Special InTAX: December 2020 Issue 3 | Volume 1
Special InTAX: December 2020 Issue 3 | Volume 1
InTAX is an official publication of R.G. Manabat & Co.'s Tax Group
Department of Finance
The Department of Finance (DOF) issued the following:
Revenue Regulation (RR) No. 32-2020, 17 December 2020, to further amend RR No. 4-2019, relative to the period of availment of Tax Amnesty on Delinquencies (TAD).
Section 3 was amended to further extend the period of availment of the TAD until 30 June 2021. However, the said date may be extended if the circumstances warrant an extension such as country-wide economic or health reasons.
RR No. 33-2020, 17 December 2020, to amend the period of availment and privilege under Sections 4 and 10 of RR 21-2020.
The following amendments were made to certain provisions of RR No. 21-2020:
- Qualified persons can avail of the benefits of the Voluntary Assessment and Payment Program (VAPP) until 30 June 2021, unless extended further by the Secretary of Finance.
- Taxpayers who avail of the VAPP on withholding taxes shall be allowed to claim deduction on the corresponding income payment pursuant to RR No. 6-2018.
- No denial of application or invalidation of a previously issued Certificate of Availment shall be valid unless the taxpayer is formally notified by the Division Chief (LT Office) or the Revenue District Officer where the taxpayer is registered, stating the factual reasons.
- The taxpayer can appeal the said denial or invalidation to the Assistant Commissioner – Large Taxpayer Service (ACIR-LTS) or Regional Director (RD) within (30) days from receipt of such notice.
(RGM & Co. Note: The RRs were published in the Philippine Star on 22 December 2020.)
RR No. 34-2020, 18 December 2020, prescribes the guidelines and procedures for the submission of BIR Form No. 1709, Transfer Pricing Documentation (TPD) and other supporting documents. The RR amends pertinent provisions of RR Nos. 19-2020 and 21-2020 as amended by RR No. 15-2010.
Pertinent provisions are as follows:
1. The following taxpayers are required to file and submit BIR Form No. 1709 or the Related Party Transaction (RPT) Form, together with the Annual Income Tax Return (AITR):
a) Large Taxpayers;
b) enjoying tax incentives, i.e., BOI-registered and economic zone enterprises, those enjoying Income Tax Holiday or those subject to preferential income tax rate;
c) Taxpayers reporting net operating losses for the current taxable year and the immediately preceding two (2) consecutive taxable years; and
d) A related party, as defined under Section 3 of RR No. 19-2020, which has transactions with (a), (b), or (c).
2. Key Management Personnel (KMP), as defined under Section 3(7) of RR No. 19-2020, shall no longer be required to file and submit the RPT Form, nor shall there be any requirement to report any transaction between KMP and the reporting entity/parent company of the latter in the RPT Form.
3. When short period AITR is required by law or existing issuances to be filed, the RPT Form shall be accomplished regardless of the reason for filing said return. This shall be mandatory for short period returns filed in 20201 and subsequent years.
4. Preparation and submission of the TPD shall be mandatory for taxpayers enumerated above who meet the following materiality thresholds:
a) Annual gross sales/revenue for the subject taxable period exceeding One Hundred Fifty Million Pesos (₱150,000,000.00) and the total amount of related party transactions with foreign and domestic related parties exceeds Ninety Million Pesos (₱90,000,000.00).
In computing the above threshold, the following items shall be included:
i. Amounts received and/or receivable from related parties or paid and/or payable to related parties during the taxable year but excluding compensation paid to key management personnel, dividends and branch profit remittances; and;
ii. Outstanding balances of loans and non-trade amounts due from/to all related parties.
Related party transactions covered by an Advance Pricing Agreement (APA) need not be disclosed in the RPT Form but shall nonetheless be included in the computation of the amount of related party transactions following the prescribed formula; or
b) Related party transactions meeting the following materiality threshold:
i. If involving sale of tangible goods in the aggregate amount exceeding Sixty Million Pesos (₱60,000,000.00) within the taxable year;
ii. If involving service transaction, payment of interest, utilization of intangible goods or other related party transaction in the aggregate amount exceeding Fifteen Million Pesos (₱15,000,000.00) within the taxable year; or
c) If TPD was required to be prepared during the immediately preceding taxable period for exceeding either (a) or (b) above.
5. The TPDs and other supporting documents as set out in Section 6 of RR No. 19-2020 shall no longer be attached to the RPT Form but shall be submitted within thirty (30) calendar days upon receipt of request by the Commissioner or his/her duly authorized representatives, pursuant to a duly issued Letter of Authority covering All Internal Revenue Taxes (AITR), subject to non-extendible period of 30 calendar days based on meritorious grounds.
6. In addition to the requirements provided under RR No. 21-2002, as amended by RR No. 15-2010, taxpayers who are not covered under Sections 2 of RR No. 19-2020 are required to disclose in the Notes to the Financial Statements that they are not covered by the requirements and procedures for related party transactions provided under this RR.
7. The simplified version of the RPT Form (BIR Form 1709) shall henceforth be used in lieu of the old form.
8. The RR shall take effect immediately following its circulation in a newspaper of general circulation.