Latest BIR Regulation affecting cooperatives

Monday, December 13, 2010

HOLD YOUR 2010 FINANCIAL STATEMENTS, THE BIR REQUIRES A LAST-MINUTE SET OF DOCUMENTARY REQUIREMENTS

So, you are almost finished doing your cooperative's Financial Statements for 2010. But not yet.

The Department of Finance, through the Bureau of Internal Revenue, has just published last December 13, 2010 in major newspapers Revenue Regulations No. 15-2010, dated November 25, 2010.

What is so hot about this regulation that it appears like a last-minute imposition on tax payers? I said so, because the said regulations take effect "fifteen (15) days following complete publication in a newspaper of general circulation in the Philippines." This means that this will take effect on December 28, 2010, just three (3) days before the year would have ended.

I am not a tax accountant/lawyer or anything. But the little that I know about this, is that this new regulation takes effect three days before the year ends, but will have the effect of being effective for the whole of 2010, and the Financial Statements for 2010. Is not that something? Would it not have been more 'proper', if this were to take effect, covering the tax returns of 2011?

Well, the regulations might be 'last-minute', but they would have to be followed.

We have tried to visit the BIR website (www.bir.gov.ph). Revenue Regulations No. 15-2010 is not easily accessible, like the others posted on the site. It will take some efforts to access it. Anyway, a copy of the same was published on page 7, Manila Bulletin, Dec. 13, 2010.

For whatever it is worth, we are reproducing the said regulations, in the hope that those who might have missed the publication, would have at least the chance to view it online -on this space.

One caveat. Pls., check this out and clarify the implementation of these regulations with your accountant, your cooperative's external auditor and/or the Bureau of Internal Revenue within your locality.

Cooperatives are about to finish preparing their yearly Financial Statements. So, they are as much affected by this set of regulations, as others are. So, here it goes:

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE

REVENUE REGULATIONS NO. 15-2010

SUBJECT: Amending Certain Provisions of Revenue Regulations No. 21-2002, as
Amended, Implementing Section 6 (H) of the Tax Code of 1997,
Authorizing the Commissioner of Internal Revenue to Prescribe
Additional Procedural and/or Documentary Requirements in
Connection with the Preparation and Submission of Financial
Statements Accompanying the Tax Returns

TO : All Internal Revenue Officers and Others Concerned

_____________________________________________________________

Section 1. Pursuant to Section 244 of the Tax Code of 1997, as amended, in relation to Section (H) of the Same Code, these Regulations are hereby promulgated to amend certain provisions of Revenue Regulations No. 21-2002 prescribing the manner of compliance with any documentary and/or procedural requirements in connection with the preparation and submission of financial statements accompanying the tax returns.

Section 2. Section 2 of RR No. 21-02, as amended, is hereby further amended to insert the following to paragraph (e) thereof:

"In addition to the disclosures mandated under the Philippine Financial Reporting Standards, and such other standards and/or conventions as may heretofore be adopted, the Notes to Financial Statements shall include information on taxes, duties and license fees paid or accrued during the taxable year, particularly the following:

1. The amount of VAT output tax declared during the year and the account title and amount/s upon which the same was based. If there are zero-rated sales/receipts and/or exempt sales/receipts, a statement to that effect and the legal basis therefor;

2. The amount of VAT input taxes claimed broken down into:

a. Beginning of the year;
b. Current year's domestic purchases/payments for:

i. Goods for resale/manufacture or further processing
ii. Goods other than for resale or manufacture
iii. Capital goods subject to amortization
iv. Capital goods not subject to amortization
v. Services lodged under cost of goods and
vi. Services lodged under other accounts

c. Claims for tax credit/refund and other adjustments; and
d. Balance at the end of the year

3. The landed cost of imports and the amount of customs duties and tariff fees paid or
accrued thereon;

4. The amount of excise tax/es, classified per major product category, i.e., tobacco
products, alcohol products, automobiles, minerals, oil and petroleum, etc. paid on

a. Locally produced excisable items, and
b. Imported excisable items.

5. Documentary stamp tax (DST) on loan instruments, shares of stocks and other
transactions subject thereto;

6. All other taxes, local and national, including real estate taxes, license and permit
fees lodged under the Taxes and Licenses account both under the Cost of Sales
and Operating Expense accounts;

7. The amount of withholding taxes categorized into

i. Tax on compensation and benefits
ii. Creditable withholding tax/es
iii. Final withholding tax/es

8. Periods covered and amount/s of deficiency tax assessments, whether protested
or not

9. Tax cases, and amounts involved, under preliminary investigation, litigation and/or
prosecution in courts or bodies outside the BIR."

Section 3. Section 6 of RR 21-02 is hereby amended to read as follows:

"Section 6. Repealing Clause. - all existing rules, regulations and other issuances
or portions thereof inconsistent with the provisions of these Regulations are
hereby modified, repealed or revoked accordingly, including the submission of
a separate Schedule of Taxes and Licenses."

Section 4. Effectivity Clause. - These regulations shall take effect fiffteen (15) days
following complete publication in a newspaper of general circulation in the
Philippines."

(Signed) CESAR V. PURISIMA
Secretary of Finance
001263

Recommending Approval:


KIM S. JACINTO-HENARES
Commissioner, Bureau of
Internal Revenue
001650
Manila Bulletin -Dec.13, 2010

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