Priority Key VAT Implementing Programs

February 13, 1990 REVENUE MEMORANDUM ORDER NO. 11-90 SUBJECT : Priority Key VAT Implementing Programs TO : Regional Directors, Revenue District Officers and Others Concerned A. Increase VAT filers to at least 78,000 by March 31, 1990. As of January 31, 1990, the VAT filers numbered 67,994, lagging behind the 91,889 VAT registrants by 35%. In order to widen the tax base, it is urgent and necessary to search for new VAT taxpayers and that the number of filers should approximate or equal the number of registrants. In this connection, immediate steps should be undertaken to: 1. Search for new VAT taxpayers by: a. identifying potential VAT taxpayers from the: 1) telephone directory yellow pages; 2) records of suppliers of VAT-registered and non-VAT taxpayers; 3) records of electric consumptions from electric companies; 4) list of contractors of agencies involved in infrastructure projects such as the Department of Public Works and Highways, Department of Transportation and Communications, etc., as well as other national, provincial, city or municipal governments; 5) records of government regulatory and monitoring offices; 6) list of suppliers of goods and services of government offices and government-owned or controlled corporations; 7) business registers of various business and professional organizations; and 8) other sources which may provide the desired information; b. cross-checking the lists of VAT and non-VAT taxpayers with the lists of businesses registered with the city and municipal governments; c. conducting massive door-to-door campaign to ferret out VAT-registrable persons; d. computing and determining the ratio of production costs and/or operating expenses such as rentals, power and fuel, salaries and wages, etc., to the sales declared by potential VAT taxpayers; e. cross-checking the sales and purchases of non-VAT taxpayers against the records of their suppliers and buyers, and vice versa; 2. Compel the non-VAT registrants and/or non-filers who are otherwise liable for the VAT, to register and/or file their returns and to pay the VAT due by either placing them under surveillance or recommending their establishments for closure under Section 111 of the Tax Code, the implementation of which is governed by RMO 13-88. cd In appropriate cases, the Revenue District Officer shall develop and initiate the identification, investigation and prosecution of persons engaged in fraudulent practices to compel the payment of correct VAT due. In this regard, close coordination with the Legal Service, thru the Regional Directors, shall be observed. B. Campaign for the submission of summary lists of sales and purchases under RR 6-89 as published and amplified by RMC 2-90. The objective sought to be accomplished with the requirement is to gather, collate and assemble data which can be used as the basis for cross-checking sales and purchases, not only of original sellers, but also of subsequent sellers along the distribution lines, as well as to preclude possible manipulation of sales and purchase transactions. In this connection, the RDO concerned shall: 1) determine the VAT taxpayers who are required to submit the list; 2) conduct dissemination campaign to ensure compliance with the requirements regarding the prescribed format of the summary list/lay-out of the magnetic tapes or diskettes; 3) make arrangement with the banks authorized to receive VAT returns and payments. The RDO concerned shall see to it that Revenue Enforcement Officers are assigned to the agent banks to collect the duplicate copy of the VAT returns together with the summary lists/magnetic tapes/diskettes to avoid delays and mis-transmittals. 4) transmit the original copy of the summary lists/magnetic tapes/diskettes to the VAT Division not later than 15 days from the due date of filing the VAT returns. C. Recommendation for suspension/closure of erring business establishments. It has been noted that, except for few cases recommended for suspensions or closures, this potent and effective power to enhance voluntary compliance is rarely availed of. Henceforth, as part of the overall evaluation of the performance of Revenue District Officers and Revenue Enforcement Officers, the reports and recommendations on suspensions and closures of business establishments shall be taken into account; that is, those with reports/recommendations shall be given additional points while those who failed to submit shall receive a demerit. casia D. Prompt transmittal of invoices or receipts. In accordance with RR 6-89, one of the transactions that should be covered by a 4-copy invoice or receipt is the sale of goods and services to national and local government agencies and instrumentality and government-owned or controlled corporations. The buyer-government office shall submit the second copy to the Revenue District Office of the city or municipality where the said buyer is located, within 15 days after the end of each calendar quarter, pursuant to Memorandum Order No. 219 of the President of the Republic of the Philippines. The said 2nd copy shall be transmitted by the RDO to the VAT Division for processing not later than the 5th day from the receipt thereof. E. Effectivity This order shall take effect immediately. casia (SGD.) JOSE U. ONG Commissioner of Internal Revenue