RR No. 21-2020: Implementation of the VAPP

By: Pamela Ruth G. Calog, CPA

2 months ago

Issued on September 4, 2020, Revenue Regulations No. 21-2020 prescribes the policies, procedures and guidelines in the implementation of the Voluntary Assessment and Payment Program (VAPP) for the collection of additional tax revenues, which could otherwise be collected through audit and enforcement effort for Taxable Year 2018.


Qualified persons can avail of the benefits of the VAPP until December 31, 2020, unless extended by the Secretary of Finance.


Who may avail?


Any person, natural or juridical, including estates and trusts, liable to pay internal revenue taxes for the above specified period/s who, due to inadvertence or otherwise, erroneously paid his/its internal revenue tax liabilities or failed to file tax returns/pay taxes.


Except those falling under any of the following instances:

  • Those taxpayers who have already been issued a Final Assessment Notice (FAN) that have become final and executory, on or before the effectivity of the Regulations;

  • Persons under investigation as a result of verified information filed by a tax informer under Section 282 of the NIRC of 1997, as amended, with respect to the deficiency taxes that may be due out of such verified information;

  • Those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and

  • Those with pending cases involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended.


How to avail?


To avail of the benefits of the VAPP, the following requirements shall be submitted to the BIR:


  1. Duly accomplished Application Form (BIR Form No. 2119);

  2. Payment Form (BIR Form No. 0622) with proof of payment; and

  3. Copy of duly paid BIR Form 0605 and proof of payment representing settlement of previous deficiency tax, with or without an assessment notice, if any, on the taxable year ending December 31, 2018, and fiscal year 2018 ending on the last day of the months of July 2018 to June 2019.


The amount of taxes to be paid as a condition to avail the privilege shall be determined in accordance with the following schedule:


I. For Income Tax, Value-Added Tax, Percentage Tax, Excise Tax, and Documentary Stamp Tax other than DST on ONETT


Increase/Decrease in
the Total Taxes Due
from 2017 to 2018
(A)

Amount of Voluntary Tax
Payment whichever is the
higher of –
(B)

Minimum Amount
(C) 

Net increase of not
more than 10% 

3% of 2018 gross sales or 7% of 2018 taxable net
income 


(1) Individuals, estates and trusts – P75,000                    


(2) Corporations –


a. With subscribed capital of more than ₱ 50 million – ₱ 1,000,000


b. With subscribed capital of more than ₱ 20 million up to ₱ 50 million – ₱ 500,000


c. With subscribed capital of more than ₱ 5 million up to ₱ 20 million – ₱ 250,000


d. With subscribed capital of ₱ 5 million and less – ₱ 100,000

(3) Other juridical entities, including but not limited to cooperatives, foundations, general professional partnerships – ₱ 75,000

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

Net decrease of not
more than 10% 

4% of 2018 gross sales or
8% of 2018 taxable net
income

Net decrease of more
than 10% 

5% of 2018 gross sales or
9% of 2018 taxable net
income


Additional requirements for Schedule I: Filed tax returns, proof of payment of taxes paid in 2017 and 2018 and audited Financial Statements.


II. For Final Withholding Taxes and Creditable Withholding Tax other than CWT on ONETT, the amount to be paid shall be five percent (5%) of the total basic Withholding Tax remittance for the taxable year 2018.


Additional requirements for Schedule II: Copy of remittance returns and proof of payment of final and creditable withholding taxes.


III. For taxes on ONETT, such as Estate Tax, Donor’s Tax, Capital Gains Tax, ONETT-related CWT/Expanded Withholding Tax and DST, the amount to be paid shall be the basic tax due of the unfiled tax return/unpaid tax due plus 5%.


Additional requirements for Schedule III: Duly accomplished ONETT tax return(s) (BIR Form Nos. 1800, 1801, 1706, 1707, 2000-OT, 0619-E) and corresponding documentary requirements.


The requirements can be filed personally or through courier service with the LT Office/RDO having jurisdiction over the taxpayer and will be processed by concerned officials within thirty (30) working days from its receipt.


If the review reveals deficiencies or defects in the availment, the approving official shall notify the concerned taxpayer and shall require the taxpayer to rectify the defects and/or comply with/pay the deficiencies within ten (10) working days from receipt of the notification/email. Failure to act and/or pay the required amount on the part of the taxpayer within such period shall result in the denial of the application.


How to determine if approved?


A Certificate of Availment shall be issued by the concerned LT Office/RDO within three (3) working days from approval of the application. The Certificate shall serve as proof of the taxpayer’s availment of the VAPP, compliance with the requirements and entitlement to the privilege granted under the Regulations.


Taxpayers whose availment is found to be invalid, deficient or defective are not entitled to the privilege under the Regulations. However, they may apply the voluntary payments made against any deficiency tax liability for the taxable year 2018, in case of audit/investigation.


What are the privileges?


Under Section 10 of RR No. 21-2020:


  1. A taxpayer with a duly issued Certificate of Availment shall not be audited for 2018 for the tax types covered by the availment.

  2. In case the taxpayer’s tax returns for 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.

  3. If the taxpayer’s availment has been determined to be valid, a Certificate of the Availment shall be issued and consequently, the issued Letter of Authority, Tax Verification Notice, Discrepancy Notice, Notice for Informal Conference, Preliminary Assessment Notice, Final Assessment Notice for pending cases shall be withdrawn and cancelled.


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