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Executive Order No. 167, s. 2014

Posted: June 3, 2014 in News

MALACAÑAN PALACE
MANILA

EXECUTIVE ORDER N0.167

INCREASING THE AMOUNT OF CERTAIN EMPLOYMENT COMPENSATION BENEFITS FOR EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS

WHEREAS, there is a need to continually improve benefits under the Employees’ Compensation Program (ECP) to make them more responsive to the welfare and development needs of occupationally disabled workers;

WHEREAS, the current Employees’ Compensation (EC) Funeral Benefit for both private and public sectors is no longer sufficient to cover funeral costs;

WHEREAS, pursuant to Article 177(e) of Presidential Decree No. 626, as amended, the Employees’ Compensation Commission (ECC) shall have the power and duties, among others, to upgrade benefits and grant new ones for permanent disability or death, subject to the approval of the President, provided that the actuarial stability of the State Insurance Funds (SIF) shall be guaranteed and that such increases in benefits shall not require any increase in contributions from the employers, both private and public;

WHEREAS, the results of the actuarial studies of the Social Security System (SSS) and the Government Service Insurance System (GSIS) show that the SIFs administered by them respectively can finance the increase in benefits herein set forth without affecting the stability of the SIFs and without requiring additional contributions; and

WHEREAS, on 2 July 2013 and 29 November 2013, the ECC adopted Resolution Nos. 13-07-14, 13-07-15 and 13-11-37 approving the increase in benefits herein set forth.

NOW, THEREFORE I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers vested in my by law, do hereby order:

SECTION 1. EC Funeral Benefits for the Private and Public Sectors. The amount of EC Funeral Benefits in both the private and public sectors shall be increased from Ten Thousand Pesos (Php 10,000.00) to Twenty Thousand Pesos (Php 20,000.00), effective immediately; Provided, that the stability of the SIFs is not affected and there is no corresponding increase in the EC contribution from the employers, both private and public.

SECTION 2. EC Disability and Death Benefits for the Private Sector. There shall be a -ten (10%) across-the-board increase in EC Pension for all EC permanent partial disability, permanent total disability and survivorship pension in the private sector, effective immediately; provided, that the stability of the relevant SIF is not affected and there is no corresponding increase in the EC contributions from the employers.

SECTION 3. Appropriation and Release from the SIFs. The ECC, SSS and GSIS are hereby directed to appropriate and release the amounts necessary to cover the increase in benefits set forth in Sections 1 and 2 above from the reserves of the relevant SIF that the SSS and GSIS administer, respectively, under the ECP.

SECTION 4. Implementing Rules and Regulations. The ECC shall issue such rules and regulations as may be necessary to implement this Executive Order, including the retroactive application of the increase in benefits for the private sector to September 2013 as adopted in Resolution Nos. 13-07-14 and 13-07-15.

SECTION 5. Amendment or Modification. All Presidential issuances, rules and regulations inconsistent herewith are hereby amended or modified accordingly.

SECTION 6. Separability Clause. If any provision of this Executive Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.

SECTION 7. Effectivity. This Executive Order shall take effect fifteen days after its publication in the Official Gazette and in a newspaper of general circulation.

DONE in the City of Manila, this 26th day of May in the year of Our Lord, Two Thousand and Fourteen.

(Sgd.) BENIGNO S. AQUINO III

By the-President:

(Sgd.) PAQUITO N. OCHOA, JR.
Executive Secretary

SOURCE: http://www.gov.ph/2014/05/26/executive-order-no-167-s-2014/

Subject Matter: Proposed Revenue Regulations entitled “Amending Pertinent Provisions of Revenue Regulations No. 2-98, as amended, increasing the Withholding Tax Rates on Certain Income Payments and Amending the manner of submission of the Alphabetical List of Employees/Payees which are required to be attached in the Annual Information Returns (BIR Forms 1604-CF and 1604-E).

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PDF : http://taxandaccountingconsultancy.files.wordpress.com/2014/05/60970draft-rr-increasing-ewt-rates-and-amending-manner-of-submission-of-al.pdf

SOURCE: http://www.bir.gov.ph/proposed_rr.htm

 

Renewal of Professional ID (SM Malls).

Net operating loss means the excess of allowable deduction over gross income of the business in a taxable year.

Revenue Regulation 14-2001 implements a statute that the allowance to net operating loss-carry over will be a deduction from gross income.

Accordingly, the net operating loss of the business or enterprise for any taxable year immediately preceding the current taxable year which had not been previously offset as deduction from gross income shall be carried over as a deduction from gross income for the next three (3) consecutive taxable years immediately following the year of such loss; Provided, however, that any net loss incurred in a taxable year during which the taxpayer was exempt from income tax shall not be allowed as a deduction under this Subsection: Provided, further, that a net operating loss carry-over shall be allowed only if there has been no substantial change in the ownership of the business or enterprise in that –

  1. Not less than seventy-five percent (75%) in nominal value of outstanding issued shares, if the business is in the name of a corporation, is held by or on behalf of the same persons; or
  2. Not less than seventy-five percent (75%) of the paid up capital of the corporation, if the business is in the name of a corporation, is held by or on behalf of the same persons.

Illustration:

The Company started its operation on Janaury 2013
Net Operating Loss CarryOver (NOLCO)-page-001

-thanks kel.santos sa format :)-

The Bureau of Internal Revenue issued a regulation implementing limitation of interest expense, specifically provides that the limitation shall apply regardless of whether or not a tax arbitrage scheme was entered into by the taxpayer for as long as, during the taxable year, there is an interest expense incurred on one side and an interest income earned on the other side, which interest income had been subjected to final withholding tax.

First things first, we need to know the requisites and rules on the deductibility of interest expense.

In Accordance with the BIR Revenue Regulation 31-2009, the requisites and rules are the following:

REQUISITES FOR DEDUCTIBILITY OF INTEREST EXPENSE (rr 31-09)

  1. There must be an indebtedness;
  2. There should be an interest expense paid or incurred upon such indebtedness;
  3. The indebtedness must be that of the taxpayer’
  4. The indebtedness must be connected with the taxpayer’s trade, business or exercise of profession
  5. The interest expense must have been paid or incurred during the taxable year;
  6. The interest must have been stipulated in writing;
  7. The interest must be legally due;
  8. The interest payment arrangement must not be between related taxpayers as mandated in Sec. 34(B) (2) (b), in relation to Sec. 36(B), both of the Tax Code of 1997.
  9. The interest must not be incurred to finance petroleum operations; and
  10. In case of interest incurred to acquire property used in trade, business or exercise of profession, the same was not treated as a capital expenditure.

RULES ON THE DEDUCTIBILITY OF INTEREST EXPENSE

The general rule is that the amount of interest expense paid or incurred within a taxable year on indebtedness in connection with the taxpayer’s trade, business or exercise of profession shall be allowed as deduction from the taxpayer’s gross income. (rr 31-09)

However, the amount of interest expense paid or incurred by a taxpayer in connection with his trade business or exercise of a profession from an existing indebtedness shall be reduced by an amount equal to the following percentage of the interest income earned which has been subjected to final withholding tax depending on the year when the interest income was earned. (rr 31-09)

Based on the regulation, the deductible interest expense is equal to 33% of interest income subjected to final tax, and the remaining portion of the said expense will be non-deductible in income tax computation.

ILLUSTRATION:

Normal Corporate Income Tax Rate                      30%

Less: Final Tax Rate                                                  20%

(NCIT Rate less FT Rate divided by NCIT Rate) 10%/30% NCIT = 33.33%

Interest Income – (Interest income (gross) x 33.33%) = Deductible Interest Expense

penalty calq

DOWNLOADpenalty calq

Failure to file and/or pay any internal revenue tax at the time or times required by law or regulation.

According to RR 2-98, Section 2.57 Withholding of Tax at Source (a) Final Withholding Tax – Under the final withholding tax system the amount of income tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee on the said income. The liability for payment of the tax rests primarily on the payor as a withholding agent. Thus, in case of his failure to withhold the tax or in case of under withholding, the deficiency tax shall be collected from the payor/withholding agent. The payee is not required to file an income tax return for the particular income.

The finality of the withholding tax is limited only to the payee’s income tax liability on the particular income. It does not extend to the payee’s other tax liability on said income, such as when the said income is further subject to a percentage tax. For example, if a bank receives income subject to final withholding tax, the same shall be subject to a percentage tax.

Interest income coming from savings deposit are subjected to Final Tax, wherein the withholding agents (banks) are required to remit the Final Tax deducted from the passive income earned by the depositor.

How will interest income subjected to Final Tax be reported in Financial Reports?

As we all know, Final Tax withheld by the withholding agent is constituted as a full and final payment of the income tax due from the payee on the said income ( rr 2-98 sec 2.57(a) ), and therefore it should not be included in the computation of the income tax payable of the company. Thus, it should be a deduction from taxable income as a reconciling item.

Illustration:

Sales and Services             P                100

Less: Cost of Sales                                 50

Gross Income                                         50

Operating Expenses                           ( 10 )

Other Income

Interest Income (net of FT)    5

Other Interest Income             5         10

Income before Income Tax                30

Add(Deduct) reconciling items:

Interest income subject to FT        ( 5 )

Taxable Income             P             25

BIR Form No. 1700Annual Income Tax Return for Individuals Earning Purely Compensation Income (Including Non-Business/Non-Profession Income)

DOWNLOAD http://taxandaccountingconsultancy.files.wordpress.com/2014/03/82310bir-form-1700-03-10-14.pdf

Description

This return shall be filed by every resident citizen deriving compensation income from all sources, or resident alien and non-resident citizen with respect to compensation income from within the Philippines, except the following: 

1. An individual whose gross compensation income does not exceed his total personal and additional exemptions.

2. An individual with respect to pure compensation income, as defined in Section 32(A)(1) derived from sources within the Philippines, the income tax on which has been correctly withheld (tax due equals tax withheld) under the provisions of Section 79 of the Code: Provided, that an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return. 

3. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units; non-resident alien not engaged in trade or business).

4. A minimum wage earner or an individual who is exempt from income tax.

Filing Date

This return is filed on or before April 15 of each year covering income for the preceding taxable year.

 

BIR Form No. 1701 – Annual Income Tax Return for Self-Employed Individuals, Estates and Trusts

DOWNLOAD: http://taxandaccountingconsultancy.files.wordpress.com/2014/03/bir-form-1701-editable-03-10-14.pdf

Description

BIR Form No. 1701 shall be filed by individuals who are engaged in trade/business or the practice of profession including those with mixed income (i.e., those engaged in the trade/business or profession who are also earning compensation income) in accordance with Sec. 51 of the Code, as amended. The annual income tax return summarizes all the transactions covering the calendar year of the taxpayer.

This return shall be filed by the following individuals regardless of amount of gross income:

1. A resident citizen engaged in trade, business, or practice of profession within and without the Philippines. 

2. A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines.

3. A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business.

4. An individual engaged in trade or business or in the exercise of their profession and receiving compensation income as well.

Filing Date

      This return is filed on or before April 15 of each year covering income for the preceding taxable year.

 

BIR Form No. 1702-RT – Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpayer Subject Only to REGULAR Income Tax Rate

DOWNLOAD: http://taxandaccountingconsultancy.files.wordpress.com/2014/03/1702-rt-june-2013-editable-03-08-14.pdf

Description

This return shall be filed by Corporation, Partnership and other Non-Individual Taxpayer Subject Only to REGULAR Income Tax Rate of 30%.  Every corporation, partnership no matter how created or organized, joint stock companies, joint accounts, associations (except foreign corporation not engaged in trade or business in the Philippines and joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations), government-owned or controlled corporations, agencies and instrumentalities shall render a true and accurate income tax return in accordance with the provisions of the Tax Code.

Filing Date

This return is filed, with or without payment, on or before the 15th day of the 4th month following close of the taxpayer’s taxable year.

 

BIR Form No. 1702-EX – Annual Income Tax Return for Use ONLY by Corporation, Partnership and Other Non-Individual Taxpayer EXEMPT under the Tax Code, as Amended, {Sec. 30 and those exempted in Sec. 27(C) and Other Special Laws, with NO Other Taxable Income

DOWNLOAD: http://taxandaccountingconsultancy.files.wordpress.com/2014/03/bir-form-1702ex-03-19-14-1.pdf

Description

       This return shall be filed by a Corporation, Partnership and Other Non-Individual Taxpayer EXEMPT under the Tax Code, as amended  [Sec. 30  and  those  exempted in Sec. 27(C)] and other Special Laws WITH NO OTHER TAXABLE INCOME such as but not limited to foundations, cooperatives, charitable institutions, non-stock and non-profit educational institutions, General Professional Partnership (GPP) etc.

Filing Date

       This return is filed on or before the 15th day of the 4th month following the close of the taxpayer’s taxable year.

 

BIR Form No. 1702-MX – Annual Income Tax Return for Corporation, Partnership and Other Non-Individual with MIXED Income Subject to Multiple Income Tax Rates or with Income Subject to SPECIAL/PREFERENTIAL RATE 

Description

This return shall be filed by every Corporation, Partnership and Other Non-Individual Taxpayer with MIXED Income subject to MULTIPLE INCOME TAX RATES or with income subject to SPECIAL/PREFERENTIAL RATE.

Filing Date

      This return is filed, with or without payment, on or before the 15th day of the 4th month following the close of the taxpayer’s taxable year.

DOWNLOAD: http://taxandaccountingconsultancy.files.wordpress.com/2014/03/bir-form-1702mx-03-09-14.pdf

 

Source: PICPA FB Member Love Raviegaye Espiritu (Forms)

: www.bir.gov.ph