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By Atty. Kathleen Guiang on October 15,2020

The Covid-19 pandemic has not only prompted a global health emergency, but also caused severe global economic stress. In response, the government has implemented various measures and programs to manage its impact. To execute and sustain them, the government had to reallocate some funds and source loans from various financial institutions, including the Asian Development Bank and World Bank.

Meanwhile, the Bureau of Internal Revenue (BIR) plans to maximize its revenue collection while limiting contact with taxpayers by reducing the number of audit investigations and encouraging taxpayers to pay their taxes through its Voluntary Assessment and Payment Program (VAPP).

Coverage of the VAPP

On Aug. 18, 2020, the BIR issued Revenue Regulations (RR) 21-2020 on the VAPP for
taxable year (TY) 2018. These regulations apply to all internal revenue taxes covering TY ending on Dec. 31, 2018 and fiscal years ending on July 31, 2018 and June 30, 2019.

These taxes include those imposed on one-time transactions (ONETT), such as estate tax, donor’s tax and capital gains tax, as well as ONETT-related creditable withholding tax, expanded withholding tax and documentary stamp tax.

Any person, natural or juridical, who, inadvertently or not, erroneously paid his or her internal revenue tax liabilities, or failed to file tax returns or pay taxes, may avail himself or herself of the benefits under RR 21-2020. Those not covered are taxpayers who have been issued a Final Assessment Notice that have become final and executory on or before Sept. 20, 2020; persons under investigation as a result of verified information filed by a tax informer; cases involving tax fraud filed and pending in the Department of Justice or in the courts; and pending cases involving tax evasion and other criminal offenses under the Tax Code.

Qualified taxpayers can avail themselves of the program’s benefits until Dec. 31, 2020, subject to possible extension by the head of the Department of Finance.

Privilege of availing the VAPP

RR 21-2020 provides that a taxpayer with a duly issued Certificate of Availment shall not be audited for 2018 for the tax types covered by the availment. In case the taxpayer’s tax returns for the covered taxable period are being audited, that audit shall be suspended upon the availment of the VAPP and pending its evaluation.

Once the availment is determined to be valid, the certificate shall be issued, and the audit documents and assessment notices withdrawn and canceled. This is in contrast to the previous voluntary assessment program under RR 8-2001 and RR 18-2005, wherein taxpayers who availed themselves of the program were accorded the privilege of last priority in the audit and investigation.

Also, unlike in the application for tax amnesty, where the duly accomplished Tax Amnesty Return and Acceptance Payment Form must be first submitted for the endorsement or approval of the proper BIR officer before payment, the VAPP requires that payment is made before the documentary requirements are submitted to the BIR. Under RR 21-2020, the taxpayer shall signify his/her/its intention to avail himself/herself/itself of the benefits by submitting a duly accomplished application form and the payment form with proof of payment.

If there are deficiencies in the availment of RR 21-2010, including in the computation of the amount paid upfront, the taxpayer has to rectify them and/or comply with or pay the deficiencies within 10 working days from being notified by the approving official.

If the taxpayer failed to act and/or pay the required amount within that period, the application shall be denied. Hence, the taxpayer must be cautious in his/her/its application. Otherwise, the application will result in payment without getting the benefit of audit immunity.

Moreover, despite the issuance of the Certificate of Availment, meaning that the taxpayer’s application for VAPP was approved, the availment will become invalid and the taxpayer shall be subject to audit or investigation when there is strong evidence or finding of underdeclaration of sales, receipts or income or overstatement of deductions by more than 30 percent, based on a written report by a revenue official; or when there is verifiable information that the taxpayer has withheld but failed to remit withholding taxes. In these cases, the taxpayer shall be subject to an audit or investigation. Any voluntary payment may be applied against the deficiency tax due that may be assessed against the taxpayer after the audit or investigation.

The VAPP for TY 2018 is an opportunity for taxpayers to avoid the tedious process of undergoing tax audits. However, taxpayers who wish to avail themselves of the program should still carefully review and study the process and requirements, and assess whether or not applying for the VAPP would be beneficial, rather than harmful, to them.|

Contact Information

Our office address:

15/f Unit A. ACT Tower, H.V. Dela Costa St.
Salcedo Village, Makati City 1227 Philippines

Telefax: +632 831-1297

Telephone: +632 808-5375 • +632 815-0069



Euney Marie J. Mata-Perez

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