InTAX: January 2022 Issue 2 | Volume 1

 

Bureau of Internal Revenue

 

The Bureau of Internal Revenue (BIR) issued the following:

Revenue Memorandum Circular (RMC) No. 11-2022, 24 January 2022, to circularize Republic Act (RA) No. 11595, entitled “An Act Amending Republic Act No. 8762, Otherwise Known as the Retail Trade Liberalization Act of 2000', by Lowering the Required Paid-Up Capital for Foreign Retail Enterprises, and for Other Purposes.”

The RA provides the following conditions for entry and participation of foreign-owned partnerships, associations, and corporations, or foreign owned single proprietorships registered with the Securities and Exchange Commission (SEC) or Department of Trade and Industry (DTI), respectively:

1.  A foreign retailer shall have a minimum paid-up capital of Twenty-Five Million Pesos (Php25,000,000.00)

2.   A foreign retailer’s country of origin does not prohibit the entry of Filipino retailers;

3.   In the case of foreign retailers engaged in retail trade through more than one (1) physical store, the minimum investment per store must be at least Ten Million Pesos (Php10,000,000.00).

This requirement shall not apply to foreign investors and foreign retailers who are legitimately engaged in retail trade and were not required to comply with the minimum investment per store at the time of the effectivity of the Act, subject to submission of their proof of qualification to engage in retail trade under Republic Act No. 8762 and its implementing rules and regulations to the Department of Trade and Industry (DTI).

The foreign retailer shall be required to maintain in the Philippines at all times a paid-up capital of Twenty-Five Million Pesos (Php25,000,000.00), unless the foreign retailer has notified the SEC or the DTI, whichever is appropriate, of its intention to repatriate the capital and cease its operations in the Philippines. The actual use in Philippine operations of the minimum paid-up capital shall be monitored by the SEC or by the DTI, whichever is appropriate.

Failure to maintain in the Philippines the paid-up capital required in the preceding paragraph, prior to notification of the SEC or the DTI, whichever is appropriate, shall subject the foreign retailer to penalties or restrictions on any future trading activities/business in the Philippines.

For purposes of registration with the SEC or the DTI, the foreign retailer shall submit a certification from the Bangko Sentral ng Pilipinas (BSP) of the inward remittance of its capital investment, in lieu thereof, such other proof certifying that its capital investment is deposited and maintained in a bank in the Philippines.

The DTI, SEC and National Economic and Development Authority shall review the required minimum paid-up capital every three (3) years from the effectivity of the Act.

RMC No. 13-2022, 24 January 2022, to circularize RA No. 11635, entitled “An Act Amending Section 27(B) of the National Internal Revenue Code of 1997, as Amended, and for Other Purposes.”

The RA amends the National Internal Revenue Code of 1997 to read as follows:

“Hospitals which are nonprofit and proprietary educational institutions shall pay a tax of ten percent (10%) on their taxable income except those covered by Subsection (D) hereof: Provided, that beginning 1 July 2020 until 30 June 2023, the tax rate herein imposed shall be one percent (1%): Provided, further That if the gross income from unrelated trade business or other activity exceeds fifty percent (50%) of the total gross income derived by such educations institutions or hospitals from all sources, the tax prescribed in Subsection (A) hereof shall be imposed on the entire taxable income. For purposes of this Subsection, the term unrelated trade, business or other activity means any trade, business or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function. Proprietary educational institution means any private school maintained and administered by private individuals or groups with an issued permit to operate from the Department of Education (DepEd) or the Commission on Higher Education (CHED), or the Technical Assistance and Skills Development Authority (TESDA), as the case may be, in accordance with existing laws and regulations.”

 

Attached are the full texts of the issuances.

Revenue Memorandum Circular No. 11-2022 Annex A

Revenue Memorandum Circular No. 11-2022

Revenue Memorandum Circular No. 13-2022 Annex A

Revenue Memorandum Circular No. 13-2022