​Requisites for a non-stock, non-profit educational institution to be exempt from taxes
TAXATION LAW UPDATE
​CIR vs. De La Salle Lipa, Inc., CTA EB No. 1412 and 1430, August 17, 2017
Exemption from income tax of a non-stock, non-profit educational institution under Sections 28(3), Article VI and 4(3), Article XIV of the 1987 Constitution, requires the following:
1. the educational institution falls under the classification non-stock, non-profit educational institution; and
2. the income it seeks to be exempted from taxation is used actually, directly, and exclusively for educational purposes.
In this case, while it was acknowledged that the school is a non-stock non-profit educational institution, it failed to fully document that that the income it earned from the lease of its facilities were used for educational purposes. The amounts were booked separate from the General Fund and no further proof was presented on its utilization. Said income were assessed for the regular corporate income tax.
BIR should wait for expiration of 15 days before issuance of FAN​
Freelife Philippines Distribution, Inc.-Philippine Branch vs. CIR, CTA Case No. 8838, August 29, 2017
​After the receipt of the PAN, the taxpayer has 15 days to file his reply and the Commissioner of Internal Revenue (CIR) is duty bound to wait for the expiration of fifteen days from the date of service of the PAN. If during the said period, the taxpayer failed to respond to the PAN, it is only then that the CIR can consider the taxpayer in default, and correspondingly cause the issuance of FLD/FAN, which shall be subsequently served to the said taxpayer. Such procedure is part and parcel of the due process requirement in the issuance of a deficiency tax assessment.
In the case at bar, the PAN was received by the taxpayer on January 10, 2013. The reply can therefore be submitted on or before January 25, 2013. However, even before the taxpayer can submit its reply to the PAN, the FAN was already served on January 25, 2013. The taxpayer was clearly deprived of his right to due process and the court declared the FLD/FAN null.
Assessment without a PAN is void
CIR vs. Philippine Aerospace Development Corporation, CTA En Banc No. 1516, August 23, 2017
​The taxpayer claimed that it did not receive a Preliminary Assessment Notice (PAN) prior to issuance of the Final Assessment Notice (FAN). For failure by the BIR to issue a PAN, the taxpayer was effectively denied its right to due process. The Court ruled that the assessment of tax deficiency is void.
New Guidelines in Permit To Use Loose-leaf Filing
Revenue Memorandum Circular No. 582017, July 21, 2017
In line with the "ease of doing business", the processing and issuance of the Permit to Use (PTU) loose-leaf books of accounts/ invoices/receipts and other accounting records shall now be handled by the concerned Revenue District Office (RDO). Prior to this issuance, processing of the application was being handled by the regional offices pursuant to RMC No. 1382.
The requirements for evaluation and approval of the application remain the same as follows:
Duly accomplished BIR Form No. 1900 (Application for Authority to Use Computerized Accounting System or Components thereof/Loose-Leaf Books of Accounts};
Sample format and print-out;
Sworn statement specifying the books to be used; invoices/receipts and other accounting records with the serial numbers of principal and supplementary invoices/receipts to be printed and commitment to permanently bind the loose-leaf forms within 15 days after end of each taxable year or upon termination.
Only the taxpayer's Head Office is required to secure the PTU loose-leaf. The same PTU shall be valid for the branches, regardless of the RDO of the branch. The branch should, however, secure certified true copy from the RDO of the taxpayer's head office. For each additional branch, updating of the PTU looseleaf is also required.