How To Use Bir Vat Relief Program
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Microfinance NGOs are SEC-registered NGOs that must be organized for the primary purpose of implementing a microenterprise development strategy and providing microfinance programs, products, and services, such as microcredit and microsavings for poor and low-income clients (Microfinance NGOs Act RA 10693 Sections 3(h), 6).
A non-stock corporation or foundation with annual contributions or donations of PHP 500,000 or more is also required to file (i) a schedule of Contributions and Donations, (ii) a schedule of application of funds and (iii) a Certificate of Existence of Program/Activity (COEP) (Revised Securities Regulation Code, Rule 68, Part I, Section 5A) issued by the government agency that exercises jurisdiction over the activity of the organization. COEPs issued by the heads or officers of private institutions or actual beneficiaries or recipients of the program or activity may be submitted in lieu of a COEP issued by a government office or entity (Revised Securities Regulation Code Rule 68, Annex 68-C).
Use the VAT relief calculator for the required figures. The calculator takes into account that some of your sales and VAT do not qualify for the relief. The calculation result gives you the information you need for requesting the relief.
Report the information relating to your request for VAT relief on your VAT return. Your tax period for VAT determines when you should make the request. You can request the relief either on the final VAT return for the calendar year or for the accounting period.
If the relief amount is greater than your VAT payable for the tax period, you will receive the rest as a refund. If you have no VAT payable for the tax period, you will receive the entire relief amount as a refund.
However, if your company uses cash-based accounting, you must record the relief as income received in the year when the Tax Administration actually pays the relief to your company. If a company that uses cash-based accounting deducts the relief from the amount of upcoming tax payable for the tax period, the relief is considered to be income received in the tax year when the VAT filed on the VAT return in question would have fallen due.
The VAT relief is considered to be received from the same income source as the income for which the relief was granted. For example, VAT relief for a business operation is considered income from a business source and VAT relief for agriculture is income from agriculture.
In addition, income from forestry (e.g. income from timber sales), for example, does not qualify for the VAT relief. Read more about exceptions to VAT relief of agricultural and forestry operators (in Finnish or Swedish).
BIR Revenue Regulation (RR) 1-2012 requires the mandatory submission of quarterly summary lists of sales and purchases by all VAT-registered taxpayers. This regulation amended Section 4.114-3 of BIR RR 16-2005, as amended, to wit:\\r\\r\\u2013 All persons liable for VAT, such as manufacturers, wholesalers and service providers, among others, are required to submit the summary list of sales\\r\\r\\u2013 All persons liable for VAT, such as manufacturers and service providers, among others, are required to file the summary list of purchases.\\r\\rFrom my point of view as a small-time practicing accountant, I cannot help but wonder if there is indeed relief for both the bureau and the taxpayers in the current Relief system. Section 4.114-3 (e)(1-6) of RR 16-2005 specifies the rules in the presentation of the required information in the summary schedules as follows:\\r\\r\\u2013 The summary schedules of sales to regular buyers\\/customers shall not only refer to sales subject to VAT but shall, likewise, include sales subject to final VAT withheld, exempt and zero-rated sales\\r\\r\\u2013 The summary schedule of purchases shall not only refer to purchases subject to VAT but also exempt and zero-rated purchases\\r\\r\\u2013 Names and sellers\\/suppliers\\/service-providers and the buyers\\/customers shall be alphabetically arranged and presented in the schedules\\r\\r\\u2013 All the summary lists or schedules mentioned for submission to the BIR shall mention as heading or caption of the report\\/list\\/schedule the BIR-registered name, trade name, address and TIN of the taxpayer-filer and the covered period of the report\\/list\\/schedule\\r\\r\\u2013 Failure to mention the TIN of the buyer in the schedule of sales may be a ground for the audit of the records of the buyer or both the buyer and the seller\\r\\r\\u2013 The quarterly summary lists shall reflect the consolidated monthly transactions per seller\\/supplier or buyer for each of the three months of the VAT taxable quarter of the taxpayer as reflected in the quarterly VAT return, except the summary list of importation that shall show the individual transactions for the month for each of the taxable quarter\\/VAT quarter. Thus, the period covered by the aforementioned summary list required to be submitted shall be the covered period of the corresponding quarterly VAT return.\\r\\rI hope we can all spare a moment to reflect on the above-mentioned rules and assess the actual challenges of VAT-registered MSM's with respect to Relief compliance.\\r\\rIt is unfortunate that not all VAT-registered sellers and buyers are fully aware of the invoicing requirements for proper substantiation. Sellers often fail to indicate the complete details of sale transactions on either invoices or official receipts. Therefore, customers who lack knowledge on how to correctly record the purchase transaction tend to either overstate or understate either their gross taxable, exempt or zero-rated purchases.\\r\\rNot all VAT-registered sellers know that they need to require the TINs of regular customers to be indicated on the invoice or receipt. This is a deterrent to the full disclosure of taxable transactions between sellers and buyers as there is no readily available TIN directory in the Relief program.\\r\\rMoving forward, MSMEs (micro-, small- and medium-sized enterprises), accountants and tax collectors are still hopeful that we will experience relief from the challenges of having to go through rigid reconciliations of listings for reasons such as erroneous classification of sale, wrong use of TIN and the use of trade names instead of taxpayer registered names, among others.\\r\\rGiven that the Train law will no longer require monthly VAT remittance returns effective 2023, we can only hope that the BIR will also consider enhancing their taxpayer information drive and upgrade the Relief system to effectively achieve reconciliation of listings and reduce collection efforts through assessments.\\r\\rIn line with the BIR's thrust to digitize the tax system of the country, we can also hope that they will consider upgrading the Relief program where a readily available TIN directory can be accessed to automatically generate the correct taxpayer details for both seller and buyer. This would facilitate reporting the correct taxpayer names and not the trade names for easy reconciliation.\\r\\rAgain, my two cents.\\r\\rMerilyn Gomez-Cheng, CPA, MBA is the managing owner of the Merilyn Gomez-Cheng Accounting Office and a member of the Acpapp. The views and opinions in this article are hers and do not represent those of the Acpapp.\\r\\r \\r\\r \",\"article_custom_fields\":\"{\\\"\\\":[\\\"\\\"],\\\"seo_meta_keywords\\\":[\\\"\\\"],\\\"seo_meta_description\\\":[\\\"\\\"],\\\"seo_meta_title\\\":[\\\"\\\"],\\\"sponsored_flag\\\":[\\\"\\\"],\\\"offer_flag\\\":[\\\"\\\"],\\\"featured_article_flag\\\":[\\\"\\\"],\\\"drupal_json\\\":[\\\"{\\\\\\\"type\\\\\\\":null,\\\\\\\"properties\\\\\\\":{\\\\\\\"PUBLISHED\\\\\\\":0,\\\\\\\"PROMOTED\\\\\\\":0,\\\\\\\"STICKY\\\\\\\":0},\\\\\\\"fields\\\\\\\":[]}\\\"],\\\"wp_custom_json\\\":[\\\"{\\\\\\\"type\\\\\\\":\\\\\\\"\\\\\\\",\\\\\\\"fields\\\\\\\":[]}\\\"],\\\"article_tags\\\":[\\\"\\\"],\\\"show_image\\\":[\\\"off\\\"],\\\"Disable_Ad\\\":[\\\"off\\\"],\\\"disable_player\\\":[\\\"off\\\"],\\\"column\\\":[\\\"\\\"],\\\"kicker\\\":[\\\"\\\"],\\\"edel\\\":[\\\"\\\"],\\\"delu\\\":[\\\"\\\"],\\\"delt\\\":[\\\"Read this in The Manila Times digital edition.\\\"],\\\"premium\\\":[\\\"off\\\"],\\\"page_number\\\":\\\"0\\\",\\\"initial_publication\\\":\\\"\\\",\\\"date_created\\\":\\\"2022-03-01 22:34:06\\\",\\\"date_modified\\\":\\\"2022-03-01 22:35:13\\\",\\\"last_modified_user\\\":\\\"Severino Frayna\\\",\\\"section_color\\\":\\\"\\\",\\\"target_page\\\":\\\"0\\\",\\\"cxense_metatags\\\":null}\",\"cms_type\":\"live\",\"author_id\":2307,\"section_id\":11,\"seo_meta_keywords\":\"Is,there,truly,relief,in,BIR's,Relief\",\"seo_meta_description\":\"Is there truly relief in BIR's Relief\",\"seo_meta_title\":\"Is there truly relief in BIR's Relief\",\"publish_time\":\"2022-03-02 00:26:00\",\"related_articles_ids\":\"\",\"article_tags\":\"\",\"sub_section_id\":18,\"visit_count\":320,\"sponsored_flag\":0,\"offer_flag\":0,\"featured_article_flag\":0,\"media_gallery_flag\":0,\"video_gallery_flag\":0,\"highlight_flag\":0,\"top_story_flag\":0,\"is_updated\":0,\"is_old_article\":0,\"old_article_id\":0,\"article_byline\":\"Merilyn Gomez-Cheng\",\"ts\":\"2022-10-25 22:57:21\",\"last_edited\":\"2022-03-01 22:35:13\",\"alt_publish_time\":\"2022-03-01 22:35:18\",\"image_path\":null,\"author_name\":\"Merilyn Gomez-Cheng\",\"section_name\":\"Business\",\"sub_section_name\":\"Top Business\",\"slide_show\":0,\"breaking_news\":0,\"visit_count_update_date\":null,\"old_cms_article_id\":null,\"permalink\":\"2022\\/03\\/02\\/business\\/top-business\\/is-there-truly-relief-in-birs-relief\\/1834787\",\"show_image_in_thumb\":0,\"api_status\":2,\"a_custom_data\":\"{\\\"exclude_from_gallery\\\":null,\\\"lead_image_id\\\":null}\",\"publication_id\":2,\"max_publish_time\":\"2022-03-02 00:26:00\",\"page_number\":\"0\",\"homepage_article_flag\":0,\"article_shortlink\":null,\"cropped_image\":0}; Business Top Business Is there truly relief in BIR's Relief Read Next Shell LiveWIRE pushes entrepreneurship var VUUKLE_CONFIG = { apiKey: \"ddc3d585-821a-474d-b7da-9360d9e4f2e7\", articleId: 1834787, author: 'Merilyn Gomez-Cheng', }; By Merilyn Gomez-Cheng March 2, 2022 320 $(function () { $('.copy_text').click(function (e) { e.preventDefault(); var copyText = $(this).attr('data-href'); document.addEventListener('copy', function(e) { e.clipboardData.setData('text/plain', copyText); e.preventDefault(); }, true); document.execCommand('copy'); $(this).addClass('active') setTimeout(function(){ $('.copy_text').removeClass('active') }, 3000); }); }); BIR Revenue Regulation (RR) 1-2012 requires the mandatory submission of quarterly summary lists of sales and purchases by all VAT-registered taxpayers. This regulation amended Section 4.114-3 of BIR RR 16-2005, as amended, to wit: 153554b96e