quality assurane ulletin i july 2019 edition...

QUALITY ASSURANCE BULLETIN I July 2019 Edition 1


RECENT SECURITIES AND EXCHANGE COMMISSION ISSUANCES

RECENT BUREAU OF INTERNAL REVENUE ISSUANCES

Revenue Memorandum Order No. 35-2019: Amends pertinent provisions of Section 2 under

RR No. 11-2018 specifically on the requirements for top withholding agents.

Revenue Memorandum Order No. 37-2019: Amends the policies, guidelines and procedures

on the registration of employees earning purely compensation income, transfer of registration of

employees, update of registration of information and issuance of TIN card

Revenue Memorandum Order No. 38-2019: Clarifies the Tax Exemption of Non-Stock, Non-

Profit Corporations under Section 30 of the National Internal Revenue Code of 1997, as

Amended

Revenue Memorandum Circular No. 68-2019: Provides clarification on certain issues rela-

tive to the Estate Tax Amnesty under RA No. 11213 (Tax Amnesty Act)

Revenue Memorandum Circular No. 73-2019: Announces the availability of various re-

vised BIR Forms (January 2018 ENCS)

Revenue Memorandum Circular No. 74-2019: Circularizes the enhanced BIR Form Nos.

2306 and 2307 (January 2018 ENCS)

Revenue Memorandum Circular No. 75-2019: Circularizes the availability of the revised

BIR Form No. 1914 [Application for Tax Credits/Refunds] April 2019 (ENCS)

Revenue Memorandum Circular No. 76-2019: Circularizes the availability of the new BIR

Form No. 0620 (Monthly Remittance of Taxes Withheld on the Amount Withdrawn from the Dece-

dent's Deposit Account) and BIR Form No 1621 (Quarterly Remittance of Taxes Withheld on the

Amount Withdrawn from the Decedent's Deposit Account)

SEC Memorandum Circular No. 14; Series of 2019: Rules and Regulations governing Crowdfunding (CF)

SEC Memorandum Circular No. 16; Series of 2019: Guidelines on the Number and Quali-fications of Incorporators Under the Revised Corporation Code

Notices:

- Guidelines On The Adoption Of Centralized (One-Stop-Shop) Framework For Accredita-tion/ Selection Of External Auditor

- New Mandatory Disclosure Form


REVENUE MEMORANDUM ORDER

NO. 35-2019

Revises certain policies in the enforcement of civil

remedies for the collection of Accounts Receivable/

Delinquent Accounts (AR/DAs)

To protect the interest of the government,

civil remedies provided under Section 205 of the

National Internal Revenue Code (NIRC), as

amended, shall immediately be pursued as soon

as the “Form 40-Collectible” reports relative to the

List of Unpaid Revenues and List of Unpaid Tax

Assessments have been received by the

offices responsible in the enforcement of

collection remedies.

With the foregoing, Preliminary

Collection Letter (PCL) and Final Notice Before

Seizure (FNBS) shall no longer be sent to the

delinquent taxpayers. Once the aforesaid

reports as well the dockets of the cases are

received by the concerned office for collection

enforcement, it shall validate if all the

applicable fields in the said "Form 40-

Collectible” reports are completely filled-out. If

so, the Warrant of Distraint and/or Levy (WDL)

shall immediately be issued using the current

format. All other collection procedures to

implement the WDL and other collection remedies,

as written in the Collection Manual, which are still

relevant shall continuously be adopted.


NO. 37-2019

Amends the policies, guidelines and procedures on the

registration of employees earning purely compensation

income, transfer of registration of employees, update of

registration of information and issuance of TIN card

New employees without TIN shall be

registered at the Revenue District Office (RDO)

having jurisdiction over the place of business

where the employer’s Head Office or Branch is

physically located. They shall accomplish BIR Form

No. 1902 (Application for Registration for

Individuals Earning Purely Compensation Income)

and submit the same to their employer who shall

secure the TIN of its new employees using the

eRegistration (eREG) System within ten (10) days

from the date of employment. The employer shall

register its new employees with the BIR as follows:

New Employees without TIN

Employer shall secure

TIN of its employees

Manual Application

When eREG is unavailable or cannot be

registered using the eREG

Who shall visit the RDO

Employees of Non-LT

*Employees of TAMP Corporations/ Individuals

*Employees of Employers us-ing eFPS

*Employees of Non- TAMP taxpayers

*Thru eREG

*Thru eREG

*RDO or thru

eREG

Submit application to the RDO of the employer

The employer

Employees of LT

Thru eREG Submit application to the local (regular) RDO of the LT- Employer

The employer


An employee earning purely compensation

income who will change or will have a new

employer or will transfer from Head Office to

another branch office (or vice versa) of the same

employer or company shall have his/her TIN/

registration records be transferred to the RDO

having jurisdiction over the place of his/her

residence and not to the RDO of his/her new

employer. The said employee shall submit the duly

accomplished and signed BIR Form No. 1905 to

the old/previous RDO where the employee is

registered who shall execute the transfer of

registration of employee within twenty-four (24)

hours from receipt of BIR Form No. 1905. In case

the employee’s location is relatively far from and/or

unable to visit the old/previous RDO for the

submission of application of transfer of registration,

a faxed/email copy of BIR Form 1905, with

signature and valid government issued

Identification Card, may be accepted by the old/

previous RDO to effect such request for transfer.

In case the employer (Head Office or

Branch) is transferring to a new different RDO, the

following policies are prescribed:

i. Employees (active/currently employed) earning

purely compensation income, whose registration

record are the same with the RDO of their

employer, shall be automatically carried by the

said transferring-employer to its new RDO, except

those employees whose residence address and

employer’s old business address are both under

the jurisdiction of the same old RDO of the

transferring-employer.

Ii. The transferring-employer shall require the said

employees mentioned above who are earning

purely compensation income to accomplish BIR

Form No. 1905 (Update Form), and facilitate the

mass transfer of employees’ registration by

submitting the Update Forms and list of said

employees to the old RDO, together with the

request for transfer of registration (Update Form)

of the said employers, excluding those employees

who have been separated prior to the transfer.

Application for any change in the

registration information (BIR Form No. 1905) of an

employee shall be submitted by the employee to

the RDO where the employee’s TIN is registered.

Application for TIN card issuance shall be

made by the registered employees at their

respective RDO or local (regular) RDO where the

taxpayer is registered. No application for TIN card

shall be submitted to the LTAD/ELTRD/LTD-Cebu/

LTD–Davao. Initial request for TIN Card issuance

is free. Subsequent request for issuance due to

lost/damaged TIN Card shall be charged P100.00.

The RDO can implement the acceptance of

TIN Card application cut-off period until 1:00 PM

(pursuant to Revenue Regulations No. 7-2012) in

order to control the voluminous application for TIN

Card.

Only the employee himself/herself shall

request and receive the TIN ID card by presenting

at least one valid government-issued ID upon

application and release of TIN ID card. In cases

where the taxpayer is not available to receive the

TIN Card, a Special Power of Attorney shall be

submitted by the authorized representative to the

RDO that will issue such TIN card, subject to the

approval of the concerned Revenue District Officer.

Employers who are required to use the

eREG System but instructed its new employees to

visit the RDOs with photocopied alleged eREG

System message presented shall be imposed a

penalty of ₱1,000.00 per employee. A penalty of

₱1,000.00 for every instance but not to exceed

₱25,000.00 shall be imposed on eREG System

users who supplied erroneous/invalid information.

The registration record of existing

employees who are registered with the RDO or

local RDO of its employer shall be maintained and

shall not be required to transfer its registration to

the RDO having jurisdiction over the place of their

residence, unless the employee will be transferring

to a new employer located in a jurisdiction covered

by a different RDO.

Received and pending applications for

registration of employees submitted to the RDO,

LTAD/ELTRD/LTD-Cebu/LTD-Davao, including

those forwarded to the National Office - Data

Center pursuant to RMO No. 20-2015 prior to the

effectivity of the Order, shall still be processed by

the concerned offices.

Continuation...



NO. 38-2019

Clarifies the Tax Exemption of Non-Stock, Non-Profit

Corporations under Section 30 of the National Internal

Revenue Code of 1997, as Amended

The said organizations and corporations are

the following:

A. Labor, agricultural or horticultural organization

not organized principally for profit;

B. Mutual savings bank not having a capital stock

represented by shares, and cooperative bank

without capital stock organized and operated for

mutual purposes and without profit;

C. A beneficiary society, order or association,

operating for the exclusive benefit of the

members, such as a fraternal organization

operating under the lodge system, or mutual aid

association or a non-stock corporation

organized by employees providing for the

payment of life, sickness, accident, or other

benefits exclusively to the members of such

society, order, or association, or non-stock

corporation or their dependents;

D. Company-owned cemetery, which is operated

exclusively for the benefit of its members;

E. Non-stock corporation or association organized

and operated exclusively for religious,

charitable, scientific, athletic, or cultural

purposes, or for the rehabilitation of veterans,

no part of its net income or asset belongs to or

inures to the benefit of any member, organizer,

officer or any specific person;

F. Business league, chamber of commerce, or

board of trade, not organized for profit and no

part of the net income of which inures to the

benefit of any private stockholder or individual;

G. Civic league or organization not organized for

profit but operated exclusively for the promotion

of social welfare;

H. A non-stock and non-profit educational

institution;

I. Government educational institution;

J. Farmers' or other mutual typhoon or fire

insurance company, mutual ditch or irrigation

company, mutual or cooperative telephone

company, or like organization of a purely local

character, the income of which consists solely

of assessments, dues and fees collected from

members for the sole purpose of meeting its

expenses; and

K. Farmers', fruit growers', or like association

organized and operated as a sales agent for

the purpose of marketing the products of its

members and turning back to them the

proceeds of sales, less the necessary selling

expenses on the basis of the quantity of

produce finished by them.

A corporation claiming tax exemption must

be able to show clearly that it is organized and

operated for the purposes under Section 30 of the

NIRC, and that its income is derived pursuant

thereto. The following shall be the basis in

determining the entitlement to exemption of an

organization:

i. Organizational Test: This requires that the

corporation or association's constitutive

documents (SEC Registration, Articles of

Incorporation and By-Laws) must show that its

primary purpose/s of incorporation fall under

Section 30 of the NIRC.

ii. Operational Test: This requires that the regular

activities of the corporation or association be

exclusively devoted to the accomplishment of

the purposes specified in Section 30 of the

NIRC. A corporation or association fails to meet

this test if the corporation has no activities

conducted in furtherance of the purpose for

which it was organized, or if a substantial part

of its operations constitutes "activities

conducted for profit".


In order for an entity to qualify as a

non-profit corporation exempt from Income Tax, it

must demonstrate that its earnings or assets do

not inure to the benefit of any of its trustees,

organizers, officers, members or any specific

person. It must not be organized or operated for

the benefit of private interests such as specific

individuals, incorporators or his family,

shareholders of the organization, or persons

controlled directly or indirectly by such private

interests. The activities that are considered

"inurements" of such nature are the following:

i. The payment of compensation, salaries, or

honorarium to its trustees or organizers;

ii. The payment of exorbitant or unreasonable

compensation to its employees;

iii. The provision of welfare aid and financial

assistance to its members. An organization is

not exempt from Income Tax if its principal

activity is to receive and manage funds

associated with savings or investment

programs, including pension or retirement

programs. This does not cover a society, order,

association, or non- stock corporation under

Section 30(C) of the NIRC providing for the

payment of life, sickness, accident and other

benefits exclusively to its members or their

dependents;

iv. Donation to any person or entity (except

donations made to other entities formed for the

purpose/purposes similar to its own);

v. The purchase of goods or services for amounts

in excess of the fair market value of such goods

or value of such services from an entity in which

one or more of its trustees, officers or fiduciaries

have an interest; and

vi. When upon dissolution and satisfaction of all

liabilities, its remaining assets are distributed to

its trustees, organizers, officers or members. Its

assets must be dedicated to its exempt

purpose. Accordingly, its constitutive documents

must expressly provide that in the event of

dissolution, its assets shall be distributed to one

or more entities formed for the purpose/

purposes similar to its own, or to the Philippine

government for public purpose.

The Income Tax exemption of

organizations and corporations under Section 30 of

the NIRC of 1997, as amended, covers only the

income derived by the corporation in furtherance of

the purposes for which it was organized. Said

corporations are still subject to the corresponding

internal revenue taxes imposed on income derived

from any of their properties, real or personal, or any

activity conducted for profit regardless of the

disposition thereof (i.e. interest income from bank

deposits, gains from investments, rental income

from real or personal properties), which income

should be reported for taxation purposes.

The interest income from currency bank

deposits and yield or any other monetary benefit

from deposit substitute instruments and from trust

funds and similar arrangement, and royalties

derived from sources within the Philippines or

organizations under Section 30 are subject to 20%

Final Withholding Tax. Moreover, the interest

income derived by them from a depository bank

under the expanded foreign currency deposit

system shall be subject to 15% Final Withholding

Tax pursuant to Section 27(D)(1) in relation to

Section 57(A), both of the NIRC of 1997, as

amended.

The tax exemption granted under Section

30 of the NIRC of 1997 does not cover Withholding

Taxes on compensation income of the employees

of the corporation, or the Withholding Tax on

income payments to persons subject to tax

pursuant to Section 57 of the NIRC of 1997. The

corporation or association is therefore constituted

as a withholding agent for the government if it acts

as an employer and any of its employees receives

compensation income subject to Withholding Tax

or if it makes income payments to individuals or

corporations subject to the Withholding Tax.

Purchase of goods or properties or services

and importation of goods by a corporation

organized and operated as a Section 30

corporation shall be subject to the 12%

Value-Added Tax (VAT). The VAT, being an

indirect tax, can be shifted or passed on the buyer/

purchaser, transferee or lessee of the goods,

properties or services. Once shifted to the buyer/

customer as an addition to the cost of goods or

services sold, it is no longer a tax but an additional

cost which the buyer/customer has to pay in order

to obtain the goods or services.


Thus, the shifting of the VAT to it does not make it

the person directly liable and therefore, it cannot

invoke its tax exemption privilege under Section 30

of the NIRC of 1997 to avoid the passing on or

shifting of the VAT.

Section 105 of the NIRC of 1997 provides

that any person who, in the course of trade or

business, sells, barters, exchanges, leases goods

or properties, renders services, and any person who

imports goods shall be subject to the VAT imposed

under Sections 106 to 108 of the same code.

The phrase “in the course of trade or

business” means the regular conduct or pursuit of a

commercial or an economic activity, including

transactions incidental thereto, by any person

regardless of whether or not the person engaged

therein is a non-stock, non-profit private

organization (irrespective of the disposition of its net

income and whether or not it sells its good

exclusively to members or its guests), or

government entity.

Hence, if the corporation is engaged in the

sale of goods or services in the course of a

business pursuit, including transactions incidental

thereto, its revenues derived therefrom shall be

subject to the 12% VAT, in case the gross receipts

from such sales exceed Three Million Pesos

(₱3,000,000.00), or to the 3% Percentage Tax, if

gross receipts do not exceed ₱3,000,000.00.

The guidelines in the processing and

issuance of Certificate of Tax Exemptions (CTE),

which have been devolved to the Revenue

Regions, are prescribed in the Order. A CTE issued

under this Order shall be valid for a period of three

(3) years from the date of effectivity specified in the

Ruling, unless sooner revoked or cancelled. The

CTE may be revalidated for another period of three

(3) years under the same procedure set forth

herein.

The Tax Exemption Ruling shall be deemed

revoked if there are material changes in the

character, purpose, or method of operation of the

corporation or association which are inconsistent

with the basis for its income tax exemption. The

revocation takes effect as of the date of the material

change.

All Regional Directors are required to

submit on or before the 20th day of the month

following the end of each quarter a Quarterly

Summary Report of all CTEs issued to Section 30

corporations, together with copies of said CTEs, to

the Assistant Commissioner, Legal Service, for a

centralized database of issued CTEs.

All applications for CTEs under Section 30

of the NIRC, as amended, filed with the Law and

Legislative Division after the effectivity of this Order

shall be transmitted to the concerned Revenue

District Office, for their appropriate processing.

REVENUE MEMORANDUM CIRCULAR

NO. 68-2019

Provides clarification on certain issues relative to

the Estate Tax Amnesty under RA No. 11213 (Tax

Amnesty Act)

The estate of the decedent who died on or

before December 31, 2017, who is not covered by

the exceptions enumerated under Section 3 of

Revenue Regulations (RR) No. 6-2019, is

qualified to avail of tax amnesty.

The executor or administrator, legal heirs,

transferees or beneficiaries (or filer) shall file the

Estate Tax Amnesty Return (ETAR) with the

Revenue District Office (RDO) having jurisdiction

over the last residence of the decedent within two

(2) years from the effectivity of RR No. 6-2019 or

from June 15, 2019 to June 14, 2021. In case the

estate has a previously issued Taxpayer

Identification Number (TIN), the ETAR shall be

filed with the RDO which issued the said TIN.


A rate of six percent (6%) based on the

decedent’s total net taxable estate at the time of

death shall be imposed at every stage of

succession. The same rate shall be imposed on

the value of the undeclared properties at the time

of death, without deductions which are deemed to

have been claimed in the previous Estate Tax

Return filed, except for the share of the surviving

spouse on the undeclared conjugal property with a

minimum amount for the payment of Estate Tax

Amnesty of Five Thousand Pesos (P 5,000.00) per

decedent.

In case the decedent died at the time when

there were estate and inheritance taxes imposed,

the estate and inheritance taxes shall not be

computed. The Estate Amnesty Tax rate of six

percent (6%) shall cover both the unpaid estate

and inheritance taxes, and shall be computed

based on the net taxable estate. In computing the

net taxable estate, the deductions to be applied in

the Estate Tax Amnesty shall be based on the

Estate Tax law prevailing at the time of death.

Payment of the Estate Amnesty Tax shall

be made to any Authorized Agent Bank (AAB)

under the jurisdiction of the concerned RDO.

However, payment may be made to the Revenue

Collection Officer (RCO) under the following

instances:

A. In case of cash payment and the amount

involved is Twenty Thousand Pesos

(P20,000.00) and below; and

B. If the payment is thru manager’s/cashier’s

check, irrespective of amount.

If there is no AAB in the RDO, payment

shall be made to the RCO subject to the conditions

in “a” and “b” above.

For purposes of Estate Tax Amnesty,

instalment payment is not allowed. Partial of total

withdrawal of cash in bank for payment of Estate

Tax Amnesty may be allowed by the BIR upon

written request of the taxpayer, without subjecting

to the final withholding tax. The form of payment to

be issued by the bank should be a manager’s/

cashier’s check.

The voluntary payment made under

Payment Form No. 0605, supposedly for Estate

Tax Amnesty, prior to the effectivity of RR No. 6-

2019, shall not be considered as valid payment for

the amnesty. The voluntary payment in this case

may be claimed for refund subject to existing rules

and regulations on refund.

Other clarifications made under the

Circular are the following:

a. A TIN shall be issued for the estate of the

decedent, if there is no existing TIN. All heirs,

including minors, without TIN are required to

secure their respective TIN.

b. In case the estate involves multiple decedent,

one (1) Extra Judicial Settlement (EJS) for

every stage of transfer/succession or one (1)

EJS covering all the stages of transfer/

succession with respect to the inherited share

of the common property/ies emanating from

the first decedent shall be submitted.

c. When no zonal valuation is available at the

time of death, the Fair Market Value (FMV)

appearing in the tax declaration issued at the

date of death or the succeeding available tax

declaration issued nearest to the date of death

shall be used as reference in computing the

value of the property at the time of death. If

there is no tax declaration available at the time

of death, the succeeding available tax

declaration issued nearest to the date of death

shall be used as reference.

d. For a real property covered by one (1) Title

involving multiple succession one (1) eCAR

only will be issued per real property, including

the improvements, if any, provided that the

ETARs are filed simultaneously at only one (1)

RDO. All the names of the decedents as

stated on the EJS or Judicial Settlement, as

the case may be, will be shown on the eCAR.

e. The filer shall not be required to submit

certificate of zonal valuation from the RDO

where the property is located. The verification

of zonal values can be made thru http://

www.bir.gov.ph/index.php/zonal-values.html.


f. In case there is no Death Certificate issued by

the Philippine Statistics Authority (PSA), the

Certificate of No Record of Death from PSA

and any valid secondary evidence including but

not limited to those issued by any government

agency/office sufficient to establish the fact of

death of the decedent may be submitted.

g. The holder/buyer in a deed of sale transaction

can avail of the Estate Tax Amnesty on behalf

of the heirs provided that holder/buyer shall

present the notarized EJS signed by all heirs

together with complete documentary

requirements.

h. A taxpayer who voluntary paid on August 15,

2018 the basic Estate Tax due of a decedent

who died on December 31, 2017 but failed to

pay the corresponding penalties can avail of

the Estate Tax Amnesty on the unpaid

penalties by paying the minimum Estate Tax

Amnesty amount of Five Thousand Pesos

(P5,000.00) and filing the required ETAR.

i. If there is an on-going expropriation case on

the property, the taxpayer can avail of the

Estate Tax Amnesty, if the expropriation

happened after the death of the decedent. In

such case, the expropriated property will form

part of the gross estate of the decedent.

However, if the expropriation happened during

the lifetime of the decedent, the expropriated

property will not form part of the gross estate of

the decedent.

j. The delinquent Estate Tax liability is not

covered by the RR on Estate Tax Amnesty. It

is covered by Section 3 of RR No. 4-2019 on

tax amnesty on delinquencies.

k. If there is an on-going investigation on Estate

Tax liabilities, the Estate Tax Amnesty can be

availed since there is no Estate Tax due that is

considered delinquent.

l. The taxpayer can avail of the Estate Tax

Amnesty on the Estate Tax deficiency resulting

from post review made by the Assessment

Division.

m. An estate involving judicial settlement/last will

of testament pending in court can avail the

Estate Tax Amnesty, provided that the filer

shall submit a certified true copy of the court

resolution or leave of court, together with all

the documentary requirements for Estate Tax

Amnesty within the two-year availment period.

However, only the CA shall be issued to the

filer. The eCAR shall be issued upon

presentation of the final order of the court.

n. An estate cannot avail of the tax amnesty if

the filer failed to submit the validated

Acceptance Payment Form (APF) with proof of

payment to the concerned RDO within the two

-year availment period of tax amnesty. Failure

to submit the validated APF with proof of

payment within the two-year period is

tantamount to non- availment of the Estate

Tax Amnesty. However, any payment made

may be applied against the total regular Estate

Tax due inclusive of penalties.

o. If the estate has an existing Estate Tax

delinquency, a filer can still avail of the Estate

Tax Amnesty for undeclared property provided

that the undeclared property is not included in

the list of properties covered in the existing

Estate Tax delinquency. Further, the ETAR

shall be filed in the RDO that issued the

assessment.

p. Estate involving judicial settlement/last will of

testament pending in court can avail the

Estate Tax amnesty provided that the filer

shall submit a certified true copy of the court

resolution or leave of court, together with all

the documentary requirements for Estate Tax

Amnesty, within the two-year availment period.

However, only the Certificate of Availment

(CA) shall be issued to the filer. The electronic

Certificate Authorizing Registration (eCAR)

shall be issued upon presentation of the final

order of the court.

Estate Tax Amnesty availment of

taxpayers with specific scenarios (such as those

with partial unpaid Estate Tax due, and those with

undeclared property in the previously filed ETAR)

are also contained in the Circular.



NO. 73-2019

Announces the availability of various revised BIR Forms

(January 2018 ENCS)

This Circular is issued to prescribe and

inform withholding tax agents on the availability of

the revised BIR Forms BIR Forms which were

revised due to the implementation of the Tax

Reform for Acceleration and Inclusion (TRAIN) Law,

to wit:

The revised manual returns, however, are

not yet available in the Electronic Filing and

Payment System (eFPS) and Electronic Bureau of

Internal Revenue Forms (eBIRForms). Once said

returns are available in eFPS or already included in

the new Offline eBIRForms Package, a revenue

issuance shall be released to announce the

availability of the revised returns.


NO. 74-2019

Circularizes the enhanced BIR Form Nos. 2306 and

2307 (January 2018 ENCS)

This Circular is issued to inform taxpayers

and others concerned other availability of the

enhanced BIR Forms to wit:

The abovementioned BIR Forms were

enhanced due to the implementation of the Tax

Reform for Acceleration and Inclusion (TRAIN)

Law.


NO. 75-2019

Circularizes the availability of the revised BIR Form No.

1914 [Application for Tax Credits/Refunds] April 2019

(ENCS)


NO. 76-2019

Circularizes the availability of the new BIR Form No.

0620 (Monthly Remittance of Taxes Withheld on the

Amount Withdrawn from the Decedent's Deposit

Account) and BIR Form No 1621 (Quarterly Remittance

of Taxes Withheld on the Amount Withdrawn from the

Decedent's Deposit Account)

Said Forms can be downloaded by banks

from the BIR Forms- Payment/Remittance Forms

section of the BIR website (www.bir.gov.ph).

Form No. Description

1604-C Annual Information Return of Income Taxes Withheld on Compensation

1604-E Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income Payments Exempt from Withholding Tax

1604-F Annual Information Return of Income

Payments Subjected to Final Withholding

Taxes

Form No. Description

2306 Certificate of Final Tax Withheld at Source

2307 Certificate of Creditable Tax Withheld at Source


The abovementioned Forms are not yet

available in pre-printed form as well as in the

Electronic Filing and Payment System (eFPS) and

Electronic Bureau of Internal Revenue Forms

(eBIRForms).

Banks that are availing the Philippine

Payment Settlement System (PhilpaSS) are

advised to manually file the said forms and remit the

corresponding tax until the issuance of a written

notice on their availability in the eFPS.

SEC MEMORANDUM CIRCULAR NO. 14

SERIES OF 2019

RULES AND REGULATIONS GOVERNING

CROWDFUNDING (CF)

In recognition of the recent financial

innovation of raising funds for a venture or

business using internet platforms, the Commission

formulated rules on crowdfunding in accordance

with the Securities Regulation Code (SCR) and

international practices and standards.

WHEREAS, it is the policy of the

Commission to encourage investments and active

public participation in the capital market, foster

good governance and ensure protection of

investors;

WHEREAS, the continuous advancement

of information and communication technology and

the globalization of financial markets facilitate

innovative financial environment, which includes

fund raiding through internet platforms such as

crowdfunding;

WHEREAS, Section 8 of the SRC provides

that securities shall not be sold or offered for sale

or distribution within Philippines, without a

registration statement duly filed with the and

approved by Commission;

WHEREAS, Section 10.2 of the SRC

provides that the Commission may exempt

securities transactions from registration

requirement if it finds that the registration is not

necessary in the public interest or for the

protection of the investors such as by reason of

small amount involved or the limited character of

the public offering;

WHEREAS, Section 32.2 (a) of the SRC

prohibits broker or dealer from making, creating or

operating, or enabling another to make, create or

operate, any trading market, otherwise than on a

registered Exchange, for the buying and selling of

any security, except in accordance with the rules

and regulations that the Commission prescribes;

WHEREAS, Section 37 of the SRC

promotes national economic development and

competitiveness in the market and directs the

Commission to promulgate rules for the

registration and licensing of innovative and other

trading markets for innovative securities,

securities of small, medium, growth and venture

enterprises and technology-based ventures;

WHEREAS, Section 72 of the SRC

authorizes the Commission to issue, amend and

rescind rules and regulations as may be

necessary or appropriate, including rules and

regulations defining accounting, technical, and

trade terms used in the SRC, and prescribe forms

in which information shall be set forth in

registration statements, applications, and

reports to the Commission. For this purpose,

the Commission may classify persons,

securities, and other matters within its

jurisdiction, prescribe different requirements for

different classes of persons, securities, or

matters, by rule or order, conditionally or

unconditionally exempt any person, security, or

transaction, or class of persons, securities or

transactions from any or all provisions of the SRC;

WHEREAS, it is essential to ensure that

crowdfunding shall operate in a manner that is

consistent with investor protection,

Continuation...


and in the interest of the public, market integrity

and transparency;

NOW THEREFORE, the Commission

hereby issues and promulgates the following

Rules Governing Crowdfunding and the

transactions and persons involved therein.

SEC MEMORANDUM CIRCULAR NO. 16

SERIES OF 2019

GUIDELINES ON THE NUMBER AND

QUALIFICATIONS OF INCORPORATORS UNDER THE

REVISED CORPORATION CODE

Two or more persons, but not more than

15, may organize themselves as a corporation.

This is opposed to the old corporation code, or

Batas Pambansa Blg. 68, which allowed a group of

not less than five but not more than 15 to form a

company.

Incorporators are defined as “those

stockholders or members mentioned in the Articles

of Incorporation as originally forming and

composing the corporation, and who are

signatories thereof.”

The SEC noted that only one-person

corporations (OPC) may have a single stockholder

and a sole director. Such entities must comply with

separate guidelines for OPCs.

“The guidelines were released for

uniformity of interpretation of the Revised

Corporation Code,” Armando A. Pan, SEC

officer-in-charge for the Office of the Commission

Secretary said in a text message when asked for

an explanation.

Section 3 of the circular outlines the

qualifications of incorporators, stating that each

incorporator of a stock corporation “must own, or

be a subscriber to, at least one share of the

capital stock.”

Meanwhile, each incorporator of a

nonstock corporation must be a member of the

corporation.

Incorporators must also be natural

persons of legal age, and must be a signatory to

the articles of incorporation or bylaws.

Partnerships that would like to register as

incorporators are required to submit a partners’

affidavit signed by all partners. This should

indicate that they have authorized the

partnership to invest in the corporation about to

be formed.

Domestic corporations or associations

are allowed to become incorporators, as long as

they have been approved by a majority of the

board of directors or trustees, and ratified by

stockholders representing at least two-thirds of

the outstanding capital stock.

For foreign corporations, a copy of a

document such as a board resolution, director’s

certificate, secretary’s certificate, or its

equivalent, must be authenticated by a

Philippine Consulate. This will give the foreign

entity authority to invest in the corporation being

formed.

Section 7 covers requirements for

signatories of a corporation’s articles of

incorporation.

The corporation must also specify the

taxpayer identification number (TIN) of its princi-

pal.

“No application for incorporation shall be

accepted unless the registration documents

reflect the TIN or passport number of all its

foreign investors other than foreign corporations

which have not yet been issued a TIN,”

according to the rules.

Continuation...


All foreign investors must secure a TIN

upon incorporation, which should be included in

all documents filed with the SEC thereafter.

Documents with no TIN from foreign investors

will not be accepted.

In addition, banks, banking and

quasi-banking institutions, preneed, insurance

and trust companies, non-stock savings and loan

associations, pawnshops, and other financial

intermediaries must obtain a favorable

recommendation from the appropriate

government agency for their articles of

incorporation to be approved.

NOTICE

GUIDELINES ON THE ADOPTION OF CENTRALIZED

(ONE-STOP-SHOP) FRAMEWORK FOR

ACCREDITATION/ SELECTION OF EXTERNAL

AUDITOR

Notice is hereby given that the Commission

intends to roll out another initiative this August

2019 which is the One-Stop-Shop (Centralized)

Accreditation of External Auditor. In this light, the

SEC is issuing the Guidelines on the Adoption of a

Centralized (OneStop-Shop) Framework for

Accreditation/Selection of External Auditors

(individual practitioners and audit firms) in the

financial sector in line with its cooperative

arrangements with the Bangko Sentral ng Pilipinas

(BSP), Insurance Commission (IC), and Philippine

Deposit Insurance Corporation (PDIC), under the

auspices of the Financial Sector Forum (FSF).

NOTICE

NEW MANDATORY DISCLOSURE FORM

Please be informed that the new

deadline for the submission of the mandatory

disclosure form will be in accordance with the

amendments to memorandum circular no. 15,

series of 2018. The commission is coming out

with a new mandatory disclosure form which

shall be submitted within thirty (30) days from

the effectivity of the amended guidelines. Those

who have not yet submitted the mandatory

disclosure form may submit the new mandatory

disclosure form within the period specified

above. The new mandatory disclosure form

will be used upon effectivity of the amended

guidelines. All concerned non-stock corporations

are thus advised to await the release of the

amended guidelines which will be posted at the

commission website.


LLAMES, GEMDEXTER A.

Tax Specialist

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]

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

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MAHAWAN, GERRY B.

Tax Specialist

[email protected]