#AskTheTaxWhiz: Can’t we make tax compliance easier?

Dear Mr Tax Whiz,

We have a small family business in the province. After listening to your radio interview last week at Go Negosyo sa Radyo (DZRH 666) which you also co-hosted, I checked our BIR registration and to my surprise our small business is VAT-registered. VAT ganun? Please help me understand and comply by answering my questions:

1. How can we claim for input VAT on purchases from non-VAT registered suppliers? Almost all our suppliers are either not registered with BIR or registered but as non-VAT.
2. Why do we need to file quarterly VAT returns when we had already filed monthly? Isn’t this redundant? Do we use the same or different VAT return?
3. What is SLSP? Are we required to submit it monthly?  

Since you’re an advocate for genuine tax reform, I would like to ask, why do they make our tax filing complicated? Even employees at the BIR are not well-trained on how to explain all their regulations to taxpayers.

We want to try our best to avoid open cases because it can be costly to the company but the BIR is not helping small companies like us. We want to be honest by all means possible but we need the BIR to help us do this.

Thank you for taking responsibility in promoting tax reform. Hope you can answer and publish my questions to help thousands of us who are confused with VAT regulations.

VAT Taxpayer

Dear VAT Taxpayer,

For the longest time, we have been proposing making tax compliance easier especially for small businesses.

With our new BIR Commissioner Atty Billy Dulay, I am more confident that we can really see change coming. But to answer your questions: 

1. You cannot claim input VAT for the purchases from non-VAT registered suppliers since they issue non-VAT receipts. Worse, you cannot claim deductible expenses from unregistered businesses or those who do not issue official receipts or invoices. 

2. BIR requirements may seem redundant and burdensome but I still encourage all taxpayers to be compliant. 

You need to file a quarterly VAT return (BIR Form 2550Q) to consolidate your quarterly sales and purchases. It’s different from the monthly VAT return (BIR Form 2550M). 

3. The Summary List of Sales and Purchases (SLSP) is one of the documentary requirements that the BIR mandates every VAT-registered taxpayer to submit as an attachment to their VAT return. And no, BIR only requires all VAT-registered taxpayers to submit the SLSP on a quarterly basis.

The BIR does not deliberately make tax filing complicated. They implement regulations to prevent tax evasion and collect more funds for the government.

I hope the BIR will collaborate more with the Department of Trade and Industry (DTI) and other government agencies in order to equip small businesses with all the necessary skills and knowledge towards growth, and help them pay their taxes correctly.

As an advocate of genuine tax reform, it is my hope that the government soon realizes the need to put greater effort into making tax compliance simpler and easier especially for small businesses.

The BIR must focus on assisting taxpayers to voluntarily fulfill their tax obligations without the fear of penalties and compromises.

THE STRATEGY: LESS audit, MORE assistance! LESS penalty, MORE incentives for taxpayers! LESS BIR requirements, MORE taxes to collect! – Rappler.com

Got a question about taxes? #AskTheTaxWhiz! Tweet @rapplerdotcom or email us at business@rappler.com.

Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon’s tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is now available in bookstores nationwide. Follow Mon on Twitter:@askthetaxwhiz or visit his group’s Facebook page. You may also email him at consult@acg.ph.