BIR Concerns

[jackbrng]

very informative posts...i have a question, what if the family discovers that their late father had properties after 13 years? they have paid the municipal real estate taxes but are unsure how to proceed in transferring the ownership of the properties given the huge tax implications. what are the family's options to lessen the tax burden? the properties value range from Php 100 to 500k.

 

thanks for your advise.

 

bro, malaking problema yan! masyadong matagal bago na-discover yung properties ng decedent. Unanga-una, maaring kasuhan ng tax evasion yan. Yan ang ginamit laban sa mga Marcoses ng PCGG na na-dismiss dahil hindi daw nabigyan ng notice ang BIR ng pagkamatay ni Marcos. Pero sabi ng korte, dahil Presidente si Marcos at ang kanyang pagkamatay ay na publish sa mga dyaryo, imposibleng hindi malaman ng mga taga BIR na patay na si Marcos. Ang punto ko rito, kung nagamit kay Marcos, pwede rin itong gamitin sa ordinaryong mamamayan. Pangalawa, dahil sa katagal, maaring tumaas na ang market value ng mga property at ang basehan ng estate tax ay fair market value. Kung may kalakihan na ang market value, malaki rin ang estate tax, compare nung 13 taong nakakaraan. At dahil hindi na-file sa BIR ang pakamatay, may penalties na ito na malaki na rin dahil sa tagal ng panahon.

 

Ang nakikita kong solusyon ay mag-avail ang mga tagapagmana ng Tax Amnesty na ipinatupad noong September, 2007 at matatapos sa loob ng 6 na buwan. Dito sa Tax Amnesty, ang basehan ng tax ay ang networth ng taxpayer. Ang taxpayer sa scenariong binigay mo ay yung tagapagmana. Ang kanyang Ari-arian o Assets ay ibabawas sa kanyang mga obligasyon o Liabilities para makuha ang Networth. Bale ang buwis nya ay 5% ng kanyang networth. Yung kanyang ari-arian ay neto ng depreciation. Ang coverage ng amnesty ay para sa taong 2005 pababa. Kapag nakapag-avail sya ng amnesty, hindi na sya i-imbistigahan ng BIR dahil isa ito sa mga probisyon ng Tax Amnesty.

[aff1979]

bro, malaking problema yan! masyadong matagal bago na-discover yung properties ng decedent. Unanga-una, maaring kasuhan ng tax evasion yan. Yan ang ginamit laban sa mga Marcoses ng PCGG na na-dismiss dahil hindi daw nabigyan ng notice ang BIR ng pagkamatay ni Marcos. Pero sabi ng korte, dahil Presidente si Marcos at ang kanyang pagkamatay ay na publish sa mga dyaryo, imposibleng hindi malaman ng mga taga BIR na patay na si Marcos. Ang punto ko rito, kung nagamit kay Marcos, pwede rin itong gamitin sa ordinaryong mamamayan. Pangalawa, dahil sa katagal, maaring tumaas na ang market value ng mga property at ang basehan ng estate tax ay fair market value. Kung may kalakihan na ang market value, malaki rin ang estate tax, compare nung 13 taong nakakaraan. At dahil hindi na-file sa BIR ang pakamatay, may penalties na ito na malaki na rin dahil sa tagal ng panahon.

 

Ang nakikita kong solusyon ay mag-avail ang mga tagapagmana ng Tax Amnesty na ipinatupad noong September, 2007 at matatapos sa loob ng 6 na buwan. Dito sa Tax Amnesty, ang basehan ng tax ay ang networth ng taxpayer. Ang taxpayer sa scenariong binigay mo ay yung tagapagmana. Ang kanyang Ari-arian o Assets ay ibabawas sa kanyang mga obligasyon o Liabilities para makuha ang Networth. Bale ang buwis nya ay 5% ng kanyang networth. Yung kanyang ari-arian ay neto ng depreciation. Ang coverage ng amnesty ay para sa taong 2005 pababa. Kapag nakapag-avail sya ng amnesty, hindi na sya i-imbistigahan ng BIR dahil isa ito sa mga probisyon ng Tax Amnesty.

 

Regarding TAx Amnesty in application with Estate Tax, Ang basis ng Payment ay Networth ng Estate Property as of December 31, 2005 or Difference from previous filed networth ,multiply by 5% or a fix amount of 50,000 which ever is higher.

 

Networth is Total Asset less Total Liabilities

[vader2007]

bro, malaking problema yan! masyadong matagal bago na-discover yung properties ng decedent. Unanga-una, maaring kasuhan ng tax evasion yan. Yan ang ginamit laban sa mga Marcoses ng PCGG na na-dismiss dahil hindi daw nabigyan ng notice ang BIR ng pagkamatay ni Marcos. Pero sabi ng korte, dahil Presidente si Marcos at ang kanyang pagkamatay ay na publish sa mga dyaryo, imposibleng hindi malaman ng mga taga BIR na patay na si Marcos. Ang punto ko rito, kung nagamit kay Marcos, pwede rin itong gamitin sa ordinaryong mamamayan. Pangalawa, dahil sa katagal, maaring tumaas na ang market value ng mga property at ang basehan ng estate tax ay fair market value. Kung may kalakihan na ang market value, malaki rin ang estate tax, compare nung 13 taong nakakaraan. At dahil hindi na-file sa BIR ang pakamatay, may penalties na ito na malaki na rin dahil sa tagal ng panahon.

 

Ang nakikita kong solusyon ay mag-avail ang mga tagapagmana ng Tax Amnesty na ipinatupad noong September, 2007 at matatapos sa loob ng 6 na buwan. Dito sa Tax Amnesty, ang basehan ng tax ay ang networth ng taxpayer. Ang taxpayer sa scenariong binigay mo ay yung tagapagmana. Ang kanyang Ari-arian o Assets ay ibabawas sa kanyang mga obligasyon o Liabilities para makuha ang Networth. Bale ang buwis nya ay 5% ng kanyang networth. Yung kanyang ari-arian ay neto ng depreciation. Ang coverage ng amnesty ay para sa taong 2005 pababa. Kapag nakapag-avail sya ng amnesty, hindi na sya i-imbistigahan ng BIR dahil isa ito sa mga probisyon ng Tax Amnesty.

 

This is very, very helpful. Can your company help the family or can you refer an expert in this area? How much will it cost?rge? Please PM me. Thanks.

[jackbrng]

very informative posts...i have a question, what if the family discovers that their late father had properties after 13 years? ..... the properties value range from Php 100 to 500k.

 

 

Kapag 100-500k ang value ng property, hindi malaki yan!

 

kung isa lang ang property, hindi nga malaki. as a matter of fact wala silang babayaran provided nadeclare kaagad. PERO, ang sabi sa statement nya ay PROPERTIES at PROPERTIES VALUE RANGE FROM ...., so i assume marami ang properties plus the fact ng haba ng panahon na hindi na-i-file, kaya nasabi ko na malaki ang problema.

 

if you think otherwise ....................................................

[jackbrng]

very informative posts...i have a question, what if the family discovers that their late father had properties after 13 years? ..... the properties value range from Php 100 to 500k.

 

 

Kapag 100-500k ang value ng property, hindi malaki yan!

 

kung isa lang ang property, hindi nga malaki. as a matter of fact wala silang babayaran provided nadeclare kaagad. PERO, ang sabi sa statement nya ay PROPERTIES at PROPERTIES VALUE RANGE FROM...., so i assume marami ang properties plus the fact ng haba ng panahon na hindi na-i-file, kaya nasabi ko na malaki ang problema.

 

if you think otherwise ....................................................

[vader2007]

kung isa lang ang property, hindi nga malaki. as a matter of fact wala silang babayaran provided nadeclare kaagad. PERO, ang sabi sa statement nya ay PROPERTIES at PROPERTIES VALUE RANGE FROM...., so i assume marami ang properties plus the fact ng haba ng panahon na hindi na-i-file, kaya nasabi ko na malaki ang problema.

 

if you think otherwise ....................................................

 

You are correct. There are 3 properties involved.

[jackbrng]

You are correct. There are 3 properties involved.

pm mo sa akin location ng mga properties like address (street, barangay, city, province if any), size area at yung classification (kung residential, condominium, industrial, agricultural. kung agricultural paki sabi kung riceland, cocoland, etc.), subukan kong alamin kung magkano valuation at macompute yung estate tax.

You are correct. There are 3 properties involved.

pm mo sa akin location ng mga properties like address (street, barangay, city, province if any), size area at yung classification (kung residential, condominium, industrial, agricultural. kung agricultural paki sabi kung riceland, cocoland, etc.), subukan kong alamin kung magkano valuation at macompute yung estate tax.

[charmed shannen]

A contract of lease was executed in December 1971 for an initial term of 20 years subject to renewal between a corporation and a city government. A mall was constructed in a portion of the land covered by the lease. A portion of the mall constituting 22 units of commercial spaces including leasehold rights were transferred to a bank by way of dacion en pago for full settelment of a loan obligation. there was a proposal for the sale of leasehold rights on the said commerical units and on September 2003, sale of leasehold rights was totally consumated and as a consequence, VAT and DST were paid and remitted to the BIR.

 

Questions:

 

1) Was the transaction subject to VAT inasmuch as the instrument executed was one of assignment of rights which did not vest title to the transferee;

 

2) Was the transaction subject to capital gains tax, creditable withholding tax, documentary stamp tax, and VAT under Section 196 of the TAX Code?

 

3) Was the transaction partook of the nature of a sale of assignment of real property?

 

4) Was the contention that the deed of assignment was not a deed of sale because what was conveyed by the assignor was not the property but the rights pertaining to such property tenable?

 

5) Was the transaction entered in to by the bank with an individual and/or corporation was subject to VAT that was subsequently passed on to the buyer or assignee?

 

6) Was the classification of the property rights and interests subject of thet sale/assignment was correctly booked as ROPOA (real and other property owned and acquired or a property)?

 

7) Is a property acquired by way fo dacion en pago to satisfy borrower's loan obligation can be classified as ordinary asset?

 

As usual, thank you very much for all the help.

[jackbrng]

A contract of lease was executed in December 1971 for an initial term of 20 years subject to renewal between a corporation and a city government. A mall was constructed in a portion of the land covered by the lease. A portion of the mall constituting 22 units of commercial spaces including leasehold rights were transferred to a bank by way of dacion en pago for full settlement of a loan obligation. There was a proposal for the sale of leasehold rights on the said commercial units and on September 2003, sale of leasehold rights was totally consummated and as a consequence, VAT and DST were paid and remitted to the BIR.

 

1. Was the transaction subject to VAT in as much as the instrument executed was one of assignment of rights which did not vest title to the transferee;

 

Assignment of leasehold right was a VAT transaction. Although acquisition of the bank of said property by way of dacion en pago and its subsequent disposal were VAT exempt as per Section 4.109-1(u) of RR No. 16-2005, its assignment of leasehold right were subject to VAT as per Section 4.106-1 of RR No. 16-2005. In addition to this, subsequent rental or lease of said property will be subjected to VAT or Percentage Tax, depending on the amount of rental.

 

2. Was the transaction subject to capital gains tax, creditable withholding tax, documentary stamp tax and VAT under Section 196 of the Tax Code.

 

Assignment of Leasehold rights was not subject to Capital Gains tax since there was no transfer of capital asset, what was transfer / assign here is the right to use of property. Also, this was not subject to Creditable Withholding Tax since RR no. 2-98 did not mention it as one of the transactions subject to Withholding. However, subsequent rental that will be paid by the lessee will be subject to withholding tax. On Documentary Stamp tax, this transaction is subject to DST under Section 194 of the Tax Code and not Section 196 because the nature of transaction is to grant a right to use or lease said commercial unit and not to transfer the title of real property. Section 194 pertains to Contract of Lease which I assume fits your situation. For VAT, please refer to question no. 1.

 

3. Was the transaction partook of the nature of sale or assignment of real property

 

The transaction that transpired here was a assignment of right to use of real property.

 

4. Was the contention that the deed of assignment was not a deed of sale because what was conveyed by the assignor was not the property but the rights pertaining to such property tenable?

 

Based on the foregoing, my answer is in affirmative because on deed of assignment, the assignee exercises only the right to use of property, unlike with deed of sale, the buyer exercises not only the right to use but also the right to dispose, in other words, the buyer has right of ownership over the property.

 

5. Was the transaction entered into by the bank with an individual and / or corporation was subject to VAT that was subsequently passed on to the buyer or assignee?

 

Definitely. This was the function of Vat, to passed on every buyer until it stop on the end-consumer. Also, it is a tool to create a trail for tax monitoring of the BIR.

 

6. Was the classification of the property rights and interest subject of the sale / assignment was correctly booked as ROPOA (Real and other property owned and acquired or a property)?

 

I think it is correct and should classify under current asset because this asset that was acquire should be dispose immediately.

 

7. Is a property acquired by way of dacion en pago to satisfy borrower’s loan obligation can be classified as ordinary asset?

 

As per noted on Section 2 ( of RR No. 7-2003, Real Properties acquired by banks through foreclosure sales are considered as their ordinary assets.

[scooby91]

tanung lng po... upon death of a parent/s, passe don po ba sa mga anak ang utang nila? (i.e housing, auto loans, credit card)?

[jackbrng]

tanung lng po... upon death of a parent/s, passe don po ba sa mga anak ang utang nila? (i.e housing, auto loans, credit card)?

 

kung ang gusto mo malaman ay kung kayong mga anak na ang magbabayad ng utang na naiwan ng mga magulang nyo, mas maganda na itanong ito sa legal thread, dahil mas alam ng abogado ang mga usaping legal tungkol dito.

 

kung tungkol naman sa taxation, itong mga utang ay maaring ibawas sa halaga ng mga ari-arian na naiwan ng magulang nyo para sa pagkwenta ng estate tax.

[jackbrng]

sa mga fellow accoutants, ano opinyon nyo sa tax amnesty na ipinapatupad ngayon bungsod sa paglabas ng bir ng revenue memorandum circular no 69-2007?

 

may bisa kaya itong rmc na ipinalabas ng BIR lalo na sa mga puntos na hindi tugma sa batas na ipinasa ng kongreso?

 

sa opinyon ko ay masusunod pa rin yung mga probisyon na nakasaad sa RA no 9480 base na rin sa desisyon ng korte suprema (GR no. 109193 Republic of the Philippine vs. The Court of Appeals and Precision Printing Inc.)

 

kayo ano ang opinyon nyo?

[LYCHEE]

sa mga fellow accoutants, ano opinyon nyo sa tax amnesty na ipinapatupad ngayon bungsod sa paglabas ng bir ng revenue memorandum circular no 69-2007?

 

may bisa kaya itong rmc na ipinalabas ng BIR lalo na sa mga puntos na hindi tugma sa batas na ipinasa ng kongreso?

 

sa opinyon ko ay masusunod pa rin yung mga probisyon na nakasaad sa RA no 9480 base na rin sa desisyon ng korte suprema (GR no. 109193 Republic of the Philippine vs. The Court of Appeals and Precision Printing Inc.)

 

kayo ano ang opinyon nyo?

 

re sa computation ng estate tax based on the 5% rate under the tax amnesty, looks like hindi rin pala discounted o mas mababa ang mababayaran ko kng base rin sa fmv or zonal valuation ng property i inherited before 2005 but which i havent paid yet. i maybe wrong...paano po ba ang formula under the amnesty?--is it: 5% x zonal value of property (as of date of death of deceased)= estate tax?

[webmaster_ph]

distinguished accountants:

 

i have a couple of questions...

 

1. what are the taxes that will be applied to a business that is purely service-based (no products)?

2. do i need to declare books of accounts?

3. how do i go about printing/making thesebooks of accounts? any format or do i buy these?

4. any recommendations on how to minimize these taxes?

5. where can i avail of accountant's services (bir-accredited) to audit financial documents?

 

background info:

*business is a general partnership; 100% filipino-owned

*the income will come from local and overseas sources.

*gross sales may range from 300k to 1.0M

 

thank you.

[weekdaywarrior69]

tanong lang po sa mga autoridad pag dating sa taxation.

 

ano po ba ang sinasabi ng batas tungkol sa pagbabayad ng buwis ng isang partnership?

 

matapos na magbayad ng isang kumpanya (partnership) ng income tax sa kinita nito sa buong taon, ilang porsyento po ba ang marapat na bayaran (kung meron man) ng individual partners sa kanilang dibidendo. ito po ba'y itinuturing na personnal income tax na subject din sa parehong exemptions? di po ba parang dalawang beses na kinaltasan ng BIR ang partners kung tutuusin?

 

meron po bang work-around sa ganitong sitwasyon?

 

salamat po sa mga sasagot sa mga katanungan ko (di ko po alam kung naitanong na ito di po masyado malayo ang ginawa ko na pagbabalik basa).