TAXDIGEST. AlasOplas credibilityandhonor defined. Volume7,Series44

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1 AlasOplas credibilityandhonor defined. TAXDIGEST Volume7,Series44 Thispublicationshouldnotbeusedortreatedasprofesionaladvice.Theinformationinthispublicationshouldnotbereliedto replaceprofesionaladviceonspecificmatersanditscontentsmustnotbeusedasbasisforformulatingdecisionsunderany circumstances.readersforthismaterialareadvisedtoseekprofesionaladvisebeforemakinganybusinesdecisionoryoumaycal andaskforthefultext.

2 REVENUE MEMORANDUM ORDER ACCREDITATION OF IMPORTERS AND CUSTOMS BROKERS The Department of Finance (DOF) by issuing DOF Department Order No , dated February 6, 2014, has ordered the Bureau of Internal Revenue (BIR) to conduct the accreditation of Importers and Customs Brokers, hence BIR s issuance of Revenue Memorandum Order No Coverage All individual, partnership, corporation and association already or will be engaged in importation or customs brokerage, unless exempted, should apply for accreditation with the BIR. If BIR approves the application, BIR Importer Clearance Certificated (BIR-ICCs) and BIR Customs Broker Clearance Certificates (BIR-BCCs) will be issued evidencing the accreditation. Requirements The following are the requirements for accreditation: Existence of Head Office or principal place of business Full compliance with all primary and secondary registration requirements No Stop-filer cases or records with the BIR No record or Accounts Receivable/Delinquent Account with BIR No record of pending tax evasion case with the BIR No unresolved assessments of undeclared income or expenses arising from third party matching of information from BIR s RELIEF System and Tax Reconciliation System Not labelled as Cannot Be Located (CBL) taxpayer No material misrepresentation in the documents submitted related to the accreditation. If there are subsequent material changes with the submitted documents, the applicant should report the same with the BIR Accounts Receivable Monitoring Division (ARMD) within ten (10) days from the date of change. The following events are considered material changes: a. b. c. d. Change of ownership, corporate officers, member of the board, or partners Change of address of the HO, Branch or facility Amendments to the Articles of Incorporation/ Partnership/Cooperation approved by SEC or CDA Mergers, consolidation and other forms of 9. e. corporate restructuring Temporary or permanent closure, cessation, stoppage of operation Not filing of notice of material change may be a ground for revocation or cancellation of accreditation or an evidence against the applicant of intention to use accreditation status to commit fraud. Regular use of the Electronic Filing and Payment System (efps) and Inter-Active Forms (IAF) system for filing the tax returns and payment of taxes due. 10. On time electronic submission of required information returns such as Summary list of Sales, Purchases and Importations (SLSP), BIR Form 1604 CF, BIR Form 1604E which should have passed the BIR system validation. Where and who to File Importers and customs brokers shall personally file application for accreditation with the office of the ARMD using the Application Form for Accreditation of Importer/Customs Broker, signed by the applicant and not a representative, and attach all supporting documents under the RMO. If the applicant is a partnership the application shall be signed by any of the partners or if it is corporation/association/other non-individual the signatory shall be any responsible and ranking officer authorized to do such task contained in a Board Resolution with Secretary s Certificate of the minutes of the resolution. Basic Supporting Documents 1. Certified true copy of the BIR Certificate of Registration (COR) of the HO and Branches, if any 2. Authenticated copy of recently filed ITR, audited FS and others documents 3. Certified true copy of Mayor s Business Permit issued to the HO by the Local Government Unit of the HO s official place of business 4. Proof of ownership or lawful occupation of the registered address, e.g. certified true copy of the Original Certificate of title or certified true copy of the contract of lease 5. Vicinity map, location plan 6. Photocopy of latest utility bill 7. Photocopy of the Official Receipt for the payment of accreditation processing and certification fee of P2,

3 For the full list of requirements, please refer to the RMO. Notices Order Of Payment This shall be issued to the applicant with complete supporting documents for the payment of the processing and certification fee. The application shall be stamped received after payment and attachment of the copy of the OR. Notice for Submission of lacking documents This is a letter notifying the firs-time applicant of the incompleteness of the requirement and to submit the missing documents before processing of the application. Notice of Denial of Application for accreditation as an Importer/Broker (BIR-NDAIB) This shall be issued to applicants who are denied of the application stating the reason/s for denial after validation of the documents. The applicant may, however, file another application when the cause/s of the denial is/are non-existent. Preliminary Notice of Dis-accreditation (BIR-PND) This notice is issued to applicants for dis-accreditation stating the reason or findings for the cancellation of accreditation. The applicant however is given thirty (30) working days to comply or correct any causes of the dis-accreditation and submit proof of compliance and correction. 5. Notice of Dis-accreditation as an Importer/ Customs Broker (BIR-NDIB) This shall be issued to applicants who after being issued BIR-PND, were not able comply with the requirements after thirty (30) days. This notice shall clearly state the cause/s of the cancellation and shall be effective on the date as appearing on the notice. The applicant may re-apply for accreditation after one (1) year from the date of effectivity of the BIR-NDIB. Transitory Provisions Accreditation certificates issued by BOC s Interim Customs Accreditation and Registration Unit (ICARE Unit) before the date of effectivity of the RMO are still valid until their expiration dates. Renewal of application should be processed by the importer/customs broker three (3) months before the accreditation expires. The applications filed with ICARE when the DO No has become effective shall be forwarded to the BIR and shall have priority over the new applications. Because of the new accreditation policies, the ARMD shall immediately notify the applicants to comply within fifteen (15) days after receipt of notice. Pending applications for accreditation filed with ICARE before effectivity of the new accreditation policies shall still be processed by the BOC. Revenue Memorandum Order No , dated February 10, 2014 REVENUE MEMORANDUM CIRCULAR CLARIFICATIONS TO RR NO ON TAX ASSESSMENTS 1. Duly Authorized Representative Revenue Regulations No states that the Commissioner or his duly authorized representative shall be the only ones to issue the Preliminary Assessment Notice (PAN), Formal Letter of Demand/Formal Assessment Notice (FLD/FAN) and Final Decision on Disputed Assessment (FDDA). The RMC seeks to clarify that the term duly authorized representative shall refer to the Revenue Regional Directors, Assistant Commissioner-large Taxpayers Service and Assistant Commissioner-Enforcement and Advocacy Service. Consequently, taxpayers shall file their reply to the PAN, protest letters and request for consideration and/or reinvestigation to the FLD/FAN with the aforementioned representatives of the Commissioner who signed the PAN, FLD/FAN. All protests for reconsideration which were elevated to the Commissioners because of inactions or unfavourable decisions by the duly authorized representatives must be filed with the Office of the Commissioner. 2

4 2. Voluntary Payments The taxpayer may be allowed to pay probable deficiency taxes and related interests, surcharge and compromise penalty before the PAN is issued. 3. Disputed Protests An issued FLD/FAN reiterating the immediate payment of deficiency taxes and penalties following taxpayer s protest to PAN is a denial of the reply to the PAN. While a final demand letter for payment of delinquent taxes issued to a taxpayer is a decision on a disputed assessment, including a PAN. 4. Validity of FDL/FAN issued beyond 15 days A FLD/FAN issued is valid even if it has exceeded 15 days after filing of the protest to PAN as long as it is issued within the period provided in the Tax Code. However, the issuance is considered as an administrative infraction and the revenue officers who caused the delay shall be subjected to applicable administrative sanctions Request for Reinvestigation The FLD/FAN under request for reinvestigation shall become final if the taxpayer who requested the reinvestigation is unable to present all necessary documents within sixty (60) days. If the FLD/FAN is final, the taxpayers is prohibited from disputing the assessment even if new evidence is uncovered because the taxpayers has lost the chance to present evidence. Place and timing issue The PAN, FLD/FAN and FFDA is to be issued to taxpayers as follows: a. first to the taxpayer s registered address before his/its known address; or b. at the same time to taxpayer s registered address and known address. Revenue Memorandum Circular No , dated February 4, 2014 ADDED FUNCTIONS OF DOF-FIU The RMC hereby issued to circulate Executive Order (EO) No. 155, dated December 18, 2013, which amended EO No. 160 (s. 2003) and for other purposes. Based on the power of the President, Benigno S. Aquino III, to recognize government offices and agencies in the Executive Branch, the following has been ordered: A. Amendment of EO No. 160 Executive Order No. 160 (s. 2003) is amended to order the Fiscal Intelligence Unit created under the Deparment of Finance (DOF-FIU) to execute functions of the Post Entry Audit Group (PEAG) and other inherent and incidental functions in: a. Trade Information and Risk Analysis Office; and b. Compliance Assessment Office B. Winding Up of Operations of PEAG Post Entry Audit Group (PEAG) shall cease its operation and transfer its functions, assets and liabilities, following the Rules and Regulations Implementing EO No. 72 (s. 2002) Rationalizing Agencies Under or Attached to the Office of the President. The employees of PEAG shall then be transferred to the Bureau of Customs. The Department of Budget and Management together with other government agencies concerned shall be liable for the smooth and efficient cessation of operation of PEAG. Revenue Memorandum Circular No , dated February 4, 2014 PROHIBITION OF OUT-OF-DISTRICT FILING RMC No , dated March 3, 2014, is circulated to remind taxpayers of the following protocols in the filing of 1700 and 1701 Annual Income tax Return and related payments thereto. Coverage The following individuals from public offices shall no longer be allowed out-of-district filing: a. Members of Armed Forces of the Philippines (AFP); b. Members of the Philippine National Police (PNP); and c. Public School Teachers/Professors/Instructors. Penalties Sanctions provided under Section 7 of Revenue Regulations (RR) No , dated November 25, 2010, shall be served to any revenue officer who is found violating the above rule. Revenue Memorandum Circular No , dated March 5,

5 EFFECTIVITY OF PHILIPPINES-NIGERIA TAX TREATY RMC No , dated March 14, 2014, was issued to inform all concern about the double taxation agreement entered into between the Government of the Republic of the Philippines and the Government of the State of the Federal Republic of Nigeria. Date of Effectivity The agreement mentioned above takes effect on August 18, 2013 but shall apply to income received and accrued starting January 01, Filing of TTRA Taxpayers applying for TTRA based on the Philippines-Nigeria Double Taxation agreement shall address their request to the International Tax Affairs Division (ITAD) at Room 811, Bureau of Internal Revenue, National Office Building, Diliman, Quezon City, Philippines. The Applicant or his/its duly authorized representative shall accomplish BIR Form 1901, Application for Relief from Double Taxation, and the required documents listed in the form in accordance with Revenue Memorandum Order (RMO) No Revenue Memorandum Circular No , dated March 14, 2014 COURT DECISION TIMING OF FILING OF JUDICIAL CLAIM FOR REFUND/TAX CREDIT Under Section 112 (A) of the National Internal Revenue Code (NIRC) of 1997, any VAT registered person whose sales are zero-rated or effectively zero-rated may file for claim for tax refund of excess creditable input tax due within two (2) years after the close of the taxable quarter when the sales were made. In a recent decision by the Supreme Court, the court held that a taxpayer may not file a judicial claim for refund/tax credit with the CTA without compliance with the 120-day mandatory period given to the Commissioner of Internal Revenue (CIR) to decide the claim for refund/tax credit or until BIR issued its decision denying in full or in part the claim for refund/tax credit. Exception to the above rule is for those claims for refund/tax credit filed prior to the SC decision on the case CIR v. Aichi Forging Company of Asia, Inc. dated October 6, 2010 which relied on the BIR ruling DA which provided that judicial claim for refund/tax credit with the CTA notwithstanding the 120-day mandatory period had not yet lapsed. In the same decision, it was cleared that the judicial claim for refund/tax credit need not necessarily be within the 2-year prescriptive period. The 2-year prescriptive period is only applicable to administrative claim for refund/tax credit. (G.R. No , Commissioner of Internal Revenue v. Team Sual Corporation, February 5, 2014) 4

6 TMAP FILED PETITION vs RR Tax Management Association of the Philippines (TMAP) filed its position paper last February 21, 2014 to the Bureau of Internal Revenue (BIR) through Commissioner Kim Jacinto-Henares, appealing the new alphalist requirements under BIR Revenue Regulation (RR) RR released last January 10, 2014 amended the requirement in submission of alphabetical list of employees/payees of income payments. The said regulation prescribed a format of Alphalist and mandated to be submitted electronically through (1) efps as attachment, (2) BIR website address at esubmission@bir.gov.ph or (3) the dedicated BIR address per Revenue District Office (RDO). A separate issuance by the BIR provided also that failure to comply with the new Alphalist requirements will make the related expenses non-deductible for income tax purposes. In the position paper filed, TMAP expressed that the disallowance for deductibility of the expense due to non-compliance in the prescribed format is an excessive exercise of quasi-legislative power of the BIR. TMAP also believes that the tax-measure is oppressive and confiscatory, which is tantamount to violation of the due-process principle of the law. RR which mandates the electronic submission of the Alphalist is said to be discriminatory given the limited internet accessibility in the country. TMAP recommended withdrawing the provision imposing the disallowance of expense due to non-compliance with the required format and to continue to allow the manual submission of Alphalist for Small and Micro Business enterprise including those with less than 10 employees. TMAP is an association of tax consultants and corporate tax practitioners, which aims to professionalize tax practice and provide channel by which the private sector may actively participate in the drafting of tax laws, rules and regulations. TMAP seeks greater fairness in the tax system by upholding taxpayers rights and promotingtaxpayers responsibilities in order for the Philippines to achieve higher level of compliance among taxpayers. CONTACT PERSON Mr. Donnies T. Alas Chairman & CEO E: donniesalas@alasoplascpas.com Ms. Marycris S. Oplas Senior Partner E: marycrisoplas@alasoplascpas.com Ms. Glesie R. Martinez Partner, Audit & Assurance - Cavite E: glesiemartinez@alasoplascpas.com Ms. Nessa S. Oplas Branch Manager - Bacolod E: nessaoplas@alasoplascpas.com Tax Digest by: Tax Advisory Services / Client Continuity & Communication Team For clarification, tax queries or if you need our assistance in securing BIR ruling, you may call us at telephone number (632) or us at aocheadoffice@alasoplascpas.com or visit us at our website Francis P. Alita, Senior Associate Tax Advisory Services 5