Gov’t extends tax amnesty to June 2021

Amid the prolonged COVID-19 quarantine limiting movement of people as well as slowing revenue collection due to the pandemic-induced recession, taxpayers with unsettled dues have been given until the middle of next year to avail themselves of the ongoing delinquencies amnesty as well as voluntary assessment and payment program (VAPP) for 2018 taxes.

In Revenue Regulations No. 32-2020 published on Tuesday, Finance Secretary Carlos Dominguez III and Commissioner Caesar Dulay of the Bureau of Internal Revenue (BIR) extended the deadline for the tax amnesty on delinquencies to June 30, 2021. This program was supposed to end on Dec. 31, 2020.

Under the Tax Amnesty Act of 2019, the last day of availment was originally last April 23, but the BIR already extended the deadline five times—to May 23, June 8, June 22, Dec. 31 and then the latest cut-off date —amid the pandemic.

The first-ever tax amnesty on delinquencies in the country covered all national taxes—capital gains tax, documentary stamp tax (DST), donor’s tax, excise tax, income tax, percentage tax, value-added tax (VAT) and withholding tax—for taxable years 2017 and earlier.

In the separate regulation No. 33-2020 also published on Tuesday, Dominguez and Dulay likewise prolonged the period to avail of VAPP until June 30, 2021, “unless extended further by the Secretary of Finance,” instead of the original deadline of Dec. 31 this year.

VAPP was aimed at collecting additional tax revenues that “could otherwise be collected through audit and enforcement effort,” but the BIR had difficulty doing due to the quarantine.

Under VAPP, voluntary settlement of unpaid 2018 dues will exempt taxpayers from audit and investigation.

Launched in September, VAPP allowed the BIR to collect an additional P200 million mostly from small business taxpayers as of November, the Department of Finance (DOF) said in a statement Tuesday.

“We are delighted that the VAPP has been helping our small and medium taxpayers settle their 2018 tax obligations while also generating additional revenue collection for the BIR. The same goes with the tax amnesty on delinquencies program. By further extending the two programs, we hope to help more taxpayers settle their tax deficiencies amid the pandemic,” Finance Undersecretary Antonette Tionko said.

According to the DOF, “RR 33-2020 ensures that the BIR correctly evaluates VAPP applications by requiring denials and invalidation to be supported by documents such as discrepancy notices and other third-party information documents.”

“Taxpayers whose VAPP applications are denied or whose VAPP entitlements are invalidated may likewise appeal to either the [BIR’s] assistant commissioner for large taxpayer service or the regional director,” the DOF said.

Although regulations were published on Tuesday, both were signed by Dominguez and Dulay last week, before the Bayanihan to Recover as One Act expired.

The Bayanihan 2 Law allowed further extensions of statutory deadlines given quarantine restrictions still in place.

Another BIR regulation issued by Dominguez and Dulay on Tuesday was regulation No. 34-2020, which streamlined the procedures during the submission of transfer pricing documents.

Internal Revenue Deputy Commissioner Arnel Guballa earlier told the Inquirer that the BIR estimated “substantial” tax leaks from related-party transactions, or deals and arrangements between two parties linked by preexisting business relationships or common interests.