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                                                               May 2005 – SPECIAL ISSUE 01

                               LAC BULLETIN
                                        Lopez and Co.
                                Certified Public Accountants




          Online filing of AFS (Audited Financial Statements) with the SEC

The SEC is now implementing their SEC i-Report project.

   (1) Filers (and the external auditors of the filers) that will opt to file online must sign
       a memorandum of agreement (prepared by the SEC) that includes a representation
       that the documents filed online are faithful reproductions of original documents.

   (2) Filing can be done by the issuers themselves or by external auditors on behalf of
       the issuer. Users have to register under the system developed by the SEC.

   (3) Issuers who file online are no longer required to file GFFS (General Form of
       Financial Statements).

   (4) Ten days after the online filing, one hard copy of the AFS should be filed with the
       SEC.


                        Deducting Input Tax Denied for Refund

Taxpayer-claimant of a denied claim for refund/ tax credit of unutilized input taxes
relating to VAT zero-rated sales may claim the same as deduction for income tax
purposes if the denial was due to the following reasons:

   1. Failure to comply with certain sales invoicing requirements, such as failure to
      issue VAT invoice/ receipt with the word “zero rated” printed thereon, or issuance
      of invoices/receipts that had been registered with the BIR.; or

   2. Failure to show evidence that the input taxes sought to be refunded were not
      carried over and applied against any output VAT in the succeeding periods.

The BIR held that input taxes are assets which are expected to bring benefit to the tax
payer. Denial by the BIR or the Court of the refund application means that the asset has
lost its useful value.

On the other hand, in case the denial was due to failure of the taxpayer to submit
supporting VAT invoices/ receipts for the purchases giving rise to the input taxes being
refunded, the denied claim cannot qualify as a loss deduction in the year denied.



                                 Withholding Tax Update

“The 2% withholding tax by top ten thousand corporations (TTC) applies only to
purchase of services. Payment of association dues is not a payment for the purchase of a
service..”

Under RMC 72-2004, only membership dues to country clubs, sports club and the likes
are considered purchase of services and therefore subject to the 2% withholding tax if
payor is TTC. Association dues to professional organization like PICPA, IBP, and TMAP
                                                                                           2


and etc., not being in the likes of country clubs and sports clubs, are therefore not subject
to the 2% withholding tax.



                             Run After Tax Evader ( RATE)

The BIR and DOF are now utilizing their information technology (IT) and computerized
resources in pinpointing cases of tax evasion. The IT system of the BIR is now able to
check more effectively whether transactions of taxpayers are being reported correctly.



                                 Subpoena Duces Tecum

A Subpoena Duces Tecum commands a taxpayer or its officers, under the treaty of
penalty, to appear before the BIR at a specified time and bring a described set of tax or
accounting records, such as, contracts, general ledgers, sales, journals, and other
documents. However, before the issuance of a subpoena, the BIR examiner must first
make two request from taxpayer to make the documents available for inspection. If the
examiner fails to get the taxpayer’s cooperation, the examiner may then request for the
issuance of a subpoena. Only the following BIR officials are authorized to issue a
subpoena.

   (1) The Commissioner and the Deputy Commisioners;
   (2) At the National office, the Assistant Commissioner of Legal Services;
   (3) At the Regional Offices, the Director, or in his absence, the Assistant Director, or
       the Chief of Legal Division, only as an alternate and as may be authorized by the
       Regional Director.

If the taxpayer named still fails, refuses, or even neglects to comply with the subpoena, a
criminal case for violation of Sec.5(C), 14, 266 of the Tax Code may be filed. Upon
conviction, the taxpayer may be punished with a fine ranging from Php 5,000 to 10,000
and imprisonment of one to two years; and/or


                                 Documentary Stamp Tax


Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers
evidencing the acceptance, assignment, sale or transfer of an obligation, right or property
incident thereto.


Tax Form
BIR Form 2000 (Documentary Stamp Tax Declaration Return)

Documentary Requirements
1) Photocopy of document(s) to which the documentary stamp shall be affixed, in case of
constructive affixture of Documentary Stamp Tax
2) For metering machine users, a schedule of the details of usage or consumption of
documentary stamp
3) Proof of exemption under special law, if applicable
4) Duly approved Tax Debit Memo, if applicable
                                                                                                             3


Tax Rates

Tax       Code
                 Document           Taxable Unit     Tax Due Per Unit   % of Unit   Taxable Base
Section
                 Debentures and P200.00         or
                                                                                    Face   value        of
174              Certificates of fraction            P1.50              .75%
                                                                                    Document
                 Indebtedness    thereof
                                   P200.00    or
                                   fraction
                 Original Issue of
                                   thereof
                 Shares of Stock                                                    Par value of shares
                 with par value                  2.00                   1%          of   stocks    actual
175                                P200.00    or                                    consideration for the
                                   fraction                                         issuance of shares of
                 Original Issue of               2.00                   1%
                                   thereof                                          stocks
                 Shares of Stock
                                   based      on
                 without par value
                                   actual
                                   consideration
                 Sales,
                 Agreements       to
                 Sell, Memoranda
                 of           Sales,
                                                                                    Par value of such
                 Deliveries       or P200.00    or
                                                                                    due-bills, certificate
176              Transfer of Due- fraction           1.50               .75%
                                                                                    of    obligation    or
                 bills, Certificate thereof
                                                                                    stocks
                 of Obligation, or
                 Shares           or
                 Certificates     of
                 Stock
                 Bonds,
                 Debentures,
                 Certificate    of P200.00      or                                  Par value of such
177              Stock          or fraction          1.50               .75%        bonds, debentures or
                 Indebtedness      thereof                                          Certificate of Stocks
                 issued in foreign
                 Countries
                 Certificate      of
                                     P200.00    or                                  Face value of such
                 Profits or Interest
178                                  fraction        .50                .25%        certificate      /
                 in Property or
                                     thereof                                        memorandum
                 Accumulation
                 Bank      Checks,
                 Drafts, Certificate
                 of Deposit not On      each
179                                          1.50
                 bearing interest Document
                 and          other
                 Instruments
                 Bonds,       Loan
                 Agreements,
                 Promissory
                 Notes, Bills of
                 Exchange,
                 Drafts,
                 Instruments and
                 Securities Issued
                 by             the
                 Government       or
                 any      of     its
                 Instrumentalities,
                 Deposit
                                     P200.00    or
                 Substitutes Debt                                                   Face value of the
180                                  fraction        .30                .15%
                 Instrument,                                                        instrument/document
                                     thereof
                 Certificates     of
                 Deposit bearing
                 interest       and
                 others         not
                 payable on sight
                 or         demand
                 (except       loan
                 agreement        or
                 promissory notes
                 exceeding
                 P250,000.00 for
                 personal use or
                 family use)
                                                                                    Face value of such
                 Bills of Exchange
                                                                                    bill of exchange or
                 or order drawn in P200.00      or
                                                                                    order       or    the
181              foreign    country fraction         .30                .15%
                                                                                    equivalent of such
                 but payable in thereof
                                                                                    value, if expressed in
                 the Philippines
                                                                                    foreign currency
                                                                                        4

                                                               Face value of such
                                                               bill of exchange or
      Foreign Bills of P200.00            or
                                                               order       or    the
182   Exchange      and fraction               .30     .15%
                                                               equivalent of such
      Letter of Credit  thereof
                                                               value, if expressed in
                                                               foreign currency
                         P200.00          or
      Life     Insurance                                       Amount Insured by
183                      fraction              .50     .25%
      Policies                                                 the Policy
                         thereof
                         P4.00
      Policies        Of
                         premium          or
184   Insurance     upon                       .50     12.5%   Premium charged
                         fraction
      Property
                         thereof
      Fidelity  Bonds P4.00
      and        other premium            or
185                                            .50     12.5%   Premium charged
      Insurance        fraction
      Policies         thereof
      Policies      of                                         Capital of annuity, or
                       P200.00            or
      Annuities,                                               if unknown 33 1/3
186                    fraction                1.50    75%
      Annuity or other                                         times    the   annual
                       thereof
      instruments                                              income
                            P500.00       or
                                                               Value or amount of
186   Pre-Need Plans        fraction           .50     .10%
                                                               the Plan
                            thereof
                      P4.00               or
187   Indemnity Bonds fraction                 .30     7.5%    Premium charged
                      thereof
      Certificates   of
      Damage         or
      otherwise     and
      Certificate    or
      document issued
      by any customs
      officers, marine Each
188                                            15.00
      surveyor, notary Certificate
      public        and
      certificate
      required by law
      or by rules and
      regulations of a
      public office
      Warehouse
      Receipts (except
189                     Each Receipt 15.00
      if value does not
      exceed P200.00)
                            P1.00 cost of
                            ticket and

      Jai-alai,   Horse     Additional
      Race      Tickets,    P0.10       on
190   lotto or Other        every P1.00 .10            10%     Cost of the ticket
      Authorized            or    fraction
      Number Games          thereof      if
                            cost of ticket
                            exceeds
                            P1.00
      Bills of Lading or
      Receipts
191                         Each Proxy         15.00
      (except     charter
      party)
      Powers           of Each
193                                            5.00
      Attorney            Document
                            First 2,000


      Lease and other       For     every
      Hiring                P1,000        or
      agreements      of    fractional
      memorandum or         part thereof 3.00          1.5%
194   contract for hire,    in excess of
      use or rent of        the        first
                                             1.00      1%
      any    land     or    P2,000       for
      tenements       or    each year of
      portions thereof      the term of
                            the contract
                            or
                            agreement
195   Mortgages             First 5,000        20.00   .4%     Amount Secured
                                                                                                           5

              Pledges of lands,
              estate,        or
                                On       each 10.00                        .2%    Amount Secured
              property     and
                                P5,000     or
              Deeds of Trust
                                fractional
                                part thereof
                                in excess of
                                5,000
              Deed of Sale,         First 1,000
              instrument       or
              writing        and                                                  Consideration or Fair
              Conveyances of        For      each                                 Market          Value,
                                                  15.00                    1.5%
              Real       Property   additional                                    whichever is higher
196                                 P1,000     or
              (except     grants,                                                 (if government is a
              patents          or   fractional    15.00                    1.5%   party, basis shall be
              original              part thereof                                  the consideration)
              certificate of the    in excess of
              government)           P1,000

                                    1,000   tons P500.00 for the first 6
                                    and below    months PlusP50 each
                                                 month     or   fraction
                                                 thereof in excess of 6
                                                 months



                                                  P1,000 for the first 6
                                                  months
                                                  Plus P100 each month
                                                  or fraction thereof in
                                                  excess of 6 months
              Charter   parties
                                1,001     to
197           and      Similar
                                10,000 tons
              Instruments
                                                  P1,500 for the first 6
                                                  months
                                                  Plus P150 each month
                                                  or fraction thereof in
                                                  excess of 6 months




                                    Over 10,000
                                    tons


Procedures

File BIR Form No. 2000 in triplicate (two copies for the BIR and one copy for the
taxpayer) with the Authorized Agent Bank (AAB) in the Revenue District where the
seller or transferor is registered, for shares of stocks or where the property is located, for
real property. In places where there are no AAB, the return will be filed directly with the
Revenue Collection Officer or Authorized City or Municipal Treasurer.
Submit all documentary requirements and proof of payment to the Revenue District
Office having jurisdiction over the place of residence of the seller.

Deadlines

The Documentary Stamp Tax return (BIR Form 2000) shall be filed in triplicate (two
copies for the BIR and one copy for the taxpayer) within five (5) days after the close of
the month when the taxable document was made signed, issued, accepted or transferred.


                                                  *******
 LAC Bulletin is the official newsletter of Lopez and Company, Certified Public Accountants
 with offices located at 2518 Leiva St., Sta Ana , Manila with phone no. 564-6472

								
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