SEC data-sharing deal will help BIR go after tax evaders

The Bureau of Internal Revenue (BIR) vowed to run after big-time corporate tax evaders as the agency can now access documents filed with the Securities and Exchange Commission (SEC).

“The BIR will maximize our partnership with the SEC by running after big-time corporate tax evaders. This sharing of information between the agencies will be used to investigate large-scale tax fraud activities perpetrated by companies such as that of ghost receipts and corporate tax evasion,” BIR Commissioner Romeo D. Lumagui, Jr. said in a statement.

Under a data-sharing deal, the BIR will have access to the SEC’s Swift Corporate and Other Records Exchange protocol where it can check all the corporate documents of any SEC-registered taxpayer in real time.

The BIR can look into the documents, such as articles of incorporation and annual financial statements, that are crucial to corporate tax fraud investigation or audit.

For its part, the BIR will provide SEC with a tax identification number verification for the latter’s online digital services to enhance its monitoring of the capital market.

Analysts said the new data-sharing deal between the BIR and SEC will help boost state revenues as the former ramps up its efforts to go after tax evaders.

“By granting the BIR access to essential documents such as articles of incorporation and audited financial statements, this initiative aims to streamline tax assessments and combat tax evasion. Companies will face stricter compliance requirements, while the SEC’s digital platforms simplify document submission and authentication,” Globalinks Securities and Stocks, Inc. Trader Mark V. Santarina said.

“The ease of data access for regulatory bodies necessitates accurate filings to avoid penalties,” he added.

AP Securities, Inc. Senior Research Analyst Francis Ferdinand D. Subido said this will result in increased transparency in the corporate sector.

“Company financials will better reflect the impact of taxes paid to their assets, especially to their cash,” he told BusinessWorld in a Viber message.

“Before, since companies submit another copy of their financial statements to the tax collectors, there is a misalignment in the timing of taxes paid to authorities versus the income tax expense recorded during the financial reporting period. This is why we get deferred tax assets and liabilities,” he said.

COL Financial Group, Inc. Chief Equity Strategist April Lynn Lee-Tan said in a Viber message that the data-sharing agreement makes it easier for the BIR to identify which companies are not paying the correct taxes.

“The BIR would need to look at a company’s financials to know how much taxes need to be paid,” she added.

The government loses around P500 billion annually due to tax evasion, the BIR said last year.

“This (data-sharing deal) can boost government revenue and promote fairer competition within the Philippine economy, but both agencies need to address data security, standardization, and staff training to ensure its effectiveness,” Security Bank Corp. Chief Economist Robert Dan J. Roces said.

Mr. Subido said the data-sharing agreement will also support the government’s push to improve tax administration.

“Gaining access to the financial statements will allow regulators to better understand the accounting methods that companies use. They can better get a gauge of what the true taxable income amount should be,” he said.

“This might even attract more businesses to the Philippines, because as we know, the amount of red tape here is something that has been keeping businesses away,” he added.

Mr. Santarina said the data-sharing initiative will also increase confidence in the local capital market.

“The SEC’s collaboration with other agencies underscores the importance of adhering to regulatory standards, enhancing comprehensive business activity monitoring and potentially boosting investor confidence in the capital markets industry,” he said.

Ensuring the ease of making tax payments would boost compliance among taxpayers, said Benedicta Du-Baladad, founding partner and chief executive officer of Du-Baladad and Associates.

“When taxpayers feel that taxes are fair, clear, easy to comply with and consistent in its application, there is a natural attraction for taxpayers to voluntarily comply without the BIR going after them,” she said.

The passage of Republic Act No. 11976 or the Ease of Paying Taxes law would also help improve the digitalization and taxpayer services of the BIR.

Source: Business World

Barcelona to ban apartment rentals to tourists in bid to cut housing costs

Spanish city is one of Europe’s top destinations but its popularity has made housing increasingly unaffordable for residents

Barcelona, a top Spanish holiday destination, has announced it will bar apartment rentals to tourists by 2028, an unexpectedly drastic move as it seeks to rein in soaring housing costs and make the city livable for residents.

Barcelona has announced plans to ban apartment rentals to tourists from 2028 in a bid to bring down housing costs for residents. Photograph: Starcevic/Getty Images/iStock

The city’s leftist mayor, Jaume Collboni, said that by November 2028, Barcelona would scrap the licences of the 10,101 apartments currently approved as short-term rentals.

“We are confronting what we believe is Barcelona’s largest problem,” Collboni told a city government event.

This meant that “from 2029”, if there were no setbacks, “tourist flats as we conceive of them today will disappear from the city of Barcelona”.

The boom in short-term rentals in Barcelona, Spain’s most visited city by foreign tourists, meant some residents could not afford an apartment after rents rose 68% in the past 10 years and the cost of buying a house rose by 38%, Collboni said. Access to housing had become a driver of inequality, particularly for young people, he added.

National governments relish the economic benefits of tourism – Spain ranks among the top-three most visited countries in the world – but with local residents priced out in some places, gentrification and owner preference for lucrative tourist rentals are increasingly a hot topic across Europe.

Local governments have announced restrictions on short-term rentals in places such as Spain’s Canary Islands, Lisbon and Berlin in the past decade.

Banners reading ‘No tourist flats’ hang from a balcony in the Barcelona neighborhood of Barceloneta. Photograph: Pau Barrena/AFP/Getty Images

Spain’s Socialist housing minister, Isabel Rodriguez, said she supported Barcelona’s decision.

“It’s about making all the necessary efforts to guarantee access to affordable housing,” she posted on X.

Vacation rentals platform Airbnb, which hosts a significant number of Barcelona listings, did not immediately respond to a request for comment.

“Collboni is making a mistake that will lead to [higher] poverty and unemployment,” Barcelona’s tourist apartments association Apartur said in a statement, adding the ban would trigger a rise in illegal tourist apartments.

Hotels stand to benefit from the move. The opening of new hotels in the city’s most popular areas was banned by a far-left party governing Barcelona between 2015 and 2023, but Collboni has signalled he could relax the restriction.

Barcelona’s hotel association declined to comment on Friday’s announcement.

“Those 10,000 apartments will be used by the city’s residents or will go on the market for rent or sale,” Collboni said of the measure.

Barcelona’s local government said in a statement it would maintain its “strong” inspection regime to detect potential illegal tourist apartments once the ban came into force.

No new tourist apartments have been allowed in the city in recent years. The local government had ordered the shutting of 9,700 illegal tourist apartments since 2016 and close to 3,500 apartments had been recovered to be used as primary housing for local residents, it said.

But that has not prevented the number of visitors to the city – known for its belle epoque architecture, museums and beaches – from continuing to increase, especially after Covid pandemic travel restrictions were lifted.

Several local associations have called for a demonstration on 6 July with the slogan: “Enough! Let’s put a stop to tourism!”

The rally will come on the heels of similar demonstrations held in recent months in other Spanish tourism hotspots such as the Canary Islands and Palma de Mallorca.

Source: The Guardian

Real property valuations to change

At present, determining the value of real properties is required for various transactions. Local and national government agencies use different real property valuation standards when assessing these transactions. Hence, the absence of a uniform set of standards for real properties in the Philippines has led to the existence of multiple, overlapping and outdated valuations.

In view of the situation, President Ferdinand Marcos Jr. signed into law Republic Act (RA) 12001, or the Real Property Valuation and Assessment Reform Act (RPVARA), on June 13, 2024, which takes effect 15 days after its publication in the Official Gazette or in a newspaper of general circulation. The law aims to encourage tax compliance and the sustainable development and maintenance of a just, equitable and uniform real property valuation aligned with international standards.

The Bureau of Local Government Finance (BLGF) of the Department of Finance (DoF) will be the primary implementing agency to develop, maintain and apply uniform valuation standards, which should be used by all appraisers and assessors in local government units (LGUs) and different agencies.

What can we expect when the RPVARA takes effect?

At this point, the Bureau of Internal Revenue (BIR) uses zonal valuation for various national real properties transactions like capital gains tax, donor's tax, documentary stamp tax and estate tax. LGUs likewise prepare and implement their own schedules of market value (SMVs) that govern real property tax, also known as assessed value. As a result, the same real property may have different valuations. In most cases, the zonal value of the BIR is often higher than the assessed values of provincial or city assessors.

The valuations used by both the BIR and LGUs for taxation purposes are likewise outdated. In 2021, the BLGF reported that nearly 40 percent of the SMVs from Revenue District Offices and 60 percent of those from LGUs had not been revised. This is despite Section 219 of RA 7160, or the Local Government Code of 1991, which requires LGUs to revise their SMVs every three years.

In the same vein, zonal value is also subject to automatic adjustment every three years pursuant to Section (6)(E) of the National Internal Revenue Code of 1997, as amended. The current situation does not provide consistency and fairness in the valuation of real properties, which could be under or overstated.

With the enactment of the RPVARA, it is hoped that these property valuation issues will be resolved as it adopts a single valuation for real properties that is based on international standards.

Essentially, the reform is intended to remove the political aspects that affect local and national taxation and instead rely on technical and international standards of valuation. To standardize property valuation, the approved SMV will be used as the basis for the determination of real property valuation for both national and local governments.

Assessors in LGUs will prepare the SMV for the different classes of real property situated within their areas. This will be approved by the DoF. In order to ensure that the LGUs use technical and international valuation standards, the RPVARA utilizes the Philippine Valuation Standards (PVS), which is based on the International Valuation Standard (IVS) — a principle-based standard that promotes transparency and consistency in valuation practice.

Under the RPVARA, internal revenue taxes such as capital gains tax, donor's tax, documentary stamp tax and estate tax that use the higher zonal value or assessed value to determine the tax base will now use the SMV approved by the DoF.

The new law is expected to have a positive impact on property owners and the government. Using a single system of property valuation, property owners — both individuals and real estate companies — can expect transparency and accuracy in the valuation of their properties. Property owners will now be aware of the actual value of their properties so they can set transaction prices appropriately. At the same time, the RPVARA may result in an increase in revenues from local and national taxes, which, if used properly, will help improve government services and develop more social projects.

In the meantime, during the transition period under the new law, an amnesty on unpaid real property taxes (RPT) and special levies on real property is granted. The amnesty applies to interest, penalties and surcharges from all unpaid real property taxes, including Special Education Fund, idle land tax, and other special levy taxes.

This may be availed of within a period of two years after the effectivity of the RPVARA. The amnesty may be availed of by a delinquent property owner with the option to settle their delinquent RPT through one-time payment or installments. However, the RPVARA amnesty program does not cover delinquent real properties that have been disposed of through a public auction, those with tax delinquencies being paid through a compromise agreement and those involved in a pending court case connected to tax delinquencies.

Moreover, under the RPVARA, a Real Property Information System will be developed and maintained by the BLGF. This is an up-to-date electronic database of the sale, exchange, lease, mortgage, donation, transfer, and all other real property transactions and declarations in the country.

Following the signing of the law, the DoF is expected to issue the rules and regulations within three months after the effectivity of the RPVARA for further clarifications and guidelines.

In conclusion, the new law is anticipated to improve the valuation system for real property, which may prove beneficial to both property owners and government agencies as they implement a standardized real property valuation system and boost government revenue.

Source: Manila Times