Category Archives: Tax Matters

Proposed Amnesty for Unpaid Estate Taxes

We’ve been consulted on a number of real estate transactions that had to be shelved because of unsettled estate taxes. It’s not because the owners — who inherited the properties — have the intention of evading taxes; it’s just that a lot of people do not know about, or do not give much importance to, the settlement of estate taxes immediately after the death of the original owner. The rule is: if a real estate owner dies, the heirs (spouse, children, etc.) must file the appropriate tax return with the Bureau of Internal Revenue (BIR) and pay the corresponding estate taxes. Unless the estate tax is paid and the BIR issues a Certificate Authorizing Registration (CAR), the Register of Deeds will not allow the transfer of the title to the real estate. The difficiculty of complying with this requirement discourages transactions involving the property, like partition among the heirs and sale of the property itself. There are estate taxes that remain unpaid after decades, with the basic tax, plus interest, penalties and surcharges, potentially exceeding the value of the property. Continue reading

Republic Act No. 10653: Adjusting the Ceiling for 13th Month Pay and Other Benefits for Tax Computation

Republic of the Philippines
Congress of the Philippines
Metro Manila
Sixteenth Congress
Second Regular Session

REPUBLIC ACT NO. 10653

AN ACT ADJUSTING THE 13TH MONTH PAY AND OTHER BENEFITS CEILING EXCLUDED FROM THE COMPUTATION OF GROSS INCOME FOR PURPOSES OF INCOME TAXATION, AMENDING FOR THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Section 32(B), Chapter VI of the National Internal Revenue Code of the Philippines (Republic Act No. 8424) is hereby amended as follows:

“SEC. 32. Gross Income. —
“x x x
“(B) Exclusions from Gross Income. — The following items shall not be included in gross income and shall be exempt from taxation under this Title:
“xxx

“(7) Miscellaneous Items. — “xxx

“(e) 13th Month Pay and Other Benefits. — Gross benefits received by officials and employees of public and private entities: Provided, however, That the total exclusion under this subparagraph shall not exceed eighty-two thousand pesos (P82,000) which shall cover:
“xxx

“(iv) Other benefits such as productivity incentives and Christmas bonus: Provided, That every three (3) years after the effectivity of this Act, the President of the Philippines shall adjust the amount herein stated to its present value using the Consumer Price Index (CPI), as published by the National Statistics Office (NSO).”

SEC. 2. Implementing Rules and Regulations. — The Secretary of Finance shall promulgate the necessary rules and regulations for the faithful and effective implementation of the provisions of this Act: Provided, That, the failure of the Secretary of Finance to promulgate the said rules and regulations shall not prevent the implementation of this Act upon its effectivity.

SEC. 3. Repealing Clause. — All laws, orders, issuances, circulars, rules and regulations or parts thereof which are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 4. Separability Clause. — If any provision of this Act is declared unconstitutional or invalid, other parts or provisions hereof not affected thereby shall continue to be in full force and effect.

SEC. 5. Effectivity. — This Act shall take effect fifteen (15) days following its publication in at least two (2) newspapers of general circulation.

Approved: 12 February 2015.

Republic Act 7833: Excluding 13th Month Pay and Bonuses from Tax Computation (Full Text)

REPUBLIC ACT NO. 7833

AN ACT TO EXCLUDE THE BENEFITS MANDATED PURSUANT TO REPUBLIC ACT NO. 6686 AND PRESIDENTIAL DECREE NO. 851, AS AMENDED, AND OTHER BENEFITS FROM THE COMPUTATION OF GROSS COMPENSATION INCOME FOR PURPOSES OF DETERMINING TAXABLE COMPENSATION INCOME, AMENDING FOR THE PURPOSE Sec. 28(B)(8) OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED

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Increase the Maximum Bonus and 13th Month Pay Tax Exemption?

A proposal is currently pending in the Senate to increase the tax exemption of 13th month pay, Christmas bonuses, productivity incentives and similar benefits — from the original maximum tax-free amount of P30,000 to P75,000. The proposal also provides for an adjust of the cap every three years, to raise the maximum exemption to its present value using the consumer price index. Under existing laws, any amount beyond P30,000 is subject to income tax. Continue reading

Primary Registration, Updates, And Cancellation of Tax Registration (Revenue Regulations 7-2012)

[See related article]

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE
Quezon City

April 2, 2012

REVENUE REGULATIONS NO. 7-2012

SUBJECT : Amended Consolidated Revenue Regulations On Primary Registration, Updates, And Cancellation

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Tax Registration and Requirements of Marginal Income Earners (Memorandum Circular 7-2014)

[See related article]

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE

February 5, 2014

MEMORANDUM CIRCULAR NO. 7-2014

SUBJECT : CLARIFYING THE ISSUES ON THE REGISTRATION AND COMPLIANCE REQUIREMENTS OF MARGINAL INCOME EARNERS PURSUANT TO REVENUE REGULATIONS NO. 7-2012

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Primer on Taxation of Philippine Cooperatives

One of the biggest advantages of a cooperative is its tax-exempt status. However, not all incomes arising from activities of cooperatives, as well as its members, are free from taxes. Tax treatment largely depends on whether the cooperative transacts business with members or non-members. To remove the confusion on the taxation of cooperatives, the various agencies of the government issued the following guidelines:

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Joint Rules and Regulations in Cooperative Taxation

[See also An Introduction to Cooperatives in the Philippines; the Primer on Taxation of Philippine Cooperatives and; full text of Republic Act No. 9520]

Republic of the Philippines
DEPARTMENT OF FINANCE
Roxas Boulevard corner Pablo Ocampo, Sr. Street
Manila 1004

5 February 2010

JOINT RULES AND REGULATION

IMPLEMENTING ARTICLES 60, 61 AND 144 OF REPUBLIC ACT NO. 9520, OTHERWISE KNOWN AS THE “PHILIPPINE COOPERATIVE CODE OF 2008” IN RELATION TO RA NO. 8424 OR THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED

SECTION 1. SCOPE. Pursuant to the provisions of Sections 4 and 244 of the National Internal Revenue Code of 1997 (NIRC), as Amended, and Article 144 of RA 9520, this Joint Rules and Regulations are hereby promulgated to implement Articles 60 and 61 of RA No. 9520 granting tax exemption to cooperatives, prescribe the guidelines for the availment thereof and for other purposes.

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Tax Amnesty Available until May 2008

The last day to avail of tax amnesty is 5 May 2008. Now, before you get excited because you may happen to have failed to file your income tax return by 15 April 2008, this tax amnesty refers to all national internal revenue taxes for the taxable year 2005 and prior years that have remained unpaid as of 31 December 2005. Continue reading

Implementing Rules and Regulations of RA 9480

DEPARTMENT ORDER No. 29-07

August 15, 2007

RULES AND REGULATIONS TO IMPLEMENT REPUBLIC ACT No. 9480

Pursuant to Section 15 of Republic Act No. 9480, “An Act Enhancing Revenue Administration and Collection By Granting An Amnesty On all Unpaid Internal Revenue Taxes Imposed by the National Government For Taxable Year 2005 and Prior Years,” the following rules and regulations are hereby promulgated to implement the provisions of said Act.

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