(NAR) VOL. 19 NO. 1 / JANUARY - MARCH 2008
"Q-28 If a company which is in a deficit position (negative networth) amends its Balance Sheet to include additional assets resulting to a reduction in deficit, can it avail of the amnesty tax law on the change in networth (still in a deficit position)? What about companies in deficit position that will not amend their Balance Sheets but would want to avail of the tax amnesty, can they qualify?All internal revenue officers and others concerned are hereby directed to be guided accordingly and to give this circular a wide publicity as possible.
A-28 Yes, companies in a deficit position can likewise avail of the tax amnesty provided that amendments to the Balance Sheet shall be made resulting to a reduction in the reported deficit. The resulting decrease in the deficit shall be the basis for the computation of the five percent (5%) amnesty tax rate and the amnesty tax payable is whichever is higher between the resulting figure after applying the five percent (5%) on the reduction in capital deficit or the prescribed minimum absolute amount.
Companies in a deficit position who will not amend their Balance Sheets are not qualified to avail of the tax amnesty."