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www.paguiodumayasassoc.com

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Contents

Recent BIR Issuances

1) Amends Section IV.C.4 of RMO No. 22-2016 on the acceptance of Certificate of Remittance with

bank seal from Authorized Agent Bank.

2) Prescribes the policies, guidelines and procedures in the availment of the eight percent (8%)

Income Tax Rate option for individuals earning from self-employment and/or practice of

professions.

3) Amends the documentary requirements for new business registrants .

4) Prescribes and circularizes the Revised BIR Form No. 1701Q (Quarterly Income Tax Return)

January 2018 (ENCS)

5) Reiterates the imposition of Value-Added Tax on goods disposed of or existing as of the date of

change in or cessation of status of a person as VAT-Registered taxpayer.

6) Clarifies the issuance of Taxpayer Identification Number (TIN) for corporations relative to its

corporate term under the Corporation Code of the Philippines.

7) Suspends the use of the Update of Exemption of Employees (UEE) Data Entry Module in the

filing of BIR Form No. 2305 (Certificate of Update of Exemption and of Employers and

Employee's Information) and 2305 Batch File Validation Module.

CTA Recent Decisions

1. COMMISSIONER OF INTERNAL REVENUE VS. PREMIUM LEISURE CORPORATION FORMERLY:

SINOPHIL CORPORATION; CTA EB NO. 1702

2. CLARK WATER CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE; CTA CASE NO. 9286

3. BONIFACIO LAND CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO.

9068

4. CTA CASE NO. 9252, MACINTEL, INC. VS. COMMISSIONER OF INTERNAL REVENUE

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REVENUE MEMORANDUM ORDER NO.

21-2018

Amending Section IV.C.4 of Revenue

Memorandum Order (RMO) No.22-2016 on

the Acceptance of Certificate of Remittance

with Bank Seal from Authorized Agent Bank

(AAB).

The Chief, Collection Section of the

Revenue District Office/Large Taxpayers

Division Chief shall verify the collection/

payment of the internal revenue taxes, if any,

against the BIR-ITS Collections and Bank

Reconciliation System (CBR), and shall affix

his/her signature on the CBR payment

verification printout before the eCAR is issued.

In case data is not uploaded in the said

systems within five (5) days from the date of

payment, the concerned Revenue Officers

may accept Certificate of Remittance signed

by the Cashier and countersigned by the

Manager with bank seal from AABs.

REVENUE MEMORANDUM ORDER NO.

23-2018

Prescribing Policies, Guidelines and

Procedures in the Availment of the Eight

Percent (8%) Income Tax Rate Option for

Individuals Earning from Self-Employment

and/or Practice of Professions.

In general, income of self-employed

individuals (includes Single Proprietors,

Professionals and Mixed Income Earners) is

subject to the graduated Income Tax rates.

Self-employed individuals earning income

purely from self-employment/business and/or

practice of profession whose gross sales and/

or receipts and other non-operating income

does not exceed the Value-Added Tax

(VAT) threshold of Three Million Pesos (₱

3,000,000.00) shall have the option to avail of

the following:

a. Graduated income tax rates as provided

under Section 24 (A)(2)(a) of the National

Internal Revenue Code (NIRC), as

amended; or

b. Eight percent (8%) tax on gross sales or

receipts and other non-operating income in

excess of Two Hundred Fifty Thousand

Pesos (₱ 250,000.00) in lieu of the

graduated Income Tax rates and

Percentage Tax under Section 116 of the

NIRC, as amended.

Individuals earning income both from

compensation and from self-employment

(business or practice of profession) or Mixed

Income Earners shall apply the following

Income Tax rates:

a. The compensation income shall be subject

to graduated Income Tax rates; and

b. The income from business or practice of

profession shall be subject to the following:

If the gross sales/receipts and other non-

operating income do not exceed the VAT

threshold of ₱ 3 Million, the individual has

the option to be taxed at:

i) graduated Income Tax rates; or ii) Eight

percent (8%) Income Tax rate based on

gross sales/receipts and other

non-operating income.

If the gross sales/receipts and other non-

operating income exceeds the VAT

threshold, the individual shall be subject to

the graduated Income Tax rates.

The following criteria should all be

satisfied to be able to qualify and avail of the

8% Income Tax rate option:

a. Individuals (Single Proprietor or

Professional or Mixed Income Earner)

earning from self-employment and/or

practice of profession;

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other non-operating income;

c. Taxpayers exempt from VAT or Other

Percentage Taxes whose gross sales/

receipts and other non-operating

income exceeded the ₱ 3 Million VAT

threshold during the taxable year;

d. Taxpayers who are subject to Other

Percentage Taxes under Title V of the

Tax Code, as amended, except those

subject under Section 116 of the same

Title;

e. Partners of a General Professional

Partnership (GPP);

f. Individuals enjoying Income Tax

exemption.

Individual person who is exempted

from Income Tax, such as those

registered Barangay Micro Business

Enterprises (BMBEs) is bound to the

choice that it made to avail itself the

privilege under Republic Act No. 9178 for

the entire period of its registration with the

BIR pursuant to Department Order No. 17

-04.

The BMBE cannot avail both

BMBE status (exempted from Income

Tax, but liable to other internal revenue

tax) and the 8% Income Tax rate option

(in lieu of the graduated Income Tax rates

and Percentage Tax) at the same time

since taxpayers are not allowed to avail of

double or multiple tax exemption under

different laws, unless specifically provided

by law.

At the beginning of each taxable

year, all individuals are subjected to

graduated Income Tax rates. The 8%

Income Tax rate option of self-employed

individuals is effective only for the current

taxable year when the election has been

made, and shall automatically revert back

b. Taxpayers whose gross sales/receipts and

other non-operating income did not exceed

the ₱ 3 Million VAT threshold during the

taxable year;

c. Taxpayers registered and subject only to

Percentage Tax under Section 116 of the

NIRC, as amended; or taxpayers exempt

from VAT or other Percentage Taxes; and

d. Taxpayer must have signified his/her

intention to elect the 8% Income Tax rate.

Self-employed individuals shall signify

their intention to elect the 8% Income Tax rate

in filing any of the following:

a. For New Business Registrant

Upon registration using BIR Form No. 1901

and/or 1701Q; or

On the initial quarter return (BIR Form No.

2551Q and/or 1701Q) of the taxable year

after the commencement of a new

business/practice of profession.

b. For existing Individual Business Taxpayers

Filing of BIR Form 1905 (Application for

Registration Information Update) at the

beginning of the taxable year, to end-date

the form type of quarterly Percentage Tax.

Provided that an option to avail the 8%

Income Tax rate shall be selected in filing

the initial quarterly Income Tax return for

Income Tax purposes; or

1st Quarterly Percentage Tax Return; and/

or

1st Quarterly Income Tax Return.

The 8% Income Tax rate option is not

available to the following individual taxpayers

who shall correspondingly be taxed based on

the graduated Income Tax rates:

a. Purely Compensation Income Earners;

b. VAT-registered taxpayers, regardless of

the amount of gross sales or receipts and

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Continuation…

to the graduated Income Tax rates at the

beginning of the succeeding taxable years.

Thus, the availment of the 8% Income Tax

rate option is required to be signified and

selected every taxable year, if the taxpayer

wishes to be covered by such Income Tax

rate. The Income Tax rate option, once

elected, shall be irrevocable, and no

amendment of option shall be made for the

taxable year it has been made.

Self-employed individual who is

qualified and availed of the 8% Income Tax

rate option is not required to file the Quarterly

Percentage Tax Return but is required to: i)

file the Quarterly Income Tax Return, unless

exempted by any revenue issuances; ii) file

the Annual Income Tax Return [Financial

Statement (FS) is not required to be attached];

iii) signify the intention to avail the 8% Income

Tax rate every taxable year; iv) maintain

Books of Accounts and issue receipts/

invoices.

A taxpayer shall automatically be

subjected to graduated Income Tax rates and

be liable to VAT prospectively. He/She shall

attach an audited FS in filing of the annual

Income Tax return, if the gross annual sales

and/or receipts exceed the amount of ₱3

Million anytime during the current taxable year

when the option was made. He/She shall

immediately update his/her registration within

the month following the month he/she

exceeded the VAT threshold to reflect the

change in tax profile from non-VAT to a VAT

taxpayer. Percentage Tax shall be imposed

from the beginning of the year until taxpayer is

liable to VAT.

Taxable income for individuals earning

income from self-employment/practice of

profession shall be based on the net taxable

income, if taxpayer opted to be taxed at...

… graduated rates or has failed to signify the

8% Income Tax rate option; and the gross

sales/receipts and other non-operating income

in excess of ₱250,000, if the 8% Income Tax

rate is availed by self-employed individuals

earning income from purely self- employment

and/or practice of profession. However, in

case of Mixed Income Earner, the taxable

income is based on the gross sales/receipts

and other non-operating income without the

₱250,000 reduction, if the option availed is the

8% income tax rate.

The provision under Section 24(A)(2)(b)

of the Tax Code, as amended, which allows

an option of 8% income tax rate on gross

sales/receipts and other non-operating income

in excess of ₱250,000 is available only to

self-employed individuals earning income

purely from self-employment and/or practice of

profession. The ₱250,000.00 reduction from

taxable gross sales/receipts and other

non-operating income is not applicable to

mixed income earners since it is already

incorporated in the first tier of the graduated

Income Tax rates applicable to compensation

income.

For Mixed Income Earner, the excess

of the ₱250,000.00 over the actual taxable

compensation income is not deductible

against the taxable income from business/

practice of profession under the 8% Income

Tax rate option. The total tax due shall be the

sum of the tax due from compensation

computed using the graduated Income Tax

rates and the tax due from self-employment/

practice of profession resulting from the

multiplication of the 8% Income Tax rate with

the total of the gross sales/receipts and other

non-operating income.

Self-employed individuals may signify

their intention to elect the 8% Income Tax rate

option by filing an Application for Registration

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Continuation…

Information Update (BIR Form No. 1905) at

the beginning of the taxable year.

Self-employed individuals availing the

8% Income Tax rate option shall still be

registered with “Percentage Tax – Quarterly”

tax type, and the 2551Q form type shall be

end-dated. On the beginning of the following/

each year, the 2551Q form type shall be

automatically registered in the BIR registration

system to confirm that the taxpayer is subject

to graduated Income Tax rates and required to

file the quarterly Percentage Tax return,

unless an Application for Registration

Information Update to avail the 8% Income

Tax rate for the said taxable year has been

submitted to the concerned Revenue District

Office or the 8% Income Tax rate option has

been elected during the filing of the 1st

Quarterly Percentage or Income Tax Return.

A Non-VAT individual taxpayer who

availed of the 8% Income Tax rate and whose

subsequent cumulative gross sales and/or

receipts exceeded the ₱3 Million threshold

during the taxable year shall be liable to pay

Income Tax under the graduated Income Tax

rates and shall be allowed a tax credit for the

previous quarter/s Income Tax payment/s

under the 8% Income Tax rate option. The

taxpayer shall be required to update his/her

registration immediately within the month

following the month he/she exceeded the VAT

threshold. The taxpayer shall automatically be

liable to VAT prospectively starting the first

day of the month following the month when the

threshold is breached. The taxpayer shall pay

the required Percentage Tax covering the

sales/receipts and other non-operating income

from the beginning of the taxable year or

commencement of business/practice of

profession until the time the taxpayer becomes

liable to VAT.

A VAT-registered person whose gross

sales and/or receipts for three (3) consecutive

years did not exceed the amount of ₱3 Million

may update his registration from VAT to

Non-VAT, in order to qualify to avail the 8%

Income Tax rate option, on or before the first

quarter of a taxable year, following rules and

regulations on registration, updates,

verification, and the inventory and cancellation

of VAT invoices/receipts.

REVENUE MEMORANDUM CIRCULAR NO.

30-2018

Amended Documentary Requirements

for New Business Registrants

The following changes on the list of

documentary requirements have been made in

Annexes A l -A3 of the said RMC:

1) Removal of Books of Account in securing a

Certificate of Registration (COR) and

Authority to Print (ATP). Books of Account

for new business registrants shall be

registered by the taxpayer within thirty (30)

calendar days from the date of business

registration. Failure to register such

within the prescribed period shall be

subject to penalties pursuant to existing

revenue issuances.

2) In case of an authorized representative

who will transact with the Bureau in behalf

of the taxpayer, the following shall be

required:

2.1 For Individual

Special Power of Attorney (SPA): and

Identification Card (ID) of the authorized

person

2.2 For Non-Individual

A. Board Resolution indicating the name of

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Continuation…

… the authorized representative;

B. Secretary's Certificate; and

C. ID of the authorized person.

This Circular revokes all other issuances

inconsistent herewith and shall take effect

immediately.

REVENUE MEMORANDUM CIRCULAR NO.

32-2018

Circularizing the Availability of the Newly

Revised BIR Form No. 1701Q (Quarterly

Income Tax Return for Individuals, Estates

and Trusts) January 2018 (ENCS)

Said newly-revised return shall be used

by the taxpayers in filing their quarterly Income

Tax return and paying the corresponding tax

due thereon starting the 1st Quarter of 2018.

Manual filers can download the PDF

format of BIR Form No. 1701Q from the BIR

website (www.bir.gov.ph under the BIR Forms

-Income Tax Return section), print it and fill

out the applicable items/fields.

eBIRForms filers shall use the newly-

revised BIR Form No. 1701Q (available in the

Offline eBIRForms Package v7.1) in filing and

paying their Quarterly Income Tax due starting

the 1st Quarter of 2018.

The newly-revised return is not yet

available in the eFPS. As a work-around

procedure, the eFPS filers shall use the newly-

revised return in the Offline eBIRForms

Package v7.1 to file their Quarterly Income

Tax return.

Payment of the Income Tax due

thereon by manual/eBIRForms/eFPS filers

shall be made as follows:

1) For Manual Payment

Through Authorized Agent Bank (AAB)

located within the territorial jurisdiction of

the Revenue District Office (RDO) where

the taxpayer is registered

In places where there are no AABs, the

return shall be filed and the tax due shall

be paid with the concerned Revenue

Collection Officer (RCO), thru the Mobile

Revenue Collection Officers System

(MRCOS) facility, under the jurisdiction of

the RDO.

In case the manual/eBIRForms/eFPS

filers had already filed and paid the Income

Tax due for the 1st Quarter using the old

return, the taxpayer is still required to file the

quarterly Income Tax return using the newly-

revised BIR Form No. 1701Q and mark the

return as an amended return. This is to

determine whether or not the taxpayer is

availing of the 8% Income Tax rate based on

the gross sales/receipts and other non-

operating income in lieu of graduated rates.

Said taxpayer shall indicate in the

newly-revised return the payment, if any, he/

she made using the old return. If the

computation resulted to a payable amount, the

taxpayer shall pay the tax still due thereon.

Penalties shall apply if payment is made after

the due date. If the result is no payment/

overpayment, the taxpayer shall file the “No

Payment Return” thru the use of eBIRForms.

Taxpayer shall signify his/her intention

to elect the 8% Income Tax rate either by

updating his/her registration using the BIR

Form No. 1905 or by checking/clicking Item

No. 13 in BIR Form No. 2551Q or Item No. 16

in BIR Form No. 1701Q, and such election/

option shall be irrevocable for the taxable year

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REVENUE MEMORANDUM CIRCULAR NO.

39-2018

Reiterates the Imposition of Value-Added

Tax on Goods Disposed of or Existing as of

the Date of Change in or Cessation of Status

of a Person as VAT-Registered Taxpayer

Pursuant to Sec. 4.106-8 of Revenue

Regulations (RR) No. 16-2005, Implementing

Sec. 106(C) of the Tax Code of 1997, as

further amended by R.A. 10963, Otherwise

Known as the "Tax Reform for Acceleration

and Inclusion" or the TRAIN Law

This Circular is issued to reiterate and

clarify the taxability of goods or properties

originally intended for sale or use in business,

including capital goods, disposed of or existing

as of the date of change in or cessation of

status of a person as VAT-registered taxpayer

pursuant to Sec. 4.106-8 of RR No. 16-2005,

implementing Sec. 106(C) of the Tax Code of

1997, as further amended by R.A. 10963,

otherwise known as the "Tax Reform for

Acceleration and Inclusion" or the TRAIN Law.

It has been observed that taxpayers

who changed their status from VAT to

Non-VAT due to the increase in the VAT

threshold of P3,000,000.00 as provided for

under Section 109(BB) of the TRAIN Law,

amending the Tax Code of 1997, are

submitting only the "Application for

Registration Information Update " (BIR Form

1905) without filing the quarterly VAT returns

and paying the tax due on the inventories

existing as of the date of change of status.

The pertinent provision of Sec. 106(C)

of the Tax Code of 1997, as implemented by

Sec. 4.106-8 of RR No. 16-2005, states as

follows:

" (C) Changes in or Cessation of Status of a

VAT-registered Person -

The tax imposed in Subsection (A) of this

Section shall also apply to goods disposed of

… or existing as of a certain date if under

circumstances to be prescribed in rules and

regulations to be promulgated by the

Secretary of Finance, upon the

recommendation of the Commissioner, the

status of a person as a VAT-registered person

changes or is terminated. ..

Sec. 4.106-8 of Revenue Regulations No.

16-2005:

"SEC 4. 106-8. Change or Cessation of

Status as VAT-registered Person. -

a) Subject to output tax

The VAT provided /or in Sec. 106 of the

Tax Code shall apply to goods or properties

originally intended /or sale or use in business.

and capital goods which are existing as of the

occurrence of the following:

1) Change of business activity from VAT

taxable status to VAT-exempt status. An

example is a VAT-registered person

engaged in a taxable activity like

wholesaler or retailer who decides to

discontinue such activity and engages

instead on life insurance business or

any other business not subject to VAT.

2) Approval of a request or cancellation of

registration due to reversion to exempt

status.

3) Approval of a request for cancellation of

registration due to a desire to revert to

exempt status after the lapse of three (3)

consecutive years from the time of

registration by a person who voluntarily

registered despite being exempt under Sec.

109(2) of the Tax Code.

4) Approval of a request for cancellation of

registration of one who commenced

business with the expectation of

gross ...

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Continuation…

… sales or receipts exceeding P1,500,000.00

(now P3,000,000.00) but who failed to

exceed this amount during the first twelve

months of operation. " (emphasis supplied)

Pursuant to the afore-quoted provisions,

it is hereby emphasized that goods or

properties originally intended for sale or use in

business, including capital goods, disposed of

or existing as of the date of change of status of

a taxpayer from VAT to Non-VAT are subject to

VAT imposed under Section 106(A) of the Tax

Code of 1997, as amended. Hence, taxpayers

are required to file the quarterly VAT return

covering the period when the change of status

transpired and pay the corresponding VAT due

thereon.

REVENUE MEMORANDUM CIRCULAR NO.

41-2018

Clarification on the Issuance of

Taxpayer Identification Number (TIN) for

Corporations relative to Its Corporate Term

Under the Corporation Code of the

Philippines.

A corporation or partnership whose

corporate life has been granted an extension

by the Securities and Exchange Commission

(SEC) prior to the expiration of its corporate

life and those that have been issued a

second or new SEC Certificate of

Registration (SEC COR) to correct the

typographical errors in its first SEC COR,

shall not be issued a new TIN. It is, however,

mandated that the said taxpayer shall update

its registration record with the BIR by

submitting BIR Form No. 1905, together with

a copy of the newly-issued SEC COR and

Amended Articles of Incorporation bearing

the same name as a proof of its corporate

life extension.

A corporation or partnership whose

registration with SEC has been revoked or its

corporate life has expired shall cease to exist

as a juridical entity to do business. Expired

corporations are those with corporate terms

that have lapsed without being renewed or

extended.

While SEC allows the re-registration

of expired corporation using the same

corporate name as reflected in the SEC

COR, such corporation is a new corporation

bearing a new SEC Registration Number and

new pre-generated TIN as confirmation that

the same is a separate and distinct entity

from the expired corporation.

The pre-generated TIN issued thru

SEC to the newly-registered corporation

using the name of the expired corporation

shall be confirmed by the BIR using BIR

Form No. 1903, ...

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Continuation…

… for the issuance of BIR Certificate of

Registration and application for Authority to

Print principal/supplementary invoices/receipts,

simultaneous with the application for

cancellation of the old TIN of the expired

corporation, following existing procedures.

The TIN of corporation or partnership

which ceased to exist as a juridical entity due

to the expiration of its corporate life shall be

used by the said corporation in the process of

liquidation/winding-up its business and shall be

cancelled upon the issuance of clearance by

the BIR.

In case the expired corporation is

classified as a Large Taxpayer (LT), such

registration status shall be carried over by the

newly-registered corporation that assumed the

business name and operations of the expired

corporation. Hence, registration will have to be

made with the LT Division where the old

corporation is registered.

In the merger of corporations, the

surviving corporation shall retain its TIN while

the TIN of the merged corporation shall be

cancelled. In the consolidation of corporations,

a new TIN shall be issued to the new

corporation and the TINs of the consolidated

corporations shall be cancelled.

REVENUE MEMORANDUM CIRCULAR NO.

42-2018

Suspension of the Use of the Update of

Exemption of Employees (UEE) Data Entry

Module in Filing of the BIR Form No. 2305

(Certificate of Update of Exemption and of

Employers and Employee’s Information) and

2305 Batch File Validation Module

Section 35 of the National Internal

Revenue Code (NIRC) of 1997. as amended,

which allowed personal and additional

exemptions for an individual taxpayer, has

been repealed by Section 12 of Republic

Act (RA) No. 10963 otherwise known as

the Tax Reform for Acceleration and

Inclusion (TRAIN) Law effective January 1,

201 8. Thus, taxpayers with dependents are

no longer required to update their additional

exemptions by filing the BIR Form No. 2305 -

Certificate of Update of Exemption and of

Employer's and Employee's Information.

This is to circularize the suspension of

the use of Update of Exemption of Employees

(UEE)/Batch File Validation Modules and the

submission of report pursuant to Revenue

Memorandum Circular (RMC) No. 59-2015.

Change of civil status and Employee's

Information shall now be done manually using

BIR Form No. 1905 (Application for

Registration Information Update).

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CTA EB. No. 1702 CTA Case No. 8940

PREMIUM LEISURE CORP. (formerly Sinophil Corporation)

A petition for review was filed by the petitioner Commissioner on Internal Revenue (CIR) which seeks for the reversal of the decision as well as the resolution granting the order for a refund in favor of Premium Leisure Corp.

Onset, the respondent erroneously remitted capital gains tax from the receipt of a real property by way of liquidating dividends from BBCC. In settling the petition, the Court En Banc is of the view that receipt by a stockholder, whether corporate or individual, of liquidating dividends is not subject to CGT. The basis for this position is not because of the absence of income from or the absence of sale, disposition or conveyance of real property, but because such transaction is subject to ordinary income tax on the part of the individual stockholders, or corporate income tax for corporate stockholders.

The court also referred to Section 73 (A) of the 1997 NIRC, which ministers that the gain realized or loss sustained by the stockholder from its receipt of liquidating dividends, is a taxable income or a deductible loss. Hence, having been already paid corporate income tax for the gains it derived from its receipt of liquidating dividends from BBCC, respondents payment of CGT for the same income is clearly erroneous and should be refunded.

Wherefore, the present Petition for Review is DENIED for lack of merit.

RECENT DECISIONS

CTA Case No. 9286 CLARK WATER CORPORATION

Clark Water Corporation, the petitioner filed a Petition for Review to appeal for the cancellation and withdrawal of respondent Commissioner of Internal Revenue’s assessment for alleged deficiency income tax, Value-Added Tax (VAT), Expanded Withholding Tax (EWT), and Fringe Benefits Tax (FBT), including interest, surcharge and penalties arising from income generated from sources outside the Ecozone or Freeport Zone.

At the outset, the petitioner’s services rendered to customers outside the zone is subject to 12% VAT. However, the Petitioner contest that as a registered CSEZ enterprise, it enjoys the 5% preferential tax rate in lieu of all local and national taxes which also covers VAT, unless it reaches the 30% threshold. Consequently, revenues from enterprises outside the territory correspond only to 7.12% of its total revenues which was way below the aforesaid 30% threshold.

Wherefore, the instant Petition for Review is hereby GRANTED. Also, the VAT tax assessment is hereby CANCELLED and WITHDRAWN.

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CTA Case No. 9068 BONIFACIO LAND CORPORATION

An amended petition for review is filed by Bonifacio Land Corporation to set aside the deficiency tax assessments issued by the Commissioner of Internal Revenue (CIR).

Issues arise regarding the scope of authority of the Revenue Officers who were named in the Letter of Authority (LOA), wherein the assigned RO in the original LOA was not the only RO who conducted the audit and examination of the Petitioner’s books. By the virtue of the request for reinvestigation, the Petitioner’s case was re-assigned to another RO who conducted the same. However, no new LOA was issued as a consequence of the reassignment as required by the RMO No. 43-1990 viz: “Any reassignment/transfer of cases to another ROs, and revalidation of L/As which have already expired, shall require the issuance of new L/A, with the corresponding notation thereto, including the previous L/A number and date of issue of said LOA”

Apparently, there must be a grant of authority before any RO can conduct an examination or assessment. Equally important is that the RO must not go beyond the authority given. In the absence of such authority, the assessment or examination is a nullity.

Considering the assessment is void, and Supreme Court ruled that tax collection should be premised on a valid assessment, and the issuance of a valid formal assessment is a substantive pre-requisite for collection of taxes, the amended petition for review is further GRANTED and the assessments are CANCELLED and WITHDRAWN.

CTA Case No. 9252 MACINTEL INC.

A Petition for Review filed by Macintel, Inc. about the judgment be rendered ordering the cancellation and invalidation of the respondent Commissioner ofw Internal Revenue's (CIR) deficiency tax assessments pursuant to a Letter Notice.

The respondent contend that the Petition for Review should be denied for the failure of the Petitioner in filing any protest letter since it only submitted a request for extension of time within which to respond to the LN until the assessment is final and executor.

On the other hand, the Petitioner vie that the right of the BIR to assess has already prescribed given the 3-year period. However, it was found that the Petitioner presumptively filed a false return wherein it failed to report more than 30% of its sales and receipts of that of the declared tax returns.

Therefore, the Petitioner may be assessed for deficiency income and VAT assessments within ten years (10) from the discovery of the said falsity, since the Petitioner failed to overcome the presumption.

Wherefore, the present Petition for Review is DISMISSED for lack of jurisdiction.

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Tax Supervisor

Senior Tax Specialist

Managing Partner

Tax Specialist

FLOYD C. PAGUIO KEN JOHN B. ASADON

AILEEN P. MELCHOR AIRA IZA G. GALLEGOS

EDITORIAL BOARD Unit 3207 Cityland Pasong Tamo Condominium, Pasong Tamo St.,

Barangay Pio del Pilar, Makati City

Telephone: (+632) 238-0505

Email:

Floyd C. Paguio:

floyd.paguio@paguiodumayasassoc.com

Ken John B. Asadon:

ken.asadon@paguiodumayasassoc.com

Aileen P. Melchor

aileen.melchor@paguiodumayasassoc.com

Aira Iza G. Gallegos:

aira.gallegos@paguiodumayasassoc.com

We are a team of Certified Public Accountants,

who aim to be the accounting firm of choice for

business entities in terms of:

Audit and Assurance

Taxation

Business Process Outsourcing

Management Consultancy