Taxpayers who want to avail of the government’s tax amnesty program due to their failure to properly declare their sales and income may do so, the Bureau of Internal Revenue (BIR) said over the weekend.
The BIR, however, said that these delinquent taxpayers may only do so provided that their so-called under-declared sales shall be treated as under-declared assets.
The BIR started implementing its tax amnesty program last September 6, through the Tax Amnesty Law of 2007.
The program immunes a qualified taxpayer from any law suits involving deficient tax payments covering the period 2005 and prior years if he or she pays the tax amnesty fee.
Under the law, delinquent taxpayers have six months or until March next year to avail of tax amnesty from the BIR.
For those who failed to properly declare their sales and income, the BIR said that the higher amount of gross sales or revenue receipt in the table of discrepancies shall be added to any income in the taxpayer’s networth.
In the cease of discrepancy on taxes withheld claimed by the payee, this will not be covered by the tax amnesty for it represents unpaid self-assessed tax, the BIR said.
Discrepancy discovered under the module “agent reconciliation” is not covered by the tax amnesty as it represents error in withholding tax computation and remittance, the BIR added.
Furthermore, Internal Revenue Commissioner Lilian Hefti issued Revenue Memorandum Circular 77-2007 to clarify certain issues relative to discrepancies on sales and purchases.
Since both discrepancies on sales and purchases result in under-declaration of networth, the base amount shall be added to any increase in the networth, the BIR explained.
Hence, five percent of the base amount or the prescribed minimum absolute amount or whichever is higher shall be the tax amnesty payment.
Moreover, the over-declaration of purchases has no effect on the taxable gross receipts subject to value added tax (VAT) but has effect on the VAT payable as the taxpayer has over-declared the input tax claimed.
For gross income for income tax purposes, the over-declaration of purchases results to over-declaration of cost of sales, thereby under-declaring the income by same amount.
For cases where taxpayer received two kinds of Letters of Notice, the basis of the tax amnesty amount shall be that letter which shows a higher increase in assets or networth.
Hefti has been appealing to taxpayers, individual and corporate, to avail of the amnesty program amid efforts of the BIR to make a strong recovery for the remainder of the year.
The BIR is tasked to collect P765 billion this year and it expects to raise P4 billion to P6 billion from the tax amnesty program.
Under the law, the tax amnesty rate is five percent of a taxpayer’s net worth or a fee ranging from P25,000 to P500,000 depending on the net worth.
The BIR, the government’s main revenue earner is under heavy pressure to raise revenues to help boost state coffers.