quality assurane ulletin i january 2019 edition...

QUALITY ASSURANCE BULLETIN I January 2019 Edition 1


RECENT BUREAU OF INTERNAL REVENUE ISSUANCES

RECENT COURT OF TAX APPEALS CASES

RECENT SECURITIES AND EXCHANGE COMMISSION ISSUANCES

Revenue Memorandum Order No. 3-2019: Creates and drops the Alphanumeric Tax Code

(ATC) on Microfinance Non-Government Organizations and Documentary Stamp Tax in BIR

Form 2000-OT under RA No. 10963 (TRAIN Law)

Revenue Memorandum Order No. 4-2019: Creates the Alphanumeric Tax Code (ATC) for

selected Excise Taxes on exports paid through Payment Form (BIR Form No. 0605)

Revenue Memorandum Order No. 5-2019: Modifies the Alphanumeric Tax Code for

Compensation Income under RA No. 10963 (TRAIN Act) and for Withholding Taxes

Revenue Memorandum Circular No. 4-2019: Publishes the full text of the letter from the Food

and Drug Administration containing the "List of VAT-Exempt Diabetes, High-Cholesterol and

Hypertension Drugs" pursuant to Joint Administrative Order No. 2-2018

Revenue Memorandum Circular No. 16-2019: Clarifies the validity of the Certifications on the

existence of Outstanding Tax Liabilities and Certification on the Status of Cases Pending legal

or judicial resolution of taxpayers claiming for VAT refund.

Revenue Memorandum Circular No. 17-2019: Prescribes the new BIR Form No. 1701A-

Annual Income Tax Return for Individuals Earning Purely from Business/Profession (those under

the graduated Income Tax rates with Optional Standard Deduction as mode of deduction or

those who opted to avail of the 8% flat Income Tax rate) January 2018 version

Revenue Memorandum Circular No. 19-2019: Prescribes various revised BIR Forms (Version

January 2018)

Failure of the Respondent to submit sufficient and competent evidence to support its assessment that the

Petitioner is not a VAT exempt entity.—CTA Case No.9399

Failure of the Accused to supply correct and accurate information is his Annual Income Tax Returns (ITRs)

and to pay the correct taxes. In violation of Section 254 and 255 of the Tax Code.—CTA Crim. Case

Nos. 0-287,0-288,0-289,0-290, and 0-291

Petitioner is owned and controlled, or enjoying refinancing from Foreign governments, hence, such being

the case, the income derived by the Petitioner from the sale of listed shares in the PSE is exempt from

income tax and Stock Transaction Tax.—CTA Case No.

SEC Memorandum Circular No. 1-Series of 2019

SEC MC No. 1 Series of 2019:

2019 FILLING OF ANNUAL FINANCIAL STATEMENT AND GENERAL INFORMATION

SHEET


REVENUE MEMORANDUM ORDER

NO. 3-2019

Creates and drops the Alphanumeric Tax Code

(ATC) on Microfinance Non-Government

Organizations and Documentary Stamp Tax

in BIR Form 2000-OT under RA No. 10963

(TRAIN Law).

The Alphanumeric Tax Code (ATC) on

Microfinance Non-Government Organizations

(NGOs) and Documentary Stamp Tax (DST) in

BIR Form No. 2000-OT under Republic Act No.

10963 (TRAIN Law), to wit:

A. ATCs Created

B. ATCs Dropped


NO. 4-2019

Creates the Alphanumeric Tax Code (ATC) for

selected Excise Taxes on exports paid through

Payment Form (BIR Form No. 0605).

Alphanumeric Tax Code (ATC) for

selected Excise Taxes on exports paid through

Payment Form (BIR Form No. 0605), in

accordance with Revenue Regulations (RR)

No. 3-2008 (Amending Certain Provisions of

Existing Revenue Regulations on the Granting

of Outright Excise Tax Exemption on Removal of

Excisable Articles Intended for Export or Sale/

Delivery to International Carriers or to

Tax-Exempt Entities/Agencies and Prescribing

the Provisions for Availing Claims for Product

Replenishment). Said ATCs are the following:

ATC Description Tax

Rate

BIR

Form

No.

IC210 Preferential tax rate on Micro-finance NGOs

2% 1702Q

1702MX

DO102

DO125

Sales, Agreements to Sell, Memoranda of Sales, Deliv-eries or Transfer of Shares or Certificate of Stock

A) In case of stock with par value

B) In case of stock without par value

1.50/200.00

50% of DST paid on original issue

2000-OT

DO122 Deeds of Sale, Conveyances and Donation of Real Property

15.00/1,000.00 2000-OT

ATC Description Tax

Rate

BIR

Form

No.

PT118 Preferential tax rate on Micro-finance NGOs

2% 2551M

DS102

DS125

Sales, Agreements to Sell,

Memoranda of Sales, Deliveries or Transfer of

Shares or Certificate of Stock

A) In case of stock with par value

B) In case of stock without par value

1.50/P200.00 50% of DST paid on original issue

2000 and 2000-OT

DS122 Deeds of Sale, Conveyances and Donation of Real Property

15.00/1,000.00 2000-OT

ATC Description

BIR

Form

No.

EXA10 Excise Tax on

Export of Alcohol

EXT10 Excise Tax on

Export of Tobacco Products

EXP10 Excise Tax on

0605 Export of Petroleum

EXM10 Excise Tax on

Export of Coal and Coke

EXG10

Excise Tax on

Export of Automobiles and

Non-Essentials



NO. 5-2019

Modifies the Alphanumeric Tax Code for

Compensation Income under RA No. 10963

(TRAIN Act) and for Withholding Taxes.

The Alphanumeric Tax Code (ATC) for

Compensation Income under RA No. 10963

(TRAIN Act) and for Withholding Taxes, to wit:

REVENUE MEMORANDUM CIRCULAR

NO. 4-2019

Publishes the full text of the letter from the Food and Drug Administration containing the "List of VAT-Exempt Diabetes, High-Cholesterol and Hypertension Drugs" pursuant to Joint Administrative Order No. 2-2018.

Issued on January 15, 2019 announces

the availability in (www.bir.gov.ph) the full text of

the letter from the Food and Drug Administration

containing the “List of VAT-Exempt Diabetes,

High Cholesterol and Hypertension Drugs”

provide under Republic Act (RA) No. 8424, as

amended by RA No. 10963 (TRAIN Law).


NO. 16-2019

Clarifies the validity of the Certifications on the

existence of Outstanding Tax Liabilities and

Certification on the Status of Cases Pending legal

or judicial resolution of taxpayers claiming for VAT

refund.

This Circular is issued to clarify that the

inter-office Request for Certification on

Outstanding Tax Liability/ies of Taxpayer and

Certification on the Status of Cases Pending

Legal or Judicial Resolution, for the specific

purpose of satisfying the requirements of claims

for VAT refund pursuant to Revenue

Memorandum Order (RMO) No. 29-2014 as

amended by RMO No. 42-2018, shall be valid for

a period of six (6) months.

In view thereof, all concerned revenue

offices are hereby enjoined to indicate clearly

in the Certification to be issued that the validity

of which is six (6) months from the date of

issuances. Annexes “A and B” of RMO No.

29-2014 which shows validity of one (1) month

must be adjusted every time request for

Certification shall be issued for VAT refund

purpose.


NO. 17-2019

Prescribes the new BIR Form No. 1701A - Annual

Income Tax Return for Individuals Earning Purely

from Business/Profession (those under the

graduated Income Tax rates with Optional

Standard Deduction as mode of deduction or those

who opted to avail of the 8% flat Income Tax rate)

January 2018 version.

Issued on January 24, 2019 prescribes the new BIR Form No. 1701A, which is available in the BIR Forms-Income Tax Return section of the BIR website (www.bir.gov.ph).

The new return (BIR Form No. 1701A)

shall be used by Individuals Earning Income

Purely from Business/Profession who are under

the graduated Income Tax rates with Optional

Standard Deduction as mode of deductions or

EXISTING (per ATC Handbook)

MODIFIED/ NEW

ATC Description Tax Rate BIR

Form No.

BIR Form

No.

II011

WI450

WC450

Compensation Income

Income payments

subject to Final

Withholding Taxes

A. Capital Gains

Tax on sale

exchange or other

disposition of real

Property-individual

B. Capital Gains

Tax on the sale

exchange or other

disposition of land

and building

Graduated

Income

Tax Rates

6%

6%

1701

1701Q

1600

1601-E

1601-F

2307

1700

1701

1701Q

1706

2307

http://www.bir.gov.ph

http://www.bir.gov.ph/


those who opted to avail of the 8% flat Income

Tax rate, in filing the annual Income Tax Return

and paying the Income Tax due starting the

year 2018, which is due on or before April 15,

2019.


NO. 19-2019

Prescribes various revised BIR Forms (Version January 2018).

Issued on January 30, 2019 prescribes the

following revised BIR Forms (Version January

2018) which are available in the BIR Forms-

Income Tax Return section of the BIR website

(www.bir.gov.ph):

ANAPI MULTI-PURPOSE COOPERATIVE

(Petitioner)

versus

COMMISSIONER OF INTERNAL REVENUE

(Respondent)

Petition for Review filed by the

Petitioner, seeking to annul and set aside the

decision of Commissioner of Internal Revenue,

which upheld the assessments for deficiency

Value Added Tax (VAT), Expanded Withholding

Tax (EWT), Ad Valorem and Compromise

penalties for the taxable year 2005.

At the outset, Respondent states that

Petitioner failed to file any VAT return, as such,

the applicable provision in Section 222(a) which

provides that the period to make an assessment

may be made within ten (10) years after discovery

of the falsity, fraud or omission. Respondent also

states that to be exempt from payment of VAT

upon removal of the refined sugar, a cooperative

must own or produce the sugar. However,

Respondent states that its investigation revealed

that Petitioner did not own the raw sugar cane

produce, as shown by the sugar quedans which

are not in the name of the cooperative.

On the other hand, Petitioner argues that it

is a tax-exempt entity, being a bona fide

agricultural cooperative, based on Section 109(r)

[renumbered as section 109(L)] of the NIRC, and

Articles 60 and 61 of the Philippine Cooperative

Code of 2008. Petitioner states that sales by

agricultural cooperative duly registered with the

Cooperative Development Authority (CDA) to their

members, as well as the sales of their produce,

whether in its original state or processed form, to

non-members, are exempt from VAT. Based on

this, Petitioner states that it is exempt from the

payment of VAT for withdrawing their refined sugar

from the sugar mill.

Petitioner also state that all its refined sugar withdrawals made in 2005 were covered by the Authorization Allowing Release of Refined Sugar (AARRS), issued by the BIR Revenue District Officer (RDO). In line with the presumption of regularity in the performance of duties of public...

Continuation...

BIR

Form

No.

Form Name

1700 Annual Income Tax Return – Individuals Earning Purely

Compensation Income (Including Non-Business/

Non-Profession Income)

1702-EX Annual Income Tax Return – Corporation, Partnership

and Other Non- Individual Taxpayer EXEMPT under

the Tax Code, as amended [Section 30 and those

exempted in Sec. 27 (C), and Other Special Laws,

with NO Other Taxable Income.

1702-RT Annual Income Tax Return – Corporation, Partnership

and Other Non- Individual Taxpayer Subject Only to

REGULAR Income Tax Rate

1707 Capital Gains Tax Return for Onerous Transfer of Shares

of Stock Not Traded Through the Local Stock Exchange

Failure of the Respondent to submit sufficient and

competent evidence to support its assessment that the

Petitioner is not a VAT exempt entity.

http://www.bir.gov.ph/


officers, the issuance of the AARRS in favor of

Petitioner presupposes that the cooperative

submitted to the BIR the complete documents

requirement for application, including the quedans

in its name. Petitioner also state that respondent

was not able to present any proof to the contrary

except baseless and unsubstantiated allegations

that the refined sugar was not owned by the

Petitioner.

It is clear that the AARRS were issued

upon the presentation of the sugar quedans,

among other requirements, showing that the sugar

is owned by the Petitioner. Respondent failed to

submit sufficient and competent evidence to

support its allegation that the sugar quedans were

not in the name of the Petitioner. Absent of

sufficient evidence to support the assessment, the

presumption of correctness no longer applies.

Thus, the assessment has no factual basis nor

sufficient support evidence, and must therefore be

cancelled.

WHEREFORE, the instant petition for

review is GRANTED. The assessment for

deficiency and penalties for the taxable year 2005

are hereby CANCELLED.

Continuation...

PEOPLE OF THE PHILIPPINES

(Plaintiff)

versus

REX CHUA CO HO

(Accused)

Failure of the Accused to supply correct and accurate

information in his Annual Income Tax Returns (ITRs)

and to pay the correct taxes. In violation of Section

254 and 255 of the Tax Code.

The Bureau of Internal Revenue filed with

the Department of Justice a complaint against

Accused for five (5) counts of attempt to evade or

defeat tax and five (5) counts of willful failure to

supply correct and accurate information in his

Annual Income Tax Returns (ITRs) and to pay the

correct taxes, in violation of Sections 254 and 255

of the Tax Code.

The prosecution contends accused is the

sole proprietor of Rex Gift Shoppe and is likewise

engage in the business of selling gold and silver

to the BSP during taxable year 2005 to 2009.

Documents show that Accused sold to the

BSP in the years 2005 to 2009 (refined) gold and

silver amounting to P4.95 billion. A certification of

the total sales and net payments received by

Accused and copies of the Letters of Delivery and

Sale detailing the number of pieces and the

weight of the gold and silver sold signed by him

were obtained by the BIR from BSP.

Investigation by the BIR disclosed that

Accused willfully failed to declare all his income in

his Annual ITRs for taxable years 2005 to 2009. A

comparison of the gross income he declared in

his ITRs with the net payment he received from

BSP in the years in question revealed he grossly

under-declared his income by more than 30%.

Accused admitted he did not include the sale of the gold and silver in his ITRs on the honest belief that it was tax exempt believing to the advised by the BSP that their transaction with them is a zero-rated transaction, and is exempted from 12% VAT. Also, pointing out that the BSP did not collect the required withholding tax. However, he later admits that he is fully aware that the BSP in not a taxing authority. Accused said what was declared was his earnings derived from his store


Rex Gift Shoppe based along Ongpin St., Sta.

Cruz, Manila.

Under Sec. 248 of the Tax Code, an

under-declaration of taxable income by more than

30% constitutes a prima facie case of fraud.

WHEREFORE, in light of the foregoing,

accused Rex Chua Co Ho is hereby found

GUILTY BEYOND REASONABLE DOUBT of

violating Section 255 of the NIRC of 1997, as

amended, in CTA crim. Cases Nos. 0-287, 0-288

0-289 0-290, and 0-291.

With regard to the civil liability, accused

Rex Chua Co Ho, is hereby ORDERED TO PAY

the total amount of 12 Billion for the taxable year

2005 to 2009, inclusive interest.

IFC CAPITALIZATION (EQUITY) FUND, LP,

(Petitioner)

versus

COMMISSIONER OF INTERNAL REVENUE

(Respondent)

A petition for review was filed by the

Petitioner seeking for the refund of allegedly

erroneously withheld stock transaction tax (STT)

on the sale of its listed shares of stock.

Petitioner argues that it is exempt from

STT, and as such, its sales of shares in the local

stock exchange should not have been subjected

to withholding tax by the stockbrokers. Based on

the principle of the solution indebiti, the STT

erroneously collected by the BIR must allegedly

be returned to Petitioner as the beneficial owner

of the listed BDO shares traded in the PSE

considering that Petitioner complied with the

procedural requirements for the refund of its

erroneously withheld STT on the sale of its listed

BDO shares.

It must be noted that the Petitioner is owned and

controlled, or enjoying refinancing from Foreign

governments, specifically IFC capitalization

(Equity) Fund GP, LLC, IFC and JBIC. Hence,

such being the case, the income derived by the

Petitioner from the sale of listed BDO shares in

the PSE is exempt from income tax and conse-

quently, STT.

Section 32(B)(7)(a) of the NIRC of 1997 as

amended, provides that:

“SEC. 32. Gross Income-(B)(7)(a) Income

Derived by Foreign Government- Income

derived from investments in the

Philippines in loans, stocks, bonds, or

other domestic securities, or from interest

on deposits in banks in the Philippines by

(I) Foreign governments, (II) Financing

Institutions owned, controlled, or enjoying

refinancing from Foreign government, and

(III) international or regional financial

institutions established by Foreign

government.”

Thus, considering that in the instant case,

there were erroneously collected, withheld STT

and that the Petitioner was able to prove

compliance with the requisites for the grant of the

refund being sought.

WHEREFORE, the instant petition for

review is GRANTED. Accordingly, the

Respondent is hereby ORDERED TO REFUND to

Petitioner the amount due representing STT

erroneously collected.

Petitioner is owned and controlled, or enjoying

refinancing from Foreign governments, hence, such

being the case, the income derived by the Petitioner

from the sale of listed shares in the PSE is exempt

from income tax and Stock Transaction Tax.


AUDITED FINANCIAL STATEMENTS OF

COMPANIES WHOSE FISCAL YEAR

ENDS ON DECEMBER 31, 2018

2.)

Those whose AFS are being audited

by the Commission on Audit (COA)

provided that the following documents

are attached to their AFS:

II. GENERAL INFORMATION SHEET (GIS)

1.)

SEC Memorandum Circular No. 1 Series of 2019

2019 FILLING OF ANNUAL FINANCIAL STATEMENT AND

GENERAL INFORMATION SHEET

April 22, 23, 24, 25, 26


This bulletin is a compilation of relevant issuances, rulings and memoranda from various government agencies to enhance the

technical skills of the professional staff of Paguio, Dumayas and Associates, CPAs and is not intended to replace the original

issuances of the related government agencies.

PAGUIO, FLOYD C.

Managing Partner

[email protected]

[email protected]

GALLEGOS, AIRA G.

Tax Specialist

[email protected]

MELCHOR, AILEEN P.

Senior Tax Specialist [email protected]

ASADON, KEN JOHN B.

Tax Supervisor

Unit 3207 Cityland Pasong Tamo Condominium, Pasong Tamo St., Barangay Pio del Pilar, Makati City

Contact us at: 950-9853/950-9854

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

[email protected]

RULLODA, JOHN ERIC M.

Tax Specialist