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Without a doubt, globalization of businesses has been thriving. Multinational and domestic firms alike are often engaged in multiple transactions with and on behalf of each other in a bid to achieve cost efficiency due to readily available resources and administrative convenience or practical exigencies. These types of transactions are usually made without any intention to make profits.

Last month, I wrote an article about the saga of transfer pricing in the Philippines. The tale begins in 1939 when the Commonwealth Act 466 or the “National Internal Revenue Code was passed. This is the source of the Commissioner of Internal Revenue’s (CIR) authority to review, allocate and distribute the income and deductions of related-party transactions (RPT), both cross-border and domestic, including intra-firm transactions between related parties, to determine the appropriate revenue and taxable income.

“Tale as old as time” — this now-famous beginning lyric from “Beauty and the Beast” can also applied to the authority of the commissioner of the Bureau of Internal Revenue (BIR) to review, allocate and distribute the income and deductions of related-party transactions, both cross-border and domestic. This include intra-firm transactions between related parties to determine the appropriate revenue and taxable income. Few people would know that this authority is now 81 years old; it was introduced on June 15, 1939 under Section 44 (now Section 50) of Commonwealth Act 466 or the “National Internal Revenue Code.” Let us recount the notable events and facts on this authority’s implementation and evolution.

Last week’s article discussed the accounting treatment for a short-term lease and a lease for low-value assets under the new Philippine Financial Reporting Standard (PFRS) 16 and taxation of operating lease as prescribed in Revenue Regulations (RR) No. 19-86 both for the lessee and the lessor. The discussion also tackled how the lessee and the lessor will record in their respective books various transactions related to leases, such as prepaid rentals and security deposits, and the proper reporting of these transactions for income tax purposes.

Philippine Financial Reporting Standard (PFRS) 16 is the new accounting standard for lease of assets or arrangements that contain a lease. It became effective on Jan. 1. It replaces Philippine Accounting Standard (PAS) 17, which means that entities reporting under PFRS shall apply this new standard in their lease transactions starting on the effectivity date.

The continuous globalization of trade has led to an increase in intra-group services. Intra-group services are those provided by one or more entities within a group to other fellow units, or for the benefit of the group as a whole. Such services include administrative, finance, human resources, information technology (IT), management, marketing, procurement, research and development, and technical services, among others.

Last month, President Rodrigo R. Duterte revoked the amnesty that former president Benigno Aquino III granted to Duterte’s antagonist and critic, Senator Antonio F. Trillanes IV.

My employed friend recently requested me to compute her annual income tax due for the prior year 2017. Her gross compensation from her lone employer was less than P250,000. I arrived at her annual income tax due after deducting the taxes withheld by her employer. I told her then that, if she receives the same amount of compensation this year, there will be no more withholding tax and annual income tax due. To my surprise, her employer continuously withheld tax on her January and February 2018 salary, even if she has been receiving the same monthly salary since last year. This was despite the passage and effectivity of the TRAIN Law effective Jan. 1, 2018 and notwithstanding the other pertinent issuances by the Bureau of Internal Revenue (BIR) early this year. Her employer explained that their reason for the continuous withholding was that they were still waiting for the BIR’s specific guidelines on implementing the new compensation tax rule in the TRAIN law.