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BIR Issuances

Local Suppliers of Registered Export Enterprises No Longer Required to Apply for VAT Zero-Rating

Revenue Regulations No. 3-2023
Issued on April 20, 2023

This amends certain provisions of Revenue Regulations (RR) No. 16-2005, as amended by RR No. 21-2021.

The items below shall not be considered as “directly and exclusively used” in the registered project or activity of a registered export enterprise (REE):

1. Janitorial services
2. Security services
3. Financial services
4. Consultancy services
5. Marketing and Promotion; and
6. Services rendered for administrative operations such as Human Resources (HR), legal and accounting

The above notwithstanding, the REE may still prove and submit supporting evidence to the Investment Promotion Agency (IPA) that the above services are indeed directly and exclusively used in its registered project or activity. In all instances, in issuing the VAT zero-rating certification, the concerned IPA shall be guided by the rule that local purchases of goods/services are directly attributable to the registered project or activity if without said goods/services the registered project or activity cannot be carried out. These are costs that are indispensable to the project or activity, i.e. without which the project or activity cannot proceed, and these include expenses that are necessary or required depending on the nature of the registered project or activity of the export enterprise.

If the purchased goods or services are used in both the registered project or activity and administrative operations, the REE shall adopt a method to best allocate the same. If a proper allocation could not be determined, the purchase of goods or services shall be subject to 12% VAT.

Health Maintenance Organization (HMO) plans acquired by REEs for employees who are directly and exclusively involved in the operations of the registered project or activity and forming part of their compensation package shall be considered as “directly and exclusively used” in the registered project or activity of a REE subject to the conditions provided under existing laws and regulations.

The VAT zero-rating shall be availed of on the basis of the VAT-zero rating certification issued by the concerned IPA without prejudice to the conduct of post audit investigation/verification by the BIR.

Upon the effectivity of these regulations, local suppliers of goods or services of REE shall no longer be required to apply for approval of VAT zero-rating with the BIR. All applications with accompanying VAT-zero rating certification issued by the concerned IPA which have been received but have not yet been acted upon by the BIR upon the effectivity of these regulations shall be accorded VAT-zero rating treatment from the date of filing of such application subject to the conduct of post audit by the BIR.

Constructive Affixture of Documentary Stamp for Certificates issued by Government Agencies or Instrumentalities

Revenue Regulations No. 2-2023
Issued on April 13, 2023

Constructive affixture of documentary stamp means attachment of the original copy of the government official receipt issued by government agencies or instrumentalities evidencing payment of DST on the taxable certificate. This constructive affixture will be in lieu of loose documentary stamps.

For every issuance of a certificate, government agencies or instrumentalities will collect from the applicants the corresponding amount of DST, which will then be indicated as an item in the government official receipt. The same receipt will then be attached to the taxable certificate as proof of payment of the tax.

In addition to the affixture of the government official receipt, the government agency or instrumentality shall also stamp or print in a clear and readable manner on the face of the taxable certificate the phrase “DOCUMENTARY STAMP TAX PAID”, including the serial number, and the date of the government official receipt.

The government agencies or instrumentalities will be constituted as agents of the CIR for the collection and remittance of such DST to the BIR.

Filing of Appeal against Final Decision on Disputed Assessments (FDDA)

Revenue Memorandum Circular No. 43-2023
Issued on April 14, 2023

In case of filing an appeal against the FDDA, the taxpayer shall furnish a copy of the said appeal to the Chief of the Assessment Division for regional cases, or the concerned Head Revenue Executive Assistant, in the case of taxpayers under the jurisdiction of the Large Taxpayers Service or investigated by the National Investigation Division under the Enforcement and Advocacy Service, within five (5) days from date of filing with the Office of the Commissioner of Internal Revenue or the Court of Tax Appeals (CTA).

Updates to the List of VAT-Exempt Products under the TRAIN Law and CREATE Act

Revenue Memorandum Circular No. 42-2023
Issued on April 4, 2023

This RMC updates the list of VAT exempt medicines by adding certain medicines for cancer, diabetes, kidney disease, mental illness, and tuberculosis and providing corrections for medicines for high cholesterol and hypertension in the published List of VAT-Exempt Medicines under R.A. No.11534 or the CREATE Act. The Complete List may be accessed through this link.

SEC Issuances

Deadline to file SEC Amnesty Application, extended

SEC Memorandum Circular No. 6, Series of 2023
Dated April 25, 2023

The deadline to file amnesty applications under Memorandum Circular No. 2, s. 2023 has been extended until 30 June 2023.

(1) Eligible corporations shall comply with the complete and correct set of requirements indicated in Section 3 of MC No. 2, s. 2023, within ninety (90) days from the date of payment; and

(2) The extension shall automatically be applied without the need for a request from covered corporations.

Non-compliance with Item No. 1 shall be construed as a waiver to proceed with the amnesty process, and any payment made shall be forfeited in favor of the Commission. Thereafter, an updated scale of fines and penalties for the covered reportorial requirements shall be implemented effective 01 July 2023.

IRR Financial Products and Services Consumer Protection Act of 2022

Memorandum Circular No. 5, Series of 2023
Dated April 25, 2023

The SEC has approved the implementing rules and regulations of Republic Act No. 11765, otherwise known as The Financial Products and Services Consumer Protection Act of 2022 (SEC FCPA), which shall take effect fifteen (15) days after publication in the Official Gazette or in at least two (2) national newspapers of general circulation.

The SEC FCPA states that “No person shall engage in the business of, or act as an investment adviser in the Philippines, and/or represent or identify himself or herself as an investment adviser or make use of the words “investment adviser” or “financial adviser” or variations thereof, descriptive of a position or title, unless registered as such with the Commission.”

The SEC FCPA provides for the duties and responsibilities of Financial Service Providers, which includes:

1. Board and Senior Management Oversight
2. Appropriate Product Design and Delivery
3. Transparency, Disclosure, and Responsible Pricing
4. Fair and Respectful Treatment of Clients
5. Privacy and Protection of Client Data
6. Financial Consumer Protection Assistance Mechanism
7. Information Security Standards

The SEC FCPA likewise provides the rules in relation to bundling of products; training of staff of financial service providers; investment fraud; non-waiver of rights provision on contracts for financial products or services; liability of financial service providers for acts or omissions of authorized agents and/or representatives; and penalties/sanctions/actions for violations of the FCPA.

ASEAN Sustainable and Responsible Fund Standards (SRFS)

Memorandum Circular No. 4, Series of 2023
Dated April 13, 2023

The ASEAN Capital Market Forum (ACMF), composed of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Singapore, Thailand, Vietnam, and the Philippines, initiated the Framework for Cross-Border Offering of ASEAN Collective Investment Schemes (ASEAN CIS Framework), which allows fund managers operating in a member jurisdiction to offer CIS, such as unit trust funds or mutual funds, constituted and authorized in that jurisdiction, in other member jurisdictions under a streamlined authorization process.

In line with the growing importance of sustainable finance in ASEAN and the actionable recommendations contained in the Roadmap for ASEAN Sustainable Capital Markets geared towards driving the ASEAN’s sustainable agenda forward, the ACMF also developed the ASEAN SRFS to provide the minimum disclosure and reporting requirements that can be consistently applied to CIS that seek to qualify under the ASEAN SRFS and to address the need for a comparable, uniform and transparent disclosure of information to mitigate the risk of greenwashing, among others.

The SEC issued this circular in order to formally adopt the ASEAN SRFS and issue rules to assist local investment companies and their fund managers that seek to offer either locally or on a cross-border basis to qualify under the ASEAN SRFS, as well as foreign CIS operators already qualified under the ASEAN SRFS that seek to offer in the Philippines.

The rules provide for the requirements for Investment Companies seeking to qualify under the ASEAN SRFS; requirements for local investment companies qualified under the ASEAN SRFS to make offers under the ASEAN CIS Framework; requirements for Foreign SRFs to be recognized in the Philippines; procedure for recognition of Foreign SRF to be offered locally in the Philippines under the ASEAN CIS Framework; marketing materials and website disclosures; reportorial requirements of a Foreign SRF; reporting and rectification of a breach of Environmental, Social and Governance (ESG) investment threshold or inconsistency with sustainable investment objective; the suspension or revocation of the qualification as an ASEAN SRF/recognition of a Foreign SRF; requalification or re-recognition as an ASEAN SRF; Voluntary withdrawal of qualification as an ASEAN SRF or recognition of a Foreign SRF; and administrative sanctions.

In case of violation by the CIS Operator/Foreign SRF of the rules, the following penalties may be imposed:

The penalties shall be without prejudice to any other actions and sanctions that may be taken or imposed by the SEC under the Investment Company Act, Securities Regulation Code, and their respective IRRs, the Revised Corporation Code, all other laws that may subsequently be implemented by the SEC, and all other rules and regulations that the SEC may issue in the exercise of its mandates.

Guidelines on the Issuance of Sustainability-Linked Bonds under the ASEAN Sustainability-Linked Bond Standards in the Philippines

Memorandum Circular No. 3, Series of 2023
Dated March 30, 2023

The SEC has adopted the ASEAN Green Bond Standards, the ASEAN Social Bond Standards, and the ASEAN Sustainability Bond Standards to attract sustainable investments in the debt security market and address key areas of environmental and social concern.

Sustainability-Linked Bonds are any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability/environmental, social and governance (ESG) objectives.

In relation thereto, the SEC issued the Guidelines on the Issuance of Sustainability-Linked Bonds under the ASEAN Sustainability-Linked Bond Standards (ASEAN SLBS Guidelines) in addition to the applicable requirements under Section 8 and 12 of the Securities Regulation Code, requiring the registration of securities and non-financial disclosures for the sale, offer for sale or distribution of securities within the Philippines.

The ASEAN SLBS Guidelines shall primarily govern the issuance of Sustainability-Linked Bonds where the proceeds are intended to be used for general purposes.

BOC Issuance

Guidelines on the Operation of the Bureau of Customs Customer Assistance and Response Services (BOC-CARES) Unit

Customs Memorandum Order No. 10-2023
Dated April 20, 2023

This order provides for the administrative and operational framework of the BOC-CARES Unit in the handling of concerns and complaints lodged through calls, social media accounts, emails, BOC portal (Customer Care Portal System) or those coursed through other government agencies.

In compliance with existing rules and regulations on working hours, the BOC-CARES shall operate from 8:00 AM to 5:00 PM, Monday-Friday. Should the Commissioner require a skeleton workforce in observance of holidays, the unit shall continue to operate.

The BOC-CARES shall process complaints received from various agency portals, such as, but not limited to, the following:

1. Hotline 8888;
2. Presidential Action Center;
3. Anti-Red Tape Authority;
4. Contact Center ng Bayan

The BOC-CARES shall also attend to concerns received from the following:

1. BOC Portals;
2. BOC-CARES email ([email protected]);
3. BOC Social Media Platforms (official Facebook, Twitter, Instagram, Tiktok, Youtube, and other accounts that may be created)
4. BOC Hotline

FIRB Issuances

Guidelines for the Submission of Reportorial Requirements of Cooperatives Registered with the CDA under the CREATE Act as implemented by DOF-DTI JAO No. 001-2023

FIRB Advisory No. 007-2023
Dated April 24, 2023

All reports covering the taxable year 2022 or prior years shall use the older version of templates/reports prescribed under DOF-DTI JAO No. 1-2016, DOF-CDA-BIR JAO No. 1-2019, and CDA Memorandum Circular No. 2019-06, series of 2019 and shall be submitted on or before the dates indicated below:

All reports covering the taxable year 2023 and onwards shall be submitted using the new version of the templates/reports prescribed under JAO No. 001-2023 and subject to the deadlines indicated therein.

All CDA-registered cooperatives availing of incentives are required to submit to the CDA a complete annual tax incentives and benefits report on or before May 15 of the immediately following year from the statutory deadline for filing tax returns and payment of taxes. The incentives report shall contain a complete and detailed report on tax incentives availed in a taxable year. The benefits report, on the other hand, shall present a clear, complete, and data-driven account of the performance of cooperatives vis-a-vis the purpose for which they are organized and registered.

For purposes of submission of reportorial requirements for the taxable year 2023 and thereafter, the CDA and all registered cooperatives shall already use the prescribed Forms under JAO No. 001-2023.

The deadlines for the submission of the required reports for taxable year 2023 under JAO No. 001-2023 are as follows:

 

All submissions to the FIRB shall be sent to the official email of the FIRB Monitoring and Evaluation Group (MEG), [email protected].

Clarifications on the Supplemental Guidelines on the Registration of Registered Business Enterprises (RBEs) in the Information Technology- Business Process Management (IT-BPM) Sector with the Board of Investments (BOI)

FIRB Advisory No. 006-2023
Dated April 5, 2023

This advisory clarifies the supplemental guidelines on the registration of RBEs in the IT-BPM Sector with the BOI in relation to FIRB Administrative Order (AO) No. 001-2023, as amended.

Assets Covered

Only capital equipment and other assets related to the IT-BPM project or activity registered with the BOI and are to be used to implement work-from-home (WFH) arrangements shall be covered by these regulations.

Coverage of the Tax Exemption Indorsement (TEI) to be secured from the Department of Finance – Revenue Office (DOF-RO)

Based on Section E of FIRB AO No. 001-2023, as amended by FIRB AO 003-2023, only assets intended to be moved out of or currently outside the economic zones and/or freeport zones for WFH arrangements shall be covered by a TEI.

Existing goods will be covered by a blanket TEI per project, covering existing goods that were imported as of 31 January 2023. For new importations starting 1 February 2023, the TEI shall be processed per project per shipment.

In addition, a TEI must be secured for an intangible asset/software which forms part of the imported asset i.e. the cost of such intangible asset/software will be embedded in the purchase price of the tangible/physical asset that will be processed by the Bureau of Customs (BOC).

If a foreign-supplied intangible asset/software will not pass through BOC/any port (e.g. purely internet-based), TEI will no longer be required. TEI only covers goods that are physically imported and processed by the BOC as imports.

Implementation of WFH Arrangement

WFH arrangements are already permitted upon registration with the BOI. However, during the pendency of the issuance of the TEI, the movement of goods from the economic zones and/or freeport zones to operationalize the WFH arrangements, shall only be allowed upon successfully securing a provisional goods declaration (PGD) and submitting a notarized undertaking.

Existing Assets (imported as of January 31, 2023)

The duration of the bond-free transition period for existing assets shall run from January 1, 2023 to June 30, 2023.

After the bond-free transition period, the goods may still be allowed to be moved outside the economic zone or freeport zone provided that a PGD has been secured and the specific and sufficient surety bond has been posted, as approved by the BOC.

However, in no case shall the TEI of existing assets currently outside the economic or freeport zone be secured later than one (1) year from the issuance of FIRB AO No. 003-2023 or the end of the bond-free transitory period, whichever comes later.

If a blanket TEI has already been secured for existing goods, there is no need to lodge a PGD.

New Assets (imported starting February 1, 2023)

New importations of IT-BPM RBEs shall undergo the existing/status quo clearance procedures and documentary requirements of their concerned IPA in order to release the goods from BOC custody. The additional step of securing a TEI from the DOF-RO will only arise when the IT-BPM RBE requests for the movement of goods from the economic zone or freeport zone.

The related import permit/admission permit, or any other equivalent document to be issued by the concerned IPA for all new importations, must indicate an annotation that a TEI must be secured if the related assets will be moved out of the economic zone or freeport zone for WFH purposes.

As amended by FIRB AO No. 003-2022, new imported assets may still be allowed to be moved outside the economic or freeport zone provided that a PGD has been processed, the specific and sufficient bond has been paid, and an application for TEI has already been filed with the DOF-RO at the time of lodgment. For the requirements and procedures regarding PGD, please refer to Customs Administrative Order No. 02-2021.

VAT incentives for local assets

Locally purchased goods used for WFH arrangements, which were subject to VAT zero-rating, should be supported by the related VAT zero-rating certificate issued by the concerned IPAs.

Expansion Projects under the PEZA

An extension office (i.e., activity on the same building but on a different floor) is considered as another project that needs to be registered for tax incentives separately if the operations at the additional floor would entail an increase in production capacity, either through the installation of new IT equipment or the hiring of additional personnel. A qualified expansion project shall be subject to a separate application and approval process, as aligned under existing rules and regulations.

If the extension office is intended only for rearranging the office premises, the concerned RBE shall secure a Letter of Authority (LOA) from PEZA for the additional area of operations. In this instance, there will be no additional incentives granted to the RBE, and the incentives for the extension office shall be co-terminus with the incentives of the existing project.

Updating of the BIR Registration of IT-BPM transferees

IT-BPM transferees are required to update their BIR COR. The IPA to be indicated is the new IPA followed by the old IPA, separated by a forward slash (e.g., BOI/PEZA or BOI/CDC). This is also the IPA that will be indicated in the Income Tax Return (ITR).

For RBEs with multiple registered activities under multiple IPAs, additional sheets of BIR Form No. 1905 should be accomplished (as many as necessary). The RBE shall inform the BIR Revenue Officer of the fact that there are multiple registered activities under multiple IPAs to be updated.

The registration update may also be done using the Online Registration and Update System (ORUS) of the BIR (https://orus.bir.gov.ph/).

PEZA Issuances

Applications for Certificate of Entitlement to Tax Incentives (CETI)

Memorandum Circular No. 2023-025
Dated April 13, 2023

The Fiscal Incentives Registration and Monitoring System (FIRMS) database of PEZA Registered Business Enterprises (RBEs) has not yet been completed, thus all requests/applications for CETI should still be filed with PEZA through the Office of the Director General ([email protected]) until such time that a system generated CETI can be issued via FIRMS.

RBEs that have successfully lodged their CETI application through FIRMS are advised to refile their application with PEZA and refer to PEZA MC No. 2022-025 for the procedure for filing of application for the issuance of the CETI.

CETIs that are issued manually by the IPAs shall still be accepted as an attachment to the Annual Income Tax Return to be filed by the RBEs as proof of entitlement to income tax incentives.

Conduct of Work Environment Measurement (WEM)

Memorandum Circular No. 2023-024
Dated April 12, 2023

All establishments, without exemption, must conduct WEM periodically as may be necessary but not to exceed a one-year interval.

Conducting WEM generally covers all parameters (i.e. temperature, illumination, noise, humidity, ventilation, pressure and concentration of substances and chemicals). However, recognizing difficulties due to limited number of WEM providers, which are mostly situated in the National Capital Region, the Department of Labor and Employment – Bureau of Working Conditions (DOLE-BWC) suggested that for low-risk establishments, conducting WEM on only three (3) parameters, specifically temperature, illumination, and noise, shall apply.

Thus, WEM can be conducted by OSH-trained personnel who have undergone the Basic Occupational Safety and Health (BOSH) and Industrial Hygiene training, and has acquired the necessary experience in WEM as per the requirement of OSHS Rule 1077.03.

Lastly, for the low-risk establishments to gain the necessary trainings and experiences in WEM, PEZA, through its Environmental Safety Group (ESG) and Environment, Health and Safety Divisions (EHSDs), shall coordinate with the DOLE – Occupational Safety and Health Center or any of DOLE’s accredited WEM providers for the conduct of the said trainings.