Day 1 Material Slides

HOW TO REDUCE
TAX LEGALLY AND

ETHICALLY (WITH
TAX UPDATES)
ATTY. ARNOLD A. APDUA, CPA
Managing Partner, AAA AND CO., CPAS
(Former BIR Revenue Officer)
Sharing competitive edge for success


Arnold Apdua has eighteen (18) years of meaningful experience in tax practice, including
seven (7) years as Revenue Officer of the Bureau of Internal Revenue (BIR) and eleven
(11) years as tax practitioner. He is the Managing Partner of AAA and Co., CPAs and owner
of Bizmaker Tax and Accounting Consultancy Services.
He was a tax lawyer of Quasha, Ancheta, Peña and Nolasco Law Office. He was also a
professor at the University of Asia and the Pacific, University of the East and Pamantasan
ng Lungsod ng Maynila, where he taught accounting and taxation.
He is a resource person and speaker for various Continuing Professional Development

(CPD) tax seminars conducted by the following:
Philippine Institute of Certified Public Accountants (PICPA);

Asian Institute of Taxation (AIT);
Association of Certified Public Accountants in Commerce and Industry (ACPACI);
Association of Certified Public Accountants in Public Practice (ACPAPP);
Philippine Association of Management Accountants (PAMA);
University of Asia and the Pacific;
PowerMax Consulting Group;
Indu Inferentia Training Center;
IAM Training Center;
Moores Rowland Philippines; and
Various auditing firms.

INVITED AS RESOURCE SPEAKER OF:
PHILIPPINE INSTITUTE OF CERTIFIED

PUBLIC ACCOUNTANTS
- Agusan Del Norte / Butuan Chapter

- Albay Chapter
- Angeles Chapter
- Bukidnon Chapter
- Bulacan Chapter
- Cabanatuan Chapter
- Cagayan De Oro - Misamis Oriental Chapter
- Camarines Sur Chapter
- Cavite Chapter
- Cebu Chapter Atty. Arnold A. Apdua, CPA


PUBLIC ACCOUNTANTS
- Davao Chapter
- Davao Del Norte and Comval Chapter
- La Union Chapter
- Laguna Chapter
- Lanao Del Norte / Iligan City Chapter
- Lipa City Chapter
- Negros Occidental Chapter
- Negros Oriental Chapter
- Northern Metro Manila Chapter
- Olongapo Chapter Atty. Arnold A. Apdua, CPA


PUBLIC ACCOUNTANTS
- Pampanga Chapter
- Pangasinan Chapter
- Quezon Province Chapter
- San Pablo City Chapter
- Santiago City Chapter
- Southern Metro Manila Chapter
- Tarlac Chapter Chapter
- Western Metro Manila Chapter Atty. Arnold A. Apdua, CPA

ACCOUNTING ORGANIZATIONS / FIRMS
Laguna Association
Association of CPAs in
of Local Government
Mindanao (ACPAMIN) Accountants (LALGA) Atty. Arnold A. Apdua, CPA

PROFESSIONAL / BUSINESS ORGANIZATIONS
United Architects Philippine Dental

of the Philippines Association
(UAP) (PDA)
The Philippine Philippine

College of Hospital Association of Real
Administrators, Inc. Estate Brokers
(PCHAI) (PAREB)
Business Network
International (BNI)
Atty. Arnold A. Apdua, CPA

CORPORATE / NON-PROFIT ENTITIES
Rotary
International
Coconut
Industry
Investment Fund

SCHOOLS / UNIVERSITIES

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FOR OUR CONTACT DETAILS:

TAX EVASION AND

TAX AVOIDANCE
Email: services@aaacpas.com.ph
Sharing competitive edge for success.

TAX EVASION AND TAX AVOIDANCE
“Tax evasion connotes fraud through the use of pretenses

and forbidden devices to lessen or defeat taxes. On the
other hand, tax avoidance is a legal means used by the
taxpayer to reduce taxes.” (Benny v. Commr., 25 T. Cl. 78)
Sharing competitive edge for success Email: services@aaacpas.com.ph

TAX EVASION AND TAX AVOIDANCE
“Tax evasion connotes the integration of three (3) factors:
• The end to be achieved;
• An accompanying state of mind which is described as “evil”,

in “bad faith”, “willful” or “deliberate and not accidental”; and
• A course of action or failure of action which is unlawful.

 

EXAMPLES OF TAX EVASION

1. Non-filing of tax return/s
2. Non-payment of required taxes
3. Under-declaration of income by more than 30% percent
of the declared income per return
4. Deliberate overstatement of amount of deductions by
more than 30% of actual deductions

EXAMPLES OF TAX EVASION
5. Personal expense claimed as business expense

6. False deductions in computing income tax
7. Failure to officially register with BIR
8. Maintaining more than one set of books of accounts
9. False entries in the books and records

REDUCING TAX PAYMENTS

LEGALLY AND ETHICALLY
TAX MINIMIZATION STRATEGIES

PAY THE CORRECT TAXES TO
AVOID PENALTIES
DEFICIENCY TAX COMPUTATION
SAMPLE COMPUTATION OF PENALTIES

BASIC DOCUMENTARY STAMP TAX (2016) 100,000.00
ADD: PENALTIES
SURCHARGE (25%) 25,000.00
INTEREST - 20% (1.6.17 TO 12.31.17) 19,726.03
INTEREST - 12% (1.1.18 TO 12.31.18) 12,000.00
COMPROMISE PENALTY 15,000.00 71,726.03
TOTAL DEFICIENCY DOCUMENTARY STAMP TAX 171,726.03

DEFICIENCY TAX COMPUTATION
SAMPLE COMPUTATION OF PENALTIES (FRAUDULENT)

BASIC DOCUMENTARY STAMP TAX (2016) 100,000.00
ADD: PENALTIES
SURCHARGE (50%) 50,000.00
INTEREST - 20% (1.06.17 TO 12.31.17) 19,726.03
INTEREST - 12% (1.1.18 TO 12.31.18) 12,000.00
COMPROMISE PENALTY 0.00 81,726.03
TOTAL DEFICIENCY DOCUMENTARY STAMP TAX 181,726.03

SUBJECT TRANSACTIONS TO
LEAST TAX RATES
PERSONAL INCOME TAX RATES
Effective January 1, 2018 until December 31, 2022
RANGE OF TAXABLE INCOME TAX DUE = a+ (b x c)
BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 20% 250,000.00
400,000.00 800,000.00 30,000.00 25% 400,000.00
800,000.00 2,000,000.00 130,000.00 30% 800,000.00
2,000,000.00 8,000,000.00 490,000.00 32% 2,000,000.00
8,000,000.00 - 2,410,000.00 35% 8,000,000.00

PERSONAL INCOME TAX RATES

Effective January 1, 2023 and onwards:
RANGE OF TAXABLE INCOME TAX DUE = a+ (b x c)
BASIC ADDITIONAL OF EXCESS
OVER NOT OVER AMOUNT RATE OVER
(a) (b) (c)
- 250,000.00 - -
250,000.00 400,000.00 - 15% 250,000.00
400,000.00 800,000.00 22,500.00 20% 400,000.00
800,000.00 2,000,000.00 102,500.00 25% 800,000.00
2,000,000.00 8,000,000.00 402,500.00 30% 2,000,000.00
8,000,000.00 - 2,202,500.00 35% 8,000,000.00

SUMMARY OF CORPORATE RATES

The higher between the “Regular” or “Minimum Corporate
Income Tax (MCIT)” rates
Type of Corporation
Regular MCIT
Rate Effectivity Rate Effectivity
Domestic Corporation:
1% July 1, 2020 to June

30, 2023
Domestic corporations, in general 25% July 1, 2020
2% July 1, 2023
SUMMARY OF CORPORATE RATES

Type of Corporation
Regular MCIT
Domestic Corporation:
20% July 1, 2020 1% July 1, 2020 to June
For corporations with net taxable income
not exceeding Five Million Pesos 30, 2023
(P5,000,000) AND total assets not
exceeding One Hundred Million 2% July 1, 2023
(P100,000,000), excluding the land on
which the particular business entity's
office, plant and equipment are situated
CORPORATE TAX RATES

Type of Corporation
Regular MCIT

1% July 1, 2020 to June Not Applicable
30, 2023
Proprietary Educational Institutions and
Hospitals
10% July 1, 2023
CORPORATE TAX RATES

Type of Corporation
Regular MCIT

Foreign Corporation [on taxable income (e.g. net or gross income, as applicable)
derived from all sources within the Philippines]:
25% July 1, 2020 1% July 1, 2020 to June

30, 2023
Resident Foreign Corporation
2% July 1, 2023
CORPORATE TAX RATES

Type of Corporation
Regular MCIT
Foreign Corporation [on taxable income (e.g. net or gross income, as applicable)
derived from all sources within the Philippines]:
Offshore Banking Unit (OBUs) (Note: 1% Upon the effectivity
OBUs shall now be taxed as resident Upon the effectivity of the CREATE until
25%
foreign corporation upon effectivity of the CREATE June 30, 2023
of CREATE) 2% July 1, 2023
1% January 1, 2022 to
Regional Operating Headquarters (ROHQ) 25% January 1, 2022 June 30, 2023
2% July 1, 2023
Non-Resident Foreign Corporation 25% January 1, 2021 Not Applicable
INCOME TAX
PURELY SELF-EMPLOYED OR
PROFESSIONAL
(GROSS SALES/RECEIPTS OF P3M AND BELOW)
OPTION 1: OPTION 2:
- Income Tax based - Income Tax (8%)

NET INCOME based on GROSS
SALES / REVENUE
- Business Tax (3% / RECEIPTS in
PT*) based on excess of
GROSS SALES / P250,000.00
REVENUE /
RECEIPTS - It is in lieu of
Income Tax AND
3% PT
*1% under CREATE Act (July 1,
2020 to June 30, 2023)

PERCENTAGE TAX:
*1% under CREATE Act

(July 1, 2020 to June
30, 2023)


MIXED INCOME EARNER
(GROSS SALES/RECEIPTS OF P3M AND BELOW)
OPTION 1: OPTION 2:
- Income Tax based - Compensation

NET INCOME taxed using
Graduated Table
- Business Tax (3%
PT*) based on - Business Income
GROSS SALES / taxed 8% based on
REVENUE / GROSS SALES /
RECEIPTS REVENUE /
RECEIPTS, in lieu
*1% under CREATE Act (July 1, of Income Tax AND
2020 to June 30, 2023) 3% PT

PERCENTAGE TAX:
*1% under CREATE Act

(July 1, 2020 to June
30, 2023)


PERSONAL INCOME TAX
Tax SSS,
Deductible Income Business Business Retirement
Exempt Philhealth,
Expense Tax Tax (PT) Permits Pay
Benefits Pag-ibig
P250k,
Employee Yes 90k, De PIT None Yes None Yes
Minimis
If 8%,
Contractor Yes P250k PIT / 8% Yes Yes None
None
Director Yes P250k PIT / 8% None Yes None None

PERSONAL INCOME TAX
Employee
Salary 3,000,000.00
13th month and other benefits 90,000.00
De Minimis 100,000.00
Total Compensation 3,190,000.00
Less: Exempt
SSS, Philhealth, Pag-ibig 21,600.00
13th month and other benefits 90,000.00
De Minimis 100,000.00 211,600.00
Taxable Income 2,978,400.00
Income Tax 810,000.00
Net Income 2,168,400.00
Exempt Benefits 190,000.00
Net Pay 2,358,400.00

PERSONAL INCOME TAX
Consultant
Total Professional Fee 3,000,000.00
Deductions:
8% Gross Sales Tax 220,000.00
SSS, Philhealth and Pag-ibig 51,600.00
Business Permit (3%) 75,000.00 346,600.00

Net Pay 2,653,400.00
PERSONAL INCOME TAX
Consultant
Total Professional Fee (OSD) 3,000,000.00
Deductions:
Income Tax Due (OSD) 430,000.00
Business Permit (3%) 75,000.00
Percentage Tax Due 90,000.00 646,600.00
Net Pay 2,353,400.00
PERSONAL INCOME TAX
Director (Personal Income Tax)

Director’s Fee (OSD) 3,000,000.00
Personal Income Tax 430,000.00 481,400.00
Net Pay 2,353,400.00
Director (8% Tax)
Total Professional Free 3,000,000.00
8% Gross Sales Tax 220,000.00 271,600.00
Net Pay 2,728,400.00

SEC. 22 of the Tax Code

Definitions.
(B) The term ‘corporation’ shall include ONE PERSON

CORPORATIONS, partnerships, no matter how created or
organized, joint-stock companies, joint accounts (cuentas
en participacion), Xxx xxx xxx.

PERSONAL INCOME TAX
Income Tax Business Tax Tax Exempt

OSD Dividends Tax
Due (PT) Benefits
Sole
PIT or 8% Yes P250k Gross Sales None
Proprietor
RCIT (25% /
One Person
20%) / MCIT Yes None Gross Income 10%
Corp
(1%)
OPC – Direct costs may vary in determining Gross Income

CLASSIFICATION OF REAL ESTATE:
ORDINARY ASSET
CAPITAL ASSET
45

NORMAL INCOME TAX:
SALE OR EXCHANGE OF ORDINARY ASSET:
INDIVIDUAL: 20% - 35% of Net Taxable Income
CORPORATION: 20% - 25% of Net Taxable

Income

CAPITAL GAINS TAX:
SALE OR EXCHANGE OF CAPITAL ASSET
6% of Gross Selling Price, Zonal Value or Fair

Market Value, whichever is higher

Ordinary assets shall refer to all real properties

specifically excluded from the definition of capital
assets under Sec. 39(A)(1) of the Code, namely:
1. Stock in trade of a taxpayer or other real property
of a kind which would properly be included in the
inventory of the taxpayer if on hand at the close of
the taxable year; or
2. Real property held by the taxpayer primarily for

sale to customers in the ordinary course of his trade
or business; or

3. Real property used in trade or business (i.e.,

buildings and/or improvements) of a character
which is subject to the allowance for depreciation
provided for under Sec. 34(F) of the Code; or
4. Real property used in trade or business of the

taxpayer.
Capital assets shall refer to all real properties held

by a taxpayer, whether or not connected with his
trade or business, and which are not included
among the real properties considered as ordinary
assets under Sec. 39(A)(1) of the Code.
GIVEN:
Selling Price 50,000,000
Cost 30,000,000
Gross Profit 20,000,000
Operating Expenses 500,000
Net Income 19,500,000
Income Tax Due (25%) 4,875,000
51
TAXES DUE:
ORDINARY CAPITAL
IT 4,875,000.00 0.00
VAT (OT) 6,000,000.00 0.00
CGT 0.00 3,000,000.00
DST 750,000.00 750,000.00
TOTAL 11,625,000.00 3,750,000.00
52
DISPOSAL OF REAL PROPERTY
(CAPITAL ASSETS)

(ORDINARY ASSETS)

(PERSONAL ASSETS)

EXEMPT FROM INCOME TAX:
SALE OF PRINCIPAL RESIDENCE
• Individual sells principal residence

• Entire sales proceeds is used to acquire or
construct new principal residence within 18
calendar months from sale or disposition
• BIR is notified within 30 days from sale or
disposition of his intention

EXEMPT FROM INCOME TAX:
SALE OF PRINCIPAL RESIDENCE
• Use of historical cost or adjusted basis of old

principal residence on sale of new principal
residence
• Escrow deposit account
• Withdrawal of escrow deposit
VAT TRANSACTIONS:
ZERO- PERCENTAGE
VATABLE EXEMPT
RATED TAX
Secs. 106(A)(1), Secs.

Secs. 109(1)(A) Secs. 116 to
106(B), 107 and 106(A)(2)(a)
to (CC) 128
108(A) and 108(B)

CORPORATE SETUP IN MINIMIZING
TAX LIABILITIES
TAX-FREE EXCHANGE
Sec. 40 (C) (2)
The transfers of properties in exchange for shares of stocks made pursuant to
Section 40 (C) (2) of the 1997 Tax Code, as amended, shall be exempt from the
following taxes:
a. Capital Gains Tax (CGT);
b. Creditable Withholding Tax (CWT);
c. Income Tax (IT);
d. Donor's Tax (DT);
e. Value-Added Tax (VAT); and
f. Documentary Stamp Tax (DST) on conveyances of real properties and shares
of stocks.

TAX-FREE EXCHANGE
INDIVIDUAL/S (4) Issue shares of

Gains 51% of the total
stocks
voting power of
all classes of stocks
entitled to vote.
Real properties /
shares of stock of CORPORATION
corporation

CORPORATE RESTRUCTURING
Stockholders / Directors
Investment Directors Fee - 8%

(Deductible)
Operating Corporation
Employee or Consultant -
Deductible

Investment Directors Fee – 8%

(Deductible)
Family Corporation (Holdings)
Dividends (Tax
Investment
Exempt)
Operating Corporation
Employee or Consultant -
Deductible

Directors Fee 8% (Deductible)

Family Corporation Investment
Dividends (Tax Exempt)

Corporation New Corporation
Employee / Consultant - Deductible

CORPORATION CODE
Sec. 30. Compensation of directors. - In the absence of any provision

in the by-laws fixing their compensation, the directors shall not
receive any compensation, as such directors, except for reasonable
pre diems: Provided, however, That any such compensation other
than per diems may be granted to directors by the vote of the
stockholders representing at least a majority of the outstanding
capital stock at a regular or special stockholders' meeting. In no case
shall the total yearly compensation of directors, as such directors,
exceed ten (10%) percent of the net income before income tax of the
corporation during the preceding year.

ESTATE PLANNING
Parents
Parents
Parcel of Land
Parcel of Land
Corporation
A B C D A B C D

CLAIM ALLOWABLE TAX
DEDUCTIONS

REQUIREMENTS FOR
DEDUCTIBILITY OF EXPENSES
Time for availing deductions
• A taxpayer has the right to deduct all authorized allowances

for the taxable year.
• If he does not within any year deduct certain of his

expenses, losses, interest, taxes or other charges, he cannot
deduct them from the income of the next or any succeeding
year. (Section 76 of Income Tax Regulations)

REQUIREMENTS FOR
General Requirements:
1. Should be ordinary and necessary expenses paid/
incurred during the taxable year:
• Salaries and other remuneration

• Travel expenses
• Rentals
• EAR expenses directly related to or in furtherance of trade

REQUIREMENTS FOR
2. Substantiated by adequate proof which reflect the:
• Amount being deducted
• Connection or relation of expense to the business/trade
of the taxpayer;
3. Not contrary to law, morals, public order or public policy
(e.g., bribes, kickbacks or similar payments);

REQUIREMENTS FOR
4. The taxes required to be withheld (if applicable) have

been properly withheld and remitted on time.

DEDUCTIBILITY FOR
Substantiation Requirements:
“The trend then was to allow deductions based on cash

vouchers which are signed by the payees. It bears to note that
the cases cited by petitioner are pronouncements by this Court
in 1980, 1982 and 1989.”
(H. Tambunting Pawnshop, Inc. v. Commissioner of Internal Revenue, G.R. No. 173373,
[July 29, 2013], 715 PHIL 386-404)

DEDUCTIBILITY FOR
The rationale behind the latter requirement is the duty of the
taxpayer to keep adequate records of each and every transaction
entered into in the conduct of its business. So that when their
books of accounts are subjected to a tax audit examination, all
entries therein could be shown as adequately supported and
proven as legitimate business transactions. Hence, petitioner's
claim that the NIRC of 1977 did not require substantiation
requirements is erroneous.

DEDUCTIBILITY FOR
In order that the cash vouchers may be given probative value,

these must be validated with official receipts.
(H. Tambunting Pawnshop, Inc. v. Commissioner of Internal Revenue, G.R. No. 173373, [July 29, 2013], 715 PHIL 386-404)

DEDUCTIBLE LOSSES
SECTION 96. Losses generally. — Losses must usually be evidenced by closed

and completed transactions. Proper adjustment must be made in each case for
expenditures or items of loss properly chargeable to capital account, and for
depreciation, obsolescence, amortization, or depletion. Moreover, the amount
of the loss must be reduced by the amount of any insurance or other
compensation received, and by the salvage value, if any, of the property. A loss
on the sale of residential property is not deductible unless the property was
purchased or constructed by the taxpayer with a view to its subsequent sale
for pecuniary profit. No loss is sustained by the transfer of property by gift or
death. Losses sustained in illegal transactions are not deductible.
(Income Tax Regulations, Revenue Regulations No. 02-40, [February 10, 1940])
DEDUCTIBLE LOSSES
In the case of Manotok Realty Incorporated vs. Commissioner of Internal

Revenue, actual loss may be claimed as deduction from gross income when the
following requirements concur:
a) The loss must be that of the taxpayer;
b) The loss must have been actually sustained and suffered within the taxable year;
c) The loss must be evidenced by a closed and completed transaction; and
d) The loss must not be compensated or otherwise.
And necessarily, the loss must be connected with the trade, business or profession of
the taxpayer.
(Solid Cement Corp. v. Commissioner of Internal Revenue, C.T.A. Case No. 6248, [January 30,
2009])

DEDUCTIBLE LOSSES
Policies and Guidelines for the Reporting of Casualty Losses,

Revenue Memorandum Order No. 031-09, (October 16, 2009)
1. Sworn Declaration of Loss, to be filed within forty-five (45) days
after the date of the event.
2. Proof of the elements of the loss(es) claimed.
Subject to verification by the concerned Bureau office, and should be
kept by the taxpayer as part of his tax records, and be made available
to the duly-authorized Revenue Officer(s), upon audit of his Income
Tax return and the declaration of loss.

BAD DEBTS
RR NO. 25-2002
Sec. 3. Requisites for valid deduction of bad debts from gross income.
(1) There must be an existing indebtedness due to the taxpayer which
must be valid and legally demandable;
(2) The same must be connected with the taxpayer's trade, business or
practice of profession;
(3) The same must not be sustained in a transaction entered into
between related parties enumerated under Sec. 36(B) of the Tax Code of
1997;

BAD DEBTS
RR NO. 25-2002
Sec. 3. Requisites for valid deduction of bad debts from gross income.
—
(4) The same must be actually charged off the books of accounts of the
taxpayer as of the end of the taxable year; and
(5) The same must be actually ascertained to be worthless and
uncollectible as of the end of the taxable year.
Revenue Regulations No. 25-02, [November 19, 2002])

BAD DEBTS
RR NO. 25-2002
"Before a taxpayer may charge off and deduct a debt, he must ascertain and be
able to demonstrate with reasonable degree of certainty the uncollectibility of
the debt. The Commissioner of Internal Revenue will consider all pertinent
evidence, including the value of the collateral, if any, securing the debt and the
financial condition of the debtor in determining whether a debt is worthless, or
the assigning of the case for collection to an independent collection lawyer who
is not under the employ of the taxpayer and who shall report on the legal
obstacle and the virtual impossibility of collecting the same from the debtor and
who shall issue a statement under oath showing the propriety of the deductions
thereon made for alleged bad debts."

BAD DEBTS
RR NO. 25-2002
Thus, where the surrounding circumstances indicate that a debt is

worthless and uncollectible and that legal action to enforce payment
would in all probability not result in the satisfaction of execution on a
judgment, a showing of those facts will be sufficient evidence of the
worthlessness of the debt for the purpose of deduction.

CHARITABLE CONTRIBUTIONS
Section 34 (H) Charitable and Other Contributions.
(1) In General. — Limited Deductibility: Taxpayer's taxable

income before the donation:
• Ten percent (10%) in the case of an individual
• Five percent (5%) in the case of a corporation

(2) Contributions Deductible in Full. —
• Donations to Government
• Donations to Certain Foreign Institutions for International
Organizations
• Donations to Accredited Nongovernment Organizations

Valuation. — The amount of any charitable contribution of

property other than money shall be based on the acquisition
cost of said property.
Proof of Deductions. — Contributions or gifts shall be allowable

as deduction only if verified under the rules and regulations
prescribed by the Secretary of Finance, upon recommendation of
the Commissioner.

REPRESENTATION EXPENSES
RR No. 10-2002
Actual entertainment, amusement and recreation expenses paid

or incurred within the taxable year by the taxpayer, but in no
case shall such deduction exceed:
- ½ of 1% of net sales (i.e., gross sales less sales returns/

allowances and sales discounts) the taxpayers engaged in sale
of goods or properties; or

 
RR No. 10-2002
Actual entertainment, amusement and recreation expenses paid

or incurred within the taxable year by the taxpayer, but in no
case shall such deduction exceed:
- 1% of net revenue (i.e., gross revenue less discounts) for

taxpayers engaged in sale of services

 
The term 'Representation Expenses' shall refer to expenses incurred

by a taxpayer in connection with the conduct of his trade, business or
exercise of profession, in entertaining, providing amusement and
recreation to, or meeting with, a guest or guests at a dining place,
place of amusement, country club, theater, concert, play, sporting
event, and similar events or places. For purposes of these
Regulations, representation expenses shall not refer to
fixed representation allowances that are subject to withholding tax on
wages pursuant to appropriate revenue regulations.

DEPRECIATION EXPENSES
RR No 12-2012
A. No deduction for depreciation shall be allowed unless

substantiated by official receipts or other records with:
I. Specific Motor Vehicle identification Number, Chassis

Number or registrable ID numbers of the Vehicle;
II. The total price subject to depreciation; and

 

RR No 12-2012
III. The direct connection or relation of the Vehicle to the

development, management, operations, and/or conduct of the
trade or business or profession of the taxpayer
• B. Only one Vehicle is allowed for the use of an employee, the

value of which should not exceed Php2.4M;

 

RR No 12-2012
C. All maintenance expenses on account of non-depreciable

Vehicles for taxation purposes are disallowed in its entirety;

 
NET OPERATING LOSS
CARRY-OVER
The NOLCO shall be separately shown in the taxpayer's annual ITR
(also shown in the Reconciliation Section of the annual ITR).
The unused NOLCO shall be presented in the Notes to the Financial

Statements showing, in detail:
the taxable year in which the net operating loss was sustained or
incurred; and

NET OPERATING LOSS

CARRY-OVER
• any amount thereof claimed as NOLCO deduction within three

(3) consecutive years immediately following the year of such
loss.
• Failure to comply with this requirement will disqualify the

taxpayer from claiming the NOLCO.

Revenue Regulations No 25-2020

Prescribes the Rules and Regulations to
implement Section 4 (bbbb) of RA No. 11494
(Bayanihan to Recover as One Act) relative to Net
Operating Loss Carry-Over (NOLCO) under
Section 34 (D)(3) of the NIRC, as amended
Coverage:
Deduction from gross income of the Net Operating Loss
Carry-Over (NOLCO) incurred by businesses or
enterprises for taxable years 2020 and 2021 pursuant to
Section 4 (bbbb) of Republic Act (R.A.) No. 11494.

Entitlement:
Unless otherwise disqualified from claiming the
deduction, the business or enterprise which incurred net
operating loss for taxable years 2020 and 2021 shall be
allowed to carry over the same as a deduction from its
gross income for the next five (5) consecutive taxable
years immediately following the year of such loss.
OPTIONAL STANDARD DEDUCTION
Persons Covered. —
1. Individuals:
i. Resident Citizen
ii. Non-resident citizen
iii. Resident Alien
iv. Taxable estates and trusts

Persons Covered. —
2. Corporations:
i. Domestic corporation
ii. Resident foreign corporation

TAXPAYER TREATMENT
Individual Taxpayer 40% of gross revenue / sales
Domestic and Resident

40% of gross income
Foreign Corporation

CLAIM TAX CREDITS IN THE
CORRECT PERIOD

CREDITABLE WITHHOLDING
TAX

WITHHOLDING TAX SCHEME
SALE OF OFFICE SUPPLIES

SELLER BUYER (WT)
Per ITR (Sales) 20,000

Per ITR (Expense) 20,000
BIR Form 2307 (1%) 200
BIR Form 1601EQ (1%) 200
CREDITABLE WITHHOLDING TAX
BIR Form 2307 - Certificate of Creditable Tax Withheld at

Source
A Certificate to be accomplished and issued to recipients of
income subject to expanded withholding tax paid by a Payor/
Withholding Agent including government money payments
made by a government office showing the monthly
breakdown of the total income payments made and the total
taxes withheld and remitted during the quarter/period.

CREDITABLE WITHHOLDING TAX
BIR Form 2307 - attached to the Quarterly/Annual Income Tax

Return - BIR Forms 1701Q / 1701 for individuals or BIR Form
1702Q/ 1702 for non-individuals
The tax withheld shall be allowed as a tax credit against the

income tax liability of the recipient in the taxable quarter or
year in which the income was earned or received.

BIR FORM No. 2307

Certificate of Creditable Tax
Withheld at Source
BIR FORM 2307
RENTALS (5%) WI100 10,000 10,000 10,000 30,000 1,500

RECONCILING EXPANDED WITHHOLDING TAX
*(NET OF VALUE-ADDED TAX)
Rental Expense (P10,000 per month)

1st Year (July 2021) FS ITR EWT
Prepayment (2 months) - BS 20,000 0 20,000
Expenses (6 months) - IS 60,000 60,000 60,000
Total 80,000 60,000 80,000
Withholding Tax Rate 5%
Withholding Tax Due 4,000

RECOGNITION OF CWT
RENTAL EARNED IN 2021, SUBJECTED TO EWT IN 2021

2021 2022
PERIOD OF CLAIM OF
ALLOWED DISALLOWED
CWT
AMEND 2021 ITR
CARRY-OVER EXCESS RECOGNIZING
REMEDY CWT, TAX REFUND OR CWT AND AVAIL
TAX CREDIT CERTIFICATE REMEDY FOR
2021

VALUE-ADDED TAX:
EXCESS INPUT TAX
In the latter scenario where the taxpayer engages in both VATable and zero-
rated activities but the input VAT cannot be directly attributable to such zero-
rated activities, the taxpayer may only file a claim for refund or
issuance of TCC if it has excess and unutilized input VAT, i.e., its input VAT is
greater than its output VAT. Necessarily, if the taxpayer has a VAT payable, it
cannot be entitled to a refund or issuance of TCC even if the input VAT being
claimed for refund or issuance of TCC is from zero-rated activities. Any input
VAT from both VATable and zero-rated activities must be offset against any
output VAT before it can be said that an excess input VAT exists.
(Total (Philippines) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 1153 (C.T.A. Case
No. 8253) (Resolution), [April 20, 2016])

EXCESS INPUT TAX:

ZERO-RATED TRANSACTION
Sales (net) 100,000.00
Output tax (0%) 0.00
Purchases (net) 60,000.00

Input tax (12%) 7,200.00
Net VAT payable (For refund / TCC/ carry-
(7,200.00)
over)

AVAIL TAX HOLIDAYS AND
SPECIAL RATES
Sharing competitive edge for success. Email: services@aaacpas.com.ph

TITLE XIII
TAX INCENTIVES
SECTION 291 TO 311 OF THE TAX CODE
SCOPE AND COVERAGE – THIS TITLE SHALL COVER ALL

EXISTING INVESTMENT PROMOTION AGENCIES AS DEFINED IN
THIS CODE OR RELATED LAWS UNLESS OTHERWISE
SPECIFICALLY EXEMPTED FROM THE COVERAGE OF THIS
CODE.

SUMMARY OF
FISCAL INCENTIVES RATIONALIZATION
PRIOR TO CREATE ACT EFFECT OF CREATE ACT
PARTICULARS DOMESTIC MARKET DOMESTIC MARKET

EXPORTERS EXPORTERS
ENTERPRISE ENTERPRISE
Income Tax
Holiday 4 - 6 years 4 - 6 years 4 - 7 years 4 - 7 years
(Sec. 296)
Extension of 2 more years, and 2 more years, and
Income Tax
Holiday
3 years for 3 years for Not applicable Not applicable
(Sec. 296) expanding firms expanding firms

SUMMARY OF
PARTICULARS
DOMESTIC MARKET DOMESTIC MARKET
EXPORTERS EXPORTERS
Relocation outside Relocation outside
Additional of NCR: additional of NCR: additional
Incentives for ITH of 3 years ITH of 3 years
relocation
outside of NCR None None Relocation to Relocation to
and in disaster/ areas recovering areas recovering
conflict areas from disaster/ from disaster/
(Sec. 296) conflict: additional conflict: additional
ITH of 2 years ITH of 2 years

SUMMARY OF
EXPORTERS EXPORTERS
ITH Duration 4 - 6 years 4 - 6 years 4 - 7 years 4 - 7 years
OPTION 1: ITH + 5% Tax on Gross Income Earned (GIE)
SCIT / GIE 5% GIE for 10

5% GIE forever None Not applicable
Duration years
14 - 17 years (ITH:
ITH + SCIT /
Forever None Up to 7 years, and Not applicable
GIE Duration
GIE: 10 years)

SUMMARY OF
EXPORTERS EXPORTERS
ITH Duration 4 - 6 years 4 - 6 years 4 - 7 years 4 - 7 years
OPTION 2: ITH + Enhanced Deductions (ED)

Enhanced
Deductions None None 10 years 5 years
Duration
ITH + Enhanced 14 - 17 years (ITH: 9 - 12 years (ITH: Up
Deductions None None Up to 7 years, and to 7 years, and
Duration ED: 10 years) ED: 5 years)

SUMMARY OF
ENHANCED DEDUCTIONS
PARTICULARS
Power Expense 100% 150%
Labor Expense 150% * 150%
Training Expense 100% 200%
Research and
100% 200%
Development
* The deduction shall be 200% if the activity is located in less developed areas. However, this incentive does
not apply to TIEZA, SBMA, CDC and APECO

SUMMARY OF
ENHANCED DEDUCTIONS
PARTICULARS
Domestic Input
100% 150%
Expense
Reinvestment Up to 50% of reinvested
Allowance to the None profit (within 5 years from
Manufacturing Industry time of reinvestment)
Depreciation 10% for buildings, 20% for
None
Allowance machinery

SUMMARY OF
CREATE ACT
PARTICULARS DOMESTIC MARKET
EXPORTERS
ENTERPRISES
Currently in ITH: Finish ITH Currently in ITH: Finish ITH
as scheduled as scheduled
Transition Period
Existing firms under 5% Existing firms under 5%
GIE incentive: 10 years at GIE incentive: 10 years at
5% GIE 5% GIE

IDENTIFY DOUBLE
TAXATION AGREEMENTS

SEC. 25 (B) OF THE TAX CODE
(B) Nonresident Alien Individual Not Engaged in Trade or Business
Within the Philippines.- There shall be levied, collected and paid for each
taxable year upon the entire income received from all sources within the
Philippines by every nonresident alien individual not engaged in trade or
business within the Philippines as interest, cash and/or property
dividends, rents, salaries, wages, premiums, annuities, compensation,
remuneration, emoluments, or other fixed or determinable annual or
periodic or casual gains, profits, and income, and capital gains, a tax
equal to twenty-five percent (25%) of such income.

(B) Nonresident Alien Individual Not Engaged in Trade or
Business Within the Philippines.-
Capital gains realized by a nonresident alien individual not

engaged in trade or business in the Philippines from the sale of
shares of stock in any domestic corporation and real property
shall be subject to the income tax prescribed under Subsections
(C) and (D) of Section 24.


(B) Tax on Nonresident Foreign Corporation. -
(1) In General. - Except as otherwise provided in this Code, a foreign

corporation not engaged in trade or business in the Philippines, effective
January 1, 2021, shall pay a tax equal to twenty-five percent (25%) of the
gross income received during each taxable year from all sources within the
Philippines, such as interests, dividends, rents, royalties, salaries, premiums
(except reinsurance premiums), annuities, emoluments or other fixed or
determinable annual, periodic or casual gains, profits and income, and
capital gains, except capital gains subject to tax under subparagraph 5(c)

MATRIX OF
DOUBLE TAXATION AGREEMENTS

ATTRIBUTES UNITED STATES OF AMERICA SINGAPORE
Taxes Covered Income Tax Income Tax

UNITED STATES OF
ATTRIBUTES SINGAPORE
AMERICA
“Resident of a Contracting State” means any person who is

resident in a Contracting State for tax purposes of that
Contracting State.
Resident of both contracting parties:
Fiscal - Permanent home

Residence / - Personal and economic relations
Domicile - Habitual abode
- Citizenship
- Mutual agreement
None Non-individual - Place of e ective
management

ff
UNITED STATES OF
ATTRIBUTES SINGAPORE
AMERICA
Fixed place of business through which a resident of one of the
Contracting States engages in a trade or business.
A seat of management A mine, quarry, or other place of extraction of
natural resources
A branch A building site or construction or assembly
project or supervisory activities in connection
Permanent An office therewith, provided such site, project or activity
continues for a period of more than 183 days
Establishment A store or other sales outlet The furnishing of services, including
consultancy services, by a resident of one of
A factory the Contracting States through employees or
other personnel, provided activities of that
A workshop nature continue (for the same or a connected
project) within the other Contracting State for
a period or periods aggregating more than
A warehouse
183 days.

Business profits of a resident of one of the

Contracting States shall be taxable only in that State
unless the resident has a permanent establishment in the
Business other Contracting State. If the resident has a permanent
Pro ts establishment in that other Contracting State, tax may be
imposed by that other Contracting State on the business
profits of the resident but only on so much of them as
are attributable to the permanent establishment.

fi
The permanent establishment may claim deductions that are ordinary

and necessary expenses which are reasonably allocable to such profits,
including executive and general administrative expenses. However, no
such deductions shall be allowed in respect of amounts paid or payable
(other than reimbursement of actual expenses) by the permanent
establishment to the head office of the resident of which it is a
Business permanent establishment or any of its other offices, by way of -
Pro ts
- royalties, fees or other similar payments in return for the use of
patents or other rights;
- commission, for specific services performed or for management; and
- interest on moneys lent to the permanent establishment, except in the
case of a banking institution.

fi

BE UPDATED WITH TAX

RULES

TAX UPDATES

Revenue Regulations No. 1-2022
Extends the deadline for the filing of returns and payment of the
corresponding taxes due thereon, including submission of
required documents (position papers, replies, protests,
documents and other similar letters and correspondences in
relation to on-going BIR audit investigation), application for tax
refund and issuance of Assessment Notices and Warrants of
Distraint and Levy for taxpayers within the jurisdiction of BIR
Regional and District Offices classified under Alert Level 3 or
higher.
These Regulations shall extend the statutory deadlines for the

following activities falling due during the period declared as Alert
Level 3 or higher by the IATF this month of January 2022, for
thirty (30) calendar days from their due dates:
(1) Submission and/or filing of the documents and/or returns, as
well as the payment of the corresponding taxes due thereon;
(2) Filing of position papers, replies, protests, documents and
other similar letters and correspondences in relation to the on-
going BIR audit investigation;
(3) Filing of application for tax refund, including VAT refund, and
processing of VAT refund claim; and,
(4) Issuance and service of Assessment Notices, Warrants of
Distraint and/or Levy, as well as Warrants of Garnishment, to
enforce collection of deficiency taxes.
The extension applies to all taxpayers within the jurisdiction of
the Revenue Regional (RR) and Revenue District Offices (RDOs)
of the BIR classified under Alert Level 3 or higher by the IATF.
Implements the provisions of RA No. 11635,

titled "An Act Amending Section 27 (B) of the
National Internal Revenue Code of 1997, as
Amended, and for Other Purposes" on the
income taxation of proprietary educational
institutions and hospitals which are non-profit.
Coverage of the Preferential Corporate Income Tax Rate. —

The following institutions shall be covered by the preferential
ten percent (10%) corporate income tax rate; Provided, that
beginning July 1, 2020 until June 30, 2023, the rate of one
percent (1%) shall apply, as imposed under Section 27 (B) of
the NIRC, as amended:
(1) Proprietary Educational Institutions;
(2) Hospitals which are non-profit; and,

(3) Non-Stock, Non-Profit Educational Institutions whose net

income or assets accrue/inure to or benefit any member or
specific person.
After June 30, 2023, the rate shall revert to the preferential
corporate income tax rate of 10%.

Implementing the Estate Tax Exemption Under

Republic Act No. 11597, Otherwise Known as "An Act
Providing for the Revised Charter of the Philippine
Veterans Bank, Repealing for the Purpose Republic
Act No. 3518, as Amended, Otherwise Known as 'An
Act Creating the Philippine Veterans Bank, and For
Other Purposes “
(3)SECTION 1. Scope. — Pursuant to Sections 244 and 245

of the National Internal Revenue Code (NIRC) of 1997, as
amended, these Regulations are hereby promulgated to
implement Section 5 (b) of Republic Act No. 11597 which
mandates the estate tax exemption on the transfer by a
veteran of his/her share/s, common or preferred, with the
Philippine Veterans Bank (Veterans Bank).

SECTION 2. Coverage.— These Regulations shall cover all transfers of the

share/s stock, common or preferred, owned by a veteran with the Philippine
Veterans Bank (Veterans Bank) to his/her widow, orphan or compulsory heir,
as determined by existing laws, by way of succession or donation mortis
causa.
SECTION 3. Estate Tax Exemption.— All transfers, by way of succession or

donation mortis causa, made by a veteran of his/her shares of stock,
common or preferred, with the Veterans Bank shall not be subject to estate
tax, provided that the same was made in favor of the veteran's widow, orphan
or compulsory heir as determined by existing laws.

An electronic Certificate Authorizing Registration (eCAR)/

Tax Clearance Certificate (TCC) must be secured with the
Revenue District Office (RDO) where the estate of the
decedent is registered before any transfer of share/s is
registered in the books of the Veteran's Bank.

Removal of Five (5)-year Validity Period on

Receipts/lnvoices
The five-year validity period of the Permit To Use (“PTU”) and/

or system-generated receipts/invoices is hereby removed,
hence all PTUs to be issued shall be valid unless revoked by
the Bureau of Internal Revenue (BIR) on grounds which shall
include, but not limited to, the following:
A. Tampering of sales data/integrity of the data and/or
software specification/features to alter/avoid the recording of
a sale transaction;
B. Any major repair, upgrade, integration and modification/alteration

without prior notification and approval by the BIR office concerned,
including the items enumerated in Section V, Item No. 8 of RMO No.
9-2021, to wit:
i. Change in the functionalities of the system, particularly on
enhancements that will have a direct effect on the financial aspect of the
system that includes modified computations and other financial-related
issues that were considered;
ii. Addition or Removal of modules or submodules within the system that
will have a direct impact on the financial aspect of the system;

iii. Change in the system/software Version or Release

Number that will have enhancements on the financial aspect
of the system; and
iv. All other enhancements that will be deemed as a major
system enhancement based on the recommendation of the
technical evaluators of the BIR.

C. Any violation(s) on the policies and procedures for registration

under RMO No. 10-2005 and RMO No. 9-2021, and other related
revenue issuances.
2. The phrase "THIS INVOICE/RECEIPT SHALL BE VALID FOR FIVE
(5) YEARS FROM THE DATE OF THE PERMIT TO USE" as previously
required under RR No. 10-2015, as amended by RR No. 16-2018, and
the phrase "Valid Until" required on RMC No. 107-2019 shall be
OMITTED at the bottom portion of the system-generated receipts/
invoices;

3. ATP principal and supplementary receipts/invoices inclusive

of its serial numbers and its usage shall also have no
expiration, thus, the phrase "THIS INVOICE/RECEIPT SHALL BE
VALID FOR FIVE (5) YEARS FROM THE DATE OF THE ATP." and
the phrase "Valid Until (mm/dd/yyyy)" on the manual receipts/
invoices previously required on RMO No. 12-2013 shall also be
OMITTED (or DISREGARDED for unused receipts/invoices).
Tax Incentives Under the Renewable Energy

Act of 2008 and the Policies and Guidelines for
the Availment Thereof
Fiscal Incentives for Renewable Energy Projects and Activities. — The following
provisions shall govern the tax incentives and treatments on the DOE-certified
existing and new RE developers of RE facilities in consultation with BOI,
including hybrid systems, in proportion to and to the extent of the RE component,
for both power and non-power applications:
A. Income Tax Holiday (ITH) — The duly-registered RE Developer shall be exempt
from income taxes levied by the National Government for the period as follows:
(1) Existing RE Projects — Shall be entitled to ITH for seven (7) years from start of
commercial operations which is when the RE Project has been issued a
Certificate of Compliance (COC) by the ERC under RA No. 9136 (Electric Power
Industry Reform Act of 2001 or the EPIRA) and is ready to inject power to the grid.

(2) New investment in RE Resources — Shall be entitled to

ITH for seven (7) years from the start of commercial
operations resulting from new investments.
(3) Additional investments in the RE Project — Availment of
ITH for additional investments in RE project shall not be more
than three (3) times the period of the initial availment by the
existing or new RE Project or covering new or additional
investments.
B. Net Operating Loss Carry-Over (NOLCO) — The NOLCO of the RE

Developer during the first three (3) years from the start of commercial
operation shall be carried over as a deduction from gross income for
the next seven (7) consecutive taxable years immediately following
the year of such loss, subject to the following conditions:
(1) The NOLCO had not been previously offset as a deduction from
gross income; and
(2) The loss should be a result from the operation and not from the
availment of incentives provided for in the Act.

C. Corporate Tax Rate — After availment of the ITH, all registered RE

Developers shall pay a corporate tax of ten percent (10%) on their net
taxable income as defined in the National Internal Revenue Code (NIRC)
of 1997, as amended: Provided, That the RE Developers shall pass on
the savings to the end-users in the form of lower power rates.
All RE Developers that acquire, operate, and/or administer existing RE
facilities that were or have been in commercial operation for more than
seven (7) years, upon the effectivity of the Act, shall pay a corporate tax
rate of 10% on their net taxable income, upon registration with the DOE.
Prescribing Policies and Guidelines for the

Implementation of Section 237 and 237-A of the
National Internal Revenue Code, as Amended by
Republic Act (R.A.) No. 10963, Otherwise Known as
the Tax Reform for Acceleration and Inclusion or
TRAIN, Through the Use of the Electronic Invoicing/
Receipting System (EIS)
SECTION 2. Coverage. — The following taxpayers are mandated

to issue electronic receipts or sales/commercial invoices under
Sec. 237 of the NIRC of 1997, as amended, to wit:
1. Taxpayers engaged in the export of goods and services;
2. Taxpayers engaged in electronic commerce (e-commerce);
and
3. Taxpayers under the Large Taxpayers Service (LTS).

Relative thereto, Section 237-A of the NIRC of 1997, as amended,

required the abovementioned taxpayers, except for the taxpayers
engaged in e-commerce, to electronically report or transmit their
sales data to the Bureau through the use of their Sales Data
Transmission System.
On the other hand, taxpayers who are not covered by the mandate
may issue electronic receipts or sales/commercial invoices in lieu
of manual receipts/invoices.

SECTION 3. Electronic Invoicing/Receipting System (EIS). — The Bureau, as mandated, established an

Electronic Invoicing/Receipting System (EIS) capable of storing and processing the data required to be
transmitted by covered taxpayers using their Sales Data Transmission System.
In compliance with the relevant provisions of the TRAIN Law, these Regulations hereby direct the
taxpayers under Section 2 to comply with the following:
1. Issuance of e-Receipts/e-Invoices to their customers/buyers, in lieu of manual receipts/invoices;
2. Registration of their Computerized Accounting System (CAS) generating e-receipts/e-invoices and/or
Cash Register Machines (CRM)/Point-of-Sales Systems and Certification of Sales Data Transmission
System; and
3. Transmission of the sales data covered by the e-receipts/e-invoices using their Sales Data Transmission
System into the EIS of the Bureau.

Prescribing Policies and Guidelines for the Admissibility of

Sales Documents in Electronic Format in Relation to the
Implementation of Section 237, Issuance of Receipts or Sales
or Commercial Invoices, and 237-A, Electronic Sales Reporting
System, of the National Internal Revenue Code of 1997, as
Amended by Republic Act (R.A.) No. 10963, Otherwise Known
as the Tax Reform for Acceleration and Inclusion or the "TRAIN
Law"
In compliance with the TRAIN law, the Bureau has developed the
Electronic Invoicing/Receipting and Sales Reporting System (EIS)
that is capable of storing and processing sales data required to be
transmitted by covered taxpayers using their Sales Data
Transmission System. EIS is also capable of issuing sales
documents through its web-based issuance facility to be used by
qualified taxpayers that will be determined by the BIR. EIS ensures
integrity and reliability of the sales and purchases data that will be
generated and verified therefrom.
Thus, these Regulations are issued to address concerns of

taxpayers in the substantiation of sales and purchases,
particularly the submission of hard copies of invoices and
receipts and to ease compliance with the BIR.
On the part of the Bureau, this will provide a more efficient and
accurate manner of investigating internal revenue tax liabilities of
taxpayers and verification of sales and purchases in the
processing of VAT refund claims under Section 112 of the
National Internal Revenue Code of 1997 (Tax Code), as amended.
Prescribes the guidelines and procedures for

requesting Mutual Agreement Procedure
(MAP) assistance in the Philippines
The Regulations enumerate some typical examples of taxation that are

not in accordance with a tax convention that would necessitate a MAP
assistance.
To implement the MAP article, the Commissioner of Internal Revenue
(CIR) is designated as the Competent Authority for the Philippines
(Philippine CA). Where it is not possible for the CIR to deal directly
with MAP cases, he/she shall delegate his/her functions and powers to
other competent officials of the BIR via a Revenue Delegated Authority
Order (RDAO).

Prescribes the guidelines and procedures for

the spontaneous exchange of taxpayer
specific rulings
The International Tax Affairs Division (lTAD) of the Bureau of

Internal Revenue (BIR), through its Exchange of Information
(EOI) Section, shall be responsible for exchanging the
taxpayer specific rulings to the foreign tax authority of the
potential exchange jurisdictions on or before the prescribed
deadline.

The rulings within the scope of the transparency framework include the
following:
i. rulings related to a preferential regime;
ii. cross-border unilateral Advance Pricing Arrangements (APAs) and other
cross-border unilateral tax ruling (such as an Advance Tax Ruling) covering
transfer pricing or the application of transfer pricing principles
iii. cross-border rulings giving a unilateral downward adjustment to the
taxpayer’s taxable profits in the country giving the ruling
iv. PE rulings; and
v. related party conduit rulings

Revenue Memorandum Circular

No. 3-2022
Clarifies the preparation of assessment
notices for compromise penalty


No. 3-2022
Compromise penalties are amounts collected in lieu of criminal prosecution for
violation committed by the taxpayer, where payment is based on a compromise
agreement validly entered into between the taxpayer and the Commissioner of Internal
Revenue.
Item No. III.4 of the aforesaid RMO laid down that:
"Although all amounts of compromise penalties incident to violations shall be

itemized in the assessment notice and/or demand letter, the same should not form part
of assessment notice that reflects deficiency basic tax, surcharge and interest but
should appear in a separate assessment notice/demand letter as the amount
suggested to the taxpayer to pay in lieu of criminal prosecution." (emphasis supplied)


No. 3-2022
Notwithstanding the foregoing, it has been observed that there are times
when the assessment notice for deficiency basic tax(es) and civil penalties
also includes the compromise penalty(ies).
Hence, for uniformity in the preparation of assessment notices, the

prescribed formats under RR No. 18-2013 such as Preliminary Assessment
Notice (PAN) and Formal Letter of Demand shall now be composed of Part
I and Part II, where Part I shall pertain to deficiency basic tax(es) and civil
penalties, while Part II shall pertain to the assessed compromise
penalty(ies) relative to violations uncovered during the conduct of audit.

No. 16-2022
Clarifies the scope and coverage of the
extension of deadlines granted pursuant to
Revenue Regulations No. 1-2022.


No. 16-2022
It is hereby clarified that:
(1) Section 2, item 1 of RR No. 1-2022, shall include
submission of all required documents, including but not
limited to Inventory Lists, and all returns, whether tax
returns or information returns, including Alphalists, among
others. It shall also include registration of books of
accounts.


No. 16-2022
(2) On the extension of filing of VAT refund claims under
Section 2, item 3 of RR No. 1-2022, the extension of thirty (30)
days also applies even if the applicant is a registered taxpayer
in the area declared as Alert Level 1 or 2 provided that the
venue of the filing thereof is in the area declared as Alert Level
3 or higher. This case is applicable to the filing of claims in the
VAT Credit Audit Division (VCAD) at the National Office of direct
exporters who are registered in various RDO jurisdiction.

No. 16-2022
Also, the extension shall apply to the processing period
prescribed for VAT refund processing. For example, if the
VAT refund claim was filed on the December 15, 2021, the
90-day processing period is until March 14, 2022. However,
in view of the declaration of Alert Level 3 in the National
Capital Region, the processing of VAT refund claim shall be
extended until April 13, 2022 (30 days from March 14, 2022).

No. 16-2022
(3) The extension of deadlines covering all the items in
Section 2 of RR No. 1-2022 applies to all taxpayers within
the jurisdiction not only of the Revenue Regional (RRs) and
Revenue District Offices (RDOs) but also of the Large
Taxpayers Services (LTS) Offices of the BIR classified under
Alert Level 3 or higher by the IATF this month of January
2022.

No. 19-2022
Provides clarification and guidance on Section
8 of RR No. 5-2021 on the tax-free exchanges
of properties under Section 40(C)(2) of the
NIRC of 1997, as amended by RA No. 11534
(CREATE)


No. 19-2022
This Circular is, therefore, issued to provide clarification and
guidance to the RDO, other internal revenue officers and others
concerned on Section 8 of RR No. 5-2021, particularly on the
mandate to issue CAR sans a prior BIR confirmation or tax ruling
on the tax-free exchanges of properties, while at the same time
ensuring that the proper taxes due the Government on their
subsequent sale or disposition are protected and collected thru
the establishment and proper monitoring of their correct
substituted basis.

No. 19-2022
The transfers of properties in exchange for shares of stocks made pursuant to Section
40 (C) (2) of the 1997 Tax Code, as amended, shall be exempt from the following taxes:
a. Capital Gains Tax (CGT);
b. Creditable Withholding Tax (CWT);
c. Income Tax (IT);
d. Donor's Tax (DT);
e. Value-Added Tax (VAT); and
f. Documentary Stamp Tax (DST) on conveyances of real properties and shares of
stocks.
However, the original issuance of shares in exchange for the properties transferred
shall be subject to the DST under Section 174 of the 1997 Tax Code, as amended.


No. 19-2022
IX. CONDUCT OF POST-TRANSACTION AUDIT:
The concerned RDO shall conduct a post-audit of said transactions
pursuant to existing revenue issuances on tax audit and assessment, to
determine the taxability thereof.
If after audit, the transaction is found to be not entitled to the tax
deferment treatment under Section 40 (C) (2) of the Tax Code, as
amended by CREATE, the transaction shall be subject to the applicable
taxes, plus interest, penalty and surcharge. However, the result of the
audit shall not invalidate the CAR previously issued for the transfer of
the properties.


No. 20-2022
Provides guidance on the filing of Requests
f o r C o n f i r m a t i o n , Ta x Tr e a t y R e l i e f
Applications and Tax Sparing Applications


No. 20-2022
To limit the number of Request for Confirmation (“RFC”) and Tax Treaty Relief
Applications (“TTRA”) filed with ITAD, this Circular is hereby issued to clarify that
taxpayers who were already issued with COEs, the tenor thereof allows the ruling
to be applied to subsequent or future income payments, shall no longer file an
RFC or TTRA every time an income of similar nature is paid to the same
nonresident.
In applying the confirmed treaty benefit to future income payments, the income
payor or withholding agent shall always be guided by the requisites mentioned in
the COE. Thus, if the COE mentions tax residency as a requisite for continuous
enjoyment of treaty benefit, the income payor must require the nonresident to
submit first a Tax Residency Certificate (TRC) for such relevant year before
making any payment.


No. 21-2022
Prescribes the guidelines in the claim of Input
VAT on purchases or importations of capital
goods pursuant to Section 110 of the Tax
Code, as amended by RA No. 10963 (TRAIN
Law)


No. 21-2022
That the amortization of the input VAT shall only be allowed
until December 31, 2021 after which taxpayers with
unutilized input VAT on capital goods purchased or
imported shall be allowed to apply the same as scheduled
until fully utilized: Provided, finally, That in the case of
purchase of services, lease or use of properties, the input
tax shall be creditable to the purchaser, lessee or licensee
upon payment of the compensation, rental, royalty or fee.

No. 21-2022
Under EFPS and eBIRForms, the balance of input tax to be carried to
succeeding period is computed automatically by these systems. Hence, for
purposes of implementing the provisions in the Tax Code of 1997, as
amended, that effective January 1, 2022, all input tax on purchases of capital
goods shall already be allowed upon purchase/payment, and shall no longer
be deferred, the taxpayer shall indicate Roman numeral “1” as the estimated
useful and recognized useful life and encode the total input taxes claimed
from purchase/s of capital goods exceeding ₱1M under Column “G” in order
to show a nil amount of “Balance of Input Tax to be Carried to Next Period”
under Column “H” of the monthly and quarterly VAT returns.

No. 22-2022
Provides Tax Compliance Reminders for the
May 9, 2022 National and Local Elections


No. 22-2022
I. BIR Registration
II. Annual Registration Fee and Certificate of Registration
III. Registration of Books
IV. Issuance of BIR Registered Non-Vat Official Receipt
V. Income Tax
VI. Donor's Tax
VII. Withholding of Taxes
VIII. Preservation of Accounting Records
IX. Post-Election

No. 23-2022
Suspends the Income Tax incentives granted
to Registered Business Enterprises (RBEs) for
v i o l a t i n g t h e Wo r k - F r o m - H o m e ( W F H )
threshold as prescribed by the Fiscal
Incentives Review Board


No. 23-2022
The non-compliance with all the conditions prescribed
under FIRB Resolution Nos. 19-21 and 23-21 shall be meted
with suspension of the income tax incentive on the revenue
corresponding to the months of non-compliance. Hence,
RBE shall pay the income tax using the regular rate of either
twenty-five percent (25%) or twenty percent (20%) based on
the taxable net income corresponding to the months the
RBE has violation.

No. 24-2022
Clarifies issues relative to RR No. 21-2021 implementing the
amendments to the Value-Added Tax (VAT) zero rating
provisions under Sections 106 and 108 of the National Internal
Revenue Code of 1997 (Tax Code), in relation to Sections 294(E)
and 295(D), Title XIII of the Tax Code, introduced by RA No.
11534 (CREATE Act), and Section 5, Rule 2 and Section 5, Rule
18 of the CREATE Act Implementing Rules and Regulations


No. 24-2022
This Circular is issued to clarify the transitory provisions
under RR No. 21-2021 and certain issues pertaining to the
effectivity and VAT treatment of transactions by registered
business enterprises (RBEs) particularly the registered
export enterprises.

No. 24-2022
Q1: Prior to the CREATE Act, for VAT purposes, what rule governs the sale of
goods and services by a VAT-registered seller from the customs territory to
enterprises located and registered within the economic zones (Ecozone) or a
Freeport?
A1: Before the CREATE Act, Ecozones and Freeport zones were, by legal
fiction, regarded as foreign territories under RMC No. 74-99 and RMC No. 7-2007.
Thus, following the "cross border doctrine," the sale of goods and services by a
VAT-registered seller to registered enterprises in these economic and freeport
zones were treated as constructive export subject to zero-percent (0%) VAT.


No. 24-2022
Q2: With the passage of CREATE Act, is the "cross border doctrine" still
applicable for purposes of VAT as laid down in RMC No. 74-99 and RMC No.
50-2007?
A2: No. The "cross border doctrine" as applied to Ecozones or Freeport
zones has been rendered ineffectual and inoperative for VAT purposes because of
the following:
(i) Passage of RA No. 11534, or the CREATE Act, expressly providing that only
those goods and services that are directly and exclusively used in the
registered project or activity of RBEs qualify as VAT 0% local purchases;


No. 25-2022
Clarifies the taxability of Electronic Sabong (e-
Sabong) operations as regulated by the
Philippine Amusement and Gaming
Corporation (PAGCOR)


No. 25-2022
The Gaming Income from e-Sabong Operation by an e-Sabong Operator,
shall be subject to a five percent (5%) franchise tax, which shall be in
lieu of all internal revenue taxes except VAT or percentage tax,
depending on the threshold. In the event that the e-Sabong operator has
contracted with PAGCOR for the provision of goods and services in
connection with PAGCOR's gaming operations, then, such provision of
goods and services to PAGCOR is subject to VAT at zero-rate.
The franchise tax shall be remitted by the e-Sabong Operator directly to

the BIR.

No. 25-2022
The five percent (5%) franchise tax due from the e-Sabong
Operator shall be separate and distinct from the five percent
(5%) franchise tax due from PAGCOR arising from the
licensing and regulatory fees that PAGCOR receives from
the e-Sabong Operator.

No. 27-2022
Circularizes the lists of withholding agents
required to deduct and remit the 1% or 2%
Creditable Withholding Tax for the purchase of
goods and services under Revenue
Regulations No. 31-2020


No. 28-2022
Prescribes the guidelines in the submission of
Certificate of Entitlement to Tax Incentives
(CETI) under RA No. 11534 (CREATE Law)


No. 28-2022
Pursuant to the CREATE Law, all Registered Business Enterprises (“RBEs”) shall
apply for a Certificate of Entitlement to Tax Incentives (“CETI”) with their
|||
concerned Investment Promotion Agency prior to the filing of Annual Income Tax
Return (AITR). The CETI shall then be attached to the AITR filed with the BIR as
provided by Section 4, Rule 8 of the aforementioned IRR.
The CETI is a requirement for all RBEs in order to avail of the Income Tax Holiday
(ITH) or preferential rate granted by CREATE law.
This repeals the provisions stated in RMC No. 14-2012 dated April 4, 2012 which
required the submission of the Certificate for Entitlement to Income Tax Holiday,
now CETI, within thirty (30) days from filing of the RBE's AITR.


No. 32-2022
Clarifies the tax treatment of the Philippine
Amusement and Gaming Corporation
(PAGCOR), its licensees and contractees

REVENUE MEMORANDUM CIRCULAR

NO. 32-2022
TAX TREATMENT OF PAGCOR
The Supreme Court held that PAGCOR's income from its gaming
operations shall be subject to the five percent (5%) franchise tax while its
income from other related services shall be subject to the corporate income
tax rate provided in the NIRC. The Court ruled as follows:
"[PAGCOR's] income from gaming operations is subject only to five
percent (5%) franchise tax under P.D. 1869, as amended, while its
income from other related services is subject to corporate income tax
pursuant to P.D. 1869, as amended, as well as R.A. No. 9337.
x x x" (Underscoring and emphasis ours)


NO. 32-2022
Accordingly, PAGCOR's income from its operations and licensing of gambling
casinos, gaming clubs and other similar recreation or amusement places, gaming
pools are, in lieu of all taxes, subject to the five percent (5%) franchise tax pursuant
to P.D. No. 1869, as amended. This includes, among others:
1. Income from its casino operations;
2. Income from dollar pit operations;
3. Income from bingo operations, including all variations thereof; and
4. Income from mobile bingo operations operated by it, with agents on
commission basis. Provided, however, that the agent's commission income
shall be subject to regular income tax, and consequently, to withholding tax
under existing regulations.


NO. 32-2022
On the other hand, income from "other related operations/services" shall be subject to corporate income
tax, VAT and other applicable taxes under the NIRC, as amended. This includes, among others, but is not limited
to:
1. Regulatory/license fees from licensed private casinos;
2. Regulatory/license fees from private bingo operations, including all variations thereof;
3. Regulatory/license fees from private internet casino gaming, internet sports betting and private mobile
gaming operations;
4. Regulatory/license fees from private poker operations;
5. Regulatory/license fees from private junket operations;
6. Regulatory/license fees from SM demo units;
7. Regulatory/license fees from all other electronic derivatives of brick and mortar games regulated by
PAGCOR;
8. Income from other necessary and related services, shows and entertainment.
PAGCOR's other income that are not connected with the foregoing operations are likewise subject to
corporate income tax, VAT and other applicable taxes under the NIRC, as amended.

No. 36-2022
Prescribes the uniform template for VAT Zero
Percent (0%) Certification to be issued by
Investment Promotion Agencies in relation to
Q & A No. 34 of RMC No. 24-2022


NO. 36-2022
This Circular is being issued to prescribe the format of

VAT Zero Percent (0%) Certification issued by IPAs to the
duly registered export enterprises (REEs).

No. 37-2022
Clarifies the guidelines on the submission of
Certificate of Entitlement to Tax Incentives
pursuant to RMC No. 28-2022


NO. 37-2022
All registered business enterprises (RBEs) enjoying tax
incentives under the transitory provisions in Section 311 of Title XIII
of Republic Act No. 11534, otherwise known as Corporate Recovery
and Tax Incentives for Enterprises (CREATE) Act and all business
enterprises registered under the said law shall apply for a Certificate
of Entitlement to Tax Incentives (CETI) with their respective
Investment Promotion Agency (IPA) through the Fiscal Incentives
Registration and Monitoring System (FIRMS) prior to the filing of the
Annual Income Tax Return (AITR).

NO. 37-2022
However, RBEs already issued with a certificate of entitlement
to tax incentives in a template/format previously prescribed by
the IPA, such as, certificate of entitlement to income tax holiday,
certificate of available incentives, certificate of registration and
tax exemption, or any similar certificate, as proof of the RBE's
entitlement to fiscal incentives, shall be allowed to attach the
same in their AITR for taxable year 2021, in lieu of the Fiscal
Incentives Review Board (FIRB)-prescribed CETI.

No. 38-2022
Clarifies the Transitory Provision for the non-
income related tax incentives granted to
registered export enterprises under
Investment Promotion Agencies


NO. 38-2022
All existing registered export enterprises (REEs) prior
to CREATE that will continue to avail of their existing income tax
incentives, may continue to enjoy the VAT zero-rating on local purchases
that are directly attributable and exclusively used in the registered
project or activity until the expiration of the transitory period, as follows:
1. For REEs which are granted only an Income Tax Holiday (ITH) —
until the remaining period of the ITH.
2. For REEs which are granted an ITH and/or five percent (5%) tax on
gross income earned — until the expiration of the ten (10)-year limit.


NO. 38-2022
The extent for the availment of VAT zero-rating on local

purchases is anchored on the transitory period stated above.
Thus, if the income tax incentive of REE has already expired
prior to CREATE then, the VAT zero-rating on local
purchases could no longer be availed.

No. 40-2022
Provides clarifications and guidelines on the
use of Electronic Audited Financial Statement
(eAFS) System


NO. 40-2022
In order to provide ease to taxpayers, the submission of eFiled
Annual Income Tax Returns (AITR) and its attachments to eAFS is
applicable to any taxable year and all succeeding fiscal and/or
taxable years. The existing procedures on the submission of filed
AITR and its attachments to eAFS system shall be observed.
Likewise, the use of Electronic Signature applies to all tax

returns, attachments and documents required to submit AITR and
returns.

No. 42-2022
Clarifies the deadline for filing of Annual Income Tax
Returns for TY ending December 31, 2021; providing
guidelines in the manner of filing and payment
thereof; and non-imposition of surcharge on amended
returns


NO. 42-2022
In relation to the BIR advisory dated March 22, 2022, this

Circular is hereby issued to reiterate the deadline for the
filing of Annual Income Tax Return (AITR) for Calendar Year
2021 as well as the payment of the corresponding taxes due
thereon is on April 18, 2022 (Monday),since April 15, 2022
falls on a non-working holiday.

NO. 42-2022
Further, to alleviate the difficulties in beating the deadline on a
holiday and considering the challenges encountered in the hybrid
working arrangement adapted by most taxpayers, tentative AITR
may be filed on or before April 18, 2022. The return may be amended
on or before May 16, 2022,without imposition of interest, surcharge
and penalties. Provided that, a taxpayer whose amended returns will
result in overpayment of taxes paid can opt to carry over the
overpaid tax as credit against the tax due for the same tax type in
the succeeding period or file for refund.

No. 43-2022
Prescribes the non-imposition of surcharge on
amended tax returns


NO. 43-2022
25% surcharge shall not be imposed to an amendment of
a tax return if the taxpayer was able to file the initial tax
return on or before the prescribed due date for its filing. On
the other hand, the 25% surcharge shall be imposed on a tax
deficiency found during audit if the particular tax return
being audited was found to have been filed beyond the
prescribed period or due date.

No. 44-2022
Prescribes guidelines in the filing of Annual Income
Tax Returns and payment of tax due thereon for TY
2021


No. 46-2022
Clarifies the deadline of submission of
attachments to the 2021 Annual Income Tax
Return and other matters


No. 46-2022
This Circular is being issued in relation to Revenue Memorandum Circular
(RMC) Nos. 42-2022 and 44-2022, particularly on the deadline of the
submission of attachments to the 2021 Annual Income Tax Return (AITR).
In view thereof, it is hereby clarified that the deadline for submission of

attachments to the said AITR is on or before May 31, 2022, whether the
electronically filed AITR is an original or an amended return. The submission
shall be made manually to the Revenue District Office (RDO) or to the Large
Taxpayers Division where the taxpayer is registered or electronically through
the Electronic Audited Financial Statements (eAFS) System of the BIR.

No. 46-2022
Further, it is hereby reiterated that manual filers of the 2021
Annual Income Tax Return shall file and pay the
corresponding tax due thereon manually to any Authorized
Agent Banks (AABs) or to the Revenue Collection Officers
(RCOs) of any Revenue District Office (RDO) on or before
April 18, 2022. The eBIRForms and the eFPS filers shall
follow the guidelines stated in RMC No. 44-2022.

No. 48-2022
Revises provisions on the submission of financial
statements of cooperatives registered under the
Cooperative Development Authority as a
requirement for the renewal of Certificate of Tax
Exemption of cooperatives pursuant to RMO No.
76-2010


No. 48-2022
"(A) Corporations, Companies, Partnerships or Persons required to Keep Books of Accounts. —
All corporations, companies, partnerships or persons required by law to pay internal revenue
taxes shall keep and use relevant and appropriate set of bookkeeping records duly authorized
by the Secretary of Finance wherein all transactions and results of operations are shown and
from which all taxes due the Government may readily and accurately be ascertained and
determined any time of the year. Provided, that corporations, companies, partnerships or
persons whose gross annual sales, earnings, receipts or output exceed Three Million pesos
(P3,000,000) shall have their books of accounts audited and examined yearly by independent
Certified Public Accountants (CPA) and their income tax returns accompanied with a duly
accomplished Account Information Form (AIF) which shall contain, among others, information
lifted from certified balance sheets, profit and loss statements, schedules listing income-
producing properties and the corresponding income therefrom and other relevant statements."

No. 48-2022
Relative thereto, cooperatives registered under the CDA
whose gross annual sales, earnings, receipts do not exceed
the above threshold of P3,000,000 shall not be required to
submit a Financial Statement (FS) audited by an
independent CPA when renewing its application for CTE.

No. 52-2022
Clarifies the filing and payment date of the
franchise tax and its corresponding return for
PAGCOR Licensees under RMC No. 32-2022


No. 52-2022
On March 29, 2022, Revenue Memorandum Circular (RMC) No. 32-2022 was
issued to clarify the tax treatment of the Philippine Amusement and Gaming
Corporation (PAGCOR), its Licensees and Contractees. As stated under the
RMC, the 5% franchise tax is directly payable to the BIR, specifically to the
concerned Revenue District Office (RDO) where the Licensee is registered and
that the Licensee shall remit the franchise tax to the BIR using BIR Form 2553
indicating the Alphanumeric Tax Code (ATC) OT 010.
This Circular is issued to clarify that said BIR Form 2553 shall be filed and the
corresponding franchise tax be paid within 25 days after the end of each
taxable quarter.

No. 53-2022
Publishes the full text of the Data Sharing
Agreement between the BIR and the Philippine
Statistics Authority


No. 61-2022
Announces the availability of Central Business
Portal (CBP) for online registration of all types
of corporations, partnerships and sole
proprietors


NO. 61-2022
In this regard, the following guidelines shall be observed
by CBP applicants:
1. Business taxpayers who are registering through CBP may

opt to pay their Annual Registration Fee (ARF) amounting
to Five hundred pesos (P500.00) and loose Documentary
Stamp Tax (DST) of Thirty pesos (P30.00) either
electronically or manually.


NO. 61-2022
2.Business taxpayers who pay online through various

electronic payment (e-Payment) channels may immediately
have their electronic Certificate of Registration (COR) with
Quick Response (QR) Code be printed in A4 size bond
paper thru CBP.

NO. 61-2022
3.The electronic COR issued by the CBP shall have the same
purpose of the signed hard copy issued by the Bureau and
shall be posted together with the duly validated proof of
payment of ARF in the principal place of business in a
place that is clearly and easily visible to the public.

NO. 61-2022
4. Business taxpayers who opt to pay manually shall complete its business
registration at the respective Revenue District Office (RDO) by presenting
the printed copy of the following CBP generated documents, together
with the "Checklist of Documentary Requirements" (Annex "A"):
a. CBP Unified Form (Annex "B1" for Corporations/Partnerships or "B2"

for Sole Proprietors);
b. Accomplished Tax Type Questionnaire (Annex C); and
c. Pre-filled BIR Form No. 0605 (Payment Form) (Annex D).


NO. 61-2022
5. All business taxpayers who registered in CBP shall

proceed immediately to the RDO indicated in the electronic
COR in order to complete its registration and buy a BIR
Printed Receipts/Invoices (BPR/BPI) or secure an Authority
to Print (ATP) receipts/invoices before they can have their
own receipts/invoices printed by BIR Accredited Printers.

NO. 61-2022
6. Register books of accounts on or before the deadline for

filing of the initial quarterly income tax return or the annual
income tax return whichever comes earlier.

NO. 61-2022
7. Any correction on the required tax returns or tax types on the
electronically issued COR from CBP shall require updates by
the taxpayer with the concerned RDO. The latter shall then
review the registered tax and form types of the concerned
business taxpayer in the Internal Revenue Integrated System-
Taxpayer Registration System (IRIS-TRS), make necessary
update, if any and replace the COR, if necessary, upon the
issuance of BPR/BPI or ATP, whichever is applicable.

No. 69-2022
Circularizes the “Updated List of Accredited
Microfinance NGOs” as of April 4, 2022


No. 71-2022
Circularizes DTI-DSWD-NCSC-NCDA-DOH-BIR-
DILG JMC 01-2022, titled ”Guidelines on the
Provision of the Mandatory Statutory Benefits And
Privileges of the Senior Citizens And Persons
With Disabilities on their Purchases through
Online (E-Commerce) and Phone Call/SMS"


NO. 71-2022
E-Commerce Purchases through the internet or online platform:
6.5. The Senior Citizen or Person with Disability must, prior to

placement of order, declare to the online platform/merchant
that he/she is a Senior Citizen or a Person with Disability. Upon
confirmation of order/s, the Senior Citizen or Person with
Disability must provide/attach a scanned copy/screenshot or
image of his/her ID, as explained in paragraph 6.1 of this JMC.

NO. 71-2022
In addition, the following shall also be attached by the Senior
Citizen or the Person with Disability upon placement of the order:
6.5.1. For purchases of medicines, copy of the medical
prescription, copy of the front page and last entry page of the
Senior Citizen/Person with Disability purchase booklet.
6.5.2. For purchases of basic necessities and prime commodities,
copy of the front page and last entry page of the Senior Citizen/
Person with Disability purchase booklet for commodities.

NO. 71-2022
6.6. Upon delivery of the goods/orders or performance of the
service purchased through the online platform the Senior
Citizen or the Person with Disability, or his/her duly
authorized representative, shall present the original copy
of the Senior Citizen or the Person with Disability proof of
entitlement which was attached during the confirmation of
his/her order/s together with the authorization letter, if
applicable.

NO. 71-2022
6.7. In the event that upon delivery of the goods/orders or
performance of the service, the Senior Citizen, Person with
Disability, or his/her authorized representative failure to
present the Senior Citizen/Person with Disability ID, or any
government issued ID, as proof of discount entitlement and
authorization letter, if applicable, the concerned platform/
merchant may charge the Senior Citizen and the Person with
Disability the full amount of the goods/orders or service.

NO. 71-2022
C. Purchases through the telephone or mobile phone call:
6.8. The Senior Citizen or Person with Disability must upon

placement of order provide his/her name, date of birth, and the ID
number of those provided under Section 6 (6.1) of this JMC, as
proof of discount entitlement.
6.9. The business establishment shall exert effort and ask the
customer if he/she is a Senior Citizen and/or Person with
Disability.


NO. 71-2022
6.10. After completing the order, the business establishment shall
apply the appropriate discount to the price of the goods or services
for the consumption of the Senior Citizen or Person with Disability.
6.11. Upon delivery of the goods/orders or performance of the

service, the Senior Citizen or Person with Disability must present
his/her Senior Citizen or Person with Disability proof of entitlement
together with the authorization letter, if applicable, to the business
establishment representative or its third-party service provider.

NO. 71-2022
6.12. In the event that upon delivery of the goods/orders or
performance of the service purchased through phone call/mobile
call, the Senior Citizen and Person with Disability or his/her
authorized representative failure to present the Senior Citizen or
Person with Disability ID, or any government issued ID, as proof of
discount entitlement and authorization letter, if applicable, the
concerned platform/merchant may charge the Senior Citizen and
Person with Disability the full amount of the goods/orders or
services.

No. 76–2022
Suspension of Audit and Other Field
Operations Pursuant to, and Under Authority
of, All Task Forces Created Thru Revenue
Special Orders, Operations Memoranda and
Other Similar Orders/Directives


No. 76-2022
All field audit and other field operations pursuant to, and under
authority of, all Task Forces, created thru Revenue Special Orders
(RSOs), Operation Memoranda (OM) and other similar orders or
directives, relative to examinations and verifications of taxpayers'
books of account, records, and other transactions are hereby ordered
suspended until further notice.


No. 76-2022
As such, no field audit, field operations, or any form of
business visitation in execution of Letters of Authority/Audit
Notices (LOAs) or Mission Orders (MOs) should be conducted
by the said Task Forces.
Further, no written orders to audit and/or investigate taxpayers'

internal revenue tax liabilities shall be issued and/or served
pursuant to, and under authority, of said Task Forces.


No. 77–2022
Suspension by the Bureau of Internal Revenue
Effective May 30, 2022 of All Pending Letters
of Authority/Mission Orders as of May 30, 2022
and Submission of Inventory Thereafter


No. 77-2022
All field audit and other field operations of the Bureau of Internal
Revenue covered by Letters of Authority/Mission Orders relative to
examinations and verifications of taxpayers' books of account, records,
and other transactions are hereby ordered suspended until further
notice.
As such, no field audit, field operations, or any form of business

visitation in execution of Letters of Authority/Audit Notices (LOAs) or
Mission Orders (MOs) should be conducted, nor any new Letters of
Authority/Mission Orders be further issued.


No. 77-2022
No written orders to audit and/or investigate taxpayers' internal revenue tax liabilities shall be
issued and/or served, except in the following cases:
• Investigation of cases prescribing on or before October 31, 2022;
• Processing and verification of estate tax returns, donor's tax returns, capital gains tax returns and
withholding tax returns on the sale of real properties or shares of stocks together with the
documentary stamp tax returns related thereto;
• Examination and/or verification of internal revenue tax liabilities of taxpayers retiring from
business;
• Audit of National Government Agencies (NGAs), Local Government Units (LGUs) and Government
Owned and Controlled Corporations (GOCCs) including subsidiaries and affiliates; and
• Other matters/concerns where deadlines have been imposed or under the orders of the
Commissioner of Internal Revenue.


No. 77-2022
However, service of Assessment Notices, Warrants, and Seizure
Notices should still be effected. Also, taxpayers may voluntarily pay
their known deficiency taxes without the need to secure authority
from concerned Revenue Officials.
In this regard, inventory of all outstanding Letters of Authority/Audit

Notices, and Letter Notices as of May 30, 2022, shall be submitted to
the Office of the Commissioner in Excel format, both in softcopy in
CD/DVD and hardcopy, on or before noon of June 15, 2022.


No. 78–2022
Clarifying the Income Tax Treatment of the
Different Classifications of Educational
Institutions and Their Tax Obligations


NO. 78-2022
SECTION 2. Coverage. —
This Circular shall cover the following educational institutions and their
income tax treatment, to wit:
A. Proprietary Educational Institution — refers to any private school in and

administered by private individuals or groups with an issued permit to
operate from the Department of Education (DepEd), or the Commission on
Higher Education (CHED), or the Technical Education and Skills
Development Authority (TESDA), as the case may be, in accordance with
existing laws and regulations.


NO. 78-2022
1.Domestic Corporation — The income of a proprietary
educational institution that is considered a "corporation,"
as defined under Section 22 (B) of the Tax Code, and is
organized in or existing under the laws of the Philippines,
is subject to the ten percent (10%) preferential income tax
rate under Section 27 (B) of the Tax Code. Provided, that
beginning July 1, 2020 until June 30, 2023, the tax rate
imposed shall be one percent (1%).

NO. 78-2022
Moreover, all domestic non-stock, non-profit (NSNP)

educational institutions whose net income or assets accrue/
inure to or benefit any member or specific person shall
likewise be subject to the ten percent (10%) preferential
income tax rate under Section 27 (B) of the Tax Code.
Provided, that beginning July 1, 2020 until June 30, 2023, the
tax rate imposed shall be one percent (1%).

NO. 78-2022
If the gross income of the domestic corporation proprietary
educational institution — including NSNP educational institution in
the preceding paragraph insofar as its revenues or income not used
actually, directly and exclusively for educational purposes are
concerned — from 'unrelated trade, business or other
activity' exceeds fifty percent (50%) of the total gross income it
derived from all sources, the regular corporate income tax
prescribed in Section 27 (A) of the Tax Code shall be imposed on the
entire taxable income of the said institution.

NO. 78-2022
2. Others — The other proprietary educational institutions that are
not organized as domestic corporations are taxable as follows:
i. Individual — The income of an individual, trust, or estate that

owns the proprietary educational institution as a sole
proprietor, is taxable under Sections 24 and 25 of the Tax
Code, and the applicable tax rates shall depend on the
citizenship and residence of such individual, trust, or estate.

NO. 78-2022
ii. Other Corporations — The income of a corporation, as

defined under Section 22 (B) of the Tax Code, that is not
organized as domestic corporation but is classified as
resident foreign corporation, is taxable under Section 28
(A) of the Tax Code.

NO. 78-2022
C. Non-stock and Non-profit Educational Institution — All revenues and
assets of a non-stock, non-profit (NSNP) educational institution used
actually, directly and exclusively for educational purposes shall be
exempt from taxes and duties, pursuant to Paragraph 3, Section 4, Article
XIV of the 1987 Constitution, and as reiterated in Section 30 of the Tax
Code. For the Constitutional exemption to be enjoyed, the NSNP
educational institutional must comply with the two requisites: (1) the
school must be non-stock and non-profit; and (2) the income is actually,
directly and exclusively used for educational purposes.

NO. 78-2022
Certificate of Income Tax Exemption
1. As provided under Section 2 (C) of this Circular, all

revenues and assets of a NSNP educational institution
used actually, directly and exclusively for educational
purposes shall be exempt from income taxes.


NO. 78-2022
2. To ensure that the exempt income of a NSNP educational
institution are used actually, directly, and exclusively for
educational purposes, the NSNP educational institution is required
to secure a one-time certificate of income tax exemption or
exemption ruling from the BIR, subject to the submission of
applicable documents, pursuant to Revenue Memorandum Circular
(RMC) No. 24-2016 and Revenue Memorandum Order (RMO) No.
44-2016. Otherwise, the income of the NSNP educational institution
shall be subject to applicable taxes under the Tax Code.

No. 82–2022
Clarification on the Service of Letter of
Authority Pursuant to Revenue Audit
Memorandum Order (RAMO) No. 1-2000


No. 82-2022
This Circular is hereby issued to address the issues and concerns on the service of the
electronic Letter of Authority (eLA) to the taxpayer within the 30-day period from the
date of issuance thereof.
Item No. VIII of RAMO No. 1-2000 provides:
"2.3 A Letter of Authority must be served or presented to the taxpayer within 30 days
from its date of issue, otherwise, it becomes null and void unless revalidated. The
taxpayer has all the right to refuse its service if presented beyond the 30-day period
depending on the policy set by top management. Revalidation is done by issuing a new
Letter of Authority or by just simply stamping the words 'Revalidated on ____' on the
face of the copy of the Letter of Authority issued"


No. 82-2022
Let it be clarified, that RAMO No. 1-2000 was already amended by RAMO No. 1-2020,
thereby deleting the above quoted provision to read as follows:
"1. Serving of eLA
a. On the first opportunity of the RO to have a personal contact with the taxpayer, he
should present the eLA together with the checklist of requirements. The eLA should
only be served by the RO assigned to the case. He should have the proper
identification card and should be in uniform. However, the service of eLA may
likewise be done in other manners as prescribed in existing policies.
b. An eLA authorizes or empowers a designated RO to examine, verify and scrutinize
a taxpayer's books and records in relation to his internal revenue tax liabilities for a
particular period.
2. Request for Accounting Records xxx”


No. 82-2022
What is crucial is that the entire audit process shall be
completed within a period of 180 days for RDO cases/240 days
for LT cases from the date of issuance of eLA.
Therefore, eLA which remains unserved upon the effectivity of

this Circular or have been served beyond the 30-day period from
the date of its issuance shall still be considered valid and
enforceable, provided that the 180-day/240-day period to
complete the audit process has not yet expired.

No. 84–2022
P r e s c r i b i n g t h e Te m p l a t e f o r S w o r n
Declaration to be Executed by the Registered
Business Enterprise (RBE) in Relation to Q
and A No. 36 of RMC No. 24-2022


No. 84-2022
This Circular is being issued to prescribe the template of Sworn
Declaration to be executed by the duly registered RBE stating that
the goods and/or services being purchased shall be used directly
and exclusively in the registered project or activity. The said
sworn declaration shall then be provided to the RBE's supplier
prior to the sale transaction to avail of the VAT zero-rate
incentives.


No. 102–2022
Publishing Fiscal Incentives Review Board (FIRB)
Resolution No. 017-22 — Grant of Authority to
Implement a 70:30 Work-from-Home (WFH)
Arrangement for Registered Business Enterprises
(RBEs) in the information Technology- Business
Process Management (IT-BPM) Sector

Revenue Memorandum Circular No. 102-2022
NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY

RESOLVED, that as a temporary measure under Rule 23 of
the CREATE Act IRR, RBEs of the IT-BPM sector may be
allowed by their respective IPAs to continue implementing
WFH arrangements without adversely affecting their fiscal
incentives under the CREATE Act from 1 April 2022 until 12
September 2022 only.

RESOLVED, FURTHER, the number of employees under a WFH arrangement

shall not exceed thirty percent (30%) of the total workforce of the RBE, while
the remaining seventy percent (70%) of the total workforce shall render work
or service within the geographical boundaries of the ecozone or freeport
zone being administered by the IPA with which the project/activity is
registered; Provided, That the total workforce shall refer to the total
employees that are directly or indirectly engaged in the registered project or
activity of the RBE, but excludes third-party contractors rendering janitorial
or security services and other similar services.

RESOLVED, FURTHER, RBEs in the IT-BPM sector adopting

a WFH arrangement exceeding the thirty percent (30%)
threshold shall not be entitled to avail of fiscal and non-
fiscal incentives for the said month/s of non-compliance.
RESOLVED, FURTHER, the 70:30 WFH arrangement is a
temporary measure under Rule 23 of the CREATE Act IRR
implemented in view of Proclamation No. 1218, s. 2021.

No. 103–2022
Publishing Fiscal Incentives Review Board
(FIRB) Resolution No. 018-22 — Granting the
Board of Investments (BOI) Authority to
Implement Temporary Measures for Registered
Business Enterprises (RBEs) Affected by
Typhoon Odette

FIRB Resolution No. 018-22 which grants BOI authority to implement

temporary measures for RBEs affected by typhoon Odette, such as
movement of the start of commercial operations and the reckoning
date of their Income Tax Holiday (ITH), and deferment of the ITH
availment, until 21 December 2022 or until Presidential Proclamation
No. 1267 has been lifted, whichever comes earlier, and subject to the
terms and conditions stated in the RBE's respective registrations.

No. 115–2022
Lifts the suspension on the issuance of

Mission Orders for the conduct of Tax
Compliance Verification Drive (TCVD)

Lifts the suspension on the issuance of Mission Orders insofar as

authorizing Revenue Officers to conduct Tax Compliance Verification
Drive (TCVD). This includes verification of complaints involving alleged
violation of the 1997 National Internal Revenue Code (NIRC), as amended.
Strict compliance with the existing applicable Rules and Regulations of

the BIR on the issuance and implementation of such Mission Orders shall
be observed. The issuance of Mission Orders other than for TCVD
purposes shall remain suspended until further notice..
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HOW TO REDUCE

TAX LEGALLY AND

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ATTY. ARNOLD A. APDUA, CPA

He is a resource person and speaker for various Continuing Professional Development

Philippine Institute of Certified Public Accountants (PICPA);

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INVITED AS RESOURCE SPEAKER OF:

PHILIPPINE INSTITUTE OF CERTIFIED

- Agusan Del Norte / Butuan Chapter

INVITED AS RESOURCE SPEAKER OF:

PHILIPPINE INSTITUTE OF CERTIFIED

INVITED AS RESOURCE SPEAKER OF:

PHILIPPINE INSTITUTE OF CERTIFIED

INVITED AS RESOURCE SPEAKER OF:

ACCOUNTING ORGANIZATIONS / FIRMS

INVITED AS RESOURCE SPEAKER OF:

PROFESSIONAL / BUSINESS ORGANIZATIONS

United Architects Philippine Dental

The Philippine Philippine

INVITED AS RESOURCE SPEAKER OF:

CORPORATE / NON-PROFIT ENTITIES

Atty. Arnold A. Apdua, CPA

INVITED AS RESOURCE SPEAKER OF:

Atty. Arnold A. Apdua, CPA

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TAX EVASION AND

TAX EVASION AND TAX AVOIDANCE

“Tax evasion connotes fraud through the use of pretenses

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“Tax evasion connotes the integration of three (3) factors:

• The end to be achieved;

• An accompanying state of mind which is described as “evil”,

• A course of action or failure of action which is unlawful.

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EXAMPLES OF TAX EVASION

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5. Personal expense claimed as business expense

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REDUCING TAX PAYMENTS

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SAMPLE COMPUTATION OF PENALTIES

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SAMPLE COMPUTATION OF PENALTIES (FRAUDULENT)

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PERSONAL INCOME TAX RATES

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SUMMARY OF CORPORATE RATES

Rate Effectivity Rate Effectivity

1% July 1, 2020 to June

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SUMMARY OF CORPORATE RATES

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CORPORATE TAX RATES

The higher between the “Regular” or “Minimum Corporate

Rate Effectivity Rate Effectivity