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In our previous article titled “Taxation of cross-border services,” we featured Revenue Memorandum Circular (RMC) No. 5-2024, where the Bureau of Internal Revenue (BIR) clarified the proper tax treatment of cross-border services in light of the SC En Banc Decision in Aces Philippines Cellular Satellite Corporation vs. The Commissioner of Internal Revenue (CIR) and provided a new framework for assessing the final withholding tax and the final withholding Value-Added Tax (VAT) on services provided by non-resident foreign corporations (NRFC) to Philippine businesses.

You may have watched Dune: Part Two by now. The movie is set in the year 10191. Despite being set on the future, one thing that most viewers will notice is the lack of modern technology. There are no phones or computers, nor robots or AIs.

They say wishes do come true if you only believe in three (3). In April 2021, I wrote an article under this section entitled “Wish list for reforms on tax filing, payment, and administrative compliance.” In that article, I listed three wishes, some of which are already embodied under the then proposed bill on the Ease of Paying Taxes (EOPT) Act.

It has been more than a month since Republic Act (RA) No. 11976, otherwise known as the “Ease of Paying Taxes (EOPT) Act” was signed into law and took effect on 22 January 2024. This law was enacted as a significant milestone in the development of a modernized and easier tax system in the Philippines.

In last week’s article, my colleague discussed the new rules on the treatment of foreign currency transactions for internal revenue tax purposes. That article provided clarifications and guidelines on the use of appropriate forex rates in recording and reporting foreign currency transactions for tax purposes.

It is common for taxpayers dealing with foreign entities, whether for purchases or sales, to have transactions in foreign currency. Therefore, it is important for taxpayers to be guided by the rules governing the use of forex rates in business transactions.

For years, taxpayers have been wishfully thinking of simple and practical yet comprehensive tax laws and regulations for better compliance. With this, our legislators heeded the call, embraced the convenience brought about by digitalization, and introduced changes adapting to the current taxpayer’s situation.

Is there a flow of wealth when there is a reimbursement at cost? Is there an income to speak of when repaying a cost allocated by a related party?