BIR to monitor big ticket transactions

BIR to monitor big ticket transactions

The BIR has announced that it will be closely monitoring big-ticket transactions to ensure that they are properly treated for tax purposes.

A transaction is considered a big-ticket item (BTI) if the amount involved exceeds P200 Million.  These may include purchase or sale of goods or services, acquisitions, investments, financing arrangements, among others.

These will be monitored  from reports published in the newspapers or broadcasted over television and radio stations, announcements and releases in the websites of taxpayers, and disclosures to and/or actions from  government regulatory authorities such as the Securities and Exchange Commission (SEC), Board of Investments (BOI) and the Bangko Sentral (BSP). The BIR shall send an Access to Records letter to the taxpayer which, if not complied with, would result in the issuance of subpoena duces tecum (SDT).

Upon receipt of documents, the BIR shall evaluate the tax consequences of the transaction and determine if the relevant taxes are paid correctly and on time, or if there are tax issues including aggressive tax planning and avoiding schemes implemented by the taxpayer.  A letter of authority for a short audit may be issued if a more thorough verification is needed to evaluate the transaction.
  
This recent BIR effort stresses the importance of careful planning to ensure that the verification of BTI transactions will not trigger a tax assessment. BIR rulings can also be secured to confirm the correct tax treatment for significant transactions. Maintenance of proper documentation in accordance with tax rules and accounting principles is also critical in any transaction for purposes of determining the correct tax treatment. 

For further details, please see attached copy of RMO 11-10.