The Office for Alternative Dispute Resolution ("OADR") has certified the Intellectual Property Office of the Philippines ("IPOPHL") as the mediation service provider in the Philippines in the field of intellectual property ("IP"). OADR will endorse IPOPHL as the recommended mediation service provider for all IP cases before it.
OADR and IPOPHL agreed to conduct online seminars on the services of IPOPHL which include: (i) mandatory mediation; (ii) mediation outside litigation; and (iii) international mediation.
OADR and IPOPHL will further execute a Memorandum of Agreement ("MOA") to formalise their partnership. The MOA is expected to be signed in October.
On 27 August 2020, the Anti-Red Tape Authority ("ARTA") issued Memorandum Circular No. 2020-06 to streamline the standards, measures, and procedures to be adopted by the various government agencies and local government units during the "New Normal". "New Normal" refers to the set of norms and standards for strengthening safety measures due to the pandemic. It is described by zero-contact measures and the availability of electronic platforms and mechanisms.
Some of the guidelines under this issuance include the reduction of requirements for permits, licenses, and authorisations where specified agencies are encouraged to remove unnecessary processes and procedures. The specified agencies are also now required to set up an online processing system for accepting applications for permits, licenses and clearances. Electronic versions of such documents shall be recognised with the same level of authority as that of a signed hard copy. In line with this, electronic signatures shall also be used in lieu of physical signatures. Government agencies are also required to establish a payment gateway to process digital payments (i.e. credit cards, debit cards or bank transfer), among others.
To minimise face-to-face interactions, ARTA also required the removal of meetings and interviews as indispensable requirements for the issuance of permits and licenses, among other measures, unless these are strictly necessary for complex or highly technical applications. In these situations, the agencies shall utilise videoconferencing platforms.
On 18 August 2020, the Bureau of Internal Revenue ("BIR") issued Revenue Regulations No. 21-2020 which introduced the Voluntary Assessment and Payment Program ("VAPP") for the collection of additional tax revenue. The VAPP is intended to mitigate the losses incurred during the COVID-19 situation and to incentivise taxpayers to voluntarily pay their taxes within the covered period in order to avail themselves of the privilege of immunity from audit and investigation.
The VAPP shall cover all internal revenue taxes covering the taxable year ending 31 December 2018, and fiscal year 2018 ending on 31July 2018 to 30 June 2019. These include estate tax, donor's tax, capital gains tax, creditable withholding tax, expanded withholding tax, and documentary stamp tax related to one-time transactions.
Taxpayers who, due to inadvertence or otherwise, erroneously paid taxes, failed to file tax returns or pay taxes may avail themselves of the benefits of VAPP, subject to the fulfilment of requirements and conditions imposed by the BIR. That said, those who (i) have already been issued a Final Assessment Notice, (ii) are under investigation as a result of verified information; (iii) have cases involving tax fraud and pending in the Department of Justice or in courts; and (iv) have pending cases involving tax evasion and other criminal offenses, cannot avail themselves of the VAPP. Qualified persons can avail themselves of the benefits of the VAPP until 31 December 2020, unless otherwise extended. An important condition is that the voluntary payment should be made in cash.
The House of Representatives ("HoR") Committee on Ways and Means approved the Substitute Bill to House Bills No. 6765, 6944, 4531, and House Resolution No. 685, which aims to impose value-added tax ("VAT") on digital services. Digital services refers to any service that is delivered or subscribed over the internet or other electronic network, which cannot be obtained without the use of information technology.
The Substitute Bill further provides that non-resident digital service providers are liable for assessing, collecting, and remitting VAT on the transaction that goes through their platforms. Thus, they may claim creditable input tax. However, if they are not duly registered with the Bureau of Internal Revenue, payments to non-residents for services rendered in the country shall be subject to 12% withholding tax at the time of payment. Moreover, non-resident digital service providers are not eligible to avail of the tax credit mechanism in relation to VAT.
The Substitute Bill is currently being subjected to interpellations with the HoR Committee on Rules in preparation for the second reading.1 Afterwards, it will undergo readings and separate votings with the HoR and Senate. A bicameral conference committee may be formed in order to reconcile conflicting provisions in the HoR and Senate versions of the bill. Upon approval by both bodies, the final version of the Substitute Bill will be submitted to the President who may either veto or sign it into law.2
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1 See HoR – Committee on Rules, List of Primary Referred House Bills, available at http://congress.gov.ph/committees/search.php?id=0532&pg=primary#tab (last accessed on 1 October 2020).
2 See 1987 Constitution, Article VI, Section 26. The full details of the legislative process may be found at HoR – Legislative Process, available at http://www.congress.gov.ph/legisinfo/?v=process (last accessed on 1 October 2020).
The Bureau of Internal Revenue ("BIR") has recently released issuances in relation to cross-border and intra-firm transactions among related parties or associated enterprises, to further enforce BIR Revenue Regulation ("RR") No. 2-2013 on transfer pricing guidelines. The objective of BIR RR No. 2-2013 is to determine the appropriate revenues and taxable income of parties in controlled transactions, or those that involve the transfer of resources, services, or obligations among associated enterprises.
On 8 July 2020, BIR issued BIR RR No. 19-2020 which prescribes the use of BIR Form No. 1709 or the Information Return on Related Party Transactions. BIR Form No. 1709 and its supporting documents shall form part of the required attachments to the Annual Income Tax Return. The taxpayer must properly disclose information on related party transactions. These include the following: (i) nature of the transactions and affected accounts; (ii) business overview of the ultimate parent company, if applicable; and (iii) the taxpayer's functional profile and the industry in which it operates.
Other supporting documents that may be attached to BIR Form No. 1709 include: (i) certified true copy of the relevant contracts or proof of transaction; (ii) withholding tax returns and the corresponding proof of payment of taxes withheld and remitted to BIR; (iii) proof of payment of foreign taxes or ruling duly issued by the foreign tax authority where the other party is a resident, which must be duly authenticated or apostilled; (iv) certified true copy of the advance pricing agreement, if applicable; and (v) any transfer pricing documentation.
On 29 July 2020, BIR issued BIR Revenue Memorandum Circular No. 76-2020 to provide clarifications of the requirements in relation to the filing of BIR Form No. 1709.
Failure to comply may subject the taxpayer to penalties prescribed by the Tax Code.
