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REVENUE REGULATIONS NO.3-2012. THRESHOLD AMOUNTS. The threshold amounts has been adjusted as follows:.

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revenue regulations no 3 2012

REVENUE REGULATIONS NO.3-2012

THRESHOLD AMOUNTS

RR 3-2012

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Sale of residential lot with gross selling price exceeding P1,919,500.00residential house and lot or whether dwellings with gross selling price exceeding P3,199,200.00, where the instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of conditional sale or otherwise) is executed and notarized on or after January 1, 2012 and shall be subject to twelve percent(12%) output VAT.

RR 3-2012

revenue regulations no 13 2012
REVENUE REGULATIONS NO.13-2012

VAT treatment on Sale of Adjacent Residential Lots, House and Lots or Other Residential Dwellings.

RR 13-2012

background
BACKGROUND

It has come to the attention of the Bureau of Internal Revenue that sale to one buyer of adjacent residential lots, house & lots or other residential dwellings like condominium units which are actually being combined and utilized as one residential unit are intentionally being documented as separate units in order to avoid payment of value added tax (VAT) by keeping them below the VAT threshold amount.

RR 13-2012

sale of real properties
SALE OF REAL PROPERTIES

Sale, Transfer or disposal within a 12-month period of two or more adjacent residential lots, house and lots or other residential dwellings in favor of one buyer from the same seller, for the purpose of utilizing the lots, house and lots or other residential dwellings as one residential areawherein the aggregate value of the adjacent properties exceeds P1,919,500.00, for residential lots and P3,199,200.00 for residential house and lots or other residential dwellings. Adjacent residential lots, house and lots or other residential dwellings although covered by separate titles and/or separate tax declarations, when sold or disposed to one and the same buyer, whether covered by one or separate Deed/s of Conveyance. Shall be presumed as a sale of one residential lot, house and lot or residential dwelling.

This however, does not include the sale of parking lot which may or not be included in the sale of condominium units. The sale of parking lots in a condominium is a separate and distinct transaction and is not covered by rules on threshold amount not being a residential lot, house & lot & lot or a residential dwelling, thus, should be subject to VAT regardless of amount of selling price.”

RR 13-2012

revenue memorandum circular no 48 2011
REVENUE MEMORANDUM CIRCULAR NO. 48-2011

Imposition of Documentary Stamp Tax on inter-office memo covering ADVANCES GRANTED by an affiliated corporation

RMC 48-2011

loan agreement
LOAN AGREEMENT

Refers to a contract in writing where one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. The term shall include credit facilities, which may be evidenced by credit memo, advice or drawings.

RMC 48-2011

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In cases where no formal loan agreements or promissory notes have been executed to cover credit facilities, the documentary stamp tax shall be based on the amount of drawings or availment of the facilities, which may be evidenced by credit/debit memo, advice or drawings by any form of check or withdrawal slip.

RMC 48-2011

slide10

Applying the aforesaid provisions to the case at bench, we find that the instructional letter as well as the journal and cash vouchers evidencing the advances FDC extended to its affiliates in 1996 and 1997 qualified as loan agreements upon which documentary stamp tax may be imposed.(En Banc Supreme Court Decision in the case CIR vs. Filinvest Development Corp. G.R. Nos. 163653 and 167689 dated July 19, 2011

revenue regulations no 5 2012
REVENUE REGULATIONS NO. 5-2012

Binding effect of rulings issued prior to Tax Reform Act of 1997

RR 5-2012

coverage
COVERAGE

All rulings issued prior to January 1, 1998 will no longer have any binding effect. Consequently, these rulings cannot be invoked as basis for any current business transaction/s. Neither can these rulings be used as basis for securing legal tax opinions/rulings. (Sec. 244, in relation to Sec. 4 NIRC)

RR 5-2012

repealing clause
REPEALING CLAUSE

All laws decrees, executive orders, rules and regulations or parts thereof which are contrary to or inconsistent with this Code are herby repealed, amended or modified accordingly. (Sec.291- NIRC R.A. 8424 or Tax Reform Act of 1997)

RR 5-2012

revenue memorandum circular no 22 2012
REVENUE MEMORANDUM CIRCULAR NO. 22-2012

Clarification on Revenue Regulation No.5-2012

RMC 22-2012

slide15

All BIR Rulings issued prior to January 1, 1998 are not be used as precedent by any taxpayer as a basis to secure rulings for themselves for current business transaction/s or in support of their position against any assessments.

  • All BIR Rulings issued prior to Jan.1,1998 are not to be used by any BIR action lawyer in issuing new rulings for request for rulings involving current business transaction/s.
  • However, BIR Rulings issued prior to Jan. 1,1998 remains to be valid but only:
    • To the taxpayer who was issued the ruling;and
    • Covering the specific transaction/s which is the subject of the same ruling
  • BIR Ruling issued prior to Jan.1, 1998, shall remain valid as mentioned above, unless expressly notified of its revocation or unless the legal basis in law for such issuance has already been repealed/amended in the current Tax Code.

RMC 22-2012

revenue regulation no 12 2010
REVENUE REGULATION NO. 12-2010

Deductibility of Depreciation Expenses as it Relates to Purchase of Vehicles and other Expenses Related Thereto, and Input Taxes Allowed Therefor.

RR 12-2010

depreciation
DEPRECIATION

As a general rule, there shall be allowed as depreciation deduction a reasonable allowance for the exhaustion , wear and tear (including reasonable allowance for obsolescence) of property used in the trade or business.

RR 12-2010

slide18
RULES ON DEDUCTIBILITY OF DEPRECIATION ON VEHICLES,OTHER EXPENSES INCURRED THEREON,AND INPUT TAXES ON DISALLOWED EXPENSES
  • No deduction from gross income for depreciation shall be allowed unless the taxpayer substantiates the purchase with sufficient evidence, such as official receipts or other adequate records which contain the following, among others:
      • Specific Motor Vehicle Identification Number, Chassis Number, or other registrable identification numbers of the Vehicle.
      • The total price of the specific Vehicle subject to depreciation; and
      • The direct connection or relation of the Vehicle to the development, management, operation, and/or conduct of the trade or business or profession of the taxpayer;

RR 12-2010

slide19

Only one Vehicle for land transport is allowed for the use of an official or employee, the value of which should not exceedTwo Million Four Hundred Thousand Pesos (Php2,400,000.00);

RR 12-2010

slide20

No depreciation shall be allowed for yachts, helicopters, airplanes and/or aircrafts, and land vehicles which exceed the above threshold amount, unless the taxpayer’s main line of business is transport operations or lease of transportation equipment and the vehicles purchased are used in said operations;

RR 12-2010

slide21

All maintenance expenses on account of non-depreciable Vehicles for taxation purposes are disallowed in its entirely;

RR 12-2010

slide22

The input taxes on the purchase of non-depreciable Vehicles and all input taxes on maintenance expensesincurred thereon are likewise disallowed for taxation purposes.

RR 12-2010

revenue memorandum circular no 2 2013
REVENUE MEMORANDUM CIRCULAR NO. 2-2013

Clarification regarding Revenue Regulation No.12-2012

  • Effectivity-date of the RR 12-2012

October 17, 2012

RMC-2-2013

slide24

Does the RR apply to land vehicles purchased prior to its effectivity where the purchased amount exceed the threshold of P2,400,000.00?

    • No. The RR applies prospectively, thus, it applies to land vehicles purchased upon its effectivity.
  • In case the Vehicles (defined in the RR as passenger vehicles of all type, whether by land, water, or air) which are not allowed depreciation expense, or the non-depreciable Vehicles, will be sold at a loss, will the loss to be incurred from such sale deductible from gross income?
    • Any loss the will be incurred as a result of the sale shall NOT be allowed as a deduction.

RMC 2-2013

revenue memorandum circular no 53 2011
REVENUE MEMORANDUM CIRCULAR NO. 53-2011

SSS,GSIS, PHIC, and HDMF Contribution of the employees cover only the mandatory and the compulsory contributions referred to in Section 32(B)(7)(f) of the 1997 NIRC.

Voluntary Contributions to these institutions in excess of the amount considered compulsory are not excludible from gross income of the taxpayer and hence, not exempt from Income Tax and Withholding Tax.

RMC 52-2011

revenue regulations no 1 2012
REVENUE REGULATIONS NO. 1-2012

Requiring the Mandatory Submission of Quarterly Summary List of Sales and Purchases (SLSP) by All VAT Registered Taxpayer.

RR 1-2012

revenue memorandum circular no 85 2012
REVENUE MEMORANDUM CIRCULAR NO. 85-2012

“Every payor required to deduct and withhold taxes under these regulations shall furnish in triplicate, each payee, whether individual or corporate, with a withholding tax statement, using the prescribed form,(BIR Form No. 2307),showing the income payments made and the amount of taxes withheld therefrom, for every month of the quarter, within twenty (20) days following the close of taxable quarter employed by the payee in filing his/its quarterly income tax return”.

RMC 85-2012

revenue memorandum circular no 85 20121
REVENUE MEMORANDUM CIRCULAR NO. 85-2012

The payor should always retain a copy of duly issued BIR Form No.2307. Failure to furnish the same shall be a ground for mandatory audit of payor’s income tax liabilities (including withholding tax)upon verified compliant of the payee.

For final withholding taxes, the statement should be given to the payee on or before January 31 of the succeeding year.

Upon request of the payee, however, the payor must furnish such certificate simultaneously with the income payment. Section 2.58(B) RR 2-98

RMC 85-2012

revenue memorandum circular no 21 2013
REVENUE MEMORANDUM CIRCULAR NO. 21-2013

Making the disclosure of Supplemental Information under BIR Form Nos. 1700 and 1701 optional on the part of the taxpayer for income tax filing covering and starting with the calendar year 2012.

Starting with the calendar year 2013, the disclosures required under Supplemental Information portion of the said forms will be mandatory.

RMC 21-2013

revenue regulations no 4 2012
REVENUE REGULATIONS NO.4-2012

Deleting Section 2.6.1 of Revenue Regulation 13-2001 which provides that penalties and/or interest imposed on the taxpayer may be abated or cancelled on the ground of one date late filing and remittance due to failure to beat the bank cut-off time.

RR 4-2012

bank bulletin 2013 03
BANK BULLETIN 2013-03

All Accredited Agent Banks (AABs) are hereby reminded to accept tax payments on April 6, 2013 and April 13, 2013 and extend banking hours up to 5:00 P.M. for the period April 1 to 15, 2013 for purposes of accepting tax payments.

BANK BULLETIN 2013-03

background1
BACKGROUND

To ensure strict compliance by taxpayers with internal revenue laws and regulations, in relation to requisites of deductibility or certain expenses and payment of correct income tax, annual income tax returns(ITRs)filed for the current year shall be subject to pre-audit by the Revenue District Offices.

RMO 25-2012

coverage1
COVERAGE

Shall cover the pre-audit of all the annual ITRs filed by individual taxpayers engaged in business or in the practice of their profession and corporate taxpayers that are registered in the Revenue District Offices

RMO 25-2012

slide37

The pre-audit of annual ITRs shall be conducted without field investigation and shall not be covered by electronic Letter of Authority (eLA) or Tax Verification Notice (TVN).

  • In the conduct of the pre-audit, the RO shall verify the following:

2.1Mathematical computation of income tax due and payments;

2.2 Correctness and applicability of personal and additional exemptions claimed by individuals against the registration records per ITS;

2.3 Correctness and validity of the following deductions/expenses subject to the ceiling/limitations prescribed under existing laws and regulations;

2.3.1. Interest expenses;

2.3.2 Charitable and other contributions;

2.3.3 Representation expense and

2.3.4 Miscellaneous expense.

2.4 Validity of claims for income tax holiday, tax exemptions and other claimed tax incentives which resulted to non-payment or reduced payment tax due;

RMO 25-2012

slide38

2.5 Correctness of the application of the minimum corporate income tax (MCIT) pursuant to Sec. 27 (E) and Sec.28(A)(2) of the National Internal Revenue Code of 1997 (Tax Code), As amended, as implemented by Revenue Regulations (RR)No. 9-98 and amended by RR No. 12-2007 and clarified through Revenue Memorandum Circular (RMC) No.4-2003 and RMC No. 24- 2008;

2.6 Claimed creditable withholding taxes against tax due and substantiation of claims through the certificates of withholding taxes attached to the tax returns or submitted electronically to the BIR;

2.7 Correct utilization of Tax Credit Certificates which should be duly supported by an approved Tax Debit Memo issued by the authorized Revenue Officials;

2.8 Correctness of deductions claimed by taxpayers who opted for Optional Standard Deductions (OSD) pursuant to Sec.34(L) of Tax Code, as amended, and implemented by RR No. 16-2008,as amended by RR No. 2-2010;

2.9 Accuracy and applicability of the computation of the Net Operating Loss Carry-Over (NOLCO) pursuant to Sec.34(D)(3) of the Tax Code, as amended and implemented by RR No.14-2001;and

2.10 Completeness of the required attachments to annual ITRs as prescribed under existing revenue issuances

RMO 25-2012

slide39

In case the pre-audit will result to a deficiency tax, the RO shall perform the following:

3.1 Prepare the memorandum report and BIR Form No.0500 for approval and signature of Revenue District Officer.

3.2 Send a letter through registered mail signed by the Revenue District Officer starting the computed assessment as a result of the pre-audit and requiring the settlement of the deficiency tax within fifteen (5)days from receipt thereof. The Letter shall state the pre-audit will not preclude the issuance of an eLA subsequently.

3.3 In case the taxpayer agrees to pay the deficiency tax, BIR Form No.0605 (payment Form) shall be utilized for this purpose and a copy of the proof of payment shall be attached to the report.

3.4 If the taxpayer fails to respond or does not pay the deficiency tax, prepare a report recommending the issuance of a Preliminary Assessment Notice (PAN) or a Final Assessment Notice(FAN), if warranted, pursuant to Sec.228 of the Tax Code, as amended, and transmit the docket of the case to the Assessment Division for review and issuance of assessment notices, subject to the approval of the Regional Director.

RMO 25-2012

slide40

If in the course of the pre-audit of the tax return, it has been established by the RO that a thorough audit/investigation is necessary, the RO assigned may recommend to the Regional Director, through his Revenue District Officer, the audit/investigation of all internal revenue tax liabilities of the concerned taxpayer.

RMO 25-2012

revenue memorandum order no 5 2012
REVENUE MEMORANDUM ORDER NO.5-2012

Performance Benchmarking Method

BENCHMARK

Is a point of reference for measurement or a set of standard to be used to measure the performance/compliance of taxpayers in a particular industry

BENCHMARKING OF TAXPAYERS

Refers to the process of setting a standard to determine the performance level of taxpayers in a given line of industry or sector. In this case, the ratios of Net VAT Due and Income Tax Due in relation to gross sales/receipts. vis-à-vis profit margin rate is to be used for the purpose of setting the industry standard for taxpayers’ compliance

RMO 5-2012

slide42

TAX GAP

Is defined as the aggregate amount of true tax liability imposed by law for a given tax year that is not paid voluntarily and timely. It represents the difference between the actual revenue collected and the amount that would be collected if there were 100percent compliance.

GROSS COMPLIANCE RATIO

Is defined as the actual VAT collection in ratio or as percentage to total potential VAT collection.

RMO 5-2012

slide43

EFFECTIVE VAT RATIO (EVR)

Means the profit margin rate of an industry, as benchmarked, multiplied by the VAT rate fixed by law.

TAXPAYER PROFILING

Is a method of gathering data or information to determine the general view of what is actually occurring within a system. It covers extensive analysis of taxpayer data within a given line of industry to diagnose compliance bottlenecks.

RMO 5-2012

clarification on the audit program
CLARIFICATION ON THE AUDIT PROGRAM

In the absence of an annual audit program, the Commissioner has the authority to make assessments pursuant to Section6(A) of the Tax Code, as amended, to wit:

SEC.6. Power of the Commissioner to Make Assessments and Prescribe Additional Requirements for Tax Administration and Enforcement.-

(A) Examination of Returns and Determination of Tax Due.- After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer.

RMC 6-2013

clarification on tax agents practitioners
CLARIFICATION ON TAX AGENTS/PRACTITIONERS

The BIR, in accordance with Revenue Regulation 11-2006, as amended, can refuse to transact official business with tax agents/practitioners who are not accredited before it.

Therefore, all taxpayers are enjoined to ensure that the tax agents/practitioners whom they will engage are accredited with the BIR.

RMC 6-2013