Client Advisory Letter (August-September 2008)

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Lead article: Protecting the environment
In order to allow for sustainable human activity that will not adversely harm the environment, various governments across the world have adopted several approaches to influence and direct these human activities.

BIR issuances
  • Clarification on the procedure of handling of taxpayer’s application for cancellation of business registration (RMC No. 56-2008 dated July 25, 2008)
  • Period for payment of applicable taxes on the foreclosure of real estate mortgage under the General Banking Law of 2000 (RMC No. 58-2008 dated August 15, 2008)
  • Amendments to RMC No. 30-2008 providing for the taxability of insurance companies for business tax, MCIT and DST purposes (RMC No. 59-2008 dated August 23, 2008)
  • BIR grants authority to change inventory method to FIFO (DA (TAR-002) 128-2008 dated August 11, 2008)
  • Sale of roasted and fried chicken with steamed rice exempt from VAT (DA (VAT-017) 134-2008 dated August 12, 2008)
  • ROHQ’s Filipino managerial end technical personnel entitled to 15% tax based on gross income (DA (ECB-002) dated 143-2008 dated August 13, 2008)
  • Foreign exchange gains generated from registered activities covered by ITH (DA (IL-011) 107-2008 dated August 5, 2008))
  • Transfer of idle land subject to CGT and DST but exempt from VAT (DA (C-024) 108-2008 dated August 5, 2008)
  • Sales of goods or services to PEZA registered customers are subject to VAT at zero-percent rate DA (VAT-025) 162-2008 dated August 21, 2008)
  • Taxability of liquidating dividends (DA(C-48) 168-2008 dated August 22, 2008)
  • Percentage-of-completion method used for long-term contracts (DA (TAR-002) 186-2008 dated August 29, 2008)

Other issuances
  • Bangko Sentral ng Pilipinas (BSP): 20% final withholding tax on overnight Reverse Repurchase Agreements (RRPs) with the BSP (BSP Circular No. 619, series of 2008 dated August 22, 2008)
  • Securities and Exchange Commission (SEC): Guidelines on on-site verification of financial records relative to certain applications filed with the Commission (SEC Memorandum Circular No. 6, Series of 2008 dated July 22, 2008)
  • Bureau of Immigration (BI): Revised rules on Philippine citizenship retention/reacquisition (Bureau of Immigration, Memorandum Circular No. MCL-08-06 dated September 05, 2008)

Court decisions
  • Supreme Court (SC): SC orders refund of excise taxes on tobacco products based on the clear wording of the Tax Code (G.R. No. 163583 dated August 20, 2008)
  • SC: Two-year period to claim unutilized input VAT not counted from date of payment of input VAT (G.R. No. 172129 dated September 12, 2008)
  • Court of Tax Appeals (CTA): Deductibility of donations (CTA E.B. No. 371 dated August 12, 2008)
  • CTA: CDA registration not required for DST exemption (CTA Case No. 7291 dated August 12, 2008)
  • CTA: Taxpayer must prove that service recipient is doing business outside the Philippines to qualify for VAT zero-rating (CTA Case Nos. 7158, 7285 and 7313 dated August 07, 2008)
  • CTA: Waiver of the statute of limitations must strictly comply with requirements to expend prescriptive period to assess (CTA Case No. 6720 dated August 7, 2008)

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