TAX Advisory

Kinds of Stocks Fair Market Value Date of AFS

Book Value based on the latest available audited financial statements (AFS)

Liquidation value – equal to the Liquidation value – equal to the redemption price of the preferred shares including any premium and cumulative preferred dividends in arrears

CS – Book Value computed by CS – Book Value computed by deducting the liquidation value of the PS from total equity and dividing the number of outstanding CS.

PS – Liquidating Value

Prior to the date of sale but not earlier than the immediately preceding taxable year

As of balance sheet As of balance sheet date nearest to the transaction date

As of balance date nearest to the transaction date

Murabahah (Profit disclosed sale);Tawarrue (Commodity Murabahah);Salam (Sale with deferred delivery and spot payment);Ijarah (Lease);Mudarabah Partnership (Profit Sharing Partnership);Wakalah Investment (Investment Agency);Istisna;Istisna;Musharaka;Suksuk; andOther Islamic banking transactions with economically equivalent conventional finance transactions

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Income from EmploymentSpecial Tax Residency RulesInadvertent Creation of PE

The employee has not been present in the Philippines for more than 183 days The employee has not been present in the Philippines for more than 183 days (more than 120 days for residents of Poland; at least 90 days for residents of the United States of America) in aggregate in the year of income, fiscal year, calendar year, or any twelve-month period, depending on the applicable DTA;

His/her remuneration is paid to him/her by, or on behalf of, an employer that is not a resident of the Philippines; and

His/her remuneration is not deductible against the profits of a permanent His/her remuneration is not deductible against the profits of a permanent establishment which the foreign employer has in the Philippines.

Home OfficeConstruction Dependent Agent

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File 1 - Income Tax Return: EAFSXXXXXXXXXITRTYMMYYYY

File 2 - Audited Financial Statements: EAFSXXXXXXXXXAFSTYMMYYYY

File 3 - Other Attachments: EAFSXXXXXXXXXOTHTYMMYYYY-01

Authenticated sworn certification stating the relevant facts and circumstances of the bona fide presence of the employee in the Philippines;Duly executed contract/s (must be consularized or apostillized, if executed/signed in a foreign country);Certified true copy of the confirmed booking or flight itinerary for the Certified true copy of the confirmed booking or flight itinerary for the original flight;Certified true copy of the confirmed booking or flight itinerary for the re-booked flight;Certified copy of the travel advisory on the cancellation of flight issued by the airline company;Certified true copy of boarding pass;Certified true copy of the employee’s passport, including blank pages Certified true copy of the employee’s passport, including blank pages thereof; andOther documents that the Bureau shall deem necessary depending on the circumstances.

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Emailed Confirmation Receipt of SAWT through the eSubmission Facility

BIR Form No. 2307

Tax Debit Memo

Others

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Document Group and File Name Manually Filed Electronically Filed

File 1EAFSXXXXXXXXXITR#QMMYYYY

where:XXXXXXXXX - 9-digit TIN# - Taxable quarter (TQ) covered by the attachmentsMM Calendar month ending of the TQYYYY- TY covered by the attachmentsYYYY- TY covered by the attachments

File 3EAFSXXXXXXXXXOTH#QMMYYYY-01

where:XXXXXXXXX - 9-digit TIN# - TQ covered by the attachmentsMM - Calendar month ending of the TQYYYY- TY covered by the attachmentsYYYY- TY covered by the attachments01 - 1st file of other attachments

File size should not exceed 4.8 GB

ln case of additional file:

File 4EAFSXXXXXXXXXOTH#QMMYYYY-02

where:XXXXXXXXX - 9-digitTINXXXXXXXXX - 9-digitTIN# - TQ covered by the attachmentsMM - Calendar month ending of the TQYYYY – TY covered by the attachments02 - 2nd file of other attachments

Quarterly Income Tax Return (BIR Form No. 1701Q or 1702Q)

Filing Reference Number(FRN)

or

Email Notification

XXXXXXXXXX is the 9-digit TINTY is the placeholder for TY to identify it as annual submission regardless if FY or CY submissionMM is the Month end of the TYYYYY is the Year Ended01 is the first file of other attachments, up to 99 (applicable for File 3 - Other 01 is the first file of other attachments, up to 99 (applicable for File 3 - Other Attachments)

- Taxpayer submitting for Calendar year 2020 (ended December 31,2020) with TIN 123-456-789

File 1 - EAFS123456789ITRTY122020File 2 - EAFS123456789AFSTY122024File 3 - EAFS123456789OTHTY122020-01

- Taxpayer submitting for Fiscal year ended October 31,2020 with TIN - Taxpayer submitting for Fiscal year ended October 31,2020 with TIN 987-654-321

File 1 - EAFS987654321ITRTY102020File 2 - EAFS987654321AFSTY102020File 3 - EAFS987654321OTHTY102020-01

For Quarterly Income Tax, the submission of attachments shall also be done through eAFS. The following documents shall be scanned and classified with their corresponding naming conventions of the files:

Where:

Example 1

Example 2

As the National Capital Region (NCR), Bulacan, Cavite, Laguna and Rizal were once again put under the Modified Enhanced Community Quarantine (MECQ) for the period August 4, 2020 to August 18,2020, the BIR issued a circular to inform all concerned taxpayers about the manner of filing, and payment of taxes during this period. Accordingly, all concerned taxpayers under the jurisdiction of Revenue District Office (RDO) Nos. 24 to 34, 38 to 54B may:

File the tax return and pay the internal revenue taxes at the nearest Authorized Agent Banks (AABs), notwithstanding RDO jurisdiction.;

File the tax return and pay the corresponding tax due thereon to the concerned Revenue Collection Officers (RCOs) of the nearest Revenue District Office (RD), even in areas where there are AABs.

Provided that payment of internal revenue taxes in cash should not exceed Provided that payment of internal revenue taxes in cash should not exceed Twenty Thousand Pesos (P20,000.00), while those for check payment will have no limitation if the same is made with RCO in the district office. Provided further that all check payment from any taxpayer shall be made payable to Bureau of Internal Revenue (with or without "Name and TIN of the taxpayer" written on the check as previously required) and that the name and branch of the receiving AAB may no longer be indicated therein.

Taxpayers who are enrolled in eFPS shall continue to settle the tax liabilities with Taxpayers who are enrolled in eFPS shall continue to settle the tax liabilities with the AAB where the taxpayer is enrolled, while for those who will file through the eBIRForms Facility whether mandated or not mandated, may use the following payment options:

Development Bank of the Philippines'(DBP) Pay Tax OnlineLand Bank of the Philippines (LBP) Link.biz Portal Union Bank Online Web and Mobile Payment FacilityMobile Payment (GCash/PayMaya)

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Taxpayer who will avail of the electronic payment (ePay) may access the above mentioned ePay facilities by accessing the BIR website. Click the ''ePay" icon, and user shall be directed to the ePayment icons. Taxpayer may also directly access the following AAB links:

For taxpayer who will avail of GCash shall download and install the GCash or For taxpayer who will avail of GCash shall download and install the GCash or visit the App, and for those who will avail of PayMaya shall download and install the PayMaya App in the Google play Store or Apple App Store or Huawei AppGallery.

The circular shall take effect immediately until MECQ has been lifted and placed the mentioned areas under General Community Quarantine (GCQ).

Since the Metro Cebu is now under the MECQ, the BIR issued a circular to inform the Since the Metro Cebu is now under the MECQ, the BIR issued a circular to inform the concerned taxpayers of the manner of filing and payment of taxes during this period. All taxpayers who are under the jurisdiction of Revenue Region No. 13 - Cebu City are hereby allowed to file their respective tax returns and pay the corresponding tax due thereon to the nearest AABs via their over-the-counter payment facilities or to the nearest RCO, duly authorized by the RDO to receive tax returns and accept payments of the taxes thereon.

Concerned taxpayers are encouraged to electronically file returns through the eBIR Forms Concerned taxpayers are encouraged to electronically file returns through the eBIR Forms System and pay the corresponding taxes due thereon using the following ePayment facilities:

Taxpayer who will avail of the electronic payment (ePay) may access the above mentioned ePay facilities by accessing the BIR website. Click the "ePay" icon,and user shall be directed to the ePayment icons. Taxpayer may also directlyaccess the following AAB links:

For taxpayer who will avail of GCash shall download and install the GCash or visit the App, For taxpayer who will avail of GCash shall download and install the GCash or visit the App, and for those who will avail of PayMaya shall download and install the PayMaya App in the Google play Store or Apple App Store or Huawei AppGallery.

Development Bank of the Philippines' (DBP) Pay Tax OnlineLandBank of the Philippines (LBP) Link.biz PortalUnion Bank Online Web and Mobile Payment FacilityMobile Payment (GCash/PayMaya)

LBP - www.lbp-eservices.com/eeps/portal/index.ispDBP - www.dbppaytax.comUnion Bank - online.unionbankph.comUnion Bank - online.unionbankph.com

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LBP - www.lbp-eservices.corn/egps/portal/indexjspDBP - www.dbppaytax.comUnion Bank - online.unionbankph.com

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It clarifies the purpose of the BIR on requiring the related party disclosure.BIR audit guidelines for transfer pricing is already published – RAMO No. 19-2020.All taxpayers, whether individual and non-individual taxpayers, with related party transaction are required to complyFor Fiscal Year ending March 31, 2020, the deadline was moved to September 30, 2020Contemporaneous Transfer Pricing Documentation (TPD) is a required to any Contemporaneous Transfer Pricing Documentation (TPD) is a required to any taxpayers that have a related party transaction.There was no threshold mentioned in compliance with BIR Form No. 1709Submission of voluminous contract can be made using DVD-R accompanied by Sworn Certification.Additional sheet can be attached to the form if necessarySecondment arrangement are considered as related party transactions, thus, must Secondment arrangement are considered as related party transactions, thus, must comply with the sameDividends and redemption shares from related parties are to be included in the form but TPD is not requiredCost-sharing arrangement should have a formal written agreementNon-filing of the form is subject to penaltiesFailure to produce the form and its attachments upon issuance of summons can lead Failure to produce the form and its attachments upon issuance of summons can lead to penalties and imprisonment upon convictionIn case the foreign related party withheld taxes on its payment to Philippine taxpayer, the proof of payment of such taxes (e.g. similar to BIR Form No. 2307/2306) is required and should be authenticated or apostillizedTax Treaty Relief Application (TTRA) required are only those connected to related party transactionsNon-Stock, Non-Profit (NSNP) corporation or organization are required to comply if Non-Stock, Non-Profit (NSNP) corporation or organization are required to comply if they have related party transactionsRevenue Officers are empowered to obtain information despite Data Privacy Rules; andBanks are also required to comply.

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“The cited provisions and stated circumstances therefore warrant the suspension of the running of the Statute of Limitations under Section 203 and 222 of the NIRC of 1997, as amended, for a period starting on March 16, 2020 until the lifting of the extreme community quarantine (ECQ) and for sixty (60) days thereafter. The suspension of the running of the Statute of Limitations shall likewise apply with respect to the issuance and service of assessment notices, warrants and enforcement and/or collection of deficiency taxes. This circular shall apply nationwide on areas placed under deficiency taxes. This circular shall apply nationwide on areas placed under ECQ”