Amending Revenue Memorandum Order No. 23-2002 to Prescribe Additional Guidelines and Procedures in the Implementation of the Expanded Voluntary Assessment and Abatement Program Promulgated Under Revenue Regulations No. 17-2002, as Amended by Revenue Regulations No. 18-2002 Allowing for the Installment Payment of VAAP Amounts and for Other Purposes

November 22, 2002 REVENUE MEMORANDUM ORDER NO. 32-02 SUBJECT : Amending Revenue Memorandum Order No. 23-2002 to Prescribe Additional Guidelines and Procedures in the Implementation of the Expanded Voluntary Assessment and Abatement Program Promulgated Under Revenue Regulations No. 17-2002, as Amended by Revenue Regulations No. 18-2002 Allowing for the Installment Payment of VAAP Amounts and for Other Purposes TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Objectives . This Order is issued to amend Revenue Memorandum Order No. 23-2002 relative to the following: 1.1 Incorporate in the Order guidelines and procedures relative to the expanded coverage of VAAP and the installment payment promulgated pursuant to Revenue Regulations No. 17-2002; 1.2 Incorporate in the Order guidelines and procedures relative to the amendments introduced to Revenue Regulations No. 17-2002 (RR 17-2002) by Revenue Regulations No. 18-2002 (RR18-2002) which was published last November 18, 2002 and made effective beginning November 19, 2002 which, among others, provided for: the extension of VAAP availment to taxpayers voluntarily disclosing their sales for income tax, VAT and excise tax for the years/periods covering Year 2000 to June 2002; the minimum payments on voluntarily disclosed amounts for the taxes and taxable periods covered by the Program; the conditions for the grant of extension on installment payments; as well as the increase in the threshold amounts as a result of incorrect submission. 1.3 Prescribe additional documents to be required for the availment of VAAP with respect to one-time transactions and those with no previously filed returns. SECTION 2 . General Policies . Pertinent portions of Section 2 of RMO 23-2002 are hereby amended to read as follows: "xxx xxx xxx "2.1 Persons Covered . Any person, natural or juridical, including estates and trusts, liable to pay any of the internal revenue taxes mentioned in Subsection 2.2 hereof for the taxable periods specified in Subsection 2.3, who due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes including those subject to preferential tax rates pursuant to special laws (e.g., RA 7227, RA 7916, EO 226, as amended) . "2.2 Taxes Covered . VAT, income tax, excise tax, percentage tax, documentary stamp tax, improperly accumulated earnings tax, withholding tax, taxes on one-time transactions such as estate tax, donor's tax, capital gains tax, expanded withholding tax and documentary stamp tax on the sale, exchange, disposition of real property and/or shares of stock as well as taxes paid by corporations/enterprises subject to preferential tax rates pursuant to special laws (e.g., RA 7227, RA 7916, E.O. 226, as amended) . "2.3 Taxable Periods Covered . The Program shall cover all the taxable years/periods provided for under Section 2(B) of RR 17-2002, as amended. The taxable periods to be availed of by corporations/enterprises subject to preferential tax rates pursuant to special laws shall follow the taxable period/s available for corporations subject to income tax under Section 2(B)(1) of said Regulations . "xxx xxx xxx "2.6 Forms to be Accomplished for VAAP Amounts . "2.6.1 Voluntary Assessment and Abatement Program Payment Form (VAAP-PF) . . . The VAAP-PF to be used shall be BIR Form 0611 September 2002 version or BIR Form 0611 October 2002 (ENCS) (Annexes "C-1" and "C-2") . "2.6.2 Voluntary Assessment and Abatement Program Application Form (VAAP-AF) . . . The VAAP-AFs to be used for availment shall be as follows: (a) BIR Form 2111 V (Annex "D") for VAT ; (b) BIR Form 2111 IT (Annex "E") for income tax ; (c) BIR Form 2111 X (Annex "F") for excise tax ; and (d) BIR Form 2111 (Annex "G") for all other tax types covered by the Program . In addition to the VAAP-AF for income tax, VAT, excise tax, and percentage tax, there shall be attached a computation sheet (Annex "H") detailing how the VAAP amount payable was arrived at. "2.6.3 Manner of Accomplishing the Forms . "2.6.3.1 Per tax type and taxable period basis . . . . In case the VAAP amount as computed is allowed to be paid in installments, there will be as many sets of VAAP-PF to be filled up and submitted to the AAB corresponding to the installments allowed as discussed under Subsection 3.3 hereof . "2.8 Disposition of Current Audit Cases . "2.8.1 Upon payment of the VAAP amounts prescribed above, the audit case shall be suspended and the docket thereof including the VAAP-AF and VAAP-PF shall be transmitted to the Technical Working Group-Final Validation of Discrepancy (TWG-FVD) for evaluation, except for VAAP availments involving one-time transactions which shall be reviewed by the Chief, Assessment Division and approved by the Regional Director . "2.8.2 . . . "2.10 Computation of VAAP . The computation of the VAAP amounts to be paid shall be made in accordance with Section 5 and 6 of Revenue Regulations No. 12-2002 and Section 4 of Revenue Regulations No. 17-2002, as amended by Revenue Regulations No. 18-2002 . A more detailed discussion on how to arrive at the VAAP amounts is properly illustrated in Annex "A", as amended , of this Order. In respect to the minimum amounts prescribed for VAT (P100,000 for corporations and P50,000 for individuals) and for percentage tax (P50,000 for corporations and P10,000 for individuals) under Section 4(B)(3) and (D)(3) of RR 17-2002, as amended RR 18-2002, the minimum amounts to be taken in computing the VAAP payable covering the taxable period January to June 2002 for VAT shall only be P50,000 for corporations and P25,000 for individuals and for percentage tax, the minimum amounts shall be P25,000 for corporations and P5,000 for individuals. In addition to the taxes covered, penalties that have accrued due to late payment of basic tax may be a subject of VAAP availment provided that the VAAP amount shall consist of the payment of interest at the rate of twenty percent (20%) per annum of the basic tax computed from the due date when the basic tax was supposed to be paid up to the time of payment thereof. An example of such instance is when an individual who is paying his income tax for the year 2001 on installment pays his 2nd installment on August 15, 2002 instead on July 15, 2002. In such case, he may avail of VAAP for the penalties that have accrued as a result of late payment of his basic tax where the VAAP amount shall be computed at the rate of 20% per annum from April 16, 2002 up to August 15, 2002. Such VAAP payment consisting of the interest payment shall be in lieu of the 25% surcharge, interest and compromise penalty that would have been imposed as a result of late payment of basic tax. Example: The penalties due for late payment of 2nd installment of basic tax of P1,000 are as follows : Surcharge (P1,000 x 25%) P250.00 Interest (from 04/15 to 8/15) [P1,000 x 20% x 4/12] 66.67 Compromise penalty 400.00 Total penalties due P716.67 ====== With the availment of VAAP, the only amount to be paid shall be P66.67 while the surcharge amount of P250.00 and compromise penalty of P400.00 shall be abated. VAAP availments for corporations subject to preferential tax rates pursuant to special laws shall be subject to a VAAP amount equivalent to conditions provided for income tax under Section 4 of RR 17-2002 as amended by RR 18-2002. Taxpayers who have been identified to be non-filers/stop-filers may avail of VAAP for the tax types and taxable periods/years for which they have failed to file returns by filing the appropriate VAAP-AF and paying the VAAP amounts computed in accordance with Section 4 of Revenue Regulations No. 17-2002 as amended by Revenue Regulation No. 18-2002 using the VAAP-PF, and by manually filing the tax returns which have not been filed with the RDO at the time of the submission of the VAAP-AF. The manually filed tax returns, VAAP-AF, and the VAAP-PF as submitted shall be the basis in closing non-filer/stop-filer cases of taxpayers who have availed of the Program. Unregistered taxpayers intending to pay taxes on their undeclared income may likewise avail of VAAP by: (1) registering themselves with the RDO having jurisdiction over their principal place of business; (2) filing the appropriate VAAP-AF and paying the VAAP amounts computed in accordance with Section 4 of Revenue Regulations No. 17-2002, as amended by RR 18-2002, using the VAAP-PF; and (3) manually filing the tax returns supposedly filed with the RDO at the time of the submission of the VAAP-AF. The manually filed returns shall be the basis for establishing a database in the ITS in respect to such taxpayers. DEIHSa (Note: Tax deduction and credit claimed as applicable to sales discrepancy per LN and/or on sales voluntarily disclosed shall be subject to the submission of soft copy of schedule of purchases of goods and services following the format provided for under Revenue Regulations No. 13-97 as amended by Revenue Regulations No. 7-99. Such summary list of purchases shall be submitted to the RDO at the time of submission of the VAAP-AF but however, the taxpayer may be given extension and allowed to submit such schedule within thirty (30) days from the time of submission of the VAAP-AF). The receiving officer in the RDO shall print his name and sign the transmittal letter submitted by the taxpayer together with the diskette attesting to the fact that the contents of the diskette are readable and prepared in accordance with the format prescribed in RR 13-97, as amended by RR 7-99. The diskettes, together with the VAAP-AF and VAAP-PF, shall be forwarded by the RDO to the VAT-PCC for review after a back up for the contents of the diskette is created by the RDC and the VAAP-AF and VAAP-PF has been encoded by the RDO in the tracking system. "2.11 Offices Responsible . The Offices identified in Annex "B", as amended, of this Order shall be responsible in ensuring the proper implementation of the Program." SECTION 3 . Conditions, Deadlines and Installment Payments of VAAP Availment . Pertinent portions of Section 3 of Revenue Memorandum Order No. 23-2002 are hereby amended to read as follows: "Section 3. Conditions, Deadlines, and Installment Payments of VAAP Availment "3.1 For Taxpayers Who Have Been Sent LN By The BIR. For taxpayers who have been sent Letter Notices (LNs), the deadline for the availment of VAAP (i.e., submission of VAAP-AF) shall be stated in the LN unless extension is granted or a different deadline is approved by MANCOM of the BIR. Upon approval, MANCOM shall also state the deadline date from which to reckon the installment payments provided in Section 3.3. hereof . "xxx xxx xxx "3.2 For Taxpayers Who Have Not Been Sent LN By the BIR . "3.2.1 Deadline for VAAP Availment. Applications for VAAP availment and corresponding payments thereon for all tax types and taxable periods with no noted sales discrepancy must be received on or before November 29, 2002, subject to the right of the taxpayer to pay in installment as that provided in Subsection 3.3 below . With the effectivity of RR 18-2002 on November 19, 2002 imposing minimum payments on voluntarily disclosed sales/receipts or taxable base, taxpayers who have either submitted VAAP-AF or made initial VAAP payments using VAAP-PF prior to November 19, 2002 shall be considered to have availed of VAAP under the conditions previously provided by RR 17-2002 . In the submission of the VAAP-AF for VAAP availments consisting only of abatement of penalties, the same shall be accompanied by the document showing the original computation of penalties (e.g., reminder letters or Pre-Assessment Notice (PAN) or FAN) . Submission of VAAP-AF for withholding tax on compensation shall be accompanied by Form No. 1604 CF or the alphabetical listing of the employees from whom taxes were withheld indicating therein all the information necessary to compute the withholding tax as reflected and required in BIR Form No. 1604-CF . Submission of VAAP-AF for expanded/final withholding tax shall be accompanied by a schedule of income payments subjected to withholding tax showing the name of the payee, TIN of payee, nature of income payment, amount of income payment, applicable tax rate, and tax withheld and such other information required to accomplish or fill up BIR Form No. 1604-E . "3.3. Conditions for Installment Payment of VAAP . "3.3.1 For Tax Types and Taxable Year/Period With Noted Discrepancy as Stated in the LN . "3.3.1.1 Where the Minimum Amount Is Less Than P500,000. If the minimum amount as computed is less P500,000, no installment payment shall be allowed and the same shall be paid on or before the deadline set in the LN . "3.3.1.2 Where the Minimum Amount is P500,000 or More . "3.3.1.2.1 For Minimum Amounts Below P3.0Million but not less than P500,000. The payment shall be made in two (2) equal parts : (i) First installment payment On or before the deadline set in the LN; and (ii) Second installment payment Within 30 days from the deadline of the first installment . "3.3.1.2.2 For Minimum Amounts totaling P3.0 Million and above. The payment shall be made in three (3) equal parts : (i) First installment payment On or before the deadline set in the LN ; (ii) Second installment payment Within 30 days from deadline of first installment; and (iii) Third installment payment On or before December 27, 2002 for LNs issued prior to November 7, 2002 and within 30 days from deadline of second installment for LNs issued on November 7, 2002 and thereafter . "3.3.1.3 Remaining Balance/Additional Payment . For the remaining balance (i.e., the additional payment to be made in case the 110% of the basic tax is higher than the minimum amount), after full payment of the minimum amount, where said remaining balance/additional payment exceeds P1.0 Million, the same shall be paid in two (2) equal installments, both to be paid on or before December 27, 2002 for LNs issued prior to November 7, 2002 . For LNs issued on November 7, 2002 and thereafter, the first installment payment shall be made within 30 days from date of full payment of minimum amount and the second installment shall be within 30 days from deadline of first installment payment of the remaining balance . "3.3.1.4 Illustrative Example . Mr. X received a LN from the BIR. The LN was dated September 16, 2002 where sales discrepancy has been noted in Year 2001. Among the conditions stated in the LN is for him to pay the minimum amounts on or before October 15, 2002 and to file the VAAP-AF and pay the balance between 110% of basic tax and the minimum amount previously paid on or before October 30, 2002 in case the 110% of the basic tax as computed is higher than the minimum amount paid . If the minimum amount as computed for income tax amounted to P3,900,000, Mr. X may elect to pay the same in three (3) equal parts which shall be paid on the following dates using the VAAP-PF : October 15, 2002 P1,300,000 November 15, 2002 P1,300,000 Any time before December 27, 2002 P1,300,000 When he files his VAAP-AF on October 30, 2002 and computes the 110% of the basic tax, his basic tax payable amounted to P5,000,000 where the remaining balance/additional payment thereof is P1,100,000 (i.e., P5,000,000 P3,900,000). Since the remaining balance/additional payment exceeds the P1,000,000, the same may be paid in two (2) equal parts which shall be paid on or before December 27, 2002. However, such remaining balance shall be considered paid only upon full payment of the minimum amounts. All installment payments for the minimum payments and remaining balance/additional payment must be turned in on or before December 27, 2002. "3.3.2. Installment Payment of VAAP Availment for Tax Types and Taxable Year/Period With No Noted Sales Discrepancy or For Taxpayers Without LN . Installment payment must be in three (3) equal parts. The first payment must be made with the Accredited Agent Bank (AAB) using the VAAP-PF before the filing of the VAAP Application Form with the Revenue District Office. The payment form duly filed and validated by the AAB must accompany the VAAP Application Form filed with the RDO. The second and third payments, accompanied by the corresponding VAAP payment forms, must be made to the AAB on or before December 27, 2002 . Provided, that no installment payment shall be allowed if the amount payable is less than five hundred thousand pesos (P500,000.00) . "3.3.3 Request for Extension of Installment Payment. Notwithstanding the above terms for installment payment, taxpayers may nevertheless request an extension for installment payment of VAAP on the ground of financial incapacity by filing a written request for extension of installment payment to be approved by the Regional Director for those without LN and by MANCOM for those with LN, subject to delegation to the concerned Regional Director, under certain instances, which extension is premised upon compliance of the following conditions : "3.3.3.1 Taxpayer must submit a list of banks to which he maintains bank deposits/accounts; "3.3.3.2 Taxpayer must submit/execute a waiver of bank secrecy of deposits thereby authorizing the BIR to inquire into the bank accounts of the taxpayer to verify claim of financial incapacity; "3.3.3.3 Taxpayer must submit a written undertaking to pay the VAAP amount by installment within a period not exceeding six (6) months from the date of filing of VAAP-AF; and "3.3.3.4 Taxpayer must issue postdated checks corresponding to the installment payments to be made. The above requirements must be filed with the RDO at the time of the submission of the VAAP-AF for those without LN and for taxpayers with LN, such requirements must be submitted to MANCOM, through the Office of the Commissioner, for evaluation. "3.4 Additional Conditions for Taxpayers' Availment of VAAP on One-Time Transactions . 3.4.1 Submission of Appropriate Returns and Additional Requirements . Aside from the submission of VAAP-AF and VAAP-PF, taxpayers availing of VAAP for one-time transactions shall at the same time of filing the VAAP-AF be required to manually file with the RDO the appropriate tax returns (in case of no returns previously filed) or amended returns (in case of returns previously filed) as well as the applicable documentary requirements enumerated at the back thereof and such other documents as may be necessary to evaluate and properly compute the valuation of the property sought to be transferred either by way of gratuitous or onerous transfer as well as properly check the deductions and tax credits claimed and determine the amount of tax due ." 3.4.2 Issuance of Certificate of Qualification . The issuance of Certificate Authorizing Registration (CAR)/Tax Clearance Certificate (TCL) on VAAP availments involving the transfer of real property and/or shares of stock shall be conditioned to issuance of Certificate of Qualification to be issued by the Regional Director upon proper review by the Assessment Division after the VAAP docket has been processed by the RDOs. The same shall be issued by the Regional Director within fourteen (14) days from receipt of VAAP docket as recommended for approval by the Chief, Assessment Division . The Certificate of Qualification shall be issued in three (3) copies where the original copy shall go to the taxpayer, duplicate copy to the Issuing Office and the triplicate copy to be filed in the docket of the case. The same shall be numbered and accounted for using the same procedures provided in RMO 21-2001 which operationalized Revenue Regulations No. 8-2001, as amended, otherwise known as the "Voluntary Assessment Program". The RDO which processed the VAAP-AF shall issue all the needed CARs (one CAR per Register of Deeds or one CAR per property, whichever is the prescribed rule and procedure under existing normal procedures) upon taxpayer's presentation of the duly issued Certificate of Qualification ." SECTION 4 . Processing of VAAP . Pertinent portions of Section 4 of Revenue Memorandum Order No. 23-2002 are hereby amended to read as follows: "xxx xxx xxx "4.3 Availment of VAAP . 4.3.1 For Taxpayers with LN . . . . If VAAP availment is qualified for installment . If the minimum amount as computed is qualified to be paid in installment, the taxpayer shall make the first installment on or before the deadline set in the LN to the concerned AAB using the VAAP-PF which must be accomplished in the same manner provided above. The second and the third installment, if applicable, shall be paid within the period required in Subsection 3.3.1 hereof by paying the same to the AAB using the same VAAP-PF. The VAAP-AF shall not be filed with the AAB but rather with the RDO on or before the deadline set in the LN even if at the time of the submission thereof, there still remains a portion of the minimum amount that needs to be paid on installment. The remaining balance of the computed 110% of the basic tax, in case the same is higher than the minimum amount, as required in the VAAP-AF shall be paid to the concerned AAB in two (2) equal installments, if the amount involved exceeds P1,000,000; otherwise, the same shall be paid in full within thirty (30) days from full payment of the minimum amount. Copies of all Official Receipts/BIR-prescribed deposit slips issued by the concerned AAB as well as VAAP-PF duly validated by the AAB corresponding to the installments payments shall continually be furnished by the taxpayer to the RDOs who shall attach the same to the VAAP-AF submitted and who shall encode into the Tracking System all installment payments received. 4.3.2 For Taxpayers without LN . . . . If VAAP availment is qualified for installment . If the 110% basic tax is qualified to be paid in installment, the taxpayer shall make the installment payments to the concerned AAB using the VAAP-PF within the period prescribed in Subsection 3.3.2 hereof which must be accomplished in the same manner provided above. The VAAP-AF shall not be filed with the AAB but rather with the RDO on or before the deadline set in Subsection 3.2 above. Copies of all Official Receipts/BIR-prescribed deposit slips and duly validated VAAP-PF corresponding to the installments payments shall continually be furnished by the taxpayer to the RDOs who shall attach the same to the VAAP-AF submitted and who shall encode into the Tracking System all installment payments received. 4.3.3 . . . "xxx xxx xxx 4.3.7 In processing of the VAAP-AF and VAAP-PF filed for one-time transactions including the tax returns physically/manually filed with the RDOs in respect thereto, the RDOs must ensure the completeness of the documentary requirements, correctness of tax as computed as well as ascertain that the valuation rules used and the deductions claimed are well in accordance with the statutes in force at the time when the taxable event occurred. Once reviewed and information contained in the VAAP-AF and VAAP Payment Form have been encoded in the Tracking System, the Certificate of Qualification shall be prepared and initialed by the RDO and the entire VAAP docket including attachments thereto shall be submitted to the Chief, Assessment Division within five (5) days from receipt of complete documents from taxpayer, for final review and evaluation. The Chief, Assessment must be able to review the same within fourteen (14) days from receipt of docket from the RDO and submit his/her recommendation to the Regional Director. The Chief, Assessment Division, upon review, shall likewise affix his/her initial to the Certificate of Qualification and the VAAP docket including all attachments shall be transmitted to the Regional Director for the approval of the Certificate of Qualification which shall be signed and approved not later than seven (7) days from receipt of docket from the Chief, Assessment Division. The Certificate of Qualification must be issued within forty five (45) days from receipt of complete documentary requirements from the taxpayers, otherwise, the taxpayer may elevate to the MANCOM of the BIR a complaint of non-issuance of the Certificate of Qualification within the prescribed time. Once Certificate of Qualification is signed by the Regional Director and VAAP docket as well as attachments are returned to the RDO, the CAR/TCL shall be issued and released to the taxpayer together with the Certificate of Qualification. It should be noted that the Certificate of Qualification shall only be issued once all the taxes due are completely collected. 4.3.8 For VAAP availments of taxpayers identified as stop-filers, the processing thereof shall likewise include ascertaining that all VAAP-AF submitted are accompanied by the physical/manual submission of the respective regular tax returns. Such returns shall be the basis in resolving the stop-filer cases of those who availed of VAAP . 4.4 Disposition of VAAP Availments . 4.4.1 Original copies of the VAAP-AF together with attachments shall be submitted by the RDOs to the TWG-IVD within one (1) week from receipt thereof for matching and consolidation with the taxpayer's docket and which shall immediately be forwarded to the TWG-FVD for evaluation, except for VAAP availments on one-time transactions which shall be reviewed by the Chief, Assessment Division and approved by the Regional Director . 4.4.2 TWG-FVD shall then validate the VAAP-AF of taxpayers against the original discrepancy uncovered by RELIEF System. Additional discrepancies shall be provided by TWG-IVD as they are released by the RELIEF System . If additional discrepancies are uncovered on top of what has been previously discovered and/or voluntarily disclosed, the same shall be referred back to the RDO for the execution of the actions provided in 2.9 above subject to the amendment of Revenue Regulations No. 18-2002 which increased the threshold amount from 10% or P1,000,000, whichever is lower, to thirty percent (30%). This means that if the additional discrepancy discovered is thirty percent (30%) or below, the VAAP availment shall remain valid, provided that there is payment of additional VAAP amounts as computed in accordance with Section 5 of RR 12-2002 for those who were sent LNs, and for those without LN, the VAAP amount shall be computed based on Section 6 of RR 12-2002 and Section 4 of RR 17-2002 as amended by RR 18-2002 . "xxx xxx xxx" 4.5 Monitoring . The TWG-ISG, TWG-IVD, and TWG-FVD shall submit to the VAT-PCC, copy-furnished Collection Service , every Friday of the following week summary progress reports of VAAP availments which shall then be consolidated by VAT-PCC to come up with a consolidated VAAP Management Report Information for submission to MANCOM. Such consolidated report shall be the basis for MANCOM discussion of revenue generated, problems encountered and other matters relative thereto." SECTION 5 . Effectivity Clause . This Order shall take effect immediately. (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue ANNEX A COMPUTATION OF THE VAAP AMOUNT A. For Taxable Period/s with Discrepancy Stated in the LN. 1. Initial VAAP Payments . Within the period prescribed in the LN, the taxpayer shall make initial VAAP payments for the corresponding taxes due on the amount of under-declared sales/revenues/taxable amounts for the years/periods with noted discrepancy (see Section 2.5.1.1) discovered by the BIR as stated in the LN. The initial VAAP payments shall consist of minimum VAAP amounts computed as follows: (a) VAT Minimum Amount Payable . On the amount of under-declared sales/receipts stated in the Letter Notice, the minimum amount that must be paid shall be 3% for seller of goods and 6% for the seller of service; (b) Income Tax Minimum Amount Payable . 2% of the amount of underdeclared sales/receipts stated in the LN; and (c) Excise Tax Minimum Amount Payable . In case the taxpayer is likewise subject to excise tax, 2% of the amount of under-declared sales /receipts/ taxable amounts stated in the LN. 2. Subsequent VAAP Payments at the Time of Submission of VAAP-AF . Notwithstanding the initial VAAP minimum payments made, additional VAAP payments shall be made on the corresponding taxes for the taxable period where under-declaration of sales has been noted by the BIR if it appears that the amount as determined below is higher than the minimum VAAP amount paid, pursuant to No. 1 above. (a) VAT Payable 110% of the basic tax due computed as follows: Sales declared per returns Pxxxx Add: Sales discrepancy per LN No. ____ Pxxxx Voluntary disclosure xxxx xxxx Total Adjusted Sales Pxxxx x output tax rate .10 Output tax Pxxxx Less: Tax Credits Total input tax claimed per original return (xxxx) Tax paid per return (tax credit claimed/payments) (xxxx) Input taxes on sales discrepancy Domestic purchases capital goods (xxxx) Domestic purchases goods other than capital goods (xxxx) Domestic purchases services (xxxx) Domestic services rendered by non-resident (xxxx) Importations capital goods (xxxx) Importations goods other than capital goods (xxxx) (xxxx) Other tax credits applicable to sales discrepancy (xxxx) VAP availment per RR 8-2001, if any (xxxx) Basic Tax Pxxxx X VAAP rate 110% VAT Payable Pxxxx Less: VAT Minimum Amount Paid per LN xxxx Additional VAAP Amount Payable Pxxxx ==== The factor of 1/11 in arriving the Output tax due as provided in Revenue Regulations No. 12-2002 shall only be applied if the declaration of sales is inclusive of VAT. However, for uniformity in presentation, this Order requires that the total adjusted sales for the VAAP computation required above and Item (B)(1) below, be presented at net of the VAT amount. (b) Income Tax Payable . 110% of the basic tax due computed as follows: Sales declared per returns Pxxxx Add: Sales discrepancy per LN No. ____ Pxxxx Voluntary disclosure xxxx xxxx Total Adjusted Sales Pxxxx Less: Adjusted Cost of Sales Cost of sales per return (xxxx) Cost of sale applicable to underdeclaration (xxxx) (xxxx) Total Gross Income Pxxxx Less: Adjusted Expenses Expenses per return (xxxx) Expenses applicable to underdeclaration (xxxx) (xxxx) Adjusted Net Income Pxxxx x income tax rate xxx Income Tax due (normal rate or MCIT, whichever is higher) Pxxxx Less: Tax paid per return (not including the amount of MCIT for the year in excess of the normal rate) (xxxx) Tax credit applicable to sales discrepancy per LN and/or on sales voluntarily disclosed (xxxx) VAP availment per RR 8-2001, if any (xxxx) (xxxx) Basic Tax Pxxxx X VAAP rate 110% Income Tax Payable Pxxxx Less: Income Tax Minimum Amount Paid per LN (xxxx) Additional VAAP Amount Payable Pxxxx ==== (c) Excise Tax Payable. 110% of the basic tax due computed as follows: Original, Declaration (Per return) Pxxxx Add: Underdeclaration per LN No.____ Pxxxx Voluntary disclosure xxxx xxxx Total Adjusted Declaration Pxxxx x excise tax rate xxx Excise Tax Due Pxxxx Less: Tax Paid per Return (xxxx) VAP availment per RR 8-2001, if any xxxx (xxxx) Basic Tax Pxxxx X VAAP rate 110% Excise Tax Payable Pxxxx Less: Excise Tax Minimum Amount Paid per LN (xxxx) Additional VAAP Amount Payable Pxxxx ==== The term "income tax due" for domestic corporations and resident foreign corporations shall refer to the higher amount between the normal income tax and the MCIT rate of 2% of gross income. The term "tax paid per return" shall be construed as the total tax due per return consisting of the tax credits applied and the tax actually paid at the time of the filing of returns. As stated above, the same shall not include portion of MCIT paid in the year in excess of the normal rate of 32% which amount can be utilized in the succeeding year. Excess tax credits appearing in the originally filed returns in the covered years as well as unutilized balance of tax credit certificates (TCC) shall not be allowed to be used as payment under this Program. This means that any tax credits applied on subsequent returns filed shall not be disturbed. Additional VAAP payments shall be made for the difference between 110% basic taxes as computed above and the minimum VAAP payments computed in item (A)(1) above. Such amounts shall be paid by using again the VAAP-PF. B. For Taxable Period/s without Noted Discrepancy Stated in the LN and for taxpayers without LN availing of VAAP The VAAP amounts shall be paid at the time of the submission of the VAAP-AF which shall be the highest figure among the different formulas enumerated hereunder and computed as follows: 1. VAT Payable The VAT payable shall be the highest amount computed in any of the following: (a) 110% of the basic tax due, computed as follows: Sales declared per returns Pxxxx Add: Voluntary disclosure xxxx Total Adjusted Sales Pxxxx x output tax rate .10 Output tax Pxxxx Less: Tax Credits Total input tax claimed per original return (xxxx) Tax paid per return (tax credit claimed/payments) (xxxx) Input taxes on sales discrepancy Domestic purchases capital goods (xxxx) Domestic purchases goods other than capital goods (xxxx) Domestic purchases services (xxxx) Domestic services rendered by non-resident (xxxx) Importations capital goods (xxxx) Importations goods other than capital goods (xxxx) Other tax credits applicable to sales discrepancy (xxxx) VAP availment per RR 8-2001, if any (xxxx) (xxxx) Basic Tax Pxxxx X VAAP rate 110% VAT Payable Pxxxx ==== As stated in A(2)(a) above, the sales declaration shall be presented in the computation at net of VAT where the 10% output tax rate shall be applied instead of the factor of 1/11 as stated in Revenue Regulations No. 12-2002. (b) 10% of total output tax per original return filed (if return was filed) . Total Output Tax per VAT Returns For the Covered Year/Period Pxxx Multiply by: 10% x VAT Payable Pxxx (c) Minimum payment of P100,000 for corporations and P50,000 for individuals . Minimum payment of P100,000 for corporations and P50,000 for individuals in case the VAAP availment covers one taxable year (i.e., for year 2001 and prior years). However, if the availment covers the period January to June 2002, the minimum amount shall be P50,000 for corporations and P25,000 for individuals. 2. Income Tax Payable . The income tax payable shall be the highest amount computed in any of the following: (a) 110% of the basic tax due computed as follows : Sales declared per returns Pxxxx Add: Voluntary disclosure xxxx Total Adjusted Sales Pxxxx Less: Adjusted Cost of Sales Cost of sales per return (xxxx) Cost of sale applicable to underdeclaration (xxxx) (xxxx) Total Gross Income Pxxxx Less: Adjusted Expenses Expenses per return (xxxx) Expenses applicable to underdeclaration (xxxx) (xxxx) Adjusted Net Income Pxxxx x income tax rate xxx Income Tax due (normal rate or MCIT, whichever is higher) Pxxxx Less: Tax paid per return (not including amount of MCIT for the year in excess of the normal rate) (xxxx) Tax credit applicable to sales discrepancy voluntarily disclosed (xxxx) VAP availment per RR 8-2001, if any (xxxx) (xxxx) Basic Tax Pxxxx X VAAP rate 110% Income Tax Payable Pxxxx ==== (b) 0.5% of adjusted sales/receipts less tax due and paid per tax return filed in the covered year for individuals and 1% of total adjusted sales/receipts less tax due and paid per tax return filed in the covered year for corporations. Total adjusted sales/receipts Pxxx Multiply by: 0.5%/1% Xx Total Pxxx Less: Tax Due and Paid per Return Filed in Covered Year X Income Tax Payable Pxxx (c) 20% of basic tax due per original return (if return was filed) . Basic tax due per original return filed Pxxx Multiply by: 20% xx Income Tax Payable Pxxx (d) Minimum payment of P50,000 for corporations and P10,000 for individuals . 3. Excise Tax Payable . The excise tax payable shall be the highest amount in any of the following: (a) 110% of the basic tax due computed as follows : Original Declaration (Per return) Pxxxx Add: Voluntary disclosure xxxx Total Adjusted Declaration Pxxxx x excise tax rate xxx Excise Tax Due Pxxxx Less: Tax Paid per Return (xxxx) VAP availment per RR 8-2001, if any (xxxx) (xxxx) Basic Tax Pxxxx X VAAP rate 110% Excise Tax Payable Pxxxx ==== (b) 2% of voluntarily disclosed taxable base. Voluntarily Disclosed Taxable Base Pxxx Multiply by: 2% x Excise Tax Payable Pxxx 4. Percentage Tax Payable . The percentage tax payable shall be the highest amount in any of the following: (a) 110% of the basic tax due on adjusted tax base, computed as follows : Sales/Receipts declared per returns Pxxxx Add: Voluntary disclosure xxxx Total Adjusted Sales Pxxxx x Percentage Tax Rate .xx Percentage Tax Due Pxxxx Less: Tax paid per returns filed (xxxx) Other tax credits applicable to sales discrepancy (xxxx) VAP availment per RR 8-2001, if any (xxxx) (xxxx) Basic Tax Pxxxx X VAAP rate 110% Percentage Tax Payable Pxxxx ==== (b) 20% of basic tax due per original return (if return was filed) . Basic tax due per original return filed Pxxx Multiply by: 20% xx Percentage Tax Payable Pxxx (c) Minimum payment of P50,000 for corporations and P10,000 for individuals . Minimum payment of P50,000 for corporations and P10,000 for individuals in case the VAAP availment covers one taxable year (i.e., for year 2001 and prior years). However, if the availment covers the period January to June 2002, the minimum amount shall be P25,000 for corporations and P5,000 for individuals. 4. Other Taxes Payable . Taxable Base Pxxxx Add: Underdeclaration of taxable base, if with Previously filed return xxxx Undeclared taxable base, if no return previously Filed xxxx Total Adjusted Declaration Pxxxx Tax Due Pxxxx Less: Tax Paid per Return (xxxx) Less: Taxes Withheld (xxxx) Less: VAP availment per RR 8-2001, if any (xxxx) Basic Tax Pxxxx Multiply: VAAP rate (110% or 120%, whichever is applicable) xx% Total Tax Payable Pxxxx ==== As stated above, the term "income tax due" for domestic corporations and resident foreign corporations shall refer to the higher amount between the normal income tax and the MCIT rate of 2% of gross income. The term "tax paid per return" shall be construed as the total tax due per return consisting of the tax credits applied and the tax actually paid at the time of the filing of returns. As stated above, the same shall not include portion of MCIT paid in the year in excess of the normal rate of 32% which amount can be utilized in the succeeding year. Excess tax credits appearing in the originally filed returns in the covered years as well as unutilized balance of tax credit certificates (TCC) shall not be allowed to be used as payment under this Program. This means that any tax credits applied on subsequent returns filed shall not be disturbed. Note: Tax deduction and credit claimed as applicable to sales discrepancy per LN and/or on sales voluntarily disclosed shall be subject to the submission of soft copy of schedule of purchases of goods and services following the format provided for under Revenue Regulations No. 13-97 as amended by Revenue Regulations No. 7-99. Such summary list of purchases shall be submitted to the RDO at the time of submission of VAAP-AF but however, the taxpayer may be given extension and allowed to submit such schedule within thirty (30) days from the time of submission of VAAP-AF . HICcSA ANNEX B Office/s Responsibilities (1) VAT-Project Coordinating Coordinates and monitors all the activities of Committee (VAT-PCC) the Offices and technical working groups (TWGs) involved in the implementation of all VAT-related projects including the Voluntary Assessment and Abatement Program (VAAP) promulgated under Revenue Regulations No. 12-2002 Monitors the submission of reports required from the RDOs, Regional Offices relative to VAAP (2) TWG-Initial Validation of Generates and validates discrepancy reports Discrepancy (TWG-IVD) Prepares LN for the signature of the Commissioner after discrepancy reports have been validated and reviewed by the TWG- FVD (3) TWG-Final Validation of Validates and reviews initial discrepancy Discrepancy (TWG-FVD) reports prepared by TWG-IVD. The (RSO 604-2002) validated discrepancy reports shall be the basis for the issuance of LN Monitors taxpayers who have availed of VAAP and validates in the discrepancy reports subsequently generated whether there have been an honest and accurate disclosure of sales in the VAAP-AF submitted Evaluates additional findings disclosed by TWG-IVD which were not declared in the VAAP-AF and recommends to the Commissioner the enforcement action to be undertaken by RDOs Evaluates cases of non-availment and determine and recommend next course of action Monitors enforcement actions instituted against taxpayers who have incomplete VAAP availment or those who have not availed of VAAP despite receipt of LN from the BIR (5) VAAP Call Center Mans "hotline" on taxpayers' queries regarding VAAP (6) AABs Receive VAAP payments from taxpayers together with duly filled-out VAAP-PF which shall then transmit such forms together with BCS/reports to the BIR within the period prescribed under existing rules and regulations (7) RDOs Provide the TWG-IVD with certified true copies of income tax/VAT returns of taxpayers Personally deliver Letter Notices to taxpayers Encode in the Tracking System developed by the TWG-ISG status of Letter Notices which have been duly received by the taxpayers and actions taken on unserved Letter Notices based on prescribed monitoring sheets Receive VAAP-AF and duly validated VAAP-PF from taxpayers Monitor submission of summary schedule of purchases from taxpayers availing of VAAP who claimed additional deductions as per VAAP-AF which summary schedules must be received at the time of the submission of VAAP-AF, however, the taxpayer may be given extension and allowed to submit such schedule within thirty (30) days from date of submission of VAAP-AF Monitor VAAP payments of taxpayers availing of installment payments and call up taxpayers for any default in the payment thereof Process VAAP-AF by encoding the information contained therein in the Tracking System developed by TWG-ISG with reference to the Letter Notice received, if applicable, using the required file format Encode into the Tracking System, installment payments received as evidenced by Official Receipts issued by the AAB and duly validated VAAP-PF submitted by taxpayers Process and evaluate VAAP availments on one-time transactions and ensure that all documentary requirements necessary to check the propriety of deductions claimed as well as properly compute the valuation of the property and the tax due including the appropriate returns to be filed in respect thereto have been submitted Prepare and initial Certificate of Qualification Issue CAR/TCL upon issuance of Certification of Qualification by the Regional Director Submit processed VAAP-AF, VAAP-PF and audit dockets, in case of any, of taxpayers who availed of VAAP, except VAAP availments for one-time transactions to the TWG-FVD for evaluation Resolve stop-filer cases of those taxpayers which availed of Prepare and submit reports of status of compliance of taxpayers with Letter Notice and on VAAP availments of those with or without Letter Notices to TWG-ISG, using the prescribed format Identify taxpayers who availed of VAAP and those who have not Set-up own "hotline" to address VAAP queries (8) Regional Director/ODCIR- Monitor activities of RDOs with respect to Operations Group VAAP Regional Director shall sign and approve Certificate of Qualification on VAAP availments for one-time transactions upon recommendation of Chief, Assessment Division (9) TWG -ISG Develops a Tracking System which could generate consolidated management reports appertinent to the following: LNs that were successfully delivered and those which were not delivered Taxpayers who have received Letter Notices and have availed of VAAP as well as the corresponding VAAP amounts paid on the tax types and taxable periods covered by the availment Taxpayers who have received Letter Notices but did not avail of VAAP in any or in all the taxable periods covered by the Program. Taxpayers who have not received Letter Notices but have availed of VAAP Taxpayers who have availed of VAAP on the tax types and taxable periods covered by Revenue Regulations No. 17-2002 as well as the corresponding VAAP amounts paid on the tax types and taxable periods covered by the availment Capture relevant information contained in the VAAP-AF and VAAP payments contained in the VAAP-PF which will be utilized by the TWG-IVD/TPI- Relief Committee in order to determine whether additional subsequent findings discovered in the RELIEF and other processes had already been disclosed in the VAAP-AF Constantly monitor submission of reports by RDOs Provides VAT-PCC, ODCIR-Operations Group and the Commissioner consolidated VAAP management reports (10) LTS/LT-DPQAD/LTDO Provide relevant information that may be necessary in the matching and reconciliation of transactions involving large taxpayers (11) Taxpayers' Assistance Plans tax campaign activities in various Service (TAS) RDOs and coordinates with RDOs for the effective dissemination of VAAP to taxpayers (12) Assessment Division Review VAAP availments on one-time transactions before Certificate of Qualification is issued by the Regional Director ANNEX C-1 VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM PAYMENT FORM (Pursuant to RR No. 12-2002) GUIDELINES AND INSTRUCTIONS ANNEX C-2 VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM PAYMENT FORM (Pursuant to RR Nos. 12-2002VAND 17-2002) GUIDELINES AND INSTRUCTIONS ANNEX D VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM APPLICATION FORM Pursuant to Rev. Reg. No. 12-2002 GUIDELINES AND INSTRUCTIONS ANNEX E VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM APPLICATION FORM Pursuant to Rev. Reg. No. 12-2002 GUIDELINES AND INSTRUCTIONS ANNEX F VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM APPLICATION FORM Pursuant to Rev. Reg. No. 12-2002 Scheduled I Detailed Computation of Basic Tax Due per Application for Voluntary Assessment and Abatement Program GUIDELINES AND INSTRUCTIONS ANNEX G VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM APPLICATION FORM Pursuant to Rev. Reg. No. 17-2002 GUIDELINES AND INSTRUCTIONS ANNEX H COMPUTATION SHEET FOR VAAP AVAILMENT Pursuant to Rev. Reg. No. 12-2002 as amended by RR 17-2002 and 18-2002 GUIDELINES AND INSTRUCTIONS