Duremdes Teves Sagmit Ramos & Partners

So you may know...

When making a motor claim, an insurance company will require the following:

1. Police report and affidavit
2. Copy of certificate of registration and official receipt of the vehicle
3. Copy of the driver’s license and official receipt of the driver
4. Photographs showing damage portion of the vehicle (plate number should be visible)
5. Stencil of the vehicle motor/engine and serial/chassis numbers
6. Bring unit to the accredited shop for estimate as advised by the insurance company.

When is the deadline for Filing of the [1] Annual Information Return of Creditable Income Taxes Withheld (Expanded)/Income AND [2] Quarterly Income Tax Return for Corporations, Partnerships and Other Non-Individual Taxpayers Payments Exempt from Withholding Tax]BIR Form 1604E & BIR Form 1702Q?

Ans: ftp://ftp.bir.gov.ph/webadmin1/pdf/pr23feb2613.pdf

Every wondered how to treat rent deposits?

The BIR issued RMC 16-2013 regulating these deposits. These are subject to tax.

To get over your shock, see this link:

ftp://ftp.bir.gov.ph/webadmin1/pdf/68486RMC%20No%2016-2013.pdf

More on RR 2-2013: Transfer Pricing Guidelines:

Documents are very essential for the examination as well as the defense against the application of transfer pricing.

Taxpayers are required to keep documents so that [1] it will be able to “defend their transfer pricing analysis”, [2] prevent transfer pricing adjustments arising from tax examinations, and [3] support their claims for the application of the Mutual Agreement Procedure of the Philippine tax treaties.

The “BIR does not require transfer pricing documents to be submitted when the tax returns are filed. However, such documents should be retained by the taxpayers and submitted to the BIR when required or requested to do so.”

More on RR 2-2013: Transfer Pricing Guidelines:

The arm’s length principle:

The arm’s length principle requires the transaction with a related party to be made under comparable conditions and circumstances as a transaction with an independent party. If associated enterprises derive profits below or above market levels solely by reason of the special relationship between them, the profits will be deemed as non-arm’s length. In such case the tax authorities can make adjustments to the taxable profits so as to reflect the true value that would otherwise be derived on an arm’s length basis.

Comment: Since market forces and market levels are always changing, these conditions would merely create constantly different views which will even complicate the search for the true value of the transaction.

More on RR 2-2013: Transfer Pricing Guidelines:

The purpose of the regulations are:

1. To prescribe guidelines in determining the appropriate revenues and taxable income of the parties in the controlled transaction by providing for the methods of establishing an arm’s length price

2. To require the maintenance and safekeeping of the documents necessary to prove that efforts were exerted to determine the arm’s length price or standard in measuring transactions among associated enterprises.

* * *

"safekeeping of the documents" - this requires proper organization of files. Time to dust off those files :)

More on RR 2-2013: Transfer Pricing Guidelines

The Tax Code provides that the BIR has the power to allocate gross income and deductions among corporations whether or not organized in the Philippines.

“Associated Enterprises” or “related parties” exists if one enterprise participates directly or indirectly in the management, control or capital of the other. This relationship is important to determine if transactions falls within the purview of “arms-length”.

Ever wondered how income is taxed between related party transactions?

The BIR recently issued RR2-2013 entitled Transfer Pricing Guidelines.

Transfer pricing is the pricing of intra-firm transactions between related or associated enterprises. In the Philippines, there is a domestic transfer pricing issue when:

a. income are shifted in favor of a related company with special tax privileges such as BOI incentives and PEZA fiscal incentives; or,
b. expenses of a related company with special tax privileges are shifted to a related company subject to regular income taxes; or,
c. income and/or expenses are shifted to a related party in order to minimize tax liabilities.

Interested? See this: ftp://ftp.bir.gov.ph/webadmin1/pdf/68122RR%202-2013.pdf

Treating OPE deposits as gross income the BIR way:

Revenue Memorandum Circular No. 89-2012 says:

Upon receipt of the cash deposits/advances from the client, the GPP shall issue an official receipt. The amount received shall be booked as income of the GPP and form part of the GPP’s gross receipts and subject to VAT.

Mighty whale of a difference!

-Hot Off the Press-

Policies on the Recording of Client Out of Pocket Expenses

ftp://ftp.bir.gov.ph/webadmin1/pdf/67452RMC%2089-2012.pdf

TAKE NOTE: This is done by treating OPE deposits as income.

Bottomline: The BIR is reminding everyone not to record and claim expense deductions twice.

Taxation of Employee Award from Stock Option Plans

If a stock option plan provides an award for exemplary service, the income derived from such award including those derived from shares of stock is considered a fringe benefit subject to fringe benefits tax.

Read on for more info: ftp://ftp.bir.gov.ph/webadmin1/pdf/67450RMC%2088-2012.pdf

First off for the new year: Dreaming about designing your own law firm?

We think the goal is to simplify the space, making ample room for clients to relax and for records to be organized.

http://www.examiner.com/article/how-to-design-law-firm-layouts-and-storage

How to design law firm layouts and storage I have seen layouts and storage systems in law offices that mimicked corporate offices, but law firms are different in important ways. My dad was the managing p