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  • Formal Letter of Demand: Republic of The Philippines Department of Finance Bureau of Internal Revenue

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    Dominic Dela Vega
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    The Bureau of Internal Revenue issued a formal letter of demand to ABC Inc. for deficiencies in income tax, value-added tax, expanded withholding tax, and improperly accumulated earnings tax for tax year 2020 totaling 9,328,991.06 PHP. The deficiencies were found after an investigation uncovered undeclared income, non-withheld payments, and unaccounted expenses. ABC Inc. is requested to pay the full amount through an authorized bank within the time specified in the assessment notice to avoid further interest charges.

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    The Bureau of Internal Revenue issued a formal letter of demand to ABC Inc. for deficiencies in income tax, value-added tax, expanded withholding tax, and improperly accumulated earnings tax for tax year 2020 totaling 9,328,991.06 PHP. The deficiencies were found after an investigation uncovered undeclared income, non-withheld payments, and unaccounted expenses. ABC Inc. is requested to pay the full amount through an authorized bank within the time specified in the assessment notice to avoid further interest charges.

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    © All Rights Reserved
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    40 views3 pages

    Formal Letter of Demand: Republic of The Philippines Department of Finance Bureau of Internal Revenue

    Uploaded by

    Dominic Dela Vega
    The Bureau of Internal Revenue issued a formal letter of demand to ABC Inc. for deficiencies in income tax, value-added tax, expanded withholding tax, and improperly accumulated earnings tax for tax year 2020 totaling 9,328,991.06 PHP. The deficiencies were found after an investigation uncovered undeclared income, non-withheld payments, and unaccounted expenses. ABC Inc. is requested to pay the full amount through an authorized bank within the time specified in the assessment notice to avoid further interest charges.

    Copyright:

    © All Rights Reserved
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    of 3

    REPUBLIC OF THE PHILIPPINES

    DEPARTMENT OF FINANCE
    BUREAU OF INTERNAL REVENUE
    Revenue Region No. 78 - East NCR

    Demand No. 043-2020-0001-01


    Date Issued. 13 August 2021

    FORMAL LETTER OF DEMAND

    The President
    ABC INC
    2nd Flr. DEF Bldg., Ortigas Jr. Rd.
    Ortigas Center, San Antonio 1605 Pasig City
    TIN: 000-111-222-333

    Sir/Madam:

    Please be informed that after investigation, there has been found due from you deficiency
    Income Tax, Value-Added Tax, Expanded Withholding Tax and Improperly Accumulated Earnings
    Tax for the taxable year 2020, to wit:

    I. INCOME TAX
    Taxable Income per Income Tax Return (ITR) ₱ (700,000.00)
    Add: Adjustments per investigation:
    Disallowed Income due to non-withholding ₱2,246,500.00
    Undeclared income from unaccounted expenses ₱19,354,400.00
    Salaries and Wages not subjected to WC 274,550.00 21,875,450.00
    Taxable Income ₱21,175,450.00
    Add: Net Operating Loss Carry Over 650,000.00
    Adjusted Taxable Income ₱21,825,450.00
    Income Tax Due (30%) ₱6,547,635.00
    Less: Tax Credits and Payments per ITR/ITS
    Previous Year's Excess Tax Credits ₱5,250,000.00
    Creditable tax withheld 3,120,000.00
    Total ₱8,370,000.00
    Less: Excess Tax Credits Carry Over to 6,500,000.00
    Succeeding Period
    Excess MCIT over NCIT carried over to 1,800,000.00 70,000.00
    Succeeding Period
    Deficiency Income Tax Due ₱ 6,477,635.00
    Add: 20% Interest (16 April 2021 - 12 Sept 528,858.97
    2021)
    Compromise 50,000.00
    TOTAL AMOUNT DUE ₱ 6,870,937.96
    II. VALUE ADDED TAX
    Vatable Sales per Return ₱410,550,450.00
    Undeclared income from unaccounted expenses 19,354,400.00
    Adjusted Vatable Sales ₱429,904,850.00

    Output Tax Due (12%) ₱51,588,582.00


    Less: Allowed Tax Credits/Payments
    Input tax on current purchases ₱48,250,500.00
    Payments 200,250.00
    Input Tax carry over from previous 1,300,450.00
    period
    Total ₱49,751,200.00
    Less: Input Tax Carried over to succeeding 335,000.00
    period
    Others 365,000.00 50,451,200.00
    Deficiency Value-Added Tax Due ₱1,137,382.00
    Add: 20% Interest (25 Jan 2021 - 12 Sept 143,341.29
    2021)
    Compromise 25,000.00
    TOTAL AMOUNT DUE ₱1,260,851.24

    III. EXPANDED WITHHOLDING TAX


    Basic Tax Due ₱ 26,664.89
    Add: 20% Interest (30 Jan 2021 - 12 Sept 3,360.51
    2021)
    Compromise 10,000.00
    TOTAL AMOUNT DUE ₱ 38,973.42

    IV. IMPROPERLY ACCUMULATED EARNINGS TAX


    Basic Tax Due ₱ 735,080.30
    Add: 20% Interest (15 Jan 2021 - 12 Sept 96,668.09
    2021)
    Compromise 25,000.00
    TOTAL AMOUNT DUE ₱ 827,747.97

    TOTAL ₱ 9,328,991.06

    Please note that the interest and the total amount due will have to be adjusted if paid after the date
    specified herein.

    The complete details covering the aforementioned discrepancies established during the investigation
    of this case are shown in the accompanying ANNEX-A of this letter.

    The twenty percent (20%) interest per annum until December 31, 2020 has been imposed pursuant
    to the provisions of Section 249(8) of the National Internal Revenue Code of 1997 (NIRC), as amended, and the
    twelve percent (12%) interest per annum from January 1, 2018 up to present has been imposed pursuant to
    the provisions of Section 249(8) of the Tax Reform for Acceleration and Inclusion (TRAIN).

    Page 2 of 3
    In view thereof, you are requested to pay your aforementioned deficiency tax liabilities through the
    duly authorized agent bank in which you are enrolled in using the electronic BIR Payment Form (eBIR Form
    0605) within the time shown in the enclosed assessment notice. Afterwards, submit a copy thereof to the
    Office of The Regional Director, this Region, located at 24th & 25th Floors, The Podium West Tower, ADB Road,
    Ortigas Center Mandaluyong City, to update your records and for the cancellation of the herein FLD, if
    warranted.

    Very truly yours,

    CAESAR R. DULAY
    Commissioner of Internal Revenue

    By,

    EDGAR TOLENTINO
    Regional Director

    RR7B-ABC INC
    SN eLA202100012345/LOA-043-2021-00000123 dated 20 April 2021

    Page 3 of 3

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