Asian Financial Services M&A poised to accelerate in late 2011 and 2012

Client Advisory Letter, July-September 2011 issue

The sixth annual Asian Financial Services M&A report explores the growing potential for deal activity in the region, including analysis of recent transactions and economic trends, as well as insights into emerging investment opportunities. The report is based on the findings of a survey of 375 senior FS executives from across 13 Asian territories
and is supplemented by qualitative research, client interviews and the views of PwC financial services M&A experts.

Bureau of Internal Revenue

Revenue Regulation (RR)

  • Implementing rules of the tax provision of RA 9856 (RR 13-2011 dated 25 July 2011)
  • Reportorial requirement for establishments leasing or renting out spaces for commercial activities (RR 12-2011 dated25 July 2011)
  • Amendment to the definition of gross receipts for purposes of the common carrier’s tax of international carriers (RR 11-2011 dated 20 July 2011)

Revenue Memorandum Circular (RMC)

  • Services rendered by hotels to international air transport operators are subject to 12% VAT (RMC 31-2011 dated 4 August 2011)
  • Clarification of issues concerning the IAET (RMC 35-2011 dated 14 March 2011)
  • VAT on tollway operators (RMC 39-2011 dated 31 August 2011)
  • BIR prescribed new income tax forms covering the 2011 filing (RMC 40-2011 dated 5 September 2011)

BIR Ruling

  • Power generating companies’ VAT based on VAT actually collected from DUs/ECs and remitted to such companies (BIR Ruling 232-2011 dated 15 July 2011)
  • Merchandise service fees are characterized as royalties (BIR Ruling ITAD 201-11 dated 26 July 2011)
  • Failure to file TTRA with ITAD before the transaction shall be a ground for disqualification under RMO 72-2010 (BIR Ruling ITAD 210-11 dated 15 August 2011)
  • Failure to file before transaction date is fatal to an application for treaty relief  (BIR Ruling ITAD 211-2011 dated 15 August 2011)

 

Other issuances

Court decisions

Supreme Court (SC)
  • Toll fees are subject to VAT (G.R. No. 193007 dated 19 July 2011)
  • BIR cannot impute “theoretical” interest on intercompany advances/ Intercompany advances may be subject to DST (G.R. No. 193007 dated 19 July 2011)
  • To determine transferee corporation’s control for purposes of qualifying as a tax-free exchange, consider the resulting collective ownership of all transferors (G.R. No. 193007 dated 19 July 2011)
Court of Tax Appeals (CTA)
  • Income from operations as a hospital does not strip it of its charitable character (CTA Case No. 7857, 03 June 2011)
  • Counting of legal periods (CTA Case No. 8102, 03 June 2011)
  • Premature filing of a judicial claim for refund is fatal to one’s cause of action (CTA Case No. 7808, 1 June 2011)
  • Failure to state the legal and factual bases of the assessment renders the same invalid
  • Willful failure to file a return (CTA Crim. Case No. 0-013 dated 5 January 2011)
  • A special law cannot be repealed, amended or altered by mere implication in a subsequent general law (CTA Case No. 7867 dated 4 January 2011)

Executive issuances

Securities and Exchange Commission (SEC)
  • Amendment of Securities Regulation Code Rule 9.2(2)(D) (SEC Memorandum Circular No. 4 dated 16 June 2011)

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