TAX DIGEST

Member, RSM International

In this issue:
BIR ISSUANCES
Brokerage Companies
Required to Submit
Quarterly List of
Client-Importers
New Guidelines on
Availment of 15%
Preferential Income Tax
eSales Reporting for Large
Taxpayers
SUPREME COURT
DECISIONS
Zero-rated must be
Printed on Invoice to Claim
Tax Refund
Previous Tax Examination
does not Bar Tax Fraud
Audit
BIR ISSUANCES
Brokerage Companies Required to Submit Quarterly List of
Client-Importers
Taxpayers engaged in the business
of providing customs brokerage
services are now required to
submit a list of their client
importers for cross-checking and
verification with the records of the
Bureau of Customs (BOC). The list
should have the tax identification
number (TIN), name of
client-importer, address and
Voulme 3, Series 21
Accreditation Service (CAS)
Registration Number. The
quarterly list shall include
additional client-importers for the
quarter as well as those that
ceased to be their clients.
(Revenue Memorandum Circular
No. 84-2010, October 25, 2010)
Tax Calendar 2011
Get a free copy of our tax calendar 2011 through our Business
Development Department. Call 759-5090 or visit our website at
www.rsm-alasoplascpas.com.
Alas, Oplas & Co., CPAs
Tax Digest
Volume 3, Series 21
New Guidelines on Availment of 15% Preferential Income Tax
The BIR clarifies the term Managerial and Technical
Positions and modifies previous guidelines on availment of
15% preferential income tax rate for qualified Filipino
personnel employed by Regional or Area Headquarters
(RHQs) and Regional Operating Headquarters (ROHQs) of
multinational companies.

The Tax Code provides that every alien individual occupying
managerial and technical position in RHQs and ROHQs
established in the Philippines shall be subject to 15% final
withholding tax. The same tax treatment shall apply to
Filipinos employed and occupying the same positions as
those aliens employed by RHQs and ROHQs, regardless of
whether or not there is an alien executive occupying the
same position.
The term multinational company means a foreign firm or
entity engaged in the international trade with its affiliates
or subsidiaries or branch offices in Asia-Pacific Region and
other foreign markets.
Filipinos employed by RHQs and ROHQs may exercise the
option to be taxed at 15% but must meet the following
requirements:
To avail of this 15% preferential income tax rate, it shall no
longer be necessary for the RHQ or ROHQ to file a request
for ruling with the BIR National Office. Instead, the RHQ or
Office or with the LT Assistance Division/LT Regulatory
1. Position and Function Test the employee must
occupy a managerial or technical position AND must
actually be exercising such managerial or technical
functions pertaining to said position;
2. Compensation Threshold Test the employee
must have received or is due to receive under a
contract of employment, a gross annual taxable
compensation of at least Php 975,000.00, whether
or not actually received. Provided that, a change
that the employee will receive a lesser
compensation within a calendar year will result to
being subjected to the regular income tax rate; and
3. Exclusivity Test the Filipino managerial or
technical employee must be working exclusively for
the RHQ or ROHQ as a regular employee and not just
as a consultant or contractual personnel. Exclusivity
means having just one employer at a time.
ROHQ must file the following not later than January 31st of
the succeeding year to their respective Revenue District
Division/LTDO:
a. Declaration of Employees Availment of the 15%
b. Employers sworn declaration stating under oath:
c. Employees sworn declaration, under oath:
Failure to file any of the requirements or filing of false
information shall subject the employee on the regular
income tax.
(Revenue Regulations No. 11-2010, October 26, 2010)
i.
ii.
iii.
iv.
the name of its employees who received, or are due to
receive, under an employment contract, a gross annual
compensation equivalent to or more than Php975,000.00
or its adjusted amount;
the inclusive dates for the relevant calendar year when
the employee received, or are due to receive, gross
annual compensation equivalent to or more than
Php975,000.00 or its adjusted amount;
that the employees received compensation solely from
the ROHQs or RHQs and not from the company of which it
is a branch, or from other entity which may be an affiliate
or subsidiary of the said company; and
that such employees exercise managerial or technical
functions.
his complete name, Taxpayer Identification Number
(TIN);
job title and brief description and responsibility;
the equivalent amount of gross annual compensation
which he received or is due to receive must be at least
Php 975,000.00 or its adjusted amount;
the inclusive dates of the calendar year when he
received or is due to receive gross annual compensation
of at least Php 975,000.00 or its adjusted amount;
that he is exclusively employed by the ROHQ or RHQ;
that he does have any other employer other than the
RHOQ or RHQ;
that he does not receive compensation from sources
other than the RHOQ or RHQ where he is employed; and
that he exercises managerial or technical functions.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Preferential Tax Rate of every qualified employee (BIR
Form No. 1947).
Tax Digest
Volume 3, Series 21
SUPREME COURT DECISIONS
Zero-rated must be Printed on Invoice to Claim Tax Refund
J.R.A. Philippines, Inc. is a registered
company with the Bureau of Internal
Revenue (BIR) as a VAT taxpayer and as
an Ecozone Export Enterprise with the
Philippine Economic Zone Authority
(PEZA). It filed with the BIR an
application for tax credit/refund of
unutilized input VAT on its zero-rated
sales for the taxable quarters of 2000
but was not acted upon by the bureau.
A petition was filed before the Court of
Tax Appeals but was denied, hence, J.R.A.
Philippines, Inc. elevated the matter
before the highest court.
The solitary issue is whether the failure
to print the word zero-rated on the
invoices/receipts is fatal to a claim for
credit/refund of input VAT on zero-rated
sales.
The Supreme Court confirmed the
decision of the CTA. The appearance of
the word zero-rated on the face of
invoices covering zero-rated sales
prevents buyers from falsely claiming
input VAT from their purchases when no
VAT was actually paid. If not, for any
claim for input VAT, the government
would be refunding money it did not
collect. Further, the printing of the word
zero-rated on the invoice helps
segregate sales that are subject to 12%
VAT from those sales that are zero-rated.
Moreover, the requirement is reasonable
and is in accord with the efficient
collection of VAT from the covered sales
of goods and services. Unable to submit
the proper invoices, a taxpayer has been
unable to substantiate its claim for
refund.
(J.R.A. PHILIPPINES, INC. vs.
COMMISSIONER OF INTERNAL
REVENUE, G.R. NO. 177127, October 11,
2010)
eSales Reporting for Large Taxpayers
The BIR re-implements the Electronic Sales (eSales)
Reporting. Large Taxpayers using Cash Register Machines
(CRMs), Point-of-Sale (POS) Machines and other similar
sales machines are required to report their monthly sales
on or before the 10th day of the month for each CRM/POS.
Sales report should be in accordance with the required
format under this memorandum circular and under
Revenue Regulations No. 5-2005. It should contain the
Machine Identification Number (MIN), Gross Monthly Sales
per machine as stored in the machines non-volatile
memory (with or without sales), Month and Year of sales
being reported, and Serial Number of the last Official
Receipt/Transaction Number of the last sales transaction
issued for the month being reported.
Taxpayers who will fail to comply for three (3) consecutive
months shall be subject to penalty Section 250 of the Tax
Code and to the following:
1st offense Reminder Letter
2nd offense Machine Inspection/Post-Evaluation
3rd offense Revocation of Permit/Cancellation of MIN
This shall take effect on January 2011.
(Revenue Memorandum Circular No. 92-1010, November
25, 2010)
Tax Digest
Volume 3, Series 21
In this case, the non-declaration by LMCEC for the taxable
years 1997, 1998 and 1999 of an amount exceeding 30%
income declared in its return is considered a substantial
underdeclaration of income, which constituted prima
facie evidence of false or fraudulent return under Section
248(B) of the NIRC, as amended.
Further, RR No. 2-99 was issued providing for last priority in
audit and investigation of tax returns to accomplish the
said objective without, however, compromising the
revenue collection that would have been generated from
audit and enforcement activities. The program Economic
Recovery Assistance Payment (ERAP) Program granted
immunity from audit and investigation of income tax, VAT
and percentage tax returns for 1998. Since such immunity
from audit and investigation does not preclude the
collection of revenues generated from audit and
enforcement activities, it follows that the BIR is likewise not
barred from collecting any tax deficiency discovered as a
result of tax fraud investigations.
(Commissioner of Internal Revenue Vs. Hon. Raul M.
Gonzalez, Secretary Of Justice, L. M. Camus Engineering
Corporation, G.R. No. 177279, October 13, 2010)
This publication should not be used or treated as
professional advice. The information in this
publication should not be relied upon to replace
professional advice on specific matters and its
contents must not be used as a basis for
formulating decisions under any circumstances.
Readers of this material are advised to seek
professional advice before making any business
decision or you may call and ask for the full text.
Tax Updates by: Marissa C. Yambao
The author is a tax lawyer at Alas, Oplas & Co. CPAs.
For clarification, tax queries or if you need our
assistance, you may call us at telephone number
(632)759-5090 or email us at
aocheadoffice@rsmalasoplascpas.com or visit us
at our website: www.rsm-alasoplascpas.com
Previous Tax Examination does not Bar Tax Fraud Audit
The BIR National Office conducted a fraud investigation for
all internal revenue taxes to determine the tax liabilities of
L. M. Camus Engineering Corporation (LMCEC) for the
taxable years 1997, 1998 and 1999 due to the information
provided by an informer that it had substantial
underdeclared income for the said period.
LMCEC failed to comply with the subpoena duces tecum
issued in connection with the tax fraud investigation,
hence, a criminal complaint was instituted by the BIR for
violation of Section 266 of the NIRC against LMCEC, Luis M.
Camus and Lino D. Mendoza, the latter two were sued in
their capacities as President and Comptroller, respectively.
Camus and Mendoza assail the validity of the complaint
and further aver that the company had already undergone
a series of routine examinations for the years 1997, 1998
and 1999 for under the NIRC, only one examination of the
books of accounts is allowed per taxable year.
The Chief State Prosecutor, the Secretary of Justice and the
Court of Appeals dismissed the complaint instituted by the
BIR. Hence, this petition was filed before the Supreme
Court.
The core issue is whether LMCEC and its corporate officers
may be prosecuted for violation of Sections 254 (Attempt
to Evade or Defeat Tax) and 255 (Willful Failure to Supply
Correct and Accurate Information and Pay Tax) of the Tax
Code.
The Supreme Court ruled in favor of the BIR. LMCEC cannot
claim as excuse from the reopening of its books of
accounts the previous investigations and examinations.
Under Section 235 (a), an exception was provided in the
rule on once a year audit examination in case of fraud,
irregularity or mistakes, as determined by the
Commissioner. The distinction between a Regular Audit
Examination and Tax Fraud Audit Examination lies in the
fact that the former is conducted by the district offices of
the Bureaus Regional Offices, the authority emanating
from the Regional Director, while the latter is conducted by
the TFD of the National Office only when instances of fraud
had been determined by the BIR.