Tuesday, January 08, 2008 Tax notes: Amnesty for payers with deficit position
THE Bureau of Internal Revenue (BIR) has reconsidered its initial position on the applicability of the tax amnesty with respect to taxpayers in a deficit position or with negative networth.
Hence, pursuant to Revenue Memorandum Circular (RMC) 90-2007, taxpayers in a deficit position are now qualified to avail of the tax amnesty provided that they declare an increase in networth or a reduction in the reported deficit and pay the amnesty tax.
This was introduced as an amendment to Question 28 of RMC 69-2007.
The resulting decrease in the deficit shall be the basis for the computation of the five percent amnesty tax rate and the amnesty tax payable is whichever is higher between the resulting figure after applying the five percent on the reduction in capital deficit or the prescribed minimum absolute amount.
However, a taxpayer in a deficit position that does not declare an increase in networth will not be qualified for the amnesty.
This change in BIR position came about as a result of clamor from taxpayers who wish to avail of the amnesty with good intentions to straighten out their tax records.
This is also expected to benefit companies under dissolution and which need to secure the required BIR tax clearance.
