- In general, all persons, natural and juridical, including estates and trusts, are qualified to avail of the VAPP.
- The VAPP 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 taxpayer 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 l, 2018 to April 30,2019, the ONETT covered is within this inclusive period.
- The taxpayer cannot avail for only or two tax types and leave out the other tax types to which the taxpayer is registered.
- Availment 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.
- The taxpayer can avail of the program for the tax type(s) only on ONETT.
- Taxpayers shall use BIR Form No. 2l I 9 for the application and BIR Form No. 0622 for payment of the corresponding voluntary tax.
- In case of shares of stock not traded through the local stock exchange, the application shall be filed with the BIR Office where the taxpayer-seller is registered.
- The additional requirements that must be submitted are Capital Gains Tax Return Documentary Stamp Tax Declaration/Return Payment Forms and proofs of tax payments.
- For the availment re. creditable/expanded withholding tax for onerous transfer of real property other than capital asset, BIR Form No. 1606 – Withholding Tax Remittance Return shall be submitted as additional document.
- In case the tax returns data are different from those in the BIR’s information system, the BlR-Integrated Tax System (ITS)-generated data will prevail unless there is proof of error in encoding of the tax returns data.
- If a taxpayer is registered in one district, wants to avail of the VAPP for all his registered internal revenue taxes and he also wants to avail for his donor’s tax on his donation and capital gains tax on a sale of his real property, he should he file the VAPP applications as follows:
- For availment of the registered internal revenue taxes, 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 the 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 considered as “cash” under the regulations. 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.
- Gross sales as basis for computing the amount of voluntary tax payment 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. of the regulations.
- 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, the taxpayer can avail of the VAPP. 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.
- If the taxpayer paid improperly accumulated earnings tax, the payment will be included in the total taxes due for the purpose of computing the increase/decrease as it can be considered as income tax.
- If the taxpayer’s assessment on ONETT pertains 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 basis for his/its income tax due per return for 2017 and 2018 shall be as follows:
- The MCIT shall be the income tax due for 2017 while the annual corporate income tax due computed under the normal income before deducting any tax credits/payments shall be considered the income tax due for 2018.
- We consider excess tax credits from prior period/taxable year 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.
- If the taxpayer 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), he 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.
- 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, any deficiency tax payment for 2017 will not be added to all the tax due of the returns in 2017.
- The waiver for refund is applicable only to claims for refund on erroneous payment. In Section 9.a of the same 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 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 of the VAPP but he 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 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, 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 withholding 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 in 2018 which shall be taxable base in determining the 5% required amount to be paid to avail of the benefits under VAPP.
- The exception “with pending cases” does not include those who failed to comply with an issued subpoena Duces Tecum, if no criminal case has been filed in court yet for failure to comply with SDT.
- If the taxpayer is currently under audit/investigation for 2018 and availed of the VAPP but the application is under evaluation and awaiting approval in the investigating office, the conduct of audit shall be suspended while the availment is under evaluation. Upon the issuance of a Certificate of Availment, the electronic Letter of Authority and other related notices shall be withdrawn and cancelled.
- If the taxpayer has an on-going investigation or a duly issued but protested FAN for 2017 and/or 2018, he can avail of the VAPP, but the availment will not cover taxable year 2017. The amount on the FAN for the audit case will, in no way, affect the computation of the VAPP.
- The taxpayers with duly issued but protested FANs can avail of the VAPP, provided the FANs are for taxable year 2018, are under protest on or before the effectivity of the regulations and all tax types of the taxpayer are covered in the availment.
- The concerned office, g.the investigating, reviewing and legal offices, will be informed when the taxpayer gives a copy of the payment form, proof of payment and Certificate of Availment (CA)
- If the taxpayer with FAN has a duly issued CA after availing of the VAPP, there is a need to issue an Authority to Cancel Assessment (ATCA), which shall be approved and issued by the authorized revenue official in accordance with existing policies and procedures.
- In case of denial of the availment, the taxpayer will be notified by the head of the processing office, which will issue a letter informing the taxpayer of the denial and the reasons therefor.
- In case of VAPP under Section 9.c, an electronic Certificate Authorizing Registration (eCAR) shall be issued within 5 days from the issuance of the CA.
- If a taxpayer who was notified to rectify the deficiencies in the availment or to pay the additional voluntary tax but fails to do so within 10 days from receipt of the notification, he is not given allowance or extension to rectify. Therefore, he cannot comply before even before the deadline of December 31, 2020 and qualify for the benefit of the VAPP.
- In case the taxpayer’s availment rendered invalid and the taxpayer was subjected to audit or investigation, any voluntary tax paid shall constitute as payment of the deficiency tax assessments for the 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 and submits the application after the deadline, the VAPP is considered availed of within the deadline. However, validity of the availment will depend upon the documents submitted and the amount of voluntary payment.
What are the taxes Covered?
– Internal revenue taxes covering:
o Taxable year ending December 31, 2018 or Fiscal year 2018 ending the last day of months of July 2018 to June 2019 (Subject Period)
– Internal revenue taxes include one tax transactions (ONETT) such as estate tax, donor’s tax, Capital Gains Tax and ONETT-related creditable withholding tax (CWT)/expanded withholding tax and documentary stamp tax (DST)
Who are qualified to avail of the VAPP?
– Those who are liable to pay internal revenue taxes for the Subject Period who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file returns/pay taxes
Who are not qualified to avail of VAPP?
– 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;
– 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;
– Those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and
– Those with pending cases involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended.
Until when can the VAPP be availed of?
– December 31, 2020, unless extended by the Secretary of Finance
How much is tax to be paid as a condition to avail of the benefits under the VAPP?
|Increase/Decrease in the Total Taxes Due from 2017 to 2018*
|Amount of Voluntary Tax Payment Whichever is the higher of –
|Net increase of not more than 10%||3% of 2018 gross sales**
7% of 2018 taxable net income
|Individuals, estates and trusts – P75,000
a. With subscribed capital of more than P50 Million – P1,000,000.00
b. With subscribed capital of more than P20 million up to P50 Million – P500,000
c. With subscribed capital of more than P5 million up to P20 Million – P250,000
d. With subscribed capital of P5 Million and less – P100,000.00
Other juridical entities, including but not limited to cooperative, foundations, general professional partnerships – P75,000
|Net increase of more than 10% up to 30%||2% of 2018 gross sales
6% of 2018 taxable net income
|Net increase of more than 30%||1% of 2018 gross sales
5% of 2018 taxable net income
|Net decrease of not more than 10%||4% of 2018 gross sales
8% of 2018 taxable net income
|Net decrease of ore than 10%||5% of 2018 gross sales
9% of 2018 taxable net income
|*Total taxes due in 2017 and 2018, for purposes of the above schedule refer to the sum of all tax due per tax return (IT, PT, ET, and DST) and net VAT payable (VAT) before deducting any creditable withholding tax, quarterly payment or advance payment.
**Gross sales and taxable net income shall be based on the Annual Income Tax Return for the taxable year ending December 31, 2018, and fiscal year 2018, ending on the last day of July 2018 to June 2019.
How much is the settlement amount for Final withholding taxes (On compensation, fringe benefits etc.) and creditable withholding tax (CWT) other than CWT on ONETT?
– 5% of the basic withholding tax remittance for the taxable year
How much is the settlement amount for taxes on ONETT, such as Estate Tax, Donor’s Tax, CGT, ONETT-related CWT/Expanded Withholding Tax and DST?
– Basic tax due of the unfiled tax return/unpaid tax due plus 5%
What are the requirements to avail of the benefits under VAPP?
– Mandatory Requirements:
o Duly accomplished BIR Form No. 2119
o Payment Form (BIR Form No. 0622) with proof of payment
– Additional Requirements:
o 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/non-ONETT (i.e. income tax, VAT, percentage tax, excite tax, and DST other than DST on ONETT)
o Copy of remittance return and proof of payment of final and creditable withholding taxes for taxpayers availing of the program under Section 9.b (Final Withholding Taxes)
o Copy of duly paid BIR Form 0605 stamped either by the Authorized Agent Banks or Revenue Collection Officers duly signed by the BIR 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
o ONETT Tax returns and corresponding documentary requirements for the transaction of taxpayers availing of the program under Section 9.c
What is the mode of submission?
– Personally or through courier service
What is the mode of payment?
Cash only. Non-cash mode of payment such as tax debit memo, will not qualify as a valid payment.
Where should the taxpayer pay?
– Authorized Agent Banks (AAB) or Revenue Collection Officer (RCO) under the BIR office having jurisdiction over the taxpayer
– For sale of property: AABs/RCO under the BIR office covering the location of the property
Should the application be separately filed in case of multiple availment?
– Yes, separate application must be filed in case the availment is under non-ONETT and ONETT
What is the BIR’s procedure in handling the VAPP?
– Within thirty (30) working days from receipt, the Revenue Officer will evaluate the Application, Payment Form and other documents submitted, and will endorse the same to the Assistant Chief, LT Office/Assistant Revenue District Officer (ARDO) for review, and to the Chief, LT Office/Revenue District Officer, as the case may be, for approval, who shall affix his signature on the BIR Form No 2119.
– If the review reveals deficiencies or defects in the availment, the approving official shall notify the concerned taxpayer through the email address provided in BIR Form No. 2119 and shall require the taxpayer to rectify the defects and/or comply with/pay the deficiencies within ten (10) working days from receipt of the notification/email. Failure to act and/or pay the required amount on the part of the taxpayer within such period shall result in the denial of the application.
– A Certificate of Availment 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.
What is the consequence if the taxpayer failed to submit the documentary requirements or if the taxpayer submits erroneous/incomplete/falsified information?
– The taxpayer shall not be entitled to avail of the benefits under the VAPP.
– The voluntary payment may be applied against any deficiency tax liability for the taxable year 2018, in case of audit/investigation.
What is the consequence if the availment is found to be invalid, deficient or defective?
– The taxpayer shall not be entitled to the privilege.
– However, the taxpayer may apply the voluntary payments made against any deficiency tax liability for the taxable year 2018 in case of audit/investigation.
What is the effect if the taxpayer is issued Certificate of Availment?
– It/he shall not be audited for 2018 for the tax types covered by the availment
– In case of audit, the issued Letter of Authority, Tax Verification Notice, Discrepancy Notice, Notice for Informal Conference, Preliminary Assessment Notice, Final Assessment Notice for pending cases shall be withdrawn and canceled.
What is the effect if the taxpayer’s tax returns for the covered taxable period are currently being audited?
– The conduct of the audit shall be suspended upon the availment of the VAPP while the availment is under evaluation. It shall resume if the availment has been found invalid.
What are the instances where despite the issuance of a Certificate of Availment, the availment is rendered invalid and shall be subject to audit/investigation:
- When there is strong evidence or findings of under-declaration of sales, receipts or income or overstatement of deductions by more than 30% based on a written report of the appropriate revenue official stating the facts with supporting documents; and/or
- When there is verifiable information that the taxpayer has withheld but failed to remit withholding taxes.
Any voluntary payment may be applied against the deficiency tax due, if any, that may be assessed against the taxpayer after the audit/investigation.
Can taxpayers who failed to file tax returns and/or pay their non-ONETT taxes for the taxable year 2018 avail of the VAPP?
– Yes, provided the unfiled tax returns shall first be filed and/or unpaid taxes plus corresponding penalties for late filing and payment shall first be paid by the taxpayer.
Can taxpayer claim for refund or credit for any payment made under this VAPP (i.e erroneous payment)?
– No, the payment is construed as a waiver of the taxpayer’s right to claim for refund or credit, notwithstanding the collection thereof from an erroneous payment, unless the taxpayer excludes in the availment the specific tax type for which it is pushing the claim for tax credit/refund.
Is payment under the VAPP considered an admission of fraud on the part of the taxpayer?
– No, the act of voluntary payment under this program 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 an intention to pay the tax erroneously.
When is the VAPP effective?
– 15 days after publication on September 5, 2020