Jul 172017

Some taxpayers have reported receiving Benchmarking Notices from the Bureau of Internal Revenue (BIR). As in most cases, any letter or notice from the BIR is received with great trepidation and uncertainty. Generally, taxpayers should keep calm and not be unnecessarily anxious about the benchmarking notice. Industry benchmarking is not a new program. This was originally instituted in 2006 through the issuance of Revenue Memorandum Order No. (RMO) 4-2006. However, it was not fully implemented at that time. Six year after, RMO 5-2012 was released to prescribe the revised guidelines and procedures in the conduct of industry performance benchmarking but on limited scale. Click for detailed story

Jul 102017

On Aug. 19, 2013, the Supreme Court (SC) decided in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue (G.R. No. 188550) and made the emphasis that the BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. The SC was referring to the BIR requirement to file a tax treaty relief application (TTRA) within a specified period to avail of the treaty rates. Click for detailed story

Jun 262017

Many taxpayers believe that, in a tax assessment conducted by the Bureau of Internal Revenue (BIR), even though the taxpayers submit a reply to the Preliminary Assessment Notice (PAN), a Final Assessment Notice (FAN) or Formal Letter of Demand (FLD) will be issued against them by the BIR without considering the arguments laid down in the reply to PAN. Some have the impression that the FAN is already drafted or prepared ahead without waiting for the taxpayer’s reply to PAN. This is due to the observation that most of the time, the contents of the FAN are basically the same to that of the PAN. Click for detailed story

May 222017

A few weeks ago, I attended a meeting where it was discussed that Bureau of Internal Revenue (BIR) rulings are no longer published. Suddenly losing my appetite, I decided to forego dessert and coffee and instead, concentrated on listening to the discussion. The speaker said that BIR rulings must be kept private because they contain confidential information of the taxpayers which can violate the taxpayer’s right to confidentiality. In some cases, it was noted that even bank account details are included in the rulings necessitating the need to keep them private. Click for detailed story

May 172017

Another income tax filing season is over and the post-filing period is an opportune time to do housekeeping on accounting documents and records. Also, this gives us breathing room for updates on the latest tax issuances of the Bureau of Internal Revenue (BIR). One issuance that caught my attention recently is the BIR’s Revenue Memorandum Order No. (RMO) 8-2017 which will take effect on June 26, 2017. This amended the previous RMO (72-2010), which prescribes the guidelines and processes for tax treaty relief applications (TTRA). Compliance with the previous RMO was challenging to most taxpayers as it requires filing the TTRA and supporting documents with the BIR before the transaction (i.e. first taxable event). Under the RMO, failure to file the TTRA prevents taxpayers from claiming relief under the tax treaty. Click for detailed story

May 082017

A lot has been going on with respect to tax reform. Some tax rates are proposed for adjustment, while some tax exemptions face removal, among other expected changes. One thing that taxpayers can assume to remain constant — the right of the Bureau of Internal Revenue (BIR) to audit them. And the very idea of a “BIR audit” can be the source of much stress. In the medical context, stress is a physical, mental, or emotional factor that causes bodily or mental tension. Medical studies show that unnecessary worries result in self-inflicted stress. This means that there are instances where we, ourselves, primarily contribute to our own anxieties. Now, how about when we face a BIR audit? How are we supposed to react to specific situations to avoid this self-inflicted stress? You may want to consider the following: Click for detailed story

Apr 242017

Can the Bureau of Internal Revenue (BIR) issue an assessment even after the lapse of the three-year prescriptive period even if it is clear that no fraud was committed? This is the question I usually received from clients. And my answer to this question is, “Yes.” The general rule is that the BIR is given three years to issue an assessment against a taxpayer. However, Section 222 of the Tax Code of 1997, as amended, provides three instances where the prescriptive period is extended to 10 years from discovery. These are: (1) if the return is false; (2) if the return is fraudulent with the intent to evade taxes; and (3) if no return is filed. Among these three cases, the issue normally lies in what constitutes a false return. Would a simple mistake make a return false for purposes of applying the 10-year prescriptive period? Click for detailed story