Aranas Consunji Barleta Law Offices

March 25, 2008 BIR RULING [DA-194-08] R.A. 9480; RMC 55-2007 and 69-2007 Aranas Consunji Barleta Law Offices G/F Le Metropole Building 326 Tordesillas Street cor. Dela Costa Street Salcedo Village, Makati City Attention: Atty. Jesus Clint O. Aranas Gentlemen : This refers to your letter dated January 3, 2008 inquiring on the validity of the availment of tax amnesty by your client, Lubwell Corporation (Lubwell). Specifically, you requested for a ruling on the following questions: 1. Is the payment of the amnesty tax by Lubwell through the Electronic Filing and Payment System ("EFPS") considered valid under Republic Act ("RA") No. 9480, Department Order ("DO") No. 24-07, and Revenue Memorandum Circular ("RMC") Nos. 55-2007, and 69-2007? 2. Did Lubwell sufficiently comply with the requirements of the tax amnesty program as per attached documents? 3. What are the immunities and privileges to which Lubwell is entitled after sufficiently complying with the requirements of the tax amnesty program of the government under RA 9480, DO No. 29-07, and RMC's 55-2007 and 69-2007? It is represented that Lubwell is a domestic corporation with subscribed capital of below P5,000,000.00 and with principal place of business at Facility 7530 Cargohaus Building, Civil Aviation Complex, Clark Special Economic Zone, Pampanga; that it has not previously filed with the Bureau of Internal Revenue (BIR) any Balance Sheet or Statement of Assets and Liabilities (SALN) as of December 31, 2005; that Lubwell is enrolled with the BIR's EFPS; that on September 14, 2007, Lubwell availed of the tax amnesty and paid the prescribed tax of P2,215,304.90, representing five percent (5%) of its total net worth, which amounted to P44,306,098.00 per its SALN as of December 31, 2005; that since Lubwell is enrolled with the BIR's EFPS, the foregoing payment was, accordingly, made electronically; that on September 18, 2008, Lubwell submitted all its tax amnesty forms and documents ( i.e. Notice of Availment of Tax Amnesty Form, Tax Amnesty Return or BIR Form No. 2116, the corresponding electronic payment printout, and SALN) to the Large Taxpayers Audit and Investigation Division II at the BIR National Office. We reply to your query as follows: 1. Is the payment of the amnesty tax by Lubwell through the Electronic Filing and Payment System ("EFPS") considered valid under Republic Act ("RA") No. 9480, Department Order ("DO") No. 24-07, and Revenue Memorandum Circular ("RMC") Nos. 55-2007, and 69-2007? Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997, in relation to Section 27 of RA 8792, otherwise known as the "Electronic Commerce Act", Revenue Regulations ("RR") No. 9-2001, as amended by RR No. 05-04, provides that: "All BIR-prescribed tax returns may be filed electronically or manually upon the discretion of the Commissioner of Internal Revenue (CIR) except for returns of the large taxpayers being handled by the Large Taxpayers Service which shall be filed electronically. . . . " (Emphasis supplied.) Lubwell, being a large taxpayer, is required to file its returns and pay the corresponding tax via the EFPS under the aforequoted provision. At the time that Lubwell electronically paid its amnesty tax on September 14, 2008, there was no established procedure yet for taxpayers enrolled under the EFPS. There is no question, however, that Lubwell's amnesty tax in the amount of P2,215,304.90 was duly paid as shown by the corresponding electronic payment printout attached to your request. Accordingly, Lubwell's payment of the amnesty tax via EFPS has substantially complied with the requirements of the t a x amnesty law. 2. Did Lubwell sufficiently comply with the requirements of the tax amnesty program as per attached documents? Section 6, Rule III of Revenue Memorandum Circular No. 55-2007, provides viz.: "SEC. 6. Method of Availment of Tax Amnesty. 1. Forms/Documents to be filed. To avail of the general tax amnesty, above P50M P500,000, whichever is higher a.2.2 With subscribed capital 5% of networth or P250,000, of above P20M up to P50M whichever is higher a.2.3 With subscribed capital of 5% of networth or above P5M up to P20M P100,000, whichever is higher a.2.4 With subscribed capital of 5% of networth or P25,000, below P5M whichever is higher a.3 Other juridical entities including 5% of networth or partnerships but not limited to P50,000, whichever is higher cooperatives and foundations that have become taxable as of December 31, 2005. (Emphasis supplied.) Likewise, based on Q & A No. 13 of RMC 69-2007, Lubwell substantially complied with the documentary requirements of, and procedures for, the valid availment of tax amnesty. In this regard, we note that Lubwell submitted all the required documents for a valid tax amnesty availment to the correct agency of jurisdiction, which is the Large Taxpayers Audit and Investigation Division II at the BIR National Office. 4. What are the immunities and privileges to which Lubwell is entitled after sufficiently complying with the requirements of the tax amnesty program of the government under RA 9480, DO No. 29-07, and RMC's 55-2007 and 69-2007? The immunities and privileges to which a taxpayer availing of the tax amnesty is entitled to are provided in RA 9480, DO No. 29-07, and RMC's 55-2007 and 69-2007, thus: 1. The taxpayer shall be immune from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years; 2. The taxpayer's Tax Amnesty Return and the SALN as of December 31, 2005 shall not be admissible as evidence in all proceedings that pertain to taxable year 2005 and prior years, insofar as such proceedings relate to internal revenue taxes, before judicial, quasi-judicial or administrative bodies in which he is a defendant or respondent, and except for the purpose of ascertaining the networth beginning January 1, 2006, the same shall not be examined, inquired or looked into by any person or government office. However, the taxpayer may use this as a defense, whenever appropriate, in cases brought against him; and 3. The books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined: Provided, That the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws. However, please be advised that the foregoing immunities and privileges shall not apply where the person failed to file a SALN and the Tax Amnesty Return, or where the amount of net worth as of December 31, 2005 is proven to be understated to the extent of thirty percent (30%) or more, in accordance with the provisions of Section 3 of RA 9480. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service