BIR Ruling [DA-287-06]

April 28, 2006 BIR RULING [DA-287-06] R.R. 18-05; BIR Ruling 130-99 Aranas Consunji Barleta Law Office Unit 106, Le Metropole Bldg. 326 Tordesillas Cor. Dela Costa Sts. Salcedo Village, Makati City Attention: Ma. Louella M. Aranas Partner Gentlemen : This refers to your letter filed on behalf of your client, LG Electronics Philippines Inc. (LGEPH), requesting for confirmation of your opinion that the Letters of Authority issued against LGEPH for taxable years 2002 to 2004, prior to its availment of the EVAP under Revenue Regulations No. 18-05, should be cancelled after showing proof of availment and securing the relevant Certificates of Qualification for the relevant taxable years. It is represented that LGEPH is a corporation engaged in the manufacture and sale of consumer electronics with principal place of business at 15 Francisco Legaspi Street, Barrio Maybunga, Pasig City; that it availed of the EVAP under Revenue Regulations No. 18-05 and were issued the corresponding Certificates of Qualification on February 2, 2006 covering taxable years 2002 - 2004; that the Letters of Authority to audit LGEPH's books and records were issued prior to LGEPH's availment of and qualification for the EVAP; and that now, the BIR examiner tasked to audit LGEPH's books and records is still using the same Letters of Authority for continuing his audit. In reply, please be informed that the EVAP is governed by Revenue Regulations No. 18-05 issued on October 2, 2005. Section 2 thereof states that: "SEC. 2. Taxpayer's Benefit from Availment of EVAP . xxx xxx xxx Letters of Authority (LAs)/Audit Notices (ANs), Letter Notices (LNs), Taxpayer Verification Notices (TVNs) and Mission Orders (MOs) shall be cancelled and withdrawn for EVAP availments with issued Certificate of Qualification. The suspension of audit/investigation and the cancellation of the authority to audit/investigate, shall be on a per tax type basis or only on the kind of tax covered by the EVAP availment. (Emphasis supplied)" Based on the foregoing, the Letters of Authority that have been issued against LGEPH should be cancelled and withdrawn upon securing the relevant Certificates of Qualification. The same position has already been adopted by the BIR in BIR Ruling No. 130-99 to wit: "In reply, please be informed that under Item II I(2) of RMO No. 63-97, any person liable to pay any internal revenue tax for the taxable year 1996 prior years, who due to inadvertence or otherwise, has under-declared his internal revenue tax liabilities or has not filed the required tax return may avail of the benefits under the VAP. Said Item II I(2) also provides that a taxpayer under audit pursuant to a duly issued LA or Revenue Verification Order (RVO) to whom a final notice of assessment has not been issued may also avail of the VAP. Upon availment of the VAP, pending LAs or RVOs are automatically revoked. Such being the case the LA issued to your company has been automatically revoked pursuant to the aforecited provision of RMO No. 63-97." Accordingly, it is hereby confirmed that the Letters of Authority issued against LGEPH for taxable years 2002 to 2004, prior to its availment of the EVAP under Revenue Regulations No. 18-05, should be cancelled considering that it has qualified to avail thereof and in fact has secured the required Certificates of Qualification for taxable years 2002-2004. 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 be null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal service