COA questions Pilar's failure to deduct VAT

CEBU, Philippines - Based on the findings and observation rendered by the Commission on Audit involving the transactions of the town, the municipality of Pilar failed to deduct VAT in the amount of P77,958.78 from its payments to suppliers in the total amount of P1,359,387. 10. COA said this has deprived the government of additional income that maybe used to finance their various projects.

State auditors pointed out that the town has violated Section 4 of the Bureau of Internal Revenue (BIR) Regulation No. 10-93 dated June 16, 1993 which provides that local government units represented by their respective provincial, city, municipal and barangay treasurers or any person holding a similar position and performing similar functions “shall deduct and withhold the prescribed creditable value-added tax before making any payment to seller of goods and services.”

In the post audit of transactions from January to December, the State auditors noted that no VAT was deducted from the payments made by the municipality for diesel, fuel, gasoline and catering services totaling the amount of P1, 359, 387.10.

“As a result, the government was deprived of the additional income from the VAT, that could have been used to finance its various projects,” the report read.

The state auditors called the attention of the municipal accountant over his failure to deduct the VAT. COA also took note of municipal accountant’s reason that they did not deduct VAT from the suppliers who are not registered with the BIR.

This has prompted COA to direct the Municipal Accountant to withhold all creditable taxes upon payment of goods and services to the suppliers in order to assure additional income for the government. (FREEMAN)