BIR tightens rules on VAT

MANILA, Philippines – The Bureau of Internal Revenue (BIR) has tightened its rules regarding value-added tax (VAT) payments by imposing tougher penalties for taxpayers who fail to submit their so-called summary list of sales and purchases (SLSP).

The BIR issued a memorandum order that provides policies on the strict submission of SLSP.

In the order, BIR Commissioner Sixto Esquivias said that those who fail to submit the list may be held criminally liable.

The so-called SLSP contains information on the suppliers of a taxpayer as well as parties to whom a particular service is rendered.

Esquivias said that only less than 30 percent of registered VAT taxpayers who are required to submit the so-called SLSP have actually complied and submitted the information to the BIR.

He said the BIR was unable to double-check an increasingly large volume of taxable sales and purchases because some VAT taxpayers fail to submit the SLSP and just simply pay a very modest amount of compromise penalty.

“The foregone revenues resulting from this practice is incalculable and would have reduced the tax agency’s collection shortfalls in recent years,” Esquivias said.

According to the order issued by Esquivias, every time a taxpayer fails to submit the required SLSP in the prescribed format for a particular period or submits erroneous or incomplete information in the list, it shall be considered grounds for the issuance of a Subpoena Duces Tecum (SDT).

In terms of penalties, the memorandum order imposes a higher amount of compromise penalty of P10,000 from the previous amount of P1,000 for failure of VAT taxpayers to submit the SLSP wherein they declare their taxable sales and purchases for prescribed periods.

Should the taxpayer continue to fail to submit the required SLSP despite the issuance of a subpoena, the BIR said this would be tantamount to failure to supply correct and accurate information under Section 255 of the National Internal Revenue Code (Code). For this violation, the taxpayer will be prosecuted and upon conviction shall be punished by a fine of not less than P10,000 and suffer imprisonment of not less than one year but not more than ten years.

For corporations, the responsible corporate officers, partners or employees shall, upon conviction for each act or omission penalized by the Code be punished by a fine of not less than P50,000 but not more than P100,000.

“The practice of foregoing the submission of the SLSP is becoming widespread and may be an indication of tax evasion,” Esquivias said.