InTAX: September 2020 Issue 2 | Volume 1
InTAX is an official publication of R.G. Manabat & Co.'s Tax Group
InTAX is an official publication of R.G. Manabat & Co.'s Tax Group
Bureau of Internal Revenue
The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) No. 26-2020, 11 August 2020, to prescribe the use of the revised Exchange of Information (EOI) Working Manual by the EOI Unit of the International Tax Affairs Division (ITAD) and by all officers of the BIR whose functions relate to the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the exchange of information provision of the relevant tax treaty.
Notable differences between the old and revised EOI Working Manuals are specified below.
OLD EOI Working Manual |
Revised EOI Working Manual |
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Only the Commissioner could sign EOI documents |
The following officials are now allowed to sign EOI documents on behalf of the Commissioner pursuant to Revenue Delegation Authority Order (RDAO) Nos. 2-2019 and 3-2020:
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Request for information was only for the purpose of assessment of taxes |
Request for information may relate to the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes covered by the exchange of information provision of the relevant tax treaty.
Thus, not only examiners are encouraged to initiate a request for information. Even the action officers and the Chief of ITAD may initiate a request if the information is necessary. Collection Officers and Prosecution Officers may likewise request for information.
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For banking information, notification to the accountholder shall be made within sixty (60) days from receipt of the letter of request |
During the second round of peer review, the Global Forum recommended that the Philippines should ensure that there is an exception from the time-specific, post-exchange notification requirement.
Since the Philippines cannot dispense with the post-exchange notification requirement, it issued Revenue Regulations (RR) No. 22-2018. The provisions of the said RR have already been included in the revised EOI Working Manual. |
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Group request was not included |
The manner of initiating an EOI group request was already included in compliance with the EOI standard. |
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The period provided within which to provide the information is usually 60 days, subject to extension for another 30 days |
The requested office or taxpayer shall be given a shorter period (usually 30 days) within which to provide the information, subject to extension which shall not exceed 30 days. |
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The Model Templates were likewise revised, especially the template for outgoing EOI |
Supreme Court / Court of Tax Appeals
The Supreme Court / Court of Tax Appeals issued the following:
A technical malfunction is not among the instances under Revenue Regulations (RR) No. 12-2001 when the penalties and/or interest imposed may be abated or cancelled on the grounds that the imposition thereof is unjust or excessive. The 25% surcharge imposed for the one (1)-day late filing (Php7,385,209) is not considered unjust or excessive to be a proper subject of abatement. In this case, it was found that there was no advice on eFPS unavailability on 29 November 2011 (when the 2nd quarter ITR for fiscal year ending 31 March 2012 was due for filing) and the 1-day delay could have been easily avoided had the taxpayer filed its ITR earlier or before the deadline (not at the 11th hour or on the last day of filing). Qatar Airways Company with Limited Liability vs. Commissioner of Internal Revenue (CIR), G.R. No. 238914, 8 June 2020.
The 3-year prescriptive period to collect is counted from the day of the receipt of the Final Assessment Notice (FAN). First Far East Development Corporation vs. CIR, CTA Case no. 9678, 04 June 2020.
Gross Receipts Tax (GRT) is based on the amount of income actually or constructively received during a taxable period. Gross receipts (Section 108 of the Tax Code, in relation to Revenue Memorandum Circular No. 51-02) refers to the total amount of money or its equivalent, representing the contract price, compensation, service fee, rental or royalty, including the amount for materials supplied with the services and deposits and advance payments actually or constructively received during the taxable quarter. The tax base for GRT purposes should be income actually or constructively received by the taxpayer. Physical receipt may be actual or constructive, while in contrast, accrual pertains to income already earned but not yet received, neither physically nor constructively. Aeon Credit Service (Philippines), Inc. vs CIR, CTA Case No. 9770, 15 July 2020.
Property Dividend is not contemplated by the “Other disposition of shares of stock” subject to Donor’s Tax under RR No. 6-2008, as amended. Clearly, in property dividend distribution, the taxpayer or distributing corporation does not receive any consideration in exchange for the dividends. Property dividends are unilateral distributions taken from the company’s unrestricted earnings without any consideration. These cannot be considered as donations made out of the liberality of the corporation. CIR vs. Trans-Asia Oil and Energy Development Corporation, CTA EB No. 2009, 21 July 2020.
Attached are the full texts of the issuance.
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