For example, if the basic tax being assessed is P100 Million, the taxpayer has to pay P10 Million in case of financial incapacity or P40 Million in case of doubtful validity before the BIR is even allowed to start processing the application for compromise. But as mentioned above, a taxpayer is required to pay the amount it offers. The taxpayer and the Commissioner must sign an agreement before a compromise becomes effective. Sworn Statement of no Tax Credit Certificate(TCC) on hand or in transit or claim for tax refund or TCC.Ĭompromise must be consensual. Waiver of the Privilege of the Secrecy of Bank Deposits under Republic Act (RA) No. Submit the following documents as required under Revenue Regulation (RR) No. Agree to pay the amount offered (generally 10% of the basic tax or 40% of the basic tax) and 2. The Tax Code allows compromise amount lower than-the-above rates but it has to be approved by the National Evaluation Board, which is composed of the four deputy commissioners and the Commissioner.īut in order to avail of compromise, taxpayers must comply with the following: 1. Another ground is when the taxpayer is financially incapable, in which case, taxpayer may only pay not less than 10 percent of the basic tax.
One ground for compromise is doubtful validity of assessment, in which case, the Commissioner can compromise to not less than 40 percent of the basic tax. To avoid this, tax investigations that are still in their early stages are encouraged by the BIR to apply for compromise. When a taxpayer receives a collection notice, it has no other recourse but to either pay or go to court. That is why I am not surprised that the BIR is active in issuing Final Decisions on Disputed Assessment, Warrants of Distraint and Levy and Notice of Garnishment across all sectors. Low lying fruits for tax collection are tax investigations that are already in their final stages. What are the other possible sources of revenue? But the government needs to look for money fast. It is hesitant to introduce new taxes in fear of being accused as insensitive to businesses that are barely surviving. Aside from borrowing money, the government must look for other sources of revenue. The government obviously needs money to sustain its efforts in giving aid to many suffering Filipinos during this tumultuous year of volcanic eruption, pandemic and super typhoon. But in order for this program to be successful, the BIR must reconsider its policy of requiring taxpayers to pay in advance." It will spare the taxpayer and the government from engaging in a contentious and time-consuming litigation. "Compromise is a good source of revenue for the government.
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