RMR 01-01WAIVER OF SURCHARGE, INTEREST AND COMPROMISE PENALTY on the temporary deferment of payment by Philippine Appliance Corp. (PHILACOR) of national taxes due to a labor strike - Under Sections 248(A)(1) and (3) and 249, both of the Tax Code of 1997, the imposition of the surcharge and interest on delinquency is mandatory. However, since Philacor notified its failure to file the returns and pay the taxes thereon within the prescribed period due to the labor strike, its request for waiver of the payment of surcharge and penalty is granted but not to the payment of interest imposed under Sec. 249 of the Tax Code of 1997, pursuant to Section 204 of the same Code which grants the Commissioner the authority to abate or cancel a tax liability. (BIR Ruling No. 001-2001 dated January 8, 2001)

RMR 01-02DOCUMENTARY STAMP TAX; tax deferred exchange/merger - The tax deferred exchange of properties of a corporation, which is a party to a merger or consolidation, solely for shares of stocks in a corporation, which is also a party to the merger or consolidation, is subject to the Documentary Stamp Tax under Section 176 if the properties to be transferred are shares of stocks or even certificates of obligations, and also to the Documentary Stamp Tax under Section 196, if the properties to be transferred are real properties. The original issuance of shares of stock of the surviving cooperative in favor of the stockholders of the absorbed corporation as a result of the merger is subject to the Documentary Stamp Tax under Sec. 175 of the Tax Code of 1997. (BIR Ruling No. 002-2001 dated February 2, 2001)

Revenue Memorandum Order No. 32-2001Issued December 5, 2001 prescribes the guidelines on the monitoring of the basis of the property transferred and shares of stock received in a tax-free exchange transaction, as well as revises and updates the requirements and conditions precedent to the non-recognition of gain or loss in said transactions.

The application for Certification/Ruling on the tax consequence of the exchange of properties described in the Order shall be filed with the BIR Law Division using the form provided for the purpose, together with a transmittal letter containing a brief overview of the transaction and three (3) copies of each of the documents specified in the Order.

In the case of executed and/or completed transactions, either original executed and notarized copies or certified true copies of the specified documents must be submitted, together with a proof of payment of the applicable Documentary Stamp Taxes (DST) on the transactions. In the case of issuance of shares/unit of participation by the transferee, the due dates for the payment of the corresponding DST prescribed under RMO No. 8-98, as amended, shall apply.

Soft copy of the form of request for ruling and certification is available at the Taxpayers Information and Education Division and Law Division of the BIR. It may also be downloaded from the BIR website at www.bir.gov.ph.

If the application is to be signed and submitted not by the taxpayer himself, but only by his authorized representative, the appropriate special power of attorney shall be submitted with the application for a certification-ruling. In the case of a juridical person, the corporate secretary shall issue a sworn statement that the signing officer has been authorized by the Board of Directors to represent the company and has personal knowledge of the facts of the exchange transaction.

Before filing the request for certification-ruling, the taxpayer/applicant shall pay first the applicable processing and certification fee as provided in RR No. 18-2001. Said fee shall be adjusted accordingly if additional transfer certificates of title/condominium certificates of title/certificates of stock are submitted for processing.

The Certificate Authorizing Registration/Tax Clearance for the real property or share of stock/unit of participation/interest involved in the exchange shall be issued by the Revenue District Officer or by the authorized Internal Revenue Officer, on the basis of the certification-ruling issued by the Commissioner or his duly authorized representative to the effect that the transaction qualifies as a tax-free exchange or corporate reorganization

RMR 02-2002Non-taxability of monetized leave credits - Executive Order No. 291 dated September 27, 2000, which provides for the non-taxability of monetized leave credits of government officials and employees, cannot be given retroactive application. (BIR Ruling No. 002-2002 dated January 12, 2002)