Client Advisory Letter (May-June 2007)

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Too much autonomy
The City is engaging in double taxation "of the obnoxious kind", according to the Court of Tax Appeals (CTA AC No.21, May 10, 2007). The duplicitous tax is obvious in this case. The ordinance of this prime City allows it to collect two types of business taxes on the same business.

BIR

Revenue Regulations (RR)

• Taxation of Securities Borrowing and Lending (SBL) transactions

• Enterprises inside Clark Freeport Zone entitled to PEZA incentives
• Delegated authority to sign tax rulings
• Income Tax and VAT treatment of Security Agency Fees

• Collection of homeowner's dues is not subject to income tax and VAT
• A corporation that is not closely-held is not subject to the IPO Tax
• The transfer of Condominium Certificate of Title to a spouse pursuant to a court-approved Agreement on Distribution of Communal Property is tax exempt
• Sale of a parcel of land located within the ecozone by a PEZA-registered seller to a PEZA-registered buyer is tax exempt
• Supply of services to PEZA enterprises must be within the ecozone to be VAT-zero rated
• Sale of real property not primarily held for sale or lease is VAT-exempt
• Revenues of off-line international air carriers from sales of their passage documents by a General Sales Agent (GSA) in the Philippines not taxable
• Conveyance of realty pursuant to internal reorganisation not subject to CGT or CWT
• Recruitment fees from foreign clients situated outside the Philippines are subject to 0% VAT
• Pawn Ticket (PT) not 5 subject to ATP requirement
• BAI registrations govern the classification of items being sold for VAT purposes
• Imported broken rice or rice residue is VAT exempt
• DST shall be based on the face value of the Note actually issued which is equivalent to the amount of the loan actually disbursed as of drawdown date

• The International Organisation for Immigration shall enjoy the same privileges and immunities as those granted to specialised agencies of the United Nations
• ADB shall be exempt from all VAT in all its transactions
• Payment of service fees by PEZA-registered enterprise to a Japanese entity without a PE under a Consultancy Contract shall be exempt from VAT
• The tax exemption privilege granted to WHO applies to its local important purchases of properties for official use but not to purchases of services

• Sale of roasted chicken exempt from VAT

• Options available for disputing tax assessment are mutually exclusive, resort to one bars the use of the other
• Revocation of rulings of the CIR has no retroactive application if it would be prejudicial to the taxpayer except where the latter acted in bad faith

• No cause of action before the court if no prior exhaustion of administrative remedies

• Tax Amnesty
• Amended Labor Code of the Philippines
• Anti-Red Tape Act of 2007

• Amending circular on thrift banks' license to invest in foreign currency denominated debt instruments
• Special Deposit Account (SDA)
• SPV certification guidelines

• New PEZA Information Technology Centers proclaimed
• Run After Tax Evaders (RATE) Program
• Approval of the 2007 Investments Priorities Plan (IPP)

• Provision of electric power in the ecozones
• Schedule of documents submission to PEZA and other requirements
• e-IPS rolled out in Luzon

• Voluntary Disclosure Program (VDP)

• Rules and Regulations (RR) of the Biofuels Act of 2006

• Corporate Incentives (CI)

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