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8box Solutions Inc.

4_20230710_150500_0001

Contact Number: 09369340340
Email: sales@8box.solutions

REVENUE MEMORANDUM CIRCULAR NO. 111-2020 issued on October 15, 2020 clarifies certain issues relative to the Voluntary Assessment and Payment Program (VAPP) pursuant to Revenue Regulations No. 21-2020.

All persons, natural and juridical, including estates and trusts, are qualified to avail of the VAPP. The Program covers calendar year 2018 and fiscal year 2018 ending in July, August, September, October and November 2018, as well as those ending in January, February, March, April, May and June 2019.

For one-time transactions (ONETT) of individuals and taxpayers on a calendar year basis, the VAPP covers all transactions from January to December 2018. For taxpayers on a fiscal year basis, the covered ONETT are those within their fiscal year 2018. For example, if the fiscal year of the taxpayer is from May 1, 2018 to April 30, 2019, the ONETT covered is within this inclusive period.

Availment of the VAPP should cover all the tax types to which the taxpayer is registered, including Withholding Taxes, except when the taxpayer is pursuing a claim for tax credit/refund, in which case, he can leave out the tax type for such claim. A taxpayer can avail of the Program for the tax type(s) only on ONETT.

Taxpayers shall use BIR Form No. 2119 for the application and BIR Form No. 0622 for the payment of the corresponding voluntary tax. Taxpayers, including those registered in the Electronic Filing and Payment System (eFPS), have to download the PDF version of BIR Form Nos. 2119 and 0622 from the BIR website (www.bir.gov.ph) (BIR Forms section), completely fillout the applicable fields and pay the corresponding taxes due thereon to the Authorized Agent Bank (AAB)/Revenue Collection Office (RCO) where the taxpayer is registered or having jurisdiction over the transaction, as the case may be. Payment through e-payment channels (e.g., G-Cash and PayMaya) is not allowable.

If a business taxpayer wants to avail of the benefit of the Program, his availment should cover both Sections 9.a. and 9.b. Separate application and payment forms should be accomplished for these sections. Likewise, if availment will also cover Section 9.c, a separate application and payment form should be prepared. The said forms, together with other required documents, may be filed in person or through courier service, to the concerned BIR office.

For availment under Section 9.a for Income Tax, Value-Added Tax, Percentage Tax, Excise Tax and Documentary Stamp Tax (DST) other than for ONETT, the Alphanumeric Tax Code (ATC) is MC341. For availment under Section 9.b for Final and Creditable Withholding Taxes, the ATC is MC342 and for availment for taxes on ONETT (Estate Tax, Donor’s Tax, Capital Gains Tax, Creditable/Expanded Withholding Tax and DST), the ATC is MC343.

The application for VAPP on ONETT for sale of shares of stock not traded through the local stock exchange shall be filed with the BIR Office where the taxpayer-seller is registered. The additional requirements that must be submitted are copies of the duly validated BIR Form No. 1707 – Capital Gains Tax Return (For Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange) and BIR Form No. 2000-OT (Documentary Stamp Tax Declaration/Return – One-Time Transactions), Payment Forms and proofs of tax payments.

A copy of BIR Form No. 1606 – Withholding Tax Remittance Return shall be submitted as additional requirement for availment for Creditable/Expanded Withholding Tax for onerous transfer of real property other than capital asset. If there are tax returns data which are different from those in the BIR’s information system, the BIR-Integrated Tax System (ITS)-generated data will prevail over the taxpayer’s copy, unless there is proof of error in encoding of the tax returns
data.
For availment of the registered internal revenue taxes under Sections 9.a and 9.b of RR No. 21-2020, the filing of the application should be in the BIR office where the taxpayer is registered. For availment of Donor’s Tax, the application should be filed at the RDO where the donor-taxpayer is domiciled at the time of donation, and for transaction involving sale of real property, the application should be filed with the RDO having jurisdiction over the location of the property.

Payment by check is acceptable, provided that check payments conform to the payment requirements of the BIR. Payment through Tax Remittance Advice (TRA) is not acceptable as payment under the Program since it cannot be considered as “cash” under RR No. 21-2020. Only cash or all its forms are acceptable as payment under the VAPP.

For purposes of the Regulations, “gross sales” (as basis for computing the amount of voluntary tax payment under Section 9.a) shall mean the sales/receipts/ revenues/fees net of sales returns, allowances and discounts per Annual Income Tax Return.

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.
If the taxpayer is only in its first year of operation for 2018 and there are taxes due for the year per tax returns filed, the taxpayer can avail of the VAPP. In this case, 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.

Improperly accumulated earnings tax paid by a taxpayer should be included in the total taxes due for the purpose of computing the increase/decrease since it can be considered as Income Tax. If the taxpayer’s assessment on ONETT pertains only to the penalties, the voluntary payment shall be 5% of the basic tax paid 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.

Excess tax credits from prior period/taxable year shall be 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.

A taxpayer who paid Percentage Tax or availed of the eight percent (8%) Income Tax rate despite having exceeded the threshold of Three Million Pesos (₱ 3,000,000.00) can apply for the VAPP, 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.

The basic deficiency payment shall only be added to the taxable period covered under Section 3 of RR No. 21-2020 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.

The waiver of refund in Section 12 of the Regulations is applicable only to claims for refund on erroneous payment. In Section 9.a of the Regulations, it is stated that for taxpayers with claims for tax credit/refund, payment under the VAPP shall constitute as a waiver of such claims under Section 12 unless they exclude from their availment the specific tax type for which they are pursuing the claim for tax credit/refund.

If the taxpayer would like to apply for the VAPP but declines to waive his right to claim for refund, he can leave out from the availment the tax type for said refund. Thus, the specific tax type pertaining to the refund on erroneous payment referred to in Section 12 of the Regulations shall not be covered by the availment.

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. For regular claims on tax types under Secton 9.a, the audit/ verification and processing of the claim shall be continued, even if the corresponding tax type is included in the availment.

A taxpayer who failed to withhold and remit withheld taxes in 2018 is 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 the VAPP.

The Capital Gains Tax (GCT) and Documentary Stamp Tax (DST) shall be computed based on the highest value among the selling price, zonal value and fair market value of the property.

The exception in Section 3.d of the Regulations “with pending cases” does not include those who failed to comply with an issued Subpoena Duces Tecum (SDT) if no criminal case has been filed in court yet for failure to comply with the SDT.

If a taxpayer is currently under audit/investigation for 2018 and he/she availed of the VAPP, the conduct of audit shall be suspended while the availment of the VAPP is under evaluation. Upon issuance of a Certificate of Availment, the electronic Letter of Authority and other related notices shall be withdrawn and canceled.
A taxpayer with an on-going investigation or a duly issued but protested Final Assessment Notice (FAN) for 2017 and/or 2018 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.

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 Court of Tax Appeals (CTA) within 30 days from the inaction of the BIR after 180 days from the appeal on the FDDA.

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) are final and executory.

Taxpayers with duly issued but protested FANs can avail of the VAPP 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 taxpayer are covered in the availment.

Taxpayers who had been issued a Certificate of Availment (CA) should give a copy of the CA, Payment Form and proofs of payment to the concerned offices who are conducting audit, investigation and review of their case.

If the taxpayer with FAN has a duly issued CA after availing of the VAPP, the assessment shall be cancelled through issuance of an Authority to Cancel Assessment by the authorized revenue official, in accordance with existing policies and procedures. If the taxpayer availed of the VAPP under Section 9.c, the electronic Certificate Authorizing Registration (eCAR) shall be issued within five (5) days from the issuance of the CA. In case of denial of the VAPP availment, the head of the processing office shall issue a letter informing the taxpayer of the denial and the reason(s) therefor.

A taxpayer who was notified to rectify the deficiencies in the VAPP availment or to pay the additional voluntary tax but fails to do so within ten (10) days from receipt of the notification can no longer qualify for the benefit of the VAPP.

In case the taxpayer’s availment was denied and rendered invalid and the taxpayer was subjected to audit/investigation under existing rules and regulations, 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 payment includes the specific tax types and taxable period covered by the assessment notice.

If the taxpayer paid the tax for the VAPP on or before December 31, 2020 but submits his/her/its application after the deadline, this can be considered as availment within the deadline. However, the validity of the availment will depend upon the documents submitted and the amount of voluntary payment.