification of Self-Employed Self-Employed Professionals

For Income Tax Purposes

With Opting to pay 8% in lieu of Paying income tax based on

With
Sales/Gross income and % tax graduated rates
Sales/Gross
Receipts
Receipts
Of
Of
Php3M & Claiming Claiming
Over Php3M Itemized
below Optional
Standard Deduction
Deduction

Classification of Sec 24 Income Tax Rates

Mixed Income Taxpayers as amended by TRAIN

2018-20122 2023-onwards

250,000 & below 0% 0%

Over 250,000 to 400,000 20% 15%
Over 400,000 to 800,000 25% 20%
Compensation Compensation Over 800,000 to 2,000,000 30% 25%
income plus Income plus Over 2,000,000 to 8,000,000 32% 32%
Gross Sales/Receipts Gross Over 8,000,000 35% 35%
Php3M & below Sales/Receipts
Over Php3M

21
 08/08/2018

Sec 24 Income Tax Rates Income Tax System

TRAIN vs Old Rates in the Philippines
Income
Tax
System
TRAIN Law OLD Law
Global
250,000 & below 0% 5%-25% Business Income Tax
System
Over 250,000 to 400,000 20% 30% Professional Income
Rental of properties
Over 400,000 to 800,000 25% 30%-32% Compensation Income
Over 800,000 to 2,000,000 30% 32% Commission
Transportation Allowance
Over 2,000,000 to 8,000,000 32% 32% Representation Allowance
Over 8,000,000 35% 32% Director’s Fees
All income subject to
Creditable Withholding Tax
All income not subjected
to CWT and FWT

Employees
Rules on Income Tax for Employee

Income is subject to withholding tax on compensation

based on the schedular rate under Sec. 24(A)(2)(a).

The employer is required to issue Form 2316 to the

employee reflecting the income (both taxable and
non-taxable) and the tax withheld.

No need to file Form 1700 if

Minimum Wage Rank & File Supervisor,
Earners Employees Manager & Up. Working for just one employer.

Need to file Form 1700 if

working for two or more
Employers.

22
 08/08/2018

Formula for Employee Formula for Employee

Working for one employer
:
Gross Compensation
Exclude: non-taxable benefits
Less: Mandatory Contributions
Equals: Taxable Compensation Income
Multiplied by the Tax Rates
under Section 24(A)(2)(a)
Working for two or more employers
Gross Compensation from all employers
Exclude: non-taxable benefits
Less: Mandatory Contributions
Equals Taxable Compensation Income
Multiplied by the Tax Rates
under Section 24(A)(2)(a)

Equals: Tax due Equals: Tax due

Less: W-Tax on Compensation Less: W-Tax on Compensation
Equals: Tax payable or Equals: Tax payable or
refundable refundable

Self-Employed Rules on Income Tax for

Self-Employed
For purely self-employed and/or professionals whose
gross sales/receipt and other non-operating income do
not exceed P3M, the tax shall be, at the taxpayer’s
option, either:
1. 8% income tax on gross sales or gross receipts in
With excess of P250,000 in lieu of the graduated income
With
Sales/Gross
Sales/Gross
tax rates and the
Receipts
Receipts percentage tax under
Of
Of Sec. 116; OR
Php3M &
below
Over Php3M 2.Income tax based on the
graduated income tax rates
for individuals under Sec 24

23
 08/08/2018

Rules on Income Tax for Formula for 8%

Self-Employed Self-employed P3M or <
Professional Fee is subject to Creditable Withholding
- Tax (CWT) of 8% if paid by W-Tax Agents.
Gross Sales/Receipts
Receives Certificate of Creditable Tax Withheld at Less: P250,000
Source (Form 2307 ) from Net Amount Taxable
W-Tax Agents
Multiply by 8%
Files Form 1701Q during Equals: Tax Due
the 1st three quarters
Less: Creditable W-Tax
and final ITR Form 1701
Balance – Payable or Refundable
for the entire year.

Formula for Graduated Rates Mixed Income Taxpayers

Self-employed > P3M

Gross Sales/Receipts
Less: Cost of Sales/Service
Gross income

Less: Allowable Deductions

Equals: Net taxable income
Compensation Compensation
income plus Income plus
Multiplied by applicable rate (graduated) Gross
Gross Sales/Receipts
Income tax due Sales/Receipts
Php3M & below
Over Php3M
Less: Creditable W-Tax
Balance – Payable or Refundable

24
 08/08/2018

Rules on Income Tax for Rules on Income Tax for

Mixed Income Mixed Income P3M>
1. The compensation income shall be subject to the tax
rates prescribed under Section 24(A)(2)(a) of the Tax lf the gross professional fee and other non-operating
Code, as amended; income exceeds P3M there is no option:

AND The compensation income and the professional income

as wells as other non-operating income
2.The income from business shall be subject to the
or practice of profession shall graduated income tax rates
be subject to either 8% income prescribed under Sec 24
tax or graduated rates, of the NIRC, as amended.
depending on the amount of
Gross Receipts

Rules on Income Tax for Rules on Income Tax for

Mixed Income P3M&<
lf the gross professional fee and other non-operating
income do not exceed P3M, options are:
a. Graduated income tax rates shall apply
compensation income under Sec 24(A)(2)(a);
And
b. 8% income tax rate on gross
receipts in lieu of graduated
income tax rates and % tax
under Sec 116 of the NIRC.
Mixed Income Professionals P3M&<
The total tax due shall be the sum of:
(1) tax due from compensation, computed using the
to graduated income tax rates; and
(2) tax due from self-employment/practice of profession,
resulting from the multiplication of the 8% income tax
rate with the total of the gross
sales/receipts and other
non-operating income.

25
 08/08/2018

Income Tax Formula for Income Tax Formula

Mixed Income P3M & < for Mixed Income >P3M
Gross Compensation
Exclude: non-taxable benefits Gross Sales/Receipts
Less: Mandatory Contributions Less: Cost of Sales/Service
Multiplied by the Tax Rates Gross Profit
under Section 24(A)(2)(a) Less: Deductions
Net Income from business
Opted for 8% Plus: Compensation Income
Gross Receipts/Sales Equals: Net taxable income
Net Amount Taxable Multiplied by graduated rates
Multiply by 8% Income tax due
Equals: Tax Due Less: W-Tax on Compensation and Creditable W-Tax
Less: W-Tax on Compensation and Creditable W-Tax Balance – Payable or Refundable
Equals: Payable or Refundable

Income Tax System Income Subject to Final Income Tax

in the Philippines in the Philippines
Income Income
Tax Tax
System System

Global Schedular Schedular

Business Income Tax Tax Tax
System System Interest Income System Interest Income
Professional Income Sale of Shares of Stocks Dividend Income
Rental of properties Sale of Real properties Royalties
Compensation Income Dividend Income Prizes
Commission Royalties Winnings
Transportation Allowance Prizes Pensions
Representation Allowance Winnings Fringe Benefits
Director’s Fees Pensions Sale of Shares of Stocks
All income subject to Fringe Benefits Sale of Real properties
Creditable Withholding Tax
All income not subjected All Income subject to Final All Income subject to Final
to CWT and FWT Withholding Tax(FWT) Withholding Tax(FWT)

26

Passive Income Subject to Final Tax
Section 3 (E) of RR 8-2018
1. interests from any currency bank deposit a - 20 %;
2. Interest income received by an individual taxpayer from
a depository bank under the expanded foreign currency
deposit system – 15%
3. Proceeds of pre-terminated long-term deposit or
investment in the form of savings, trust funds, deposit
substitutes, investment management accounts and
other investments as prescribed by the BSP –the final
tax shall be based on the remaining maturity:
Four (4) years but less than five (5) years – 5%
Three (3) years but less than four (4) years – 12%;
Less than three (3) Years – 20%
Q&A
RMC 50-2018
Q4. De Minimis Benefits:
Medical Cash Allowance to dependents of employees –
P1,500 per semester or P250/month
Rice Subsidy – P2,000
Uniform and Clothing allowance - P6,000
08/08/2018
Passive Income Subject to Final Tax
Section 3 (E) of RR 8-2018
4. Royalties (except royalties on books and other literary
works and musical compositions) - 20%
5. Royalties on books and other literary works and musical
compositions – 10%
6. Prizes (except prizes amounting to P 10,000 or less)- 20%
7. Winnings (except Philippine charity Sweepstakes and
Lotto winnings amounting to P 10.000 or less) -20%
8. Cash and Property Dividends – 10%
9. Capital Gains from Sale of Shares of Stocks not Traded in
the Stock Exchange - 15%;
10. Capital Gains on of Real Property located in the
Philippines-6%.
Q&A
RMC 50-2018
Q 5. De Minimis Benefits:
In excess of allowed amounts shall be allowed as prt of
“Other Benefits” up to P90,000 limit.
27
 08/08/2018

Q&A Q&A
RMC 50-2018 RMC 50-2018

Q 6 Incentives given to employees:
In general any incentives given to employees shall form part
of the compensation subject to income tax, unless
specifically exempted under special lw or incentives in the
nature of “de minimis” benefits
Q 16 Who are not entitled to 8% Income Tax rate
1. Purely compensation income earners
2. VAT registered taxpayers
3. Non-VAT whose grsoss receipts/sales exceeded P3M
4. Taxpayers subject to percnetgae tax unde rTitle V
5. Partners of GPPs
6. Individuals enjoying income tax exemptions like BMBEs

Q&A Q&A
RMC 50-2018 RMC 50-2018

Q 19 How can one avail of 8% in lieu of graduated?
The option to avail of the 8% income tax rate must be
signified annually, on or before May 15.
Such election is irrevocable within the year unless the gross
sales/receipts for the year exceeds P3M in which case, the
taxpayer automatically become subject to graduated.
Q 26 Are returnable deposits or deposits held in trust, like
security deposits under lease agreements part of
definition of gross receipts?
In general, all deposits ras taxable except returnable
deposits or deposits held in trust and recorded as liability
are excluded.

28

Q&A
RMC 50-2018
Q 28 Is an individual under a contract of service or job
order arrangement considered self-employed?
Yes.
Q&A
RMC 50-2018
Q 28 What are the applicable withholding taxes for
individual under a contract of service or job order
arrangement considered self-employed?
Hired by Private Sector – withhold income tax only.
However, if earning P250,000 from one single payee –
exempt from income tax upon submission of Annex B-2
under RR 11-2018 together with the copy of the COR
08/08/2018
Q&A
RMC 50-2018
Q 28 What are the applicable withholding taxes for
individual under a contract of service or job order
arrangement considered self-employed?
Hired by Public or Govt Sector – withhold income and
business tax. However, if earning P250,000 from one single
payee – exempt from income tax upon submission of Annex
B-2 under Rr 11-2018 together with the copy of the COR
and percentage tax if employee signified tohe option to
avail of 8% income tax regime
Q&A
RMC 50-2018
Q 53 Are those availing of 8% income tax rate required to
file FSs when filing ITR?
No.
29
 08/08/2018

Q&A Business Taxation

RMC 50-2018

Q 54 If a professional or self-employed did not avail of 8%

and opt for the graduated rates table but claimed OSD,
can he be exempt form FS submission?

Yes

Classification of Taxpayers VAT Taxpayers

For Business Tax Purposes

VAT TP
Self-employed

12% 0%

VAT TP Non-VAT TP
Gross Sales/ Gross Sales/ Sale to Sale to Automa Effective
Receipts is over Receipts P3M Govt Private tic zero- ly zero-
rating trating
P3M and below
Per 12-month Per 12-month
(Sec 106/108) (Sec 116)

30
 08/08/2018

Non-VAT Taxpayers Sale of Goods

Section 106
Non-
VAT TP
(109)

a. agri/marine FP b.fertilizers Exempt Percent 116 3% Seller P3M

c.d settling -personal effects
E, f. % taxpayers/ACG
g.h. medical etc/edu services
i.j. employees/RAH multi-N
k.l.int’l agree/agri coop
m.n.credit multip other Coop
o.p. export/real properties
q.r. leases/books
s.t. cargo V/fuel in’tl ship/air
U,V. Int’l fuel/banks, NBFI
w,x SC/PWD/Sec40©(2)
TP age TP
This section applies to sale of goods.
(109) 116-127 117 3% Common Carriers
118 3% Int’l Carriers
119 3%/2% Franchises
Sale of goods by professionals (i.e. medicines and vaccines
120 10% Overseas Dispatch
for doctors) are subject to 12% VAT and to be combined
121 0-7% Banks and NBFI with the professional services in computing the threshold
122 1-5% Other NBFI of P3M.
123 5% Life Ins Premiums
124 10% Agents Foreign Ins The taxable base for goods is the selling price upon delivery
125 10-30% Amusement Tax
whether paid in cash or on account.
Y,z Asso condo dues/BSP 126 4-10% Tax on Winnings
AA/BB medicines/P3M or < 127 ½ of 1% S of S LSE

Sale of Services Exempt Sale of Goods and Services

Section 108 Section 109

This Section applies to sale of services which covers all This Section provides the list of all goods and services
kinds of professional services. exempt from Value added tax from letter “A” to letter “BB”.

The taxable base is actual collections. Uncollected billings

for services rendered are not subject to VAT until collected.

31

VAT Threshold
Section 109 (BB)
VAT Threshold – refers to the ceiling set to determine VAT
registrable taxpayers, currently set at P3M.
It is the same threshold to be used to determine the
income tax liability of self – employed and/or professionals
under Sections 24(A)(2)(b) and 24(A)(2)(c)(2) of the Tax
Code, as amended.
Gross Sales
RR 8-2018 Section 2(h)
1. Sales returns and allowances for which a proper credit
or refund was made during the month or quarter to the
buyer for sales previously recorded as taxable sales; and
2. Discounts determined and granted at the time of sale,
which are expressly indicated in the invoice, the amount
thereof forming part of the gross sales duly recorded in
the books of accounts.
Discounts indicated in the invoice at the time of sale,
the grant of which is not dependent upon the
happening of a future event, may be excluded from the
gross sales within the same month/quarter it was given.
08/08/2018
Gross Sales
RR 8-2018 Section 2(h)
Refers to the total sales transactions net of VAT, if
applicable, reported during the period, without any other
deduction.
However, gross sales subject to the 8% income tax rate
option shall be net of the following deductions:
Gross Receipts
RR 8-2018 Section 2(g)
Refers to the total amount of money or its equivalent
representing the contract price, compensation, service fee,
rental or royalty, including the amount charged for
materials supplied with the services, and deposits and
advance payments actually or constructively received
during the taxable period for the services performed or to
be performed for another person, except returnable
security deposits.
In the case of VAT taxpayer, this shall exclude the VAT
component.
32
 08/08/2018

Gross Receipts of Professionals Exempt Sale of Goods and Services

VAT or 3% RR 13-2018 Section 109

1. Professional Fee from clients/patients

2. Retainer Fees w. Sale or lease of goods and services to senior citizens and
3. Consultation Fees persons with disabilities, as provided under Republic Act
4. Management Fees Nos. 9994 (Expanded Senior Citizens Act of 2010) and
5. Honorarium 10754 (An Act Expanding the Benefits and Privileges of
6. Talent fees Persons with Disability), respectively;
7. Commission and service fees
8. Bookkeeping fees
9. Payments from PHIC and HMOs by Doctors

Exempt Sale of Goods and Services Exempt Sale of Goods and Services
RR 13-2018 Section 109 RR 13-2018 Section 109

x. Transfer of Property pursuant to Section 40(C)(2) of the (z) Sale of gold to the Bangko Sentral ng Pilipinas;
Tax Code, as amended;

(y) Association dues, membership fees, and other (aa) Sale of drugs and medicines prescribed for diabetes,
assessments and charges collected on a purely high cholesterol, and hypertension to beginning January 1,
reimbursement basis by homeowners' associations and 2019 as determined by the Department of Health; and
condominium corporations established under Republic Act
No. 9904 (Magna Carta for Homeowners and Homeowners'
Association) and Republic Act No. 4726 (The Condominium
Act), respectively;

33
 08/08/2018

Exempt Sale of Goods and Services Withholding Taxes

RR 13-2018 Section 109

(bb) Sale or lease of goods or properties or the

performance of services other than the transactions
mentioned in the preceding paragraphs, the gross annual
sales and/or receipts do not exceed the amount of Three
Million Pesos (P3,000,000.00).

Kinds of Withholding Taxes Withholding Taxes on Income

WT
Employer B/P, GO,NSNP B/P, GO No EWT
Payor

Compensation Business Passive Exempt

Income Owners/ Income Income
Income Business Payee Earners Professionals Earners Earners
Tax Tax

Individuals Individuals Individuals

Individuals Corporations Corporations Corporations
% Tax Partnerships Partnerships (ITH, BMBE)
WT on On 5% FVW
Wages Income Withhol
12% FVW
Payment: ding
FWT on
Fringe Creditable Withholding Creditable Final
Benefit Final Kind tax on Withholding Withholding Not applicable
of W-Tax compensation Tax Tax

34
 08/08/2018

Ewt or CWT
Withholding Tax on VAT & % Tax RR 11-2018

Government B/P/GO/NSNP
1. Professional fees, talent fees, etc. for services rendered
Payor
— On the gross professional, promotional, and talent
Business fees or any other form of remuneration for the
Owners/
Payee Professionals
Non-Residents services rendered by the following:
on sale of
On sale of
Service to B/P, Individual payee:
NSNP,
goods and
Government
services to
government If gross income for the current year did not exceed P3M
- Five percent (5%)
5%
3% or
applicable 12% FVW
If gross income is more than P3M -Ten percent (10%)
FVW
rates

Ewt or CWT Ewt or CWT

RR 11-2018 RR 11-2018

1. Professional fees, talent fees, etc. for services rendered
— On the gross professional, promotional, and talent
fees or any other form of remuneration for the
services rendered by the following:
Non-individual payee:
If gross income for the current year did not exceed
P720,000 - Ten percent (10%)
If gross income exceeds P720,000 - Fifteen
percent (15%)
Income Payments to certain brokers and agents [formerly
under letter (G)] — on gross commissions of customs,
insurance, stock, immigration and commercial brokers,
fees of agents of professional entertainers and real estate
service practitioners (RESPs), (i.e., real estate consultants,
real estate appraisers and real estate brokers) who failed
or did not take up the licensure examination given by and
not registered with the Real Estate Service under the
Professional Regulations Commission; 5%/10%

35

Ewt or CWT
RR 11-2018
Commissions of independent and/or exclusive sales
representatives, and marketing agents of companies
[formerly under letter (O)]; -5%/10%
Ewt or CWT
RR 11-2018
Income payments, except any single purchase which is
P10,000 and below, which are made by a government
office, national or local, including barangays, or their
attached agencies or bodies, and government owned or
controlled corporations, on their purchases of goods and
purchases of services from local/resident suppliers:
Supplier of goods — One percent (1%)
Supplier of services — Two percent (2%)
08/08/2018
Ewt or CWT
RR 11-2018
Income payment made by top withholding agents, either
private corporations or individuals to their local/resident
supplier of goods/services, including non-resident aliens
engaged in trade or business in the Philippines, shall be
subjected to the following withholding tax rates: ITAaHc
Supplier of goods — One percent (1%)
Supplier of services — Two percent (2%)
Top TWA
RMO 26-2018 dated May 24, 2018
Prescribes the new guidelines in the inclusion and deletion
of TWA for purposes of withholding on local purchases of
goods and services at 1% and 2%, respectively.
1. TWA includes duly-notified Medium Taxpayers (MT)
and taxpayers with issued Taxpayer Account Management
Program (TAMP).
2. TWA includes existing Large Taxpayers (LT), Top 20,000
Private Corporations, and Top 5,000 Individual Taxpayers s
36

Top TWA
RMO 26-2018 dated May 24, 2018
Prescribes the new guidelines in the inclusion and deletion
of TWA for purposes of withholding on local purchases of
goods and services at 1% and 2%, respectively.
1. TWA includes duly-notified Medium Taxpayers (MT)
and taxpayers with issued Taxpayer Account Management
Program (TAMP).
2. TWA includes existing Large Taxpayers (LT), Top 20,000
Private Corporations, and Top 5,000 Individual Taxpayers s
Top TWA
RMO 26-2018 dated May 24, 2018
3. The approved list shall be publicized not later than
every June 15 and December 15. Publication is already
considered sufficient notice to the TWA.
4. After publication, withholding shall commence on July
1 and January 1 of each calendar year.
08/08/2018
Top TWA
RMO 26-2018 dated May 24, 2018
1. RDOs and LT offices shall submit a list of taxpayers
recommended for inclusion and deletion on a
semestral basis, not later than every April 30 and
October 31.
2. Further evaluation shall be conducted not later than
every May 31 and November 31, for approval of the
Commissioner. Failure to submit on or before June 30,
2018 gives rise to the presumption that the existing
lists are still valid.
Other Updates
37
 08/08/2018

New Invoicing Requirements The New Invoicing Requirements

RR 16-2018 amended RR 10-2015 RR 16-2018 amended RR 10-2015

In addition to the usual required information to be

The BIR has finally allowed businesses to have indicated in the Official Receipt (OR)/ Sales lnvoice (SI),
the option to use the type of paper depending on the regulation requires the serial number of the
their business requirements, subject to the retention CRM/POS machine to be shown as well.
and preservation of accounting records.

The New Invoicing Requirements The New Invoicing Requirements

RR 16-2018 amended RR 10-2015 RR 16-2018 amended RR 10-2015

The returned tape receipt shall be attached to the

duplicate copy of the manually-issued invoice or receipt
Buyers who are in need of a manual invoice or
and shall be the basis in adjusting the seller’s amount of
receipt, to be able to claim for an expense (for income
sales in the CRM sales book report.
tax purposes) or input tax (for VAT purposes), they
may need to return the issued tape receipt and
The amount of the sale for which a manual invoice or
request for a manual invoice or receipt from the
receipt was issued shall be separately indicated in the
seller.
Summary List of Sales (SLS) required to be submitted by
VAT- registered taxpayers to the BIR.

38
 08/08/2018

Penalties and Interest

Penalties/Additions to the Tax RMC 54-2018

1. 25% Surcharge BSP Circular 799 Series of 2013 states that:

2. interest per annum - double the legal interest rate for
loans
3. Compromise penalty (Refer to RMO 7-2015)
In case of willful neglect to file the return on time or false
/fraudulent return, 25% surcharge will become 50%.
The rate of interest for the loan or forbearance of any
money, goods or credits in the absence of any express
contract as to such rate of interest shall be six per cent
(6% ) per annum

1.

Penalties and Interest Ease of Doing Business

RMC 54-2018

An amendment of a return where an additional tax is

due per amended return, 25% penalty and 12% interest per
annum until a new interest rate shall be prescribed by the BSP

39
 08/08/2018

EASE OF DOING BUSINESS

RMC 56-2018 dated June 26, 2018
World Bank Survey 2016-2017
Ease of Doing Business Index
Circularized R.A. No. 11032 otherwise known as the “Ease of
Doing Business and Efficient Government Service Delivery Act
of 2018”.

Ease of Doing Business in ASEAN Ease of Doing Business in ASEAN

2016 2017

2 Singapore 2 Singapore 2
23 Malaysia 24 Malaysia 23
46 Thailand 26 Thailand 46
72 Brunei D 56 Brunei D 72
82 Vietnam 68 Vietnam 82
91 Indonesia 72 Indonesia 91
99 Philippines 113 Philippines 99
131 Cambodia 135 Cambodia 131
139 Lao PDR 141 Lao PDR 136
170 Myanmar 171 Myanmar 170

40

Ease in Doing Business in the Phil
Historical updated May 2018
MOU for Ease in Doing Business
RMC 32-2015 dated June 8, 2015
DOF, DTI,DILG, QC-LGU,BIR, SEC, SSS,PHIC,
HMDF, and National Competitive Council signed
an MOU to improve business regulations among
10 indicators: starting a business, dealing with
construction permits, getting electricity, registering
property, getting credit, protecting investors,
paying taxes, trading across borders, enforcing
contracts and resolving insolvency.
Reducing steps from 16 to 8 steps; and
completing registration from 34 days to 8 days.
08/08/2018
Realities in Starting a Business
It takes an average of:.
 3 procedures & 2 & 1/2 days - Singapore
 3 procedures & 6 days - Malaysia
 4 procedures & 17 & 1/2days Thailand
 10 procedures & 34 days – Vietnam
 16 procedures & 34 days - Philippines
 10 procedures & 48 days - Indonesia
 6 procedures & 92 days - Laos
2015 FIGURES
EASE OF DOING BUSINESS
RMC 56-2018 dated June 26, 2018
Circularized R.A. No. 11032 otherwise known as the “Ease of
Doing Business and Efficient Government Service Delivery Act
of 2018”.
1. Law applies to all government offices including Local
Government Units, Government-Owned & Controlled
Corporations, and government instrumentalities, whether
located in the Philippines or abroad.
41

EASE OF DOING BUSINESS
RMC 56-2018 dated June 26, 2018
ALL OFFICES ARE REQUIRED TO:
2.1 Perform re-engineering of systems and procedures to
reduce bureaucratic red tape and processing time. Feedback
mechanism shall also be incorporated which shall the basis of
awards and recognition for excellent delivery of services
2.2 Come up with Citizen’s Charter which shall be made
known to the public
EASE OF DOING BUSINESS
RMC 56-2018 dated June 26, 2018
ALL OFFICES ARE REQUIRED TO:
2.4 Be accountable through its respective heads, with
presumption that all transactions and processes are released
with their approval
2.5 Act within the prescribed processing time stated in the
Citizen’s Charter, with the corresponding penalties and
liabilities for non-compliance. Formal notification should be
sent in case of approval, justified inaction, disapproval or
denial. Otherwise, automatic approval or automatic extension
shall be accorded for every application.
08/08/2018
EASE OF DOING BUSINESS
RMC 56-2018 dated June 26, 2018
ALL OFFICES ARE REQUIRED TO:
2.3 Observe zero-contact policy once web-based software is
formulated by the DICT which shall also be responsible in
operating and maintaining Central Business Portal and serve
as the central system capable of linking online registration and
application systems established by National Government
Agencies.
DICT shall also devise Philippine Business Databank
(PBD) which shall serve as repository of records already
processed, for ready access of government agencies and
EASE OF DOING BUSINESS
RMC 56-2018 dated June 26, 2018
ALL OFFICES ARE REQUIRED TO:
2.6 Streamline procedures for the issuance of local business
permits and licenses by establishing a single or unified
business application through one-stop business facilitation
service
42
 08/08/2018

Good News! Audit Experience

PRC Rapid Assessment

Asian Institute of Taxation
The Professional Regulations Commission conducted a
Rapid Assessment of all professions on its readiness
for the 2015 ASEAN Economic Community launching
through an Australian Consultant Jane Brake-
Brockman. In her June 26, 2012 report, her
conclusion:
Philippines is globally competitive in the
Accountancy profession except for the derailed
implementation of the QAR.

What’s right? What’s wrong?

Nervous

Asian
AsianInstitute
Instituteof
ofTaxation
Taxation Asian Institute of Taxation

Know your legal references

Knowing what’s right and what’s wrong

will build up your confidence

43
 08/08/2018

Scared Worried

Asian Institute of Taxation Asian Institute of Taxation

Sad Angry

Asian Institute of Taxation Asian Institute of Taxation

44
 08/08/2018

Very, very angry Felt like boxing someone

Asian Institute of Taxation Asian Institute of Taxation

Felt sick after Felt like crying after

Asian Institute of Taxation Asian Institute of Taxation

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 08/08/2018

Confident!!! Levelling Up

Asian Institute of Taxation Asian Institute of Taxation

End of Presentation . . .

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