Client Advisory Letter (October 2008)

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Lead article: When “all” is not everything
There are two important recent decisions of the Supreme Court on the tax exemption of entities with a Congressional franchise that should also teach any entity enjoying or trying to claim an exemption in general.

BIR issuances
  • Consolidated Revenue Regulations on primary registration, its updates and cancellation promulgated (RR No. 11-2008 dated August 15, 2008)
  • Payment of income tax due deemed substantial compliance with withholding tax requirement (DA(C-070) 235-2008 dated September 18, 2008 (citing earlier BIR DA 225-2003 dated July 16, 2003)
  • Sale of scrap materials arising from a SBMA company’s registered operations entitled to 5% preferential tax (DA(C-072)237-2008 dated September 19, 2008)
  • Withholding tax treatment of interest on amortization payments and reservation fee (DA(C-073)238-2008 dated September 19, 2008)
  • Royalties paid by a PEZA registered company subject to 25% FWT under the RP-Japan tax treaty but are VAT exempt (DA-ITAD 65-08 dated September 10, 2008)
  • Taxability of receipts of condominium dues (DA(C-068) 231-2008 dated September 18, 2008)
  • Taxability of income derived by a resident alien with dual employers (DA(C-074) 239-2008 dated September 19, 2008)
  • VAT treatment of laboratory and diagnostic services (DA (VAT-029) 258-2008 dated September 26, 2008)
  • Tax consequences of the amendment of applicable currency in loan agreement and lease contract (DA (FIT-009) 260-2008 dated September 26, 2008)

Court decisions
  • Court of Tax Appeals (CTA): Taxability of properties transferred by way of dacion en pago (CTA Case No. 7130 dated September 16, 2008)
  • CTA: Absence of the proof of receipt of PAN violates due process (EB No. 306 dated September 16, 2008)
  • CTA: Conditions to qualify for VAT zero-rating (CTA Case No. 6220 dated September 17, 2008)