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Tax managers seek overturn of Henares orders

By Prinz Magtulis (The Philippine Star) | Updated July 1, 2016 - 12:00am


At least 22 orders and regulations issued by former Internal Revenue commissioner Kim Henares should be reviewed or repealed, a tax industry group said. STAR/File photo

MANILA, Philippines - At least 22 orders and regulations issued by former Internal Revenue commissioner Kim Henares should be reviewed or repealed, a tax industry group said.

The Tax Management Association of the Philippines (TMAP) will be presenting a list of rules it wants dropped to Finance Secretary Carlos Dominguez and BIR chief Cesar Dulay, who promised to meet with the group soon.

“We will be doing our courtesy calls to (Dominguez and Dulay) and we will give them copies of the list,” TMAP president Benedict Tugonon said in a text message.

“Our legislative committee is still working on getting comments from our members. Expect that the list would only increase,” he added.

Dulay earlier said he would review BIR regulations.

On top of the list are Revenue Memorandum Orders 24 and 25-2016, which Tugonon earlier said should not have been issued during the transition to the Duterte administration.

The orders laid out tax probe rules for property buyers and sellers who will not be able to show any financial capacity to hold on to their assets. TMAP said the order is “unjust and unfair.”

There is also RMO 20-2013, which prescribed requirements for non-stock, non-profit organizations to secure certification from BIR to avail of the incentive. The group said it is “unconstitutional.”

TMAP also branded as “too harsh” Revenue Regulations 12-2012, which disallowed the withholding agent to pay its deficiency taxes and claim it later on as deduction on gross income.

RR 18-2013, which mandates the automatic issuance of final assessment notice 15 days after its preliminary counterpart, should also be revoked, the group said.

Originally, a conference with the taxpayer is held before FAN is issued. TMAP said without which, a “mis-appreciation of facts” of the case by BIR is possible.

RMC 64-2016 defining the “characteristics” of a non-profit organization qualified for tax relief is also “too restrictive” and could be a “stumbling block” for schools, foundations and non-government organizations.

Value-added tax (VAT) on condominium dues under RMC 6-2012 should also be repealed since they are already part of the gross receipts of condominium corporations.

RR 12-2012 that limits the value of the vehicle that can be claimed as “depreciation expense,” meanwhile, is an “over-regulation” for the BIR, TMAP said.

RMO 72-2010 and RMO 27-2016, which both tackled treatment on tax treaties, are also being asked repealed.

“If the BIR really wants to help in attracting foreign investors..., it could just rely on existing rulings issued already by the BIR or proactively determine through government-to-government channels if (other) countries...does not impose any tax on dividends paid by Philippine corporations,” TMAP said.

Meanwhile, RR 18-2013, which imposes a combined 40 percent deficiency and delinquency interests on failure to pay tax due “encourages compromise” where the taxpayer is at the disadvantage.
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BIR clears tax treatment on non-profit firms



By Prinz Magtulis (The Philippine Star) | Updated June 28, 2016 - 12:00am



Outgoing Internal Revenue commissioner Kim Henares has been hit for her slew of regulations issued weeks before she steps down by June 30. AP/Bullit Marquez, File

MANILA, Philippines - There’s no stopping outgoing Internal Revenue commissioner Kim Henares.

More than a week before she steps down, Henares has institutionalized regulations on tax exemptions for non-stock and non-profit corporations.

Issued June 20, Revenue Memorandum Circular 64-2016 clarified that being registered as a non-profit organization with the Securities and Exchange Commission (SEC) does not guarantee an automatic income tax exemption.

The circular then laid down “characteristics” which would make an organization qualify for tax relief, covering educational institutions, religious and labor organizations, mutual savings associations, agricultural organizations, among others.

“There is nothing new there. That is already being practiced. What we are doing is merely to institutionalize the rules so that everyone knows it,” Henares said in a phone interview.

“It does not mean that you are registered as non-stock, you will be tax-exempt. The SEC registration is different from tax treatment,” Henares added.

Under the circular, non-stock, non-profit companies were reminded that only their income in their operations is tax-exempt, and that assets earned from other means are levied.

It said since granting tax exemption results into revenue losses, it will be up to the corporation to prove it is worthy of such relief.

“It (company) must thus demonstrate that its earnings or assets shall not inure to the benefit of any of its trustees, organizers, officers, members of any specific person,” the circular said.

Henares said the BIR would evaluate companies if they are worthy of exemption during their regular audits.

The outgoing BIR chief has been hit for her slew of regulations issued weeks before she steps down by June 30.

But Henares reiterated she is merely putting in black-and-white what is already being practiced “I am only putting everything on paper,” she said.

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On 1st day of Duterte administration: BIR to halt tax probes

By Prinz Magtulis (The Philippine Star) | Updated June 21, 2016 - 12:00am
Henares (left) and Dulay

 
DAVAO CITY, Philippines – All pending tax investigations and audits will be stopped on day one of the new administration, the incoming chief of the Bureau of Internal Revenue (BIR) said yesterday.

“We have considered initially, for the first day (of our term), to recall all letters of authority (LOA),” Cesar Dulay told businessmen on the first day of the Sulong Pilipinas workshop here.

The workshop is being held until today by the incoming administration to consult with business leaders on the specifics of its economic agenda.

The BIR issues a LOA to inform a taxpayer that he or she is being investigated for possible tax violations.

But according to Dulay, he received information that probes conducted under LOA are being abused and could last for “two to three years.”

“We should put a cap on that period because it is an opportunity for what we can call negotiation (for corruption),” Dulay said.

Dulay also vowed to conduct an “immediate review” of revenue regulations to ensure tax requirements are reduced as part of ease of doing business.

Dulay’s pronouncements comes after a new spat between outgoing Internal Revenue commissioner Kim Henares and industry group Tax Management Association of the Philippines (TMAP) over the issuance of two revenue regulations weeks before Henares steps down.

Revenue Memorandum Order 24-2016 laid out tax probe rules for property buyers and sellers found not to have financial capacity to hold onto their assets. It was issued last June 7.

Meanwhile, Revenue Memorandum Circular 62-2016 clarified how banks and non-banks should treat “passed-on” gross receipts tax to their clients. It was issued June 13.

Sought for comment, Henares said Dulay “could do whatever he wants within his power” once he takes over.

TMAP president Benedict Tugonon supported both plans, saying BIR should not be given excessive discretion against taxpayers.

Specifically, he expressed optimism a review of the issuances would allow the reversal of regulations he deemed are against the National Internal Revenue Code of 1997.

“We hope it will clear inconsistencies with the Tax Code and also take into account the tendencies of over regulation and simplification,” Tugonon said in a phone interview.

On the dismissal of all LOA, the TMAP chief said there was a need to check BIR’s “very powerful” tool against taxpayers.

“The exercise of this LOA should be done with caution because this could be very destructive to taxpayers. We support moves to make the issuance of the LOA as objective as possible,” Tugonon said.
KNOWING YOUR BIR REGULATIONS AND ISSUANCES

Revenue Regulations (RRs)
are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, that specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes

Revenue Memorandum Orders (RMOs) are issuances that provide directives or instructions; prescribe guidelines; and outline processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue Memorandum Rulings (RMRs) are rulings, opinions and interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio

Revenue Memorandum Circular (RMCs) are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB) refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue's position on certain specific issues of law or administration in relation to the provisions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.