tax evasion

[Ask the Tax Whiz] Can the BIR lock a store for non-compliance?

Mon Abrea
[Ask the Tax Whiz] Can the BIR lock a store for non-compliance?
The Philippine Tax Whiz talks more about the Bureau of Internal Revenue's Oplan Kandado

What is Oplan Kandado? Can the Bureau of Internal Revenue (BIR) really suspend my business operations and temporarily close my store or establishment?

Oplan Kandado is an enforcement program of the BIR which involves the imposition of administrative sanctions such as suspension and temporary closure of business for non-compliance with requirements.

These requirements include the issuance of receipts, filing of returns, declaration of taxable transactions, taxpayer registration, and paying the correct amount of taxes as mandated by the norms or standards of their particular industry or line of business.

The National Internal Revenue Code, as amended, empowers the BIR commissioner to suspend the business operations of a taxpayer on certain grounds:

SEC. 115. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. The Commissioner or his authorized representative is hereby empowered to suspend the business operations and temporarily close the business establishment of any person for any of the following violations:

(a) In the case of a VAT-registered Person

(i) Failure to issue receipts or invoices

(ii) Failure to file a value-added tax return as required under Section 114; or

(iii) Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter.

(b) Failure of any Person to Register as Required under Sec. 216.

This program is guided by Section Nos. 113 and 114 of the tax code, which require the issuance of a mission order during surveillance or apprehension activities.

Who is a non-compliant taxpayer? How does Oplan Kandado work? Who is authorized to issue a closure order against non-compliant taxpayers?

Per Revenue Memorandum Order (RMO) 3-2009, a non-compliant taxpayer is defined as a taxpayer who, as a result of surveillance/stocktaking activities, has been found to have committed the violations enumerated in Item 1, Section IV of the said order and who, notwithstanding the issuance of several notices of violations, continues to refuse to comply with the requirements provided under existing rules and regulations. 

  1. Revenue officers must present a valid mission order which authorizes them to conduct surveillance on the business.
  2. Following the mission order, the BIR will impose a 48-hour notice. The business must ensure that its written reply is duly notarized and correctly addresses the findings stated. 
  3. If the taxpayer fails to respond within the given period or the BIR finds the explanation insufficient or unjustified, a five-day VAT Compliance Notice (VCN) shall be issued. The business must check if it has all the details of the investigating officer’s findings and if it states the particular provision of the tax code that has been violated and for which rectification should be done.
  4. Taxpayers have two days from the receipt of the VCN to adhere to the terms. Part of this includes addressing tax findings adequately and collating the needed documents for support.

The BIR deputy commissioner for operations was designated as the signatory for closure orders pursuant to RMO 36-2009.

How can businesses avoid being padlocked under Oplan Kandado?

Sparing businesses from temporary closure can be possible by checking if they are fully registered with the BIR and issuing official receipts or sales invoices to their customers.

Upon registration, businesses must also ensure that their cash register machine, point-of-sale machine, and other related devices are all registered with the BIR to avoid hefty fines. They must also have their book of accounts registered with the agency register and maintain these records diligently.

Aside from being registered, paying taxes on time is the key to maintaining compliance. And if businesses struggle to keep up with the immense workload, the Asian Consulting Group (ACG) can help them through game-changing tax assistance and consultation services.

Through ACG’s tax compliance review, taxpayers will be able to monitor whether they’re missing deadlines or if they’re still on track with their tax obligations.

Got more tax-related questions? Watch out for the next edition of Ask the Tax Whiz and download the TaxWhizPH app for free on Google Play and the App Store. You can also avail of our free tax assistance service by emailing us at consult@acg.ph. Use the promo code ACG10RAPPLER. – Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB Task Force. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the Outstanding Young Persons of the World, an Asia CEO Young Leader, and one of the Ten Outstanding Young Men of the Philippines because of his tax advocacy and expertise. Currently, he is the chairman and CEO of the Asian Consulting Group and trustee of the Center for Strategic Reforms of the Philippines – the advocacy partner of the Bureau of Internal Revenue, Department of Trade and Industry, and Anti-Red Tape Authority on ease of doing business and tax reform. Visit www.acg.ph for more information or email him at mon@acg.ph and download the TaxWhizPH app for free if you have tax questions.

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