RMO No. 27-2005: Prescribes a short audit for the Value-Added Tax liabilities of taxpayers with reported zero-rated sales and exempt sales under the jurisdiction of the Large Taxpayers Service and the Regional Offices

Summary

RMO No. 27-2005 prescribes a short audit of Value-Added Tax liabilities of taxpayers with reported zero-rated and exempt sales under the Large Taxpayers Service and the Regional Offices, for taxable year 2004 and the first semester of 2005.

Key points

1. Priority industries. Top audit priority goes to telecommunication companies, manufacturing (flour, softdrinks, sugar, cement and plastic), logistics providers (arrastre, stevedoring, freight, trucking and courier services), and construction.
2. Who audits and the list. RDOs and the investigating offices of the Large Taxpayers Service conduct the audit. The initial list comes from the Information Systems Group (ISG). The RDOs and LTS offices may add other taxpayers afterward. Returns already under regular audit or other Commissioner programs are not included.
3. Letters of Authority. LAs/ANs may be issued once the list is approved, and the Commissioner may order or recommend cancellation if a violation is found. An LA/AN is issued only with the duplicate copy of the VAT returns for all months or quarters of 2004 and the first semester of 2005 attached.
4. Time limit. Audit and report are due within 30 days from issuance of the LA/AN. Only one revalidation is allowed when the delay is due to the taxpayer, with a progress report noted by the Group Supervisor and approved by the head of the investigating office. The LA/AN is stamped “Revalidated on ____” and signed by the Regional Director/OIC-LTS.
5. Review and register. The Assessment Division/LTS Review Team reviews dockets before any assessment notice, termination letter, confirmation letter, and tax credit certificate or refund check. It returns dockets to the investigating office for additional deficiencies or compliance and may not adjust audit reports. The Regional Director/OIC-LTS keeps a register of all LAs/ANs.

Who is affected

• Taxpayers with reported zero-rated and exempt sales
• Telecommunication, manufacturing, logistics and construction companies

Deadlines and effectivity

• Covers taxable year 2004 and first semester of 2005
• Audit report within 30 days from LA/AN issuance

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