Request for Waiver of Surcharge, Interest and Penalties Relative to Late Filing and Payment of Value-Added Tax

April 14, 1998 BIR RULING NO. 048-98 248 (a) (3) (b)-249-00-000 48-98 SGV & Co. 6760 Ayala Avenue Makati City Attention: Atty . J . A . Osana Gentlemen : This refers to your letter dated May 29, 1997 requesting on behalf of your client, Dow Jones Telerate (Asia Pacific) Limited (formerly Telerate Financial Information Network) (Asia Pacific) Limited ('Telerate') for the waiver of the payment of surcharge, interest and penalties relative to the late filing and payment of value-added tax for the Ist quarter of 1996 and for the month of April 1996. It is represented that Telerate is a Hong Kong Corporation duly authorized to do business in the Philippines as a server of financial information; that it paid royalties to Telerate International Company (TIC), a Delaware, USA partnership covering the First (1st) quarter of 1996 and the month of April 1996, however, the value-added tax on such payments in the total amount of P606,052.99 was paid to the BIR only on May 9, 1997; that Telerate has no intention to delay payment of the value-added tax due on the royalties; that it has requested the external auditor of its Regional Office in Hong Kong to issue a Certification relative to the share of the Philippine Branch in the Head Office expenses; that such Certification is necessary for the preparation of Telerate's Philippine Branch financial statements; that it appears that there was a misunderstanding and it was only very recently that your client was advised that among its expected share in head office expenses are actually royalties which is subject to value-added tax; and that the delay in payment was caused by circumstances beyond its control. In reply, please be informed that since Telerate had already paid the amount of P606,052.99 representing the value-added tax due on the royalties remitted to Telerate International Company covering the Ist quarter of 1996 and the month of April 1996, this Office has decided to forego the imposition of the 25% surcharge and penalties imposed under Section 248(a)(3) and (b) of the Tax Code, as amended. 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 P606,052.99 does not preclude us from conducting an investigation/verification of your client's VAT liability for the Ist quarter of 1996 and the month of April 1996 and for issuing an assessment notice against it if it is found out that there is a deficiency in the payment made. prLL Very truly yours, (SGD.) LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue