October 2022

SGV thought leadership on pressing issues faced by chief executives in today’s economic landscape. Articles are published every Monday in the Economy section of the BusinessWorld newspaper.
31 October 2022 Lucil Q. Vicerra and Yzrael Edwin V. Pineda

Navigating Customs audit and prior disclosure

After more than three years from the time the Bureau of Customs (BoC) resumed the conduct of customs audits, many importers stepped forward and voluntarily paid deficiency duties and taxes by availing of the Prior Disclosure Program (PDP).Based on international best customs practices, the PDP authorizes the BoC Commissioner to accept, as a potential mitigating factor, the prior disclosure by importers of errors and omissions in goods declaration that resulted in the deficiency in duties and taxes on past imports. It is both a compliance and revenue measure aimed to generate additional revenue with the least administrative cost both to government and importers. The PDP also helps importers avoid a full customs audit and the steep penalty in case of deficiency duty and tax findings in the course of an audit.In availing of the PDP, the bigger question is — is it worth the potential risk of being exposed to closer scrutiny? We break down our observations to assist importers in navigating their customs audits and in deciding whether to avail of the PDP or not.WHAT IS THE STATUS OF THE BOC POST CLEARANCE AUDIT?Since January 2019, the BoC has issued almost a thousand Audit Notification Letters (ANLs) to conduct audits on importers, covering companies from various industries and groups such as oil and gas, automotive, pharmaceutical, consumer, and those in the Super Green Lane category, etc. Based on information from the BoC website as of June 2022, the BoC Post Clearance Audit Group (PCAG) has collected about P600 million from audit findings and P5 billion from PDP applications filed by importers, whether under audit or not. Based on these figures alone, around 90% of the PCAG’s collection came from PDP applications.It appears that there were several companies under audit who availed of the PDP. Moreover, there were also companies who, even without an ongoing audit, availed of the PDP. This goes to show that importers who are not under audit may come forward at any time and volunteer to pay their deficiency duties and/or taxes to show good faith and commitment to comply with the customs laws and its rules and regulations.   WHO MAY FILE AND WHEN TO FILE A PDP?Importers who are not undergoing an audit may file a PDP at any time. Those undergoing audit should file the PDP within 90 days from the receipt of the ANL as provided under Customs Administrative Order (CAO) 1-2019. In this case, the PDP application may be amended within 30 days from the filing of the initial PDP.Some of the common issues covered by the PDP applications filed include dutiable royalties, upward transfer pricing adjustments, error in value declared, excise tax on sweetened beverages, industry specific issues, among others.Moreover, importers may avail of the PDP for the following reasons without penalty and interest: dutiable royalty payments; other proceeds of any subsequent resale, disposal, or use of the imported goods that accrue directly or indirectly to the seller; or any subsequent adjustment to the price paid or payable. For these, the PDP application should be filed within 30 calendar days from the date of payment or accrual of subsequent proceeds to the seller or from the date of the adjustment to the price paid or payable is made.PENALTIES TO BE PAID FOR AVAILING OF PDP AND HOW TO AVOID OR MINIMIZE THEMWhile the PDP provides for a facility to pay deficiency duties and taxes, the same is subject to penalty and/or interest depending on whether the importer is under audit or not. If the importer is under audit, the availment of the PDP with the 90-day period is subject to a 10% penalty and 20% interest per year.On the other hand, an importer who is not under audit will only be subject to 20% interest per year. Since the penalty and/or interest may be significant, importers availing of the PDP normally request for its waiver pursuant to the power of the BoC Commissioner to compromise any administrative case arising under the Customs Modernization and Tariff Act (CMTA) involving the imposition of fines and surcharges, including those arising from the conduct of a post clearance audit. The BoC Commissioner’s power to compromise, however, is subject to the approval of the Secretary of Finance.Since there is no specific guidance on the parameters or requirements for the approval of PDP applications with request for waiver of penalty and/or interest, the PCAG has to consider on a case-to-case basis the PDP applications that they will endorse to the Commissioner and ultimately to the Secretary of Finance for approval. We understand that for PDP applications of importers without an audit and which are found to be complete and accurate, the same are being approved by PCAG and endorsed to the Commissioner for approval.Meanwhile, PDP applications of importers with an audit which are also found to be complete and accurate will be subject to evaluation by PCAG. These applications may or may not be endorsed for approval depending on the issues applied for PDP and the relevant facts and circumstances.To ensure the approval of PDP applications, the same should be filed on time and should include a full disclosure of the relevant issues. Moreover, the same should comply with the documentary requirements provided under CAO 1-2019. If importers fail to comply with these, the PDP application may be denied.THE BEST TIME TO AVAIL OF THE PDPGiven the greater certainty in the approval of the PDP filed by importers not undergoing an audit, it seems more prudent to avail of the PDP while the company is not yet under audit. Though some importers think that availing of the PDP when they are not yet under audit may expose them to additional risks and potential liabilities, it seems this is not the case based on previously filed applications.We are not aware of an importer who is not under audit and availed of PDP who was subsequently subjected to a full-blown customs audit. It appears that the BoC recognizes the good faith of the voluntary payment made given that there is no on-going audit that may possibly result in deficiency findings.PROACTIVITY IS THE KEYIt is prudent for importers to review their customs practices and procedures without waiting for an ANL. Upon determination of the actual exposure, importers may consider availing of the PDP considering that the benefits far outweigh the risks, if any. The filing of PDP without awaiting an ANL may potentially save importers from the customs audit for a certain period. This may also help importers avoid the hassle of going through a three-year audit, saving time, effort, steep penalties and interest.This will also enable importers to contribute to the collection efforts of government while complying with customs laws and regulations. Moreover, importers who are aware of their exposure and risk areas can better implement corrective measures to strengthen compliance with existing customs rules and regulations.To encourage more importers to avail of the PDP, the BoC and the DoF should continue to exert their best efforts in expediting the processing of filed PDP applications. In the end, success in any initiative will undoubtedly be achieved when all stakeholders work together.     This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.Lucil Q. Vicerra is a Tax Principal for Indirect Tax Services – Global Trade & Customs and Yzrael Edwin V. Pineda is a Tax Senior Director, respectively, of SGV & Co.

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24 October 2022 Marivic M. Rebulanan


In the last two years, the world has witnessed how an unforeseen event can bring about a major shift in the business environment, forcing governments and business leaders to make drastic changes. Accountants and tax practitioners became economic frontliners for a struggling economy during the pandemic. Fast-forward to 2022. Businesses are slowly reopening and their operations are recovering. Offices are transitioning to either 100% face-to-face or hybrid set-ups. Simultaneously, the Bureau of Internal Revenue (BIR) is also keen to implement transformative changes to adapt to these developments to ease the process of paying taxes and comply with administrative requirements. By streamlining these processes, the government is effectively helping taxpayers meet the social responsibility of paying their tax obligations. These can pave the way for changes in policy that are sustainable and, at the same time, environment-friendly, resilient against unforeseen events, with the potential for reducing the financial burden on taxpayers.In this regard, the BIR issued Revenue Regulations (RR) No. 6-2022 to remove the five-year validity of receipts and invoices. This RR covers manual receipts and invoices with Authority to Print, those that are generated by Computerized Accounting Systems (CAS) and related components, and those issued from Cash Register Machines (CRM) and Point of Sale (POS) Machines with Permit to Use. This removal took effect on July 16, 2022. The implementation of this RR will reduce the burden on taxpayers to comply with the BIR’s administrative requirements when the receipts and invoices expire. This may also reduce the cost of doing business, allowing taxpayers to improve their financial performance.This initiative is also in line with the BIR’s adoption of the Electronic Invoicing/Receipting System (EIS). This requires certain taxpayers to electronically report their sales data to the BIR, which should be implemented within five years from the effectivity of the TRAIN Law, and upon establishment of a system capable of storing and processing the required data used by electronic point of sale systems. This will be mandatory for taxpayers engaged in the export of goods and services, those engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service. The EIS is capable of storing and processing the data that taxpayers must transmit using the taxpayers’ Sales Data Transmission System (SDTS).Now, taxpayers are required to issue electronic receipts and invoices, and the related sales data should be transmitted to the BIR within three calendar days from the date of transaction, which is almost real time. With this, taxpayers are no longer required to issue hard copies of receipts and invoices with ATP, or print those that are generated from the CAS, CRM, and POS machines. The soft copies of these documents are considered valid for tax purposes. Relative to sales data transmission, taxpayers are required to develop a BIR-certified SDTS. Moreover, taxpayers are required to submit an application for the issuance of the Permit to Transmit to allow transmission of sales data to the EIS. The SDTS will effectively link the taxpayers’ accounting system with the BIR’s EIS.The implementation of the EIS may result in long-term cost savings in doing away with the cost of paper and supplies, mailing, handling, archiving, storage, and labor, among others. While refining the administrative aspect of the business processes, this may also result in improved financial performance for taxpayers. To add, this change is environment-friendly and more sustainable in the long run. However, taxpayers will have to incur costs at the start, particularly the cost of developing the SDTS. Nonetheless, this is a forward-looking investment and the benefits from implementation may eventually outweigh the related costs.Another important change implemented by the BIR is the removal of the 25% surcharge in amending tax returns. This is to ensure consistency with the rules applicable when paying deficiency taxes and penalties during a BIR audit. To provide context, in 2018, the BIR set the rule that a 25% surcharge will be imposed on additional tax payments arising from the amendment of tax returns. However, no 25% surcharge is imposed if the additional tax payments are made in the course of a tax assessment. In effect, taxpayers are being unduly penalized for voluntarily amending their tax returns to pay their taxes correctly. Under this recent RMC, the 25% surcharge for amending tax returns will be removed, provided that the original tax returns were filed on time. With this new rule, taxpayers may be encouraged to voluntary amend their tax returns to address any errors or corrections in their original filings.Given the economic agenda of the new administration, investors and business owners would do well to closely monitor the government’s efforts to rationalize tax policies to ensure not only compliance, but to also take advantage of any beneficial changes to the tax filing and payment process. Prudent business entities would be wise to consult experienced tax professionals as early as possible to better transform their tax compliance efforts, and by doing so, more effectively support the resurgence of our country’s economy. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Marivic M. Rebulanan is a tax senior director of SGV & Co.

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17 October 2022 Jocelyn M. Magaway

Tax issues arising from cross-border WFH arrangements

Before COVID came, flexible work arrangements, such as work-from-home (WFH), were for the large part unheard of, at least in the Philippines.  However, when lockdowns were implemented, there was no other choice but to embrace WFH to continue business operations.Lockdowns have now been lifted, but the COVID threat remains, resulting in WFH arrangements becoming accepted as the new normal. In fact, in the EY 2022 Work Reimagined Survey, 40% of respondents from the Philippines indicated that they would like to work remotely more than five days a week (essentially the entire work week), 20% prefer four days a week, 24% three days a week, 12% two days a week, 2% once a week and only 2% want to return full-time to the office. We can also see an increasing number of companies supporting their employees with WFH allowances and subsidies (e.g., internet allowances and equipment subsidies) so that they can set up their workstations and be able to carry out their tasks efficiently and effectively at home.The WFH arrangement has also expanded to the cross-border workforce. Some foreign companies are now engaging Filipino or foreign nationals in the Philippines without physically moving such talent to foreign/host locations. There are also cases where foreign nationals are hired/assigned to Philippine entities but continue to work outside the country or from their foreign residences. While cross-border WFH may satisfy an employee’s remote working preferences, it may pose some tax issues to both the employer and the employee.The Philippine Tax Code, with its various amendment in recent years, still considers the situs of taxation for income on services as the place where the personal services are rendered. Thus, compensation for labor or personal services performed within the Philippines regardless of the residence of the payor, or of the place in which the contract of services was made, or the place from which payment was made, is considered Philippine-sourced income. The determination of the tax residency also remains unchanged and so is the scope of taxation, based on the tax residency status of the taxpayer/filer.To illustrate what these issues are, let us take as an example a Filipino citizen, Juan, who was hired by a Japanese entity, receiving payroll from Japan but living in the Philippines due to a WFH arrangement with the employer. For tax purposes, Juan will remain a resident Filipino citizen and is subject to tax on his worldwide income. His Japan-paid salary is Philippine-sourced income. Thus, even if his salary is paid by his Japanese employer and taxed in Japan, he will not be able to claim Japan-paid taxes as foreign tax credits for his Philippine income tax return because the salary, on which Japan imposes taxes, is not foreign-sourced but Philippine-sourced income. Consequently, there may be double taxation on the same income. Also, as Juan is an employee of the Japanese entity, there is a risk that his presence in the Philippines is creating a permanent establishment (PE) in the Philippines for his employer. If a PE status is created, the Japanese entity may be exposed to corporate taxes (i.e., income tax, VAT or withholding tax) and will be required to fulfill administrative tax compliance here in the Philippines.Consider another example, this time a foreign national, John, who is on assignment to a Philippine entity, receives his payroll from the Philippine company but stays in his home country while on foreign assignment. Technically, John should not be subject to tax in the Philippines. As a foreign national, he is subject to tax only on his Philippine-sourced income. As he is rendering his services in his home country, the remuneration that he receives for such services is foreign-sourced income, not Philippine-sourced compensation. However, a corporate tax issue arises if the Philippine entity claims John’s salary as an expense in its books. There is a risk that the tax authorities may disallow the tax deduction of such salaries if these were not subjected to Philippine withholding taxes. Furthermore, as an employee of a Philippine entity working in a foreign jurisdiction, there is again a PE risk being created in that foreign jurisdiction. If PE is created, the Philippine entity may be subject to tax and administrative compliance in such foreign jurisdiction.There are other variations to WFH arrangements (e.g., split payroll, working in third country, among others) that would likely result in the same double taxation, PE creation and tax deduction disallowance risks). Given that cross-border tax on WFH scenarios can be significantly more complex than what most people believe, it is advisable for both companies and their cross-border employees to proactively consult tax professionals who are well-versed in these issues before entering into such arrangements, if possible. For companies that have pre-existing cross-border employees, they should consider conducting a review well ahead of the actual filing of tax returns to ensure that they are not only compliant in both home and host jurisdictions, but that they also understand what options they have to address possible challenges that may arise. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Jocelyn M. Magaway is a tax senior director of SGV & Co.

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10 October 2022 Maria Margarita D. Mallari-Acaban and Michelle C. Arias

BEPS 2.0: A Philippine perspective

More than a year since the OECD/G20 Inclusive Framework proposed the two-pillar approach, we have heard much about BEPS 2.0 from a global standpoint. In this article, we now look at the Philippine perspective, what MNEs in the Philippines should start considering and what’s at stake once it is implemented.LOOKING BACK ON BEPS 1.0BEPS 1.0 started back in 2015 when the Organization for Economic Cooperation and Development (OECD) and the G20 countries led the first ever global initiative to address base erosion and profit shifting (BEPS) practices. Essentially, these referred to aggressive tax planning strategies that tend to exploit gaps and mismatches in the tax rules of various countries. Some Multinational Entities (MNEs) would often choose to locate in lower tax jurisdictions and treat their profits as sourced from that country instead of the jurisdiction where the activity creating those profits takes place (profit-shifting) or reduce tax bases through certain deductions (base erosion). While not illegal per se, BEPS practices were viewed as unfair since they allowed international companies to reduce their effective tax rate and gain competitive advantage over local competitors.The rise of the digital economy in recent years created another gap in prevailing tax rules as MNEs took advantage of online platforms to enter foreign markets without having to establish a physical presence. Some of the early responders began imposing a “Digital Services Tax” on the revenue of MNEs engaged in online economic activity. However, this approach was viewed as ineffective not only because the additional tax cost will likely be passed on to the consumers, but also because it could lead to double taxation and other trade-related issues due to inconsistent tax treatment.ENTER BEPS 2.0To effectively address the increasing tax challenges and complexities arising from the digitalization of the economy, the OECD introduced BEPS 2.0.A two-pillar approach was proposed under this reform package to help ensure that MNEs pay their fair share of taxes wherever they operate in the world:(1) Pillar 1 on new nexus and profit allocation rules aims to reallocate a certain portion of taxable profits of MNEs with more than €20 billion in global revenue and profitability above 10% to market jurisdictions.(2) Pillar 2 has two components: the Global Anti-Base Erosion (‘GloBE’) Rules, which seek to ensure that MNEs pay a 15% minimum tax and the Subject To Tax Rule (STTR), which seeks to limit the treaty benefits on certain related-party payments.PILLAR 1: NEW NEXUS AND PROFIT ALLOCATION RULEPillar 1 proposes a new taxation system to capture and reallocate 25% of excess profits of MNEs to the various jurisdictions where the goods and services are actually sold and consumed. Ultimately, it will give a taxing right to these market jurisdictions to facilitate re-allocation.Realistically, however, Pillar 1 may take longer to implement given the complexity of the issues at the MNE Group level as well as the removal of the Digital Services Taxes (DST) from some jurisdictions.  Hurdling these issues is necessary before Pillar 1 can take effect. Pillar 2, on the other hand, is more likely to take off earlier as some jurisdictions are already looking at legislation to implement the minimum tax. Given this, it is imperative to understand the concept of global minimum tax and how it stands to affect MNEs headquartered or operating in the Philippines.PILLAR 2: GLoBE RULESTo start off, Pillar 2 does not require any country to increase corporate income tax rates. Instead, it envisions imposing an additional tax (top-up tax) to bring the total Effective Tax Rate (ETR) for MNEs in that particular jurisdiction to 15%.The GloBE rules are intended to cover only MNE groups with consolidated annual revenue of more than €750 million. Moreover, government entities, international organizations, non-profit organizations, pension funds or investment funds that are ultimate parent entities of an MNE group or any holding vehicles used by such entities, organizations or funds are exempt.Now, the mechanism for the 15% minimum tax is quite tricky as Pillar 2 talks about three kinds of top-up taxes (Qualifying Domestic Minimum Top-up Tax, Income Inclusion Rule and Undertaxed Payments Rule) imposed either at Subsidiary or Parent level.In applying these top-up taxes, Pillar 2 contemplates a hierarchical approach where the taxing right is primarily exercised at the subsidiary level of an MNE, followed by parent level and then finally by another subsidiary within the group (in case any residual amount of the top-up tax remains unpaid).CONSIDERATIONS FOR MNEsAs MNEs continue to do business and invest in the Philippines and overseas, much thought should now be given on how they should approach the future with the GloBE rules in mind. Some initial considerations and action items for the MNEs are:• Review of the group structure to determine (1) whether one is likely to fall within the scope of the GloBE rules under the €750-million consolidated revenue test, (2) which are in-scope entities where the top-up taxes may be applied and (3) which are excluded entities.• Run initial simulations on GloBE Income and ETR of each in-Scope entity. For this purpose, the group should consider subsidiaries in the Philippines (and elsewhere) enjoying income tax holidays and special income tax rates in the ETR calculation.• Conduct a resource assessment across functions such as Tax, Treasury, Internal Audit and IT to determine if any capability is lacking and consequently tap the necessary internal or external resources to ensure the group’s overall preparedness.• Consider any potential accounting, legal, transactional issues and other complications resulting from potential application of different top-up taxes.It is also important to note that even in cases where the GloBE ETR of a group is more than 15%, it is not necessarily compliance-free. There could still be compliance and calculation requirements to be made especially if the jurisdictions involved have local GloBE legislation in place.REGULATORY AND POLICY CHALLENGESAdmittedly, developing countries like the Philippines stand to gain tax revenue if and when they implement local top-up tax rules. However, this must be weighed against possible foreign investment flight and other adverse effects on investment promotion efforts. In such a case, the government will have to revisit our investment packages to maintain our competitive advantage.The other practical consideration is the resources needed to manage the complexity of the implementation framework and address possible challenges at every stage. Without a tried and tested framework, the top-up tax may not translate to real tax collections and instead end up as disputed assessment cases in the tax courts.    CONCLUSIONThe Philippines has yet to adopt its own legislation to implement Pillar 2. For now, it appears that it is not yet at the top of the government’s tax agenda. From an MNE perspective, however, the top-up tax could always find its way into the group — with or without a local top-up tax as yet. Accordingly, there is clear value in preparation and early Pillar 2 impact assessment. Without it, MNEs may not have sufficient time and resources for potential restructuring and other planning opportunities to address associated risks. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Maria Margarita D. Mallari-Acaban is a lawyer and tax principal and Michelle C. Arias is a tax senior director of SGV & Co.

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03 October 2022 Thyrza F. Marbas

What to expect when BIR tax audits resume

At the start of the third quarter, the Bureau of Internal Revenue (BIR) declared a moratorium on the conduct of BIR audits via Revenue Memorandum Circular (RMC) No. 77-2022. The RMC suspended all field audits and other field operations covered by Letters of Authority/Mission Orders relative to examinations and verification of taxpayers’ books of account, records, and other transactions, including suspending any field audits or any form of business visitation. No new orders to audit or investigate taxpayers were issued or served.The suspension was not without exceptions though. The exception included, among others, the investigation of cases prescribing on or before Oct. 31, which generally covers taxable years 2019 and prior.Consequently, RMC No. 121-2022 was issued setting the guidelines for the lifting of the suspension on field audits and operations pursuant to RMC No. 77-2022. Accordingly, the lifting will be on a per investigating office basis upon the approval of the Commissioner of Internal Revenue (CIR). Once approved, the investigating office is to immediately resume its field audit and operations on all outstanding LoAs/Audit Notices and Letter Notices. However, no new LoAs are generally be issued/served until further instructions from the CIR.Thus, in recent weeks we have seen numerous Notices of Discrepancies (NoDs) in connection with prescribing cases being served as the respective Investigating Offices comply with RMC No. 121-2022.Some taxpayers who have multiple existing LoAs covering prescribing cases have, in fact, received NoDs one after the other. Tax professionals are also frantic after having to deal with multiple, sometimes simultaneous, deadlines for the respective replies to the NoDs due to the numerous cases being handled.This has raised the eyebrows of some taxpayers who feel that the periods given to respond to audit notices, especially when a NoD is already served, have been abbreviated considering that the nature of the issues usually raised by the BIR require tedious reconciliation procedures, collation of voluminous supporting documents, and the drafting of protest letters.In one of the breakout sessions in the recently concluded 1st SGV Tax Symposium held on Aug. 19, the author facilitated a discussion on BIR audits in which participants were refreshed on the assessment process. It also focused on taxpayer remedies and periods to file replies or protest letters, as well as a discussion on the latest court decisions relevant to BIR audits.Receiving a NoD, or any kind of assessment notice for that matter, can be overwhelming. Imagine addressing multiple assessment notices at the same time. In such situations, having a deep understanding of the tax assessment rules, procedures, and remedies, as well as periods and deadlines, will significantly help ease the stress and pressure of managing simultaneous BIR audits.Consider, for example, how a taxpayer who is not familiar with the deadlines under the rules might react with panic once he or she receives a NoD, particularly upon reading the standard statement in the NoD that the presentation of a response, in a Discussion of Discrepancy (DoD), is needed within five days from receipt. A five-day period to respond is admittedly too short to prepare the necessary reconciliations and supporting documents, which may involve massive piles of paper receipts and invoices.However, those who understand the rules will know that taxpayers are afforded a 30-day period for the DoD. And while taxpayers can maximize this full 30-day period, they should also coordinate closely with the handling examiner on the proposed schedule of discussions. Generally, it is better to settle as many issues as possible at the NoD level or at the earliest stage of the audit.Taxpayers may also consider pursuing discussions with the handling examiner and submitting documents, reconciliations, and position papers with factual and legal bases in tranches as they become available. In this way the handling examiner will have a better chance of appreciating the taxpayer’s submissions.Taxpayers who are subject to audit should understand just how fast-paced the response time for all types of assessment notices can be. Given such a short window of time to prepare response letters and supporting documents, it would greatly benefit taxpayers to proactively prepare for tax audits. They can do this by carrying out advance reconciliation work. Another thing taxpayers can also do is to keep accurate, detailed and easily accessible records of transactions and documents so they can quickly and easily address any questions from the BIR. These and many other areas are where a robust and experienced tax team or the support of trusted tax professionals can make a significant difference in reducing time, costs, and anxiety overall.Given the BIR’s intent to transform the way it conducts audits with digital transformation, such as with the use of electronic invoicing and receipting systems (EIS), taxpayers will also need to quickly evolve their strategy and approach to handling BIR audits. These are possibilities we generally see in the future of tax audits. For now, taxpayers who have already received NoDs will be under pressure to act quickly to timely respond to the BIR. At the same time, taxpayers who have not received a NoD should not be complacent. As we approach the close of the calendar year and the lifting of audit suspensions, we can expect the BIR to go full throttle very soon. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.Thyrza F. Marbas is lawyer and a tax partner of SGV & Co.

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