2000

REVENUE REGULATIONS
REVENUE REGULATIONS NO. 1-2000 issued January 6, 2000 prescribes the regulations to implement
Section 4 of R.A. No. 8748, amending Revenue Regulations No. 12-97, with respect to the sharing,
distribution and manner of disposition of the two percent (2%) share of local government units from the five
percent (5%) special tax on gross income earned imposed on PEZA-registered enterprises. Said enterprises
shall, in lieu of all taxes (except real property tax on land owned by developers), pay a tax equivalent to 5%
based on gross income earned. Said tax shall be shared and distributed to the national government (3%) and
to the treasurer's office where the registered enterprise is located (2%). In case the Special Economic Zone
(ECOZONE) is situated and encompasses the territorial jurisdiction of more than one (1) city or
municipality, the share of each city or municipality from the 2% special tax paid by ECOZONE enterprises
shall be determined in accordance with the implementing PEZA regulations on the subject. The Philippine
Economic Zone Authority (PEZA) shall issue certification as to the exact share of the concerned cities or
municipalities from the 2% tax allocated under the implementing rules of PEZA. Every ECOZONE
registered enterprise subject to the 5% special income tax shall file a quarterly income tax return within
sixty (60) days after the close of each of the first three (3) quarters and a final adjustment income tax return
covering the entire taxable year, not later than the fifteenth (15th) day of the fourth month following the
close of its taxable year.

REVENUE REGULATIONS NO. 2-2000 issued January 15, 2000 prescribes the procedures to be adopted
during the transition period in the phasing out of leaded gasoline in Metro Manila, as mandated in Executive
Order No. 446. The transition period shall be reckoned from the day of inventory taking which will be
conducted within five (5) days from the effectivity of the Regulations and shall last not more than forty-five
(45) days or whichever is earlier until such time that the leaded gasoline has been diluted to unleaded
gasoline. A conduct of physical inventory of all stocks on hand of leaded and unleaded gasoline stored at the
refinery plants and depot/terminals in Metro Manila shall be done by the BIR, in coordination with
representatives from the Department of Energy and in the presence of representative(s) of the concerned oil
company. Each removal of the remaining stocks of leaded gasoline subjected to inventory taking shall be
accompanied by a Withdrawal Certificate duly issued by the BIR personnel assigned on the premises of the
subject taxpayers. A weekly report of inventory utilization shall be submitted to the Assistant Commissioner
of the Excise Taxpayers Service on or before Tuesday of the following week, until such time that the said
inventories are fully exhausted. In the event that the said stock has been completely exhausted and the
remaining stock of diluted gasoline does not meet the prescribed maximum lead content of 0.013 gram per
liter for unleaded gasoline, each subsequent removal of such gasoline shall be considered leaded gasoline
and an additional tax of P 1.00 Peso per liter of said gasoline shall be due therefrom and shall be paid in
accordance with the provisions of RMO No. 99-98. The said procedure shall continue until such time that
the content of the storage tank conforms with the prescribed maximum lead content for unleaded gasoline.
The first-in-first-out method of accounting shall be used in the receipt of unleaded gasoline and removal of
leaded gasoline from the storage tank. After the transition period, commingling of leaded gasoline with
unleaded gasoline is prohibited.

REVENUE REGULATIONS NO. 3-2000 issued August 15, 2000 extends the deadline for the
accreditation of tax agents until December 31, 2000. After the said date, all returns, statements, reports,
protests, requests for ruling, official correspondence and other papers filed on behalf of the taxpayer shall
bear the following information below the signature of the accredited tax representative (individual
practitioners and members of GPPs): 1) for CPAs and others - a) Taxpayer Identification Number (TIN); and
b) Certificate of Accreditation Number, date of issuance and date of expiry; 2) for members of the
Philippine Bar - a) TIN; and b) Attorney's roll number or accreditation number, if any.

REVENUE REGULATIONS NO. 4-2000 issued August 15, 2000 prescribes the posting in places of
business of a notice on the requirement for the issuance of sales/commercial invoices and/or official receipts
by persons engaged in trade or business, including the exercise of profession. Issuance of invoices/receipts
is not required for every sale valued at P 25 or below by a non-VAT taxpayer. Failure and neglect to post the
notice required and/or deliberate removal of the notice constitute violation of the regulations. Any person
who commits any of the said violation shall, upon conviction, be punished by a fine of not more than One
Thousand Pesos (P1,000) or suffer imprisonment of not more than six (6) months, or both. In case of
corporations, partnerships or associations, the penalty shall be imposed on the president, partner, general
manager, branch manager, officer-in-charge and/or employees responsible for the violation.

REVENUE REGULATIONS NO. 5-2000 issued August 15, 2000 prescribes the regulations governing the
manner of the issuance of Tax Credit Certificates (TCCs) and the conditions for their use, revalidation and
transfer. A TCC may be used by the grantee or his assignee in the payment of his direct internal revenue tax
liability. However, in no case shall the TCC be used in the payment of the following: 1) payment or
remittance for any kind of withholding tax; 2) payment arising from the availment of tax amnesty declared
under a legislative enactment; 3) payment of deposits on withdrawal of exciseable articles; 4) payment of
taxes not administered or collected by the Bureau of Internal Revenue; and 5) payment of compromise
penalty. Moreover, in no case shall a tax refund or TCC be given resulting from availment of incentives
granted pursuant to special laws for which no actual tax payment was made.

BIR-issued TCCs may be transferred in favor of an assignee subject only to the following conditions: 1) the
transfer of a valid TCC must be with prior approval of the Commissioner or his duly authorized
representative; 2) the transfer should be limited to one transfer only; and 3) the transferee shall use the TCC
assigned to him strictly in payment of his direct internal revenue tax liability and in no case shall the same
be available for conversion to cash in his hands. Any TCC issued which remains unutilized after five (5)
years from the date of issue shall, unless revalidated before the end of the fifth year, be considered invalid.
This means that the TCC shall not be allowed for use in payment of any of the taxpayer's internal revenue
tax liability nor allowed to be transferred and the unutilized amount thereof shall revert to the General Fund
of the National Government. The revalidated TCC shall be valid for a period of five years from the date of
issue. Any request for conversion into cash refund of unutilized tax credits may be allowed during the
validity period of the TCC, subject to conditions specified in the Revenue Regulations. Any TCC issued
prior to January 1, 1998, may be submitted for revalidation by the holder within six (6) months prior to the
end of the fifth (5th) year. No revalidated TCC shall be issued unless the Commissioner's duly authorized
representative has certified that the applicant taxpayer has no outstanding tax liability. If the holder has any
outstanding tax liability, said liability should be applied first against the TCC sought to be revalidated
through the issuance of a Tax Debit Memo.

REVENUE REGULATIONS NO. 6-2000 issued September 25, 2000 prescribes the regulations to
implement the compromise settlement of internal revenue tax liabilities of taxpayers with outstanding
receivable accounts and disputed assessments. Cases which may be the subject of compromise settlement
are the following: 1) delinquent accounts; 2) cases under administrative protest pending in the Regional
Offices, Revenue District Offices, Legal Service, Large Taxpayers Service (LTS), Enforcement Service,
Excise Taxpayers Service (ETS) and Collection Service; 3) civil tax cases being disputed before the courts;
4) collection cases filed in courts; and 5) criminal violations, other than those already filed in court, or those
involving criminal tax fraud. Cases that cannot be compromised are: 1) withholding tax cases; 2) criminal
tax fraud cases; 3) criminal violations already filed in court; and 4) delinquent accounts with duly approved
schedule of installment payments.

The basis for the acceptance of compromise settlement are: 1) doubtful validity of the assessment; and 2)
financial incapacity. The prescribed minimum rates for the compromise settlement of tax liabilities,
reckoned on a per tax type assessment basis, are: a) 40% in cases of doubtful validity; b) 10% in cases of
financial incapacity; and c) 50% in cases of delinquent accounts and disputed assessments of taxpayers
registered under the LTS and ETS. Applications for the compromise settlement of tax liabilities will be
evaluated and approved/disapproved by the: a) National Evaluation Board (for basic assessed tax exceeding
P 1 Million and for offers less than the prescribed minimum rates); b) Regional Evaluation Board (for basic
assessed tax of P 500,000.00 or less); and 3) Commissioner of Internal Revenue (for basic assessed tax
exceeding P 500,000.00 but not over P1 Million).

REVENUE REGULATIONS NO. 7-2000 issued November 7, 2000 amends Sec. 2.83.3 of RR No. 2-98
regarding the requirement for list of income payees. In lieu of the manually-prepared alphabetical list of
employees and payees and income payments subject to creditable and final withholding taxes, which are
required to be attached as integral part of the Annual Information Returns, the Withholding Agent may, at
his option, submit 3.5 inch floppy diskettes containing the said lists. For large taxpayers, excise taxpayers
and other taxpayers whose number of employees or income payees are fifty (50) or more, the said list of
employees and income payees shall be submitted in magnetic form using 3.5-inch floppy diskettes to the
Large Taxpayers Assistance Division, Large Taxpayers District Offices, Excise Taxpayers Assistance
Division or to the respective Revenue District Office having jurisdiction over the taxpayer. The deadline for
the submission of the list shall be on or before January 31 of the succeeding year, for income payments
subject to compensation and final withholding taxes, and on or before March 1 of the following year, for
those subject to creditable expanded withholding taxes.

REVENUE REGULATIONS NO. 8-2000 issued November 22, 2000 amends specific provisions of RR
No. 2-98 and RR No. 3-98 with respect to the "De Minimis" Benefits, Additional Compensation Allowance
(ACA), Representation and Transportation Allowance (RATA) and Personal Economic Relief Allowance
(PERA). Said benefits/allowances received by employees are not considered as items of income and,
therefore, are not subject to income tax and, consequently, to the withholding tax. Effective the Taxable Year
2000, ACA will be classified as part of the "Other Benefits" excluded from one's gross compensation
income, provided that the total amount of such benefits does not exceed P 30,000. Items of "de minimis"
benefits exempt from the fringe benefits tax are enumerated in the Regulations.

REVENUE REGULATIONS NO. 9-2000 issued November 22, 2000 identifies the persons liable for the
Documentary Stamp Tax (DST) and the mode of payment/remittance of the said tax under certain
conditions. The DST, in general, is a tax imposed against the person making, signing, issuing, accepting or
transferring the document or facility evidencing the aforesaid transactions. Thus, in general, it may be
imposed on the transaction itself or upon the document underlying such act. Any of the parties to the taxable
transaction will be liable and responsible for the payment and remittance of the full amount of the tax due.
However, whenever one of the parties to the taxable transaction is exempt from the DST, the other party
who is not exempt shall be the one directly liable for the said tax.

If the tax-exempt party is one of the persons constituted as agent of the Commissioner for the collection of
the tax, he shall be required to collect and remit the DST. Failure on his part to collect and remit the DST
would make him personally liable for the tax and the penalties prescribed under Title X of the Tax Code.

The DST on the specified cases will be remitted as follows: 1) stamp tax on bonds, debentures, certificates
of indebtedness, deposit substitute, or other similar instruments - to be remitted by the person who issued
the instrument; 2) stamp tax on original issue of shares of stock in a corporation - to be remitted by the
corporation which issued the share(s) of stock; and 3) stamp tax on jai-alai, horse race, lotto or other
authorized number games - to be remitted by the proprietor or operators. Whenever one of the parties to the
taxable document or transaction is included in any of the entities enumerated in the Regulations, such
entities will be responsible for the remittance of the DST.

The "on-line electronic DST imprinting machine", unless expressly exempted by the Commissioner, will be
used in the payment and remittance of the DST by the following class of taxpayers: a) bank, quasi-bank or
non-bank financial intermediary, finance company, insurance, surety, fidelity, or annuity company; b) the
Philippine Stock Exchange (in the case of shares of stock and other securities traded in the local stock
exchange); c) shipping and airline companies; d) pre-need company (on sale of pre-need plans); and e) other
industries as may be required by the Commissioner.
REVENUE REGULATIONS NO. 10-2000 issued December 29, 2000 amends further RR Nos. 2-98, 3-98
and 8-98 with respect to the exemption of monetized leave credits of government officials and employees
and the enumeration of "de minimis" benefits which are exempt from income tax on compensation and from
fringe benefits tax.

REVENUE REGULATIONS NO. 11-2000 issued December 29, 2000 prescribes the registration and
filing of income tax returns and payment of income tax, if any, of marginal income earners with gross
sales/receipts not exceeding P 100,000.00 during any twelve (12) month period.

Marginal income earners will be given the opportunity to register with the Bureau of Internal Revenue, with
no charge and without complying with the usual documentary requirements, such as maintenance of books
of accounts and issuance of registered receipts/invoices.

REVENUE REGULATIONS NO. 12-2000 issued December 29, 2000 extends further the deadline for the
accreditation of tax agents from December 31, 2000 to February 28, 2001.

REVENUE REGULATIONS NO. 13-2000 issued December 29, 2000 implements the provisions of
Section 34(B) of the Tax Code of 1997 relative to the requirements for the deductibility of interest expense
from the gross income of a corporation or an individual engaged in trade, business or in the practice of
profession.

In general, subject to certain limitations, the following are the requisites for the deductibility of interest
expense from gross income: a) there must be an indebtedness; b) there should be an interest expense paid or
incurred upon such indebtedness; c) the indebtedness must be that of the taxpayer; d) the indebtedness must
be connected with the taxpayer's trade, business or exercise of profession; e) the interest expense must have
been paid or incurred during the taxable year; f) the interest must have been stipulated in writing; g) the
interest must be legally due; h) the interest payment arrangement must not be between related taxpayers; i)
the interest must not be incurred to finance petroleum operations; and j) in case of interest incurred to
acquire property used in trade, business or exercise of profession, the same was not treated as a capital
expenditure

REVENUE REGULATIONS NO. 14-2000 issued December 29, 2000 amends Sections 3(2), 3 and 6 of
RR No. 13-99 relative to the sale, exchange or disposition by a natural person of his "principal residence".

The residential address shown in the latest income tax return filed by the vendor/transferor immediately
preceding the date of sale of said real property shall be treated, for purposes of these Regulations, as a
conclusive presumption about his true residential address, the certification of the Barangay Chairman, or
Building Administrator (in case of condominium unit), to the contrary notwithstanding, in accordance with
the doctrine of admission against interest or the principle of estoppel.

The seller/transferor's compliance with the preliminary conditions for exemption from the 6% capital gains
tax under Sec. 3(1) and (2) of the Regulations will be sufficient basis for the RDO to approve and issue the
Certificate Authorizing Registration (CAR) or Tax Clearance Certificate (TCC) of the principal residence
sold, exchanged or disposed by the aforesaid taxpayer. Said CAR or TCC shall state that the said sale,
exchange or disposition of the taxpayer's principal residence is exempt from capital gains tax pursuant to
Sec. 24 (D)(2) of the Tax Code, but subject to compliance with the post-reporting requirements imposed
under Sec. 3(3) of the Regulations.