The Bureau of Internal Revenue in Central Visayas (BIR-13) temporarily suspended the operations of a restaurant in Mabolo, Cebu City, and a warehouse in Subangdaku, Mandaue City, on 28 November 2024, due to multiple tax violations.
BIR-13 Legal Officer Jay Rozen Bartazan stated that the 88 BBQ House in Mabolo and its warehouse in Subangdaku violated Section 115 of the Tax Code of 1997.
"They made payments, but they under-declared their income. So, it was insufficient. Their under-declaration is more than 30 percent, which is one of the grounds for suspension and temporary closure," Bartazan explained.
"In BIR, there is a certain threshold of P3 million. Since they exceeded the threshold, they have to register as a VAT taxpayer, which they failed to do. This is a violation of the tax code," he added.
BIR-13 Regional Director Douglas Rufino told DAILY TRIBUNE that their investigation revealed the restaurant had been using unregistered receipts and cash register machines and failed to issue the required value-added tax (VAT) receipts.
Despite a notice of discrepancies issued on 17 September 2024, the restaurant management failed to provide an explanation.
The BIR recently issued Revenue Memorandum Order 37-2024, establishing new classifications on gross sales for business taxpayers. This aligns with Section 21(b) of the Tax Code, as amended, and Section 47 of the Ease of Payment Taxes (EOPT) Act.
Gross sales refer to total sales revenue, net of VAT if applicable, during the taxable year, without any deductions. The measure aims to streamline tax administration and ensure that tax obligations correspond to the scale of business operations.
Under Philippine tax law, micro taxpayers—those with gross sales or receipts below P3 million annually—are generally exempt from VAT. Instead, they are subject to a three percent tax on gross sales or receipts if they opt not to register for VAT.
However, if a micro taxpayer, such as 88 BBQ House, exceeds the P3 million threshold at any time during the year, they must register for VAT and comply with the corresponding VAT regulations.
BIR Chief Revenue Officer IV Eddie Leo Galera II emphasized that the temporary closure of 88 BBQ House serves as a warning to all taxpayers as it means that the BIR is closely monitoring compliance of businesses.
"The mandate of the office is to collect taxes, and it is better for taxpayers to pay voluntarily rather than have to go through enforcement activities like surveillance operations," Galera stated.
He further explained, "The only way to lift the temporary closure order is for the taxpayer to come to BIR Revenue District Office 81. Once they settle their tax liabilities, the order can be lifted."