| Centennial Taxpayers Recognition Program | Imposition of Advance Tax on Privilege Stores | Letter Notice Monitoring Project | Modified Tax Compliance Verification Drive | Voluntary Assessment and Abatement Program (VAAP)
Centennial Taxpayers Recognition Program
Bureau launched on March 2, 2004 its Centennial Taxpayers Recognition
Program or CTRP as a way of honoring the country’s top taxpayers who
have contributed significantly to the pursuit of government’s
CTRP is a voluntary tax program designed to recognize taxpayers who
have shown remarkable growth rates in their income and business (VAT
and percentage) taxes.
following the calendar year of reporting as well as individuals engaged
in business or considered as mixed income earners can vie for the
Centennial Taxpayer Award provided they meet all the conditions
specified in Revenue Memorandum Order No. 7-2004.
with the symbols of honor and prestige (i.e. Centennial Taxpayer Trophy
and Centennial Honor Prestige Card), the Top Centennial Taxpayer
awardees will have the BIR Commissioner’s protection against undue
examination and investigation and be accorded last priority in audit.
Centennial Honor Prestige Card will entitle the awardees privileged
attention in all BIR and Department of Finance offices and priority
attention in the resolution of official matters.
the day of the launch itself, the Lina Group of Companies, headed by
Mr. Bert Lina, signified its intention to participate in the CTRP.
Other show of support followed through with the signing of Agreements
of Cooperation between the BIR and several organizations, namely: the
Association of Certified Public Accountants in Public Practice; Chinese
Filipino Business Club; Philippine Chinese Charitable Association,
Inc.; Filipino Chinese General Chamber of Commerce; Philippine Exporter
Confederation; Philippine Institute of Certified Public Accountants;
Federation of Filipino Chinese Chamber of Commerce and Industry;
Integrated Bar of the Philippines and Philippine Chamber of Commerce
Expansion of CTRP Coverage
view of the clamor to expand the coverage of the CTRP, the Bureau
issued on March 26, 2004 Revenue Memorandum Order No. 14-2004 to
include in the coverage corporate taxpayers using the fiscal year of
and individual business income earners vying for the Centennial
Taxpayer award have until May 30, 2004 to submit a duly accomplished
CTRP Participation From and make the necessary voluntary payment using
the Centennial Voluntary Payment Form (BIR Form 0605-100).
Extension of CTRP Deadline and Further Expansion of Coverage
BIR has given taxpayers interested to vie for the Centennial Taxpayers
award until June 30, 2004 to fulfill the qualification requirements of
the Centennial Taxpayers Recognition Program or CTRP.
to Revenue Memorandum Order No. 25-2004, taxpayers vying for the CTRP
after May 31, 2004 (Late Qualifiers) may still qualify as CTRP awardees
by making a voluntary tax payment to attain the required growth rate in
Income Tax payment under the CTRP, in addition to the payment of 20%
interest per annum computed daily from June 1, 2004 to date of actual
Qualifiers must also make a voluntary payment not lower than 1% of tax
due for annual income tax year 2003 and Income Tax for the 1st quarter of tax year 2004, plus 20% interest per annum computed daily from June 1, 2004 to date of actual payment.
said 2 conditions must be fulfilled by the Late Qualifiers, in addition
to the qualification requirements provided under Revenue Memorandum
Order Nos. 7-2004, 14-2004, 18-2004 and 20-2004.
Taxpayers following the fiscal year reporting ending
January 31, 2004 can now also participate in the CTRP. Said taxpayers
may pay their CTRP voluntary payments without any monthly incremental.
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Imposition of Advance Tax on Privilege Stores
in January this year, the problem of collecting taxes from "tiangges"
(or "privilege stores" as coined by the BIR) was brought to the
attention of the Bureau by the officers of the Philippine Retailers
Association (PRA), led by Mr. Bienvenido Tantoco III and Mr. Manuel
Siggaoat. After several meetings with the PRA officers, BIR came out
with a Revenue Regulations (RR No. 16-2003) last April 29 to impose the
advance payment of business tax and income tax on operators of
"privilege stores" or "tiangges", as well to prescribe the tax
obligations of organizers or exhibitors of space for the operation of
Under the said Regulations, a fixed amount of
Value-Added Tax or Percentage Tax, as the case may be, of P 150 per day
(or P 4,500 per month) and Income Tax of P 50 per day (or P 1,500 per
month) shall be imposed and collected in advance on a monthly basis
from "tiangge" operators for the entire duration of their business
operation. The advance payments are credited against the actual
business tax and income tax due from such persons for the taxable
period for which such payments were remitted to the BIR.
In response to the various comments received by
the BIR after the issuance of RR No. 16-2003, a revised revenue
issuance (Revenue Regulations No. 24-2003) was issued on August 29,
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Letter Notice Monitoring Project
the LN Monitoring Project, the generation and monitoring of Letter
Notices (LNs) to be sent to taxpayers will be automated.
Last October 14, 2003, the BIR LN Monitoring Project
kicked off through a meeting attended by top BIR officials, led by
Commissioner Guillermo L. Parayno, Jr., and officials of SAS.
Through the Project, a system will be developed by
SAS, which will have the capability to automatically produce LNs and
its details, and deliver them to the Revenue District Offices via the
BIR website. The initial coverage of the project, however, will be
limited to the Reconciliation of Listings for Enforcement (RELIEF)
The system will also have the capability to monitor
and generate management reports on the status of LNs, including the
progress of collection.
Automating the LN processes will strengthen the
capability of the BIR to better manage the growing number of LNs sent
to identified taxpayers with deficiency taxes/tax fraud cases, which
were uncovered through the discrepancy reports generated under the
RELIEF program and other Third Party information systems of the Bureau.
The LN Monitoring System is targeted to be completed by December 2003 and rolled out by early 2004.
The Bureau of Internal Revenue (BIR) has adopted a
"no-contact-audit" approach in examining and assessing taxpayers'
compliance with their tax obligations.
Pursuant to Revenue Memorandum Order No. 42-2003, the
approach includes the computerized matching of sales and purchases data
contained in the Schedule of Sales and Domestic Purchases, and Schedule
of Importation submitted by VAT taxpayers under the Reconciliation of
Listings for Enforcement (RELIEF) System.
The approach likewise includes the matching of data
from other information or returns filed by taxpayers with the BIR such
as Alphalist of Payees Subject to Final or Creditable Withholding Taxes.
Even without conducting a detailed examination of the
taxpayer's books and records, which is normally done under the
traditional audit approach, discrepancies in the taxpayers'
declarations will be uncovered through the computerized/manual matching
of sales and purchases/expenses under the "no-contact-audit" approach.
Taxpayers will be notified of the said discrepancies
through computer-generated Letter Notices that will be served to them
by the concerned Revenue District Offices.
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Modified Tax Compliance Verification Drive
Guillermo L. Parayno, Jr. signed a Memorandum of Understanding (MOU)
with the Fellowship of Christians in Government, Inc. (FOCIG) last
October 22 for a more effective implementation of the Bureau's Tax
Compliance Verification Drive (TCVD).
Under the MOU, FOCIG, as represented by its Chairman,
Niels Patrick Riconalla, volunteered to be the Bureau's partner in the
dissemination of tax information prior to the conduct of the TCVD.
With the issuance of Revenue Memorandum Order No.
31-2003 last October 7, a Modified TCVD is being implemented wherein
standardized reminder letters will be distributed to business
establishments during the Tax Information and Compliance Phase (Phase
The conduct of Phase I in the MTCVD aims to give
business establishments the opportunity to comply with the tax
requirements listed in the reminder letter before they are visited by
authorized Revenue Officers.
Phase I of the MTCVD will be
undertaken by FOCIG and other interested civic and cause-oriented
groups that are willing to assist the BIR in its tax information drive.
To ensure its legitimacy, FOCIG will provide its
volunteers with identification cards to be countersigned by the
concerned Revenue District Officer (RDO), together with a letter of
authorization that will be used during the information campaign.
In addition to organizing/conducting briefings and
door-to-door campaigns, FOCIG will also submit to concerned RDOs
reports of their monthly accomplishments, contributions and policy
recommendations on the conduct of the MTCVD.
Use of Mobile Technology in TCVD
the positive impact on collection brought about by the conduct of Tax
Compliance Verification Drives (TCVD) in 2003, the Bureau is bent on
intensifying and enhancing its conduct in 2004 through the use of
use of "mobile technology" was first tested by the Bureau during a TCVD
operation spearheaded by Commissioner Guillermo L. Parayno, Jr. on
December 22, 2003 in the Greenhills Shopping Center.
the use of "mobile technology", Revenue Officers were able to access
the Bureau’s data warehouse and perform on-the-spot verification of
taxpayers’ compliance with the registration requirements.
the information that a Revenue Officer could validate with the use of
"mobile technology" are the taxpayer’s TIN information, authenticity of
receipts/invoices being issued, and validity of cash register machine
Findings on site can be recorded in the mobile device and reported immediately to the Regional/National Office.
Proof-of-Concept (POC) using this technology was developed for the
Bureau by SMART Communications and GLOBE Telecoms. Another POC was
completed by Sun Microsystems for the web-based reporting system.
The use of "mobile technology" in the conduct of TCVD is targeted for implementation in all BIR regional offices by 2004.
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Voluntary Assessment and Abatement Program (VAAP)
set in place an integrated approach in the handling of
under-declarations generated by the RELIEF system, the BIR issued
Revenue Regulations (RR) No. 12-2002 on September 12, 2002.
the RR, Income, VAT and Excise taxpayers with under-declared
sales/receipts/income for the Calendar and Fiscal Years 2000 and 2001,
and the first and second quarters of 2002 are entitled to avail of the
Bureau's Voluntary Assessment and Abatement Program (VAAP) until
November 15, 2002 (or before the deadline specified in the Letter
Notice that will be sent by the BIR).
Under-declarations in the third quarter 2002 returns
and succeeding quarters will no longer be entitled to the VAAP, but
will be subjected to the full force of the law.
In case a concerned taxpayer fails or refuses to avail
of the VAAP for any of the taxable periods covered by the RR, the BIR
shall institute such criminal or administrative actions as may be
authorized under the Tax Code, specifically closure, criminal actions
or audit and investigation, depending on the extent of
Expansion of VAAP Coverage
With the issuance of RR No. 17-2002 on October 16,
2002, taxpayers subject to Percentage Tax, Documentary Stamp Tax,
Improperly Accumulated Earnings Tax, Withholding Tax and taxes
involving one-time transactions (i.e. Estate Tax, Donor's Tax, etc.)
can also avail of the VAAP.
Even the taxable periods covered by VAAP was expanded
to include calendar/fiscal year and taxable period ending June 30, 2002
and all prior taxable periods (in the case of Income, VAT, Excise and
To make it easier for taxpayers to pay their
deficiency taxes under the VAAP, payment of the minimum amounts per
Letter Notices (amounting to P 500,000 and above) is also allowed in
two to three equal installments within 2002, depending on the minimum
For voluntarily disclosed amounts (P 500,000 and
above), installment payment will be in three (3) equal parts, the first
payment being made before the filing of the VAAP Application Form with
the concerned Revenue District Office.
The deadline for submission of Application Forms for
VAAP availment and payment of corresponding deficiency Income Tax, VAT
and Excise Tax is on November 15, 2002. Applications and payment for
the other type of taxes covered must be received by the BIR not later
than November 29, 2002.
Extension of Installment Payment
The BIR issued RR No. 18-2002, which made it possible
for taxpayers to request for extension of installment payment of their
deficiency taxes under VAAP on the ground of financial incapacity.
their request to be approved, taxpayers must submit a list of banks to
which they maintain bank deposits/accounts as well as execute a waiver
of bank secrecy of deposits, among others.
Taxpayers have until December 16, 2002 to avail of the VAAP pursuant to RR No. 23-2002.
Further Extension of VAAP
With the issuance of Revenue Regulations No. 28-2002,
the period for availment of the VAAP was further extended, subject to
additional incremental surcharge (progressively increasing from January
to October 2003) of 5% to 50% for those with Letter Notices (LNs), and
2.5% to 25% for those without LN.
To effectively monitor the status of VAAP availments
as well as the compliance of taxpayers who have been sent LN by the
Bureau, a VAAP Tracking and Monitoring System (TMS) was rolled out in
all Revenue District Offices on December 11, 2002.
Through the VAAP TMS, taxpayers who (after availing
the VAAP) still have under-declared sales/receipts/income for taxable
years 2000, 2001 and the first and second quarters of 2002 will be
VAAP Frequently Asked Questions
Q: Can we still pay despite the lapse of the VAAP?
A: Within 10 days from receipt of demand letter otherwise NO.
Q: Can we pay on installment basis?
A: RR 28 - 2002 ; subject to approval of DCIR Evangelista
Q: What is the effect if we don't comply with the demand letter?
A: Criminal Prosecution / Closure of business
Q: Can we reduce the rate of penalty?
Q: Will the BIR issue us a certification that we have settled out tax liabilities?
A: VAAP application and proof of compliance will suffice.
-Promised to come back
a. With payments / PDC's
b. Submit requirements
-Those who did not respond
a. Did they receive the LN
b. Did they receive the demand letter
- Failure to comply will cause the filing of criminal case / closure of business
- Returned to sender (demand letter) - call then verify address
c. Single proprietor to corporation
- Responded to demand letter but:
a. Only thru letter
b. Only thru phone calls
- Those who went to the BIR but did not make any commitment
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