Atty. Pierre Martin D. Reyes

In September 2016 the Philippine Amusement and Gaming Corp. (Pagcor) started issuing Philippine Offshore Gaming Operations licenses that allow entities to engage in the business of offshore gaming operations. The government’s Pogo revenue in 2017 reached around P3 billion ($56 million) and is expected to rise to a whooping P6 billion ($115.2 million) this year. With its fast growth and profits, Philippine offshore gaming has caught the attention of the taxman.

A draft Constitution was submitted to the President on July 9, 2018, by the Consultative Committee constituted to review the 1987 Constitution. The main aim of the draft Constitution is to change the country’s political system, from unitary to federal. This draft was approved by the President on July 10, 2018, and has since then been endorsed to Congress. Though the said draft still needs to go through other processes before approval, it gives us a glimpse of the tax system to be employed under the proposed federal system of government.

More often than not, the sum of the quarterly tax payments made by a corporation during the taxable year is more than the total tax due on the entire taxable income of that year. In simpler terms, corporations have overpaid their income-tax liability as adjusted at the close of the taxable year. This is mostly due to the excess withholding taxes on income payments.

While lower income-tax rates and higher excise-tax rates in the Tax Reform for Acceleration and Inclusion (TRAIN) law have been receiving much attention, the changes introduced for value-added tax (VAT) refunds have been left undiscussed. Such changes deserve the same attention as those changes being subjected to much media mileage.

Nonpayment or deficiency in the payment of taxes would always give rise to the running of interests. This is so since taxes are liabilities of a taxpayer to the government, which, according to the Supreme Court, are burdens to be borne by citizens for the preservation of the nation’s sovereignty, and to ensure revenue for the upkeep of security and defense forces and installation of public improvements, which are supposed to be provided by the government. Similar to a loan of money, unpaid taxes incur interests due to the time value of money: The value of money at present will be worth more in the future due to its potential earning capacity.

The Tax Code provides that a taxpayer shall be informed in writing of the law and the facts on which the assessment is made. This is also echoed in the regulations of the Bureau of Internal Revenue (BIR), which require that the assessment notices show in detail the facts and the law, rules and regulations, or jurisprudence on which the proposed assessment is based.

In the historic Paris climate agreement to which the Philippines is a signatory, countries have agreed to hold the increase in global average temperature to below 2°C and to pursue efforts to limit the temperature increase to 1.5°C. In order to meet this commitment, the Philippines has to transition to a clean energy economy through investments in renewable energy (RE). Although we have seen in recent years a boost in RE development, further investments in the sector are threatened by the lack of clarity over the tax provisions of Republic Act 9513, or the Renewable Energy Act of 2008 (RE law), in particular, the value-added-tax (VAT) zero-rating of purchases.

Attracting widespread attention and, perhaps, public condemnation in recent days is the impending crackdown by the Land Transportation Franchising and Regulatory Board (LTFRB) on Uber and Grab drivers without franchises. In a Palace briefing on Tuesday, Transportation Secretary Arthur P. Tugade asserted that “the government should also have a share from their [Uber and Grab] earnings”. He added that there should be mechanics on revenue-share collection.

Relying on the tax-exemption provisions of the Asian Development Bank (ADB) Charter Agreement and the ADB Headquarters Agreement and in the absence of an express and unequivocal Bureau of Internal Revenue (BIR) issuance on the matter, ADB Filipino employees did not pay income tax since its establishment. This changed when, on April 12, 2013, then-Commissioner of Internal Revenue (CIR) Kim Jacinto-Henares issued Revenue Memorandum Circular (RMC) 31-2013, which provides, among others, that only non-Filipino ADB employees are exempt from Philippine income tax.