BIR Revenue Regulation (RR) 1-2012 requires the mandatory submission of quarterly summary lists of sales and purchases by all VAT-registered taxpayers. This regulation amended Section 4.114-3 of BIR RR 16-2005, as amended, to wit:
– All persons liable for VAT, such as manufacturers, wholesalers and service providers, among others, are required to submit the summary list of sales
– All persons liable for VAT, such as manufacturers and service providers, among others, are required to file the summary list of purchases.
From my point of view as a small-time practicing accountant, I cannot help but wonder if there is indeed relief for both the bureau and the taxpayers in the current Relief system. Section 4.114-3 (e)(1-6) of RR 16-2005 specifies the rules in the presentation of the required information in the summary schedules as follows:
– The summary schedules of sales to regular buyers/customers shall not only refer to sales subject to VAT but shall, likewise, include sales subject to final VAT withheld, exempt and zero-rated sales
– The summary schedule of purchases shall not only refer to purchases subject to VAT but also exempt and zero-rated purchases
– Names and sellers/suppliers/service-providers and the buyers/customers shall be alphabetically arranged and presented in the schedules
– All the summary lists or schedules mentioned for submission to the BIR shall mention as heading or caption of the report/list/schedule the BIR-registered name, trade name, address and TIN of the taxpayer-filer and the covered period of the report/list/schedule
– Failure to mention the TIN of the buyer in the schedule of sales may be a ground for the audit of the records of the buyer or both the buyer and the seller
– The quarterly summary lists shall reflect the consolidated monthly transactions per seller/supplier or buyer for each of the three months of the VAT taxable quarter of the taxpayer as reflected in the quarterly VAT return, except the summary list of importation that shall show the individual transactions for the month for each of the taxable quarter/VAT quarter. Thus, the period covered by the aforementioned summary list required to be submitted shall be the covered period of the corresponding quarterly VAT return.
I hope we can all spare a moment to reflect on the above-mentioned rules and assess the actual challenges of VAT-registered MSM's with respect to Relief compliance.
It is unfortunate that not all VAT-registered sellers and buyers are fully aware of the invoicing requirements for proper substantiation. Sellers often fail to indicate the complete details of sale transactions on either invoices or official receipts. Therefore, customers who lack knowledge on how to correctly record the purchase transaction tend to either overstate or understate either their gross taxable, exempt or zero-rated purchases.
Not all VAT-registered sellers know that they need to require the TINs of regular customers to be indicated on the invoice or receipt. This is a deterrent to the full disclosure of taxable transactions between sellers and buyers as there is no readily available TIN directory in the Relief program.
Moving forward, MSMEs (micro-, small- and medium-sized enterprises), accountants and tax collectors are still hopeful that we will experience relief from the challenges of having to go through rigid reconciliations of listings for reasons such as erroneous classification of sale, wrong use of TIN and the use of trade names instead of taxpayer registered names, among others.
Given that the Train law will no longer require monthly VAT remittance returns effective 2023, we can only hope that the BIR will also consider enhancing their taxpayer information drive and upgrade the Relief system to effectively achieve reconciliation of listings and reduce collection efforts through assessments.
In line with the BIR's thrust to digitize the tax system of the country, we can also hope that they will consider upgrading the Relief program where a readily available TIN directory can be accessed to automatically generate the correct taxpayer details for both seller and buyer. This would facilitate reporting the correct taxpayer names and not the trade names for easy reconciliation.
Again, my two cents.
Merilyn Gomez-Cheng, CPA, MBA is the managing owner of the Merilyn Gomez-Cheng Accounting Office and a member of the Acpapp. The views and opinions in this article are hers and do not represent those of the Acpapp.