RMO No. 19-2012: Prescribes the policies and procedures in the Value-Added Tax Audit Program for Large Taxpayers Service

Key points

1. High risk selection criteria. High risk taxpayers include those whose input taxes claimed exceed 75% of total output tax, those with substantial sales but a net loss, and those with a history of refund claims or Tax Credit Certificate (TCC) requests. They also include those who acquired more than One (1) million in capital assets without amortizing the input tax, or who deal with the government.
2. Medium risk selection criteria. Medium risk taxpayers include those with corporate reorganizations, cessation or retirement of business, a sale or transfer of business, or multiple lines of business with different VAT computation bases.
3. VAT Audit Team. The team has two VAT Audit Team Heads and five audit groups. It lists taxpayers recommended for audit using the format in Annex A and submits the list to the Assistant Commissioner, LTS (ACIR, LTS) for approval.
4. Letters of Authority. One e-Letter of Authority (eLA) is issued for each taxable quarter or semester, approved by the ACIR, LTS. An eLA may also cover prior periods if a current deficiency issue could be present in them.
5. Case handling. Cases returned to the Revenue Officer for compliance get top priority and must be submitted within 15 days from receipt of the docket. Going over the 20-case limit because of returned cases is not a violation.
6. Assessment and reports. Preliminary and Final Assessment Notices follow existing regulations, and the Final Assessment Notice is signed by the ACIR, LTS. Monthly consolidated reports go to the ACIR, LTS on or before the 8th day of the following month, and a quarterly report goes to the Management Committee.

Who is affected

• LTS taxpayers
• VAT Audit Team
• ACIR, LTS

Deadlines and effectivity

• Implementation: September 2012
• Monthly reports: on or before the 8th day of the following month
• Returned cases: within 15 days from receipt of docket