Features of Tax Mapping or Compliance Verification Drive Philippines

By: Garry S. Pagaspas, CPA

In an effort to expand the tax base, enhance tax compliance in the Philippines, and consequently boost tax collection tax mapping or tax compliance verification drive in the Philippines has been instituted as early as 2003. Under these, the assigned revenue officers would make actual visitation of taxpayer’s premises for purposes of tax compliance verification.

For some taxpayers, presence of assigned revenue officers at their premises is an awkward situation especially when it ends up with penalties for non-compliance. At times, they would avoid such inconvenience in a way or another such as closing the day’s operation.

For better appreciation, let us take up the features of tax mapping or tax compliance verification drive in the Philippines as follows:

Mission Orders of revenue officers

A mission order shall be issued by the Regional Director authorizing specific revenue officers to specific area of operation (not necessarily specific taxpayers) at a specific date and time of operation, to sign Taxpayer Information Sheet (TIS) and apprehension slip in the course of tax mapping operation in the Philippines. Taxpayer could verify the revenue officers identification cards for the purpose.

Issuance of reminder letter

At the start of the mapping in the Philippines of a particular taxpayer, a reminder letter shall be issued to all establishments being tax mapped in the Philippines containing the following:

• Enumeration of what every taxpayer/business establishment is required to do:
• A short list of the BIR requirements prior to, during, and after operations of a business (closure of business);
• Commonly filed BIR forms and deadlines for their filing and payment of corresponding taxes due thereon.

This would serve as the taxpayer’s guide on what to comply under the tax mapping or tax compliance verification drive.

Coverage of Tax Mapping Philippines

Tax mapping in the Philippines is not a tax assessment or examination within the three-year (3-year) or ten-year (10-year) period whether or not the taxpayer has correctly and timely paid taxes due. It is a mere verification of taxpayer’s compliance with registration and other requirements prior to, during, and after its business operations such as the following:

• Taxpayer’s registration of head office and branches (BIR Form No. 2303) along with related update thereto and posting the same in conspicuous place;
• Payment of annual registration fee (BIR Form No. 0605) and posting the same in conspicuous place;
• Authority to Print receipts and invoices, issuance of such receipts and invoices on every sale of services and goods, and contents of receipts and invoices under the rule on invoicing requirements;
• Registration of cash register machines (CRM), point-of-sale machines (POS), and computerized accounting system (CAS); display of registration notices, and other related requirements;
• Registration of books of accounts in the Philippines to manual and simplified books or BIR approval on loose-leaf books of accounts; and compliance with bookkeeping regulations (Revenue Regulations No. V-1) such as updating of such books of accounts;

As you will note on the above, the revenue officers will not look into the details of the books of accounts in relation to filed returns as to whether or not the taxpayer had fully and timely accounted taxes due.

Tax Mapping Penalties for Violations

The revenue officers would note every violation committed by the taxpayer on the Taxpayer Information Sheet (TIS), issue a Violations Checklist, and explain the violations committed and the basis thereof such as the revenue regulations, circular, or order. If the taxpayer believes that the alleged violation is unjustified by the regulations, then, the taxpayer can explain its side in the process so the revenue officer could consider. The taxpayer will be required to pay related penalties and fines for tax mapping violation in the Philippines within five (5) days from receipt.

Upon failure of the taxpayer to pay the penalties, the BIR will issue a Second Opportunity Notice (SON), then Final Opportunity Notice after five (5) days from SON, and finally, a complaint with the Prosecutor’s Office for such violation.

Apprehension and confiscation of unauthorized items

For using unauthorized items like receipts and invoices, books of accounts, the revenue officers will issue apprehension slip and take possession thereof. For using unauthorized CRM, POS, CAS, the revenue officers will likewise issue apprehension slip, seal the CRP/POS with witnesses and taxpayer on photograph or video, and bring the apprehended CRM/POS to assigned vehicle for delivery to custodian in the Regional Office.

Tax Mapping Sticker

Before leaving the taxpayer, the tax mapping team shall post a tax mapping sticker as proof that the establishment has been tax mapped with the following color codings:

• Yellow – first visit
• Red – second visit
• Green – third visit

Such tax mapping sticker would remain in the taxpayers premises and will indicate the frequency of such tax mapping for the particular taxpayer.

References:

• Revenue Memorandum Order No. 31-2003
• Revenue Memorandum Order No. 9-2006

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at 

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