Winter of discontent for ‘small’ taxpayers
ATTY. PEACHES ARANAS
August is upon us, and, without us knowing it, the first half of the year is gone. Next month will be the start of the “ber” months, ushering in chilly mornings and windy afternoons. Nowadays, a different kind of wind is blowing, and its coming from the direction of the Bureau of Internal Revenue (BIR).
In the past weeks, we discussed Revenue Memorandum Order (RMO) No. 32-2018, dated July 6, 2018, prescribing the audit/investigation of “small” individual and non-individual taxpayers by the Assessment Divisions of the BIR Regional Offices.
Under RMO No. 32-2018, a “small” taxpayer would be considered as such, depending on the taxpayer’s gross sales/receipts, which amount varies depending on the particular BIR Revenue Region (RR) a taxpayer belongs to. With the identification of small taxpayers, the BIR shall issue electronic Letters of Authority (eLA) to cover the audit/investigation of small taxpayers for taxable year 2017. In this regard, the BIR has issued RMO No. 34-2018, which amends the threshold amounts of gross sales/receipts, as well as providing for additional policies for the issuance of eLAs:
– For those belonging to Regions 5, 6, 7 and 8and with gross sales/receipts amounting to P10,000,000 and below;
– For those belonging to Regions 1, 4, 9A, 9B, 11, 12, 13,16 and 19 and with gross sales/receipts amounting to P5,000,000 and below;
– For those belonging to Revenue District Office (RDO) No. 36 (Puerto Princesa) and with gross sales/receipts amounting to P3,000,000 and below;
– For those belonging to Regions 2, 3, 10, 14, 15, 17 and 18 and with gross sales/receipts amounting to P2,000,000 and below;
– For those belonging to RDO No. 35 (Romblon), RDO No. 37 (Occidental Mindoro), RDO No. 62 (Marinduque), and RDO No. 63 (Oriental Mindoro) and with gross sales/receipts amounting to P2,000,000 and below;
Interestingly, under RMO No. 32-2018, taxpayers belonging to RDO No. 36 (Puerto Princesa) were considered as “small” taxpayers, and were priority candidates for BIR audit, only if their gross sales/receipts amounted to P10,000,000 and below, considering that Puerto Princesa is under RR No. 6. Now, the threshold amount has been lowered to P3,000,000 and below. The lowering of the threshold amount is clearly seen as a way for the BIR to broaden its tax base by including more taxpayers under the threshold amount subject to priority BIR audit.
The same lowering of the threshold amounts was done for RDO No. 35 (Romblon), RDO No. 37 (Occidental Mindoro), RDO No. 62 (Marinduque), and RDO No. 63 (Oriental Mindoro), which all used to have threshold amounts of P5,000,000 and below.
Despite the increase in the number of taxpayers who will be subject to priority BIR audit, RMO No. 34-2018 attempts to soften the blow by noting that the eLA shall be issued only to taxpayers who have not been audited/investigated by the BIR for the last three years (or should this be considered a bane?). One eLA shall be issued to a taxpayer, which will include all internal revenue tax liabilities, except when a specific tax type had been previously examined (e.g., audit of VAT under the VAT Audit Program and claim for issuance of VAT refund/Tax Credit Certificate).
With the issuance of RMO No. 32-2018 and RMO No. 34-2018, the BIR is keen to fulfill its mandate to assess and collect all national internal revenue taxes, fees, and charges, no matter what the outcome. To the “small” taxpayers: winter is coming.
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