10 business groups slam taxes on cross-border services
Ten prominent local business groups have called on the Bureau of Internal Revenue (BIR) to revoke a recent tax policy that slaps tax on cross-border services, citing the prohibitive impact on the cost of doing business.
They questioned the legal basis cited by the BIR for its Revenue Memorandum Circular 5-2024 dated Jan. 24, which levies 25-percent withholding tax and 12-percent final withholding value-added tax on such services.
Those opposing the measure include the country’s largest business group, Philippine Chamber of Commerce and Industry, as well as the Philippine Exporters Confederation and the Management Association of the Philippines.
Tax Management Association of the Philippines, Philippine Institute of Certified Public Accountants, the Financial Executives of the Philippines, Association of Certified Public Accountants in Commerce and Industry, Association of Certified Public Accountants in Public Practice, the Joint Foreign Chambers of the Philippines, and the IT and Business Process Association of the Philippines also opposed.
They said that the Supreme Court decision on the Aces Philippines Cellular Satellite Corp. versus the BIR case did not account for several crucial factual elements that had qualified the income-generating activity of Aces as one complete and integral process.
The high court ruled that the satellite airtime fee payment made by the domestic corporation, Aces Philippines, to the nonresident foreign corporation, Aces Bermuda, was subject to final withholding tax, following a two-tiered test that identified the source of the income and the physical location of that income source.
