PRESCRIBING THE GUIDELINES AND PROCEDURES IN THE IMPLEMENTATION OF THE VOLUNTARY ASSESSMENT AND ABATEMENT PROGRAM (VAAP) PURSUANT TO THE PROVISIONS OF REVENUE REGULATIONS NO. 12…

1.1  Prescribe
uniform rules for the availment of VAAP and the processes involved in
the handling of VAAP applications pursuant to the provisions of Revenue
Regulations No. 12-2002;

1.2  Prescribe the documentary requirements and information that must be submitted by taxpayers who would avail of VAAP; and

1.3  Define
the roles and responsibilities of Offices involved in the processing,
review, and monitoring of taxpayers who have availed of VAAP.

SECTION 2.       General Policies. —

2.1  Persons Covered.
— Any person, natural or juridical, who has underreported his/its
sales/receipts/income or taxable base subject to income tax under Title
II, value-added tax under Title IV, and excise tax under Title VI of the
National Internal Revenue Code of 1997 (Tax Code).

2.2  Taxes Covered.
— VAT, income tax, and excise tax, resulting from the underdeclared
sales/receipts/income/taxable base, covered by appropriate revenue
regulations at the time of taxpayer’s availment.  The
VAAP availment shall include the payment of VAT, income tax, and excise
tax due from the sales underdeclaration which taxes/amounts payable
shall be computed in accordance with Annex “A” hereof.

2.3       Taxable Periods Covered. —

2.3.1 Income Tax.
— (a) Calendar years 2000 and 2001; (b) Fiscal years 2000 and 2001
except FY ending the month of June 2002 (although considered part of FY
2001 ).  Taxpayers with fiscal year ending the
month of June 2002 are not covered by the Program because the deadline
for the filing of their income tax returns is on October 15, 2002 and
therefore, many might not have filed yet their original income tax
returns upon the effectivity of Revenue Regulations No. 12-2002.

2.3.2 Value Added Tax. — (a) Calendar Year 2000; (b) Calendar Year 2001; and (c) First Calendar Semester of Year 2002

2.3.3 Excise Tax. — (a) Calendar Year 2000; (b) Calendar Year 2001; and (c) First Calendar Semester of Year 2002.

2.4       Exception from the VAAP Coverage. —

2.4.1 Those
taxpayers subjected to regular audit/investigation covering the taxable
years covered by VAAP (i.e., 2000, 2001, etc.) who have been issued
Final Assessment Notice (FAN) on or before September 16, 2002 in respect
to the taxes covered.

2.4.2 Persons
under investigation as a result of a verified information filed by a
Tax Informer under Section 282 of the Tax Code of 1997, duly processed
and recorded in the Official Registry Book on or before September 16,
2002.

2.5  Types of VAAP Availment.
— The type of VAAP availment shall depend on the discrepancy discovered
by the BIR through its RELIEF Program and other processes.

2.5.1 Taxpayers who have been sent Letter Notice (LN) by the BIR shall be advised of the following, where applicable:

2.5.1.1 Years/periods with noted discrepancy as of the date of LN;

2.5.1.2 Years/periods without noted discrepancy yet as of the date of LN.

Example. — Mr. A was sent an LN by the BIR.  The LN states that for Year 2001, it was discovered that Mr. A underdeclared his sales by P20,000,000.  In
the LN, he was advised to avail of VAAP not only for Year 2001 but also
for Years 2000 and first two (2) calendar quarters of 2002.

In the said LN, Year 2001 is the
year with noted discrepancy, whereas Year 2000 as well as first semester
of 2002 are, respectively, the periods with no noted discrepancy yet.

2.5.2 Taxpayers
who have not received LN from the BIR but would nevertheless want to
voluntarily disclose their underdeclared sales/income/taxable base
through VAAP for the years covered by the Program.

2.6       Forms to be Accomplished for VAAP Availment. —

2.6.1 Voluntary Assessment and Abatement Program — Payment Form (VAAP-PF) — VAAP-PF shall be accomplished in four (4) copies.  This form shall be used for payment of the amount of taxes required to be paid under the Program.

2.6.2 Voluntary Assessment and Abatement Program — Application Form (VAAP-AF) — VAAP-AF shall be accomplished in triplicate copies.  This
form shall be used to disclose the total adjusted sales/taxable base
after considering the amount of underdeclared sales/taxable base
voluntarily disclosed, the amount of discrepancy discovered by the BIR
as stated in the LN, if any, and the sales/transactions declared per
original returns filed.  It shall likewise show
the deductions/credits claimed to arrive at the taxable base on which
the appropriate tax rate is applied to determine the adjusted tax due,
basic tax as defined in RR No. 12-2002 as well as the VAAP amount
required to be paid under the Program.

2.6.3 Manner of Accomplishing the Forms. —

2.6.3.1 Per tax type and taxable period basis. — VAAP-PF and VAAP-AF shall be accomplished on a per tax type and taxable period basis.  Thus,
if the VAAP availment covers two (2) types of taxes, there shall be two
(2) sets of VAAP-PF and VAAP–AF to be accomplished corresponding to the
tax types and taxable periods covered by the availment except when
additional VAAP payments require the accomplishment of another set of
VAAP-PF to cover the additional payments to be made.  In short, one VAAP-PF with corresponding VAAP-AF covers one tax type for one taxable period as enunciated in this RMO.

2.6.3.2 Taxable Periods Per VAAP Availment.
— VAAP availment for income tax shall be on a yearly basis. VAAP
availment for VAT and excise tax shall likewise be on a yearly rather
than on a quarterly basis for Years covering 2000 and 2001.  However,
for VAAP availment on VAT and excise tax covering the period January
2002 to June 2002, the VAAP availment shall be the cumulative total of
the two (2) quarters.

Example:

		YEAR	VAAP-AF	VAAP-PF
	Year 2000
		VAT	1	1
		Income Tax	1	1
		Excise Tax	1	1
Year 2001
		VAT	1	1
		Income Tax	1	1
		Excise Tax	1	1
Year 2002 (up to June 2002)
		VAT	1	1
		Excise Tax	1	1
		Total	8	8
			=	=

2.7       Effect of VAAP Availment.
— The following shall be the effects of VAAP availment subject to
Section 8 of Revenue Regulations No. 12-2002 and Section 2.9 of this
Order.

2.7.1 Abatement
or cancellation of penalties that would otherwise be imposed to the
taxpayer with respect to the applicable taxes due from the underdeclared
sales disclosed, which penalties include the imposition of the 50%
surcharge, 20% interest per annum and compromise penalties;

2.7.2 Taxpayer shall not be subjected to criminal penalties;

2.7.3 Taxpayer
shall not be subjected to the administrative penalty of closure of
business establishment for underdeclaration of at least 30%; and

2.7.4 Taxpayer
shall be entitled to the privilege of last priority in audit but the
BIR shall continue in gathering third party information from external as
well as its internal records.

Nothing precludes the BIR from
checking with available sources of information the correctness of the
tax base used by the taxpayer in his VAAP availment in respect to the
taxable periods where no returns have been previously filed.

2.8       Disposition of Current Audit Cases. —

2.8.1 Upon
payment of the VAAP amounts prescribed above, the audit case shall be
suspended and the docket thereof including the VAAP-AF and VAAP-PF shall
be transmitted to the Technical Working Group-Final Validation of
Discrepancy (TWG-FVD) for evaluation.

2.8.2 All
audit cases (i.e., with Letters of Authority issued) initiated as a
result of the discrepancies uncovered by RELIEF, whether such
investigation is still on-going or has already been concluded, shall be
transmitted to the Technical Working Group-Initial Validation of
Discrepancy (TWG-IVD) for evaluation and preparation of Letter Notice
embodying the RELIEF findings as well as the findings of the RDO/BIR
Office that is conducting the audit of the taxpayer’s records and tax
liabilities.

2.9       Consequence of Incorrect Disclosure.
— The abatement or cancellation of penalties is predicated and
conditioned on the taxpayer’s full, complete, correct, accurate and
honest disclosure of his sales/receipts/income/taxable base as well as
the payment of correct amount of taxes due thereon.  Accordingly, the following rules shall apply:

2.9.1 Notwithstanding
taxpayer’s availment of VAAP and payment of the amount required under
the Program, such availment and the payments made thereon shall be null
and void and the entire underdeclaration shall be subjected to the full
force of the law ( i.e., criminal prosecution, closure of business
establishment, tax audit, provided, approved by the Commissioner) in any
of the following cases:

2.9.1.1             The
Bureau discovers additional sales/revenues/taxable amounts which have
not been disclosed in the VAAP-AF submitted which exceed the amount
voluntarily disclosed by 10% or P1,000,000, whichever is lower.

Example. — Mr. X availed of VAAP for the calendar year 2000 despite not having received any LN from the BIR.

In his VAAP-AF, he declared a total adjusted sales amounting to P70,000,000 consisting of the following:

Sales per Y2000 ITR/VAT Returns                 P50,000,000

Additional Sales per Voluntary Disclosure        20,000,000

Total Adjusted Sales                                       P70,000,000

                                                                        ==========

He paid the corresponding VAAP amounts due on VAT and income using the VAAP-PF.

Subsequently, however, the BIR discovered the following:

Additional Sales per Voluntary Disclosure as indicated in VAAP-AF	P20,000,000
Additional Sales Not Included in VAAP-AF	P40,000,000
(a)        Percentage of Incorrect Disclosure. —
(P40,000,000/P20,000,000) =            200%
========

(b)        Threshold
Amount for Nullity of VAAP. — Additional sales/revenues/taxable amounts
discovered exceed 10% of amount voluntarily disclosed or P1,000,000,
whichever is lower.

In this case, since the P40,000,000
additional sales discovered is 200% of the additional sales voluntarily
disclosed in the VAAP-AF or more than P1,000,000, the VAAP amounts paid
by the taxpayer under the Program shall be considered null and void and
the appropriate enforcement action shall be instituted.  The
maximum penalties shall be applied to the taxpayer’s tax liabilities
including the amount of sales/receipts/income for which VAAP was
availed, less the VAAP amounts and taxes previously paid.  Additional
sanctions and penalties may still be imposed depending upon the gravity
and degree of the discovered underdeclarations.

2.9.1.2 The
BIR discovers overstatement in purchases/costs/deductions/credits by
more than 10% of what has been disclosed in the VAAP-AF or 1,000,000,
whichever is lower.

2.9.2 If the
additional sales/revenue/taxable base underdeclaration subsequently
discovered by the BIR is less than 10% of what has been previously
disclosed in the VAAP-AF submitted or P1,000,000, whichever is lower,
the VAAP availment shall remain valid, provided that payment of
additional VAAP amounts computed in accordance with Sections 5 and 6 of
RR No. 12-2002 as illustrated in Annex “A” hereof shall be made on the
additional discrepancy discovered.

2.10    Computation
of VAAP. — The computation of the VAAP amounts to be paid shall be made
in accordance with Sections 5 and 6 of Revenue Regulations No. 12-2002.
A more detailed discussion on how to arrive at the VAAP amounts is
properly illustrated in Annex “A” of this Order.

(Note: Tax deduction
and credit claimed as applicable to sales discrepancy per LN and/or on
sales voluntarily disclosed shall be subject to the submission of soft
copy of schedule of purchases.)

2.11    Offices
Responsible. — The Offices identified in Annex “B”^[1] of this Order
shall be responsible in ensuring the proper implementation of the
Program.

SECTION 3.       Conditions and Deadlines of VAAP Availment. —

3.1       For Taxpayers Who Have Been Sent LN By The BIR. —

3.1.1 Payment
on or before the deadline prescribed in the Letter Notice of the
minimum amounts payable for VAT, income tax, excise tax, if applicable,
etc., for the taxable year or years/periods with noted discrepancy (see
Section 2.5.1.1) at the following rates stated below which shall be
applied on the under-reported sales stated in the LN, using the
VAAP-Payment Form (VAAP-PF):

3.1.1.1 VAT — 3% (for sale of goods) or 6% (for sale of services);

3.1.1.2 Income tax — 2% ; and

3.1.1.3 Excise tax — 2%.

3.1.2 Submission
of VAAP-Application Form (VAAP-AF) on or before the deadline prescribed
in the LN for the year/period with noted discrepancy for VAT, income
tax, excise tax, if applicable, etc.; and

3.1.3 Payment
on or before the date prescribed in the LN of (A) the balance, if any,
110% of basic tax due on total adjusted sales/income/taxable base for
VAT, income tax, excise tax, if any, for taxable year/period with noted
discrepancy if the same is bigger than the minimum payment required for
under-declared sales/revenue/taxable base discovered (see Section
2.5.1.1); and (B) 110 % of basic tax due on total adjusted
sales/income/revenue/taxable base for VAT, income tax, excise tax, if
any, etc., for the other taxable years covered by the Program (see
Section 2.5.1.2).

3.2  For Taxpayers Who Have Not Been Sent LN By The BIR. — Submission on or before November 15, 2002 of the following:

3.2.1 VAAP-AF for each type of tax and taxable period intended to be covered by the availment;

3.2.2 Payment
of VAAP amount (i.e., 110% of basic tax due) of the particular taxes
and taxable periods intended to be covered by the availment, using
VAAP-PF.

SECTION 4.       Processing of VAAP. —

4.1       Data Gathering, Processing and Matching of Gathered Information. —

4.1.1 The
TWG-IVD, under the supervision of the VAT-Project Coordinating Committee
(VAT-PCC), gets from the concerned office (e.g., Large Taxpayers
Service, through the LT-DPQAD or Systems Operations Division), the
summary of sales/purchases filed by taxpayers pursuant to Revenue
Regulations No. 13-97 as amended by Revenue Regulations 7-99 and as
further amended by Revenue Regulations No. 8-2002.

4.1.2 The
RELIEF System consolidates purchases by one or several taxpayers (i.e.
Buyers) from a particular supplier (i.e., the “Seller”) and matches this
against the sales data of Seller;

4.1.3 TWG-IVD
requests from concerned RDOs/BIR offices certified true copies of VAT
returns, income tax returns, excise tax returns/payment forms of Sellers
falling under their respective jurisdiction.

4.1.4 Upon
receipt of certified true copies of returns from the RDOs/concerned BIR
office, TWG-IVD then transmits initial discrepancy reports together with
tax returns to the TWG-FVD for review and validation.

4.2       Validation of Discrepancy Reports and Issuance of LNs. —

4.2.1 TWG-FVD then reviews and validates initial discrepancy reports against the tax returns filed.  The validated discrepancy reports shall subsequently be transmitted back to the TWG-IVD for the preparation of the LN.

4.2.2 TWG-IVD
prepares LNs for the signature of the Commissioner of Internal Revenue
(CIR). Letter Notices must be numbered in order to serve as reference in
checking the actions undertaken by the RDOs/concerned BIR offices and
must be encoded into the Tracking System developed by TWG-ISG using the
file format prescribed for control and monitoring purposes.  The
LNs shall be farmed-out to the RDOs/concerned BIR office for delivery
to the concerned taxpayers together with a transmittal list of taxpayers
given with Letter Notices, copy furnished TWG-FVD and VAT-PCC.

Soft copies of LN masterlist
register and subsequent updates thereto shall be submitted by the
TWG-IVD to the TWG-ISG, VAT PCC, ODCIR-Operations Group, and the Office
of the CIR every Monday of the following week.

4.2.3 TWG-ISG
consolidates LN inventory report file with LN masterlist register and
with the collection data extracted from LBDES and e-mails consolidated
report to Office of the CIR, ODCIR-Operations Group and VAT-PCC.

4.2.4 RDOs
personally delivers LN to taxpayers within twenty four (24) hours from
receipt thereof. Using the file format provided by the TWG-ISG, RDOs
shall then encode into the Tracking System status of LNs which have been
duly received by taxpayers and actions taken on unserved LNs based on
prescribed monitoring sheets.

All copies of LNs not successfully
delivered, accompanied by a written report of action taken and
recommendation, must be returned to the TWG-FVD within two (2) weeks
from receipt thereof.  The whole docket shall be
forwarded by the TWG-IVD to the TWG-FVD which shall then evaluate the
next course of action to be undertaken.

4.3       Availment of VAAP. —

4.3.1 For Taxpayers with LN. — Once the taxpayer receives an LN, he shall secure the VAAP-AF and VAAP-PF forms from the RDOs.  He
shall pay the minimum amounts prescribed in Subsection 3.1.1 hereof
within the period stated in the LN using the VAAP-PF which must be
accomplished in four (4) copies.  Payments of said
amounts shall be made with the AABs of the BIR Office having
jurisdiction over the taxpayer’s principal place of office.  Upon
receipt of the VAAP payments, the AAB shall validate the VAAP-PF,
retain two (2) copies thereof and issue an official receipt (OR).  The taxpayer shall then accomplish the VAAP-AF in three (3) copies.  If
the 110% basic tax due computed per VAAP-AF is higher than the VAAP
minimum amount initially paid, he shall again pay the additional VAAP
amount by again accomplishing the VAAP-PF in four (4) copies which
additional VAAP payment following the same procedures aforecited.  For
years/periods without noted discrepancy, he shall accomplish VAAP-AF
and VAAP-PF for each of the tax type of such year/period and shall pay
110% basic tax with the AAB following the procedures set forth above.

4.3.2 Taxpayers
without LN. — A taxpayer who has not received any LN from BIR shall
avail of VAAP by accomplishing the VAAP-AF in three (3) copies.  The
110% basic tax due computed in the VAAP-AF shall then be paid with the
AAB having jurisdiction over the taxpayer’s principal place of office
using the VAAP-PF which must be accomplished in four (4) copies.  The concerned AAB shall then validate the VAAP-PF, retain two (2) copies thereof and issue OR.

4.3.3 Any
query that the taxpayer may have on the sales discrepancy stated in the
LN may be addressed to the VAT-PCC through the TWG-IVD with telephone
numbers 922-1926 and 926-3282. Any query on the procedures, however,
shall be addressed to the VAAP Hotline set up by the RDOs or the
National Office VAAP Hotline with telephone numbers 929-7602, 929-7603,
and 919-7604.

4.3.4 The
accomplished VAAP-AF shall then be submitted to the RDOs with a copy of
the OR/s and VAAP-PF attached to the original copies of the VAAP-AF
within the periods prescribed in Section 3 hereof.  RDOs
shall then review the correctness of the computation of the VAAP-AF and
the VAAP amounts paid and shall retain the original and duplicate
copies of the VAAP-AF together with attachments.  The triplicate copy of VAAP-AF as duly received by the RDO shall be returned to the taxpayer for his file copy.

4.3.5 Within
three (3) days from receipt of the VAAP-AF and VAAP-PF from taxpayer,
RDOs shall encode into the Tracking System all information contained in
the VAAP-AF and VAAP-PF submitted by the taxpayers and such other
information that may be required in order to come up with the following
reports:

4.3.5.1 Taxpayers
who were sent LNs and availed of VAAP for all the tax types and taxable
periods covered by the VAAP Availment as well as the corresponding VAAP
amounts paid for the tax types and taxable periods covered by the
availment;

4.3.5.2 Taxpayers
who were sent LNs but only availed VAAP in respect to the taxable
period where sales discrepancy has been noted by the BIR as well as the
minimum and additional VAAP amounts paid for the tax types and taxable
period covered by the availment;

4.3.5.3 Taxpayers who were sent LNs but did not avail of VAAP; and

4.3.5.4 Taxpayers
who were not sent LNs but availed of VAAP and VAAP amounts paid for the
tax types and taxable periods covered by the VAAP availment.

4.3.4 Soft
copies of information encoded shall be sent by the RDOs to the TWG-ISG
every Monday of the following week which shall then consolidate such
information with the VAAP payments extracted from the LBDES.

4.4       Disposition of VAAP Availments. —

4.4.1 Original
copies of the VAAP-AF together with attachments including case dockets
of those with LAs issued shall be submitted to the TWG-FVD within one
(1) week from receipt thereof.

4.4.2 TWG-FVD shall then validate the VAAP-AFs received with the discrepancy reports continually being uncovered by the System.  If
additional discrepancies are uncovered on top of what has been
previously discovered and/or voluntarily disclosed, the same shall be
referred back to the RDO for the execution of the actions provided in
2.9 above.

4.4.3 Based
on the additional discoveries made by the BIR, RDOs shall seek
additional VAAP payment from the taxpayer if the amount of additional
discrepancy is less than the thresholds provided in 2.9 above or shall
proceed with appropriate enforcement action of audit, closure or
criminal complaint upon receipt of directive from the Commissioner
through the TWG-FVD.

4.4.4 For
those taxpayers who have incomplete availment or with no VAAP availment
despite receiving LNs from the BIR, percentage of sales discrepancy in
the Letter Notice shall be analyzed by the TWG-FVD and subsequent
enforcement actions of audit, closure of business or criminal
prosecution shall be recommended pursuant to guidelines which shall be
issued for the purpose.

4.5  Monitoring —
The TWG-ISG shall then supply the VAT-PCC, ODCIR-OG, and CIR every
Friday of the following week with the consolidated VAAP Management
Report Information which will be used to strictly monitor the progress
of activities of all Offices involved in the Program and shall be a
basis for MANCOM discussion of revenue generated, problems encountered
and other matters relative thereto.

SECTION 5.       Effectivity Clause. — This Order shall take effect immediately.

Adopted: 30 Sept. 2002

(SGD.) GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

ANNEX “A”

COMPUTATION OF THE VAAP AMOUNT

A.        For Taxable Period/s with Discrepancy  Stated in the LN. –

1.      Initial VAAP Payments.
— Within the period prescribed in the LN, the taxpayer shall make
initial VAAP payments for the corresponding taxes due on the amount of
under-declared sales/revenues/taxable amounts for the years/periods with
noted discrepancy (see Section 2.5.1.1) discovered by the BIR as stated
in the LN.  The initial VAAP payments shall consist of minimum VAAP amounts computed as follows:

(a)     VAT Minimum Amount Payable.
— On the amount of under-declared sales/receipts stated in the Letter
Notice, the minimum amount that must be paid shall be 3% for seller of
goods and 6% for the seller of service;

(b)     Income Tax Minimum Amount Payable. — 2% of the amount of under-declared sales/receipts stated in the LN; and

(c)     Excise Tax Minimum Amount Payable.
— In case the taxpayer is likewise subject to excise tax, 2% of the
amount of under-declared sales/receipts/taxable amounts stated in the
LN.

2.         Subsequent VAAP Payments at the Time of Submission of VAAP-AF.
— Notwithstanding the initial VAAP minimum payments made, additional
VAAP payments shall be made on the corresponding taxes for the taxable
period where under-declaration of sales has been noted by the BIR if it
appears that the amount as determined below is higher than the minimum
VAAP amount paid, pursuant to No. 1 above.

(a)     VAT Payable — 110% of the basic tax due computed as follows:

The factor of 1/11 in arriving the
Output tax due as provided in Revenue Regulations No. 12-2002 shall only
be applied if the declaration of sales is inclusive of VAT.  However,
for uniformity in presentation, this Order requires that the total
adjusted sales for the VAAP computation required above and Item (B)(1)
below, be presented at net of the VAT amount.

(b)     Income Tax Payable. — 110% of the basic tax due computed as follows:

(c)     Excise Tax Payable — 110% of the basic tax due computed as follows:

The term “income tax due”
for domestic corporations and resident foreign corporations shall refer
to the higher amount between the normal income tax and the MCIT rate of
2% of gross income.

The term “tax paid per return”
shall be construed as the total tax due per return consisting of the
tax credits applied and the tax actually paid at the time of the filing
of returns.  As stated above, the same shall not
include portion of MCIT paid in the year in excess of the normal rate of
32% which amount can be utilized in the succeeding year.

Excess tax credits appearing in the
originally filed returns in the covered years as well as unutilized
balance of tax credit certificates (TCC) shall not be allowed to be used
as payment under this Program.  This means that any tax credits applied on subsequent returns filed shall not be disturbed.

Additional VAAP payments shall be
made for the difference between 110% basic taxes as computed above and
the minimum VAAP payments computed in item (A)(1) above.  Such amounts shall be paid by using again the VAAP-PF.

B.        For
Taxable Period/s without Noted Discrepancy Stated in the LN and for
taxpayers without LN availing of VAAP (Sections 2.5.1.2 and 2.5.2). —
There shall be no VAAP minimum payments to be initially paid but rather
the VAAP amounts shall be paid at the time of the submission of the
VAAP-AF which shall be computed as follows:

1.      VAT Payable — 110% of the basic tax due computed as follows:

As stated in A(2)(a) above, the
sales declaration shall be presented in the computation at net of VAT
where the 10% output tax rate shall be applied instead of the factor of
1/11 as stated in Revenue Regulations No. 12-2002.

2.      Income Tax Payable. — 110% of the basic tax due computed as follows:

3.      Excise Tax Payable. — 110% of the basic tax due computed as follows:

As stated above, the term “income
tax due” for domestic corporations and resident foreign corporations
shall refer to the higher amount between the normal income tax and the
MCIT rate of 2% of gross income.

The term “tax paid per return”
shall be construed as the total tax due per return consisting of the tax
credits applied and the tax actually paid at the time of the filing of
returns.  As stated above, the same shall not
include portion of MCIT paid in the year in excess of the normal rate of
32% which amount can be utilized in the succeeding year.

Excess tax credits appearing in the
originally filed returns in the covered years as well as unutilized
balance of tax credit certificates (TCC) shall not be allowed to be used
as payment under this Program.  This means that any tax credits applied on subsequent returns filed shall not be disturbed.

Note: Tax deduction and
credit claimed as applicable to sales discrepancy per LN and/or on sales
voluntarily disclosed shall be subject to the submission of soft copy
of schedule of purchases.

ANNEX “B”

OFFICES RESPONSIBLE

Office/s	Responsibilities
(1) VAT-Project Coordinating Committee (VAT-PCC)	· Coordinates and monitors all the activities of the Offices and technical working groups (TWGs) involved in the implementation of all VAT-related projects including the Voluntary Assessmnet and Abatement Program (VAAP) promulgated under Revenue Regulations No. 12-2002
	· Monitors the submission of reports required from the RDOs, Regional Offices relative to VAAP
(2) TWG-Initial Validation of Discrepancy (TWG-IVD)	· Generates and validates discrepancy reports
	· Prepares LN for the signature of the Commissioner after discrepancy reports have been validated and reviewed by the TWG-FVD
(3) TWG-Final Validation of Discrepancy (TWG-FVD)   (RSO 604-2002)	· Validates and reviews initial discrepancy reports prepared by TWG-IVD.  The validated discrepancy reports shall be the basis for the issuance of LN
	· Monitors taxpayers who have availed of VAAP and validates in the discrepancy reports subsequently generated whether there have been an honest and accurate disclosure of sales in the VAAP-AF submitted
	· Evaluates cases of non-availment and determine next course of action
	· Monitors enforcement actions instituted against taxpayers who have incomplete VAAP availment or those who have not availed of VAAP despite receipt of LN from the BR
(5) VAAP Call Center	· Mans “hotline” on taxpayers’ queries regarding VAAP
(6) AABs	· Receive VAAP payments from taxpayers together with duly filled-out VAAP-PF which shall then transmit such forms together with BCS/reports to the BIR within the period prescribed under existing rules and regulations
(7) RDOs	· Provide the TWG-IVD with certified the true copies of income tax/VAT returns of taxpayers
	· Personally deliver Letter Notices of taxpayers
	· Encode in the Tracking System developed by the TWG-ISG status of Letter Notices which have been duly received by the taxpayers and actions taken on unserved Letter Notices based on prescribed monitoring sheets.
	· Receive VAAP-AF and duly validated VAAP-PF from taxpayers
	· Process VAAP-AF by encoding the information contained therein in the Tracking System developed by TWG-ISG with reference to the Letter Notice received, if applicable, using the required file format
	· Prepare and submit reports of status of compliance of taxpayers with Letter Notice and on VAAP availments of those with or without Letter Notices to TWG-ISG using the prescribed format.
	· Identify taxpayers who availed of VAAP and those who have not
	· Set-up own “hotline” to address VAAP queries
(8) Regional Director/ODCIR-Operations Group	· Monitor activities of RDOs with respect to VAAP
(9) TWG-ISG	· Develops a Tracking System which could generate consolidated management reports appertinent to the following:
	· LNs that were successfully delivered and those which not delivered
	· Taxpayers who have received Letter Notices and have availed of VAAP as well as the corresponding VAAP amounts paid on the tax types and taxable periods covered by the availment
	· Taxpayers who have not received Letter Notices but have availed of VAAP
	·Relevant information contained in the VAAP-AF and VAAP payments contained in the VAAP-PF which will be utilized by the TWG-IVD/TPI-Relief Committee in order to determine whether additional subsequent findings discovered in the RELIEF and other process had already been disclosed in the VAAP-AF
	· Constantly monitors submission of reports by RDOs
	· Provides VAT-PCC, ODCIR-Operations Group and the Commissioner consolidated VAAP management reports
(10) LTS/LT-DPQAD/LTDO	· Provide relevant information that may be necessary in the matching and reconciliation of transactions involving large taxpayers
(11) Taxpayer’s Assistance Service (TAS)	· Plans tax campaign activities in various RDOs and coordinates with RDOs for the effective dissemination of VAAP to taxpayers