Tax Alert No. 64 [Revenue Memorandum Circular (RMC) No. 76-2020 dated 29 July 2020]

Clarifies certain issues on the filing of BIR Form No. 1709, or the Related Party Transaction Form, and its attachments

The Commissioner of Internal Revenue (CIR) has issued RMC No. 76-2020 to address the frequently asked questions (FAQs) regarding the submission of BIR Form No. 1709, or the Related Party Transactions (RPT Form), and its attachments pursuant to Revenue Regulations (RR) No. 19-2020. We highlight below some salient provisions.

Clarifications on the Purpose and Coverage

• The objective of the new form is to improve and strengthen the BIR’s transfer pricing risk assessment and audit. It shall be used to monitor compliance with the transfer pricing documentation (TPD).

• The RPT Form, which is downloadable from the BIR website, is to be completed by Philippine taxpayers with RPTs regardless of the amount and volume of transactions. 

• Since the law took effect on 25 July 2020, the RPT Form is now required to be submitted as an attachment to the Annual Income Tax Return (AITR) for the fiscal year (FY) ending 31 March 2020, tentative or otherwise, irrespective of the date of filing of the said AITR and to all AITRs to be submitted after such date. AITRs for calendar year 2019 or FY ending before 31 March 2020 are not covered by RR No. 19-2020.

Clarifications on the Deadline and Manner of Filing

• Taxpayers with a fiscal year ending 31 March 2020 are given an extension of two (2) months from 30 July 2020, or until 30 September 2020, within which to prepare, file and submit the RPT Form and its required attachments.

• For both manual and eFPS filers, the hardcopy of the RPT Form and its required attachments must be submitted manually and stamped “Received” at the Large Taxpayers Division/Revenue District Office where the taxpayer is registered and must bear the date of actual receipt and the signature of the receiving officer.

• All contracts substantiating the RPTs for the taxable year concerned, regardless of volume, are required to be attached either as hard copies or in digital format.

• All taxpayers with RPT are required to attach a TPD, local or otherwise, regardless of the amount and volume of RPT.

Clarification with regard to Data Privacy Rules

• The power of the CIR to obtain the necessary information to ascertain the correctness of any return, or in determining the liability of any person for any internal revenue tax, or in evaluating tax compliance under Section 5(b) of the Tax Code serves as an exception to the Data Privacy Act (DPA) of 2012.

You may access the full version of this issuance through the BIR website.