ISSN 2094-1226/January 2016

ISSN 2094-1226/January 2016
w
/P
o.
Is
la
Li
pa
na
&
C
Client
advisory
letter
C
Sales to COMELEC are effectively VAT zero-rated p5 | “Mutually” defective waiver was held
valid p6 | The counting of 120-day period in a VAT refund clarified p7 | Teleconferencing for
stockholders’ meeting not allowed p12
Isla Lipana & Co.
At a glance
IFRS 16 - Leases
The long wait is over
Estate tax for CARP properties ..................................................... 4
Fees for technical assistance and loan guarantee
are business profits under the PH-Japan Tax Treaty................... 4
Amended RR on common carriers................................................ 4
Processing of ATRIGs is now centralized...................................... 5
RO cannot be taxed as ROHQ....................................................... 5
Sales to COMELEC are effectively VAT zero-rated....................... 5
Corporate officers are personally liable in a
willful nonpayment of tax................................................................ 6
Latest on regulatory landscape
Is
la
Li
pa
/P
o.
na
Rules under the new compensation scheme for AABs................ 8
Rules on related party transactions of banks................................ 8
Mediation of complaints filed against HMOs................................ 8
Renewal of HMO clearances and licenses.................................... 9
Quarterly reportorial requirements for pre-need companies....... 9
Regulations on clean note and coin policy amended................... 9
Operational risk management for BSP-supervised FIs................ 9
Outsourcing of certain bank activities......................................... 10
The CARS Program approved...................................................... 10
A law to speed up labor cases......................................................11
Filing of AFS and GIS still on number coding...............................11
Teleconferencing for stockholders’ meetings not allowed......... 12
2
Client advisory letter2016
The standard applies to annual periods beginning on or
after 1 January 2019, with earlier application permitted if
IFRS 15, ‘Revenue from Contracts with Customers’, is also
applied.
Key provisions
&
“Mutually” defective waiver was held valid.................................... 6
RDO’s demand letter clearly stating final decision is an FDDA... 6
The counting of 120-day period in a VAT refund clarified............ 7
On 13 January 2016, the International Accounting
Standards Board (IASB) finished its long-standing project
on lease accounting and published IFRS 16, ‘Leases’,
which replaces the current guidance in IAS 17. This will
require far-reaching changes in accounting by lessees in
particular.
C
Latest on tax assessments/ refund procedures
w
Latest on income tax and other taxes
C
Updates, reiterations and clarifications on
selected topics
Under IAS 17, lessees were required to make a distinction
between a finance lease (on balance sheet) and an
operating lease (off balance sheet). IFRS 16 now requires
lessees to recognize a lease liability reflecting future lease
payments and a ‘right-of-use asset’ for virtually all lease
contracts. The IASB has included an optional exemption
for certain short-term leases and leases of low-value
assets; however, this exemption can only be applied by
lessees.
For lessors, the accounting stays almost the same.
However, as the IASB has updated the guidance on the
definition of a lease (as well as the guidance on the
combination and separation of contracts), lessors will
also be affected by the new standard. At the very least,
the new accounting model for lessees is expected to
impact negotiations between lessors and lessees.
Under IFRS 16, a contract is, or contains, a lease if
the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
C
Transition
IFRS 16 is likely to have a significant impact on the financial
statements of a number of lessees.
IFRS 16 is effective for annual reporting periods beginning
on or after 1 January 2019. Earlier application is permitted,
but only in conjunction with IFRS 15, ‘Revenue from
Contracts with Customers’. In order to facilitate transition,
entities can choose a ‘simplified approach’ that includes
certain reliefs related to the measurement of the rightof-use asset and the lease liability, rather than full
retrospective application; furthermore, the ‘simplified
approach’ does not require a restatement of comparatives.
In addition, as a practical expedient entities are not required
to reassess whether a contract is, or contains, a lease at
the date of initial application (that is, such contracts are
“grandfathered”).
/P
C
&
• Statement of comprehensive income
o.
• Statement of financial position
The new standard will affect both the balance sheet and
related ratios, such as debt/equity ratios. Depending on
the particular industry and the number of lease contracts
previously classified as operating leases under IAS 17, the
new approach will result in a significant increase in debt on
the balance sheet.
w
Impact
Lessees will have to present interest expense on the lease
liability and depreciation on the right-of-use asset in their
income statement. In comparison with operating leases
under IAS 17, this will change not only the allocation of
expenses but also the total amount of expenses recognized
for each period of the lease term. The combination of a
straight-line depreciation of the right-of-use asset and the
effective interest method applied to the lease liability will
result in a higher total charge to profit or loss in the initial
years of the lease, and decreasing expenses during the latter
part of the lease term.
Entities should ensure that they have implemented systems
and processes to identify all lease contracts, to capture the
information needed to determine the measurement of the
right-of-use asset and the lease liability, and to prepare the
new disclosures.
pa
na
Start preparing now
Li
• Statement of cash flows
Is
la
The new guidance will also change the cash flow statement,
because lease payments that relate to contracts that have
previously been classified as operating leases are no longer
presented as operating cash flows in full. Only the part of
the lease payments that reflects interest on the lease liability
can be presented as an operating cash flow (if it is the
entity’s policy to present interest payments as operating cash
flows). Cash payments for the principal portion of the lease
liability are classified within financing activities. Payments
for short-term leases, for leases of low-value assets and
variable lease payments not included in the measurement of
the lease liability are presented within operating activities.
2016
Client advisory letter 3
C
Latest on income tax and other
taxes
Fees for technical assistance
and loan guarantee are
business profits under the PHJapan Tax Treaty
The BIR was asked to rule on the tax treatment of the income
of an NRFC from (1) a Memorandum for Technical Assistance
to provide technical assistance to a PEZA company; and (2)
letters of guarantee in favor of the PEZA company to guarantee
payment of loans obtained from a Japanese bank.
C
To supplement the 2013 Joint DAR-DOF-DOJ-LBP
Memorandum Circular, the BIR issued a new RR to
streamline the procedure of collecting estate tax on CARPcovered properties of deceased landowners. In summary,
the RR laid down the following procedures for processing of
estate tax returns:
o.
• No penalties and surcharges on late payment of estate tax for
CARP-covered properties
/P
w
Estate tax for CARP
properties
correct estate tax liability.
na
&
• DAR Provincial Office shall provide the BIR a list of CARP- According to the BIR, under the Philippines-Japan tax treaty, the
service fee under the Memorandum for Technical Assistance is
covered landholdings.
considered as business profits exempt from income tax since the
NRFC has no permanent establishment (PE) in the Philippines.
• The RDO having jurisdiction on the residence of the
The contract is for the performance of services rather than for
deceased landowners shall require the heir/successorthe supply of know-how or existing information; hence, the
in-interest to submit the prescribed documents1 and any
service fees are considered business profits rather than royalties.
other additional documents necessary to determine the
Is
la
Li
pa
As for the guarantee fees which do not arise from the primary
business
activities of the NRFC, these are covered by Article 22
• The RDO shall provide to the LBP and to the heirs a
of
the
tax
treaty. This provides that items of income of a resident
computation of the gross estate and the estate tax liability
of
Japan
from
wherever sources and not dealt with in any
within five working days from receipt of the prescribed
specific
article
of the treaty are taxable only in Japan. However,
documents, or within three working days from receipt of
these
may
be
taxed
in the Philippines if effectively connected
additional documents. No penalties and surcharges shall
to
a
PE,
in
which
case,
the provision on business profits would
be imposed except for non-CARP covered properties.
apply. Accordingly, since the NRFC had no PE in the Philippines,
the guarantee fees are exempt from income tax.
• The heir/successor-in-interest shall file the estate tax
return (BIR Form No. 1801) within three days from receipt (BIR Ruling No. ITAD 375-15 dated 29 December 2015)
of the computation sheet, and pay the estate tax through
the LBP. The bank shall then deduct the amount of tax
from the compensation payable to the heir.
• Within two working days upon receipt of the proof of
tax remittance from the bank, the RDO shall issue the
Certificate Authorizing Registration to the heir, executor/
administrator, or authorized representative of the estate.
(Revenue Memorandum Circular No. 77-2015 dated 2 November 2015)
1
4
Prescribed under Revenue Memorandum Order No. 15-2003
dated 15 May 2003
Client advisory letter2016
Amended RR on common
carriers
Upon recommendation of the CIR, the DOF further amended RR
No. 16-2005, otherwise known as the Consolidated Value-Added
Tax Regulations, to essentially reflect the VAT exemptions of the
following:
1. Transport of passengers and cargo by international carriers.
The international carriers are not allowed to register for VAT
purposes; and
RO cannot be taxed as ROHQ
2. Sale, importation or lease of vessels and aircrafts for
domestic or international transport operations. The
exemption from VAT on the importation and local
purchase of passenger and/or cargo vessels shall be
subject to the requirements on restriction on vessel
importation and mandatory vessel retirement program
of the Maritime Industry.
The CTA en banc voided the tax assessment against a
representative office. The court explained that under RA
No. 8179 or the Foreign Investment Act of the Philippines,
a Representative Office (RO) does not derive income from
the host country and is fully subsidized by its head office.
Similarly, it is treated as a Regional Headquarters (RHQ)
which also does not derive income in the Philippines and
which acts as supervisory, communications and coordinating
center for its affiliates, subsidiaries, or branches. Both RHQ
and RO are not subject to income tax under the Tax Code2.
(Revenue Regulation No. 15-2015 dated 28 December 2015)
w
C
Processing of ATRIGs is now
centralized
The CTA denied the attempt of the BIR to treat the RO as a
Regional Operating Headquarters (ROHQ). According to the
CTA, an ROHQ is allowed to derive income in the Philippines
by performing qualifying services such as marketing control
and sales promotion, among others, to affiliates, subsidiaries,
or branches of its head office in the Asia-Pacific Region
(including the Philippines) and other foreign markets.
/P
To ensure that importation of excisable products is fully
accounted for, the CIR implemented the centralized policy
of processing and issuance of Authority to Release Imported
Goods (ATRIGs) subject to the following rules:
o.
1. All applications for ATRIGs for excisable products shall
be processed and issued centrally at the Excise Large
Taxpayers Regulatory Division of the BIR National Office.
&
C
In this case, the CTA found that the taxpayer does not have
its own Articles of Incorporation. This strengthens the
2. ATRIGs issued by the Regional Offices and Excise Tax
Areas, upon the effectivity of this Order, shall be deemed contention that it is a mere RO of a foreign company as stated
in its SEC registration. The phrase “promotion of the parent
null and void.
company’s products” stated in the RO’s SEC Registration
3. All ATRIGs manually processed and issued by the Regional does not make it a sales office nor one engaged in marketing
control and sales promotion, as well as research and
Offices for VAT-exempt transactions shall be stamped
development services, and product services – all qualifying
with the phrase “NOT VALID FOR ALL EXCISABLE
services a representative office cannot legally render.
PRODUCTS”.
Considering this, it cannot be taxed as an ROHQ.
na
This RMO is effective immediately.
(Revenue Memorandum Order No. 1-2016 dated 6 January 2016)
Glossary
pa
ATRIG - Authority to Release Imported Goods
BIR - Bureau of Internal Revenue
CARP - Comprehensive Agrarian Reform Program
CIR - Commissioner of Internal Revenue
COMELEC - Commission on Elections
CTA - Court of Tax Appeals
DAR - Department of Agrarian Reform
DOF - Department of Finance
DOJ - Department of Justice
LBP - Land Bank of the Philippines
NRFC - Nonresident Foreign Corporation
PE - Permanent Establishment
PEZA - Philippine Economic Zone Authority
RA - Republic Act
RDO - Revenue District Office
RHQ - Regional Headquarters
RMO - Revenue Memorandum Order
RO - Representative Office
ROHQ - Regional Operating Headquarter
RR - Revenue Regulations
SEC - Securities and Exchange Commission
VAT - Value-Added Tax
Accordingly, the assessment was cancelled on the premise
that the company is an RO not subject to income tax and VAT.
(CTA EB No. 1180 dated 4 January 2016)
Sales to COMELEC are
effectively VAT zero-rated
la
Li
Under Section 12 of RA No. 9369, the COMELEC is
authorized to procure necessary equipment “free from taxes
and import duties” for the implementation of the automated
election system program. This, according to the CTA, makes
the sales to COMELEC subject to zero percent VAT.
Is
This finds basis in the Tax Code3, which essentially provides
that services rendered to persons or entities who are
exempted under special laws are effectively subject to zero
percent VAT.
(CTA Case No. 8643 dated 4 January 2016)
2
3
Section 28(A)(6)(7) of the Tax Code
Section 108(B)(3) of the Tax Code
2016
Client advisory letter 5
Corporate officers are
personally liable in a willful
nonpayment of tax
Latest on tax asse
C
In determining whether the tax liability of a corporation
should be extended to its responsible officers, the act of
non-payment of tax must be “willful”. To be deemed a
criminal act under Section 255 of the Tax Code, there must
be a voluntary and intentional violation of a known legal
duty. Willfulness implies the existence of “knowledge” and
“voluntariness”, i.e., the taxpayer intentionally refused to
pay the tax liability despite being aware of his obligation to
pay.
la
Li
pa
na
w
/P
o.
&
(CTA Criminal Case No. O-087 dated 4 January 2016)
Failure to strictly comply with the requirements in the
execution of a waiver under RMO No. 20-90 and RDAO
No. 05-01 renders the waiver to be defective. However,
an exception to the rule arises when the parties, i.e. both
the taxpayer and the BIR, are in pari delicto or “in equal
default”. In which case, the court may interfere and grant
relief at the suit of one of them, where public policy
requires its intervention, even though the result may be
that the benefit will be derived by one party who is in
equal guilt with the other.
C
In addition, willfulness must be proven beyond reasonable
doubt. It is not upon the accused to prove his/her innocence.
Rather, it is the obligation of the prosecution to show, with
moral certainty and through its own evidence, that the
accused is guilty of the criminal charges. For failure of the
prosecutor to present proof of “willfulness”, the liability of
the corporation cannot extend to its corporate officers.
“Mutually” defective
waiver was held valid
Glossary
Is
BIR - Bureau of Internal Revenue
CIR - Commissioner of Internal Revenue
CTA - Court of Tax Appeals
FDDA - Final Decision on Disputed Assessment
RDAO - Revenue Delegation Authority Order
RDO - Revenue District Offices
RMC - Revenue Memorandum Circular
RMO - Revenue Memorandum Order
VAT - Value-Added Tax
Because both the BIR and the corporate-taxpayer were in
default, the court upheld the validity of the waivers since
the taxpayer allowed the BIR to rely on them without
raising any objection against their validity until the BIR
assessed taxes and penalties against the company. Hence,
the taxpayer should not be allowed to question the
defects in its own waivers and benefit from the flaws to
evade responsibility in paying taxes.
(G.R. No. 212825 dated 7 December 2015)
RDO’s demand letter
clearly stating final
decision is an FDDA
The CTA denied the taxpayer’s appeal for having been
filed beyond 30 days from receipt of the demand letter
of the RDO. The letter of the RDO dated 20 May 2010,
while in a form of a demand letter, already satisfied the
requirements to be considered a final decision since it
is a denial of the protested assessment. The said letter
provided the total amount of taxes and penalties due, as
well as a demand for the taxpayer to settle them. Thus,
for all intents and purposes, the demand letter from
the RDO should be considered the final decision on the
assessment from which the taxpayer should appeal within
30 days from its receipt.
(CTA Case No. 8200 dated 8 December 2015)
6
Client advisory letter2016
C
essments/ refund procedures
The counting of 120-day
period in a VAT refund
clarified
w
/P
o.
(G.R. No. 207112 dated 8 November 2015)
C
• For tax credit or refund claims filed prior to 11 June 2014,
the 120-day period given to the CIR should be counted from
the submission by the taxpayer of his complete documents.
Generally, it should be made within 30 days from filing of
the application.
Under the current policy, the prerogative to determine the
reckoning point of the 120-day period has been withdrawn
from the taxpayer. RMC No. 54-2014 now requires the
taxpayer to complete his supporting documents at the time
he files his claim and to attest that no additional documents
will be submitted to prove his claim. Thus, the taxpayer is
barred from submitting additional documents after filing his
administrative claim.
la
Li
pa
na
&
The Supreme Court clarified the reckoning point of the 120day period granted to the CIR to act upon an administrative
claim for refund involving unutilized input VAT. The rule
is that from the date an administrative claim for excess
unutilized VAT is filed, a taxpayer has 30 days4 within
which to submit the documentary requirements sufficient
to support his claim, unless given further extension by the
CIR. Upon filing by the taxpayer of his complete documents
to support his application, the CIR has 120 days within
which to decide the claim for tax credit or refund. Should
the taxpayer, on the date of his filing, manifest that he
no longer wishes to submit any additional documents to
complete his administrative claim, the 120-day period given
to the CIR begins to run from the date of filing. In all cases,
whatever documents a taxpayer intends to file to support his
claim must be completed within the two-year period under
Section 112(A) of the Tax Code. The taxpayer may appeal
within 30 days to the CTA from the denial of the claim or
from the inaction of the CIR upon expiration of the 120-day
period.
Is
For purposes of determining when the supporting
documents have been completed, it is the taxpayer who will
ultimately determine when complete documents have been
submitted. Should the taxpayer manifest that he has no
additional documents to submit in his administrative claim,
the 120-day period given to the CIR shall commence to run.
However, the summarized rule should only be made
applicable to those claims for tax credit or refund filed prior
to 11 June 2014 or before the issuance of RMC No. 54-2014.
4
Pursuant to RMC No. 49-2003
2016
Client advisory letter 7
C
Latest on regulatory landscape
Rules on related party
transactions of banks
/P
C
o.
In November last year, the BSP, through the Monetary
Board, issued guidelines on related party transactions
(RPTs) of banks. Generally, RPTs of banks and their nonbank financial subsidiaries and affiliates are allowed,
provided that these are done on an arm’s length basis.
However, the BSP expects banks and their affiliates to
exercise appropriate oversight and implement effective
control systems for managing exposures and preventing
abuses.
Under Section X146 of the MORB, the BSP provides the
duties and responsibilities of the board of directors, the
RPT Committee (to be created if the bank is part of a
conglomerate or if mandated by the BSP), and the senior
management. It also provides the rules on disclosure and
regulatory reporting of banks. Except for the reportorial
requirement on conglomerate structure, the requirements
and governance principles for RPT shall also apply to
branches of foreign banks.
&
Under the Treasury Single Account (TSA), the mode
of compensation of AABs for services in the collection
of national taxes had shifted from collection float to a
transaction fee-based scheme. Under the new scheme, AABs
have to remit tax collections to the TSA on the day following
the date of collection and shall be compensated based on
the number of electronic and over-the-counter transactions
processed.
w
Rules under the new
compensation scheme for
AABs
na
The RMO further prescribes the guidelines, procedures and
reporting requirements to facilitate the BIR collections.
It also identifies the concerned offices and BIR personnel
responsible in validating the number of transactions
reported by AABs each month and those tasked to
implement the provisions of the RMO.
Li
Glossary
pa
(Revenue Memorandum Order No. 25-2015 dated 22 July 2015)
Is
la
AAB - Authorized Agent Banks
AHMOPI - Association of Health Maintenance
Organizations of the Philippines
BIR - Bureau of Internal Revenue
BSFI - BSP-Supervised Financial Institution
BSP - Bangko Sentral ng Pilipinas
DOH - Department of Health
FI - Financial Institution
HMO - Health Maintenance Organization
IC - Insurance Commission
IRR - Implementing Rules and Regulations
MORB - Manual of Regulations for Banks
RMO - Revenue Memorandum Order
RPT - Related-Party Transaction
TSA - Treasury Single Account
(BSP Circular No. 895 dated 14 December 2015)
Mediation of complaints
filed against HMOs
In view of the transfer of regulatory functions over HMOs
from the DOH to the IC5, the latter is tasked to formulate the
IRR for the effective implementation of the turnover. During
the transition period, all complaints filed against HMOs will
be endorsed by the IC to the grievance machinery of the
Association of Health Maintenance Organizations of the
Philippines, Inc. (AHMOPI) for mediation. The AHMOPI is
enjoined to conclude all mediation proceedings within 30
days from receipt of the endorsements. Should the parties
fail to reach an amicable settlement, the complaint shall be
forwarded by the AHMOPI to the IC for appropriate action.
(Insurance Commission Circular Letter No. 2015-59 dated 22 December
2015)
5
8
Client advisory letter2016
Pursuant to Executive Order No. 192, Series of 2015
Regulations on clean note
and coin policy amended
The Licensing Division of the IC’s Legal Services Group is
now accepting applications for renewal of HMO Clearance
to Operate/Licenses that expired last 31 December 2015.
Regular applications for renewal may be submitted until
the last working day of January 2016. Late applications will
be accepted starting on the first working day of February
2016 subject to appropriate penalties. The requirements for
renewal are the following:
As authorized agents of the BSP, banks are enjoined to
accept unfit Philippine currency notes and coins from
the depositing public. Non-mutilated coins, regardless of
domination, shall also be accepted without handling fees or
charges.
C
Renewal of HMO clearances
and licenses
• A statement of the HMO’s financial reserves in liquid
securities duly certified by an external auditor;
a. Provincial branches may make direct deposits of
currency notes.
• Submission of auditor or actuary-certified (1) list of
officers/board of directors/stockholders, (2) audited
financial reports which include the balance date on
active members and claims experience, (3) operational
reports, and (4) any amendment/change in the
documents submitted to the DOH on initial application;
and
b. An arrangement regarding the shipment of unfit and
dirty notes shall be made with their respective head
offices in areas with no BSP regional offices/branches.
/P
o.
C
c. Expenses shall be solely for the account of the bank
concerned.
d. Coins for deposit should be packed/bagged.
&
• Payment of renewal fee.
w
• Copy of the 2015 Clearance to Operate/License issued by
the DOH;
To expedite withdrawal from circulation of unfit Philippine
currency notes, all banks and their branches should observe
the following guidelines and procedures when making cash
deposits with the Cash Department or any of the regional
offices/branches of the BSP.
Banks are required to incorporate implementation measures
to ensure compliance with the requirements.
Renewed licenses shall be valid until 31 December 2016.
(BSP Circular No. 897 dated 6 January 2016)
na
(Insurance Commission Circular Letter No. 2015-60 dated 23 December
2015)
pa
Quarterly reportorial
requirements for pre-need
companies
Operational risk
management for BSPsupervised FIs
BSFIs are required to adopt an operational risk management
framework that is effective and efficient in identifying,
assessing, monitoring, and controlling or mitigating
operational risk. The term ‘operational risks’ refers to the
risks of loss due to failed processes, people and systems.
Li
To regulate its operations and management, every pre-need
company is now mandated to file its quarterly financial
statements starting 2016. Due dates for submission are
on the 30th of the following month after the end of each
quarter.
To ensure that the framework is commensurate with the
complexity of the operation, BSFIs must conduct: (1)
effective identification and assessment of risk; (2) regular
risk monitoring and reporting; and (3) risk control and
mitigation.
Is
la
The financial statements to be filed must be: (1) complete
with a balance sheet, income statement and cash flows
with comparative figures from the immediately preceding
audited financial statements duly signed by the President
and Finance Officer of the company; (2) prepared in
accordance with the Pre-need Uniform Chart of Accounts;
and (3) submitted together with the Consolidated Trust
Fund Statements.
Moreover, BSFIs shall notify the appropriate department
of the Supervision and Examination Sector of the BSP,
within 10 calendar days from the date of discovery of any
operational risk event. The BSP may deploy enforcement
actions to promote adherence with the requirements under
Late filers shall be penalized with a PHP5,000 basic fine plus
PHP500 for each day of delay.
(Insurance Commission Circular Letter No. 2015-61 dated 23 December
2015)
2016
Client advisory letter 9
this Circular and bring about timely corrective actions6.
BSFIs must comply with the foregoing standards on
operational risk management within a period of two years
from the effectivity date of the Circular.
The CARS Program
approved
(BSP Circular No. 900 series of 2016 dated 18 December 2015)
President Benigno Aquino III approved the Comprehensive
Automotive Resurgence Strategy Program (CARS Program)
under EO No. 182 as the country’s new automotive industry
plan which aims to:
Outsourcing of certain bank
activities
C
• groom the Philippines as a regional production hub;
A bank may outsource to third parties or to related
companies in the group certain services or activities
provided that it has in place appropriate processes,
procedures and information system that can address
operational risks. The bank’s board of directors and senior
management shall remain responsible for ensuring that
activities are conducted appropriately and in compliance
with applicable laws, rules and regulations. However,
outsourcing of inherent banking functions are prohibited.
w
/P
The criteria for enrollment of a Model shall be based on, but
not limited to, the following:
o.
• Track record and competitiveness;
• New investments in Body Shell Assembly and Large
Plastic Parts Assemblies;
• Planned volume not lower than 200,000 vehicles over a
maximum of six years model life;
na
&
To evaluate key risk areas, banks shall: (1) perform risk
assessment of a business activity, (2) establish policies and
criteria to select the “best” service provider, (3) establish,
maintain and regularly test business continuity and
contingency plans, (4) ensure that it has adequate resources
and (5) ensure that designated personnel are competent to
oversee and manage the service providers. The same rule
applies to intra-group and offshore outsourcing.
• encourage large-scale production in vehicle assembly.
C
Only those banks with CAMELS composite rating of at least
three, and a Management rating of not lower than three
shall be allowed to outsource certain activities without
prior BSP approval; otherwise, the bank must secure prior
approval from the Supervision and Examination Sector of
the BSP.
• provide time-bound and performance-based fiscal
incentives to support new investments in fixed capital
expenditures; and
pa
The BSP may deploy enforcement actions to promote
adherence with the requirements set forth in this Circular
and bring about timely corrective actions.
BSP Circular No. 875 dated 15 April 2015
Is
la
6
Li
(BSP Circular No. 899 series of 2016 dated 18 December 2015)
• Economic impact of the investment plan for the Model;
• Impact on overall competitive environment and longterm industry development; and
• Compliance with safety, fuel efficiency and emission level
standards.
The DTI-BOI and the Inter-agency Committee are the
lead agencies in administering the Program. The BOI is
now accepting applications for participation to the said
program from existing and new assemblers who intend to
manufacture any of the three Models of four-wheeled motor
vehicles. Applicants may enroll only one Model during the
application period.
The application shall include the following: (1) duly
notarized application form, (2) certified true copies of
all appropriate government registration certificates, (3)
business plan including all required attachments, (4) joint
letter of intent to participate under the CARS Program
duly authenticated by the nearest Philippine Consulate
Office, and (5) payment of PHP100,000 non-refundable
application fee.
Applicants may secure the prescribed application forms
from the BOI CARS Project Management Office and file the
application together with all the requirements not later than
15 March 2016, after which the period for acceptance shall
be closed.
(Executive Order No. 182 dated 29 May 2015 and DTI-BOI Memorandum
Circular No. 1 Series of 2016 dated 15 January 2016)
10
Client advisory letter2016
A law to speed up labor
cases
Regulation Code (SRC); and (iii) Those whose AFS
are being audited by the Commission on Audit (COA),
provided that an affidavit is attached attesting to the
fact that the company timely provided their financial
statements and the audit of COA has just been
concluded, along with a letter from COA confirming the
information.
To strengthen the legal staff of the National Labor Relations
Commission (NLRC), Articles 220 and 221 of the Labor
Code had been amended to increase the number of
Commission Attorneys assigned to each Commissioner from
the existing three to a maximum of five.
4. Late filings shall be accepted starting 23 May 2016 and
shall be subject to penalties computed from the date of
the last day of the filing schedule.
C
The amendment removed the prohibition on assigning
Labor Arbiters to the functions of the Commission Attorney
or to the office of any Commissioner. It also removed the
requirement that Labor Arbiters be appointed to a specific
arbitration branch and the preference that they be residents
from a particular region. The measure of increasing NLRC
lawyers aims to reduce the volume of pending cases and the
time for resolving appealed cases.
/P
w
5. The AFS, other than the consolidated financial
statements, should bear the stamp “received” by the
BIR or its authorized banks, unless the BIR allows an
alternative proof of submission for its authorized banks.
6. The basic components prescribed under SRC Rule 68
should be submitted by filers. Non-compliance shall be
considered sufficient ground for imposition of penalties
by the SEC.
The following are the guidelines in the filing of annual
reports for 2016:
7. All corporations may directly file their reports in the
SEC Head Office and/or all satellite offices. Filers may
choose to avail of courier filing options and select
any courier of their choice. The procedures for filing
through the SEC Express Nationwide Submission and
any other courier/regular mail are provided in the
Circular.
C
Filing of AFS and GIS still on
number coding
o.
(RA No. 10741 dated 27 July 2015)
Last digit of SEC
registration/license
number
pa
Filing dates
na
&
1. All corporations, including branch offices,
representative offices, RHQs, and ROHQs of foreign
corporations, shall file their Audited Financial
Statements (AFS) based on the last numerical digit
of their SEC registration or license number under the
following schedule:
1 and 2
25-29 April
3 and 4
2-6 May
5 and 6
10-13 May
7 and 8
16-20 May
9 and 0
(SEC Memorandum Circular No. 1 s. 2016 dated 11 January 2016)
Glossary
Li
18-22 April
8. All corporations should file their General Information
Sheet within 30 calendar days from the date of annual
stockholders’ or members’ meeting per By-Laws
(for stock or non-stock corporations) or from the
anniversary date of the issuance of the SEC License (for
foreign corporations).
AFS - Audited Financial Statements
BOI - Board of Investments
BIR - Bureau of Internal Revenue
BSFI - BSP-Supervised Financial Institution
BSP - Bangko Sentral ng Pilipinas
CARS - Comprehensive Automotive Resurgence
Strategy Program
COA - Commission on Audit
DTI - Department of Trade and Industry
EO - Executive Order
GIS - General Information Sheet
NLRC - National Labor Relations Commission
RHQ - Regional Headquarters
ROHQ - Regional Operating Headquarters
SEC - Securities and Exchange Commission
SRC - Securities Regulation Code
Is
la
2. All SEC satellite offices and extension offices in Cebu,
Iloilo, Baguio, and Davao shall also observe the above
coding schedule for 2016. Any corporation may file on
or before its respective filing dates.
3. The coding schedule does not apply to the following
corporations: (i) Those whose fiscal year (FY) ends on
a date other than 31 December 2015. Instead, these
entities shall file their AFS within 120 calendar days
from the end of their FY; (ii) Those whose securities are
listed on the Philippine Stock Exchange. These entities
shall continue to file their AFS as attachment to their
Annual Reports, in accordance with the Securities
2016
Client advisory letter 11
Teleconferencing for
stockholders’ meetings not
allowed
Meet us
Is
la
Li
pa
w
/P
o.
na
&
(SEC Opinion No. 16-01 dated 19 January 2016)
Alex Cabrera exchanges
views on real estate issues
Philippine launch of Emerging
Trends in Real Estate® Asia Pacific
2016 report
C
However for board of directors (BOD) or trustees’ meeting,
teleconferencing is allowed since Section 47 of the
Corporation Code permits the “place” of the directors’
meeting to be stipulated in the corporations’ by-laws, which
may be held anywhere in or outside the Philippines. Thus,
the SEC issued Memorandum Circular No. 15, s. 2001,
providing the guidelines for the conduct of BOD meetings
through teleconferencing.
C
Appearance and voting in a stockholders’ meeting cannot
be conducted via teleconferencing or videoconferencing.
Section 51 of the Corporation Code requires that the
stockholders are in the same place during the meeting. This
is in contrast to teleconferencing where the participants
are in different places, although their presence is “virtual”
or through electronic medium. In an SEC Opinion dated
4 August 1998, the Commission maintained that in cases
where the law requires a duly called meeting to carry out a
corporate transaction, ‘constructive’ or ‘electronic presence’
is not a substitute for ‘actual presence’.
Glossary
BOD - Board of Directors
SEC - Securities and Exchange Commission
12
Client advisory letter2016
The response panel, L-R: Alex Cabrera, Edgar “Injap” Sia (Co-Chairman & CEO,
DoubleDragon Properties), Bobby Dy (President, Ayala Land), Dennis Montecillo
(EVP, Bank of the Philippine Islands), Eric Manuel (VP, Daiichi Properties), Ariel
Shtarkman (Senior Content Advisor, ULI Asia Pacific), and Rick Santos (Chairman &
Founder, CBRE Philippines).
PwC Philippines Chairman and Senior Partner Alex
Cabrera shared his views on real estate issues as a panelist
during the Philippine launch of Emerging Trends in Real
Estate® Asia Pacific 2016 last 14 January 2016 at the Ascott
Bonifacio Global City, Taguig City.
Emerging Trends, jointly published by the Urban Land
Institute (ULI) and PwC, has been released at a series of
events across Asia over the last several weeks. It provides
an outlook on Asia Pacific real estate investment and
development trends, real estate finance and capital markets,
and trends by property sector and metropolitan area. Now
on its tenth edition, the report is based on the opinions of
343 internationally renowned real estate professionals,
including investors, developers, property company
representatives, lenders, brokers and consultants.
Ariel Shtarkman, Senior Content Advisor of ULI Asia
Pacific, presented the report highlights. The response panel,
moderated by CBRE Philippines Chairman & Founder Rick
Santos, then discussed different issues and factors affecting
C
w
/P
o.
L-R: Alex with Berck Cheng of Capitol Steel, David Leechiu of Leechiu
Property Consultants, and Edgar “Injap” Sia of DoubleDragon Properties.
ULI Philippines Chairman Charlie Rufino (third from right) presents the tokens of
appreciation to the panelists.
PwC Philippines has been an event partner since ULI
Philippines organised the annual report launch in the
country a few years ago. To complement Emerging Trends,
we gave all participants copies of “Building Better Cities”
report that PwC produced for the APEC 2015 CEO Summit.
C
the industry. Aside from Ariel, his co-panelists were:
&
• Edgar “Injap” Sia (Co-Chairman and CEO, DoubleDragon
Properties)
• Bobby Dy (President, Ayala Land)
• Eric Manuel (Vice President, Daiichi Properties)
• Dennis Montecillo (EVP, Bank of the Philippine Islands).
You may download the following report here:
Is
la
Li
pa
na
Some of Alex’s opinions during the panel discussion:
• When asked what his views were on the upcoming
presidential elections, Alex cited two positive things
that the next government can do to welcome foreign
investors: foster trust in public-private partnerships,
and remove the restrictive clauses in the Constitution
on foreign ownership of property, particularly for
commercial purposes.
• The report ranks 22 cities within Asia Pacific across
different categories, and he agrees that rankings affect
perception. For the Philippine cities in the list — Manila
and Cebu — to become global cities, he believes that the
next government must maintain transparency.
• Alex sees that business process outsourcing (BPO)
companies will further proliferate in the Philippines, and
their locations outside of Metro Manila will be helped
by infrastructure and railway systems that will soon be
constructed.
• Rick asked each panelist on the greatest opportunity
and greatest threat in the next six years (during the
next administration). For the greatest opportunity,
Alex cites the indirect benefit from the common ASEAN
market, in which the Philippines will be under pressure
to change investment rules and policy to be competitive.
On the flip side, he sees natural disasters as a great
threat, noting that Manila and Cebu are not only prone
to natural disasters and but are also among the least
resistant in so far as structures and infrastructure are
concerned.
Assurance & Markets Director Allan Cao, Tax Director
Brando Cabalsi, Business Development Manager Maila
Villadelgado, Corporate Responsibility Manager Edwin
Padillo, and Markets Senior Manager Rocky Saldajeno
supported Alex on this speaking engagement.
Emerging Trends in Real
Estate® Asia Pacific
2016
http://goo.gl/kAtJPA
PwC Building Better
Cities: Competitive,
sustainable and livable
metropolises in APEC
http://goo.gl/fFJIvc
2016
Client advisory letter 13
PwC holds tax updates
seminar for accountancy
professors
Talk to us
PwC conducted a tax update seminar entitled
“Stepping up to the challenges of 2016” at the
University of Santo Tomas Alfredo M. Velayo (USTAMV) Multipurpose Hall last 14 December 2015 for
accountancy professors.
C
For further discussion on the contents of this issue of
the Client Advisory Letter, please contact any of our
partners.
/P
For tax and related regulatory matters
Malou P. Lim
Tax Managing Partner
T: +63 (2) 459 2016
[email protected]
C
o.
Alexander B. Cabrera
Chairman & Senior Partner,
concurrent Tax Partner
T: +63 (2) 459 2002
[email protected]
na
&
UST-AMV College of Accountancy Dean, Dr. Patricia
Empleo, opened the program and introduced our
Chairman and Senior Partner Alex Cabrera as the
first speaker. Alex talked about Base Erosion and
Profit Shifting (BEPS). Tax Director Brando Cabalsi
followed with a discussion on recent jurisprudence
and BIR issuances affecting corporate entities. Tax
Executive Director Gigie Longa completed the course
with a discussion on BIR issuances and jurisprudence
affecting individual taxpayers.
w
Hosted by the UST-AMV College of Accountancy,
the event gathered 52 professors from De La Salle
University – Dasmariñas, De La Salle Lipa, Far Eastern
University, National University, St. Scholastica’s College
– Manila, San Beda College – Alabang, Technological
Institute of the Philippines - Manila, University of the
East – Manila & Caloocan campuses, University of
the Philippines – Diliman, and UST. All received CPE
credits.
pa
The seminar was made possible by Tax and HC Partner
Roselle Yu Caraig, Assurance and HC Partner Lois
M. Gregorio-Abad, HC Director Pam Gregorio,
L&D Senior Manager Ron Melendres, HC Officers
Jing Saliendra and Giane Aquino, HC Associates
Art Buena and Kench Milante, L&D Administrative
Assistant Jonadine Dy, and Tax Consultant Jan
Margaret Francisco.
Fedna B. Parallag
Tax Partner
T: +63 (2) 459 3109
fedna.parallag@
ph.pwc.com
Lawrence C. Biscocho
Tax Partner
T: +63 (2) 459 2007
lawrence.biscocho@
ph.pwc.com
Li
Roselle Yu Caraig
Tax Partner
T: +63 (2) 459 2023
[email protected]
Carlos T. Carado II
Tax Partner
T: +63 (2) 459 2020
carlos.carado@
ph.pwc.com
Harold S. Ocampo
Tax Principal
T: +63 (2) 459 2029
harold.s.ocampo@
ph.pwc.com
la
For accounting matters
Is
John-John Patrick
V. Lim
Assurance Partner
T: +63 (2) 459 3023
[email protected]
Ma. Lois M.
Gregorio-Abad
Assurance Partner
T: +63 (2) 459 3023
ma.lois.m.gregorio@
ph.pwc.com
Gina S. Detera
Assurance Partner
T: +63 (2) 459 3063
gina.s.detera@
ph.pwc.com
Request for copies of text
You may ask for the full text of the Client Advisory Letter by writing
our Tax Department, Isla Lipana & Co., 29th Floor, Philamlife Tower,
8767 Paseo de Roxas, 1226 Makati City, Philippines. T: +63 (2) 845
2728. F: +63 (2) 845 2806. Email [email protected].
2015
Client advisory letter 14
C
w
/P
o.
C
&
na
pa
Li
www.pwc.com/ph
la
© 2016 Isla Lipana & Co. All rights reserved.
Is
At PwC, our purpose is to build trust in society and solve important problems. We’re a
network of firms in 157 countries with more than 208,000 people who are committed to
delivering quality in assurance, advisory and tax services. Find out more and tell us what
matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a
separate legal entity. Please see www.pwc.com/structure for further details.
Disclaimer
The contents of this advisory letter are summaries, in general terms, of selected issuances
from various government agencies. They do not necessarily reflect the official position of
Isla Lipana & Co. They are intended for guidance only and as such should not be regarded
as a substitute for professional advice.