Materiales y Recursos

1. Rule-making authority of the Secretary of Finance

a) Authority of Secretary of Finance to promulgate rules and regulations

b) Specific provisions to be contained in rules and regulations

c) Non-retroactivity of rulings

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--- a) Authority of Secretary of Finance to promulgate rules and regulations

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Q: Who promulgates revenue rules and regulations?

The Secretary of Finance, upon recommendation of the CIR, shall promulgate all needful rules and regulations for the enforcement of tax laws.

--- b) Specific provisions to be contained in rules and regulations

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Q: Enumerate and define the tax-related administrative issuances

Revenue

Regulations (RRs)

are issuances signed by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, the specify, prescribe or define rules and regulations for the effective enforcement of the provisions of the National Internal Revenue Code (NIRC) and related statutes.

Revenue Memorandum Orders (RMOs)

are issuances that provide directives or instructions;

prescribe guideline; and outline processes, operations, activites, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the Bureau in all areas of operations, except auditing.

Revenue are rulings, opinions and

Memorandum Rulings (RMRs)

interpretations of the Commissioner of Internal Revenue with respect to the provisions of the Tax Code and other tax laws, as applied to a specific set of facts, with or without established precedents, and which the Commissioner may issue from time to time for the purpose of providing taxpayers guidance on the tax consequences in specific situations. BIR Rulings, therefore, cannot contravene duly issued RMRs; otherwise, the Rulings are null and void ab initio.

Revenue Memorandum Circular (RMCs)

are issuances that publish pertinent and applicable portions, as well as amplifications, of laws, rules, regulations and precedents issued by the BIR and other agencies/offices.

Revenue Bulletins (RB)

refer to periodic issuances, notices and official announcements of the Commissioner of Internal Revenue that consolidate the Bureau of Internal Revenue’s positions of the Tax Code, relevant tax laws and other issuances for the guidance of the public.

BIR Rulings are official position of the Bureau to Queries raised by taxpayers and other stakeholders relative to clarification and interpretation of tax laws.

BIR ITAD Rulings are issued by the BIR International Tax Affairs Division to rule on certain issues relating to interpretations of international tax treaty provision under which certain taxpayers or transactions can avail of tax exemptions or preferential tax rates.

--- c) Non-retroactivity of rulings

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Q: Explain the rule on non-retroactivity of rulings

Read Section 246, Tax Code

General Rule: Revenue Regulations, Rulings, Circulars and other administrative issuances have no retroactive application

Exception: If prejudicial to the taxpayer, they shall have retroactive application

Exception to the Exception: Even if prejudicial to the taxpayer, they shall have retroactive effect in the following cases –

1. The taxpayer deliberately misstates or omits material facts

2. The facts subsequently gathered are different from the facts on which the ruling was based

3. The taxpayer acted in bad faith

Q: If a ruling was subsequently found by the CIR to be null and void, does the non-retroactivity principle still apply?

No. The non-retroactivity principle does not apply when the ruling involved is null and void for being contrary to law.

In BIRRULING NO.370-2011[OCTOBER 7,2011], the CIR affirmed its position that the Poverty Alleviation and Eradication Certificates (PEAce) Bonds are not tax-exempt and subject to a 20% FWT. Previously, 2001 BIR Rulings have considered such instruments as tax-exempt. The CIR concluded that no right has been vested by virtue of the 2001 Rulings as they were null and void for being contrary to law.

Q: What is the effect of RR 5-2012 [April 5, 2012] on rulings issued prior to January 1, 1998?

RR 5-2012 [APRIL 5, 2012] provides that all rulings issued prior to January 1, 1998 will no longer have any binding effect. They can no longer be invoked as basis for any current business transaction/s or as a basis for securing legal tax opinions and rulings.

RMC 22-2012 [MAY 7, 2012] clarified that BIR Rulings prior to January 1, 1998 remains valid:

1. To the taxpayer who was issued the ruling 2. Covering the specific transaction which is

subject of the ruling

Q: May a BIR ruling be invoked by a taxpayer other than the one who requested the same?

No. In CIR v. Filinvest Development Corp [July 19, 2011], the Supreme Court ruled that in keeping with the caveat attendant in every BIR ruling to the effect that it is valid only if the facts claimed by the taxpayer are correct, a BIR ruling could be invoked only by the taxpayer who sought the same. If the taxpayer is not the one who, in the first instance, sought the ruling from the BIR, he cannot invoke the principle of non-retroactivity of BIR rulings.

--- 2. Power of the Commissioner to suspend the business operation of a taxpayer

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Note: I already discussed this under Tax Remedies.

--- III. LOCAL GOVERNMENT CODE --- ---

A. LOCAL GOVERNMENT TAXATION ---

--- 1. Fundamental Principles

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Q: What are the fundamental principles of local government taxation?

a. Uniformity

b. Taxes, fees, charges and other impositions shall be equitable and based on ability to pay for public purposes not unjust, excessive oppressive or confiscatory, no contrary to law, public policy, national economic policy, or in restraint of trade c. The levy and collection shall not be left to

any private person

d. Inures solely to the local government unit levying the tax

e. The progressivity principle must be observed.

--- 2. Nature and Source of taxing power

a) Grant of local taxing power under the