Digesting BIR RR-21-2020 - VAPP
by: Mark Virgil Lofranco, CPA
Voluntary Assessment and Payment Program for Taxable year 2018 under Certain Conditions
Covered Taxes and Taxable Year; when to avail
- All internal revenue taxes
- Taxable year ending December 31, 2018
- Fiscal year 2018 ending on the last day of the months of July 2018 to June 2019
- Taxes on ONETT (One-Time transactions)
- Estate tax
- Donor’s tax
- Capital gains tax
- ONETT-related creditable withholding tax (CWT)
- Expanded withholding tax
- Documentary stamp tax
When to avail?
- Qualified persons can avail of the benefits until December 31, 2020 unless extended.
- Any person, natural or juridical , Estates and trusts
- Liable to pay internal revenue taxes, due to:
- Erroneous payments
- Failure to file tax returns
- Failure to pay taxes
- There is a Final Assessment Notice (FAN) issued which becomes final and executory
- There is a verified information filed by a tax Informer which resulted to investigation with respect to deficiency taxes
- Pending case involving Tax Fraud
- Pending case involving tax evasion
How to apply?
- Applicant must signify its intention of availing the said benefits and must submit the necessary documents through personal or through courier service with the RDO or agent having jurisdiction over the taxpayer.
- 2 copies of duly accomplished application form (BIR FORM 2119)
- 3 Payment form (BIR FORM 0622)
- Final tax returns
- Proof of payment of taxes paid in 2017 and 2018
- Audited Financial Statements for the covered taxable year
- Copy of remittance returns
- Proof of payment of final and creditable withholding taxes
- Copy of duly paid BIR FORM 0605 and stamped by any BIR collecting officer or accredited agent banks
- If there is previous deficiency tax settlement, proof of payment with or without assessment notice covering the taxable period
- Duly accomplished ONETT tax returns such as BIR FORM Nos. 1800,1801,1706,1707,2000-OT, 0619E with corresponding documentary requirements for the transaction
Manner of Payment
All voluntary payments should be made in cash.
Tax debit memo is not a valid payment
The duly accomplished form no. 0622 shall be presented for payment to any BIR authorized agent bank or authorized collecting agent under registered RDO.
If ONETT involving sale of property, it must be filed and paid under the RDO where the property is located
Proceeding during review
Within 30 days
the Revenue Officer will evaluate the application, payment form and other documents submitted
endorse them to the assistant chief, LT office/Assistant District Officer for review
endorse to the chief, LT office/revenue district officer, as the case may be, for approval
BIR form 2119 shall be signed by the chief, LT office/revenue district officer
If the review reveals deficiencies or defects, the approving official shall notify the applicant through email address provided and shall require to rectify the defects and/or comply with or pay the deficiencies within 10 working days from receipt of the notification/email.
Failure to act and/or pay the required amount within the period shall result to the denial of the application.
A certificate of availment shall be issued within 3 working days from approval of the application as a proof of the availment, compliance with the requirements and entitlement to the privilege.
The LT office or RDO shall transmit all dockets on approved VAPP applications to the concerned reviewing office not later than the 5th day following the month of issuance of the Certificate of availment for post review.
Consequence of non-submission; erroneous submission, incomplete/falsified submission; treatment of invalid/deficient or defective availment
Shall not entitle to avail of the privilege thus voluntary payment may be applied against any deficiency tax liability for the taxable year 2018 in case of audit/investigation
Taxpayer’s failure to file and pay tax returns for the covered taxable year; condition to avail
If the unfiled tax returns shall first be filed and/or
If the unpaid taxes plus corresponding penalties for late filing and payment shall first be paid
Condition to avail the privilege; amounts to be paid
The amount of taxes to be paid as a condition to avail the privilege:
Income Tax, VAT, Percentage Tax, Excise Tax and Documentary Stamp Tax other than DST on ONETT
|Increase/Decrease in total taxes due from 2017 and 2018
||Amount of voluntary tax payment (whichever is higher)
| Net increase of not more than 10%
||3% of 2018 gross sales OR 7% 2018 taxable net income
|Net Increase of more than 10% up to 30%
||2% of 2018 gross sales OR 6% of 2018 taxable net income
|Net increase of more than 30%
||1% of 2018 gross sales OR 5% OF 2018 taxable net income
|For individuals, estates and trusts
Subscribed capital of more than P50 Million
Subscribed capital of more than P20 Million-P50 Million
Subscribed capital of more than P5 Million-P20 Million
Subscribed capital of P5 Million and less
|Other juridical entities including but not limited to cooperatives, general professional partnerships
Final withholding taxes (Compensation, fringe benefits, etc.), Creditable withholding taxes other than CWT on ONETT
Amount shall be 5% of the total basic withholding tax remittance for the taxable year 2018
For taxpayers with claims for tax refund/credit, the application shall constitute a waiver of such claims unless they exclude in their availment the specific type for which they are pursuing the claim for tax credit/refund.
Taxes on ONETT such as Estate tax, donor’s tax, Capital gains tax, ONETT-related CWT/Expanded withholding tax and DST
Amount paid shall be the basic tax due of the unfiled tax return/unpaid tax due plus 5%.
Benefits and Privilege
Shall not be audited for 2018 for the tax types covered by the availment
If the covered taxable period are currently being audited, the conduct of the audit shall be suspended upon the availment of the VAPP while the availment is under evaluation. It shall resume of the availment has been found invalid.
If the availment has been determined to be valid, a certificate of availment shall be issued and the Letter of Authority, Tax verification notice, discrepancy notice, notice of informal conference, preliminary assessment notice, final assessment notice for pending cases shall be withdrawn and canceled.
Instances where audit and investigation are still allowed despite the issuance of certificate of availment:
There is strong evidence or finding of under-declaration of sales, receipts or income or overstatement of deductions by more than 30% based on written report of the appropriate revenue official stating the facts with supporting documents
There is verifiable information that the taxpayer has withheld but failed to remit withholding taxes
Non-availability of cash refund or credit; non-admission of fraud or erroneous payment
Any payment made is construed as a waiver for the right to claim for refund or credit notwithstanding collection from erroneous payment.
The act of voluntary payment shall not be deemed as an admission on the part of the taxpayer that there was fraud in the declaration of its taxes and/or there was an intention to pay the tax erroneously.