She wants to look back and tell people on their face that
she tried her best
By Mortz C. Ortigoza
CALASIAO – She is probably the best
commissioner the watchers of Bureau of Internal Revenue have ever seen – what with
the series of reforms she initiated and the collection target she surpassed on
a year-on-year basis after she took the tax agency’s helm in 2010.
 |
| Commissioner Kim Henares (4th from left) of the Bureau of Internal Revenue poses with the tax agency's regional director lawyer Arnel Guballa (5th from left) and his top honchos during the visit of Henares to inaugurate the new swanky Revenue District Office-4 in Calasiao, Pangasinan. |
Would Commissioner Kimi Henares runs for the
vice presidency or the senatorial seat if a political party enlists her in the
2016 polls?
An ambivalent Henares said she is not a
political person.
“I’m not a political person so I don’t think,
di ba? I’m just concentrating on doing my job as best as I can,” she said
chuckling.
She explained she wants to look back and tell
people on their face that she tries her best to give the country the chance to
become develop.
“That’s the most important thing for me, not
the political office,” she said laughing.
A Revenue District Office’s chief, who asked
anonymity, in Region 1 said Henares is a straight shooter.
She cited that before Henares became the
commissioner of the tax agency, RDO chiefs used to ask members of congress like
the Speaker of the House for promotion if not retention beyond their two years
stint as RDO.
RDO is a lucrative post in the BIR office
where big time taxpayer could bargain the worth of the taxes he pays the
government at the same time seeing to it the former gets his share from the
taxes.
“Nakakatakot si Commissioner for her no nonsense stance sa BIR,” an RDO chief,
who asked not to be named, in the Cordillera Region quipped.
In the birthday party years ago of former
Speaker Jose de Venecia, Henares, who was with her father in law columnist
Larry Henares, was seen shaking the
hands of queuing congresswomen led by Rep. Gina de Venecia (4th District,
Pangasinan).
When an RDO chief in Region 1 was asked that
it should be Henares who should be going to the round tables occupied by the
lady solons and pressed flesh, the chief said it was not the style of Henares
to ingratiate with the lawmakers.
“She even told BIR personnel that she did not
like high officials in the government interceding for the tax agency workers’
promotion from her”.
She said Henares apolitical policy could be
traced to her work as a senior private sector development specialist for the
International Finance Corporation of the World Bank.
Henares took up accounting in De La Salle
University (DLSU) then Bachelor of Laws at Ateneo de Manila University (ADMU).
She got second honor upon completion her law study. She took her Masters in Law
in Georgetown in the United States where she was a B student. She said that she
became good with numbers as she had advanced math classes in Chinese school
while her interest in law started during her high school days since she liked
to debate.
KIM HENARES, THE LIAR BIR COMMISSIONER IS HERSELF THE PROTECTOR AND LAWYER OF DUNKIN' DONUTS COMPANY - A BIGTIME TAX EVADER.
ReplyDeleteTAX EVASION CASE INTENTIONALLY NOT FILED BY THE LIAR BIR COMMISSIONER KIM HENARES
Golden Donuts, Inc. (GDI), the exclusive Philippine Franchisee of the global brand "Dunkin' Donuts", flagrantly perpetrated fraudulent acts or criminal tax violations that culminated to deficiency tax assessment amounting to P1.56 billion, including increments, for year 2007, discovered and documented by Othello Dalanon in his official capacity as former BIR Examiner.
Dalanon personally reported GDI's omissions to Commissioner Henares and recommended to her the criminal prosecution for tax evasion under the much-vaunted "Run After Tax Evaders" program of the Bureau; but she intentionally did not pursue fraud case against the company because its secretary - Marixi Prieto who also happens to be the chairperson of the Philippine Daily Inquirer - is President Aquino's friend, according to Deputy Commissioner Estela Sales.
Ms. Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner of Internal Revenue) Nestor Valeroso, on different occasion, who both gave leniency to GDI.
The aforesaid deficiency tax assessment obtained finality because GDI failed to file a VALID PROTEST against the Formal Letter of Demand and Assessment Notice (FAN).
However, Henares intentionally did not collect it, purportedly because representatives of GDI complained to her that Dalanon's assessment was faulty. Thus, she ordered two (2) re-investigations.
There is no LAW that authorizes the commissioner to order two (2) re-investigations of a FINAL, EXECUTORY and DEMANDABLE assessment.
Once the deficiency tax assessment obtained finality, the right of the government to collect the deficiency tax becomes absolute; thus, precludes the taxpayer from questioning the correctness of the assessment and from raising any justification or defense that would pave the way for a re-investigation.
She also claims that the authority to decide and declare finality of a certain assessment is a function vested by law upon the Commissioner of Internal Revenue.
Her assertion does not find basis in LAW.
It is the LAW that determines finality of a certain assessment as clearly provided under Revenue Regulations No. 12-99 as amended by Revenue Regulations No. 18-2013 which the commissioner herself promulgated, in relation to Section 228 of the 1997 National Internal Revenue Code (1997 Tax Code), as amended.
Her claim that Dalanon's assessment was faulty is WRONG.
In fact, she was not able to dispute Dalanon's assessment. What is very clear is that, while she sows fears among taxpayers, bullies private and government workers, marginal income earners, and insists on probing Supreme Court Justices; she fears, coddles and lawyers for Dunkin' Donuts' local seller – a big-time tax evader.
Just to reiterate. The P1.56 billion tax deficit of Dunkin' Donuts' franchisee has become DUE and DEMANDABLE, thus, it already legally belongs to the FILIPINO people whom PRESIDENT AQUINO considers as his "bosses", and therefore, Henares is duty-bound to enforce collection thereof - but she refuses to.
GDI’s OMISSIONS THAT CULMINATED TO DEFICIENCY TAX ASSESSMENT AMOUNTING TO P1.56 BILLION, INCLUDING INCREMENTS, FOR YEAR 2007 – DOCUMENTED BY OTHELLO DALANON:
ReplyDelete1. GDI has two (2) sets of books of accounts – one was the duly-registered hardbound computer-generated books of accounts which were the bases of Dalanon’s assessment; and the other was the unregistered not-permanently-bound “manually-posted from original books of accounts”, records which GDI claims as the bases of its Trial Balance for Financial Statements and Income Tax Return purposes;
2. It supplied false information on the tax return – the duly-registered books of accounts reflected a net income amounting to P135.2 million while the tax return showed a net loss of P44.9 million;
3. It substantially under-declared sales on the tax return in two (2) instances:
3.1 Sales per duly-registered books was P1.928 billion while the amount reflected on the tax return was P1.031 billion – a substantial discrepancy (under-declaration) amounting to P897 million;
The SUPREME COURT ruled in the case of Paper Industries Corporation of the Philippines vs. Court of Appeals, et al., 250 SCRA 434 that “where the books of accounts reflected a sales or receipts higher than that reflected on the return, the books of accounts should prevail. This is so, because the books of accounts are kept by the taxpayer and are prepared under its control and supervision; and they reflected what may be deemed to be admissions against interest.”
The representations made by GDI in the CD and duly-registered books submitted and presented by it to the Bureau for audit and examination amounted to admissions against its own interest which it cannot disown or change at its convenience of pleasure.
3.2 Other independent relevant documents, such as, but not limited to: Franchise Agreement between Dunkin’ Donuts of America, Inc. and GDI, BIR returns, etc., further revealed that GDI’s sales topped P2.366 billion but recorded per duly-registered books was only P1.928 billion – a substantial unrecorded and consequently undeclared sales amounting to P438 million.
The information contained in the aforesaid documents were utilized in further determining GDI’s sales on the basis of the provisions of Section 5(A) of the 1997 Tax Code.
The method of validation used by Othello Dalanon was already upheld by the COURT OF TAX APPEALS in the case of Asia Coal Corporation vs. CIR (CTA Case No. 6803, February 13, 2008), that “the respondent may utilize any kind of document, x x x to determine the correct sales of the petitioner…”
All the above enumerations are fraudulent acts or criminal tax violations covered by the RATE (Run After Tax Evaders) Program of the Bureau; but Henares intentionally did not pursue tax evasion case against the company.
Henares, in her position paper submitted to the Office of the Ombudsman in connection with the formal complaint filed against her by Othello Dalanon, failed to dispute the above-enumerated irregularities perpetrated by GDI.
THE DEFICIENCY TAX ASSESSMENT AGAINST GDI OBTAINED FINALITY.
ReplyDeleteThe deficiency tax assessment against GDI amounting to P1.56 billion, including increments, for year 2007, obtained finality because GDI’s letter of protest against the Formal Letter of Demand and Assessment Notice (FAN) was INVALID.
The alleged letter of protest of GDI merely states “protest against PAN adopted in toto”. It does not state the facts, the applicable law, rules and regulations, or jurisprudence on which its protest was based. It is neither a request for reconsideration nor reinvestigation.
The rules on protesting an assessment is found in Section 3 subsection 3.1.5 of RR No. 12-99, as amended, that reads:
“Disputed Assessment. – The taxpayer or his duly authorized representative may protest administratively against the aforesaid formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof.
The taxpayer shall state the FACTS, the applicable LAW, RULES and REGULATIONS or JURISPRUDENCE on which his protest is based, otherwise, his protest shall be considered VOID and WITHOUT FORCE AND EFFECT.
If the taxpayer fails to file a VALID PROTEST against the formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof, the assessment shall become FINAL, EXECUTORY and DEMANDABLE.”
The said Regulations must be taken in relation to Section 228 of the 1997 Tax Code, as amended, which reads:
“Protesting an assessment. – Such assessment may be protested administratively by filing a REQUEST FOR RECONSIDERATION or REINVESTIGATION within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. x x x otherwise, the assessment shall become FINAL.”
Clearly, what the law demands is a VALID administrative protest against the formal letter of demand and assessment notice which required the taxpayer to comply with the following:
(a) The protest must be through a REQUEST FOR RECONSIDERATION or REINVESTIGATION;
(b) The protest must be in the form and manner as prescribed under RR No. 12-99, as amended, which provides that said protest must state the FACTS, the LAW, RULES and REGULATIONS, or JURISPRUDENCE on which the protest is based; and
(c) Must be filed within thirty (30) days from receipt of the assessment.
The COURT OF TAX APPEALS in the case of Allied Banking Corporation vs. Commissioner of Internal Revenue (CTA Case No. 4581, March 25, 1992, cited that, “[f]ailure to comply with any or all of these requirements results in the assessment against the taxpayer becoming final and unappealable.”
The letter of protest should not just state “protest against PAN adopted in toto” because the administrative protest required to be filed as an answer to the formal letter of demand and assessment notice is distinct and not the same as the protest filed against the PAN.
The COURT OF TAX APPEALS emphasized in the case of Security Bank Corporation vs. Commissioner of Internal Revenue (CTA Case No. 6564, November 8, 2006) and further accentuated in the case of Bank of the Philippine Islands vs. Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008) that:
ReplyDelete“[A] protest to the preliminary assessment notice is not the same as the protest required to be filed as an answer to the final assessment notice. In fact, a preliminary assessment notice may or may not even be protested to by the taxpayer, and the fact of non-protest shall not in any way make the preliminary assessment notice final and unappealable. What is clear from Section 319-A of the Tax Code of 1977, as amended, is that failure on the part of the taxpayer to protest or reply to a preliminary assessment notice paves the way for the issuance of a final assessment notice. However, evident under said Section (now Section 228 of the 1997 Tax Code) is that failure on the part of the taxpayer to file a VALID administrative protest through a REQUEST FOR RECONSIDERATION or REINVESTIGATION on the final assessment notice, shall result in the finality of the said FAN.”
The SUPREME COURT in the case of Allied Banking Corporation vs. Commissioner of Internal Revenue (G.R. no. 175097, February 5, 2010) heightened that:
“It is the Formal Letter of Demand and Assessment Notice that must be administratively protested or disputed within 30 days, and not the PAN.”
GDI, in its INVALID letter of protest against the FAN, likewise claimed that the assessments are null and void ab initio because it was allegedly issued in rampant violation of the due process requirements prescribed under Section 228 of the Tax Code as implemented by RR No. 12-99.
GDI’s claim is not true. Records will show that the due process requirements were promptly observed. There were at least five (5) notices served to GDI either thru personal delivery or by mail before the formal letter of demand and assessment notice (FAN) was issued. In fact, it even contested the PAN as clearly admitted in GDI’s invalid letter of protest against the FAN.
The COURT OF TAX APPEALS in the case of Bank of the Philippine Islands vs. Commissioner of Internal Revenue (CTA Case No. 7397, April 9, 2008), has had the occasion to say: “[W]hen the petitioner received the final assessment notice and duly protested the same, petitioner’s right to due process was properly protected and observed.”
TAXATION - IS FAIR IF BURDEN FALLS ON THOSE BETTER ABLE TO PAY, THAN ON THE POOR.
ReplyDeleteThe VALUE-ADDED TAX (VAT) system in the Philippines took effect on January 1, 1988 by virtue of Executive Order (EO) No. 273, the law adopting the Value-Added Tax as implemented by Revenue Regulations (RR) No. 05-87 at the rate of ten percent (10%) on all taxable transactions. The tax rate was increased to twelve percent (12%) starting February 1, 2006 by virtue of Republic Act No. 9337 as implemented by RR No. 16-05 as amended by RR No. 04-07.
VAT is an indirect tax and the amount of tax may be shifted to or passed on to the buyer, transferee, or lessee of goods, properties, or services. It is a tax on consumption of goods, services, or certain transactions involving the same. It forms a substantial portion of consumer expenditures.
It is a "tax credit method" wherein the VAT "input tax" paid and incurred by a VAT-registered entity is creditable against the VAT "output tax" which it shifts to or passes on to another VAT-registered entity or buyer-end-user. In order words, Output Tax minus Input Tax.
Under the said system, the VAT-registered seller or transferor of goods, properties, or services merely acts as a collector or remittor of the tax actually paid by or shifted to or passed on to the buyer-end-user or final consumer.
While it may be an effective method of tax collection, its implementation is uncontrolled and unbounded, because it can be and actually have been abused by tricky persons simply by overstating purchases or expenses to overstate tax credit with the end view of evading remittance of correct amount of VAT.
Given the country's impoverished citizens, the uncontrolled and unbounded implementation of the VAT system have become so onerous and inequitable to the Filipino people who are not actually engage in business nor engage in undertaking affairs for profit like, exempt entities or non-stock, non-profit organizations whose affairs are not for profit such as: religious organizations, charitable organizations, and non-stock, non-profit educational institutions, and the like, because the entire burden of the tax falls on them.
The power of taxation is said to be in good exercise when it is equitable; i.e., if burden falls on those better able to pay. However, the present system seemingly favors those business enterprises which are for profit, particularly the VAT-registered ones because they are able to reclaim the VAT that was shifted or passed on to them by the VAT-registered sellers or transferors of goods, properties, or services since they are entitled to tax credit termed as "input tax".
Even those who are non-VAT-registered persons or entities but are engage in profit oriented activities are not so burdened under the present tax scheme, because the VAT that is shifted to or passed on to them can be converted to form part of their costs and expenses which are deductible from their gross income, reduces taxable income and consequently lessens income tax liability.
Under the present VAT scheme, the burden of tax falls on the Filipino people (end-users) and not upon persons or entities who are better able to pay.
The implementing rules and regulations could have provided certain limitations on input tax paid and incurred by a VAT-registered person that may be creditable against output tax, because in principle and in truth, all natural and juridical persons, whether or not engage in business for profit, are end-users in the real sense of the word, and not only the Filipino people.
Please help alleviate the Filipino people, especially the under-privilege, from the burden of tax. It should not only fall on them, but upon persons, firms, or companies engage in undertaking affairs for profit as well.
Thanks for the info Mr. Dalanon, gawan ko ng news later iyang post niyo para mabasa ni Kim Henares.
ReplyDeleteTAX ADVICE
ReplyDeleteValue-added Tax (VAT) on sale of real property – not a pre-requisite for application for Certificate Authorizing Registration (CAR)
The VAT on sale of real property is not collected simultaneously upon filing of the applicable BIR returns as pre-requisite for the application for Certificate Authorizing Registration (CAR). There are no existing laws, rules and regulations that require the same. Moreover, the venue and time for filing of returns and payment or remittance of taxes for VAT, and Capital Gains Tax (CGT) or Expanded Withholding Tax (EWT) as the case may be, relative to sale of real property subject to VAT, do not fall within the same place, period or date on which or within which they are required to be filed and paid. The VAT returns and taxes thereon are filed with and paid to any Authorized Agent Banks (AABs) of the Revenue District Office (RDO) having territorial jurisdiction over the registered place of business of the seller/transferor; whereas, the CGT or EWT returns and taxes thereon are filed with and paid to any AABs of the Revenue District Office (RDO) having territorial jurisdiction over the place where the property being transferred is located, which processes the application for CAR and issuance thereof.
Hi Mr. Dalanon, you said: "Com. Henares intentionally did not pursue fraud case against the company because its secretary - Marixi Prieto who also happens to be the chairperson of the Philippine Daily Inquirer - is President Aquino's friend, according to Deputy Commissioner Estela Sales.
ReplyDeleteMs. Prieto talked to Henares and BIR Regional Director (now Assistant Commissioner of Internal Revenue) Nestor Valeroso, on different occasion, who both gave leniency to GDI."
IBIG SABIHIN HINDI NA SININGIL NI HENARES AND BIR ANG GOLDEN DONUT - EXCLUSIVE FRANCHISEE NG DUNKIN DONUTS - NG BILYON MAHIGIT NA TAXES KASI NATATAKOT SI HENARES SA PHILIPPINE DAILY INQUIRER NA WHERE MRS. MARIXI PRIETO CHAIRS. Notwithstanding Mrs. Prieto standing as the Secretary of Golden Donuts.
Yes sir, takot s'ya kay Marixi Prieto na chairperson ng PDI (INQUIRER.net) at stockholder-secretary ng Dunkin' Donuts dahil sabi sa akin ni Estela Sales ay kaibigan itong si Marixi ni PNoy at nakakadirekta. Alam nilang merong fraud case ang kaso, ngunit pinagtakpan o pilit na kinukubli ang katotohanan.
ReplyDeleteSir very clear ito - isa sa mga audit findings ko. Ang sales per duly-registered books of accounts ng Dunkin' Donuts ay P1.928 bilyon at ang idineklara sa tax return ay P1.031 bilyon lamang. Ibig sabihin merong undeclared sales na P897 million. Ang sabi ng KORTE SUPREMA sa kaso ng Paper Industries Corporation of the Phils vs. Court of Appeals, et al, 250 SCRA 434 that "where the books of accounts reflected a Sales or Receipts higher than that reflected in the return, the books of accounts should prevail. This is so, because the books of accounts are kept by the taxpayer and are prepared under its control and supervision, and they reflected what may be deemed to be admissions against interest". Yan ay malinaw na malinaw sir, ngunit pikit-mata, bingi. at pipi si Kim sa sobrang takot kay Marixi. hihihi thank you.
ReplyDeleteMarixi Prieto's Dunkin' Donuts company ay bigtime tax evader ngunit pinagtanggol ng hipokrito at sinungaling na BIR Commissioner na si Kim Henares.
ReplyDeleteDunkin' Donuts duly-registered books reflected a net income of P135.2 million for year 2007. Its tax return for the same period reflected a net loss of P44.9 million as well as that of the prior years, as follows:
Year Net Loss
2002 - P62,919,525.00
2003 - P44,902,187.00
2004 - P46,995,142.00
2005 - P67,077,226.00
2006 - P57,254,963.00
Notwithstanding the continuous incurrence of losses, it was able to acquire and accumulate properties and presented under Property, Plant and Equipment in its Financial Statements, as follows:
Year Acquisitions
2005 - P16,819,089.00
2006 - P20,755,205.00
2007 - P34,654,371.00
2008 - P47,019,061.00
How can it afford such gargantuan amount of acquisitions if it has really been continuously incurring losses?
In 2008, it appropriated Retained Earnings amounting to P100 million for future renovation of facilities and expansion of production center and outlets.
How can the Board of Directors of Dunkin' Donuts company have the audacity to appropriate such huge amount of Retained Earnings for future expansion of its center and outlets if it is really continuously incurring losses without infusing additional capital?
Habang ang Dunkin Donuts ni Marixi Prieto ay lumalago at yumayaman, walang kahit isang kusing na binabayarang buwis
Kim Henares, hindi ba maliwanag na tax evader itong Dunkin Donuts ni Marixi Prieto. Umiral lang ang nerbiyos at takot mo kay Marixi Prieto na kaibigan ni PNoy. Baka kasi ipasipa ka dyan sa puwesto mo, kaya ka natakot, bagkus ay pinagtanggol mo pa.
Ang ordinaryong empleyado ng gobyerno ay nagbabayad ng buwis dahil ito ay kinakaltas na sa buwanang sahod, ngunit ang mayaman at lumalagong Dunkin' Donuts ni Marixi Prieto na mandaraya na nga, ay walang binabayarang buwis. As in zero, nada, nothing, none, wala talaga.
Tama bang protektahan at ipatanggol mo ang Dunkin Donuts, Ginang Kim Henares?
TAX ADVICE
ReplyDeleteEFFECT OF FAILURE TO DEDUCT AND WITHHOLD TAX
Pursuant to Revenue Regulations (RR) No. 02-98, as amended, as further elucidated under Revenue Memorandum Order (RMO) No. 23-2014, in relation to Sections 57 and 79 of Republic Act No. 8424 otherwise known as the 1997 National Internal Revenue Code (1997 NIRC), as amended, all persons, natural or juridical, engaged in business are constituted as the government’s withholding agents; thus, they are duty-bound to deduct and withhold tax/es required to be withheld upon all payments for the salaries, wages and allowances of their employees, except wages of minimum wage earners (MWEs), and upon all income payments to their local/resident suppliers of goods and services; and payments to non-residents for the lease or use of property or property rights including the 12% VAT.
Failure to deduct and withhold shall make them liable for the tax/es not withheld, including increments, as provided under Section 251 of the Code.
In addition, the expense/s or income payment/s shall not be allowed as deduction from gross income pursuant to Section 34(K) of the same Code, which reads:
“Additional requirements for deductibility of certain payments. – any amount paid or payable which is otherwise deductible from, or taken into account in computing, gross income or for which depreciation or amortization may be allowed under this Section, shall be allowed as a deduction only if it is shown that the tax required to be deducted and withheld therefrom has been paid to the BIR in accordance with this Section, Sections 58 and 81 of this Code.”
“The purpose of this requirement is to [e]nsure the collection of the income tax on these payments which constitute income to the recipients thereof and, therefore, includible in their gross income (NIRC, Annotated, 2000 ed., De Leon, p. 292). Thus, when one engaged in trade or business makes payments that are deductible from his gross income for tax purposes it is not enough that he proves that such payments have been made. He must also show proof that he withheld the tax and remitted it to the BIR before he can deduct the same as business expense (NIRC, Annotated, De Leon, supra). [Systems and Encoding Corp. vs. CIR, CTA Case No. 6999 dated Dec. 16, 2008].
Furthermore, the Supreme Court ruled in the case of Tutuban Properties, Inc. vs. CIR, CTA, Case No. 6570, Dec. 20, 2007, that “[t]he corporation is the government’s withholding agent. Hence, it is duty-bound to withhold taxes upon income payments subject to tax required to be withheld at the time such income payments are paid or payable, whichever is earlier in order to be considered as a deductible expense (Section 2.57.4 of RR No. 2-98). Since the expense was not subjected to withholding tax in the year it was accrued and claimed as expense, the same shall not be allowed as deduction from gross income.”
RR No. 12-2013 also provides: “No deduction will also be allowed notwithstanding payments of withholding tax at the time of the audit investigation or reinvestigation/reconsideration in cases where no withholding tax was made in accordance with Secs. 57 and 58 of the Code”.
TAX ADVICE
ReplyDeleteASSIGNMENT OF RIGHTS OVER PROPERTY PURCHASED ON INSTALLMENT
If upon completion of the payment of the purchase price of real property classified as ordinary asset (or capital asset), but before the execution of the Deed of Sale, the buyer decides to assign his right over the property to another person for a consideration, the assignment shall be considered a separate sale of real property and, therefore, subject to the creditable/expanded withholding tax (EWT) or final withholding of capital gains tax, as the case may be, which shall be withheld by the assignee of such property based on the consideration per Deed of Assignment or the fair market value of such property at the time of assignment, whichever is higher, and to the DST imposed under Sec. 196 using the same basis.[RR No. 17-03]
It is to be clarified, however, that sale of interest in real property (real property purchased on installment covered by Contract to Sell which was sold by the original buyer before it was fully paid) shall be taxable on the part of the original buyer (now seller) based on the realized gain thereon which is measured by the difference between the agreed consideration and the amount actually paid by the said original buyer.[RR No. 17-03]
Differing views arise in the matter of interpretation of the preceding provisions of Revenue Regulations No. 17-03, given that said Regulations did not clearly define as to the kind of tax shall the realized gain be subject to. Shall it be subject to capital gains tax or creditable/expanded withholding tax (EWT); or to the regular income tax?
The Bureau of Internal Revenue, in its BIR Ruling No. [DA-(I-041) 819-09] dated December 22, 2009, clarified that the realized gain arising from the sale of rights over the property purchased on installment is not subject to the capital gains tax or creditable/expanded withholding tax, but to the regular income tax.
It further clarified that the Deed of Assignment of Rights to be executed for the purpose is also not subject to the documentary stamp tax prescribed under Section 196 of the 1997 NIRC, as amended, but only to the P15.00 documentary stamp tax (strip stamp) imposed under Section 188 of the same Code.
TAX ADVICE [edited]
ReplyDeleteEFFECT OF FAILURE TO DEDUCT AND WITHHOLD TAX
Pursuant to Revenue Regulations (RR) No. 02-98, as amended, in relation to Sections 57 and 79 of Republic Act No. 8424 otherwise known as the 1997 National Internal Revenue Code (1997 NIRC), as amended, all persons, natural or juridical, engaged in business, including government agencies as elucidated in Revenue Memorandum Order (RMO) No. 23-2014, are constituted as withholding agents; thus, they are duty-bound to deduct and withhold tax/es required to be withheld upon all payments for the salaries, wages and allowances of their employees, except wages of minimum wage earners (MWEs), and upon all income payments to their local/resident suppliers of goods and services; and payments to non-residents for the lease or use of property or property rights including the 12% VAT.
Failure to deduct and withhold shall make them liable for the tax/es not withheld, including increments, as provided under Section 251 of the Code.
In addition, the expense/s or income payment/s shall not be allowed as deduction from gross income pursuant to Section 34(K) of the same Code, which reads:
“Additional requirements for deductibility of certain payments. – any amount paid or payable which is otherwise deductible from, or taken into account in computing, gross income or for which depreciation or amortization may be allowed under this Section, shall be allowed as a deduction only if it is shown that the tax required to be deducted and withheld therefrom has been paid to the BIR in accordance with this Section, Sections 58 and 81 of this Code.”
“The purpose of this requirement is to [e]nsure the collection of the income tax on these payments which constitute income to the recipients thereof and, therefore, includible in their gross income (NIRC, Annotated, 2000 ed., De Leon, p. 292). Thus, when one engaged in trade or business makes payments that are deductible from his gross income for tax purposes it is not enough that he proves that such payments have been made. He must also show proof that he withheld the tax and remitted it to the BIR before he can deduct the same as business expense (NIRC, Annotated, De Leon, supra). [Systems and Encoding Corp. vs. CIR, CTA Case No. 6999 dated Dec. 16, 2008].
Furthermore, the Supreme Court ruled in the case of Tutuban Properties, Inc. vs. CIR, CTA, Case No. 6570, Dec. 20, 2007, that “[t]he corporation is the government’s withholding agent. Hence, it is duty-bound to withhold taxes upon income payments subject to tax required to be withheld at the time such income payments are paid or payable, whichever is earlier in order to be considered as a deductible expense (Section 2.57.4 of RR No. 2-98). Since the expense was not subjected to withholding tax in the year it was accrued and claimed as expense, the same shall not be allowed as deduction from gross income.”
RR No. 12-2013 also provides: “No deduction will also be allowed notwithstanding payments of withholding tax at the time of the audit investigation or reinvestigation/reconsideration in cases where no withholding tax was made in accordance with Secs. 57 and 58 of the Code”.
SA TUWID NA DAAN, BALUKTOT ANG KATWIRAN NI KIM HENARES!!!
ReplyDeletePhilippine Daily Inquirer (INQUIRER.net) chairperson MARIXI PRIETO’s Dunkin’ Donuts firm is a BIGTIME TAX CHEAT!!! It owes the Filipino people huge tax deficit amounting to P1.56 billion, including increments, for year 2007, which is already final, executory and demandable; but BIR’s Kim Henares intentionally failed to either collect it or sue the company for fraud for under-declaring revenue on the tax return.
On another note. The news article published in INTERAKSYON.COM on March 31, 2015 captioned “PROBE BIR ON ‘FLAWED’ IMPLEMENTATION OF TAX LAWS – PARTYLIST” substantiates my assertion that Kim Henares promulgates tax rules and regulations that are in conflict with the terms and provisions of a pre-existing law, like: Revenue Regulations Nos. 6-2013 and 2-2014. The provisions of these Regulations have gone beyond the ambit of the 1997 Tax Code, as amended.
Sa tuwid na daan, puno ng kasinungalingan at buloktot ang katwiran ni BIR Commissioner Kim S. Jacinto-Henares na niloko ang bayan sa di pagsingil ng P1.56 bilyong utang na buwis ng "Dunkin' Donuts", na pag-aari nina Marixi Prieto na chairperson ng Philippine Daily Inquirer (INQUIRER.net), na garapal na mandaraya at di nagbabayad ng buwis. SA MAGKANONG DAHILAN, Gng. Henares? @ www.othelloedalanon.blogspot.com
ReplyDeletePHILIPPINES BIR COMMISSIONER HENARES CHEATED THE FILIPINO PEOPLE.
ReplyDeleteBureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto-Henares cheated the Filipino people. She intentionally failed to either collect the P1.56 billion unpaid tax deficit of Philippine Daily Inquirer (Official) chairperson Marixi Rufino-Prieto firm Golden Donuts, Inc. (GDI), the exclusive Philippine Franchisee of Dunkin’ Donuts of America, Inc. (now Dunkin’ Brands, Inc.) or sue the company for tax evasion for deliberately under-declaring income on the tax return with the end view of evading payment of correct taxes. @ www.othelloedalanon.blogspot.com
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