Transfer Pricing Concepts and Documentation Requirements

With the recent surge in the number of COVID-19 cases placing Metro Manila, along with other areas, in General Community Quarantine Alert Level 3, the current situation adds to the anxieties that everyone is experiencing during this challenging time. Perhaps, for a moment, we can think of some light vibes to somehow lighten our burden, particularly for taxpayers who have a lot on their plate.

Just when things were starting to feel normal again, 2022 came and so did the significant surge of COVID-19 cases. This pandemic has changed our lives in different ways. Lives were put on hold, some were overturned, and many lives were lost. Amidst this new normal, however, we have proven time and time again the Filipino’s resiliency and adaptability – finding new ways to persevere and to thrive despite challenges.

The introduction of the Tax Reform for Acceleration and Inclusion (TRAIN) Act in 2018 brought with it an amendment that provides that the “amortization of input VAT” on purchased or imported capital goods will no longer be allowed beginning Jan. 1, 2022. Therefore, the related input VAT on capital goods acquired in 2022 may be fully recognized outright and be claimed as input tax credits against output tax during the month when the capital goods are purchased or imported, regardless of whether the aggregate acquisition cost in a calendar month exceeds P1 million.