ERRATUM: Special InTAX: May 2023 Issue 1 | Volume 4

Department of Finance

The Department of Finance (DOF) issued Revenue Regulations (RR) No. 05-2023, dated 07 March 2023, amending RR No. 05-2021 on the Requirements in Availing the Income Tax Exemption of Foreign-Sourced Dividends received by a Domestic Corporation.

Pertinent provisions are as follows: 

• Foreign-sourced dividends received by domestic corporates are subject to income tax.
• Foreign-sourced dividends are exempt from income tax provided that ALL of the conditions enumerated in the RR concur.
• Absent any one of the above conditions, the foreign-sourced dividends shall be considered as taxable income of the domestic corporation in the year of actual receipt or remittance, subject to surcharge, interest, and penalties, as applicable.
• Documents required to be attached in the Annual Income Tax Return are provided in the RR and compliance with these requirements is sufficient in order to avail of the income tax exemption.
• No credit or deduction under Section 34(C) of the Tax Code shall be allowed for any taxes of foreign countries paid or incurred by the domestic corporation in relation to the exempt foreign-sourced dividends. 
• Any taxes of foreign countries paid or incurred by the domestic corporation in relation to the exempt foreign-sourced dividends shall be disregarded in computing the limitations provided under Section 34(C)(4) of the Tax Code.

The RR shall take effect fifteen days following its publication in the Official Gazette or in a newspaper of general circulation.

The RR was published in the Manila Times on 10 May 2023.

 

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 59-2023, dated 19 May 2023, to circularize the availability of the newly revised BIR Form No. 2550Q [Quarterly Value-Added Tax (VAT) Return] January 2023 (ENCS) version.

The return was revised in line with the following provisions of Republic Act (R.A.) No. 10963:

Particulars	R.A. No. 10963 Provisions
Filing of Return and Payment of VAT	Section 37: Beginning 1 January 2023, the filing and payment required under this Subsection shall be done within twenty-five (25) days following the close of each taxable quarter.
Creditable Input Tax	Section 35: The amortization of the input VAT shall only be allowed until 31 December 2021. After which, taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized.
Withholding of VAT	Section 37: Beginning 1 January 2021, the VAT withholding system shall shift from final to a creditable system.

The revised BIR Form No. 2550Q is already available in the BIR website (www.bir.gov.ph) under the BIR Forms-VAT/Percentage Tax Return Section. However, the return is not yet available in the Electronic Filing and Payments System (eFPS) and Electronic BIR Forms (eBIRForms). Thus, eFPS/ eBIRForms filers shall continue to use the BIR Form No. 2550Q in the eFPS and in the Offline eBIRForms Package v7.9.4 in filing and paying the VAT payable/due.

Manual filers shall download the PDF version of the return, print the return, and fill out the applicable fields, otherwise shall be subjected to penalties under Sec. 250 of the Tax Code, as amended.

Once the above-mentioned return is available in the eFPS or already included in the new Offline eBIRForms Package, a revenue issuance shall be released to announce the availability of the return.

(Erratum: All references to DFA should refer to DOF)

Here are the links to the full text of the issuances: RMC No. 59-2023, RMC No. 59-2023 Annex A, RMC No. 59-2023 Attachment, RR No. 5-2023, Annex A_RR No. 5-2023, and Annex B_RR No. 5-2023