ACPAPP’S

THE Auditor’s REPORT

Upcoming Events News and Events in the Practice of Accountancy

AUGUST 2015

New Auditor Reporting Standards

The IAASB’s new standards for auditor reporting will bring challenges and
opportunities

What’s new?

The new set of auditor reporting standards released by the International

Auditing and Assurance Standards Board has been described by experts as
“truly game changing for stakeholders and the profession”. These new stan-
dards are expected to be adopted by the Auditing and Assurance Standards
Council, Board of Accountancy and Professional Regulation Commission
effective for periods ending on or after 15 December 2016. The effective
date of the equivalent new auditor reporting standards in the Philippines is
expected to be the same as the ISAs.

The standards mark a move to reports that are more informative, discursive
and insightful. Similar proposals have already been rolled out in the UK,
WHAT’S INSIDE where auditors embraced the transformation - pro-
Pages 2-7 ducing insightful reports with tailored information
Technical Updates
Pages 8-9
and less jargon. Shareholder reaction in the UK has
Highlights of Events(NAWC) been very positive, referring to a ‘sea change’ in au-
ACPAPP SECRETARIAT
Pages 10-14 ditor reporting.(continue to page 11 )
2308 Cityland 10,Tower 1 H.V. Dela Costa Street
Technical Updates
corner Ayala Avenue North Makati City Page 15
Tel. Nos. 753-4089 | TeleFax: 753-4027 eBIR Form Memo
acpapp2012@yahoo.com | www.acpapp.org Page 16
Upcoming Events
ACPAPP Manila @ACPAPP2014
TECHNICAL UPDATES eBIR FORMS MEMO
Tax News
Interpret & Integrate
BIR Issuances
Revised BIR Citizen’s Charter
The Bureau of Internal Revenue (BIR) has updated the Citizen’s Charter, which contains the procedures, docu-
mentary requirements, fees and timelines involved in the processing of its services, as follows:

1. Application for Taxpayer Identification Number (TIN) of local employees and one-time taxpayers (ONETT)
2. Application for TIN and Certificate of Registration (COR) of self-employed individuals, estate and trusts,
including authority to print (ATP) and registration of books of accounts
3. Application for TIN and Certificate of Registration of corporations, partnerships, cooperatives and other
non-individual taxpayers, including ATP and registration of books of accounts
4. Request for issuance of Certification of COR/ATP/TIN Card
5. Application for subsequent registration of manual books of accounts and ATP
6. Processing of one-time transactions involving sale or transfer of shares/real property
7. Application for permit to operate as a manufacturer, producer, trader and/or importer of excisable articles
8. Application for authority to release imported goods (ATRIG)
9. Application for issuance of tax clearance for bidding purposes
10. Application for issuance of delinquency verifications
11. Application for issuance of VAT exemption certificates (VEC) and ID cards (VEIC) for embassies and its
personnel
12. Application for issuance of ruling on indirect tax exemption of embassies and its personnel on purchase of
vehicles
13. Application for issuance of Tax Credit Certificate (TCC) pursuant to Writ of Execution issued by the Court
of Tax Appeals (CTA)
14. Request for rulings on tax consequences of exchange of real properties to correct mistake
15. Request for rulings on tax exemption of senior citizens under Republic Act (RA) 7432
16. Request for rulings on the tax exemption of National Housing Authority (NHA) and private sector partici-
pating in socialized housing under RA 7279
17. Application for Certificate of Exemption for scholarship and job/livelihood programs
18. Application for contractor’s final payment release certificate
(Revenue Memorandum Circular No. 39-2015, July 13, 2015)
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 TECHNICAL UPDATES
Note that the financial statements of an investor who has no investments in subsidiaries, but has investments
in associates or joint ventures that are required by PAS 28 to be accounted for using the equity method, are
not separate financial statements. Such an investor is less likely to prepare separate financial statements and
its investments in associates or joint ventures should be always be accounted for using the equity method.
We expect that the option to use equity accounting in separate financial statements would also be adopted in
the Philippines and shall also be effective for annual periods beginning on or after 1 January 2016. When the
accounting policy choice to apply equity accounting is adopted, the application should be retrospective in ac-
cordance with PAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors. This amendment to
the standard permits early adoption.
This article originally appeared in Isla Lipana & Co.’s Client Advisory Letter ISSN 2094-1226/May 2015. This
content is for general information purposes only. They do not necessarily reflect the official position of Isla
Lipana & Co. They are intended for guidance only and as such should not be regarded as a substitute for
professional advice.
Tax in a DOT
Hot & Fresh!
Disallowance of email submission under eBIRForms system
The email submission of tax returns as an alternative mode of electronic submission under the eBIRForms
Package System has been discontinued by the BIR. Starting August 1, 2015, taxpayers enrolled to the
eBIRForms System or those required to use the eBIRForms System Package must submit their tax returns
online using the eBIRForms Package Version 5.0.
eBIRForms taxpayers who will submit their tax returns through eBIR e-mail will receive the following mes-
sage:
“This tax return submission channel is now unavailable and your tax return will be disregarded. Please
download the eBIRForms package version 5 and follow the procedures per RMC [Revenue Memorandum
Circular] No. 31-2015 to submit your tax returns.”
The BIR has discontinued the use of eBIRForms email accounts after numerous invalid formats of BIR tax
returns were found attached by taxpayers, including e-mails with no attachments.
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TECHNICAL UPDATES
Conditions for exemption from advance VAT or Percentage Tax of agricultural cooperatives as
producer of sugar
Under Section 5(b) of Revenue Regulations No. (RR) 08-2015, withdrawals of sugar for sale by agricultural cooperatives
to its non-members are subject to payment of advance value-added tax (VAT) or percentage tax. However, in case the
agricultural cooperative is the producer of the sugar, the sale to non-members or to another cooperative shall be exempt
from advance VAT or percentage tax.
In order to be considered the sugar producer exempt from advance VAT or percentage tax on its sale of sugar to non-
members, the BIR prescribed the following requisites that must be satisfied by the duly-registered agricultural coopera-
tive:
1. It is the tiller, through its members, of the land it owns or leases; and
2. It incurs cost of agricultural production of the sugar and produces the sugar cane to be refined.
In the absence of any of the above requisites, the agricultural cooperative cannot be considered a producer of sugar and,
thus, its withdrawals of sugar for sale to non-members or another agricultural cooperative are subject to advance VAT or
percentage tax.
(Revenue Memorandum Circular No. 40-2015, July 15, 2015)
Clarification on the documentary requirements for registration of labor organizations
Labor organizations, associations, or groups of unions or workers that were issued Certificate of Registration (COR) by
the Department of Labor and Employment (DOLE) need not secure a Certificate of Registration from the Securities and
Exchange Commission (SEC) to register with the BIR.
A labor organization, association, or group of unions or workers acquires legal personality pursuant to the Labor Code
of the Philippines, even without an SEC Certificate of Registration. Hence, the BIR has clarified by amending for this
purpose Section III (C) of Annex A of RR 07-2012 that labor organizations, associations, or groups of unions or workers
only need to submit: (a) copies of Certificate of Registration issued by DOLE, and (b) constitution and by-laws of the
applicant union in registering with the BIR.
(Revenue Memorandum Circular No. 41-2015, July 27, 2015)
Policies and guidelines on the establishment of BIR eLounge facilities
The BIR issued the following policies and guidelines in the establishment and operation of eLounge facilities in the vari-
ous Revenue District Offices (RDOs) of the BIR.
1. Establishment and operation of eLounge
The eLounge facilities in the RDOs shall provide taxpayers with free electronic or online medium to access the BIR eSer-
vices, including, but not limited, to the following: (a) eFiling and Payment System (eFPS); (b) eBIRForms; (c) eSubmis-
sion; (d) Internal Revenue Stamps Integrated System (IRSIS); (e) eDST; (f) eBROAD; (g) eComplaint; (h) eAccReg; (i)
eSales; (j) eReportCard; (k) eORB; (l) PAYBIR; (m) eTVCD; (n) Relief Data Entry and Validation Module; (o) Alphalist
Data Entry and Validation Module; and (p) Taxpayer Compliance Guide.
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 TECHNICAL UPDATES
Accounting for investments in other entities in separate FS
Investments in other entities would include investments in subsidiaries, associates and joint ventures. Under
PAS 27 — Separate Financial Statements (FS), the current applicable standard, these investments should be
accounted for at cost, or in accordance with PFRS 9, as long as an entity would apply the same accounting for
each category of investments.
Currently, accounting at cost or in accordance with PFRS 9 are the only options available for entities prepar-
ing separate financial statements. The only exemption is when an investment would qualify as held-for sale or
is included in a disposal group where it should be accounted for at the lower of its carrying amount and fair
value less costs to sell following the guidance under PFRS 5 - Non-current assets Held for Sale and Discontin-
ued Operations.
Further, when an entity availed of the exemption to prepare consolidated financial statements (PFRS 10 par
4) and it has an investment in a subsidiary, the guidance above should still apply in accounting for its invest-
ment in subsidiaries, as well as its investments in associates and joint ventures, in its separate financial state-
ments.
In August 2014, the International Accounting Standards Board (IASB) issued an amendment to IAS 27,
which includes the option to use equity method in accounting for investments in subsidiaries, associates
and joint ventures in separate financial statements and in financial statements of entities that availed of the
exemption to prepare consolidated financial statements.
Under the equity method, an investment is initially recognized at cost, and the carrying amount is increased
or decreased to recognize the investor’s share of the profit or loss and other comprehensive income or loss of
the investee after the date of acquisition. When the investor’s share of losses in a subsidiary, an associate or a
joint venture equals or exceeds its interest, including any other unsecured receivables, the investor does not
recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf
of the subsidiary, associate or joint venture.
The application of the equity method in the separate financial statements is expected to result in the same net
assets and profit or loss (attributable to owners) in the consolidated financial statements. However, the IASB
noted certain instances wherein differences could arise, a straightforward example is on application of im-
pairment testing. The carrying amount of the investment in a subsidiary in the separate financial statements
includes goodwill, which is not tested separately, and impairment assessment is applied to the entire carrying
amount of the investment. In the consolidated financial statements, goodwill is recognized separately and
is tested for impairment separately. The amount of loss as result of impairment test may be different in each
circumstance.
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TECHNICAL UPDATES
The eLounge shall be opened from 8 am to 5 pm or beyond office hours depending on the client’s needs
and upon the approval of the head of office (i.e., RDO), taking into consideration the requirements of the
BIR Citizen’s Charter and RA 9485 (Anti-Red Tape Act of 2007).
2. Duties and responsibilities
The following offices and personnel of the BIR shall have the following duties and responsibilities in the
establishment and operation of an eLounge.
a. Revenue District Officer (RDO)
The RDO shall ensure, among others, that the eLounge facility is fully operational and manned by duly-
designated personnel. The RDO must also ensure that only official transactions are being undertaken in
the eLounge.
b. Client Service Support personnel
The client service support (CSS) personnel shall be responsible for assisting taxpayers with their concerns
with the e-services of the BIR. The designated CSS personnel shall also be responsible for ensuring that
all devices in the eLounge, such as computers, modems, routers and internet connections, are working/
functioning properly for the smooth flow of work. The CSS personnel shall also prepare and submit the
eLounge Monthly Utilization Report to the Assistant Commissioner, Client Service Support through the
Public Information and Education Division every fifth of the following month.
c. Regional Data Center (RDC)
The Regional Data Center (RDC) shall, among others, assist the CSS personnel/clients on technical issues
encountered in the eLounge. Technical issue/s encountered by CSS personnel shall be logged by the RDC
Help Desk for proper dispatching of technical engineers to address the issue/s.
d. Public Information and Education Information
The Chief of the Public Information and Education Information (PIED) shall receive the monthly
eLounge utilization status report of the concerned RDO. The chief of the PIED shall also be responsible
for consolidating and submitting the reports to the CSS for monitoring the operation and utilization of
the eLounge facility.
(Revenue Memorandum Order No. 13-2015, July 13, 2015)
Court of Tax Appeals Decisions
DST on advances from stockholders
Section 179 of the Tax Code subjects to the Documentary Stamp Tax (DST) every original issue of debt
instruments in the amount of P1.00 on each P200.00, or fractional part thereof, of the issue price of any
such debt instrument. The CTA held that the DST under Section 179 covers advances from stockholders.
In the instant case, the BIR assessed the taxpayer for deficiency DST on the advances made by its stock-
holders. The taxpayer argued that the advances from its stockholders should not be subject to DST as it
is not covered by any document or instrument enumerated in Title VII (Documentary Stamp Tax) of the
Tax Code, as amended.
 TECHNICAL UPDATES
What are the key changes to the audit reports?
The changes that the IAASB is introducing center around three key aims: insight, transparency and improved readability.
1. Insight
Key audit matters
Without doubt, the most significant innovation in the new standards is the introduction of ‘key audit matters’ (ISA 701) that
will be required for audits of listed companies, but can also be included voluntarily by others. This section will shed light
on those matters that, in the auditor’s judgment, were of the most significance in the audit of the financial statements of the
current period.
The new ISA 701 observes that professional judgement will be needed to determine which, and how many, key audit matters
to include in the audit report. This will be an important judgement. While key audit matters will be drawn from matters
discussed with the audit committee, it is not expected that all matters communicated to those charged with governance
would be considered key audit matters to be included in the auditor’s report. Neither is the ISA looking for a long list, as
that would be contrary to the notion of such matters being those of most significance in the audit.
Key audit matters are selected from those matters involving significant auditor attention in the audit. The concept of signifi-
cant auditor attention, the ISA says, “recognizes that an audit is risk-based”, and areas of significant auditor attention “often
relate to areas of complexity and significant management judgement in the financial statements”. These are, therefore, the
areas that, “often involve difficult or complex auditor judgements”.
In practice, this means that the selection of key audit matters is a multi-step judgement. The auditor is expected to take into
account:
• Significant risks and areas of higher risk of material misstatement;
• Areas requiring significant auditor and management judgement, including accounting estimates identified as hav-
ing high estimation uncertainty and more subjective areas of the financial statements; and
• The effect on the audit of significant events or transactions that occurred during that year.
There are some situations in which the auditor would not be required to disclose a matter, such as if law or regulation pre-
cludes it, or, in extremely rare circumstances, where the adverse consequences of public communication of a matter would
reasonably be expected to outweigh the public interest benefits. The IAASB has been very clear that the provisions should
not be abused to avoid disclosing matters that do not firmly fit these circumstances.
By way of implementation advice, the IAASB set out in ISA 701 some considerations that may be relevant to determining
whether a matter is significant, and therefore may qualify as a key audit matter.
The new ISA requires the auditor to: describe each key audit matter; include a reference to related financial statement dis-
closures, (if any); and address why the matter was considered to be one of most significance in the audit and how it was ad-
dressed in the audit. While the amount of detail is a matter of professional judgement, the ISA notes that this might include:
• Aspects of the auditor’s response or approach that were most relevant to the matter or specific to the assessed risk.
• A brief overview of procedures performed.
• An indication of the outcome of the auditor’s procedures.
• Key observations with respect to the matter.
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TECHNICAL UPDATES
In the ruling issued to PNCC, the BIR confirmed that the share of PNCC in gross revenues should only be
subject to 2% CWT. Accordingly, the taxpayer instructed the escrow agent to release the 3% difference to
PNCC in consonance with the escrow agreement. Subsequently, the taxpayer executed a settlement agree-
ment with PNCC whereby the latter relinquishes its right to file or seek any claim for refund before any
court, tribunal, or administrative body with respect to the 3% overpaid CWT and recognizes the right of
the taxpayer to pursue the claim for refund.
The taxpayer filed its claim for refund with the BIR, and elevated the same to the CTA after alleging inac-
tion on the part of the BIR.
The BIR asserted that the taxpayer had no legal right to claim for refund. Moreover, the BIR submitted that
the SC ruling allowing withholding agents to claim for refund applies only when the withholding agent
and the taxpayer are related parties, i.e., where the withholding agent is a wholly owned subsidiary of the
taxpayer.
The CTA held that although the relation between the taxpayer and the withholding agent is a factor that
increases the latter’s legal interest to file a claim for refund, there is nothing in the decision to suggest that
such relationship is required or that the lack of such relation deprives the withholding agent of the right to
file a claim for refund.
The CTA explained that what is clear in the decision is that a withholding agent has a legal right to file a
claim for refund for two reasons: First, it is considered a “taxpayer” under the Tax Code as it is liable for
the withholding tax as well as for deficiency assessments, surcharges, and penalties should the amount of
the tax withheld be finally found to be less than the amount that should have been withheld under law.
Second, as an agent of the taxpayer, its authority to file the necessary income tax return and to remit the
tax withheld to the government impliedly includes the authority to file a claim for refund and to bring an
action for recovery of such claim.
However, the CTA noted that while the withholding agent has the right to recover the taxes erroneously or
illegally collected, it nevertheless has the obligation to remit the same to the principal taxpayer. As an agent
of the taxpayer, it is his duty to return what it has recovered; otherwise, it would be unjustly enriching itself
at the expense of the principal taxpayer from whom the taxes were withheld, and from whom its derives its
legal right to file a claim for refund.
(Commissioner of Internal Revenue vs. Manila North Tollways Corporation, CTA EB No. 1157 re CTA Case
No. 7870, June 20, 2015)
 TECHNICAL UPDATES
2. Transparency
The main proposals to enhance transparency are to introduce an explicit statement regarding the auditor’s
independence in all audit reports and to identify the engagement partner’s name in audit reports for listed
entities. Both are already part of the auditor’s report in many parts of the world - but it is not the practice
everywhere.
3. Readability
Under the new standards, the auditor’s report has been restructured to put audit and entity-specific infor-
mation at the front of the report - in particular, putting the audit opinion first. Standardized wording in the
report - such as the descriptions of the auditor’s responsibilities and what’s involved in an audit can be placed
at the end of the report, or some might even decide to put it in an appendix or refer to a common website
(such as that of a standard-setter or regulator).
Going concern will also be given more visibility in the auditor’s report. Both management’s and auditor’s
responsibilities regarding going concern will be described in the new reports. When there is a material un-
certainty about the entity’s ability to continue as a going concern, this will now be highlighted in a separate,
clearly identified section of the report.
What are the intended benefits?
• Enhanced communication between auditors and investors, as well as those charged with corporate
governance
• Increased user confidence in audit reports and financial statements
• Increased transparency, audit quality, and enhanced information value
• Increased attention by management and financial statement preparers to disclosures referencing the
auditor’s report
• Renewed auditor focus on matters to be reported that could result in an increase in professional
skepticism
• Enhanced financial reporting in the public interest
Actions required
While the new standards are not effective until the end of 2016, auditors, companies and audit committees
should consider the impact of these new requirements on auditor reporting in 2015 and early 2016.
Information contained in this report was obtained from various PwC publications. This content is for general
information purposes only. They do not necessarily reflect the official position of Isla Lipana & Co. They are
intended for guidance only and as such should not be regarded as a substitute for professional advice. 12
TECHNICAL UPDATES
The CTA cited the case of Commissioner of Internal Revenue vs. Filinvest Development Corporation (G.R.
No. 163653 and 167689, July 19, 2011) where the Supreme Court (SC) En Banc ruled over the issue on the
imposition of DST on inter-office memo covering advances granted by an affiliated corporation, explaining
that that advances not supported by any formal debt instrument may still be subjected to DST.
The CTA held that the word “affiliates” comes within the term “related party” contemplated in Philippine
Accounting Standards (PAS) 24: Related Party Disclosures, which defines a related party to be a party
related to an entity if: (a) directly, or indirectly through one or more intermediaries, the party: (i) controls,
is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow
subsidiaries); (ii) has an interest in the entity that gives it significant influence over the entity; or (iii) has
joint control over the entity.
According to the CTA, a stockholder is well within the scope of a related party as defined by the account-
ing standards. As such, the CTA held that advances to or from the stockholders are subject to DST under
Section 179 of the Tax Code.
(Lingkod Bayan Pawnshop Co. Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8554, July 29, 2015)
Withholding agent as the proper party to claim refund of withheld taxes
In the case of Commissioner of Internal Revenue v. Smart Communication, Inc. (G.R. Nos. 179045-46,
August 25, 2010), the SC held that a withholding agent is considered a proper party to file a claim for
refund of erroneously withheld taxes. The CTA held that the SC ruling applies even when the withholding
agent and taxpayer are not related parties.
In the instant case, the taxpayer refund-claimant is the authorized concessionaire of the Philippine Na-
tional Construction Company (PNCC), which was given the right to operate, maintain, and charge tolls
on the North Luzon Expressway (NLEX). The taxpayer entered into a joint venture with another domestic
corporation for the completion, rehabilitation, and modernization of NLEX.
In consideration of assignment of its franchise, the PNCC shall be entitled to receive a share of the gross
toll revenue collected from the operation of NLEX. The taxpayer withheld 5% creditable withholding tax
(CWT) on its payments to PNCC. However, PNCC insisted that it should be subject only to 2% withhold-
ing tax, and thus, they agree that the taxpayer should place in an escrow account the amount equivalent to
5% CWT that was collected and remitted by the taxpayer to the BIR pending a ruling from the BIR on the
applicable CWT rate.
5
 TECHNICAL UPDATES
In the instant case, the taxpayer-refund claimant is a regional operating headquarter (ROHQ) that acts as a
shared services center, handling the regional as well as global accounting and related controlling processes,
such as accounting production work in the global general ledger in SAP, developing and operating inter-com-
pany clearing house, accounting, and head office reporting for non-regulated entities and product control. To
establish that the foreign corporations for whom the services were performed are doing business outside the
Philippines, the taxpayer-refund claimant presented the following: (a) SEC Certifications of Non-Registration
of Company; (b) authenticated Certificate of Incorporation, authenticated Certificate of Registration, authen-
ticated Certificate of Association, and company profile fact sheet; (c) intragroup service agreements; and (d)
list of shareholdings.
The CTA noted that the documents submitted by the taxpayer, standing alone, are inadequate proof that the
taxpayer’s clients are non-resident foreign entities doing business outside the Philippines. While it is true that
the SEC Certificates of Non-Registration indicate that the named entities are not registered corporations/
partnerships in the Philippines, the CTA held that they do not prove that such entities are non-resident for-
eign corporations doing business outside the Philippines. The same can be said about the intragroup service
agreements, which only show the names of petitioner’s customers to whom it rendered services but do not
establish that such customers are non-resident foreign corporations doing business outside the Philippines.
The Certificate of Association and Certificates of Registration/Incorporation of Foreign Company only estab-
lish that the named entities were incorporated/organized abroad but do not indicate that such entities are not
doing business in the Philippines.
To be considered a non-resident foreign corporation doing business outside the Philippines, the CTA held
that each entity must be supported by both SEC Certificate of Non-registration of corporation/partnership
and certificate/articles of foreign incorporation/association/registration. Thus, only services rendered by the
ROHQ to its clients that have both SEC Certificate of Non-Registration Corporation and Certificate of For-
eign Incorporation qualify for VAT-zero rating for purposes of its claim for VAT refund.
(Deutsche Knowledge Services, Pte. Ltd., vs. Commissioner of Internal Revenue, CTA Case No. 8300, July 10,
2015)
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TECHNICAL UPDATES
Validity of waiver of the statute of limitations
Under Section 203 of the Tax Code, the BIR is authorized to assess internal revenue taxes within three years
from the last day prescribed by law for the filing of the tax return or the actual date of filing of such return,
whichever comes later. However, the period to assess may be extended upon a written agreement between
the Commissioner of Internal Revenue and the taxpayer before the expiration of the three-year prescriptive
period.
In order to be valid, the waiver of the statute of limitations executed by the taxpayer and the BIR must strictly
comply with the procedures laid down under Revenue Memorandum Order (RMO) 20-90 and Revenue
Delegation of Authority Order (RDAO) No. 05-01, which, among others, require that the date of acceptance
by the BIR be indicated on the waiver/s, and that a notarized written authority was given to the individu-
als signing the waivers on behalf of the taxpayer. In case of failure to strictly comply with the requirements
on the proper execution of the waiver as mandated under RMO 20-90 and RDAO 05-01, the waiver shall be
rendered invalid, hence, did not extend the original three-year prescriptive period.
After careful scrutiny of the waivers executed by the taxpayer and the BIR, the CTA found the same to be
defective and did not validly extend the original three-year prescriptive period because the date of acceptance
was not indicated in the waivers. Moreover, the BIR failed to verify whether a notarized written authority
was given to the individuals signing the 05-01, which provides that in case the authority is delegated by the
taxpayer to a representative, the concerned revenue official shall see to it that such delegation is in writing and
duly notarized.
The CTA also noted that the third waiver was executed beyond the expiry date indicated on the second
waiver, which is in violation of Section 222(b) of the Tax Code, as amended, which provides that “the period
so agreed upon may be extended by subsequent written agreement made before the expiration of the period
previously agreed upon.”
Considering that the waivers are invalid and without force and effect, the period to assess the taxpayer for
deficiency taxes was not extended beyond the three-year prescriptive period and, therefore, the right of the
BIR to make assessment had already prescribed.
(Total (Philippines) Corporation vs. Commissioner of Internal Revenue, CTA Case No. 8608, July 13, 2015)
Proof of doing business outside the Philippines
Under Section 108(B)(2) of the Tax Code, before the supply of service to a foreign corporation can be con-
sidered VAT zero-rated, the VAT-registered taxpayer that performed the service/s must prove that: (a) the
service is other than processing, manufacturing, or repacking of goods; (b) payment for such services is in
acceptable foreign currency accounted for in accordance with the Bangko Sentral ng Pilipinas (BSP) rules and
regulations; and (c) the recipient of such services is doing business outside the Philippines. (cont.to page 10)
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 HIGHLIGHTS OF EVENTS HIGLIGHTS OF EVENTS
“National Accountancy
Week Celebration”
Grand Ballroom, Intercontinental Hotel
July 16, 2015

Guest Speaker for

Guest Speaker for Light Session Technical Session II
- Ms. Lalaine Rodriguez Valdes - Dir. Carolyn Ann C. Reyes

Guest Speaker for

Invocation was sang by Mr. Randolf Resurreccion Technical Session III
-Ms. Marie Ancilla C. Fajardo
of Isla Lipana and Co.
Magpantay
Guest Speaker for
Technical Session I
- Hon. Gerard B. Sanvictores

9 8