COURSE OUTLINE: UPDATES IN TAXATION: BIR REGULATIONS, MEMORANDUM CIRCULARS and ORDERS ; As of CY EDSA Shangri-la Hotel, Mandaluyong City, M.M.

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1 COURSE OUTLINE: UPDATES IN TAXATION: BIR REGULATIONS, MEMORANDUM CIRCULARS and ORDERS ; As of CY 2014 DATE: 27 January :00 AM TO 5:00 P.M. VENUE: EDSA Shangri-la Hotel, Mandaluyong City, M.M. I. 8:00 AM to 10:00 A.M. COMPLIANCE/DOCUMENTATION/GUIDELINES 1. Clarifying the provisions of RR on the use of E-TRA; (RMC ); 2. Requirements for Issuance of Certification for Outstanding Tax Liabilities for purposes of tax refund, Cash Conversion of TCC s and Vat Monetization; (RMC ) (RMC ); 3. Prescribing the Uniform Format and Procedures for the Issuance of Certifications on the Existence of Outstanding Tax Liabilities of Taxpayers (RMO ) 4. Prescribing the Mandatory Use of Electronic Bureau of Internal Revenue Forms (ebirforms) in Filing of All Tax Returns by Non-Electronic Filing and Payment System (Non-eFPS) Filers Particularly Accredited Tax Agents/Practitioners, Accredited Printers of Principal and Supplementary Receipts/Invoices, and One-Time Transaction (ONETT) Taxpayers; (RR ) 5. Prescribing the Uniform Guidelines and Procedures in the Remittance of All Taxes Withheld by National Government Agencies (NGAs) to the Bureau of Internal Revenue (BIR) Through the Use of Electronic Tax Remittance Advice (etra) System; (RMO ); 6. Use of eorb as replacement for manual preparation and submission of Official registry Books of taxpayers subject to excise taxes such as, manufacturers of cigars, cigarettes, cigarette paper, etc.; (RR ) 7. Prescribing the Machine Identification Number (MIN) Sticker For the Use of Cash Register Machines (CRM), Point-of-Sale (POS) System Machines and/or Business/Sale Machines Generating Receipts/Invoices; All CRM, POS and Other Similar Business Machine Suppliers/ Distributors/ Retailers, All Business Establishments and All Internal Revenue Officers and Others Concerned; (RR ) 8. Amending Certain Provisions of Revenue Memorandum Order No , Prescribing the Policies and Procedures in the Accreditation of Cash Register Machine (CRM), Point of Sale (POS), Other Sales Machines (RMO ); 9. Amending RR : Preservation of Books of Accounts and Other Accounting Records for a period of ten years; Hard copies for the first five years and soft copies for the last five years; (RR ); 10. Returns/Forms 1701 and 1702 for self-employed individuals, with income from compensation and business; (MC ) 11. Guidelines in the Filing, Receiving and Processing of Taxable Year 2012 Income Tax Returns (ITRs) 1701 and 1702, and Prescribing the Additional Attachment of the Regular Allowable Itemized Deductions to BIR Form; (MC )

2 2 12. TENTATIVE RETURNS: Tentative Tax Return shall be considered as a final return, unless a final amended return is filed by the concerned taxpayer. However, once an electronic Letter of Authority or any other notice of audit is received, taxpayers are barred from making amendments to the tentative tax returns filed. This emphasizes that income tax returns marked as Tentative may also be the subject of examination pursuant to Section 6(A) of the Tax Code, as amended. (MC ) 13. Clarifying the Validity of Unused/Unissued Principal and Supplementary Receipts/Invoices Printed Prior to January 18, 2013 and other matters; (MC ) 14. List of accredited printers of receipts; (MC ) 15. Documentary requirements for application for registration of self-employed individuals, estates, and trusts; for local employees; and corporations, associations, cooperatives; purely TIN Issuance; transfer of RDO registration; and cancellation of TIN registration; (MC ) 16. Requirements for Alpha List of suppliers for creditable and withholding tax purposes;(rr ) 17. Filing of New ITR Forms; Mandatory Itemized deductions; (RR ) 18. Guidelines in the Filing and Receiving of new BIR forms 1701 to 1702; (MC ) 19. Guidelines, procedures and requirements for requests for BIR rulings; (RMO ); 20. Prescribing the Affixture of Internal Revenue Stamps on Imported and Locally Manufactured Cigarettes and the Use of the Internal Revenue Stamp Integrated System (IRSIS) for the Ordering, Distribution and Monitoring Thereof. (RR ) 21. Amending the Provisions of Revenue Regulations No AND penalties; No later than November 1, 2014, all locally manufactured packs of cigarettes shall be affixed with the internal revenue stamps prescribed by these Regulations; Effective March 1, 2015, all locally manufactured cigarettes found in the market shall be affixed with the said stamps. No imported cigarettes shall be found in the market without the new stamps effective April 1, 2015; provided, however, that even prior to such date, imported cigarettes should bear either the old stamps or the new stamps; (RR ); 22. Further amending RR , extending the period from March 1, 2014 to December 1, 2014 (RR ); 23. Amending Policies, Guidelines and Procedures in the Issuance of Importer s Clearance Certificate and Customs Broker s Clearance Certificate Relative to Accreditation as Importer/Customs Broker( RMO ); II. 10:00 A.M. to 10: 15 A.M. BREAK III. 10:15 A.M. TO 12:00 Noon TAXABILITY OF TRANSACTIONS/PERSONS

3 3 1. Tax treatment of Special Allowance for the Judiciary (SAJ); (RMC ) 2. Applicability of RMC to general professional partnerships (GPP s); (RMC ); 3. Tax treatment of Stock Option Plan; ( RMC ); 4. Tax Treatment of Sale of Jewelry, Gold and Other Metallic Minerals to a Nonresident Alien Individual Not Engaged in Trade or Business within the Philippines or to a Nonresident Foreign Corporation; Prescribing advance payment of business and income taxes and actual payment of excise tax by those who sell jewelry, gold and other metallic minerals to nonresident individuals not engaged in business within the Philippines and/or the nonresident foreign corporations; (RR ) 5. Requiring contractors with government contracts for infrastructure to submit application for contractor s final release certificate; (RMC ); 6. Inclusion of Real Estate Service Practitioners (i. e. Real Estate consultant, Appraiser and Broker) Who Passed the Licensure Examination given by the Real Estate Service under the Professional Regulations Commission as Among Those Professionals Falling Under Section (A)(1) of RR 2-98, as Amended, and RR as Regards Income Payments to Certain Brokers and Agents; (RR ) 7. Tiangges, etc.: New rules on the collection of business and income taxes including withholding tax on income payments by/to privilege stores popularly known as tiangge/s and the obligations of organizers or exhibitors of space for the operation of privilege stores as well as the obligations of the privilege store operators; (RR ) 8. Association dues in homeowner s association: requirements for taxability and/or exemption from income tax and VAT of association dues of homeowner s association; Exemption under RA 9904; (MC ) 9. Employees of Embassies, diplomatic missions, international organizations: Taxation of Compensation Income of Philippine Nationals and Alien Individuals Employed by Foreign Governments/Embassies/ Diplomatic Missions and International Organizations Situated in the Philippines; (MC ) 10. Donations to Homeowner s Association: Clarifying the Taxability of Donations given to Homeowners Association of Subdivisions and Villages; (MC NO ): 11. Online Business Transactions: a. Business to Consumer ( B2C ): which involves online stores selling goods and services to final consumers; b. Consumer to Consumer ( C2C ); and c. Business to Business ( B2B ): which encompasses job recruitment, online advertising, credit, sales, market research, technical support, procurement and different types of training. (MC NO ) 12. Service fees of Professionals; (RR )

4 4 Policies and Guidelines 13. Marginal Income Earner (MIE) - individual whose business do not realize gross sales or receipts exceeding P100,000 in any 12 month period. (MC ) 14. CGT on sale of shares of stocks held as capital asset: Rules on the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock Held as Capital Assets, using FMV of shares of stocks as determined by the BIR, as fixed by the Assessor, or as determined by an Independent Appraiser; (RR ) IV. 12:00 noon to 1:00 P.M. LUNCH V. 1:00 P.M. to 3:00 P.M. A. DEDUCTIONS FROM GROSS INCOME: 1. Concept of deductions; (NIRC provisions) 2. Allowable deductions; (NIRC provisions) 3. Requirement for deductions from gross income to be deductible, it must be shown that the corresponding withholding taxes have been withheld and paid to the BIR. Deductions shall not be allowed notwithstanding payment during investigation/reinvestigation/reconsideration where no withholding tax was paid; (RR ) 4. Rules on deductibility of depreciation purchase of motor vehicles and related expenses, and allowed input taxes therefor; (MC ) B. WITHOLDING TAXES 1. Withholding taxes defined; (NIRC) 2. Procedures for WT; (NIRC); 3. Professional Fees of medical practitioners; rates, procedures, for doctors and hospitals; (RR ) (a) Professional fees paid to medical practitioners. (b). It shall be the duty and responsibility of the hospitals, clinics, HMOs and similar establishments to withhold and remit taxes due on the professional fees of their respective accredited medical practitioners, paid by patients who were admitted and confined to such hospitals and clinics.. Exception C. TAX EXEMPTION/INCENTIVES 1. Concept; (NIRC; Supreme Court Rulings) 2. Guidelines for exemption under Section 30, NIRC; ( NIRC, Supreme Court Rulings) 3. Guidelines, policies and procedures, documentation, requiring all hospitals and non-stock non-profit organizations operating hospitals to secure the revalidated tax exemption certificate, corresponding procedures; all rulings

5 5 issued prior to Nov 1, 2012 providing for tax exemption of hospitals are no longer valid; (MC ) 4. New PEZA guidelines on tax incentives granted to tourism economic zones and locators; (MC ) 5. Philippine Canine Club, Inc.; tax exemption is revoked; Section 30, NIRC, paragraph (c); requirements for tax exemption; in the course of trade or business defined to qualify for the exemption; (MC ) 6. Documentary Requirements for Applications for Tax Exemption and Revalidation; additional Documentary requirements for educational institutions; guidelines in the evaluation of grant of tax exemption under Section 30, NIRC; Corporations and associations enumerated under Section 30 of the NIRC, as amended, including those which have been issued tax exemption rulings/certificates prior to June 30, 2012, shall file their respective Applications for Tax Exemption/Revalidation with the Revenue District Office (RDO) where they are registered. Only corporations or associations that are duly qualified under Section 30 of the NIRC, as amended, shall be issued Tax Exemption Rulings; (RMO ); 7. Clarifying Certain Provisions of Revenue Memorandum Order (RMO) No , as amended by RMO No , on the issuance of Tax Exemption Rulings for Qualified Non-Stock, Non- Profit Corporations and Associations under Section 30 of the National Internal Revenue Code of 1997, as amended. (RMO ); 8. Requirement for presentation of tax exemption certificate for withholding taxes, compensation income by income exempt entities; (MC ) 9. Foster Parents: (A). Additional Exemption for Dependents B. Incentives to Agencies. a. Exemption from Income Tax b. Qualification as a Donee Institution C. Incentives to Donors D. Exemption from Donor s Tax VI. VII. BREAK - 3:00 P.M. to 3:15 P.M. 3:15 P.M. to 3:30 P.M. A. RECIPROCITY RULE: 1. Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing other Taxes B. VALUE ADDED TAX (VAT) Recovery of Unutilized Creditable Input Taxes Attributable to VAT Zero-Rated Sales C. ESTATE TAX Clarification on the Proper Accomplishment and Filing of Estate Tax Returns; Responsibilities of the Heir/Executor/Administrator; Responsibilities of the RDO and Document Processing Division (DPD) VIII. 3:30 P.M. to 5:00 P.M.

6 6 A. ASSESSMENTS/PROCEDURES: 1. Pertinent NIRC provisions; (NIRC) 2. Concept of PAN, FAN; (NIRC) 3. Procedure in the issuance of a deficiency tax assessment; 4. Audit, assessment, and protesting deficiency assessments; legal petition Notices (LPN) questioning Letters of Authority to Investigate; a. Procedures on ISSUANCE OF PRELIMINARY ASSESSMENT NOTICE (PAN), FORMAL LETTER OF DEMAND (FLD) AND FINAL ASSESSMENT NOTICE (FAN) b. RESPONSIBILITY OF TAXPAYERS ON THEIR LPN 5. Prescribing guidelines for receipt of protest letters form taxpayers B. ABATEMENT/COMPROMISE OF TAX 1. Concept of Abatement/Compromise (NIRC provisions); 2. Requirements and Scope of Abatement of Surcharges, Interests and Compromise Penalties for employees of embassies, international organizations, diplomatic missions 3. Payment of the amount offered as compromise settlement even prior to approval of compromise, requirements, procedures C. AUDIT GUIDELINES 1. Procedure for Guidelines; ( NIRC) 2. Audit of Tax Returns by Revenue District Offices; 3. Policies and guidelines in the continuing audit of tax returns by the Revenue District Offices; 4. All taxpayers are considered as possible candidates for audit; 5. Priority shall be given to the following taxpayers: 1. Professionals and sole proprietorships 2. Those engaged in but not limited to the industries (to be discussed). 3. Those who fall below the established benchmarks of tax compliance; 4. Those who maintained an ending inventory with value of 100% or more of its gross sales; (RMO ) D. SUBPOENA DUCES TECUM (SDT) 1. Materiality of Subpoena Duces Tecum; (NIRC) 2. Revised Guidelines and Procedures in the Issuance and Enforcement of Subpoenas Duces Tecum and the Prosecution of Cases for Non-Compliance; 3. Amendments to RMO on issuance of subpoena duces tecum; new guidelines and procedures E. OTHER MATTERS: APPLICATION OF BIR Rulings: 1. Nature of BIR Rulings; (NIRC, Supreme Court Cases) 2. Rules on Application of BIR Rulings; (NIRC, Supreme Court Cases) 3. Non-Retroactivity of Rulings