“We are in the end game now.” This is the familiar line by Doctor Strange in the Avengers: Infinity War movie, signifying that they are approaching the final part of their battle with Thanos. As it is less than two weeks before the BIR’s deadline of submission of the Audited Financial Statements (AFS) and Annual Income Tax Returns (AITR), our dear tax consultants, auditors and accountants are also “in the end game”.
I was once an external auditor and I personally know the stress (physically, mentally and emotionally) in “beating” the deadline of submission of the AITR and AFS. This year, the deadline for the submission of the AITR for calendar year ended December 31, 2022 is on April 17, 2023, while the submission of AFS with the Securities and Exchange Commission (SEC) is from May 29 to June 30, 2023, depending on the last numerical digit of the company’s SEC registration or license number. The month of April is always considered a “crunch time” period. However, the submission does not end with the BIR. After these documents have been received by the BIR, companies also have to submit them to the SEC. In addition, the General Information Sheet (GIS) shall be filed on or before April 30, 2023.
The non-filing of the AFS, AITR and GIS with the SEC has a corresponding fine and penalty. Originally, under SEC Memorandum Circular (MC) No. 6, series of 2005, companies are liable to pay P10,0000 plus P100 per day of delay for the non-compliance of the submission requirements with the SEC. Now, companies that were late or not able to file these documents can have a “breather”, thanks to SEC MC No. 2, s.2023 which grants amnesty for the non-filing and late filing of the GIS and AFS and non-compliance with MC No. 28, s.2020.
MC No. 2, s.2023 grants amnesty to corporations, including branch offices, representative offices, regional headquarters and regional operating headquarters of foreign corporations and foundations, for the following violations:
a. Non-filing and late filing of GIS for the latest and prior years;
b. Non-filing and late filing of AFS, including fines for its attachments, for the latest and prior years; and
c. Failure to comply with MC No. 28, s.2020.
The amnesty rate for the non-filing and late filing of AFS and GIS is P5,000.00. However, for suspended and revoked corporations, including those which have filed for the lifting of suspensions and revocation, the applicable fine will be 50% of the assessed fines. Lastly, for companies that have failed to comply with MC No. 28, s.2020, the P10,000.00 penalty has been waived.
As a refresher, MC No. 28, s.2020 mandatorily requires corporations, partnerships, associations and individuals to create and/or designate email account addresses and cellphone numbers for transactions with the SEC. This is to facilitate and expedite the transmission and receipt of official communications with the SEC. The email addresses and cellular phone numbers must be under the control of the corporate secretary, the person charged with the administration and management of the corporation sole, the resident agent of the corporation, the managing partner, the individual, or the duly authorized representative.
Going back to MC No. 2, s.2023, the amnesty period is until April 30, 2023 only. Hence, the duly authorized representative of the company must: (a) file an Online Expression of Interest Form (EOI) via the Electronic Filing and Submission Tool (eFAST) and (b) pay the corresponding fees before the said date to be eligible for the amnesty. Upon uploading the EOI in eFAST, a Payment Assessment Form (PAF) will be generated which must be settled through the Electronic System for Payment to SEC (eSPAYSEC) only. Once the PAF is paid, the company must again upload the Notarized Application for Amnesty Form and all other requirements in eFAST. Once the submitted documents have been evaluated and deemed compliant, a Confirmation of Payment of Amnesty on Fines and Penalties will be issued to the company’s registered email address.
It is also worthy to note that not all corporations are eligible to apply for this amnesty. The following corporations are excluded from the coverage:
a. Corporations whose securities are listed on the Philippine Stock Exchange;
b. Corporations whose securities are registered but not listed on the PSE;
c. Corporations considered as Public Companies;
d. Corporations with intra-corporate disputes;
e. Corporations with disputed GIS; and
f. Other corporations covered under Sec. 17.2 of RA No. 8799 or the “Securities Regulation Code.
The issuance of the Confirmation of Payment for Amnesty on Fines and Penalties to companies which have fully complied with the requirements under the circular means that the amnesty is final and irrevocable for the covered period/s. However, this does not exempt the companies from filing their subsequent mandatory reportorial requirements in a timely manner. For Revoked or Suspended Corporations, this will not automatically lift its Revoked or Suspended status.
MC No. 2, s.2023 is a very welcome development for non-compliant companies. Considering the recent Covid-19 pandemic, many companies have failed and/or have difficulty in complying with the SEC’s deadline in filing their AFS and GIS. This circular gives companies a sort of a clean slate moving forward. Also, for companies planning to amend their articles of incorporation or update their current capital structure and other applications with the SEC, they need to have Monitoring Clearance from the CRMD. Availing the amnesty would expedite the clearance process.
Just like when Doctor Strange said that he has seen 14,000,605 potential futures and that there is only one future wherein they defeated Thanos, companies must take this opportunity to settle their non-compliance with the SEC since it may not be offered again soon.
Let's Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
As published in BusinessWorld, dated 04 April 2023