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DIGEST OF 1999 REVENUE REGULATIONS

Revenue Regulation No. 1-99
Issued January 6, 1999 prescribes the rules and regulations for the
effective implementation of the tax incentives provided for qualified
jewelry enterprises under ection ! "b# and "d# of $epublic %ct &o' ()*+,
otherwise ,nown as the -Jewelry Industry .evelopment %ct of 199(-'
aid tax incentives are/ 1# exemption from excise tax of manufactured
and produced jewelries, if shown to have been purchased from a qualified
jewelry enterprise0 and +# additional deduction of )*1 for training
expenses incurred by qualified jewelry enterprises'
Revenue Regulation No. 2-99
Issued 2ebruary 9, 1999 establishes the policies and procedures for the
availment of immunity from audit and investigation of Income 3ax, 4%3
and 5ercentage 3ax returns filed for taxable year 1999( granted under the
6conomic $ecovery %ssistance 5ayment "6$%5# 5rogram' 3he
immunity from audit and investigation will not apply to withholding tax
returns "whether for Income, 4%3 or 5ercentage 3ax purposes#' In order
to avail of the immunity from audit and investigation, the taxpayer should
pay or should have paid 376&38 56$96&3 "+*1# or more than the
tax paid in 199: for Income 3ax, 4%3 and;or 5ercentage 3axes, including
basic deficiency taxes paid "in cases already audited#'
Revenue Regulation No. 3-99
Issued 2ebruary 1), 1999 amends $evenue $egulations &o' 1+<9( to
streamline and ma,e more efficient the collection of the creditable
withholding tax on income payments from medical practitioners'
pecifically, it will be the duty and responsibility of the hospital or clinic
to remit taxes withheld from/ a# professional fees paid directly to
hospitals or clinics by patients0 and b# professional fees paid by patients
directly to medical practitioners where the 1*1 expanded withholding
tax will in turn be given by medical practitioners directly to the
%ccounting =ffice of the hospitals or clinics' >ospitals and clinics are
required to submit the names and addresses of medical practitioners every
1)th day after the end of each calendar quarter to the 9ollection .ivision
of the $evenue $egion where such hospital or clinic is located'
?oreover, they will also be responsible for the accurate computation of
professional fees paid directly to hospitals and clinic and for the timely
remittance of the 1*1 expanded withholding taxes' 3he deadline for the
remittance of the collected withholding tax to the %ccredited %gent
@an,s of the @I$, whether paid directly to hospitals or clinic or paid
directly to medical practitioners, is on or before the 1*th day of the
following month from January to &ovember and January +)th for the
month of .ecember'
Revenue Regulation No. -99
Issued ?arch 16, 1999 further amends $evenue ?emorandum =rder &o'
6<9+ relative to the payment of 9apital Aains 3ax and .ocumentary
tamp 3ax on extrajudicial foreclosure sale of capital assets initiated by
ban,s, finance and insurance companies' 7here the right of redemption
of the mortgagor exists, the certificate of title of the mortgagor will not be
cancelled yet even if the property had already been subjected to
foreclosure sale' Instead, only a brief memorandum will be annotated at
the bac, of the certificate of title, and the cancellation of the title and the
subsequent issuance of a new title in favor of the purchaser;highest
bidder depends on whether the mortgagor will redeem or not the
mortgaged property within one year from the issuance of the certificate of
sale' 3hus, no transfer of title to the highest bidder can be effected yet
until and after the lapse of the one<year period from the issuance of the
said certificate of sale' In case the mortgagor exercises his right of
redemption within one year from the issuance of the certificate of sale, no
9apital Aains 3ax will be imposed because no capital gains has been
derived by the mortgagor and no sale or transfer of real property was
realiBed' In case of non<redemption, the 9apital Aains 3ax on the
foreclosure sale shall become due based on the bid price of the highest
bidder, but only upon the expiration of the one<year period of redemption,
and will be paid within thirty "!*# days from the expiration of the said
one<year redemption period' 3he corresponding .ocumentary tamp 3ax
will be levied, collected and paid by the person ma,ing, signing, issuing,
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accepting or transferring the real property wherever the document is
made, signed, issued, accepted or transferred where the property is
situated in the 5hilippines'
Revenue Regulation No. !-99
Issued ?arch 16, 1999 implements ection !C"6# of the 3ax 9ode of
199: relative to the requirements for deductibility of bad debts from
gross income of a corporation or an individual engaged in trade or
business or a professional engaged in the practice of his profession' 3he
requisites for valid deduction of bad debts from gross income are/ a# there
must be an existing indebtedness due to the taxpayer which must be valid
and legally demandable0 b# the same must be connected with the
taxpayerDs trade, business or practice of profession0 c# the same must not
be sustained in a transaction entered into between related parties
enumerated under ection !6"@# of the 3ax 9ode of 199:0 d# the same
must be actually charged off the boo,s of accounts of the taxpayer as of
the end of the taxable year0 and e# the same must be actually ascertained
to be worthless and uncollectible as of the end of the taxable year' 3he
recovery of bad debts previously allowed as deduction in the preceding
year or years will be included as part of the taxpayerDs gross income in the
year of such recovery to the extent of the income tax benefit of said
deduction'
Revenue Regulation No. "-99 issued %pril 19, 1999 extends the deadline
until July 1), 1999 for the availment of the immunity from audit or
investigation of Income 3ax, 4%3 and 5ercentage 3ax returns under the
6conomic $ecovery %ssistance 5ayment "6$%5# 5rogram' 9overed by
the extension are the following/ a# Income 3ax $eturns for the 3axable
8ear 199( "whether on calendar year or fiscal year basis#, due for filing
as of %pril 1), 19990 b# Income 3ax $eturns for the 3axable 8ear 199( of
corporations using the fiscal year accounting period which are due for
filing before July 1), 19990 and c# 4%3 and 5ercentage 3ax $eturns
covering all quarters of the calendar year 199('
Revenue Regulation No. #-99 issued %pril +*, 1999 further amends
$evenue $egulations &o' :<9), as amended, by specifying that for
computeriBed 4%3 taxpayers, the ummary Eists of ales and 5urchases
will be submitted in magnetic form "using !')<inch floppy dis,ettes# to
the $evenue .istrict =ffice having jurisdiction over the place of business
of the taxpayer, or through 6lectronic .ata 3ransmission to the &ational
=ffice Information ystems =perations ervice, on or before the last day
of the month immediately following the close of each calendar quarter'
3he list must conform to the magnetic file format prescribed in %nnex %
of the $egulations'
Revenue Regulation No. $-99
Issued ?ay 11, 1999 provides penalties for violation of the requirement
that output tax on sale of goods and services should not be separately
indicated in the sales invoice or official receipt' 3he amount appearing in
the sales invoices;receipts is thus deemed inclusive of the 4alue<%dded
3ax due thereon' 3he penalty for violation of the said requirement is a
fine of not less than =ne 3housand 5esos "5 1,***# but not more than
2ifty 3housand 5esos "5)*,***#, and imprisonment of not less than two
"+# years but not more than four "C# years'
Revenue Regulation No. 9-99
Issued ?ay +C, 1999 amends $?= &o' !*<99 by prescribing non<
resident citiBens, overseas contract wor,ers and seamen to file
information returns "@I$ 2orm 1:*19 or the new computeriBed 2orm
1:*!#' aid form, together with other relevant supporting papers, shall be
filed to the 2oreign 5ost or the $evenue .istrict =ffice which has
jurisdiction over the place of residence of the taxpayer not later than %pril
1) following the taxable year' 3he 199( returns filed after %pril 1) but
not later than July 1), 1999 will not be subject to penalty charges'
Revenue Regulation No. 1%-99
Issued %ugust +), 1999 prescribes the procedures for the application and
grant of permit to use cash register and point<of<sale machines in lieu of
registered sales invoices or receipts' 3he lines of business that may
qualify for the issuance of permits to use cash register and point<of<sale
machines are specified in the $egulations'
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Revenue Regulation No. 11-99
Issued %ugust !*, 1999 prescribes the issuance of 3axpayer Identification
&umber "3I&# to all taxpayers and qualified applicants, as well as the
mandatory incorporation of 3I& in government forms, papers or
documents'
Aovernment agencies and instrumentalities, government<owned and<
controlled corporations and local government units shall provide a space
for the 3I& in all registration and transaction forms or documents, and
shall require all applicants for government permit, license and official
papers to indicate their duly issued 3I& thereon' %s proof of possession
of a valid 3I&, the government agency may require the presentation of
the 3I& 9ard' 5rovided, however, that it will be sufficient for those who
do not yet have 3I& 9ards to present his;its application for 3I& duly
stamped by the @I$ "2orm 19*1, 19*+, 19*! and 19*C#' %fter the lapse
of six "6# months from the date of the effectivity of this $egulations, no
permit, license, clearance, or official documents will be released to an
applicant without a duly<issued 3I& or without proof of application
therefore'
FnauthoriBed production of 3I& 9ards or the use of spurious 3I& by any
person will be subject to criminal prosecution under %rticles 1:1 and 1:+
of the $evised 5enal 9ode' =nly one 3I& will be assigned to a taxpayer'
%ny person who secures and;or uses more than one 3I& will be
criminally liable or will be punishable by a fine of not more than =ne
3housand 5esos "5 1,***'**# or suffer imprisonment of not more than six
"6# months, or both pursuant to ection +:) of the 3ax 9ode of 199:'
Revenue Regulation No. 12-99
Issued eptember 1C, 1999 implements the provisions of the 3ax 9ode of
199: relative to the rules on assessment of national internal revenue
taxes, fees and charges, as well as provides the rules for the extra<judicial
settlement of a taxpayerDs criminal violation of the said 9ode or any of its
implementing $egulations through payment of a suggested compromise
penalty' %s a general principle, in case the tax due from the taxpayer is
paid on a partial or installment basis, the interest on the deficiency tax or
on the delinquency tax liability of the taxpayer will be imposed from due
date of the tax until full payment thereof' 3he interest will be computed
based on the diminishing balance of the tax, inclusive of interests'
Revenue Regulation No. 13-99
Issued eptember 1C, 1999 prescribes the regulations for the exemption
of a citiBen or a resident alien individual from the payment of the 61
9apital Aains 3ax on the sale, exchange or disposition of his principal
residence' In order for a person to be exempted from the payment of the
tax, he should submit, together with the required documents, a worn
.eclaration of his intent to avail of the tax exemption to the $evenue
.istrict =ffice having jurisdiction over the location of his principal
residence within "!*# days from the date of the sale, exchange or
disposition of the principal residence' 3he proceeds from the sale,
exchange or disposition of the principal residence must be fully utiliBed
in acquiring or constructing the new principal residence within eighteen
"1(# calendar months from the date of the sale, exchange or disposition'
In case the entire proceeds of the sale is not utiliBed for the purchase or
construction of a new principal residence, the 9apital Aains 3ax will be
computed based on the formula specified in the $egulations'
If the seller fails to utiliBe the proceeds of sale or disposition in full or in
part within the 1(<month reglementary period, his right of exemption
from the 9apital Aains 3ax did not arise on the extent of the unutiliBed
amount, in which event, the tax due thereon will immediately become
due and demandable on the !1st day after the date of the sale, exchange
or disposition of the principal residence'
If the individual taxpayerDs principal residence is disposed in exchange
for a condominium unit, the disposition of the taxpayerDs principal
residence will not be subjected to the 9apital Aains 3ax herein
prescribed, provided that the said condominium unit received in the
exchange will be used by the taxpayer<transferor as his new principal
residence'
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Revenue Regulation No. 1-99
Issued =ctober 1!, 1999 amends ection + of $evenue $egulations &o'
1C<9: relative to the imposition of 6xcise 3axes on automobiles and other
motor vehicles'
%utomobile is defined as a four "C# or more wheeled vehicle other than
truc,s or passenger jeepneys, which is propelled by gasoline, diesel,
electricity or any other motive power, and specially designed to transport
persons and not primarily to transport freight or merchandise' It will
include utility or light commercial vehicles designed for passenger use
with seats for less than ten "1*# passengers, including the driver'
4ehicles that do not have manufacturerDs certification and manufacturerDs
catalogues or brochures or whose manufacturerDs certification and
manufacturerDs catalogues or brochures do not contain the required
information or show that the vehicle do not meet the requirements of this
$egulation will be subject to tax as an automobile under ection 1C9 of
3ax 9ode'
Revenue Regulation No. 1!-99
Issued &ovember 1:, 1999 creates the $evenue $egional %ccreditation
@oard in each $evenue $egion and the $evenue &ational %ccreditation
@oard in the &ational =ffice' 3he %ccreditation @oards will act upon all
applications for accreditation by tax practitioners to practice before the
@ureau of Internal $evenue, as well as institute and provide for the
conduct of accreditation, suspension or dis<accreditation proceedings'
%ny action or decision of the $evenue $egional %ccreditation @oard
"$$%@# will only become final upon affirmation by the $evenue
&ational %ccreditation @oard "$&%@# and; or by the 9ommissioner'
3he accreditation requirements will apply to/ a# individual tax
practitioners engaged in private practice who are 9ertified 5ublic
%ccountants "95%#0 b# 95%<Eawyers who issue;sign auditorDs certificate
or otherwise perform functions exclusively pertaining to a 95%0 c#
individuals other than 95%s who meet the qualifications prescribed in the
$egulations0 d# partners of a general professional partnership engaged in
the practice of taxation, accountancy and;or auditing, including their duly
authoriBed officers or representatives who regularly appear or otherwise
engage in tax practice before the @I$ and e# officers or duly authoriBed
representatives of incorporated business entities engaged in accounting,
auditing or tax consultancy services' 3hose allowed to appear before the
@I$ without undergoing accreditation proceedings are/ a# individual<
taxpayers acting on their own behalf, provided they present satisfactory
identification0 b# members of the 5hilippine @ar not suffering from
suspension;disbarment and c# other individuals presenting satisfactory
proof of identification or authority in any one of the circumstances of
limited practice or special appearances specified in the $egulations'
Revenue Regulation No. 1"-99
Issued &ovember +!, 1999 amends $evenue $egulations &o' 1<9) and
other related rules and regulations relative to the grant of tax incentives to
enterprises registered in the ubic pecial 6conomic and 2reeport Gone'
pecifically, any multinational company whose purpose is to engage in
regional and;or international trade;services and business activities may
establish in the ubic pecial 6conomic and 2reeport Gone its seat of
management and the situs of its business transactions, including the
recording of its income, from some or all countries in the %sia<5acific
region and or other parts of the world, including the 5hilippines'
2or this purpose, the multinational company should register as a ubic
@ay $egional 6nterprise "@$6# with the ubic @ay ?etropolitan
%uthority' =nce registered, the @$6 will pay a tax of )1 on gross
income earned from business transactions in some or all of the countries
in the %sia<5acific region and;or other parts of the world, including the
5hilippines' 3he @$6 may generate revenues from sources within the
9ustoms 3erritory up to )*1 of its total revenues' 3he income generated
from the customs territory will be subject to the tax of )1 on gross
income earned, provided that, if the revenues derived from the customs
territory exceed )*1 of its total revenues, the excess of the income
generated by the $egional 6nterprise will be subject to the regular
income tax rates in the customs territory'
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Revenue Regulation No. 1#-99
Issued .ecember +:, 1999 implements ections 1C1, 1C+, 1C! and 1C)
"%# and "9# "1#, "+#, "!# and "C# of the &ational Internal $evenue 9ode of
199: relative to the increase of the 6xcise 3ax on distilled spirits, wines,
fermented liquors and cigars and cigarettes pac,ed by machine by twelve
percent "1+1# effective January 1, +***' 3he new rates of pecific 3ax to
be levied, assessed and collected are specified in the $egulations,
provided, that the new specific tax rate for any existing brand of cigars,
cigarettes pac,ed by machine, distilled spirits, wines and fermented
liquor will not be lower than the 6xcise 3ax that is actually being paid
prior to January 1, +***'
Revenue Regulation No. 1$-99
Issued .ecember +9, 1999 implements ection ) of the 3ax $eform %ct
of 199: and other pertinent provisions of the &ational Internal $evenue
9ode of 199: relative to the imposition of the 4alue<%dded 3ax on
services of ban,s, non<ban, financial intermediaries and finance
companies beginning January 1, +***' 3he output tax on the services
rendered by ban,s for financial intermediation, which is an implicit fee
hidden in the interest income and interest expense, will be computed by
multiplying the gross receipts from financial intermediation services by
1;11' Ei,ewise, the output tax on the sale of other services by ban,s, non<
ban, financial intermediaries and finance companies, the compensation
of which is explicitly charged from their customers "i'e' service charges,
commissions, rentals, etc'#, will be computed by multiplying the total
amount of gross receipts during the month or quarter by 1;11' 3he
treatment of the output tax shifted to the buyer of services and the
allowable input taxes are specified in the $egulations'
Revenue Regulation No. 19-99
Issued .ecember +9, 1999 implements ection ) of $epublic %ct &o'
(C+C and other pertinent provisions of the &ational Internal $evenue
9ode of 199: relative to the imposition of the 4alue<%dded 3ax
beginning January 1, +*** on the sale of services by persons engaged in
the practice of profession or calling and professional services rendered by
general professional partnerships0 services rendered by actors, actresses,
talents, singers and emcees0 radio and television broadcasters and
choreographers0 musical, radio, movie, television and stage directors0 and
professional athletes' 2or this purpose, a professional partnership will be
treated as a separate and distinct taxable person from the individual
partners composing the partnership' %ll gross receipts from the sale of
services rendered by the partners for and in the name of the partnership
will be entirely taxable against the partnership while sales of services
made by any of the partners in his personal and individual capacity will
not be attributed to the partnership, but will be taxable against such
partner in his individual capacity'