It’s been two years since the Philippine government imposes the train law. Are you looking for train law updates 2020? In the previous article “Latest Train Law Issuance 2019,” I’ve discussed significant changes in train law taxes. Some of these adjustments are the new rates on life insurance, creditable withholding tax on top withholding agents. Also, VAT exempts for sale of Drugs for Diabetes, High-Cholesterol, and Hypertension and estate tax filing, and installment payments. If you haven’t read these updates, make sure not to miss out on those train law updates 2019.
How about this year 2020? We’ll discuss three tax updates on train law 2020. Here are the three (3) significant updates that you should know. First, application for Registration of BIR Forms using 1902 and 1905 for those individuals who earned compensation income. Second, the implementation of the New Central Bank Act and Lastly, the revised Real Estate Trust Fund Act of 2009.
Updates on Application for Registration of BIR Form 1902 and 1905.
What should you know if you get a new employee in a private company and no TIN? In the previous issuance, states, “new employees shall accomplish the Application for Registration for Individuals Earning Compensation Income and submit the same to the employer. While the employer shall file the fully accomplished registration for employees registering for the first time to the BIR within ten (10) days from the date of employment or secure the TIN of new employeesusing the e-Registration system.”
However, this year 2020 is requiring all employers to accomplish in a triplicate copy of BIR Form 1902 if the employee does not have existing TIN. These three (3) copies as Original form provided to RDO while the employer and employee will keep the rest of the prints. Both employee and employer shall accomplish this application.
If there are any changes in the information of the employee, such as multiple employment status and the amount of compensation income, the employee should apply the BIR form No. 1905. It must be duly stamped received by the RDO where he is registered, not where the employer was registered, and submit to his employer. Necessary adjustment on the withholding tax of the employee based on the updated information upon receiving the copies from the employee.
BIR grants Tax Exemption to Central Bank of the Philippines
On January 15, 2020, issued the implementation of the New Central Bank Act as known as An Act Amending Republic Act No. 7653. This R.A. No 11211 restores the central bank’s authority to issue debt papers as part of its regular transactions. Employing this, it gives greater flexibility in knowing the timing and sizes of its monetary operations.
According to Article I, as the New Central Bank Act (RA 7653), Bangko Sentral ng Pilipinas is exempted from paying all National Taxes, provincial, municipal, and city taxes, fees, charges, and assessment for five years from the approval of this Act. However, on this latest issuance 2020, all income derived from its governmental functions is not subject to any national internal revenue tax. These incomes include from its activities or transactions in the exercise of its supervision over the operations of banks and its regulatory and examination powers over non-bank financial institutions performing quasi-banking functions, money service businesses, credit granting, and payment system operations.
Besides, income in pursuits of its primary objective to maintain price stability conducive to a balanced and sustainable growth of the economy, and promotion and maintenance of monetary and financial stability and convertibility of the peso are not subject to tax. However, other incomes not mentioned above are subject to applicable internal revenue taxes.
Real Estate Investment Trust (REIT) Act of 2009
Are you familiar with Real Estate Investment? REIT are listed companies stock corporation incorporated to own income-generating real estate assets. Some of these income-producing estates are condominiums, shopping centers, hotels, office spaces, resorts, and hospitals. Furthermore, they earned also from infrastructure facilities such as tollways, airports, and highways. Here are the tax updates on the REIT Act of 2009 this year, 2020.
- Decreasing the minimum public ownership requirement (MPO) to at least one-third of the outstanding capital of the REIT. Provided at least one thousand shareholders given to the public and owning at least fifty (50) shares.
- Along with this revision, reinvestment is necessary for any sponsor or promoter who contributes to any income-generating Real Estate to a REIT. This reinvestment shall be made within one (1) year from the date of receipt of proceeds or money by the Sponsor or promoter.
- Documentary Stamp Tax on REIT. Any transfer of real property to REITs, including the sale or shipment of all security interests, is subject to fifty percent (50%) of the applicable Documentary stamp tax (DST). Documentary Stamp Tax on the transfer of real property involving stocks that represent interest is seventy-five centavos (0.75) on each two hundred pesos or fractional part thereof of the par value of the capital. However, if the stock has no par value, DST is subject to 25% of the DST paid on the issuance of the original stock.
- Value Added Tax on REIT. Changing ownership to a REIT in exchange for its shares is exempted from Value-added tax.
Other Train Law Updates 2020
Any income derived from the sale of gold is not part of the gross income. It is also exempt from income tax as well as from withholding tax. These include the sale of gold to the BSP by registered SSMs and accredited traders and vice versa.
No excise tax is imposed on the sale of gold to the BSP by registered Small Scale Miners (SSMs) and accredited traders and vice versa. If the seller of gold paid the tax, he might claim a refund from the government.
“If you have questions above, please let me know by comments below”