VAT Compliance Campaign Program

January 19, 1988 REVENUE MEMORANDUM ORDER NO. 03-88 SUBJECT : VAT Compliance Campaign Program TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Objective . To promote and enhance compliance with the Value-Added Tax, a VAT Compliance Campaign shall be undertaken to assist and educate taxpayers on the administrative requirements of value-added tax. For this purpose, Revenue District Officers under the direction of the Revenue Regional Directors shall organize teams of Revenue Enforcement Officers within their respective districts who shall participate in the campaign. cdt SECTION 2 . Campaign Period. The campaign period shall cover the months of January and February, 1988. All campaign activities shall be devoted solely to the dissemination of information regarding the compliance requirements of the value-added tax law. There shall be no apprehensions for violations of the law and regulations during this period, except for non-issuance of sales invoices. Penalties imposed shall be in accordance with existing issuances. However, violations of the provisions of the value-added tax law and its implementing regulations committed after the campaign period shall be subject to penalties to the full extent. SECTION 3 . Aspects of Compliance Requirements . Every revenue enforcement officer involved in the campaign shall look into the following aspects: a) VAT Registration . VAT registrable business establishments located within the particular area assigned to the team shall ascertain whether or not they are properly registered. Branches operating within the district must display its Certificate of Registration issued by the Revenue District Office where its principal place of business is located. The owner or other responsible official of the establishment which failed to register shall be notified of the violation and required to register as a VAT person and informed that the nominal compromise penalty of P20.00 for late registration shall be imposed. (b) Invoicing . The following items shall be checked regarding invoicing: 1) Persons not subject to the value-added tax (like operators of gas stations and small traders who did not opt to register as a VAT person) billing 10% VAT on their selling price . These taxpayers should be identified and informed that the imposition of 10% value-added tax on their sales of exempt goods is in violation of the law and should be stopped immediately. They should be warned that subsequent violations will subject them to criminal prosecution. 2) Compliance with the provisions of Sections 108 (a) on invoicing requirements and 238, issuance of receipts or sales or commercial invoices of the Tax Code. 3) Compliance with Revenue Memorandum Order No. 35-87 regarding the filing of inventory of unused sales invoices and receipts as of Dec. 31, 1987. c) Bookkeeping . Check compliance with Section 108(b) of the Tax Code . All persons subject to the value-added tax shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases shall be recorded . d) Submission of Inventory . Check compliance with Section 25(a) of EO 273 on submission of inventories of goods and supplies as of Dec. 31, 1987. cd SECTION 4 . Procedures . The following procedures are hereby prescribed: a) Revenue District Officers shall issue a letter addressed to the taxpayer (Annex A) in three copies to be distributed as follows: Original Taxpayer Duplicate Revenue Enforcement Officer (attached to his report) Triplicate File copy - RDO b) Revenue Enforcement Officers shall check compliance by the taxpayer with Section 2 of this Revenue Memorandum Order. For a uniform system of reporting, revenue enforcement officers shall prepare the VAT Visitation Report (Annex B) including the checklist printed at the back, in triplicate submitted as follows: Original Prepared by the REO to be forwarded to the VAT Division by the RDO Duplicate Taxpayer Triplicate File copy - RDO The report shall be prepared during the visit and submitted to the Revenue District Officer the following working day. The taxpayer or his authorized representative shall be requested to affix his signature in space provided therefor. The Revenue District Officer shall not accept the report unless duly signed by the taxpayer visited. c) For any violation of provisions of the Tax Code and regulations affecting compliance with the value-added tax law observed, Revenue Enforcement Officers shall call the attention of the taxpayer to such infractions and shall courteously warn him that subsequent violations of the same nature will result in the imposition of penalties and the possible closure of his business establishment. acd d) Depending on the observations of the Revenue Enforcement Officer, the Revenue District Officer shall schedule follow-up visits to check compliance by taxpayer concerned with instructions given by the Revenue Enforcement Officer in their first visit. e) Within 10 days after the campaign period Revenue District Officers shall submit to the Commissioner of Internal Revenue, Attention: Chief, Value-Added Tax Division, BIR Bldg., Quezon City, thru the Regional Director, a summary of the relevant findings and observations with copies of the VAT visitation reports attached. A copy of said report shall be prepared for the Regional Director's file. The VAT Division shall consolidate visitation reports submitted on taxpayers with branches for further evaluation. f) The Regional Director shall see to it that the provisions of this Revenue Memorandum Order are carried out and the objective for which it was issued is attained in his region. SECTION 5 . Effectivity . This Revenue Memorandum Order shall take effect immediately. cd BIENVENIDO A. TAN, JR. Commissioner ANNEX A No. _____________ ______________ Date _________________________ _________________________ Dear Taxpayer: The bearer of this letter, Revenue Enforcement Officer ____________________________, who is assigned in this Revenue District Office, is directed and hereby authorized to assist you in complying with the requirements of the Value-Added Tax law and regulations. This is not an authority to investigate any of your internal revenue tax liabilities. Please take advantage of this visit to seek advice on whatever problems you may be encountering regarding the Value-Added Tax law which took effect on January 1, 1988. Kindly ask the bearer to present his identification card. However, you may address any further inquiries on this matter to the undersigned, at _________________________, Tel. No._______________. Very truly yours, Revenue District Officer