BIR Ruling [DA-565-99]

September 29, 1999 BIR RULING [DA-565-99] A.M. Sison, Jr. & Associates Suite 2002-A Security Bank Centre 6776 Ayala Avenue Makati City Attention: Atty . Antonio L . Cardio Gentlemen : This refers to your letter dated July 22, 1999 requesting on behalf of your client, Johnson & Johnson International for the waiver of the 25% surcharge on the voluntary offer to pay the amount of P5,119,997.12 representing the deficiency value-added tax on royalties payable by Johnson & Johnson Philippines, Inc. to Johnson & Johnson International for the month of November 1998. cdlex It is represented that Johnson & Johnson International's accounting officer, Ms. Ma. Angelina de Luna, person-in-charge of the Value-Added Tax return submission was then having a difficult pregnancy which was aggravated by her illness called "Hyperthyroidism"; that because of this, she was on leave most of the time; that Ms. Araceli Messiona was assigned to act as her reliever in preparing the VAT return for November 1998; that since she was not familiar with the VAT liability of Johnson & Johnson International, she was not able to file the said return which supposedly was payable on December 25, 1998, considering that Johnson & Johnson International is a large taxpayer; that no payment was made for the output tax of Johnson & Johnson International amounting to P5,119,997.12; that, however, Ms. Araceli Messiona was also not able to include in the VAT return of Johnson & Johnson Philippines, Inc., the input tax which has exactly the same amount; hence, the Government did not lose any revenue. In reply, please be informed that based on the foregoing reasons of your client which caused the delay in the payment of deficiency value-added tax, this Office has decided to forego the imposition of the 25% surcharge and penalties imposed under Section 248(A)(3) of the Tax Code of 1997. However, it shall be subject to the corresponding interest that have accrued thereon up to the time of payment of the value-added tax imposed under Section 249 of the same Code. It is of course understood that the acceptance by this Office of your client's payment of the aforesaid amount of P5,119,997.12 would not preclude us from conducting an investigation/verification of your client's VAT liability for the month of November 1998 and for issuing an assessment notice against it if it is found out that there is a deficiency in the payment made. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue