The government implemented various programmes to help alleviate the economic impact of the Covid-19 pandemic. To sustain these measures, the Department of Finance issued Revenue Regulation (RR) No. 21-2020 in September 2020, which outlines the guidelines for the implementation of the Voluntary Assessment and Payment Programme (VAPP) for the 2018 taxable year.
To limit contact with taxpayers in light of social-distancing measures, the Bureau of Internal Revenue (BIR) aims to reduce the number of audits by encouraging tax compliance through the VAPP. The programme applies to all internal revenue taxes covering the tax year ending December 31, 2018, and FY 2018 ending on the last day of July 2018 to that of June 2019. Covered under the VAPP are all internal revenue taxes, including taxes on one-time transactions (ONETT) such as estate, donor’s and capital gains taxes, as well as ONETT-related creditable withholding taxes, expanded withholding taxes and documentary stamp taxes.
Any person, natural or juridical – including estates and trusts – liable to pay internal revenue taxes for the above periods who, due to inadvertence or otherwise, erroneously paid internal revenue tax liabilities or failed to file tax returns or pay taxes, may avail of the benefits under RR No. 21-2020. However, the following circumstances are exceptions:
• Taxpayers who have already been issued a final assessment notice that has become final and executory on or before the effectivity of RR No. 21-2020;
• Persons under investigation as a result of verified information filed by a tax informer under Section 282 of the National Internal Revenue Code of 1997 (Tax Code) as amended, with respect to deficiency taxes that may be due out of such verified information;
• Those with pending cases involving tax evasion and other criminal offences under Chapter II of Title X of the Tax Code, as amended; and
• Those with cases involving tax fraud filed and pending in the Department of Justice or in the courts.
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A taxpayer who is issued a certificate of availment gains the privilege of not being audited for 2018 for tax types covered by the availment. In the event that the taxpayer’s returns for the covered taxable period are currently being audited, the conduct of the audit shall be suspended upon the application for VAPP while the availment is under evaluation. It shall resume if the availment is found to be invalid.
If a taxpayer’s availment is determined to be valid, a certificate of availment shall be issued and, consequently, the issued letter of authority, tax verification notice, discrepancy notice, a notice for informal conference, preliminary assessment notice and final assessment notice for pending cases shall be withdrawn and cancelled. However, despite the issuance of a certificate, a taxpayer may have their availment rendered invalid and be subject to audit or investigation following the procedures under existing regulations, upon prior authorisation and approval of the commissioner of internal revenue, in the following instances:
• When there is strong evidence of the under-declaration of sales, receipts or income, or the overstatement of deductions by more than 30% based on a written report from an appropriate revenue official stating the facts with supporting documents; and/or
• When there is verifiable information that the taxpayer withheld but failed to remit withholding taxes. Qualified persons can avail of the benefits of the VAPP from September 21, 2020 until December 31, 2020, unless extended by the secretary of finance. Payment must be made in cash to any BIR-authorised agent bank or revenue-collection officer under the local tax office or revenue district office (RDO) having jurisdiction over the taxpayer. An exception was made for ONETT involving the sale of property, which falls under the RDO covering the property’s location.
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