RMO No. 20-2012: Prescribes the policies and procedures for the implementation of the 2012 Value-Added Tax Audit Program

Summary

RMO No. 20-2012 sets the policies and procedures for the 2012 Value-Added Tax (VAT) Audit Program, starting with a pilot roll-out in selected Revenue Regions in September 2012.

Key points

1. Pilot coverage. The pilot covers Revenue Region (RR) Nos. 5-Caloocan, 6-Manila (except RDO Nos. 35, 36 and 37), 7-Quezon City and 8-Makati. It applies to the 1st and 2nd quarters of 2012 VAT returns and every quarter thereafter, and other Regional Offices follow upon notification.
2. Excluded returns. Tax credit or refund claims are excluded. So are VAT returns selected for audit by the National Investigation Division of the Enforcement Service or the Special Investigation Division of the Revenue Regional Offices.
3. Selection criteria. Taxpayers are chosen on grounds such as VAT compliance below the 2010 or 2011 industry benchmarks, total purchases claimed exceeding 75% of total sales, no VAT return filed in 2011, ‘No Operations’ returns, or substantial sales with a net loss. The head of the VAT Audit Team may also select others, subject to the Regional Director’s approval.
4. VAT Audit Team. Each pilot region has one team of at least 25 Revenue Officers-Assessment, headed by the Chief of the Assessment Division. Only team members may audit the covered VAT returns.
5. eLAs and enforcement. The Electronic Letter of Authority Monitoring System (eLAMS) is used to request, approve and issue eLAs. The VAT Audit Head may recommend surveillance, closure or other enforcement based on audit findings.

Who is affected

• VAT taxpayers in RR Nos. 5, 6, 7 and 8
• Revenue Officers-Assessment on the VAT Audit Team

Deadlines and effectivity

• Pilot roll-out: September 2012
• Covers 1st and 2nd quarters of 2012 VAT returns and every quarter thereafter

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.