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					                                                                                                        1
                                                                                   September & October 2005
                                                                           September & October 2005




taxbrief
In this Issue

BIR ISSUANCES                                            VAT withheld on nonresidents may be claimed
                                                         as input in the year remitted (p 5)
    Taxation of payments for software (p 2)
                                                         VAT-exempt incorporation of a single propri-
BIR RULINGS                                              etorship (p 5)

    Reissuance of treasury shares not subject to         Insurance agents required to issue ORs on
    capital gains or income tax (p 3)                    commissions (p 6)

    Taxability of income of investors in trust funds   SUPREME COURT DECISIONS
    and IMAs from long-term investments (p 3)
                                                         RA 9337 is constitutional (p 6)
    Tax deductions for childhood care programs in
    the workplace (p 4)                                  VAT zero-rating of services rendered in the
                                                         Philippines for nonresidents (p 7)
    Refund of FWT on government securities
    issued under the 20-lender rule (p 4)              BUREAU OF LOCAL GOVERNMENT FINANCE
                                                       (BLGF) OPINIONS
    Taxation of domain name services (p 4)
                                                         LBT exemption of sale of real property by
    Due date for CGT on foreclosure sales by rural       NSNP institutions (p 7)
    banks (p 5)
                                                         Sauces and condiments are food subject to lower
    Tax consequence of a revocable trust with            LBT (p 7)
    successor trustees (p 5)
                                                       PEZA CIRCULARS
    Tax-exempt redemption of shares in a foreign
    mutual fund (p 5)                                    Tax treatment of forex gains and sale of “rejects”
                                                         and “seconds” by PEZA firms (p 8)




Member of Grant Thornton International
2       September & October 2005




BIR ISSUANCES                                                          copy of the software from which the work can be
                                                                       perceived, reproduced, or otherwise communicated,
Taxation of payments for software
                         software                                      either directly or with the aid of a machine or device.

Transactions involving software may fall under the follow-             A transfer of a copyrighted article or right in software is a
ing categories:                                                        sale or exchange of property if the benefits and burdens
                                                                       of ownership have been transferred. If there is insuffi-
1. A full or partial transfer of copyright in software                 cient transfer, and if the transferee is not treated as the
2. A transfer of a copy of the software (a copyrighted                 owner of the copyrighted article, the transaction will be a
   article)                                                            lease of a copyrighted article generating rental income.
3. Provision of services for the development or modifica-
   tion of the software                                             3. After-sales service - income from services
4. Provision of know-how relating to software program-
   ming techniques                                                  4. Site license/enterprise license/network license arrange-
                                                                       ments – business income
In mixed transactions, the appropriate treatment shall
separately apply on each of the transactions. However, a               Under these arrangements, the transferee obtains rights
transaction that is de minimis compared to the overall                 to make multiple copies of the program for operation
transaction shall be treated as part of one of the main                within its own business to enable the operation of the
transactions.                                                          program on the licensee’s computers or network.

The characterization of the resulting income/payment shall          5. Supply of information – royalties
be as follows:
                                                                       This applies to cases where the software house or com-
1. Copyrights and ownership                                            puter programmer agrees to supply information about
   • Transfer of copyright – royalties                                 the ideas and principles underlying the program. The
   • Transfer of copyright ownership – business income                 payments represent consideration for the use of, or the
                                                                       right to use, secret formulas or information concerning
    Transfer of software is classified as a transfer of a copy-        industrial, commercial or scientific experience that cannot
    right if it results in the transfer of any one or more of the      be separately copyrighted.
    following rights, but not all the substantial rights:
    a. The right to make copies of the software for distribu-       6. Transfer of full or partial ownership of the rights in the
       tion to the public by sale, rent, etc.                          copyrights – business income or capital gains
    b. The right to prepare derivative computer programs
       based on the copyrighted software                            The applicable tax rates shall depend on the tax status of the
    c. The right to make a public performance of the                seller/licensor and the end user, as follows:
       software
    d. The right to publicly display the computer program           1. Acquisition of ownership over a copyright (full or partial
    e. Other rights of the copyright owner                             transfer of a copyright)
                                                                       a. From a local owner
    Transfer of copyright ownership involves a transfer of all            i. Resident individual – 5% to 32%
    substantial rights in the copyright. The transaction shall            ii. Domestic corporation – 32%
    be considered a sale or exchange of property.                      b. From a foreign licensor
                                                                          i. Nonresident alien individual engaged in trade or
2. Copyrighted article                                                         business in the Philippines – 5% to 32%
   • Transfer of copyrighted article – business income                    ii. Resident foreign corporation – 32%
   • Lease of a copyrighted article – rental income                       iii. Nonresident foreign corporation – 32% final tax
                                                                               on gross income or the applicable treaty rate on
    A copyrighted article incorporating software includes a                    royalties
                                                                                         September & October 2005         3

2. Acquisition of copyright rights                             balance sheet as a deduction from stockholders’ equity.
   a. By a local subsidiary/reseller/distributor/retailer
      i. From a local licensor or reseller/distributor         Upon reissuance, any gain should be credited to addi-
          licensee – 20% final tax on the gross amount         tional paid-in capital. Losses, on the other hand, shall be
      ii. From a nonresident foreign licensor – 32% final      charged against additional paid-in capital to the extent of
          tax on gross income or the applicable treaty rate    previous net gains from the same class of stock. Other-
          on royalties                                         wise, the losses should be charged to retained earnings.
   b. By an end-user                                           Gains or losses on sales of treasury shares should not be
      i. From local subsidiaries, resellers, distributors or   credited or charged to income.
          resellers – 32% on net taxable income and the 2%
          creditable withholding tax                           (BIR Ruling No. 02-2005, July 22, 2005)
      ii. Directly from foreign owner and/or licensor of
          the software – 32% on gross amount or appli-         Taxability of income of investors in trust funds and
          cable treaty rate as royalties                       IMAs from long-term investments

The following payments for software transactions shall be      Pursuant to Sections 24(B)(1) and 25(A)(2), interest
subject to value-added tax (VAT) or withholding VAT in         income received by individuals, except nonresident aliens
case of nonresident payees:                                    not engaged in trade or business in the Philippines, from
                                                               long-term deposits or investments are exempt from the
1. Royalty payments for use of a copyright over software       20% final withholding tax. Such investments should
2. Payments made to resellers/distributors/retailers who       come in the form of savings, common or individual trust
   are engaged in the trade or business of distributing or     funds, deposit substitutes, investment management
   selling software                                            accounts, and other investments evidenced by certificates
3. Payments for services rendered in the Philippines in        issued by banks in such form prescribed by the Bangko
   connection with software purchased                          Sentral ng Pilipinas (BSP), with a maturity period of not
                                                               less than five years. Final taxes at 5%, 12% or 20% are,
This Revenue Memorandum Circular (RMC) supersedes              however, imposed in case of pretermination of the invest-
RMC 77-2003.                                                   ment before the fifth year.

(Revenue Memorandum Circular No. 44-2005, September            Hence, individuals who invest in qualified long-term trust
1, 2005)                                                       funds for a period of not less than five years shall be
                                                               exempt from the 20% final tax on interest income from
                                                               the fund. This does not mean, however, that the fund
BIR RULINGS                                                    itself shall be tax-exempt on income from its investments.

Reissuance of treasury shares not subject to capital           An irrevocable trust is treated as a separate taxable entity
gains or income tax                                            and taxed in the same manner (and on the same basis) as
                                                               an individual. Hence, income of an irrevocable trust may
Reissuance of treasury stock for any price, similar to the     be exempt from the 20% final withholding tax if the
issuance of unissued shares, should be considered a capital    underlying investment is a qualified long-term investment,
stock or equity transaction, and not an asset transaction.     and if the trust holds on to that investment for at least five
Hence, it should not be a taxable transaction.                 years.

Treasury stock becomes outstanding shares when reissued,       A revocable trust is only a pass-through entity and is not,
equal in all respects to every other issued share. The         for tax purposes, separate from those who establish or
Securities and Exchange Commission (SEC) stated, in its        create it by pooling their money for investment purposes.
SEC-SRC Rule No. 68, that treasury stocks should be            Income from such trusts is included in the taxable income
recorded at cost irrespective of whether these are acquired    of the grantor. Hence, income of revocable common trust
below or above par value, and should be shown in the           funds (CTFs) and investment trust accounts (ITAs) may
4      September & October 2005




be exempt from the 20% final tax on interest from qualified        Refund of FWT on government securities issued
long-term investments if the grantor is an individual other        under the 20-lender rule
than a nonresident alien not engaged in trade or business in
the Philippines.                                                   A refund may be claimed for the 20% final tax withheld
                                                                   on interest income from government securities that were
An investment management account (IMA) involves an                 issued to less than 20 lenders prior to the issuance of BIR
agreement primarily for financial return whereby the bank/         Ruling No. 7-2004.
investment manager manages the investible funds in a
representative capacity as a financial or managing agent,          Under the Tax Code, “deposit substitutes” have been
adviser, consultant or administrator. The agreement results        defined as alternative forms of obtaining funds from 20 or
only in a principal-agent relationship, not a trusteeship. The     more individual or corporate lenders. Interest income and
instruments in which the funds are invested are in the name        yield from deposit substitutes are subject to the final
of the principal or the investment manager as agent for the        withholding tax (FWT). However, under the present
principal. Interest income from a qualified long-term              rules, a mere issuance of government debt instrument and
investment under an IMA may therefore be exempt from               securities is deemed as falling within the coverage of
the 20% final withholding tax if the investor is a qualified       “deposit substitutes,” irrespective of the number of
individual.                                                        lenders at the time of origination. Hence, interest income
                                                                   from government securities shall be subject to FWT
The exemption, if applicable, covers interest income only.         regardless of the number of lenders. This was prescribed
Hence, the CTF, individual trust or IMA shall be subject to        in BIR Ruling No. 7-2004 and reiterated in BIR Ruling
the applicable tax on its other income such as the gain from       No. DA-491-2004.
sale of the securities, the tax on sale of shares of stocks (5%,
10%, or ½ of 1%), documentary stamp tax (DST), or the              Government securities issued prior to these rulings shall
10% dividends tax when investments made by the fund                nevertheless continue to be covered by the 20-lender
gives rise to such an income. Such net gains or dividends          rule. Hence, tax withheld on interest income from gov-
will no longer be subject to the 20% final withholding tax         ernment securities issued to less than 20 lenders during
when distributed to the individual investor in the CTF,            that time may be applied for refund within the two-year
individual trust or IMA.                                           prescriptive period and subject to the rules and proce-
                                                                   dures governing applications for refund. Although
(BIR Ruling No. 03-2005, July 22, 2005)                            exempt from withholding, such interest income shall be
                                                                   taxable to the recipient depending on his tax status, unless
Tax deductions for childhood care programs in the
                             care programs                         otherwise exempt.
workplace
                                                                   (BIR Ruling No. 08-2005, July 28, 2005)
Operating costs incurred by employers in supporting
workplace-based and related Early Childhood Care and               Taxation of domain name services
                                                                                           services
Development (ECCD) programs can be deducted from
their taxable income for purposes of computing their               A domain name service company is classified as engaged
income tax liability.                                              in the sale of services, not goods, if it merely renders
                                                                   administrative functions that do not involve any transfer
This privilege is embodied in RA 8980 subject to the               of technology, equipment or property to its subscribers.
condition that such employers will not charge user fees,
whether monetary or non-monetary, for the participation            Hence, a nonresident foreign corporation performing
of a child in such programs. Support for ECCD programs             domain name services outside of the Philippines shall not
may be in the form of physical facilities or recurrent operat-     be subject to Philippine taxation even on fees collected in
ing costs.                                                         the Philippines from Philippine-based clients.

(BIR Ruling No. 06-2005, July 28, 2005)                            The Philippine company, acting as agent for and on
                                                                   behalf of the nonresident foreign domain name service
                                                                                            September & October 2005        5

company, shall not be subject to Philippine income tax on        trustee for their children (successor trustees), the property
service fees collected for its principal. However, the           shall be subject to estate tax to the extent of the decedent’s
Philippine company’s gross commission earned for                 interest therein at the time of death.
collecting such fees shall be subject to the regular corpo-
rate income tax and the 10% VAT. The Philippine                  (BIR Ruling No. 013-2005, August 16, 2005)
company, as agent, shall maintain a separate book of
accounts and shall not issue its own official receipts for the               redemption shares        foreign
                                                                 Tax-exempt redemption of shares in a foreign
service fees it collects for and on behalf of its nonresident    mutual fund
principal.
                                                                 Gains derived by investors from redemption of shares of
(BIR Ruling No. 09-2005, July 28, 2005)                          stock by investors in a mutual fund are exempt from
                                                                 CGT pursuant to Section 32(B)(7)(h) of the Tax Code of
Due date for CGT on foreclosure sales by rural                   1997, which excludes such gains from gross income. The
banks                                                            exemption also applies to shares in a mutual fund estab-
                                                                 lished under the laws of a foreign country for the employ-
Under RA 720, as amended by RA 5939, land mortgaged              ees of a group of companies operating in about 40 coun-
to a rural bank may be redeemed within two years from            tries, including the Philippines.
the following dates: (1) the date of foreclosure if the
property is not covered by a Torrens title, or (2) from the      (BIR Ruling No. 14-2005, August 16, 2005)
registration date of the sheriff’s certificate of sale of such
foreclosure if the property is covered by a Torrens title.       VAT               nonresidents
                                                                 VAT withheld on nonresidents may be claimed as
                                                                 input in the year remitted
Hence, if the mortgagee is a rural bank, the 30-day period
within which to pay the capital gains tax (CGT) is reck-         VAT withheld by a local company on royalties paid to its
oned from the lapse of the two-year redemption period.           nonresident foreign licensors in 2001 and 2002 may be
However, DST should be paid on or before the fifth day           claimed as input VAT in the taxable year 2003 if such
of the month following the execution of the final deed of        VAT withheld was remitted to the government only in
sale made by the sheriff.                                        2003. Late remittance of the VAT withheld shall, how-
                                                                 ever, be subject to the applicable surcharges and interest
(BIR Ruling No. 010-2005, August 2, 2005)                        rates, which shall not form part of the creditable input
                                                                 VAT. Creditability of the input VAT shall be subject to
Tax consequence of a revocable trust with succes-
                     revocable                                   the condition that the VAT was not part of the royalty
sor trustees                                                     expense claimed as deduction for income tax purposes.

The transfer of property by the father and mother to a           (BIR Ruling No. 15-2005, August 26, 2005)
living trust under a Revocable Living Trust Agreement is
not subject to CGT and donor’s tax since there is no             VAT-exempt incorporation of a single proprietorship
                                                                 VAT                                  proprietorship
actual transfer of ownership of the property. Likewise,
since the transfer is without consideration, the deed            Incorporation of a single proprietorship shall not be
covering the transfer of the property is not subject to DST      considered a deemed-sale transaction and shall therefore
under Section 196 of the Tax Code. Only the notarial             not be subject to VAT if the original proprietor shall hold
acknowledgment of said deed is subject to DST under              the majority share of the new corporation. Such incorpo-
Section 188.                                                     ration shall be treated as a transfer of assets in exchange for
                                                                 shares of stock, thereby acquiring controlling interest in
The provision for a succession of trustees upon the death        the corporation. This is similar to VAT-exempt mergers or
of the trustor and the next-in-line trustors will not pre-       consolidations where the transferor gains control of the
clude the imposition of the estate tax upon the death of         transferee. All these are not subject to output tax.
the owners of the property. Hence, if upon the death of
one of the spouses, the surviving spouse remains the             (BIR VAT Review Committee Ruling No. 014-2005,
                                                                 August 26, 2005)
6      September & October 2005




Insurance agents required to issue ORs on commis-                 provisions in the House and Senate bills to reconcile and
sions                                                             harmonize the disagreeing provisions. It did not inject any
                                                                  idea or intent that is wholly foreign to the subject embraced
Commissions earned by insurance agents for services               by the original provisions.
rendered to insurance companies (services such as negotiat-
ing, selling and obtaining insurance policies) are considered     The “no-amendment rule” under the Constitution has not
income from services subject to internal revenue tax. Insur-      been violated. The rule refers only to the procedure to be
ance agents, VAT-registered or not, should issue duly             followed by each house of Congress with regard to bills
registered receipts to cover the payments made by the             initiated in each house, before the bill is transmitted to the
insurance company.                                                other house for concurrence or amendment. It would be
                                                                  absurd to construe the provision in such a way that would
Section 237 of the Tax Code requires all persons subject to       prohibit further changes to a bill after one house has voted
an internal revenue tax to issue duly registered receipts or      on it, because this would mean that the other house would
sales invoices for each sale or for services rendered valued at   be deprived of its constitutional power to amend or intro-
PhP25.00 or more. If the sale or service is made to a person      duce changes to the bill.
liable to VAT, or if the receipt covers payment for commis-
sions, the receipt or invoices should also show the name,         There is no question that the revenue bill originated exclu-
business style and address of the payor.                          sively in the House of Representatives. The Senate acted
                                                                  within its constitutional power to introduce amendments to
(BIR VAT Review Committee Ruling No. 013-2005, August             the House bill when it included provisions in Senate Bill
26, 2005)                                                         No. 1950 amending corporate income taxes, percentage,
                                                                  excise and franchise taxes.

SUPREME COURT DECISIONS                                           On the substantive issues:

RA 9337 is constitutional                                         The authority given to the President by RA 9337 to in-
                                                                  crease the VAT rate is not a delegation of legislative power. It
The Supreme Court (SC) ruled that there is no constitu-           is simply a delegation of ascertainment of facts upon which
tional impediment to the full enforcement and implementa-         enforcement and administration of the increase in rate under
tion of RA 9337. The temporary restraining order issued           the law is contingent. The legislature has made the operation
by the SC on July 1, 2005 shall be lifted upon finality of the    of the 12% rate effective January 1, 2006 contingent upon a
decision.                                                         specified fact or condition. It leaves the entire operation or
                                                                  non-operation of the 12% rate upon factual matters outside
On the procedural issues:                                         the control of the executive.

Under the provisions of both the Senate Rules and the             The issue of whether or not the 12% increase in VAT rate is
Rules of the House of Representatives, the Bicameral              unfair and ambiguous is not for the SC to decide. The SC
Conference Committee is mandated to settle the disagreeing        will not dawdle on the purpose of Congress or the executive
provisions of the House and Senate bills. The term “settle”       policy, given that it is not for the judiciary to “pass upon
is synonymous to “reconcile” and “harmonize.” To                  questions of wisdom, justice or expediency of legislation.”
reconcile or harmonize disagreeing provisions, the Bicam-
eral Conference Committee may then do the following: (a)          The argument that the limitation on input taxes is arbitrary,
adopt the specific provisions of either the House bill or         oppressive, excessive and confiscatory is premised on the
Senate bill; (b) decide that neither the provisions in the        constitutional right against deprivation of life, liberty or
House bill nor the provisions in the Senate bill would be         property without due process of law. This is not absolute.
carried into the final form of the bill; and (c) arrive at a      The right to credit input tax as against the output tax is
compromise between the disagreeing provisions. There              clearly a privilege created by law, a privilege that the law can
was, therefore, no irregularity committed when the Bicam-         also remove or, in this case, limit. Furthermore, it must be
eral Conference Committee introduced changes or deleted           noted that any unutilized excess input is not lost as this is
                                                                                             September & October 2005       7

retained in the books and remain creditable in the suc-            ables from its Philippine cardholders. The branch receives
ceeding taxable periods.                                           payment in acceptable foreign currency inwardly remitted
                                                                   and accounted for in conformity with BSP rules and
The VAT law is not inequitable. It provides for exemp-             regulations. Hence, input taxes of the Philippine branch
tion and thresholds taking into consideration the sizes of         arising from such services may be applied for refund or
the businesses. Congress also provides mitigating mea-             for the issuance of a tax credit certificate.
sures to cushion the impact of the imposition of the tax on
those previously exempt. On the other hand, the increase           RR 7-95 further qualified the coverage of the zero-rated
in corporate income tax rate and the removal of certain            services with the phrase “as well as services by a resident
exemptions are meant to distribute the burden of taxation.         to a nonresident foreign client such as project studies,
Although indirect taxes are regressive by nature, the              information services, engineering and architectural designs
Constitution does not prohibit the imposition of indirect          and other similar services.” These services are merely
taxes. When the Constitution mandated Congress to                  illustrative and should not restrict the scope of qualified
evolve a progressive system of taxation, it simply meant           services. Hence, facilitation of collection can still qualify
that direct taxes should be preferred and that the regres-         for zero-rating, although it is not enumerated in the
sive indirect taxes can be minimized with exemptions and           regulations.
differentiated rates.
                                                                   The SC upheld the decisions of the Court of Tax Appeals
On these bases, the SC concluded that RA 9337 is not               and the Court of Appeals.
unconstitutional. The SC is neither blind nor deaf to the
plight of the masses. But it does not have the remedy for          (Commissioner of Internal Revenue v. American Express
all political or social ills. The Constitution has judiciously     International, Inc. (Philippine Branch), GR No. 152609,
allocated the powers of government to the three depart-            June 29, 2005)
ments, and judicial interpretation respects the indepen-
dence of each department.
                                                                   BUREAU OF LOCAL GOVERNMENT FINANCE
(Abakada Guro Party List, et. al. v. The Executive Secre-          (BLGF) OPINIONS
tary, et. al., GR 168056; Aquilino Q. Pimentel, Jr., et. al. v.
Executive Secretary Eduardo R. Ermita, et. al., GR                 LBT exemption of sale of real property by NSNP
168207; Association Of Pilipinas Shell Dealers, Inc., et. al. v.   institutions
Cesar V. Purisima, et. al., GR 168461; Francis Joseph G.
Escudero, et. al. v. Cesar V. Purisima, et. al., G.R. No.
                                                                   A non-stock non-profit (NSNP) educational institution
168463; Bataan Governor Enrique T. Garcia, Jr. v. Hon.
                                                                   is not liable to pay any business tax on the sale of real
Eduardo R. Ermita, G.R. No. 168730, September 1, 2005)
                                                                   property that was acquired through donation. The sale
                                                                   would constitute a single or isolated transaction, and the
VAT zero-rating of services rendered in the Philip-
                             endered
VAT zero-rating services render
pines for nonresidents (VAT destination principle)                 institution is not engaged in any undertaking for gain or
          nonresidents (VAT
                                                                   profit that would otherwise make it liable to local business
                                                                   tax (LBT) as a real estate dealer or as a business entity.
Under Section 102 of the Tax Code, zero percent VAT
applies on services (other than the processing, manufac-
                                                                   (BLGF Opinion, August 9, 2005)
turing or repacking of goods for persons doing business
outside the Philippines) performed by VAT-registered
persons in the Philippines when paid in acceptable foreign         Sauces and condiments are food subject to lower
currency and accounted for in accordance with BSP rules            LBT
and regulations.
                                                                   Banana-based, tomato-based, or chili-based sauces and
                                                                   condiments qualify as food products that are essential
This provision clearly covers services performed by a
                                                                   commodities. Hence, local manufacturers of such prod-
VAT-registered Philippine branch for its nonresident
foreign affiliate company in the form of facilitating the          ucts shall be subject to the lower rate of LBT imposed on
collection of the company’s (credit card company) receiv-          essential commodities under Section 143(c), which is one-
8      September & October 2005




half of the rate prescribed under Section 143(a) on other
manufacturers.

(BLGF Opinion, May 30, 2005)



PEZA CIRCULARS

Tax treatment of forex gains and sale of “rejects”
    treatment forex                      “rejects”
and “seconds” by PEZA firms

The tax treatment of foreign exchange (forex) gains and sale
of production “rejects” and “seconds” by ecozone export
enterprises shall follow the tax regime covering the activities
from which the gains arise. Thus, if the forex gain is derived
from an activity with income tax incentive (Income Tax
Holiday or 5% Gross Income Tax), the appropriate tax
incentive should apply. Conversely, if the forex gain arises
from activities without tax incentive, it should be subject to
the normal corporate income tax.

The sale of production “rejects” and “seconds,” as well as
recovered waste/scrap used in production and processing
of activities registered with the Philippine Economic Zone
Authority (PEZA), is considered covered by the registered
activity of ecozone export enterprises. As such, any income
derived therefrom should be covered by the applicable tax
incentive, i.e., income tax holiday or 5% gross income tax.

However, the sale of unprocessed, unused, obsolete or             Tax Brief is a monthly publication of Punongbayan &
                                                                  Araullo (P&A) that aims to keep its clientele, as well
“off-specs” production inputs is deemed not covered by            as the general public, informed of various
                                                                  developments in taxation and other related matters.
the registered activity of an ecozone enterprise, and shall be
                                                                  This publication is not intended to be a substitute for
subject to the normal corporate income tax.                       competent professional advice. Even though careful
                                                                  effort has been exercised to ensure the accuracy of
                                                                  the contents of this publication, it should not be used
All local sales of ecozone export enterprises are also subject    as the basis for formulating business decisions.
                                                                  Government pronouncements, laws, especially on
to applicable duties and taxes (including VAT).                   taxation, and official interpretations are all subject to
                                                                  change. Matters relating to taxation, law and
                                                                  business regulation require professional counsel.
(PEZA Memorandum Circular No. 32-2005, September 15,              We welcome your suggestions and feedback so
2005)                                                             that the Tax Brief may be even more useful to you.
                                                                  Please get in touch with us if you have any
                                                                  comments and if it would help you to have the full
                                                                  text of the materials in the Tax Brief.

                                                                  Lina Figueroa
                                                                  Senior Manager
                                                                  Tax Advisory & Compliance
                                                                  P&A
                                                                  19th Floor, Tower I
                                                                  The Enterprise Center
                                                                  6766 Ayala Avenue
                                                                  1200 Makati City
                                                                  T +632 886-5511 local 507
                                                                  F +632 886-5577
                                                                  E Lina.P.Figueroa@pna.ph
                                                                  W www.punongbayan-araullo.com

				
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