Client Advisory Letters

A publication about developments in Philippine taxation. The contents usually include latest Republic Acts, Bureau of Internal Revenue issuances, Customs regulations, Court decisions, BSP circulars, SEC circulars, Department of Justice opinions and Executive Orders relevant to Tax practice.

Latest issue

Defined benefit plans: Amendments to PAS 19, ‘Employee contributions’ (CAL October 2015)

This amendment clarifies the application of PAS 19, ‘Employee contributions’ (2011) - referred to as ‘PAS 19R’, to plans that require employees or third parties to contribute towards the cost of benefits. The amendment does not affect the accounting for voluntary contributions.

Previous issues

Clarifying depreciation and amortization methods (CAL September 2015)

Over the years, there are questions on acceptable accounting methods for depreciation and amortization. IAS 16, Property, plant and equipment, and IAS 38, Intangible assets, define depreciation and amortization, respectively, as the systematic allocation of the cost of the asset after deducting its residual value over its expected useful life.

Amendments to the IFRS for SMEs - Client Advisory Letter August 2015 issue (CAL August 2015)

In July 2009, the International Accounting Standards Board (IASB) issued the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) in response to strong international support from the world’s national accounting standardsetters for the IASB to develop global standards for SMEs.

The future of lease accounting (CAL July 2015)

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (‘the Boards’) have proposed to require all leases to be reported on balance sheet. The impact on lessee financial reporting, asset financing, IT, systems and controls could be substantial.

New rules: accounting for ‘bearer’ plants (CAL June 2015)

Prior to 2014, IAS 41, Agriculture, required all ‘bearer’ biological assets and the produce growing on the bearer plant (or ‘consumable’) related to agricultural activity to be measured generally at fair value less cost to sell. This is based on the principle that the biological transformation of biological assets is best reflected by fair value measurement. IAS 41 further defines biological transformation as “the processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset”.

Accounting for investments in other entities in separate FS (CAL May 2015)

Investments in other entities would include investments in subsidiaries, associates and joint ventures. Under PAS 27 – Separate Financial Statements (FS), the current applicable standard, these investments should be accounted for atcost, or in accordance with PFRS 9, as long as an entity would apply the same accounting for each category of investments.

Accounting for leave credits: A deeper understanding of (PAS) 19 – Employee Benefits (CAL April 2015)

Why PAS 19? Philippine Accounting Standard (PAS) 19 applies to all types of employee benefits, although it is in the area of accounting for defined benefit pension plans that PAS 19 results in most complexity.

A closer look at IFRIC 21 - Levies (CAL March 2015)

One of the new interpretations that came into effect for 2014 is IFRIC 21 ‘Levies’. It was published by the IFRS Interpretations Committee (IC) in May 2013 to address diversity in practice in the recognition of the liability to pay a levy.

Shift of global economic power to emerging economies set to continue (CAL February 2015)

The global economic power shift away from established advanced economies in North America, Western Europe and Japan will continue over the next 35 years – despite a projected slowdown in Chinese growth after around 2020.

Added de minimis benefits (CAL January 2015)

Updates, reiterations and clarifications on selected topics

Year-end tax reminders for 2014 (CAL December 2014)

Amid yuletide celebrations, Philippine entities are busy closing their books of accounts for 2014. We take this opportunity to point out some key issues that are worthy to remember.