Joshua Razen E.

Nolsol
BSA 2-2
ASSIGNMENT NO. 6

TAX REMEDIES

 Stages of Imposition of Taxes:

1. LEVY – imposition by the Legislature.
2. ASSESSMENT – determination of the BIR of Tax.
3. COLLECTION – collecting and gathering.

ASSESSMENT – contains computation and demand for payment within the prescribed
period.
- Symbols time when penalties and interest begin to accrue.

 Statute of Limitation/Prescriptive Period - NIR taxes shall be assessed within

three (3) years:
a. After due date for filing;
b. From day return was filed, when filed beyond due date; and
c. From filing amended return.
Exceptions:
a. False/Fraudulent Return, within 10 years from discovery.
b. No Return filed, within 10 years after discovery.
c. Written agreement, before expiration of 3 years.
d. If government tries to assess, tax beyond prescriptive period, the taxpayer may claim
defense of prescription.

Statute of Limitation/Prescriptive Period

Fraudulent Not Fraudulent
 With prior assessment Within 5 years from Within 5 years from
assessment assessment
 Without prior assessment Within 10 years from Within 3 years from filing
discovery
 Written agreement Within 5 years

 SUSPENSION of Statute of Limitation/Prescriptive Periods:

a. CIR is prohibited from making assessment.
b. Taxpayer is out of the Philippines.
c. Warrant of distraint/levy is served.
d. Cannot be located at given address, except when there is notice to CIR.
e. Request for reconsideration/reinvestigation.
CHARGES:
a. SURCHARGE
- Willful neglect/Fraudulent - 50%
- Failure to File Return - 25%
b. Additional INTEREST - 20%

COLLECTION - assessment shall precede collection; Collection is either by:

a. Summary Proceedings (Distraint/Levy); or
b. Judicial Proceedings

LEVY upon Real Property and Interest in or rights to Real Property:

- Should be effected by writing on duly authenticated certificate served upon the Register
of Deeds and on delinquent taxpayer.
DISTRAINT of Personal Property is either:
Actual Constructive
 Personal Property physically taken only notice
 Taxpayer delinquent not necessarily

LEVY DISTRAINT GARNISHMENT

 Subject Real Property Personal Property Personal Property
 Possession Owner Owner Third party
 Disposition Owner Purchased Purchased
 Advertisement for Once a week for 3 none none
Sale weeks

TAX LIEN - legal claim/charge on all properties (real/personal) established by law

as security for payment of tax obligation.
- Notification of Register of Deeds/Property is required.

FORFEITURE of:
a. Chattels and Removal of Fixtures of any sort shall be enforced by Seizure and Sales;
or Destruction of Specific Property.
b. Real Property shall be enforced by judgment of condemnation and sale in a legal
action or proceeding.

FORFEITURE SEIZURE
 Excess of Sale Not returned Returned to taxpayer

 REDEMPTION of Real Property sold:

a. Made within 1 year from date of sale by paying:
- Unpaid tax, penalties, interest (15% per annum)
b. Release of Distraint Property upon payment prior to sale.
c. Further Levy/Distraint may be repeated until payment of amount due.
d. No Distraint/Levy where taxes involved is not more than P100.
e. Injunction not available to restrain tax collection, except Court of Tax Appeals.

 CIVIL/CRIMINAL Action:
Civil Action – resorted when there is tax liability.
Criminal Action - cannot be instituted without the approval of the CIR

“Criminal Action and Civil action are separate and distinct.”

COMPROMISE - agreement between two or more persons, who, to avoid lawsuit

amicably settle differences on terms they agree on.

COMPROMISE PENALTY – amount paid by taxpayer to compromise tax violation; paid in

lieu of criminal prosecution.

 Cases which may be compromised:

 Delinquent Acts
 Administrative Protest
 Civil Tax Cases
 Collection Cases
 Criminal tax Fraud Violations
Cases covered by Pre-assessment Notices
 CIR may:
1. Compromise
2. Abate/Cancel Tax Liability
3. Credit/Refund
a. Taxes erroneously/illegally received
b. IR Stamps returned in good condition
c. Unused stamps, unfit for use

 Payment may be Compromised:

1. Reasonable Doubt of Validity of Claim
2. Inability to Pay Due to Financial Position
a. Prescribed Minimum Corporate Rate
- Financial Incapacity - 10% of Basic Assessed Tax
- Other Cases – 40% of Basic Assessed Tax
b. Compromised Settlement subject to approval of Evaluation Board (CIR and 4 Deputy
Commissioner)
- Basic Tax exceeds P1,000,000; or
- Settlement offered is less than prescribed Minimum Rates
c. Tax Liability may be cancelled/abated, when:
- Unjust or excessive
- Administrative and collection cost do not justify collection
d. Tax Credit/Refund
- Claim within 2 years of payment
- Written claim
- Tax credit certificate

 Forfeiture of Cash Refund/Tax Credit

a. Cash Refund – unclaimed within 5 years from the date received
b. Tax Credit – unutilized after 5 years from date received

TA X NOT BEEN PAID TAX ERRONEOUSLY/ILLEGALLY PAID

BIR TAXPAYER BIR TAXPAYER
A  Notice of  Return filed is Within 2 years
D Informal automatically from payment. If
M Conference Respond within considered claim paid thru
I (NIC) 15 days from for refund installments,
N Notice  CIR, may refund counted from last
I without written installment paid.
S  Pre-Assessment claim for tax
T Notice (PAN) erroneously/illegall
R Protest within 30 y collected.
A days from Notice +
T  Formal within 60 days
I Assessment submit supporting
V Notice (FAN) documents
E
 Protest denied or Appeal to CTA  Claim for Refund
unacted within within 30 days is denied or
100 days from receipt of unacted by CIR
denial or lapse of while 2 year period
J 180 days is about to lapse.
U
D  Appeal to CTA
 I  Appeal to CTA denied
C denied Appeal to CTA en
I banc within 15
A days from receipt
L of decision
(extendable by 15  Appeal denied by
 Appeal denied days) CTA en banc
by CTA en banc
Appeal to SC
within 15 days
from receipt
(extendable to 30
days)
“Failure to avail of administrative and judicial remedies, tax is forfeited in favor of the
government.”

MULTIPLE CHOICE.

1. A.
2. D.
3. A.
4. B.
5. C.
6. A.
7. B.
8. C.
9. C.
10. D.
11. C.
ASSIGNMENT NO. 7
TAX PENALTIES

Civil Penalties

The BIR issued Revenue Regulations 12-1999 amended by Revenue Regulations 18-
2013 implementing the provisions of NIRC of 1997 governing the rules on assessment of
national internal revenue taxes; civil penalties and interest; and the extrajudicial settlement of
a taxpayer’s criminal violation of the Code through payment of a suggested compromise
penalty. Civil penalties, interests and suggested compromise penalties are discussed in this
chapter.

The additions to the tax or deficiency tax shall apply to all taxes, fees and charges
imposed under the Code. The amount so added to the tax shall be collected at the same time,
in the same manner and as part of the subject tax.

A revenue tax is considered delinquent when it is unpaid after the lapse of the last day
prescribed by law for its payment. Likewise, it could also be considered as delinquent where
an assessment for deficiency tax has become final and the taxpayer has not paid it within the
period given in the notice of assessment.

INTEREST

PER. REV. REG. 21-2018 IMPLEMENTING TRAIN

Rate of Interest – There shall be assessed and collected on any unpaid amount of tax,
interest at the rate of double the effective legal interest rate for loans or forbearance of any
money in the absence of an express stipulation as set by the BangkoSentralngPilipinas (BSP)
from the date prescribed for payment until the amount is fully paid.

The rate of interest per BSP Memorandum No. 799 series of 2013 for loans or forbearance of
any money in the absence of an express stipulation is six percent (6%). Thus, the rate of legal
interest imposable under Section 249 of the Tax Code, as amended, shall be twelve percent
(12%). A Circular shall be issued by the Commissioner in case BSP prescribes new rate of
interest.

Deficiency Interest – Interest imposed on any deficiency tax due, which is interest shall be
assessed and collected from the date prescribed for its payment until: (a) full payment
thereof, or (b) upon issuance of a notice and demand by the Commissioner or his authorized
representative, whichever comes first.

Delinquency Interest – Interest imposed on the failure to pay:

(1) The amount of the tax due on any return to be filled; or

(2) The amount of the tax due for which no return is required; or

(3) A deficiency, or any surcharge or interest thereon on the due date appearing in the notice
and demand of the Commissioner or his authorized representative until the amount is fully
paid, which interest shall form part of the tax.

No Double Imposition of Interest – Upon the effectivity of the TRAIN Law, in no case
shall the deficiency and delinquency interest prescribed herein be imposed simultaneously.

Transitory Provisions – In cases where the tax liability/ies or deficiency tax/es became due
before the effectivity of the TRAIN Law on Jan. 1, 2018, and where the full payment thereof
will only be accomplished after the said effectivity date, the interest rates shall be applied as
follows:

Period Applicable Interest Type and Rate

For the period up to Dec. 31, 2017 Deficiency and/or Deliquency Interest at 20%

For the period Jan. 1, 2018 until full payment Deficiency and/or Deliquency Interest at 12%
of the tax liability

The double imposition of both deficiency and delinquency interest under Section 249 prior to
its amendment will still apply in so far as the period between the date prescribed for payment
until Dec. 31, 2017

Surcharge and Interest

1. A surcharge of 25% of the tax due is imposed in the following cases:

a. Failure to file any return and pay the amount of tax or installment due on before the
due date.

b. Unless otherwise authorized by the Commissioner, filling a return with a person or

office other than those with whom it is required to be filled.

c. Failure to pay the full or part of the amount of tax shown on the return, or the full
amount of tax due for which no return is required to be filled on or before the due
date.

d. Failure to pay deficiency tax within the time prescribed for its payment in the notice
of assessment.

2. A surcharge of fifty (50%) of the tax or of the deficiency, in case any payment has been
made on the basis of such return before the discovery of the falsity or fraud, for each of the
following violations:

a. Willful neglect to file the return within the period prescribed by the Tax Code by rules
and regulations; or
b. In case a false or fraudulent return is willfully made.

Criminal Penalties

The fines to be imposed for any violation of the Code shall not be lower than P30,000 or
twice the amount of taxes, interest, and surcharges due from the taxpayer, whichever is
higher.

Any person convicted of a crime penalized by the Code shall be liable not only for the
payment of the tax but for the penalties imposed as well. Any person who willfully aids or
abets in the commission of such crime or who causes the commission of any offense by
another, shall be equally liable as the principal.

If the offender is not a citizen of the Philippines, he shall be deported immediately after
serving the sentence without further proceedings for deportation. If he is a public officer or
employee, the maximum penalty prescribed for the offense shall be imposed and, in addition,
he shall be dismissed from public service and shall be perpetually disqualified from holding
any public office. He is likewise disqualified to vote and participate in any election.

If the offender is a Certified Public Accountant (CPA), his certificate as CPA shall, upon
conviction, be automatically revoked or cancelled.

In the case of associations, partnerships or corporations, the penalty shall be imposed on the
partner, president, general manager, branch manager, treasurer, officer-in-charge, and
employees responsible for the violation.

Any person who willfully attempts to evade tax under the Code shall, upon conviction and in
addition to other penalties under law, be fined for not less than P30,000 but not more than
P100,000 and shall suffer imprisonment of not less than 2 years but not more than 4 years.
The conviction or acquittal obtained shall not be a bar to the filling of a civil suit for the
collection of taxes.

COMPROMISE PENALTIES

All criminal violations may be compromise except:

1. those already filled in court; or

2. those involving fraud (Sec. 204 NIRC)

This means that the taxpayer’s criminal liability arising from his violation of the pertinent
provision of the Code shall be settled extra-judicially instead of the BIR instituting a criminal
action, in Court, against the taxpayer. A compromise in extra-judicial statement of the
taxpayer’s criminal liability for his violation is consensual in character, hence, may not be
imposed on the taxpayer without his consent. The BIR may only suggest settlement of the
taxpayer’s liability through a compromise. The compromise penalty and the amount thereof
shall conform with the revised consolidated schedule of compromise penalties provided
under Revenue Memorandum Order 7-2015.

Case involving fraud shall be referred to the concerned Division having jurisdiction over the
case, for the institution of the corresponding criminal action.

GUIDELINES ON THE PROCESSING OF TAX AMNESTY APPLICATION ON TAX

DELINQUENCIES PER REV. REG. 4-2019 IMPLEMENTING RA 11213 OR THE TAX
AMNESTY ACT

SCOPE. Pursuant to the provisions of Section 244 in relation to Section 245 of the 1997 Tax
Code, as amended, and Section 27 of Republic Act (RA) No. 11213, these Regulations are
hereby promulgated to implement the provisions on Tax Amnesty on Delinquencies under
Title IV of the Tax Amnesty Act.

DEFINITIONS OF TERMS. For purposes of there Regulations, the words used herein shall
be defined as follow:

A. Delinquent Account – shall pertain to a tax due from a taxpayer arising from the audit of
the of the Bureau of Internal Revenue (BIR) which had been issued Assessment Notices that
have become final and executory due to the following instances:

B. Assessment Notice – refers to a notice issued to a taxpayer stating the amount and basis of
the deficiency tax assessed. This term includes FAN/FLD and FDDA;

C. Basic Tax Assessed – The term refers to any of the following:

1. Tax due shown on the Assessment Notice, net of any basic tax paid prior to the
effectivity of these Regulations, exclusive of civil penalties;

2.The computed basic tax liabilities as shown in the criminal complaint filed by the
BIR with the Department of Justice (DOJ)/ Prosecutor’s Office or in the information
filed in the Courts for violations of tax laws and regulations; and

3. The basic tax liabilities as per Court’s final and executory decision.

D. Criminal Cases – refer to cases involving crimes and other offenses defined and
enumerated under Chapter II of Title X and Section 275 of the 1997 Tax Code, as amended.

E. Withholding Agent – is a person required to withhold, account for, and remit within the
prescribed period any tax imposed by the 1997 Tax Code, as amended.

COVERAGE. All persons, whether natural or juridical, with internal revenue tax liabilities
covering taxable year 2017 and prior years, may avail of Tax Amnesty on Delinquencies
within one (1) year from the effectivity of these Regulations, under any of the following
instances:
A. Delinquent Accounts as of the effectivity of these Regulations, including the following:

1. Delinquent Accounts with application for compromise settlement either on the basis of (a)
dity of the assessment or (b) financial incapacity if the taxpayer, whether the same was
denied by or still pending with the Regional Evaluation Board (REB) or the National
Evaluation Board (NEB), as the case may be, on or before the effectivity of these Regulations

2. Delinquent Withholding Tax liabilities arising from non-withholding of tax; and

3. Delinquent Estate Tax liabilities.

B. With pending criminal cases with the DOJ/Prosecutor’s Office or the courts for tax
evasion and other criminal offenses under Chapter II of Title X and Section 275 of the Tax
Code, as amended, with or without assessments duly issued;

C. With final and executory judgment by the courts on or before the effectivity of these
Regulations; and

D. Withholding tax liabilities of withholding agents arising from their failure to remit
withheld taxes.

TAX AMNESTY RATES. The tax amnesty rates shall be as follows:

A. Delinquent accounts and assessments which have become final 40% of the basic tax
and executory assessed

B. Tax cases subject of final and executory judgment by the courts 50% of the basic tax
assessed

C. Pending criminal cases filed with the DOJ/Prosecutor’s Office or 60% of the basic tax
the courts for tax evasion and other criminal offenses under Chapter assessed
II of Title X and Section 275 of the Tax Code, as amended

D. Withholding agents who taxes but failed to remit the same to the 100% of the tax
Bureau assessed

The tax amnesty rate of one hundred percent (100%) provided in letter (D) shall apply in all
cases of non-remittance of withholding taxes, even if the same shall fall under letters (A), (B)
or (C) above.

In cases where the delinquent taxes have been the subject of application for compromise
settlement pursuant to Section 204 of the Tax Code, whether denied or pending, the amount
of payment shall be based on the net basic tax as certified by the concerned office following
the procedure under Section 5 (C) of these Regulations.

MANNER OF AVAILMENT OF TAX AMNESTY ON TAX DELINQUENCIES. Any

person, whether natural or juridical, who wishes to avail of the Tax Amnesty on
Delinquencies shall file, within one (1) year from the effectivity if these Regulations, an
application therefore in accordance with the procedures set forth below.

TRUE OR FALSE.

1. FALSE 14. FALSE

2. TRUE
3. FALSE
4. TRUE
5. TRUE
6. TRUE
7. TRUE
8. TRUE
9. TRUE
10. FALSE
11. FALSE
12. FALSE

ASSIGNMENT NO. 8

Compliance Requirements
Keeping of Book of Accounts

All corporations, companies, partnerships, or persons required by law to pay internal

revenue shall keep a journal and a ledger, or their equivalents.

1. Those whose gross quarterly sales, earnings, receipts or output do not exceed
50,000php shall keep and use a simplified set of bookkeeping records duly
authorized by the secretary of Finance wherein all transactions and results of
operations are shown
2. Those whose gross quarterly sales, earnings receipts, or output exceed 150,000
php, shall have their books of accounts audited and examined yearly by
independent Certified Public Accountants and their Income tax returns
accompanied with a duly accomplished Account Information Form

Electronic Recordkeeping Requirements

All large taxpayers are required to maintain Computerized Accounting Systems or

components thereof. Thus, all books of accounts and accounting records shall be in electronic
format. All large taxpayers who are currently maintaining their books of accounts and
accounting records in manual form are required to register their CAS not later than Dec. 31,
2019. E-records used to establish tax compliance shall contain sufficient transaction-level
detail information so that the details underlying the electronic records can be identified and
made available to the BIR upon request.

Preservation of Books of Accounts

Per Rev. Reg. 17-2013, issued Sept. 27, 2013. All taxpayers are required to preserve
their books of accounts, including subsidiary books and other accounting records, for a period
of 10 years reckoned from the day following the deadline in filing a return, or if filed after the
deadline, from the date of the filing of the return for the taxable year when the last entry was
made in the books of accounts.

Other accounting records are also subject to the 10-year retention period, counted from the
date of last entry in the books to which they relate

Per Rev. Reg 5-2014, issued July 30, 2014, within the first five years of the 10-year
retention period, the taxpayer shall retain the hard copies of the books of accounts, including
subsidiary books and other accounting records. After the five-year period to retain hard
copies, the taxpayer may retain only an e-copy of the hard copy in an electronic storage
system, the independent CPA who audited the records and certified the financial statements
of the taxpayer shall also maintain and preserve electronic copies of the audited and certified
financial statements, including audit working papers, for a period of 10 years from the due
date of filing the annual income tax return or the actual date of filing ,whichever comes later.

Primary Registration Requirements (per Rev. Reg. 7-2012)

 Taxpayer Identification Number (TIN). This is the system-generated reference index
number issued and assigned by the BIR to each and every person registered in its database.
The TIN comprises of a 9 to13 digit numeric code where the first 9 digits is the TIN proper
and the last 4 digits is the branch code. The TIN Card shall contain the following: serial
number, registered name of the applicant; TIN; address; birth date or date of incorporation;
date of issue; signature of the CIR; signature of the TIN owner or duly authorized
representative; and a box for picture

General Rules on the Application and Issuance of TIN

1. The TIN, once assigned to a particular taxpayer, is non-transferrable and there shall
be no instance where two or several taxpayers are holders of the same TIN
2. Only one TIN shall be assigned to the taxpayer, regardless of the variety of
transactions, except for banks with both Regular Banking Units and with Foreign
Currency Deposit Units (FCDUs) where each unit is assigned to different TINs. Any
person who shall secure more than one TIN shall be subject to the penalty prescribed
under these Regulations
3. The Estate of a deceased person or a Trust under a irrevocable trust agreement shall
be issued a TIN separate and distinct from the TIN of the deceased person and/or
trustee
4. Minors who are earning and/or who are under the circumstances prescribed under EO
98, series of 1998, shall be supplied with a TIN
5. Non-Resident Aliens not engaged in Trade or Business or Non-Resident Foreign
Corporations shall be issued TINs for purposes of WT on their income from sources
within the Philippines. The withholding agent shall apply for the TIN on behalf of the
NRAETB or NRFC prior to or at the time of the filing of their monthly WT return
under EO 98, series of 1998.
6. Branches of an Identified Large Taxpayer shall be registered at the Large Taxpayer’s
Service (LTS) where the HO is registered.
7. All incorporators of corporations/associations, partners of partnerships and members
of cooperatives must have TINs.

Persons Required to Secure TIN

1. Every person subject to National Internal Revenue Taxes;

2. Person required to withhold taxes on account of his income payments made to taxable
individuals or entities;
3. Any person required under the code to make, render, or file a return, statement or
other document whereby it is required to indicate his TIN in such return, statement or
document filed with the BIR for his proper identification for tax purposes, and which
he shall indicate in certain documents
4. All persons, whether natural or juridical, dealing with all government agencies and
instrumentalities, including Government-Owned and/or Controlled Corporations, and
all LGUs

Registration of Business Taxpayers

 The submission of a Mayor’s permit prior to registration is mandatory. If the Mayor’s
Permit is still in process with the concerned LGU, a duly stamped “Received”
application for Mayor’s Permit will temporarily suffice to qualify him/her/it for
registration, but a duly approved permit shall be submitted within 30 calendar days
from date of registration. Business taxpayers and those required to issue receipts shall
submit the following requirements to complete their registration:

1. Application for Authority to Print (ATP) Receipts/Invoicesl

2. Registration of Manual Books of Accounts; or
3. Application for Permit to use Computerized Accounting System or components
thereof, if applicable;
4. Application for permit use Loose Leaf Accounting Books, if applicable;
5. Application for permit to use CRM/POS Machines and the like, if applicable;
6. Permit to operate for taxpayers engage in activities/transactions involving products
subject to excise taxes.

Registration of Business, Employment, and Other Undertakings

Unless otherwise exempted, individuals engaged in business or practice of profession

and juridical entities shall

1. Pay annual registration fee, if applicable;

2. Secure Certificate of Registration;
3. Proceed to Secondary Registration
4. Get “Ask for Receipt” notice, if applicable; and
5. Attend taxpayer’s initial briefing to be conducted by the BIR district office for new
registrants in order to apprise them of their rights and duties/responsibilities.

Prescribes Periods to Complete Primary Registration

Every person subject to any national internal revenue tax, which is expected to be
filed/paid periodically, shall complete its registration with the BIR as follows;

1. Employees: within 10 days from date of employment

2. Self-employed individuals, professionals, estates and trusts and their brances
3. Corporations, before payment of any tax due
4. Partnerships, associations, cooperatives, government agencies and instrumentalities:
before or upon filing of a return, statement or declaration as required by the NIRC.

Certificate of Registration
 ln relation to Sections 24(A)(2)(b) and 24(A)(2)(c)(2) of the Tax Code, as amended,
relative to the option of self-employed individuals and/or professionals to avail of the 8%
income tax rate based on gross sales/receipts and other non-operating income, the existing
non-VAT taxpayer who is contemplating to avail of the 8% income tax rate at the beginning
of the taxable year or before the due date for filing and/or payment of the percentage tax shall
file an Application for Registration Information Update (BIR form No. 1905) to*end-date the
registered tax type of percentage tax. If the taxpayer is unable to timely update the required
registration, s/he shall continue to file the percentage tax return reflecting a zero-amount of
tax with a notation that s/he is availing of the 8% income tax rate option for the taxable year.
S/he is stillrequired to signify the intention to avail the option on the initial quarterly income
tax return for income tax purposes.

On the other hand, if the non-VAT taxpayer opted to be taxed under the graduated
income tax rates s/he shall continue to pay the required percentage tax under Sec' 1 16 of the
Tax Code, as amended.

A taxpayer who initially presumed that the gross sales/receipts and other non-
operating income for the taxable year will not exceed the P3,000,000.00 VAT threshold but
has actually exceeded the same during the taxable year, shall immediately update his/her
registration to reflect the change in tax profile from non-VAT to a VAT taxpayer. S/he shall
be required to update registration immediately within the month following the month s/he
exceeded the VAT threshold. S/he shall be liable to VAT prospectively starting on the first
day of the month following the month when the threshold is breached. The taxpayer shall pay
the required percentage tax covering the sales/receipts and other non-operating income, from
the beginning of the taxable year or commencement of business/practice of profession until
the time the taxpayer becomes liable for VAT, without imposition of penalty if timely paid on
the immediately succeeding month/quarter. Thus, there may be an instance when a taxpayer
files two (2) business tax returns in a month/quarter - i.e., percentage and VAT returns.

A VAT taxpayer who did not exceed the VAT threshold within the immediately
preceding three (3) year period, may opt to be a non-VAT taxpayer and avail of the 8%
income tax rate option. She shall update the registration records on or before the first quarter
ofa taxable year to reflect the change in registration. However, s/he shall remain liable for
VAT for as long as there is no update of registration and VAT-registered invoices/receipts are
continuously issued. Registration updates shall be subject to existing rules and regulations on
updates, verification, inventory and surrender/cancellation of unused VAT-invoices/receipts.

A non-VAT taxpayer who volunteers to be a VAT taxpayer knowing that

sales/receipts and other non-operating income will exceed the VAT threshold within the
taxable year, shall update the registration records. Such taxpayer becomes liable to VAT on
the day when such updating is made. In this case, the taxpayer shall automatically be subject
to the graduated income tax rates if the 8% income tax rate option is initially selected. Any
income tax paid under the said flat 8% income tax rate shall be deducted from the income tax
due under the graduated income tax rates. The percentage tax due from the beginning of the
taxable year or commencement of business/practice of profession shall be paid on the
month/quarter immediately following such registration update. However, if the graduated
income tax rates is chosen from the beginning, then taxpayer ceases to be liable to percentage
tax upon registration updates and instead is now liable to VAT.