Question & AnswerQ&A (PROCLAMATION NO. 340)
The circular aims to familiarize revenue personnel, taxpayers, and independent CPAs with the provisions of Revenue Regulations Nos. 3-90 and 6-90, and to clarify certain gray areas or doubtful provisions in these regulations.
No, submission of the CTC is optional. Taxpayers may or may not submit the CTC with their tax returns. However, only those who submit CTCs may be entitled to the privilege of last priority in audit and investigation.
The privilege applies only to taxes certified by the CPA, namely: income tax (including withholding tax) and value added tax (VAT). Other taxes like transfer taxes, other percentage taxes, excise taxes, and documentary stamp taxes may still be audited regardless of CTC submission.
Yes, partial certification is allowed. For instance, a CTC covering only income tax and withholding tax may be submitted. However, income tax and withholding tax certifications must be unqualified and go together to avail the privilege of last priority.
No. The taxpayer must submit an unqualified CTC to avail the privilege. Also, the privilege may be extended if deficiency tax arising from audit is paid before or at the filing of the tax return and CTC.
No. Regular surcharge and deficiency interest shall be imposed and collected. There is no legal basis for waiving penalties to avoid tempting taxpayers to underpay taxes deliberately.
Primarily, taxpayers with gross sales or gross receipts exceeding P100,000 per annum are required to submit a CTC. Those with amounts not exceeding P100,000 are not required but may still submit a CTC to avail the privilege of last priority.
No. Withholding tax on salaries and wages is excluded from the regulation. Only withholding taxes other than on salaries and wages must be certified and included in the CTC.
Taxpayers are primarily responsible for filing the CTC and the veracity of accounts in their returns and financial statements. CPAs must perform tax audits substantially in accordance with prescribed auditing standards and must report results to the Commissioner.
Yes. Under RR 6-90, submission of copies of engagement letters, whether for financial audit or tax audit, by independent CPAs is compulsory and must be filed within the deadlines specified.
The CPA must show working papers indicating the composition of the audit team, duly accomplished audit/work programs used, and verification that the working papers pertain to the particular taxpayer under examination.
No. Claims for refunds or tax credits, cases covered by certain exceptions in Section 235 of the Tax Code, and confidential information under Section 281 are excluded from the privilege of last priority.
The CPA must inform in writing the appropriate revenue official of the cancellation or withdrawal within 30 days from the date of such cancellation or withdrawal.
The three types are: (a) returns without any certified financial statements; (b) returns with certified financial statements only (Section 232(A)); and (c) returns with both certified financial statements and CTCs.