BIR to audit VAT returns of large taxpayers and Metro Manila filers

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MANILA - The Bureau of Internal Revenue on Thursday said it will audit the value-added tax returns of large taxpayers and those filing in Metro Manila.

The audit will begin September 19.

Commissioner Kim Jacinto-Henares told reporters that the examination aims to increase revenue collections and improve compliance among VAT-registered taxpayers.

"VAT collections have been underperforming from the start. Although we have seen collections from VAT improve, it is still deficient," Jacinto-Henares said.

Beside increasing collections, the audit is also aimed at broadening the tax base by identifying buyers and seller or suppliers who should be subject to VAT, and at provding an audit trail for transactions of VAT taxpayers.

“If they have deficiencies, we will assess them. We can also file tax evasion charges if the discrepancy and the information we gather would warrant,” Jacinto-Henares said.

VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the country and on importation of goods into the country.

Under Revenue Memorandum Orders 19 and 20-12, the bureau targets to audit Large Taxpayers and VAT-registered entities and individuals in Metro Manila revenue regions, particularly in Caloocan, Manila, Quezon City and Makati City. 

Jacinto-Henares said the bureau formed a VAT audit team composed of an audit manager and revenue officers, who will investigate this year’s first and second quarter VAT returns and every quarter thereafter.

The scheduled auditing, however, will not apply to VAT returns with tax credit/refund claims or those under audit by the Special Investigation Division and the National Investigation Division.

The following criteria apply in selecting VAT taxpayers for investigation:

- Taxpayers whose VAT compliance is below the established 2010 and 2011 industry benchmarks, whichever is available; 

- Taxpayers whose VAT returns for the succeeding quarters show substantial decrease in tax payment;

- Taxpayers whose VAT returns reflect substantial input taxes from importation 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;

- Taxpayers who are reporting/filing “No Operations” Returns; 

- Taxpayers with a history of declaring excess input tax carry over for all the quarters of 2011; 

- Taxpayers who have not submitted their Summary List of Sales or Purchases;

- Taxpayers identified to have significant under-declaration of sales as a result of the Tax Compliance Verification Drive and/or other programs of the bureau;

- Taxpayers filing exempt VAT returns due to availment of tax incentives or tax exemptions; and

- Such other taxpayers selected by the head of the VAT Audit Team subject to approval by the regional director.

For the year, the bureau targets to raise P226.185 billion from VAT, and PP575.523 billion from large taxpayers.

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