Special InTAX: March 2021 Issue 1 | Volume 3

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

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special intax

Bureau of Internal Revenue

 

The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No.36-2021, 5 March 2021, to provide guidelines in line with the shift from final to a creditable system of Value-Added Tax (VAT) Withheld on Sales to Government or any of its political subdivision, instrumentalities or agencies, including government-owned or controlled corporations (GOCCs). This is pursuant to the amendments introduced by Section 37 of Republic Act (RA) No. 10963 or otherwise known as the “Tax Reform Acceleration or Inclusion” or the “TRAIN Law” on the Tax Code.

Salient points of the RMC are shown below:

  • The following changes/adjustments shall be effected to the following forms until a new version of the forms have been developed and prescribed for use:

BIR Form No.

Line/Schedule Affected

Description

Remarks

2550M (v.February 2007)

20B

Schedule 4 – Input Tax on sale to Govt. closed to expense

Not to be filled out/to be deactivated from the electronic payment and filing system (eFPS)

 

23C

Schedule 8 – VAT withheld on sales to government

 

To reflect the creditable VAT withheld

Schedule 4

Input Tax Attributable to Sale to Government

Not to be filled out/to be deactivated from the eFPS

Schedule 8

VAT withheld on Sales to Government

To reflect the details of the creditable VAT withheld

2550M (v.February 2007)

23B

Schedule 4 – Input Tax on sale to Govt. closed to expense

Not to be filled out/to be deactivated from the eFPS

26D

Schedule 8 – VAT withheld on sales to government

 

To reflect the creditable VAT withheld

Schedule 4

Input Tax Attributable to Sale to Government

Not to be filled out/to be deactivated from the eFPS

Schedule 8

VAT withheld on Sales to Government

To reflect the details of the creditable VAT withheld

 

  •  BIR Form No. 1600-VT shall be used by the government or any of its political subdivisions, instrumentalities or agencies, including GOCCs who are required to withhold creditable VAT for filing and remittance of the VAT withheld. However, BIR Form No. 1600 shall still be used by eFPS filers due to the unavailability of BIR Form No. 1600-VT.
  •  BIR Form No. 2307 shall serve as proof of withholding of creditable VAT bearing the Alphanumeric Tax Codes of WV010 for purchases of goods or WV020 for purchases of services shall now be the only form to be used. Erroneous reporting of VAT credits per BIR Form No. 2307 in the quarterly or annual ITR will result to the disallowance of the withheld amount and forfeiture of the same in favor of the Government.
  • The use of BIR Form No. 2306 is no longer required under this RMC.

RMC No. 35-2021, 03 March 2021, to circularize the availability of the enhanced BIR Form No. 1601-FQ September 2020 (ENCS).

BIR Form No. 1601-FQ was revised to include Mexico, Qatar, Sri Lanka and Turkey, which are additional countries that have tax treaties with the Philippines.

The revised manual return is already available in the BIR website under the BIR Forms-Payment/Remittance Forms Section. However, the newly revised form is not yet available in the eFPS and Electronic Bureau of Internal Revenue Forms (eBIRForms).

Thus, eFPS filers shall use the enhanced BIR Form No. 1601-FQ January 2018 (ENCS) which contains the additional countries mentioned above. While eBlRForms filers shall use the manual return in filing and remitting the taxes due thereon, if any, in cases when taxpayer shall avail the tax treaty/ies with the newly added country/ies.

Manual filers shall download, print and fill-up the said forms, otherwise, penalties under Sec.250 of the Tax Code, as amended, shall be imposed.

Payments of taxes due thereon may be made either through:

1.  Manual Payment through the Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Large Taxpayer Service (LTS)/Revenue District Office (RDO) where the taxpayer (Head Office of the business establishment) is registered.

a.  In places where there are no AABs, the return shall be filed and tax due shall be paid with the Revenue Collection Officer (RCO) under the jurisdiction of the RDO where the taxpayer (Head Office of the business establishment) is registered using MRCOS facility.

2.  Online Payment through: (a) Gcash/PayMaya; (b) Landbank of the Philippines (LBP) Link.BizPortal; (c) Development Bank of the Philippines (DBP) Tax Online; (d) Union Bank Online Web and Mobile Payment Facility; or (e) PESONet through LBP Link.Biz Portal.

RMC No. 34-2021, 03 March 2021, to circularize the availability of the Revised BIR Form No.2200-A [Excise Tax Return for Alcohol Products] January 2020 (ENCS) and BIR Form No. 2200-T [Excise Tax Return for Tobacco, Heated Tobacco and Vapor Products]  January 2020 (ENCS)”.

The revised manual returns are already available in the BIR website under the BIR Forms-Payment/Remittance Forms Section.  However, the forms are not yet available in the eFPS and eBIRForms. 

Thus, eFPS/eBIRForms filers shall continue to use BIR Form Nos. 2200-A and 2200-T in eFPS and in Offline eBlRForms Package v7.8 in filing and paying the excise tax due.

A separate revenue issuance will be released once the returns become available in the eFPS and in the Offline eBlRForms Package.

Manual filers shall download, print and fill-up the PDF version of the applicable forms, otherwise, penalties under Sec.250 of the Tax Code, as amended, shall be imposed.

Payments of taxes due thereon may be made either through:

1.  Manual Payment through the AAB located within the territorial jurisdiction of the LTS/RDO where the taxpayer (Head Office of the business establishment) is registered.

2.  In places where there are no AABs, the return shall be filed and tax due shall be paid with the RCO under the jurisdiction of the RDO where the taxpayer (Head Office of the business establishment) is registered using MRCOS facility.

3.  Online Payment through: (a) Gcash/PayMaya; (b) Landbank of the Philippines (LBP) Link.BizPortal; (c) Development Bank of the Philippines (DBP) Tax Online; (d) Union Bank Online Web and Mobile Payment Facility; or (e) PESONet through LBP Link.Biz Portal.

RMC No. 33-2021, 03 March  2021, to circularize the availability of Offline eBIRForms Package Version 7.8.

The Offline eBlRForms Package Version 7.8 is downloadable from the following sites: (1) www.bir.gov.ph; and (2) www.knowyourtaxes.ph. .

This new Offline eBIRForms Package includes the January 2018 version of: (1) BIR Form 1800 (Donor’s Tax Return); (2) BIR Form 1801 (Estate Tax Return); and (3) BIR Form 2000-OT (Documentary Stamp Tax Declaration/Return for One-Time Transactions).

BIR Form 1800 shall be filed within thirty (30) days after the gift (donation) is made, while BIR Form 1801 shall be filed one (1) year from the decedent's death. On the other hand, BIR Form No. 2000-OT shall be filed and the tax paid within (5) days after the close of the month when the taxable document was made, signed, issued, accepted or transferred.

Payments of taxes due thereon may be made either through:

1.       Manual Payment through the AAB located within the territorial jurisdiction of the RDO having jurisdiction, as follows:

a.  BIR Form 1800- over the domicile of the donor at the time of donation

b.  BIR Form 1801- over the domicile of the decedent at the time of death

For the above forms, if there is no legal residence in the Philippines, payment of taxes shall be made with RDO 39, South Quezon City.

c.  BIR Form 2000-OT- where the seller/transferor/donor is required to be registered or where the property is located in case of sale of real property.

In places where there are no AABs, the return shall be filed and tax due shall be paid with the RCO under the jurisdiction of the RDO using MRCOS facility.

2.       Online Payment through: (a) Gcash/PayMaya; (b) Landbank of the Philippines (LBP) Link.BizPortal; (c) Development Bank of the Philippines (DBP) Tax Online; (d) Union Bank Online Web and Mobile Payment Facility; or (e) PESONet through LBP Link.Biz Portal.

 

Supreme Court

 

The Supreme Court (SC) ruled that the enumeration of direct costs, deductible from a PEZA-registered enterprise’s gross income in Revenue Regulations (RR) No. 11-2005 (which amended RR No. 2-2005), is not exclusive.

In ruling for the taxpayer, the SC explained that RR No. 11-2005 expressly removed the exclusivity of the enumeration of what constitutes as the allowable deductions for PEZA-registered enterprises, to wit: “For purpose of computing the total five percent (5%) tax rate imposed, the following direct costs are included in the allowable deductions to arrive at gross income earned for specific types of enterprises:  xxx”. As the amendment in RR No. 11-2005 now stands, the enumeration of allowable deductions was only made by way of example or illustration of the nature and type of expenses that may be deducted from a PEZA-registered enterprise’s gross income for purposes of computing the 5% gross income tax. The SC explained further that the deletion of the restrictive word “only” in the phrase “shall consist only of the following cost or expense item” in RR No. 2-2005 which became “the following direct costs are included in the allowable deductions” in RR No. 11-2005 is consistent with the PEZA Law that costs and expenses directly related to the enterprise PEZA-registered activity and are not administrative, marketing, selling and/or operating expenses or incidental losses shall be allowed as a deduction from gross income.

Accordingly, the SC upheld the CTA En Banc’s decision that the nature and type of expenses claimed by East Asia Utilities* are considered allowable deductions which were directly related to its PEZA-registered activity, i.e., power generation services. [Commissioner of Internal Revenue (CIR) vs. East Asia Utilities Corporation, G.R. No. 225266 dated 16 November 2020; uploaded in the SC website on 2 March 2021]

* The CTA Division and En Banc found the following as allowable deductions: SSS employer cost, PAG-IBIG employer cost, insurance (medical/health/accident/life), uniform/working gears, training and development (technical), hauling and trucking services, insurance and freight, brokerage fees, other inventory incidental cost, safety programs and services, other professional fees, non-life insurance (for power plant and other assets).

 

Attached are the full texts of the issuances.

Revenue Memorandum Circular 34-2021 2200-A Jan 2020 ENCS Final Annex A

Revenue Memorandum Circular 34-2021 2200-T Jan 2020 ENCS Final Annex B

Revenue Memorandum Circular No. 34-2021

Revenue Memorandum Circular 35-2021 1601-FQ 2020 Annex A 

Revenue Memorandum Circular 35-2021 1601-FQ Sep 2020 Guide

Revenue Memorandum Circular No. 35-2021

CIR v East Asia Utilities Corporation_GR No. 225266

Revenue Memorandum Circular No. 33-2021

Revenue Memorandum Circular No. 36-2021       

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