Client Advisory Letter (September-October 2007)

In this issue:

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• Suspension of RR 6-2007 on advance VAT on sale of refined sugar
• Quarterly payment of minimum corporate income tax (MCIT)

• Simplified processing of taxpayers’ remedies under Sec. 204 of the Tax Code
• Recent guidelines in computerised audit
• Latest audit policies, guidelines and standards at Large Taxpayers Service (LTS)
• Intensification of tax collection of delinquent accounts

• Collection letters issued to EFPS filers without tax payments
• Implementing rules and regulations (IRR) of Republic Act (RA) No. 9480, otherwise known as “Tax Amnesty Act of 2007”

• Non-resident citizen is taxable only on income derived from sources within the Philippines
• Any accredited non-stock, non-profit corporation/NGO not prohibited from engaging in lending activities may be evaluated for possible certification by the Philippine Council for NGO Certification (PCNC)
• APIC infused by stockholders shall form part of the acquisition costs of shares for CGT computation
• Non-stock, non-profit educational institutions are exempt from 20% final tax and 7.5% tax on their interest income under the expanded foreign currency deposit system
• Taxation of managerial and technical positions in Regional Operating Headquarter (ROHQ)
• PAS treatment of replacement parts of a power plant for depreciation purposes
• Build to Own (BTO) System not a taxable joint venture (JV)
• No CGT and DST on an exchange transaction without monetary consideration
• Taxation of idle real property
• Employees’ trust is exempt from income taxes
• Benefits received by an employee as a consequence of separation from the service of the employer for causes beyond the employee’s control are exempt from taxes
• VAT exemption privilege is personal to the grantee
• No income tax and WHT on management fee paid by a Philippine subsidiary to a foreign holding company
• The exemption from VAT is not extended to the purchase of goods/properties/services and importation of goods by non-stock, non-profit educational institutions

• Grant of authority to engage in limited trust business to thrift/rural banks
• Amendments of DOSRI rules and regulations

• Recent guidelines in determining the basis of dutiable value

• Presidential Task Force on the Security of Energy Facilities and Enforcement of Energy Laws and Standards (PTF-SEFEELS) created
• New ITC proclaimed
• Rationalising tax-free importation of Subic-registered enterprises
• All-out blanket support for the power infrastructure requirements of Texas Instruments (TI) within the Clark TI Special Economic Zone and Baguio City Economic Zone
• New ITCs proclaimed

• PEZA approves Guidelines in the Registration of Electric Power Generation Facilities/Utilities/Entities Operating Inside the Ecozone and the Supply of Electric Power therein

• Control test rule

• Payment of 10% final tax on income of Foreign Currency Deposit Unit (FCDU) does not exempt a bank from payment of Gross Receipts Tax (GRT)
• A registry return card is the best evidence to prove BIR’s receipt of a protest letter filed thru registry mail
• A letter objecting to the PAN can serve as a request for reinvestigation of an assessment which if granted by the BIR suspends the running of the period to assess under Sections 203 and 222 of the 1997 Tax Code, as amended

• Computation of legal period for filing tax refund claim

• Creating the Aurora Special Economic Zone

• Tax DDR/compliance group