Special InTAX: October 2020 Issue 1 | Volume 4

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

Bureau of Internal Revenue

The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 111-2020, 07 October 2020, to clarify certain issues relative to the Voluntary Assessment and Payment Program (VAPP) pursuant to Revenue Regulations (RR) 21-2020, to wit:

Issues	Clarifications
Persons Qualified to avail of the VAPP	Generally, all persons, natural and juridical, including estates and trusts.
Covered Period of the VAPP	(1) For availments on the registered tax types, the VAPP covers the following periods: Calendar Year (CY) 2018; Fiscal Year (FY) 2018 ending July, August, September, October and November; and FY 2019 ending January, February, March, April and May. (2) For One-time Transactions (ONETT) of individuals and taxpayers on a CY basis, the VAPP covers all transactions from January to December 2018. (3) For taxpayers on an FY basis, the covered ONETT are those within their FY 2018 (e.g., if the FY is from 01 May 2018 to 30 April 2019, the ONETT covered is within this inclusive period)
Clarification on availment of program for only one or two tax types and leaving out of other registered tax types	Generally, availment should cover all the registered tax types of the taxpayer including withholding taxes. However, if the taxpayer is pursuing a claim for tax credit/refund, he can leave out the tax type for such claim.
Clarification on availment of program for the tax type(s) only on ONETT	A taxpayer is allowed to avail of the program for the tax type(s) only on ONETT.
Forms to be used for application and payment of VAPP	The taxpayer shall use the following forms: BIR Form No. 2119 – for application; and BIR Form No. 0622 – for payment of the corresponding voluntary tax.
Clarification on the accomplishment and filing of BIR Form No. 2119 and the place where the payment per BIR Form No. 0622 will be paid.	(1) Taxpayers, including those registered in the eFPS have to download the PDF version of BIR Forms No. 2119 and 0622 from the BIR website. (2) They should completely fill out the applicable fields in the forms and pay the corresponding taxes due thereon to the Authorized Agent Bank (AAB)/ Revenue Collection Officer (RCO) where the taxpayer is registered or has jurisdiction over the transaction, as the case may be. Payment through e-payment channels (e.g., G-Cash and Paymaya) is not allowed. (3) If a business taxpayer wants to avail of the benefit, the availment should cover Sections 9.a and 9.b of RR 21-2020 which requires accomplishment of separate application and payment forms. Likewise, separate application and payments should also be prepared if availment will also cover Section 9.c of the RR.
ATC, Tax Type Code, and Tax Type Description required to be indicated in BIR Form Nos. 2119 and 0622	MC341 – for availment under Section 9.a. of Income Tax, VAT, Percentage Tax, Excise Tax and DST other than ONETT; MC342 – for availment under Section 9.b for Final and Creditable Withholding Taxes; and MC343 – for availment for taxes on ONETT (Estate Tax, Donor’s Tax, Capital Gains Tax, Creditable/Expanded Withholding Tax and DST).
Clarification on place of filing of the application for VAPP on ONETT for sale of shares of stock not traded through the local stock exchange and additional requirements required to be submitted	(1) The application shall be filed with the BIR Office where the taxpayer-seller is registered. (2) The additional requirements that must be submitted are: Duly validated BIR Form No. 1707 – Capital Gains Tax Return (For Onerous Transfer of Shares of Stock Not Traded Through The Local Stock Exchange); Duly validated BIR Form No. 2000-0T (DST Declaration/Return – One-Time Transactions); Payment Forms; and Proofs of tax payments.
Return to be submitted as additional requirement for availment of creditable/expanded withholding tax for onerous transfer of real property other than capital asset.	The taxpayer needs to submit BIR Form No. 1606 – Withholding Tax Return
Clarification on which data will prevail in case the taxpayer’s tax returns data are different from the BIR’s information system	The BIR-Integrated Tax System (ITS)-generated data will prevail unless there is proof of error in encoding of the tax returns data.
Clarification on place of filing of application in case a taxpayer who is registered in one district wants to avail the VAPP for all his registered internal revenue taxes and his donor’s tax on his donation and capital gains tax on sale of his real property.	RDO where taxpayer is registered – for availment of registered internal revenue taxes under Section 9.a and 9.b of RR No. 21-2020; RDO where the donor-taxpayer is domiciled at the time of donation – for availment of donor’s tax. RDO having jurisdiction over the location of the property – for availment of capital gains tax on sale involving real property.
Clarification on payment by check.	Payment by check is acceptable provided it conforms to the payment requirements of the BIR.
Clarification on whether payment through Tax Remittance Advice (TRA) can be considered “cash” under the regulations.	Payment through TRA cannot be considered “cash”. The purpose of the regulations is to raise additional revenues to augment government funds due to rising expenditures from the outset of the COVID-l9 pandemic. Hence, cash or all its forms are required for payment.
Definition of gross sales for purposes of computing the amount of voluntary tax payment under Section 9.a. of RR No. 21-2020	“Gross sales” shall mean the sales/receipts/revenues/fees net of sales returns, allowances and discounts per Annual Income Tax Return.
Clarification on computation of voluntary tax payment under Section 9.a if there is no increase or decrease in the total taxes due for all tax types in 2018 compared to all taxes due in 2017, as in the case of enterprises enjoying tax exemptions and incentives.	The voluntary tax payment shall be computed based on the “net increase of not more than 10%” per table under Section 9.a
Clarification on availment of VAPP if the taxpayer is only in its first year of operation for 2018 and there are taxes due for this year per tax returns filed, and the computation of voluntary tax payment under Section 9.a	Taxpayers can avail of the VAPP if it is only in its first year of operation for 2018 and there are taxes due for this year per tax returns filed. For this purpose, the voluntary tax payment shall be computed based on the "net increase of more than 30%", since there is no tax payment to be considered for 2017.
Clarification on whether the payment for improperly accumulated earnings tax should be included in total taxes due for the purpose of computing the increase/decrease.	Yes, improperly accumulated earnings tax paid should be included in the total taxes due as it can be considered as income tax.
Clarification on computation of voluntary payment if the taxpayer’s assessment on ONETT pertains only to penalties.	The voluntary payment shall be computed based on 5% of the basic tax paid.
Clarification on computation of voluntary payment if the taxpayer’s assessment on ONETT pertains only to penalties.	The voluntary payment shall be computed based on 5% of the basic tax paid.
Clarification on the basis for income tax due per 2017 and 2018 returns in case the taxpayer paid Minimum Corporate Income Tax (MCIT) in 2017 and paid the normal income tax in 2018.	The MCIT shall be the income tax due for 2017 while the annual corporate income tax due computed under the normal income tax before deducting any tax credits/payments shall be considered as the income tax due for 2018.
Clarification on whether excess tax credits from the prior period/taxable year are considered in determining the Net VAT due, and the effect in computing the increase/decrease of total taxes due from 2017 to 2018 if the Net VAT due is a negative amount.	The excess tax credits from the prior period/taxable year are considered in determining the Net VAT due. The reference to determine the VAT due for taxable years 2017 and 2018 is Line 25 – “Net VAT payable" in the quarterly VAT return. If the Net VAT due is a negative amount, then the total taxes due for the year will not be reduced by the negative VAT amount.
Clarification on whether a taxpayer can apply for the VAPP if he paid percentage tax or availed of the eight percent (8%) income tax rate despite having exceeded the threshold of three million pesos (P3,000,000).	Yes, provided that the VAT return will be filed and the VAT will be paid with the corresponding penalties after deducting the total percentage tax payments.
Clarification on whether any deficiency tax payment for 2017 will be added to all tax due of the returns in 2017 if the basic deficiency tax for 2018 is added to all the tax due per returns to determine the increase/decrease from 2017 to 2018.	No. The RR expressly stated that basic deficiency payment shall only be added to the taxable period covered under Section 3 for purposes of computing the increase/decrease in tax payments, which is taxable year 2018, that includes fiscal year ending July 2018 to June 2019.
Clarification on whether the waiver for refund in Section 12 of RR No. 21-2020 is only applicable to claims for refund on erroneous payment.	Yes. In Section 9.a of the said RR, it is stated that for taxpayers with claims for tax credit/refund, this shall constitute as a waiver of such claims under Section 12 unless they exclude the specific tax type for which they are pursuing the claim for tax credit/refund from their availment.
Clarification on whether the taxpayer can leave out from the availment of tax type refund in case he applied for the VAPP, but he declines to waive his right to claim for said refund.	Yes, the specific tax type pertaining to the refund on erroneous payment referred to Section 12 shall not be covered by the availment.
Clarification on availment of VAPP under Section 9.a by a taxpayer with pending claim for tax credit or refund and continuance of the required audit/verification to process the pending claim.	A taxpayer with a pending claim for tax credit/refund can avail of the VAPP, provided that the claim is not on erroneous payment for which the taxpayer has not waived his right to such claim. Further, for regular claims under tax types under Section 9.a, the audit/verification and processing of claim shall be continued, even if the corresponding tax type is included in the availment.
Clarification on qualification to VAPP under Section 9.b in case a taxpayer failed to withhold and remit withheld taxes in 2018.	The taxpayer is still qualified to avail of the VAPP under the condition that the amount not withheld and not remitted has to be paid first and the same shall form part of the total taxes remitted for 2018 which shall be the taxable base in determining the five percent (5%) required amount to be paid to avail of the benefits under VAPP.
Clarification on why the Selling Price (SP) is not considered in illustration 4 shown in RR 21.2020, wherein the capital CGT and DST were computed based on the higher amount between the Zonal Value (ZV) and Fair Market Value (FMV) of the property.	The illustration failed to state the SP in the given facts, but it does not mean that CGT and DST shall only be computed based on whichever is the higher value between the ZV as determined by the BIR or the FMV as indicated in the Tax Declaration of the property. It has to be based on the highest value among the SP, ZV or FMV.
Clarification on whether the exception in Section 3.d of RR No. 21-2020 "with pending cases" includes those who failed to comply with an issued Subpoena Duces Tecum (SDT).	It is not covered provided no criminal case has been filed in court yet for failure to comply with the SDT.
Clarification on the continuance of audit in case the taxpayer is currently under audit/investigation for 2018 and he availed of the VAPP but the application is still under evaluation and awaiting approval from the investigating office.	The conduct of audit shall be suspended while the availment is under evaluation. Upon issuance of a Certificate of Availment, the electronic Letter of Authority and other related notices shall be withdrawn and canceled.
Clarification on whether the program can be availed of by a taxpayer who has an ongoing investigation or a duly issued but protested Final Assessment Notice (FAN) for 2017 and/or 2018, and if the amount of the proposed deficiency tax or the assessment appearing on the FAN will be taken into account in computing the minimum voluntary payment required for VAPP.	Yes, he can avail of the VAPP, but the availment will not cover taxable year 2017. The amount on the FAN for the 2018 audit case will, in no way, affect the computation of the voluntary payment for VAPP.
FANs considered final and executory.	Per RMO No. 11-2014, FANs are final and executory: If not protested within the thirty (30)-day period from receipt; If not appealed to the Commissioner or the CTA within the thirty (30)-day period from receipt of the Final Decision on Disputed Assessment (FDDA); In case of failure to submit the documents required upon reinvestigation within the sixty (60)-day period to submit the documents from approval of the request for reinvestigation; or In case of failure to appeal to the CTA within 30 days from inaction of the BIR after 180 days from the appeal on the FDDA.
Status of FANs not protested in thirty (30) days from receipt but the same are not yet recorded as Accounts Receivable since the dockets are not yet transmitted to the Collection Division of the Revenue Region/LT Collection Enforcement Division in the National Office.	They are final and executory.
Clarification on whether taxpayers with duly issued but protested FANs can avail of the VAPP.	Yes, provided the FANs: Are for taxable year 2018; Are still under protest on or before the effectivity of the regulations; and All tax types of the taxpayers are covered in the availment.
Clarification on how concerned offices (e.g., the investigating, reviewing and legal offices) will be informed if the cases pending with them for appropriate action pertain to taxpayers who had been issued a Certificate of Availment (CA).	The taxpayer should give a copy of the Payment Form, proofs of payment and CA to the concerned office.
Clarification on the need to issue an Authority to Cancel Assessment (ATCA) in case the taxpayer with FAN has a duly issued CA after availing of the VAPP.	An ATCA should be approved and issued by the authorized revenue official in accordance with existing policies and procedures, in all instances where there will be a cancellation or reduction of assessment per FAN.
Process of notifying the taxpayer in case of denial of availment.	The head of the processing office should issue a letter informing the taxpayer of the denial and the reason(s) therefor.
Period to issue the electronic Certificate Authorizing Registration (eCAR) if the taxpayer availed of the VAPP under Section 9.c	The eCAR shall be issued within five days from the issuance of the CA.
Clarification on whether a taxpayer who was notified to rectify deficiencies in the availment or to pay the additional voluntary tax but fails to do so within ten (10) days from receipt of the notification, can comply before the 31 December 2020 deadline and qualify for the benefit of the VAPP.	No. The RR does not state any allowance or extension for the rectification.
Treatment of payment in case the availment is denied or the CA has been invalidated pursuant to Section 11 of RR No. 21-2020.	Upon authorization and approval of the Commissioner of Internal Revenue, any voluntary tax paid by the taxpayer per BIR Form No. 0622 shall constitute as payment of the deficiency tax assessments for taxable year 2018, provided that, such payments includes the specific tax types and taxable period covered by the assessment notice.
Effect of the application if the taxpayer paid the tax for the VAPP on or before 31 December 2020 and submits the application after the deadline to the concerned BIR office.	This can be considered as availed of within the deadline. However, validity of the availment will depend upon the documents submitted and the amount of voluntary payment.

Attached is the full text of the issuance.

Revenue Memorandum Circular (RMC) No. 111-2020

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