BIR to examine returns of large taxpayers

MANILA, Philippines - The Bureau of Internal Revenue (BIR), the government’s main revenue agency, is set to examine the value added tax (VAT) returns of large taxpayers and those in the National Capital Region (NCR).

The newly launched VAT Tax Audit Program is part of efforts to meet the agency’s goal of exceeding the VAT collection goal of P226.18 billion for the year and the BIR’s total revenue target of P1.06 trillion.

BIR Commissioner Kim Henares believes that the BIR can collect more from VAT than what the agency is getting now. “VAT has been underperforming, that has always been the observation. This year, it’s doing better but we just want to assess it,” she said.

Henares has issued Revenue Memorandum Order 19 and 20-2012 detailing the pilot areas of the VAT tax audit program for its large taxpayers and Metro Manila revenue regions such as Caloocan, Manila, Quezon City and Makati.

 “The RMOs aim to implement a quality short VAT audit to correct taxpayer errors and violations in the most recent VAT returns filed with the end in view of improving VAT compliance in the subsequent VAT returns filing and payment,” Henares said.

Under the two BIR orders, a VAT audit team composed of a VAT audit manager and revenue officers will audit and investigate the first and second quarter VAT returns of large taxpayers and NCR taxpayers and every quarter thereafter.

The audit will not cover VAT returns with tax credit and refund claims or those under audit by the Special Investigation Divisions (SIDs) and the National Investigation Division (NID).

According to the BIR, any of the following criteria will be applied in selecting VAT taxpayers for audit: taxpayers whose VAT compliance is below the established 200 and 2011 industry benchmarks; taxpayers whose VAT returns for the succeeding quarters show substantial decrease in tax payment; taxpayers whose VAT returns reflect substantial input taxes from importations and local purchases, such as when the total purchases claimed exceed 75 percent of the total sales.

Taxpayers with no VAT return filed in any quarter or all the quarters in 2011 may also be audited.