Mandatory TIN of Foreigners on SEC Papers in Philippines

By: Garry S. Pagaspas, CPA

Securities and Exchange Commission (SEC) in the Philippines issued Memorandum Circular No. 1-2013 (SEC MC 1-2013) dated January 7, 2013 entitled “Mandatory Incorporation of the Tax Identification Number (TIN) of Foreign Investors in All Forms, Papers and Documents Filed with the SEC”. This SEC MC. No. 1-2013 is intended to take effect immediately from its issuance last January 2013.

SEC MC 1-2013 in relation to BIR Revenue Regulations No. 7-2012

Said SEC MC. 1-2013 was issued in relation to Revenue Regulations No.  7-2012 (RR No. 7-2012) dated April 2, 2012 entitled “Amended Consolidated  Revenue Regulations on Primary Registration, Updates and Cancellation” where Section 4(1)(V) provides as quoted below:

“Section 4(1)(v) – Non-resident Aliens not engaged in Trade or Business (NRANETB) or non-resident foreign corporation (NRFC) shall be issued TIN’s for purposes of withholding taxes on their income from sources within the Philippines. The withholding agent shall apply for the TIN in behalf of the NRAETB or NRFC prior to or at the time of the filing their monthly withholding tax return.”

In effect, the above provision of RR No. 7-2012 requires the withholding agent to secure tax identification number in the Philippines in behalf of non-resident payees prior to filing or at the time of filing withholding tax returns.

SEC MC 1-2013 in relation to Executive Order No. 98 series of 1998 

Likewise, SEC MC 1-2013 was in issued in relation to Executive No. 98 series of 1998 requiring all persons (natural and juridical) dealing with government agencies and instrumentality to incorporate Tax Identification Numbers in all forms, permits, licenses, clearances, official papers and documents which they secure from these government agencies and instrumentalities.

What are the new SEC rules on TIN of foreigners?

Under SEC MC No. 1-2013, the following new guidelines are issued with respect to applications or documents filed by corporations or partnerships with respect to foreign investors:

1. TIN of foreign investors on SEC Incorporation documents

No application for incorporation of a corporation, or registration of a partnership shall be accepted unless the tax identification number in the Philippines or passport number of all its foreign investors are indicated in its registration documents such as on the following:

• Articles of Incorporation
• By-laws
• Treasurer’s Affidavit
• Joint Undertaking to Change Name
• Other registration documents

Simply stated, in application for SEC registration of new corporation or partnership, tax identification number is not mandatory because a passport number could serve the purpose.

2. TIN of foreign investors on application for SEC amendments

For applications for amendments, the same shall not be accepted unless the tax identification number of all foreign investors, natural or juridical, resident or non-resident, are indicated therein. Example of application for SEC amendments could be as follows:

• SEC application for change of name
• SEC application for change of address
• SEC application for increase of authorized capitalization
• SEC application for increase of the number of directors
• SEC application for change of accounting year, fiscal to calendar or vice-versa
• SEC application for change of annual meeting

Simply put, after SEC approval of the application for registration of corporations and partnership, they now have the opportunity to apply for tax identification number of its foreign investors so that they could comply the mandatory TIN indication on SEC application for amendments.

3. TIN of foreign investors on all other SEC filings 

All documents to be filed with the SEC by corporations and partnerships after their  incorporation shall not be accepted unless the tax identification number of all its foreign investors, natural or juridical, resident or non-resident, are indicated therein. Here are some other documents for filing with the SEC:

• General Information Sheet for stock corporations
• General Information Sheet for non-stock corporations
• Audited Financial Statements in the Philippines

Notably, once those documents to be files with the SEC are not accepted resulting to late filing or non-filing, then, corresponding penalties will be imposed by SEC.

Garry is a Certified Public Accountant (CPA) and a law degree holder in tax practice for about ten (10) years now helping out taxpayers on tax compliance, tax savings, tax assessments, tax refunds, and other related professional tax services. He is presently a frequent speaker of Tax and Accounting Center, Inc. and you may send him mail at garry.pagaspas(@)taxacctgcenter.ph.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances.