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Updates in Taxation Atty. Rizalina V.

Lumbera

Updates in Taxation Period Covered: 2007 to 2009 (a). Jurisprudence (b). Tax Laws Revenue Regulations Republic Act 9504

2007 CASES

2007 Cases: COMMISSIONER OF INTERNAL REVENUE versus ISABELA CULTURAL CORPORATION (ICC) (G.R. 172231 12 February 2007) Business Expenses: (a) Expenses for the auditing services; (b) Expenses for the legal services; (c) Expense for security services; Rules: (a) the expense must be ordinary and necessary; (b) it must have been paid or incurred during the taxable year; (c) it must have been paid or incurred in carrying on the trade or business of the taxpayer; and (d) it must be supported by receipts, records or other pertinent papers.

2007 Cases: COMMISSIONER OF INTERNAL REVENUE versus ISABELA CULTURAL CORPORATION (ICC) (G.R. 172231 12 February 2007) .Accrual method of accounting, expenses not claimed as deductions in the current year cannot be claimed as deduction from income for the succeeding year. A taxpayer who is authorized to deduct certain expenses and other allowable deductions for the current year but failed to do so cannot deduct the same for the next year.

2007 Cases: FELS ENERGY INC. VS. PROVINCE OF BATANGAS (G.R. 168557 / 2-16-2007) NAPOCOR VS. LBAA OF BATANGAS (G.R. 170628 16 February 2007) .Are over diesel engine power barges moored in Batangas owned by a private entity and leased to Napocor with agreement that NAPOCOR is liable for taxes, real or personal property? Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast" are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.

2007 Cases: FELS ENERGY INC. VS. PROVINCE OF BATANGAS (G.R. 168557 / 2-16-2007) NAPOCOR VS. LBAA OF BATANGAS (G.R. 170628 16 February 2007) .Are they subject to real estate tax? Yes. The power barges are not actually, directly and exclusively used by NAPOCOR in the generation and transmission of electric power; For the exemption to apply, the machinery must be actually, directly and exclusively used by the government owned or controlled corporation . The mere undertaking of NPC in the lease contract that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption.

2007 Cases: FELS ENERGY INC. VS. PROVINCE OF BATANGAS (G.R. 168557 / 2-16-2007) NAPOCOR VS. LBAA OF BATANGAS (G.R. 170628 16 February 2007) .What is the remedy of the taxpayer on assessment of real estate tax? .Appeal to LBAA within sixty (60) days from the date of receipt of the written notice of assessment, by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. .Not motion for reconsideration; .Failure to appeal to LBAA renders the assessment final and the LGU can collect becomes absolut upon the expiration of the period to appeal.

2007 Cases: THE COMMISIONER OF INTERNAL REVENUE versus ACESITE (PHILIPPINES) HOTEL CORPORATION( G.R. No. 147295/ February 16, 2007) .Can a lessor of PAGCOR shift the VAT due on the rentals when PAGCOR is exempt from taxes? No. P.D. 1869, the charter creating PAGCOR, grants the latter an exemption from the payment of taxes. It gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect. Although the law does not specifically mention PAGCOR.s exemption from indirect taxes, PAGCOR is undoubtedly exempt from such taxes because the law exempts from taxes persons or entities contracting with PAGCOR in casino operations. The provision clearly exempts PAGCOR from indirect taxes.

2007 Cases: THE COMMISIONER OF INTERNAL REVENUE versus ACESITE (PHILIPPINES) HOTEL CORPORATION( G.R. No. 147295/ February 16, 2007) Is the lessor entitled to refund of the VAT? Yes. The lessor has discharged the burden of proving exemption, thus, BIR should release the refund without any unreasonable delay. Indeed, fair dealing is expected by our taxpayers from the BIR and this duty demands that the BIR should refund without any unreasonable delay what it has erroneously collected.

2007 Cases: DIGITAL TELECOMMUNICATIONS PHIL., INC. vs. PROVINCEOF PANGASINAN ETC. (G. R. No. 152534/ February 23, 2007 Is DIGITEL exempt from local franchise tax and real estate tax based on Sec 23 of RA 7925 ("The Public Telecommunications Policy Act of the Philippines. )? No. The word "exemption" in the stature refers merely to an exemption from regulatory or reporting requirements of the DOTC or the NTC and not to the grantee.s tax liability. Congress did not intend it to operate as a blanket tax exemption to all telecommunications entities

2007 Cases: DIGITAL TELECOMMUNICATIONS PHIL., INC. vs. PROVINCEOF PANGASINAN ETC. (G. R. No. 152534/ February 23, 2007 .What is the nature of tax exemption? Tax exemptions are highly disfavored. The tax exemption must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer.

2007 Cases: DIGITAL TELECOMMUNICATIONS PHIL., INC. vs. PROVINCEOF PANGASINAN ETC. (G. R. No. 152534/ February 23, 2007 What is the effect of RA 7716 abolishing the franchise tax imposed on telecommunications companies effective 1 January 1996 and in its place is imposed a 10 percent Value-Added-Tax (VAT)? From 1 January 1996, DIGITEL ceased to be liable for national franchise tax and in its stead is imposed a 10% VAT (now 12%) in accordance with Section 108 of the Tax Code.

2007 Cases: REPUBLIC OF THE PHILIPPINES represented by the Commissioner of Customs vs UNIMEX MICRO ELECTRONIC (G.R. Nos. 166309-10/ 09 March 2007) .Can the CTA later on modify its earlier issued final decision ordering release by BOC of goods illegally seized by BOC? Yes. Where facts or events transpire after a decision has become executory, which facts constitute a supervening cause rendering the final judgment unenforceable. A final judgment may be altered when its execution becomes impossible or unjust. At the time CTA decision matter of seizure by the the BOC.s custody. Thus, the equivalent amount of decision. is executory, the goods subject BOC were inexplicably lost while under the modification to order BOC to pay the goods is a valid modification of

2007 Cases: REPUBLIC OF THE PHILIPPINES represented by the Commissioner of Customs vs UNIMEX MICRO ELECTRONIC (G.R. Nos. 166309-10/ 09 March 2007) Is BOC liable for payment of interest due to delay in payment of equivalent value of goods? The case does not involve a monetary obligation to be covered by Article 2209 of the Civil Code.Government was never a debtor to the petitioner in order that Article 2209 could apply. Nor was it in default for there was no monetary obligation to pay in the first place. Interest is not chargeable against government except when it has expressly stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where damages sustained by the owner take the form of interest at the legal rate.

2007 Cases: REPUBLIC OF THE PHILIPPINES represented by the Commissioner of Customs vs UNIMEX MICRO ELECTRONIC (G.R. Nos. 166309-10/ 09 March 2007) .Is BOC liable for actual damages (value of the goods)? Yes. BOC.s ineptitude and gross negligence in the safekeeping of respondent.s goods cannot be countenanced by the doctrine of state immunity from suit. The doctrine of state immunity must be fairly observed and the State should not avail itself of this prerogative to take undue advantage of parties that may have legitimate claims against it. Upon payment of the necessary customs duties by respondent, payment for the value of the goods lost shall be taken from the sale or sales of goods or properties seized or forfeited by the Bureau of Customs.

2007 Cases: ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION vs COMMISSIONER OF INTERNAL REVENUE (G.R. No. 145526/ March 16, 2007) What are the requisites of refund for excess input tax? Those seeking tax refunds or credits bear the burden of proving the factual bases of their claims and of showing, by words too plain to be mistaken, that the legislature intended to entitle them to such claims. The rule, in this case, required petitioner to (1) show that its sales qualified for zero-rating;and (2) present sufficient evidence that those sales resulted in excess input taxes. It complied with the first requirement but failed in the second requirement.

2007 Cases: BANCO FILIPINO SAVINGS & MORTGAGE BANK VS. COURT OF APPEALS ET AL. (G.R.No.155682 / March 27, 2007) What are the requisites for refund of creditable withholding tax? (1). The claim is filed with the CIR within the two-year period from the date of payment of the tax; (2). It is shown on the return of the recipient that the income payment received was declared as part of the gross income; and (3). The fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the amount paid and the amount of the tax withheld therefrom. The third condition is specifically imposed under Section 10 of Revenue Regulation No. 6-85 (as amended) Failure of the bank to comply with the form (BIR Form No. 1743.1) as prescribed by Revenue Regulations results to denial of the refund.

2007 Cases: INT'L EXCHANGE BANK VS. COMMISSIONER OF INTERNATIONAL REVENUE (G.R. No. 171266 April 4, 2007 ) Are Savings Deposit-Fixed Savings Deposit treated as certificate[s] of deposits subject to DST under Section 180 of the NIRC? Yes. The only difference between a time deposit and FSD lies on the evidence of deposit.A savings deposit-FSD is evidenced by a passbook, while a time deposit is evidenced by a certificate of time deposit."

2007 Cases: COMMISSIONER OF INTERNAL REVENUE VS. BANK OF THE PHILIPPINE ISLANDS ( G.R. No. 134062/April 17, 2007 ) Is the basis for the assessment required to be stated in the notice of assessment issued by the BIR? Nothing in the old law requires a written statement to the taxpayer of the law and facts on which the assessments were based. Jurisprudence, on the other hand, simply requires that the assessments contain a computation of tax liabilities, the amount the taxpayer was to pay and a demand for payment within a prescribed period.

2007 Cases: COMMISSIONER OF INTERNAL REVENUE VS. BANK OF THE PHILIPPINE ISLANDS ( G.R. No. 134062/April 17, 2007 ) Is a letter of the taxpayer requesting BIR for the basis of the assessment considered as a protest of the assessment? No. It does not qualify as a protest since the letter itself stated that "as soon as this is explained and clarified in a proper letter of assessment, we shall inform you of the taxpayer.s decision on whether to pay or protest the assessment." By its own declaration, BPI did not regard this letter as a protest against the assessments.

2007 Cases: COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. PHILIPPINE HEALTH CARE PROVIDERS, INC., Respondent. (G.R. No. 168129/ 24April 2007) Are the services of a prepaid group practice health care delivery system or a health maintenance organization (HMO) exempt from VAT? NO. In an HMO agreement, enrollees are entitled to preventive, diagnostic, and corrective medical services to be dispensed by Health Care's duly licensed physicians, specialists, and other professional technical staff participating in said group practice health care delivery system established and operated by Health Care. Such medical services will be dispensed in a hospital or clinic owned, operated, or accredited by Health Care. To be entitled to receive such medical services from Health Care, an individual must enroll in Health Care's health care program and pay an annual fee; They do not fall within exempt transactions ( Section 103 NIRC), Medical, dental, hospital and veterinary services

2007 Cases: RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE, Respondent. (G.R. No. 168498/ 24April 2007) What are the remedies of the taxpayer in case the CIR does not act on the protest within 180 day period? A taxpayer can either: (1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period; (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision. These options are mutually exclusive, and resort to one bars the application of the other.

2007 Cases: RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE, Respondent. (G.R. No. 168498/ 24April 2007) After availing of the first option, i.e., filing a petition for review which was however filed out of time, petitioner can not successfully resort to the second option, i.e.,awaiting the final decision of the Commissioner and appealing the same to the Court of Tax Appeals, on the pretext that there is yet no final decision on the disputed assessment because of the Commissioner.s inaction.

2007 Cases: PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OF APPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and the CITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007) PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. THE HONORABLE COURT OF APPEALS (G.R. No. 150301/ 02 October 2007) Are reclaimed lands wherein Iloilo Fishing Port Complex (IFPC) was constructed, later on turned over to Philippine Fisheries Development Authority (PFDA) for its operation, and with portions leased to private firms and individuals engaged in fishing related businesses, subject to real estate tax? Yes. PFDA is not a GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the PFDA leased to private entities.

2007 Cases: PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OF APPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and the CITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007) PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. THE HONORABLE COURT OF APPEALS (G.R. No. 150301/ 02 October 2007) The exemption does not apply when the beneficial use of the government property has been granted to a taxable person. Section 234 (a) of the Code states that real property owned by the Republic of the Philippines or any of its political subdivisions is exempted from payment of the real property tax "except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person .

2007 Cases: PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, petitioner, vs.COURT OF APPEALS, OFFICE OF THE PRESIDENT, DEPARTMENT OF FINANCE and the CITY OF ILOILO, respondents. (G.R. No. 169836/ 31 July 2007) If real estate tax is not paid, can the LGU sell the reclaimed lands in a public auction to satisfy the tax due? NO. The land cannot be sold at public auction to satisfy the tax delinquency. Reclaimed lands are lands of the public domain and cannot, without Congressional fiat, be subject of a sale, public or private. CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, provides, that the only way the government can sell to private parties government reclaimed and marshy disposable lands of the public domain is for the legislature to pass a law authorizing such sale. In order to satisfy the tax, the City of Iloilo has to resort to other means of satisfying such delinquency.

2007 Cases: COMMISSIONER OF INTERNAL REVENUE, vs. ROSEMARIE ACOSTA, as represented by Virgilio A. Abogado, (G.R. No. 154068 / August 3, 2007) Can the taxpayer immediately file a complaint in court claiming refund without filing the written claim for refund before the CIR? A claimant must first file a written claim for refund, categorically demanding recovery of overpaid taxes with the CIR, before resorting to an action in court. This is intended to afford the CIR an opportunity to correct the action of subordinate officers; and second, to notify the government that such taxes have been questioned, and the notice should then be borne in mind in estimating the revenue available for expenditure.

2008 CASES

2008 Cases: M.E. Holding Corporation versus The Hon. Court of Appeals, Court of Tax Appeals, and the Commissioner of Internal Revenue ( GR 160193/ 03 March 2008) Commissioner of Internal Revenue versus Central Luzon Drug Corporation (LUZON)( GR No. 159610/ 12 June 2008) What is the treatment of the 20% senior citizen.s discount on the part of the establishment giving the discount? Under RA 7432 (old law), the 20% sales discount to senior citizens may be claimed by an establishment owner as tax credit. Under RA 9257 (new law) The Expanded Senior Citizens Act of 2003 , the 20% sales discount granted by establishments to qualified senior citizens is to be treated as tax deduction, no longer as tax credit.

2008 Cases: Bank of Philippine Islands (formerly Far East Bank and Trust Company) versus The Commissioner of Internal Revenue ( GR 174942/ 07 March 2008) When does a request for reinvestigation filed by a taxpayer toll the running of the prescriptive period to assess/collect? The running of the statute of limitations on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection, in respect of any deficiency, shall be suspended, among others, when the taxpayer requests for a re-investigation which is granted by the Commissioner. The law is plainly worded. In order to suspend the running of the prescriptive periods for assessment and collection, the request for reinvestigation must be granted by the CIR. The delay of the CIR in acting upon and resolving the request for reinvestigation filed by BPI and in collecting the DST allegedly due from the latter, resulted in the prescription of the government.s right to collect the deficiency.

2008 Cases: COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FMF DEVELOPMENT CORPORATION, respondent. ( G.R. No. 167765/ 30 June 2008) What are the requisites of a valid waiver executed by a taxpayer in order to extend the BIR.s 3 yr period to assess? 1. It must be in the prescribed form ; 2. The waiver shall be signed by the taxpayer, accepted by the BIR, date of such acceptance by the Bureau should be indicated. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be beforethe expiration of the period of prescription or beforethe lapse of the period agreed upon in case a subsequent agreement is executed. 3. The waiver should be signed by the designated BIR officers. 4. The waiver must be executed in three (3) copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver. The fact of receipt by the taxpayer of his/her file copy shall be indicated in the original copy. 5. The prescribed procedures shall be strictly followed.

2008 Cases: COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FMF DEVELOPMENT CORPORATION, respondent. ( G.R. No. 167765/ 30 June 2008) .In this case: Not a valid waiver, period to assess prescribed and BIR cannot assess anymore (1). No proof that respondent was furnished a copy of the BIRaccepted waiver; (2). Waiver was signed only by a revenue district officer, when it should have been signed by the Commissioner as it involves an amount of more than P1 million; (3). It did not contain the date of acceptance by the Commissioner of Internal Revenue,

2009 CASES

2009 Cases: NATIONAL POWER CORPORATION, Petitioner, vs.CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA), LOCAL BOARD OF ASSESSMENT APPEALS (LBAA) OF LA UNION, PROVINCIAL TREASURER, LA UNION and MUNICIPAL ASSESSOR OF BAUANG, LA UNION, Respondents. ( G.R. No. 171470/ 30 January 2009) What is the real property tax implications of a Build-OperateTransfer (BOT) agreement between a government-owned and controlled corporation (GOCC) (NAPOCOR) that enjoys tax exemption and a private corporation? The owner-manager-operator of the project is the actual user of its machineries and equipment. Its ownership and use of the machineries and equipment are actual, direct, and immediate, while NAPOCOR.s is contingent and, at this stage of the BOT Agreement, not sufficient to support its claim for tax exemption.

2009 Cases: Agencia Exquisite of Bohol, Inc. vs. Commissioner of Internal Revenue (GR 150141/ 12 February 2009); Commissioner of Internal Revenue versus Agencia Exquisite of Bohol, Inc. ( GR 157359/ 12 February 2009); Exquisite Pawnshop and Jewelry, Inc. vs. Commissioner of Internal Revenue ( G.R No. 158644/ 12 February 2009) Are pawnshops subject to 5% lending investor.s tax? While pawnshops are indeed engaged in the business of lending money, they cannot be deemed "lending investors" for the purpose of imposing the 5% lending investor.s tax.

2009 Cases: LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOS REYES, in their capacities as President, Treasurer and Secretary of Adamson Management Corporation, Petitioners, vs. COURT OF APPEALS and LIWAYWAY VINZONS-CHATO, in her capacity as Commissioner of the Bureau of Internal Revenue, Respondents.(G.R. No. 120935/May 21, 2009) INTERNAL REVENUE, Petitioner, vs. COMMISSIONER OF COURT OF APPEALS, COURT OF TAX APPEALS, ADAMSON MANAGEMENT CORPORATION, LUCAS G. ADAMSON, THERESE JUNE D. ADAMSON, and SARA S. DE LOS REYES, Respondents. (G.R. No. 124557/May 21, 2009) Is an affidavit complaint executed by the CIR providing for the computation of tax considered as a valid assessment? NO. BIR examiners. Joint Affidavit attached to the Criminal Complaint contained some details of the tax liabilities of private respondents does not ipso factomake it an assessment. The purpose of the Joint Affidavit was merely to support and substantiate the Criminal Complaint for tax evasion. Clearly, it was not meant to be a notice of the tax due and a demand to the taxpayers for payment thereof.

.Is the recommendation letter of the CIR addressed to the DOJ considered as a valid assessment? A written communication containing a computation by a revenue officer of the tax liability of a taxpayer and giving him an opportunity to contest or disprove the BIR examiner.s findings is not an assessment since it is yet indefinite. The recommendation letter of the Commissioner cannot be considered a formal assessment. 1. It was not addressed to the taxpayers. 2. There was no demand made on the taxpayers to pay the tax liability, nor a period for payment set therein. 3. The letter was never mailed or sent to the taxpayers by the Commissioner. The recommendation letter served merely as the prima facie basis for filing criminal information for tax evasion.

PART 2 ( REPUBLIC ACTS / REVENUE REGULATIONS/ STATUTES)

REVENUE REGULATIONS NO. 1 2007 SUBJECT: Amending Revenue Regulations No. 4-2006 Implementing the Tax Privileges Provisions of R.A. No. 9257, Otherwise Known as the Expanded Senior Citizens Act of 2003 .Availment by Establishments of Sales Discounts as Deduction from Gross Income instead of tax credit; .Basis of Computation of Value-Added Tax on Sale to Senior Citizens. Amount of sale (without the VAT)P100.00 Less: 20% sales discount 20.00 Vatable sale 80.00 Plus: 12% VAT (based on P80) 9.60 Amount to be paid by the senior citizenP89.60

REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities .Microfinance -is a credit and savings mobilization program exclusively intended for the poor to improve the asset base of households and expand the access to savings of the poor. It involves the use of viable alternative credit schemes and savings programs including the extension of small loans, simplified loan application procedures, group character loans, collateral-free arrangements, alternative loan repayments, minimum requirements for savings, and small denominated savers' instruments; The maximum individual loan amount provided for microfinance loans is P150,000.00, subject to periodic determination of the Department of Trade and Industry to reflect economic changes.

REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities .SECTION 4. Tax Treatment of Microfinance Services Rendered by Cooperatives Duly registered credit cooperatives dealing/transacting with members only shall be exempt from: a. Income tax from operations b. Value -added tax (VAT), c. 3% percentage tax under Section 116 of the Tax Code of 1997, and d. Documentary stamp tax (DST) imposed under Title VII of the Tax Code of 1997, as amended, provided, however, that the other party to the taxable document/transaction who is not exempt shall be the one directly liable for the tax; and e. Annual Registration Fee of P500.00

REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities .Duly registered cooperatives dealing/transacting business with both members and nonmembers a. For cooperatives with accumulated reserves and undivided net savings of not more than Ten Million Pesos (P10,000.000.00) exempt from similar taxes; b. For credit cooperatives with accumulated reserves and undivided net savings of more than Ten Million Pesos (P10,000.000.00) (i) Exemption from income tax for a period of 10 years from the date of registration with CDA, provided, that at least twenty five percent of the net income of the cooperative is returned to the members in the form of interest and/or patronage fund. (ii) Exemption from VAT under Section 109(M) and 3% tax under Section 116, both of the Tax Code, as amended. (iii). Subject to all other internal revenue taxes unless otherwise provided by law.

REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities .All income of cooperatives which undertake microfinance activities in addition to their registered purpose except credit cooperatives and multi-purpose cooperatives which have one of its business activities as those performed by credit cooperatives, shall be subject to appropriate taxes under the Tax Code of 1997, as amended. .This is applicable to all cooperatives, whether dealing purely with members or both members and non-members. .All cooperatives, regardless of classification, are considered as withholding agents and are required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding.

REVENUE REGULATIONS NO. 14-2007: Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities .Tax Treatment of Microfinance Services Rendered by Nongovernmental Organizations All NGOs under Section 30 of the Tax Code of 1997, as amended, are exempt from income taxes, in respect of income received by them as such. Income of such NGOs from microfinance activities, and which are not in respect of their registered activities covered by Section 30 of the Tax Code of 1997, as amended, regardless of the disposition made of such income, shall be subject to tax under the Tax Code of 1997, as amended. Non-stock, non-profit NGOs, whether or not engaged in microfinance activities, are still also required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding as specified in Revenue Memorandum Circular No. 762003

REVENUE REGULATIONS NO. 5-2008: Further Amendments to Revenue Regulations Nos. 2-98 and 3-98, as Last Amended by Revenue Regulations No. 10-2000, With Respect to De Minimis Benefits . .The following shall be considered as de minimis benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank and file employees: xxxxx The term DE MINIMIS benefits which are exempt from the fringe benefit tax shall, in general, be limited to facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees such as, among others: (1). Rice subsidy of P1,500.00 or one (1) sack of 50 kg. rice per month amounting to not more than P1 ,500.00 ; (2) Uniform and Clothing allowance not exceeding P4,000.00 per annum. Xxxxxx

REPUBLIC ACT NO 9504 An Act Amending Sections 22, 24, 34, 35, 51, 79 of RA 8424 as amended (Effectivity Date: 06 July 2008) REVENUE REGULATIONS NO. 10 -2008 Implementing Pertinent Provisions of Republic Act No. 9504, An Act Amending Sections 22, 24, 34, 35, 51, and 79 of Republic Act No. 8424, as Amended, Otherwise Known as The National Internal Revenue Code Relative to the Withholding of Income Tax on Compensation and Other Concerns .

REPUBLIC ACT NO 9504 REVENUE REGULATIONS NO. 10 -2008 .(A). DE MINIMIS Benefits .(B). Minimum Wage Earners .( C ). Personal Exemptions/Additional Exemptions .(D). Optional Standard Deduction (OSD)

A). DE MINIMIS BENEFITS (not subject to income tax and withholding tax for both managerial and rank and file employees): (1) Monetized unused vacation leave credits of employees not exceeding ten (10) days during the year and the monetized value of leave credits paid to government officials and employees; (2) Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125 per month; (3) Rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice per month amounting to not more than P1,500.00; (4) Uniforms and clothing allowance not exceeding P4,000.00 per annum;

A). DE MINIMIS BENEFITS (not subject to income tax and withholding tax for both managerial and rank and file employees): (5) Actual yearly medical benefits not exceeding P10,000.00 per annum; (6) Laundry allowance not exceeding P300.00 per month; (7) Employees achievement awards, e.g., for length of service or safety achievement, which must be in the form of a tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000.00 received by the employee under an established written plan which does not discriminate in favor of highly paid employees; (8) Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 .00 per employee per annum;

A). DE MINIMIS BENEFITS (not subject to income tax and withholding tax for both managerial and rank and file employees): (9) Flowers, fruits, books, or similar items given to employees under special circumstances, e.g., on account of illness, marriage, birth of a baby, etc.; and (10) Daily meal allowance for overtime work not exceeding twenty five percent (25%) of the basic minimum wage. Notes: ExcessoftheceilingamountshallbeconsideredinthecomputationofP30,000.00exemptionof otherbenefits.OnlytheexcessoftheP30,000.00otherbenefits(toincludeheexcessofamoun tofdeminimisbenefits) shallbetaxable. Anyamountgivenbytheemployerasbenefitstoitsemployees,whetherclassifiedas deminimis be nefitsorfringebenefits,shallconstituteasdeductibleexpenseuponsuchemployer

(B). Minimum Wage Earners (MWE s) .Compensation income of MWEs in the private sector, paid the Statutory Minimum Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned: Exempt from income tax/not subject to withholding tax

(B). Minimum Wage Earners (MWE s) Statutory Minimum Wage. (SMW): Rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). The RTWPB of each region shall determine the wage rates in the different regions based on established criteria and shall be the basis of exemption from income tax for this purpose.

(B). Minimum Wage Earners (MWE s) Other Exempt Income of MWE.s: (1). Holiday pay; (2). Overtime pay; (3). Night shift differential pay; and (4). Hazard pay.

(B). Minimum Wage Earners (MWE s) Notes: (1). An employee who receives/earns additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P30,000.00, taxable allowances and other taxable income, other than the SMW, holiday pay, overtime pay, hazard pay and night shift differential pay, shall not enjoy the privilege of being a MWE. Entire earnings are not exempt from income tax and withholding tax. (2). MWEs with income from the conduct of trade, business, or practice of profession, in addition to compensation income as MWE, are not exempted from income tax, BUT the SMW, Holiday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from withholding tax.

( C ). Personal Exemptions/Additional Exemptions(effective beginning July 1, 200 8) .Individual taxpayers regardless of status: P50,000.00 (Personal exemption) P 25,000.00 (Additional exemption) -per child maximum of four (4) qualified dependent-children Dependent Child of whatever kind and status, not more than 21 years of age, not married, not gainfully employed, chiefly dependent and living with the taxpayer, and regardless of age, if incapable of self-support by reason of physical or mental defect.

( C ). Personal Exemptions/Additional Exemptions(effective beginning July 1, 200 8) .Husband is the proper claimant of the AE for qualified dependent children, unless he explicitly waives his right in favor of his wife in the Application for Registration (BIR Form No. 1902) or in the Certificate of Update of Exemption and of Employer.s and Employee.s Information (BIR Form No. 2305), whichever is applicable. Where the spouse of the employee is unemployed or is a non-resident citizen deriving income from foreign sources, the employed spouse within the Philippines shall be automatically entitled to claim the additional exemptions for children.

(D). Optional Standard Deduction (OSD) (RA 9504) REVENUE REGULATIONS NO. 16 2008: IMPLEMENTING THE PROVISIONS OF SECTION 34(L) OF THE TAX CODE OF 1997, AS AMENDED BY SECTION 3 OF REPUBLIC ACT NO. 9504, DEALING ON THE OPTIONAL STANDARD DEDUCTION (OSD) ALLOWED TO INDIVIDUALS AND CORPORATIONS IN COMPUTING THEIR TAXABLE INCOME

Optional Standard Deduction (OSD) PERSONS COVERED allowed to claim OSD in lieu of the itemized deductions: 1. Individuals: i. Resident Citizen ii. Non-resident citizen iii. Resident Alien iv. Taxable estates and trusts 2. Corporations: i. Domestic corporation ii. Resident foreign corporation Individual( except nonresident alien): OSD in an amount not exceeding forty percent (40%) of his gross sales or gross receipts; Corporation: OSD in an amount not exceeding forty percent (40%) of it gross income

REVENUE REGULATIONS NO. 1-2009: Relating to Privileges of Persons with Disability (PWD) Republic Act No. 9442 Magna Carta for Persons with Disability (PWD) .Person with disability (PWD) individual suffering from restriction or different abilities, as a result of mental, physical or sensory impairment to perform an activity in a manner or within the range considered normal for human being. .Disability shall mean a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individuals; a record of such an impairment; or being regarded as having such an impairment.

REVENUE REGULATIONS NO. 1-2009: Relating to Privileges of Persons with Disability (PWD) Republic Act No. 9442 Magna Carta for Persons with Disability (PWD) .Benefit: At least twenty percent (20%) discount from the following on sale of goods or services for their exclusive use or enjoyment, viz: 1. Hotels and similar lodging establishments and restaurants; 2. Sports and recreation centers; 3. Theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture, leisure and amusement; 4. All drugstores regarding purchase of medicine; 5. Medical and dental privileges in government facilities, such as but not limited to diagnostic and laboratory fees (e.g., xrays, computerized tomography scans and blood tests) subject to guidelines to be issued by the DOH, in coordination with the Philippine Health Insurance Corporation (Philhealth);

REVENUE REGULATIONS NO. 1-2009: Relating to Privileges of Persons with Disability (PWD) Republic Act No. 9442 Magna Carta for Persons with Disability (PWD) .Benefit: At least twenty percent (20%) discount from the following on sale of goods or services for their exclusive use or enjoyment, viz: 6. Medical and dental privileges in private facilities, such as but not limited to diagnostic and laboratory fees (e.g., x-rays, computerized tomography scans and blood tests), including professional fees of attending doctors, subject to guidelines to be issued by the DOH, in coordination with Philhealth; and 7. Domestic air and sea transportation based on the actual fare except promotional fare. If the promotional fare discount is higher than the 20% discount privilege, the person with disability may choose the promotional fare and should no longer be entitled to the 20% discount privilege; and

REVENUE REGULATIONS NO. 1-2009: Relating to Privileges of Persons with Disability (PWD) Republic Act No. 9442 Magna Carta for Persons with Disability (PWD) .Benefit: At least twenty percent (20%) discount from the following on sale of goods or services for their exclusive use or enjoyment, viz: 8. Land transportation privileges in bus fares such as ordinary, aircon fares and on public railways such as LRT, MRT, PNR, and such other similar infrastructure that will be constructed, established and operated by public or private entity. Toll fees of skyways and expressways are likewise subject to at least 20% discount, however, this privilege can be availed only by a person with disability owning the vehicle.

REVENUE REGULATIONS NO. 1-2009: Relating to Privileges of Persons with Disability (PWD) Republic Act No. 9442 Magna Carta for Persons with Disability (PWD) .SEC. 4. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM GROSS INCOME . Establishments granting sales discounts to persons with disability on their sale of goods and/or services specified under Section 3 above shall be entitled to deduct the said sales discount from their gross income.

REVENUE REGULATIONS NO. 8-2009 Amending Further Secs. 2.57.2 and 2.57.3 of Revenue Regulations No. SUBJECT 2-98, as amended, Subjecting to Creditable Withholding Tax the Income Payments Made by Political Parties and Candidates of Local and National Elections of All Their Campaign Expenditures and Income Payments Made by an Individual or Juridical Person Forming Part of Their Campaign Contributions to Candidates of Local and National Elections and to Political Parties REVENUE REGULATIONS NO. 10-2009 Amending Further Secs. 2.57.2 and 2.58 of Revenue Regulations No. 2-98, as amended, clarifying that sub-paragraph (W) as recently issued under Revenue Regulations No. 8-2009 should be sub-paragraph (X), and Other Concerns

REVENUE REGULATIONS NO. 8-2009 Five percent (5%) withholding tax on: Income payments made by political parties and candidates of local and national elections of all their campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates Withholding Agent: All individuals, juridical persons and political parties, with respect to their income payments made as campaign expenditures and/or purchase of goods and services intended as campaign contributions are constituted as withholding agents for purposes of creditable tax on income payments.

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