RMC No. 76-2020 explained the reasons for the edition of RR 19-2020. The RMC indicates that with the information collected in the RPT form and its schedules, the BIR will be able to conduct a transfer pricing risk assessment and quickly make an informed decision as to whether or not a particular company or transaction should be thoroughly reviewed. In accordance with RMC 76-2020, the BIR will be able to focus its audit and focus its resources solely on key transfer pricing issues, due to its limited resources. In recent months, the Bureau of Internal Revenue (“BIR”) has strengthened the application of transfer pricing rules and accelerated the pace of the integration of transfer pricing controls into BIR`s regular audits. The EO RAM contains schedules and forms that tax payers must complete and submit to tax inspectors during a tax audit. The BIR has made it clear that transfer pricing controls must be incorporated into regular tax controls. The purpose of a transfer pricing assessment is to determine which transactions with related parties could seriously affect the taxable base and thereby reduce the payment of income tax to the government. Since the TPP form appears to be only the first step in a transfer pricing risk assessment, the inclusion of the above information and schedules may be more than necessary. The subject normally goes through five phases of an APA application including: 1) on-demand consultation with the tax authorities on the scope of the APA; (2) filing of the official APA file; (3) the assessment of the adequacy and objectivity of the information provided by the subject to assess the method of calculating prices; (4) discussion and negotiation of the APA file; and (5) the conclusion and dissemination of the APA after the tax authorities and taxpayers have agreed on all issues in the proposed APP.
In the Bureau of Internal Revenue (BIR) strategic plan for 2019-2023, one of its priority programs is to implement Advance Pricing Arrangements to address the country`s growing transfer pricing concerns, including base erosion and profit transfers. In addition, taxpayers may be concerned about the efforts required to develop the schedules for the TPP form. In addition to the above annexes, the RPT form also requires documentation on transfer pricing and, if applicable, the Extended Price Agreement (APA). In cases where foreign withholding tax has not yet been transferred to the foreign tax authorities, a copy of the taxpayer`s tax residence certificate, issued by the IRB`s Department of International Tax Affairs and submitted to the Foreign Tax Office, must be provided. The revision of the APA occurs when a violation of critical assumptions about factors and assumptions that are so critical and significant that no partisan conclusion of an agreement is always bound by the agreement if any of the factors or assumptions are changed.