REVENUE REGULATIONS NO. 12-99 issued September 14, 1999 shall become final, executory and demandable.
cutory and demandable. The taxpayer shall
implements the provisions of the Tax Code of 1997 relative to the rules
on assessment of national internal revenue taxes, fees and charges,
as well as provides the rules for the extra-judicial settlement of a
taxpayer's criminal violation of the said Code or any of its
implementing Regulations through payment of a suggested
compromise penalty. As a general principle, in case the tax due from
the taxpayer is paid on a partial or installment basis, the interest on
the deficiency tax or on the delinquency tax liability of the taxpayer will
be imposed from due date of the tax until full payment thereof. The
interest will be computed based on the diminishing balance of the tax,
inclusive of interests.
REVENUE REGULATIONS NO. 18-2013 issued on November 28,
2013 amends certain sections of Revenue Regulations (RR) No. 12-
99 relative to the due process requirement in the issuance of a
deficiency tax assessment.
Section 3 of RR No. 12-99 was amended by deleting Section 3.1.1
thereof, which provides for the preparation of a Notice of Informal
Conference, thereby renumbering other provisions thereof, and
prescribing other provisions for the assessment of tax liabilities.
If after review and evaluation by the Commissioner or his duly
authorized representative, as the case may be, it is determined that
there exists sufficient basis to assess the taxpayer for any deficiency
tax or taxes, the said office shall issue to the taxpayer a Preliminary
Assessment Notice (PAN) for the proposed assessment. It shall show
in detail the facts and the law, rules and regulations, or jurisprudence
on which the proposed assessment is based.
If the taxpayer fails to respond within 15 days from date of receipt of
the PAN, he shall be considered in default, in which case, a Formal
Letter of Demand and Final Assessment Notice (FLD/FAN) shall be
issued calling for payment of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties.
If the taxpayer, within 15 days from date of receipt of the PAN,
responds that he/it disagrees with the findings of deficiency tax or
taxes, an FLD/FAN shall be issued within 15 days from
filing/submission of the taxpayer’s response, calling for payment of the
taxpayer's deficiency tax liability, inclusive of the applicable penalties.
Pursuant to Section 228 of the Tax Code, as amended, a PAN shall
not be required in any of the following cases:
a. When the finding for any deficiency tax is the result of mathematical
error in the computation of the tax appearing on the face of the tax
return filed by the taxpayer; or
b. When a discrepancy has been determined between the tax withheld
and the amount
actually remitted by the withholding agent; or
c. When a taxpayer who opted to claim a refund or tax credit of excess
creditable
withholding tax for a taxable period was determined to have carried
over and automatically applied the same amount claimed against the
estimated tax liabilities for the taxable quarter or quarters of the
succeeding taxable year; or
d. When the Excise Tax due on excisable articles has not been paid;
or
e. When an article locally purchased or imported by an exempt
person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold,
traded or transferred to non-exempt persons.
In the above-cited cases, a FLD/FAN shall be issued outright by the
Commissioner or
his duly authorized representative. The FLD/FAN calling for payment
of the taxpayer's deficiency tax or taxes shall state the facts, the law,
rules and regulations, or jurisprudence on which the assessment is
based; otherwise, the assessment shall be void.
The taxpayer or its authorized representative or tax agent may protest
administratively against the aforesaid FLD/FAN within 30 days from
date of receipt thereof. The taxpayer protesting an assessment may
file a written request for reconsideration or reinvestigation, which was
defined in the Regulations.
The taxpayer shall state in his protest (i) the nature of protest, whether
reconsideration or reinvestigation, specifying newly discovered or
additional evidence he intends to present if it is a request for
reinvestigation; (ii) date of the assessment notice; and (iii) the
applicable law, rules and regulations, or jurisprudence on which his
protest is based; otherwise, his protest shall be considered void and
without force and effect.
If there are several issues involved in the FLD/FAN but the taxpayer
only disputes or protests against the validity of some of the issues
raised, the assessment attributable to the undisputed issue or issues
then be required to pay the deficiency tax or taxes attributable thereto,
in which case, a collection letter shall be issued to the taxpayer calling
for payment of the said deficiency tax or taxes, inclusive of the
applicable surcharge and/or interest.
If there are several issues involved in the disputed assessment and
the taxpayer fails to state the facts, the applicable law, rules and
regulations, or jurisprudence in support of his protest against some of
the several issues on which the assessment is based, the same shall
be considered undisputed issue or issues, in which case, the
assessment attributable thereto shall become final, executory and
demandable. The taxpayer shall then be required to pay the
deficiency tax or taxes attributable thereto and a collection letter shall
be issued to the taxpayer calling for payment of the said deficiency
tax, inclusive of the applicable surcharge and/or interest.
For requests for reinvestigation, the taxpayer shall submit all relevant
supporting documents in support of his protest within 60 days from
date of filing of his letter of protest, otherwise, the assessment shall
become final. The 60-day period for the submission of all relevant
supporting documents shall not apply to requests for reconsideration.
The term “the assessment shall become final” shall mean the taxpayer
is barred from disputing the correctness of the issued assessment by
introduction of newly discovered or additional evidence, and the
FDDA shall consequently be denied.
If the taxpayer fails to file a valid protest against the FLD/FAN within
30 days from date of receipt thereof, the assessment shall become
final, executory and demandable. No request for reconsideration or
reinvestigation shall be granted on tax assessments that have already
become final, executory and demandable.
If the protest is denied, in whole or in part, by the Commissioner’s duly
authorized representative, the taxpayer may either: (i) appeal to the
Court of Tax Appeals (CTA) within 30 days from date of receipt of the
said decision; or (ii) elevate his protest through request for
reconsideration to the Commissioner within 30 days from date of
receipt of the said decision. No request for reinvestigation shall be
allowed in administrative appeal and only issues raised in the decision
of the Commissioner’s duly authorized representative shall be
entertained by the Commissioner.
If the protest is not acted upon by the Commissioner’s duly authorized
representative within 180 days counted from the date of filing of the
protest in case of a request reconsideration; or from date of
submission by the taxpayer of the required documents within 60 days
from the date of filing of the protest in case of a request for
reinvestigation, the taxpayer may either: (i) appeal to the CTA within
30 days after the expiration of the 180-day period; or (ii) await the final
decision of the Commissioner’s duly authorized representative
on the disputed assessment.
If the protest or administrative appeal, as the case may be, is denied,
in whole or in part, by the Commissioner, the taxpayer may appeal to
the CTA within 30 days from date of receipt of the said decision.
Otherwise, the assessment shall become final, executory and
demandable. A motion for reconsideration of the Commissioner’s
denial of the protest or administrative appeal, as the case may be,
shall not toll the 30-day period to appeal to the CTA.
If the protest or administrative appeal is not acted upon by the
Commissioner within 180 days counted from the date of filing of the
protest, the taxpayer may either: (i) appeal to the CTA within 30 days
from after the expiration of the 180-day period; or (ii) await the final
decision of the Commissioner on the disputed assessment and appeal
such final decision to the CTA 30 days after the receipt of a copy of
such decision.
It must be emphasized, however, that in case of inaction on protested
assessment within the 180-day period, the option of the taxpayer to
either: (1) file a petition for review with the CTA within 30 days after
the expiration of the 180-day period; or (2) await the final decision of
the Commissioner or his duly authorized representative on the
disputed assessment and appeal such final decision to the CTA within
30 days after the receipt of a copy of such decision, are mutually
exclusive and the resort to one bars the application of the other.
The decision of the Commissioner or his duly authorized
representative shall state the (i) facts, the applicable law, rules and
regulations, or jurisprudence on which such decision is based;
otherwise, the decision shall be void, and (ii) that the same is his final
decision.
The notice (PAN/FLD/FAN/FDDA) to the taxpayer herein required
may be served by the Commissioner or his duly authorized
representative through several modes specified in the Regulations.
Section 5 of RR No. 12-99 was amended by modifying Section 5.5
thereof which provides for modes of procedures in computing for the
tax and/or applicable surcharge. In cases of late payment of a
deficiency tax assessed, the taxpayer shall be liable for the
delinquency interest provided under Section 249 (C)(3) of the 1997
National Internal Revenue Code, as amended. Section 5.5 of RR No.
12-99 shall now read as follows:
“5.5 Late payment of a deficiency tax assessed. – In general, the
deficiency tax assessed shall be paid by the taxpayer within the time
prescribed in the notice and demand, otherwise, such taxpayer shall
be liable for the delinquency interest incident to late payment.”
REVENUE REGULATIONS NO. 11-2014 issued on December 22,
2014 amends further provisions of Section 2.57.2 of Revenue
Regulations (RR) No. 2-98, as amended, creating a separate sub-
section for the withholding of creditable Income Tax on Real Estate
Investment Trust (REIT) and reclassifying the treatment of locally-
produced raw sugar as a separate sub- section for purposes of the
creditable withholding tax.
The pertinent provisions of Section 2.57.2 of RR No. 2-98, as
amended, are further amended to read as follows:
“ Sec. 2.57.2. Income payment subject to creditable withholding tax
and rates prescribed thereon. – Except as herein otherwise provided,
there shall be withheld a creditable income tax at the rates herein
specified for each class of payee from the following items of income
payments to persons residing in the Philippines:
xxx xxx xxx
(M) Income payment made by the top twenty thousand (20,000)
private corporations to their local/resident supplier of goods and
local/resident supplier of services other than those covered by other
rates of withholding tax. - Income payments made by any of the top
twenty thousand (20,000) private corporations, as determined by the
Commissioner, xxx. For this purpose, an agricultural product in their
original state as used in these Regulations, shall only include corn,
coconut, copra, palay, rice, cassava, coffee, fruit, vegetable, marine
food product, poultry and livestock.
xxx xxx xxx
(S) Income payments made to suppliers of agricultural products. –
Income payments made to agricultural suppliers such as, but not
limited to, payments made by hotels, restaurants, resorts, caterers,
food processors, canneries, supermarkets, livestock, poultry, fish and
marine product dealers, hardwares, factories, furniture shops and all
other establishments, in excess of the cumulative amount of Three
Hundred Thousand Pesos (P300,000.00) within the same taxable
year. - One percent (1%);
The term “agricultural suppliers” refers to suppliers/sellers of
agricultural, forest and marine food and non-food products, livestock
and poultry of a kind generally used as, or yielding or producing foods
for human consumption, and breeding stock and genetic materials
therefor. “Livestock” shall include cow, bull and calf, pig, sheep, goat
and other animals similar thereto. “Poultry” shall include fowl, duck,
goose, turkey and other animals similar thereto. “Marine product” shall
include fish and crustacean such as, but not limited to, eel, trout,
lobster, shrimp, prawn, oyster, mussel and clam, shell and other
aquatic products.
Meat, fruit, fish, vegetable and other agricultural and marine food
products, even if they have undergone the simple processes of
preparation or preservation for the market, such as freezing, drying,
salting, smoking or stripping, including those using advanced
technological means of packaging, such as shrink wrapping in
plastics, vacuum packing, tetra-pack and other similar packaging
method, shall still be covered by this subsection.
An agricultural food product shall include, but shall not be limited to
the following: corn, coconut, copra, palay, cassava, coffee, etc.
Polished and/or husked rice, corn grits and ordinary salt shall be
considered as agricultural food products.
xxx xxx xxx
(W) Income payments made by the top five thousand (5,000)
individual taxpayers to their local/resident suppliers of goods and
local/resident suppliers of services other than those already covered
by other rates of withholding tax. - Income payments made by the top
5,000 individual taxpayers engaged in trade or business in the
Philippines, as determined by the Commissioner xxx For this purpose,
agricultural products in their original state as used in these
Regulations, shall include only corn, coconut, copra, palay, rice,
cassava, coffee, fruit, vegetable, marine food product, poultry and
livestock.
xxx xxx xxx
(Z) Income payments to Real Estate Investment Trust (REIT). –
Income payments made to corporate taxpayers duly registered with
the Large Taxpayers Regular Audit Division 3 (now Regular LT Audit
Division 3) of the Bureau of Internal Revenue, as REITs for purposes
of availing the incentive provisions of Republic Act No. 9856,
otherwise known as “The Real Estate Investment Trust Act of 2009”,
as implemented by RR No. 13-2011. – One percent (1%);
(AA) Income payments on locally produced raw sugar. – Proprietors
or operators of sugar mills/refineries on their mill share, and direct
buyers of Quedans or Molasses Storage Certificates from the sugar
planters on locally produced raw sugar and molasses shall withhold
the creditable income tax and remit the same to the BIR based on the
applicable base price of ONE THOUSAND PESOS (P1,000.00) per
FIFTY (50) kilogram (kg.) bag and FOUR THOUSAND PESOS
(P4,000.00) per metric ton, respectively, subject, however, to
adjustment, when deemed necessary by the Commissioner, upon
consultation with the Administrator of the SRA. – One percent (1%).
The Regional Director, through the recommendation of the Revenue
District Officer, which has jurisdiction over the physical location of the
sugar mills/refineries, shall issue the Authorization Allowing the
Release of Locally Produced Raw Sugar/Molasses (Annexes “A” or
“B”, as applicable) to the proprietors or operators, for purposes of
allowing the transfer/withdrawal of their mill share, or to the buyers of
Quedans or Molasses Storage Certificates on the locally produced
raw sugar, or molasses, for further processing into a refined sugar,
consumption or other purposes: Provided, however, That, copies of
proofs of payment of the creditable withholding tax due thereon (i.e.,
duly validated Monthly Remittance Return of Creditable Income Taxes
Withheld (Expanded) [BIR Form No. 1601-E] and Bank
Payment/Deposit Slip/Revenue Official
Receipt [BIR Form No. 2524]) shall have been submitted and attached
to the written request for said authorization.
Provided, finally, That, notwithstanding the presentation of proof of
exemption from the payment of income tax (e.g., BIR ruling, special
law, etc.), the concerned proprietor, or operator of the sugar
mill/refinery, or any buyer of Quedan or Molasses Storage Certificate
is still required to withhold and remit the creditable withholding tax.”
These Regulations shall take effect on January 1, 2015 following
publication in a newspaper of general circulation. The suspension of
the implementation of withholding tax on income payments made on
suppliers of agricultural products under Section 2.57.2 (S) of RR No.
2-98, as amended, as prescribed under RR No. 3-2004, is lifted
insofar as locally-produced raw sugar is concerned.
REVENUE REGULATIONS NO. 9-2013 issued on May 10, 2013
amends certain provisions of Revenue Regulations No. 30-2002
relative to the payment of the amount offered as compromise
settlement pursuant to Section 204 of the Tax Code, as amended.
Section 6 of Revenue Regulations No. 30-2002 shall now read as
follows:
“SEC. 6. APPROVAL OF OFFER OF COMPROMISE. - Except for
offers of compromise where the approval is delegated to the REB
pursuant to the succeeding paragraph, all compromise settlements
within the jurisdiction of the National Office (NO) shall be approved by
a majority of all the members of the NEB composed of the
Commissioner and the four (4) Deputy Commissioners. All decisions
of the NEB, granting the request of the taxpayer or favorable to the
taxpayer, shall have the concurrence of the Commissioner.
xxx xxx xxx
The compromise offer shall be paid by the taxpayer upon filing of the
application for compromise settlement. No application for compromise
settlement shall be processed without the full settlement of the offered
amount. In case of disapproval of the application for compromise
settlement, the amount paid upon filing of the aforesaid application
shall be deducted from the total outstanding tax liabilities.
xxx xxx xxx”