Tax Alert No. 5 [Revenue Memorandum Circular (RMC) No. 11-2022 dated 24 January 2022]

Circularizing Republic Act No. 11595, entitled “An Act Amending Republic Act No. 8762, Otherwise Known as the ‘Retail Trade Liberalization Act of 2000', by Lowering the Required Paid-Up Capital for Foreign Retail Enterprises, and for Other Purposes”

RMC No. 11-2022 was issued to to circularize Republic Act (RA) No. 11595, entitled "An Act Amending Republic Act No. 8762, Otherwise Known as the 'Retail Trade Liberalization Act of 2000', by Lowering the Required Paid-Up Capital for Foreign Retail Enterprises, and for Other Purposes".

The pertinent amendments to RA No. 8762, as provided in RA No. 11595, are as follows:

1. The categories for prequalification were removed and the minimum paid-up capital for a foreign retailer was reduced to PHP25m.
2. The minimum investment per store requirement was also reduced to PHP10m per store, which shall include the gross assets, tangible or intangible.
3. The Department of Trade and Industry (DTI), Securities and Exchange Commission (SEC), and National Economic and Development Authority (NEDA) shall review the amount of required minimum paid-up capital of foreign retailers every three (3) years.
4. The requirement for public offering of shares within eight (8) years from the start of operations was removed.
5. Foreign retailers are required to comply with the applicable provisions of the Labor Code in determining the nonavailability of a competent, able and willing Filipino citizen before employing the services of a foreign national.
6. Foreign retailers are encouraged to have a stock of inventory of products which are made in the Philippines.
7. Within ninety (90) days from approval of the law, the DTI, in coordination with the SEC and NEDA, shall formulate the implementing rules and regulations.
8. The penalties for violation of the provisions of the law were reduced. Violators shall be punishable by imprisonment of not less than four (4) to six (6) years, and a fine of not less than one million pesos (PHP1m) but not more than five million pesos (PHP5m).
9. RA No. 11595 shall take effect fifteen (15) days after its publication in the Official Gazette (OG), or at least two (2) newspapers of general publication in the Philippines. It was published in the OG last 10 January 2022.

You may access the full version of the Circular through the BIR website.