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UNDER the premise that transactions significant in size and volume generally have substantial tax consequences, the Bureau of Internal Revenue (BIR) on Feb. 2, issued Revenue Memorandum Order No. 11-2009 providing for the guidelines for the monitoring of ?Big Ticket Items? (BTI). Such transactions according to the BIR may result in a treatment that requires the payment of taxes (either immediate or deferred), or may result in the exemption from taxation of a portion or the entire transaction.
A transaction is considered as a BTI if the amount exceeds P200,000,000. This threshold amount is considered on a per single and unrelated event or transaction basis, and shall not take into account the summation or the total of several unrelated and multiple events or transactions. A transaction is also a BTI if it is the subject of a request for ruling filed with the BIR where the amount of the transaction is over P1,000,000.
Information on the occurrence of a BTI will be sourced from media accounts, web sites of taxpayers, disclosure to and/or actions from the Securities and Exchange Commission, and other government agencies, and other sources.
The Large Taxpayers Service (LTS) ?Regular, LTS-Excise, and the Enforcement Service are the offices responsible for the monitoring of BTI. These offices may require taxpayers involved in a BTI to submit documents through an ?Access to Records Letter?. Failure to submit the same within the time required may result to the issuance of a subpoena on the requested documents.
Upon receipt of the requested documents, the responsible office will evaluate the tax consequences of the transaction, to ascertain whether the taxes, if any, on the BTI have been paid correctly and on time, or whether there were issues such as aggressive tax planning or avoidance done in the structuring or documentation of the BTI.
In the event that the recommendation is the need for a more thorough verification in the form of an audit or investigation, a Letter of Authority for short audit shall be issued by the Commissioner of Internal Revenue.
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The author is a tax manager in a leading tax and auditing firm. He is from Cebu and is a graduate of theAteneo Law School (Juris Doctor in Laws, Second Honors), and UP Cebu (Bachelor of Business Management, Cum Laude). He has also completed his Masters of Law Degree from the University of California Hastings School of Law with specialization in International Business and Trade. Send feedback to rester.nonato@yahoo.com.
