One of the taxes that most taxpayers will plot in their compliance calendars this year is the value-added tax. VAT is a consumption tax levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines.
Previously, all VAT-registered taxpayers were required to file VAT declarations during the first two months of the quarter and a VAT return that reports quarter-to-date VAT information. However, on Jan. 13, the Bureau of Internal Revenue (BIR) released Revenue Memorandum Circular (RMC) 05-2023 which provides the transitory provisions for the implementation of the quarterly filing of VAT returns starting Jan. 1 pursuant to Section 114(A) of the National Internal Revenue Code (NIRC) of 1997 (Tax Code), as amended by Republic Act (RA) 10963 (TRAIN Law). The said RMC provides that for transactions beginning Jan. 1, VAT-registered taxpayers will no longer be required to file the monthly VAT declaration (BIR Form 2550M) but will instead file the corresponding quarterly VAT return (BIR Form 2550Q), within 25 days following the end of each taxable quarter when the transaction transpired.
Taxpayers will be the most affected by the issuance. In particular, it may be difficult for them to prepare the VAT return covering transactions for the whole quarter only on the third month of the quarter. As such, it is advisable if taxpayers plan ahead on the best approach for their VAT filing and on how their compliance activities would adjust with the said change. For instance, taxpayers may opt to continue their current practice of collating relevant documents and determining which transactions would be subject to VAT on a monthly basis to manage resources and timelines. On the other hand, this issuance also provides some ease to taxpayers as there would be no more monthly filings. Further, this may reduce the risk of incurring penalties on late filings.
From this, we can glean that taxpayers need to be well-informed of the developments in tax legislation. If the taxpayers are not informed about the new changes to the filing and payment of VAT returns, they may violate provisions or make unnecessary payments.
Thus, we strongly encourage taxpayers to educate themselves by attending the free webinars conducted by the BIR and by monitoring the BIR issuances relevant to them. It is best to be informed and prepared beforehand rather than incur losses in the end.
Paul Joseph S. Abenojar is an analyst from the tax group of KPMG in the Philippines (R.G. Manabat & Co.), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in transfer pricing practice and in general corporate tax practice by the International Tax Review. For more information, you may reach out to tax analyst Paul Joseph S. Abenojar or tax partner Leandro Ben M. Robediso through ph-kpmgmla@kpmg.com, social media or visit www.home.kpmg/ph.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.