Question & AnswerQ&A (BIR MEMORANDUM ORDER NO. 57-94)
The subject is the deferment of the implementation of the expanded VAT under Republic Act 7716 due to a temporary restraining order issued by the Supreme Court.
Republic Act 7716 relates to the expanded value-added tax (VAT) coverage in the Philippines, increasing the scope of VAT on goods and services.
The Supreme Court's resolution reiterated that the temporary restraining order issued on June 30, 1994, has not been lifted, thus postponing the registration and collection processes of the expanded VAT indefinitely.
The directives include continuing the VAT educational and information campaign, identifying weak and strong points in VAT collections, increasing the tax base via tax mapping, maximizing expanded withholding taxes collection, intensifying third-party information gathering for tax assessments, and continuing registration of VAT and Non-VAT taxpayers under the old VAT law (EO 273).
Registration under EO 273 allows the Bureau of Internal Revenue to maintain and update taxpayer records for both VAT and Non-VAT taxpayers, which is essential for tax administration despite the deferment of the expanded VAT implementation.
Expanded withholding taxes refer to the broader coverage and higher collection efforts on withholding taxes as part of maximizing government revenue in the absence of the expanded VAT implementation.
Identifying specific areas or industries with decreased VAT collection helps the BIR pinpoint where revenue leakages occur and where efforts must be concentrated to improve tax collection efficiency.
Tax mapping helps increase the tax base by identifying all potential taxpayers, thus enhancing revenue collection efforts and detecting tax evasion or underpayment.
Third-party information helps validate taxpayer declarations, uncover unreported income or transactions, and improve accuracy in tax assessments.
The memorandum was signed by Liwayway Vinzons-Chato, Commissioner of Internal Revenue.