RMO No. 59-2016: Prescribes the policies on the conduct of issue-based audit under the VAT Audit Program

Key points

1. Coverage. The Order covers issue-based audit or investigation of VAT liabilities for taxable quarter(s) of 2015 and thereafter.
2. Mandatory cases. Taxpayers whose VAT returns show erroneous input tax carry-over are mandatory cases for issue-based audit.
3. Priority cases. Eight priority groups are listed. They include taxpayers below industry VAT compliance benchmarks, those with zero-rated or exempt sales from incentives, and businesses where about 80% of transactions are in cash. Others are those with expanded withholding tax but no VAT remittance, unreported VAT on services bought from non-resident aliens, unreported gross sales subject to VAT withholding, income tax gross sales higher than VAT-declared gross sales, and Percentage Tax filers above the VAT threshold.
4. Excluded returns. VAT returns for Tax Credit Certificate or refund claims are excluded. So are returns selected for audit by the National Investigation Division or the Regional Investigation Division.
5. Procedures. The detailed audit procedures and reporting requirements are set out in the Order itself.

Who is affected

• VAT taxpayers

Deadlines and effectivity

• Taxable quarter(s) of 2015 and thereafter