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QUALITY ASSURANCE BULLETIN I March 2019 Edition 2
RECENT SECURITIES AND EXCHANGE COMMISSION ISSUANCES
RECENT BUREAU OF INTERNAL REVENUE ISSUANCES
Revenue Regulations No. 3-2019: Prescribes the use of the Electronic Certificate Authorizing
Registration System relative to transactions involving registration and transfer of real and
personal properties pursuant to Section 5(B) of the NIRC of 1997, as amended, and in relation
to Sections 58(E), 95 and 97 of the same Code.
Revenue Memorandum Circular No. 31-2019: Reiterates the tax compliance requirements of
candidates, political parties/party list groups and campaign contributors.
Revenue Memorandum Circular No. 34-2019: Clarifies the treatment and reporting
requirements of Input Tax as of December 31, 2018 relative to VAT-exempt medicines pursuant
to the TRAIN Law.
Revenue Memorandum Circular No. 35-2019: Reiterates the definition of Accounts
Receivable/Delinquent Accounts for purposes of issuance of Delinquency Verification
Certificates and Tax Clearance for certain/specific purpose.
Revenue Memorandum Circular No. 36-2019: Circularizes the Additional Lists of Withholding
Agents required to deduct and remit the 1% or 2% Creditable Withholding Tax for the purchase
of goods and services under RR No. 11-2018.
Revenue Memorandum Circular No. 37-2019: Circularizes the enhanced BIR Form No. 1701
[Annual Income Tax Return for Individuals (including Mixed Income Earner), Estates and Trusts]
January 2018 (ENCS).
Revenue Memorandum Circular No. 38-2019: Amends RMC No. 102-2018 specifically the
deadline for the processing of pending VAT Refund/Credit Claims filed prior to the effectivity of
RMC No. 54-2014.
NOTICE:
Clarification on the Filing of Audited Financial Statements pursuant to the Revised Corporation Code of the Philippines.
QUALITY ASSURANCE BULLETIN I March 2019 Edition 3
REVENUE REGULATIONS
NO. 3-2019
Prescribes the use of the Electronic Certificate
Authorizing Registration System relative to
transactions involving registration and transfer of real
and personal properties pursuant to Section 5(B) of
the NIRC of 1997, as amended, and in relation to
Sections 58(E), 95 and 97 of the same Code.
The Regulations mandate the Land
Registration Authority to use the eCAR System
with barcode developed and owned by the BIR as
agreed in a Memorandum of Agreement
circularized through Revenue Memorandum
Circular No. 28-2015. The BIR is likewise obligated
to upload its data to LRA using the Philippine Land
Registration and Information System (PHILARIS)
of the latter. Both systems of the BIR and LRA are
linked to make use of the LRA-BIR eCAR
Verification System (LRA-BIR-CVS), which is now
available nationwide. The eCAR System with
barcode in the meantime, however, is limited to the
use of BIR and LRA until such time that all LGUs,
banks and other entities processing the transfer of
properties are ready with their systems to link with
the BIR eCAR System in the future.
The eCAR system replaces the manually-
prepared Certificate Authorizing Registration
(CAR). The eCAR shall have a system-generated
Barcode Reference Number (BRN) printed (below
a barcode) on an accountable security paper.
There shall be issued one (1) eCAR per
title in case of registered land and/or improvement/
s, and one (1) eCAR for each tax declaration, in
case of unregistered land and/or improvement/s. A
separate eCAR shall be issued for all personal
properties. A system-generated information, such
as eCAR number, date of eCAR issuance, amount
paid, date of payment and signature of the
authorized signatory of eCAR shall be indicated or
stamped on the reverse side of each page of the
original copies of the transfer document, e.g.,
Deed of Sale, Deed of Exchange, Deed of
Donation, Deed of Extrajudicial Settlement of
Estate, etc.
The Provincial, City and Municipal
Assessor’s Offices of all LGUs, banks, and other
issuers of Stock Certificates, Bonds and other
similar Paper Securities are mandated to accept
only the eCAR printed and issued by the BIR from
the said System before any transfer of ownership
is changed to the new owner.
The eCAR shall have a validity of five (5)
years reckoned from date of issuance, for
purposes of presenting the same to the Register
of Deeds (RD). Otherwise, the eCAR shall be
deemed permanently expired and, therefore, of no
force and effect. A new eCAR may be generated
and issued upon request of the taxpayer for the
re-issuance of a new eCAR to replace the expired
eCAR.
All manually-issued CARs that are either
due for revalidation or has not been presented to
the RD within the validity period and manually
issued-CARs with partial transfer of properties as
prescribed in existing BIR issuances are
considered expired manual CARs already and, as
such, shall no longer be valid for presentation to
the RD. The said CARs shall be replaced with an
eCAR by the concerned Revenue District Officer
or Large Taxpayers Division who issued the CAR
upon presentation of the expired manual CAR.
Pursuant to the TRAIN Law, the
Commissioner of Internal Revenue is authorized
to obtain, on a regular basis, both financial and
non-financial information from persons and
offices. Accordingly, the BIR shall obtain any
information related to the payment of taxes on all
transfer of property made with the LRA and RDs.
No registration of any deed or instrument
resulting in the transfer of ownership of real
property shall be allowed by the RD unless the
Commissioner or his duly authorized
representative has issued the corresponding
eCAR that has been properly verified under
LRA- BIR-CVS. Accordingly, the RD shall inscribe
on the newly-issued Transfer Certificate of Title
(TCT) the following information: a) eCAR Number;
b) Date of Issuance of eCAR; c) Revenue District
Office (RDO) Number; and d) Amount and date of
payment per tax type.
QUALITY ASSURANCE BULLETIN I March 2019 Edition 4
An eCAR duly-issued by the BIR and
retrieved by the RD from the LRA-BIR eCAR
database, whether for taxable or tax-exempt
transactions, shall be the basis for the RD to effect
the transfer. Any eCARs not in the database are
deemed spurious and not issued by the BIR,
hence, transfer of the property should not be
effected.
For transactions involving Estate or Donor’s
Tax on which the eCARs are issued by the
Revenue District Office (RDO) having jurisdiction
over the place where the donor is domiciled at the
time of donation or where the decedent is
domiciled at the time of his death, the RDs who
have jurisdiction over the property shall no longer
require the eCAR to be authenticated or
countersigned by the issuing RDO. The provision
shall no longer apply to non-resident decedents/
donors whose eCARs are issued by RDO No. 39-
South Quezon City.
No deed, conveyance, mortgage, lease or
other voluntary instruments affecting unregistered
land shall be valid except as between the parties
thereto, unless such instrument shall have been
registered in the book of Unregistered Property of
the RD. Thus, no Tax Declaration shall be issued
in the name of the new owner by the Provincial,
City, Municipal Assessor’s Office concerned unless
proof is presented thereby that the said instrument
had already been registered with the RD.
For both manual and automated processing
of Tax Declaration, for titled and untitled real
properties, pursuant to Office of the President’s
Administrative Order No. 186, it shall be the duty
of Provincial City or Municipal Assessors to
indicate at the back/reverse side of the
newly-issued Tax Declaration the following
information contained in the eCAR: a) eCAR
Number; b) Date of Issuance of eCAR; c) Amount
and Date of payment per tax type; and d) RDO
Number.
The Tax Identification Number (TIN) of the
transferee shall, however, be indicated on the face
of the newly-issued Tax Declaration.
Subsequent updates of the Tax Declaration
without change in ownership shall require the carry
-over of the information contained in the previous
version of the Tax Declaration. Moreover,
Provincial, City or Municipal Assessors shall be
required to submit quarterly summary reports,
within 30 days after the end of the calendar
quarter, to the concerned Office of the Regional
Director of the BIR, copy furnished the
Assessment Performance Monitoring Division
(APMD) of the BIR National Office, who shall
cascade to the RDO having jurisdiction over the
Province, City or Municipality of all transfers
effected by its Office showing the following
information:
a. Tax Declaration Number of new Tax Declara-
tion issued;
b. Tax Declaration Number of Tax Declaration
cancelled;
c. Transfer Certificate of Title (TCT) No. for ti-
tled properties;
d. eCAR Number;
e. Date of issuances of eCAR;
f. TIN of Transferor;
g. Name of Transferor;
h. TIN of Transferee;
i. Name of Transferee;
j. Area of the real property transferred;
k. Location of the real property transferred;
l. Classification of the property transferred
indicating the specific area per classification
in case of multiple classifications;
m. Type of taxes paid (Capital Gains Tax, Estate
Tax, Donor’s Tax,…);
n. Amount and date of payment per tax type;
o. Official Receipt Number/Validation Number;
p. Official Receipt date/Validation Date; and
q. Remarks.
REVENUE MEMORANDUM CIRCULAR
NO. 31-2019
Reiterates the tax compliance requirements of
candidates, political parties/party list groups
and campaign contributors.
All candidates, political parties/party list
groups and campaign contributors are required
to register or update their registration with the
Revenue District Office (RDO) having jurisdiction
over their respective residence address, or
head/principal office following the guidelines
and procedures enumerated in Revenue
Memorandum Circular No. 38-2018. Individual
candidates shall be registered as “Professional”
in order to be issued an Authority to Print
Receipts/Invoices.
Continuation...
QUALITY ASSURANCE BULLETIN I March 2019 Edition 5
All candidates and political parties/party list groups
shall undertake the following:
Pay an Annual Registration Fee in the
amount of Five Hundred Pesos (P500.00).
Certificate of Registration is no longer
required to be issued to individual candidates
who are not engaged in business;
Register Non-VAT Official Receipts to be
issued for every contribution received,
whether in cash or in kind valued at Fair
Market Value;
Preserve records of contributions and
expenditures, together with all pertinent
documents, for a period of three (3) years
from the close of the taxable year during
which the election was held.
All political parties/party list groups shall
register and keep adequate books and other
accounting records such as Cash Receipts
Journal, Cash Disbursements Book or their
equivalent. Individual candidates may opt to use
a simplified set of bookkeeping records as long
as it can provide accurate information.
Income payments made by political
candidates and political parties/party list groups
on their purchases of goods and services as
campaign expenditures, and income payments
made by individuals or juridical persons for their
purchases of goods and services intended to be
given as campaign contribution to political
parties and candidates shall be subject to five
percent (5%) Creditable Withholding Tax (CWT).
BIR Form No. 2307 (Certificate of Creditable Tax
Withheld at Source) shall be issued to the payee.
All political parties/party list groups and
candidates shall:
a. Remit five percent (5%) CWT for the first two
months of the quarter on or before the 10th
day of the following month in which the
withholding was made using BIR Form No.
0619-E.
b. File and pay the quarterly Withholding Tax
return using BIR Form No. 1601-EQ not later
than the last day of the month following the
close of the quarter during which the
withholding was made, together with the
submission of the Quarterly Alphalist of
Payees through the eSubmission facility of the
BIR.
c. File the Annual Information Return of
Creditable Taxes Withheld [(Expanded)/
Income Payments Exempt from Withholding
Tax (BIR Form No. 1604-E)] as well as the
statement of Contributions and Expenditures
duly stamped “Received” by the
Commission on Elections (COMELEC) on or
before March 1 following the year of
election.
Expenses that were not subjected to the
5% CWT are not considered utilized campaign
funds, and the candidates, political parties, party
list groups are precluded from claiming such
expenditures as deductions from his/her/its
campaign contributions. As such, the full
amount corresponding to said expense shall be
reported as unutilized campaign funds subject to
Income Tax.
Only those donations/contributions that
have been utilized/spent during the campaign
period as set by the COMELEC are exempt from
Donor’s Tax. Donations utilized before or after
the campaign period are subject to Donor’s Tax
and not deductible as political contribution on
the part of the donor.
Unutilized/excess campaign funds net of
the candidate’s or political party’s/party list’s
campaign expenditures, shall be considered as
subject to Income Tax and, as such, must be
included in their/his taxable income as stated in
their/his Income Tax Return (ITR). No further
deduction, either itemized or optional, shall be
made against the said taxable income.
Continuation...
QUALITY ASSURANCE BULLETIN I March 2019 Edition 6
Any candidate or political party/party list
group, whether winner or loser, who fails to file
with the COMELEC the Statement of
Contributions and Expenditures required under
the Omnibus Election Code shall be
automatically precluded from claiming such
expenditures as deductions from the campaign
contributions making the entire amount directly
subject to Income Tax.
Every candidate and Treasurer of the
political parties/party list groups shall submit the
Statement of Contributions and Expenditures to
COMELEC and RDO where the candidates/
political parties/party list groups are registered
within thirty (30) days after the election.
The RDO shall maintain the list of all
registered candidates and political parties/party list
groups for monitoring and updating of its
registration record after election.
The registration of individuals in their
capacity as candidates shall automatically end ten
(10) days after the deadline of filing the
Quarterly Remittance Return of Creditable
Income Taxes Withheld (BIR Form No. 1601EQ).
The Client Support Section Chiefs of the
concerned RDOs shall end-date the Form Type
1601EQ and Tax Type WE of individual
candidates that were registered and/or updated,
and cancel the Branch code of those that were
registered as Branch for purposes of election.
Those candidates who are not engaged in
business shall be reverted to its previous
taxpayer type, e.g. Executive Order No. 98 or
Local Employee. However, the political parties
including party list groups shall subsist, unless
they opt to update their registration.
REVENUE MEMORANDUM CIRCULAR
NO. 34-2019
Clarifies the treatment and reporting requirements of
Input Tax as of December 31, 2018 relative to VAT-
exempt medicines pursuant to the TRAIN Law.
An Inventory List of drugs and medicines
as of December 31, 2018, which became VAT-
exempt beginning January 1, 2019 pursuant to
Section 34 of Republic Act No. 10963 (TRAIN
Law), shall be required from all manufacturers,
wholesalers, distributors and retailers regardless
of whether or not there is an existing excess Input
Tax.
The Inventory List, which shall include all
drugs and medicines on hand, imported and
locally-manufactured shall be filed (using the
format prescribed in Annex A of the Circular) with
the Large Taxpayer Service/Revenue District
Office where the taxpayer is registered on or
before April 25, 2019, as an attachment to the
Quarterly VAT Declaration Form (BIR Form
2550Q) for the first quarter of 2019. When
filing BIR Form 2550M/2550Q, the Input Tax
corresponding to the sale shall be deducted from
the taxpayer’s allowable Input Tax.
As the sale of VAT-exempt drugs and
medicines are made, the Input Tax
corresponding to the sale shall be closed to cost
or expense.
REVENUE MEMORANDUM CIRCULAR
NO. 35-2019
Reiterates the definition of Accounts Receivable/Delinquent Accounts for purposes of issuance of Delinquency Verification Certificates and Tax Clearance for certain/specific purpose.
As provided in Revenue Memorandum Order No. 11-2014, “open stop-filer cases” and deficiency tax assessments which are timely protested, subject of reconsideration/ re-investigation, or pending appeal with the Appellate Division or Court of Tax Appeals/Supreme Court shall not be considered as AR/DA and, therefore, existence of which shall not be a ground for the non-issuance of a clear DVC or Tax Clearance, as the case may be.
Continuation...
QUALITY ASSURANCE BULLETIN I March 2019 Edition 7
For purposes of issuing DVC and Tax Clearance, the existence of the outstanding AR/DAs shall generally be verified through the utilization of the Accounts Receivable Management System (ARMS). However, in the event the concerned taxpayer has record of AR/DA in the manually-maintained Inventory List of AR/DAs under the respective jurisdiction of the DVC/Tax Clearance-issuing offices, such AR/DA must first be added or created in the ARMS before denying the application for Tax Clearance or before issuing DVC reflecting the said AR/DA. Provided further that the physical docket where such record of added/created AR/DA emanated must be with the concerned office to ensure that only enforceable AR/DA is added in the ARMS database, otherwise it shall not likewise hinder the issuance of a clear DVC or Tax Clearance.
REVENUE MEMORANDUM CIRCULAR
NO. 36-2019
Circularizes the Additional Lists of Withholding Agents
required to deduct and remit the 1% or 2% Creditable
Withholding Tax for the purchase of goods and
services under RR No. 11-2018.
Additional Lists of Withholding Agents
under the jurisdiction of the Revenue Regions
who are required to deduct either the one percent
(1%) or two percent (2%) Creditable Withholding
Tax (CWT) from the income payments to their
suppliers of goods and services, as well as the
list of withholding agents for deletion from the
existing list who are no longer required to
deduct the said CWT.
Accordingly, the obligation to deduct and
remit to the BIR the 1% and 2% CWT from the
suppliers of goods and services shall continue,
commence or cease, as the case may be,
effective April 1, 2019. Any taxpayer that cannot
be found in any of the published lists of
inclusions is deemed to have been excluded and,
therefore, not required to deduct and remit the
1% or 2% CWT under Revenue Regulations No.
11-2018.
The said lists are posted in the BIR Web-
site (www.bir.gov.ph) with search facility for the
convenience of all concerned.
REVENUE MEMORANDUM CIRCULAR
NO. 37-2019
Circularizes the enhanced BIR Form No. 1701 *Annual
Income Tax Return for Individuals (including Mixed
Income Earner), Estates and Trusts+ January 2018
(ENCS).
The newly issued return shall be used by
the individuals (including those with mixed
income), estates and trusts in filing the annual
income tax return and paying the income tax due
starting the year 2018 that is due on or before
April 15,2019.
The revised manual return is already
available in the BIR website
"http://www.bir.gov.ph" under the BIR Forms -
Income Tax Return Section. However, the form is
not yet available in the (eBIRForms); thus, eFPS/
eBIRForms shall use manual return in filing and
paying the income tax due thereon.
Revenue District Offices (RDOs) shall
receive the manually-filed returns by the
taxpayers, either no payment returns or returns
with payments made online.
REVENUE MEMORANDUM CIRCULAR
NO. 38-2019
Amends RMC No. 102-2018 specifically the deadline
for the processing of pending VAT Refund/Credit
Claims filed prior to the effectivity of RMC No. 54-
2014.
Amends the deadline prescribed in
Revenue Memorandum Circular (RMC) No.
102-2018, for the processing of pending VAT
Refund/Credit Claims filed prior to the effectivity of
RMC No. 54-2014 from March 29, 2019 to July
31, 2019.
Concerned revenue officers and officials
who fail to comply with the said deadline shall be
issued a “Show-Cause Order” and may be
imposed appropriate sanctions pursuant to
Section 269(c) of the Tax Code of 1997, as
amended, and Section 43 of the “Revised Code of
Conduct for Revenue Officials and Employees”,
as implemented by Revenue Memorandum Order
No. 53-2010.
Continuation...
QUALITY ASSURANCE BULLETIN I March 2019 Edition 8
CLARIFICATIOS ON THE FILING OF AUDITED FINANCIAL STATEMENTS PURSUANT TO THE REVISED CORPORATION CODE OF THE PHILIPPINES.
WHEREAS, on February 20, 2019, the Republic Act No. 1 1232 or the Act Providing for the Revised Corporation Code (the "Revised Code") was approved which took effect on February 23, 2019.
WHEREAS, Section 177 of the Revised Code requires that:
"Except as otherwise provided in this Code or in the rules issued by the Commission, every corporation, domestic or foreign, doing business in the Philippines shall submit to the Commission:
a. Annual financial statements audited by an independent certified public accountant: Provided, That if the total assets or total liabilities of the corporation are less than Six hundred thousand pesos (P600,000.00), the financial statements shall be certified under oath by the corporation's treasurer or chief financial officer ...xxx." (emphasis supplied)
WHEREAS, the Commission has identified the following areas for clarification arising from the above provision which may be raised by the public:
1. The impact of Section 177 in the preparation and submission of 2018 AFS;
2. Comparative presentation of financial statements; and
3. Additional information that should be disclosed in the financial statements.
NOW, THEREFORE, the Commission en banc, in its meeting held on March 14,2019, approved the following guidance to address the areas for clarification:
A. Impact of Section 177 in the preparation and
submission of AFS
All financial statements covering the
periods on or before February 22, 2019, should
be prepared and submitted in accordance with
the Old Corporation Code or Batas Pambansa
68, in addition to the requirements of SRC Rule
68.
Section 177 of the Revised Code should
be applied prospectively. The requirement to
prepare and submit AFS based on the Revised
Code should be made upon the effectivity of the
same, February 23, 2019 and onwards.
B. Comparative presentation of financial
statements beginning February 23, 2019
All companies required to file Audited
Financial Statements under the Revised Code
should comply with the required comparative
presentation as provided under SRC Rule 68.
Pursuant to Section 5 of the Rule, if the financial
statements of the prior year were not audited,
such statements shall be marked prominently as
"UNAUDITED." In addition, the auditor shall
disclose this in an "other matter" paragraph in the
auditor's report.
C. Additional information to be disclosed in the
financial statements
To enhance understandability of AFS,
companies should include in the Notes to FS a
discussion of the impact of the Revised Code
relative to the preparation and submission of
financial statements.
QUALITY ASSURANCE BULLETIN I March 2019 Edition 9
This bulletin is a compilation of relevant issuances, rulings and memoranda from various government agencies to enhance the
technical skills of the professional staff of Paguio, Dumayas and Associates, CPAs and is not intended to replace the original
issuances of the related government agencies.
PAGUIO, FLOYD C.
Managing Partner
GALLEGOS, AIRA G.
Tax Specialist
MELCHOR, AILEEN P.
Senior Tax Specialist
ASADON, KEN JOHN B.
Tax Supervisor
Unit 3207 Cityland Pasong Tamo Condominium, Pasong Tamo St., Barangay Pio del Pilar, Makati City
Contact us at: 950-9853/950-9854
We are a team of Certified Public Accountants, who aim to be the
accounting firm of choice for business entities in terms of:
Audit and Assurance
Taxation
Business Process Outsourcing
Management Consultancy
RULLODA, JOHN ERIC M.
Tax Specialist