Special InTAX: September 2020 Issue 1 | Volume 2

Department of Finance

 

The Department of Finance (DOF) issued Revenue Regulations (RR) No. 21-2020, 18 August 2020, prescribing the policies, procedures and guidelines in the implementation of the Voluntary Assessment and Payment Program (VAPP) for Taxable Year 2018 under certain conditions.

RR 21-2020 shall apply to all internal revenue taxes covering 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, including taxes on One-Time Transactions (ONETT) such as Estate Tax, Donor’s Tax, Capital Gains Tax (CGT), as well as ONETT-related Creditable Withholding Tax (CWT)/Expanded Withholding Tax and Documentary Stamp Tax (DST).

Any person, natural or juridical, including estates and trusts, liable to pay internal revenue taxes for the above specified period/s who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes, may avail of the benefits under these Regulations, except those falling under any of the following instances: 

a. Those taxpayers who have already been issued a Final Assessment Notice (FAN) that have become final and executory, on or before the effectivity of these Regulations;

b. Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC of 1997, as amended, with respect to the deficiency taxes that may be due out of such verified information;

c. Those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and

d. Those with pending cases involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended.
 

Qualified persons can avail of the benefits of the VAPP until 31 December 2020, unless extended by the Secretary of Finance.

The taxpayer-applicant shall signify his/its intention to avail the benefits under these Regulations by applying through the submission of the following requirements: 

1. Mandatory Requirements: 

a. Duly accomplished Application Form [BIR Form No. 2119 (Annex A)] [original for the Large Taxpayers (LT) Office/Revenue District Office (RDO) and duplicate for the taxpayer]; and

b. Payment Form [BIR Form No. 0622 (Annex B)] with proof of payment (original for the LT Office/RDO, duplicate for the taxpayer, and triplicate for the collecting agent).

2. Additional Requirements:

c. Filed tax returns, proof of payment of taxes paid in 2017 and 2018 and audited Financial Statements for the covered taxable year for those availing of the program under Section 9.a;

d. Copy of remittance returns and proof of payment of final and creditable withholding taxes for taxpayers availing of the program under Section 9.b;

e. Copy of duly paid BIR Form 0605 stamped either by the Authorized Agent Banks (AABs) or Revenue Collection Officers (RCOs) duly signed by the LT Office/RDO where the taxpayer is registered and proof of payment representing settlement of previous deficiency tax, with or without an assessment notice, if any, covering the taxable period under Section 3;

f. Duly accomplished ONETT tax return(s) (BIR Form Nos. 1800, 1801, 1706, 1707, 2000 – OT, 0619-E) and corresponding documentary requirements for the transaction of taxpayers availing of the program under Section 9.c.

 

The voluntary payment, as indicated in the BIR Form No. 0622 (Payment Form), should be in cash as a condition to avail of the privilege under these Regulations. Hence, non-cash modes of payment, such as Tax Debit Memo and the like, will not qualify as a valid payment.

A Certificate of Availment (Annex C) shall be issued by the concerned LT Office/RDO within three (3) working days from approval of the application. Such Certificate shall serve as proof of the taxpayer’s availment of the VAPP, compliance with the requirements, and entitlement to the privilege granted under these Regulations. The LT Office/RDO shall transmit all dockets on approved VAPP applications to the concerned reviewing office not later than the 5th day following the month of issuance of the Certificate of Availment for post-review.

Taxpayers whose availment is found to be invalid, deficient or defective are not entitled to the privilege under these Regulations. However, they may apply the voluntary payments made against any deficiency tax liability for the taxable year 2018, in case of audit/investigation.

The amount of taxes to be paid as a condition to avail the privilege under these Regulations shall be determined in accordance with the following schedule: 

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 – ₱75,000   Corporations – a. With subscribed capital of more than ₱50 million – ₱1,000,000 b. With subscribed capital of more than ₱20 million up to ₱50 million – ₱500,000 c. With subscribed capital of more than ₱5 million up to ₱20 million – ₱250,000 d. With subscribed capital of ₱5 million and less – ₱100,000       Other juridical entities, including but not limited to cooperatives, foundations, general professional partnerships – ₱75,000
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%.
 

A taxpayer with a duly issued Certificate of Availment shall not be audited for 2018 for the tax types covered by the availment.

RR No. 21-2020 shall take effect fifteen (15) days following its publication in a newspaper of general circulation.

 

(RGM & Co. Note:  The RR was published in Philippine Star on 05 September 2020.)

RR No. 21-2020_VAAP

Annex C_Certificate of Availment

Annex B_Payment Form BIR Form 0622

Annex A_Application Form BIR Form 2119