Tax Reminder: Rules on Transfer of Registration of Local Employees (RR 7-12)

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i.              Individuals Earning Purely Compensation Income. — In case of transfer due to change of employer, it shall be the responsibility of the new employer to notify his BIR district office by submitting the duly accomplished form of the employee. The transfer of registration (TIN records) of such employee shall be initiated by the BIR district office which received the application.
 
 
ii.             Transfer of Employees of Transferring Employers. — Registration of employees should follow the BIR district office registration of their employers. Accordingly, a transfer of employer's BIR district office carries with it the transfer of the registration of employees earning pure compensation income mainly from said employer. The transferring employer shall require all of its covered employees to accomplish the proper BIR form and submit the same to the new BIR district office.
 
 
 
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A list of employees shall likewise be submitted together with the update form by the transferring employer to the new BIR district office excluding those employees who have been separated prior to the transfer.
 
                In case the employer hires new employees in its new location, application for employees' TIN shall be submitted to the new BIR district office.
 
 
iii.            Registered Employee Who Intends to Engage in Business or Practice of Profession. — An individual who is registered as an employee in one BIR district office but subsequently applies for registration as a business taxpayer/professional in another BIR district office shall submit the proper form to the BIR district office having jurisdiction over his business address. The transfer shall then be performed by the BIR district office where the application was submitted.
 
 
                The above procedures shall be observed once the ITS has been enhanced to provide for the required facility to effect the same. In the interim, the taxpayer shall submit his request for transfer to the old BIR district office either personally or by fax. The old BIR district office, upon receipt of the request shall immediately execute the transfer of taxpayer's registration records to the new BIR district office.

 

Increase of Tax Exclusion from P 30,000.00 to P 82,000.00

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The increase to P 82,000.00 of the total amount of exclusion from gross income for 13thmonth pay and other benefits was due to Republic Act No. 10653 and implemented by Revenue Regulations No. 3-2015.

 

 

 

 

 

Where does the P 82,000.00 applies?
 
The amount of P 82,000.00 shall only apply to the 13th month pay and other benefits prescribed under the provision of Section 2.78.1.(B)(11) of RR No. 2-98, as amended, beginning January 1, 2015, and shall in no case apply to other compensation received by an employee under an employer-employee relationship, such as basic salary and other allowances. Further, said exclusion from gross income is not applicable to self-employed individuals and income generated from business.
 
When does the law applicable?
 
The amount of P 82,000.00 shall apply to the 13th month pay and other benefits paid or accrued beginning January 1, 2015.
 
All taxpayers-employers shall ensure the correct computation and application of the said increase on the 13th month and other benefits of the employees in the year-end adjustments, and the same shall be clearly indicated, among others, in the Certificate of Compensation/Tax Withheld (BIR Form No. 2316). The said BIR form shall be issued by the employer to the employee on or before January 31 of the succeeding calendar year, or if the employment is terminated before the close of such calendar year, on the day the last payment of compensation is made.
 
In case the employee whose employment is terminated and subsequently employed by another employer before the close of the calendar year, employee-transferee shall immediately furnish the new employer the accomplished BIR Form issued by the previous employer, for the appropriate Withholding Tax computation of the employee’s regular compensation and subsequent year-end adjustment, if any.

 

 

 

How to Check Land Titles in the Philippines and Spot Fake Ones in 30 Seconds

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Despite all the regulations put in place to fight scammers and con men in the Philippine real estate industry, there are still a lot of cases being reported where unsuspecting victims fall for fake land titles. For example, just recently  (March 22, 2015), Inquirer reported on a land scam syndicate which already has a number of victims who lost their money by buying properties with fake titles. To avoid getting yourself into a similar problem, your first line of defense is a short and quick check of the land title that is presented to you. There are very specific characteristics of authentic Philippine land titles. If one or more of these are missing on the title that is presented to you, then you know you’re dealing with scammers.

 

Ms. Ruby Valdez, one of the land registration examiners from the Land Registration Authority of the Philippines, shares with us these items which you can check for in 30 seconds or less. 

 

 

 

PHYSICAL QUALITIES :

The papers used for authentic land titles in the Philippines are supplied by the Banko Sentral ng Pilipinas. These papers are physically unique from all other kinds of papers that you can buy from stores. Here are the things you should look for: 

  1. 1The texture is similar to that of a bank check

  2. It has a faint watermark that says “LRA
  3.  If it’s an old title (before the newer e-Titles being used today), the color of the paper is light yellow.
  4. If it’s an e-Title, the color should be pale straw
  5. Tiny fibers and dots should be noticeable
  6.  And if you could use a UV light, these fibers should fluoresce or shine slightly when subjected to UV light.

 

Content below are the items you should look for in the contents of the title you are checking : 

1. If it’s an Original Certificate of Title (OCT), it should indicate “Judicial Form No. 108-D” at the top.

2. If it’s a Transfer Certificate of Title (TCT), it should indicate “Judicial Form No. 109-D“.

3. The serial number label (SN No.) should be in red color,  1while the digits should be in black for the owner’s duplicate.

4. The last two digits of the page number in the upper right hand side should correspond to the last two digits of the TCT number.

5. The red/blue border should be slightly embossed and not flatly printed.

6. For e-Titles, all entries should be computer encoded and printed, unlike the old versions which were manually type-written

7. The seal on the lower left hand side should be dark red and does not blot when a litle water check is done.

8. Signatures:
for Judicial OCT, it should have 2 signatures present – the Administrator and the Registrar; while for TCT, only the signature of the Registrar is present.
For Administrative Titles: one signature from a PENRO or CENRO officer and another from the registrar.

  

KEY TAKEAWAYS : 

When it comes to transactions involving any kind of real estate, the money involved is usually considerable, if not a serious amount. So you’ll have to be careful, especially when you’re dealing with strangers. Keep in mind the above items and look for them in a land title that is presented to you. If the title does not pass this simple test, then you will save yourself a lot of trouble, time and money. 

However, please also note that even if the title passes this first and immediate test, you still can’t be 100% sure that it is authentic, until you verify it with the LRA and the Registry of Deeds. Stay safe from fake title scams everyone.

 

Here at PPE, we take good care of our clients every step of the way – from the start of the transaction, to long after the  sale. This includes empowering them with proper information about their rights, responsibilities and more importantly, how they can get the best deals on the property they want. 

If you are looking to buy a property in the Philippines, be it a condominium, house, lot or commercial property, contact us today and be assured of a competent brokerage service that will save you tons of headaches along the way.

 

Let us know about your preferences – location, time frame, budget, etc. – and we’ll give you a set of the best choices that’s tailored to your specifications.

 

 

 

 

 

Situs of Taxation

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Can the Philippine government tax all the income of persons from sources within or without the Philippines?  Are all the properties of persons whether real or personal, tangible or intangible, taxable in the Philippines?  The answer to these questions lies with the basic knowledge of the situs of taxation.

 

  

Situs of taxation literally means place of taxation.  The general rule is that the taxing power cannot go beyond the territorial limits of the taxing authority.  The basic rule is that the state where the subject to be taxed has a situs may rightfully levy and collect the tax; and the situs is necessarily in the state which has jurisdiction or which exercises dominion over the subject in question.  

 

 

Although there are situs rules that are generally recognized, one may find differences in tax rules legislated in each taxing jurisdiction.  The taxable situs, as legislated, will depend upon various factors including the nature of the tax and the subject matter thereof (which may be a person, property, act or activity), the possible protection and benefit that may accrue both to the government and the taxpayer, the residence or the citizenship of the taxpayer, and source of income.

 

 

In the Philippines, we may find the situs rules of taxation of various taxes applied as follows:

 

1. Real Property- In the Philippines, real property taxes are imposed only  by the Local Governments on real property situated within their jurisdiction.  The real estate is subject to taxation in the state in which it is located whether or not the owner is a resident of the said jurisdiction.  This is the rule of lex rei sitae ( the law of the situation of the thing) which enunciated in Article 16 of the Civil Code.  The Local Government Code and its implementing regulations provide for a definition of “real property”, such as lands, buildings, machinery and other improvements affixed or attached to real property that are subject to the tax, notwithstanding the definitions under the Civil Code.  Income from sale or lease of real property is, likewise, generally taxable in the jurisdiction where the property is located.

 

2. Tangible personal property- The modern rule is that it is taxable in the state where it is physically located notwithstanding that the owner resides in another jurisdiction.  The Philippines has also adopted this rule of lex rei sitae for personal property such that personal property is also subject to the law of the country where it is situated”.  There are no taxes on ownership of tangible personal property but income from sale or lease of tangible property is generally taxable in where the property is physically located.

 

3. Intangible personal property-Intangible personalty such as credits, bills receivable, bank deposits, bonds, promissory notes, mortgage loans, judgements and corporate stocks, does not admit of actual location, and as to such property,  taxation is at the domicile of the owner.This is in accordance with the principle of mobilia sequuntur personam- that the situs of personal property is the domicile of the owner. Income from intangible personal property, however, is generally taxable where the obligation arises.   Hence, income of a non-resident foreigner from shares of stock in a domestic corporation, whether as dividends or as gains from sale, are taxable in the Philippines.  The reason is that said shares receive the protection and benefit of our laws.  In the same manner, interest income  from a loan is taxable in the state where the loan obligation arises.

 

4. Income-Under Philippines rules, resident citizens and domestic corporation are taxable on all income derived from sources within or without the Philippines.  A non-resident citizen, an alien whether or not a resident of the Philippines and a foreign corporation, whether engaged or not in trade or business in the Philippines,  are taxable only from sources within the Philippines.

 

5. Business, occupation and transaction-As far as the situs of business, occupation, or transaction is concerned, the general rule is that the power to levy an excise tax depends upon the place where the business is done, or the occupation is engaged in, or the transaction took place.  In the Philippines, the taxes on business, occupation and transaction are the  VAT, Percentage Tax and Excise Tax.  

 

The Supreme Court in a 1936 decision has clearly summed up the situs rules.  The taxing power of a state does not extend beyond its territorial limits, but within such limits it may tax persons, property, income, or business.  If an interest in property is taxed, the situs of either the property or interest must be found within the state.  If an income is taxed, the recipient thereof must have a domicile within the state or the property or business out of which the income issues must be situated within the state so that the income may be said to have a situs therein.  Personal property may be separated from its owner and he may be taxed on its account at the place where the property is although it is not a citizen or resident of the state which imposes the tax. 

 

 

Preservation of Books of Accounts and Other Accounting Records for 10 years already amended

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Under RR 5-2014, the preservation of books for 10 years was amended and provided that within the first five (5) years the taxpayer shall retain hardcopies of the books of accounts, including subsidiary books and other accounting record and thereafter, the taxpayer may retain only an electronic copy of the hardcopy (paper) of the books of accounts, subsidiary books and other accounting records in an electronic storage system.