InTAX: August 2022 Issue 1 | 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

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DEPARTMENT OF FINANCE


The Department of Finance (DOF) issued the following:


Revenue Regulations (RR) No. 7-2022, 30 June 2022, providing for policies and guidelines for the availment of tax incentives under the Renewable Energy Act of 2008 (RE Law).


This RR provides for the required certifications and accreditations before an RE developer and manufacturer, fabricator, and supplier of locally-produced RE equipment may avail any of the incentives provided in the RE Law.

Salient points of the RR are as follows:

1.

List of fiscal incentives for RE projects and activities, including the hybrid and co-generation systems (Sections 4 and 5)

2.

List of incentives for RE Commercialization (Section 6)

3.

List of incentives for farmers engagement in the plantation of biomass resources (Section 7)

In addition to the incentives above, purchasers of RE equipment for residential, industrial, or community use shall be entitled to a rebate equivalent to the VAT passed on to them. The rebate shall only be available to purchasers who are not VAT-registered and shall be in the form of a tax credit from the income tax liability of the purchasers during the year of purchase. Any unutilized rebate or tax credit shall be forfeited.


Unless otherwise provided by law, the registration or accreditation to avail of incentives under this Act shall disqualify the availment of other tax and non-tax incentives under the National Internal Revenue Code, as amended. The non-compliance with the filing and reportorial requirements under requirements under RA No. 11534 or the CREATE Act shall be meted with penalties under the law.


The RR shall take effect 15 days after its publication or on 16 July 2022 since it was published in Manila Times on 1 July 2022.


RR No. 10-2022, 30 June 2022, prescribing the guidelines and procedures through which taxpayers can request Mutual Agreement Procedure (MAP) assistance from the designated Competent Authority for the Philippines or Philippine CA (i.e., the Commissioner of Internal Revenue or CIR) to resolve disputes arising from taxation not in accordance with the provisions of the relevant Double Tax Agreements (DTAs) or tax treaties.


The following items are specified in RR No. 10-2022:


1.

Typical scenarios of taxation that are not in accordance with a DTA requiring MAP assistance (Section 3)

2.

Composition of the MAP team (Section 4)

3.

Procedures for initiating a MAP request, including pre-filing consultation, what a valid MAP request is, and the specific information and documentation to be submitted with

4.

Processing of the MAP request (Section 6):

a.

Preliminary assessment (if all requisites are met to be considered a valid MAP request)

b.

Analysis of a MAP case (to determine whether the taxpayer’s objection/claim is justified and whether the Philippine CA can resolve it unilaterally or not)

c.

Consultations between the MAP team and other offices of the Bureau of Internal Revenue (BIR) that rendered the tax assessment/ruling

d.

Consultations between the CAs (to resolve the case with the CA of the other contracting state, in case the taxpayer’s claim is justified and cannot be resolved unilaterally by the Philippine CA)

e.

Negotiation of bilateral or multilateral Advance Pricing Arrangements (APAs) through the MAP process

f.

Authority of the MAP team (to resolve MAP cases in accordance with the terms of the applicable and effective DTA to eliminate taxation not in accordance with the provision thereof – without approval or discretion of the examiner who made any transfer pricing adjustments at issue)

g.

Resolution of a MAP case (including possible outcomes of the MAP process within an average timeframe of 24 months from receipt of complete MAP request, depending on the complexity of the case and cooperation of the taxpayer and of the CAs)

h.

CA agreement reached (if any)

i.

Timely implementation of MAP agreements

j.

No CA agreement reached (requires notification from the Philippine CA to taxpayer within 30 days from consultation or meeting citing the reasons for the CAs not being able to reach an agreement)

k.

Interaction with domestic remedies

l.

Withdrawal of a MAP case

m.

Appropriate Transfer Pricing adjustment under the DTAs

5.

Audit settlements reached between the tax authority and the taxpayers do not preclude access to MAP (Section 7)

6.

The information and documents submitted in support of the MAP request shall be treated with utmost confidentiality and shall only be used and disclosed in accordance with the provisions of the relevant DTA (Section 8)

The RR shall take effect 15 days after its publication or on 23 July 2022 since it was published in Malaya Business Insight on 8 July 2022.


RR No. 11-2022, 29 June 2022, prescribing the guidelines and procedures for the spontaneous exchange of taxpayer-specific rulings pursuant to international exchange of information agreements such as Double Taxation Agreement (DTAs), Tax Information Exchange Agreements (TIEAs) or the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC).


This RR provides for the procedures of information gathering for both past rulings and future rulings (Section 5).


Salient points of the RR are as follows:


1.

The EOI Section of the International Tax Affairs Division (ITAD) of the BIR shall be responsible for exchanging the taxpayer-specific rulings to the foreign tax authority of the potential exchange jurisdiction on or before the prescribed deadline.

2.

The rulings within the scope of the transparency framework include the following:

Rulings related to a preferential regime;

Cross-border unilateral Advance Pricing Arrangements (APAs) and any other cross-border unilateral tax ruling (such as an Advance Tax Ruling) covering transfer pricing or the application of transfer pricing principles

Cross-border rulings giving a unilateral downward adjustment to the taxpayer’s taxable profits in the country giving the ruling

PE rulings; and

Related party conduit rulings.

3.

The potential exchange jurisdictions depending on the type of ruling are summarized in Section 3(d).

4.

Upon effectivity of this RR, the EOI Section of ITAD shall:

Ensure the transmittal of the following taxpayer-specific rulings to the relevant jurisdictions in accordance with the timelines below

Rulings

Timeline

Past:

PE rulings or rulings concerning the existence or absence of PE of a foreign in the Philippines that were issued either:

i.

On or after 01 January 2015 but before 01 September 2017; or

ii.

On or after 01 January 2012 but before 01 January 2015, provided they were still in effect as of 01 January 2015.

As soon as possible after identifying the potential exchange jurisdictions

Future:

Rulings issued after the periods indicated above

As soon as possible and no later than three (3) months after the issuance thereof

Subsequent requests by another jurisdiction for a copy of the taxpayer-specific ruling must be responded to, or a status update is provided, within 90 days upon receipt of such request.

Rulings may either be exchanged via registered mail or encrypted electronic mail (email) which must be password-protected.

5.

If it is established, upon evaluation, that the rulings spontaneously exchanged will aid the BIR examiners in their tax investigation, the EOI Section of ITAD shall immediately forward a copy of the ruling to the Revenue District Office (RDO) having jurisdiction over the taxpayer.

The RR shall take effect 15 days after its publication or on 23 July 2022 since it was published in Business World on 8 July 2022.


Attached are the full texts of the issuances.


RR 2022-07

RR 2022-10

RR 2022-11

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