Tax Articles

Voluntary Assessment and Payment Program

By: Atty. Fulvio D. Dawilan

The Bureau of Internal Revenue is offering a program to taxpayers as a measure for the government to source additional funds needed during these unpreceded times, and at the same time providing an opportunity for taxpayers to avail of some privileges through the payment of additional taxes. This new program is covered by Revenue Regulations No. 21-2020 (RR 21-2020), dated August 18, 2020, but released a couple of days ago.

This is not the first time a program of this nature was offered by the BIR. Issuances had been made in the previous administrations, although the policies behind the programs and the features differ. Similar issuances in the past include the Voluntary Assessment Program, Economic Recovery Assistance Payment Program, Voluntary Assessment and Abatement Program, No Audit Program, among others. These differ from tax amnesties where erring taxpayers are usually granted full exoneration or immunities from civil and criminal liabilities upon availment and qualification. But these are also amnesties of sort as they provide certain reliefs and privileges to taxpayers, like relative or absolute immunity from tax audit or last priority in audit and investigation for the period and taxes covered by the program. In fact, some refer to these administrative programs as pseudo-tax amnesties.

Going back to RR 21-2020, this covers all internal revenue taxes, including taxes on one-time transactions, which can be availed for the calendar year 2018 and the fiscal year 2018 ending on the last day of the months of July 2018 to June 2019. The program is available to any taxpayer, natural or juridical, including estates and trusts, but is not available to those who have already been issued final assessment notice which has become final and executory on or before the effectivity of the program. Unlike previous programs, it also extends to taxpayers currently under audit. In fact, it can be availed by taxpayers already issued final assessment notices provided that the assessment has not yet become final and executory.

Other taxpayers who are disqualified are (a) those under investigation as a result of verified information from an informer with respect to taxes that may be due out of such verified information; (b) those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and (c) those with pending tax evasion cases and other criminal offenses for violations of tax laws.

Interested taxpayers may avail of the program up to December 31, 2020 by voluntary paying an amount computed based on prescribed percentage of their 2018 gross sales or net taxable income, whichever is higher, but shall not be lower than the prescribed minimum amount due. The percentage of the 2018 gross sales ranges from 1% to 5% and the percentage of the 2018 net taxable income ranges from 5% to 9%, both depending on the increase or decrease in total taxes due from 2017 to 2018. The minimum amount due for corporations ranges from P100,000 to P1 million, depending on the amount of subscribed capital, while the minimum amount for individuals and other juridical persons is P75,000. For withholding taxes, the voluntary payment shall be five percent of the total basic withholding tax remittance for taxable year 2018, and for one-time taxes, voluntary payment shall be the basic tax due of the unfiled tax return/unpaid tax due plus five percent. Payment shall be made in cash and not through other modes, like the application of tax debit memos.

What forms of relief do taxpayers expect from participating in the program? A taxpayer who validly avails of the program and issued a certificate of availment shall not be audited for the taxable year 2018 for the tax types covered if no audit has yet been conducted on the taxpayer. For taxpayers being subjected to audit, the examination shall be suspended while the availment is under evaluation and shall resume if found invalid. If valid, a certificate of availment shall be issued and the notice to audit or the assessments already issued shall be withdrawn and cancelled. For taxpayers participating in the program, the act of voluntary payment shall not be deemed as an admission on the part of the taxpayer that there was fraud in the declaration of its taxes and/or there was intention to pay the tax erroneously.

This is an opportunity for taxpayers who have inadvertently failed to file tax returns and/or pay correct taxes to file and pay correctly. But it is not correct to say that the program is aimed only at errant taxpayers. Even those who believe they had correctly filed tax returns and pay taxes may avail of the program to avoid the inconvenience and hassles experienced in the audits and investigations, especially during these times where there is difficulty in retrieving documents and presenting them to the tax examiners because of some restrictions in our movements. It may also be a less expensive and more effective way, both on the part of the tax authority and the taxpayers, of settling assessments that had already been issued, which would otherwise be collected through enforcement efforts. So if I am asked whether or not this program is worth exploring, my answer would be yes. For the other details of the program, these may be referred to in the regulations itself and in the circulars to be issued by the BIR. Let us help you if you need guidance.