The Bureau of Internal Revenue (“BIR”) recently issued Revenue Regulation No. (“RR”) 21-2020 prescribing the guidelines for availing of the Voluntary Assessment and Payment Program (“VAPP”) established by the BIR to fulfill the government’s funding requirements and reduce the number of audit investigations by encouraging voluntary tax compliance.
RR 21-2020 provides that any person/entity who, due to inadvertence or otherwise, erroneously paid its tax liabilities, failed to file tax returns or pay taxes covering internal revenue taxes for the taxable year ending 31 December 2018, and fiscal year 2018 ending on the last day of the months of July 2018 to June 2019 (covering taxes on one-time transactions), may avail of the VAPP.
A taxpayer who avails of the VAPP and is subsequently issued a Certificate of Availment, shall be entitled to the following benefits: (i) no audit for fiscal year 2018 for the tax types covered by the availment, and (ii) in case of ongoing audit, the same shall be suspended upon the availment of the VAPP while the availment is under evaluation. The suspended audit shall resume if the availment has been found invalid. If the taxpayer’s availment has been determined to be valid, a Certificate of Availment shall be issued and consequently, the issued Letter of Authority, Tax Verification Notice, Discrepancy Notice, Notice for Informal Conference, Preliminary Assessment Notice, and Final Assessment Notice for pending cases shall be withdrawn and cancelled.
The following are the amounts to be paid in cash when availing of the VAPP:
(a) For Income Tax (IT), Value-Added Tax (VAT), Percentage Tax (PT), Excise Tax (ET), and DST other than DST on ONETT:
| Increase/Decrease in the Total Taxes Due
from 2017 to 2018 (A) |
Amount of Voluntary Tax
Payment
Whichever is the higher of – (B) |
Minimum Amount
(C) |
| Net increase of not more than 10% | 3% of 2018 gross sales or 7% of 2018 taxable net
income
|
Individuals, estates
and trusts – P75,000
Corporations –
a. With subscribed capital of more than P50 million – P1,000,000
b. With subscribed capital of more than P20 million up to P 50 million – P500,000
c. With subscribed capital of more than P5 million up to P20 million – P250,000
d. With subscribed capital of P5 million and less – P100,000
Other juridical entities, including but not limited to cooperatives, foundations, general professional partnerships – P75,000
|
| Net increase of more than 10% up to 30% | 2% of 2018 gross sales or
6% of 2018 taxable net income
|
|
| Net increase of more than 30% | 1% of 2018 gross sales or 5% of 2018 taxable net income | |
| Net decrease of not more than 10% | 4% of 2018 gross sales or 8% of 2018 taxable net
income
|
|
| Net decrease of more than 10% | 5% of 2018 gross sales or 9% of 2018 taxable net income |
(b) For Final Withholding Taxes (on Compensation, Fringe Benefits, etc.) and Creditable Withholding Taxes (CWT) other than CWT on ONETT, the amount to be paid shall be five percent (5%) of the total basic withholding tax remittance for the taxable year 2018.
(c) For taxes on ONETT, such as Estate Tax, Donor’s Tax, CGT, ONETT-related CWT/Expanded Withholding Tax, and DST, the amount to be paid shall be the basic tax due of the unfiled tax return/unpaid tax due plus 5%.
It must be noted, however, that taxpayers who failed to file tax returns and/or pay their taxes for the taxable year 2018 under Item (a) above can apply for VAPP, provided that the unfiled tax returns shall first be filed and/or unpaid taxes plus corresponding penalties for late filing and payment shall first be paid by the taxpayer.
Persons excluded from availing of the benefits under RR 21-2020 include taxpayers who have already been issued a Final Assessment Notice that has become final and executory on or before the effectivity of the Regulations; persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the National Internal Revenue Code (“NIRC”) of 1997, as amended, with respect to the deficiency taxes that may be due out of such verified information; those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and those with pending cases involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended.
The full text of RR 21-2020 may be accessed at this link.