The BIR recently issued Revenue Memorandum Circular (RMC) No. 85- 2016 dated August 3, 2016, which further clarifies the coverage of the suspension of audits as provided under RMC Nos. 70 and 75- 2016:
• The processing of all requests/ applications for tax refund or tax credit certificate (TCC), regardless of tax type, is not covered by the suspension of audit;
• If a Letter of Authority (LA) has been issued on the tax refund or TCC application, it shall cover only the specific tax type, which is the subject of the application;
• The verification/ evaluation of issued Letter Notices (LNs) covering taxable year 2013 is likewise suspended;
• However, LNs covering taxable year 2013, with corresponding “open” LAs issued prior to July 1, 2016, are not covered by the suspension.
The BIR also issued RMC No. 86- 2016 dated August 2, 2016, which publishes the full text of Joint Administrative Order (AO) No. 1- 2016 signed by the Secretaries of the Departments of Finance and of Trade and Industry to implement Republic Act (RA) No. 10708, otherwise known as “The Tax Incentives Management and Transparency Act (TIMTA)”. Below are the salient points of the Joint Order:
► All Registered Business Entities (RBEs) shall file their tax returns and pay their tax liabilities on or before the deadline as provided under the Tax Code, using the BIR electronic system for filing and payment of taxes.
• An RBE shall refer to any individual, partnership, corporation, Philippine branch of a foreign corporation or other entity incorporated and/or organized and existing under Philippine laws and registered with an Investment Promotion Agencies (IPA).
• An IPA shall refer to government entities overseeing the operations of the different economic zones and freeports.
• For purposes of availing income-based tax incentives, the IPAs shall consider only electronically filed tax returns.
• In case of unavailability of the BIR electronic system for filing and payment of taxes, as evidenced by a written advice issued by the BIR, the RBEs shall file and/or pay the taxes due manually, on or before the statutory deadline, in which case, the BIR duly stamped tax returns shall be accepted by the IPAs.
• Upon issuance by the BIR of a written advice regarding the availability of the electronic system for filing, the RBEs shall, within 15 days from the date of the written advice, electronically file their tax returns which was initially filed manually.
• The RBEs availing the incentives shall file an Annual Tax Incentives Report with their respective IPAs within 30 days from the statutory deadline for filing of the Final Adjustment Return for income tax and payment of tax due thereon, if any.
• Nothing in the IRR shall be construed to limit or diminish, in whatever manner, the amount of incentives that IPAs may grant pursuant to their charters or existing laws, or to prevent, deter or delay the promotion and regulation of investments, processing of applications for registrations and evaluation of entitlement of incentives by IPAs
• RBEs, which fail to comply with the filing and reportorial requirements and/or fail to show proof of electronic filing of tax returns to IPAs and payment of taxes, shall be fined as follows:
► First (1st) violation – One hundred thousand pesos (PHP 100,000.00);
► Second (2nd) violation – Five hundred thousand pesos (PHP 500,000.00);
► Third (3rd) violation – cancellation of business registration.
Should you have any question on the above BIR issuances, please do not hesitate to contact us.
SGV & Co.