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RMC 13-80

This document summarizes the tax treatment of tax refunds and credits received by taxpayers in the Philippines. It states that taxes previously claimed as deductions but later refunded or credited must be included in gross income in the year received. However, certain taxes like income, war profits, estate, gift, and some local taxes when refunded are not included in income. It also outlines special tax credits granted under certain laws for exports, tourism, and foreign loans, and states that these credits form part of gross income in the year received since the original taxes were deductible expenses.

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471 views2 pages

RMC 13-80

This document summarizes the tax treatment of tax refunds and credits received by taxpayers in the Philippines. It states that taxes previously claimed as deductions but later refunded or credited must be included in gross income in the year received. However, certain taxes like income, war profits, estate, gift, and some local taxes when refunded are not included in income. It also outlines special tax credits granted under certain laws for exports, tourism, and foreign loans, and states that these credits form part of gross income in the year received since the original taxes were deductible expenses.

Uploaded by

matinikki
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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April 10, 1980 REVENUE MEMORANDUM CIRCULAR NO. 13-80 Subject To 1.

: : Treatment of Tax Refunds and Tax Credits When Received.

All Internal Revenue Officers and Others Concerned.

Refunds/Tax Credits under Section 295 of the Tax Code.

Taxes previously claimed and allowed as deductions, but subsequently refunded or granted as tax credit pursuant to Section 295 of the Tax Code, should be declared as part of the gross income of the taxpayer in the year of receipt of the refund or tax credit. However, the following taxes, when refunded or credited, are not declarable for income tax purposes inasmuch as they are not allowable as deductions: a. Income tax imposed in Title III of the Tax Code;

b. Income, war-profit and excess profits taxes imposed by authority of a foreign country; but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this subsection (relating to credit for taxes of foreign countries); aisa dc c. Estate and gift taxes;

d. Taxes assessed against local benefits of a kind tending to increase the value of the property assessed; e. f. g. 2. Stock transaction tax; Energy tax; and Taxes which are not allowable as deductions under the law. Special Tax Credits granted under R.A. 5186; R.A. 6135 and P.D. 535.

These tax credits and their tax consequences are as follows: a. Sales, compensating and specific taxes are paid on supplies and raw materials imported by a registered export producer. Said taxes are given as tax credit to be used in the payment of taxes, duties, charges and fees due to the national government in connection with its operations. (Sec. 7(a), R.A. No. 6135) The tax credits granted should form part of the gross income to the enterprise in the year of receipt of tax credit as said taxes paid are considered allowable deductions for income taxes purposes. b. In some cases, a registered BOI and tourism enterprise assumes payment of taxes withheld and due from the foreign lender-remittee on interest payments on foreign loans. In such cases, the enterprise is given a tax credit for taxes

withheld subject to certain conditions. (Sec. 7(f), R.A. No. 5186; Sec. 8(c), P.D. No. 535) Said taxes assumed by the registered enterprise represent necessary and ordinary expenses incurred by the enterprise; hence, deductible from its gross income. Therefore, the tax credits granted necessarily constitute taxable income of the enterprise. casia It is desired that this Circular be given as wide a publicity as possible. EFREN I. PLANA Acting Commissioner

C o p y r i g h t 2 0 0 2 C D T e c h n o l o g i e s A s i a, I n c.

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