Corporate and individual taxpayers who misapplied the optional standard deduction (OSD) when they filed their 2008 income tax returns last April have until Friday to submit corrected returns.

BIR Commissioner Sixto Esquivias IV said Thursday no penalty will be imposed for claiming higher OSD deductions provided all deficiency taxes are paid.

Records showed that many taxpayers claimed the higher 40 percent deduction on their gross sales for the whole of 2008 operations.

In the Revenue Memorandum Circular No. 22-2009, Esquivias explained that since the maximum 40 percent OSD law was approved only in June 2008, it can only be applied to cover earnings made during the second semester of last year starting July. 
                      
He stressed that the law which also hiked personal and additional exemptions of individual taxpayers cannot be applied on a retroactive basis.

Hence, taxpayers are required to amend their 2008 and pay the corresponding deficiency taxes if they used the higher deductions for gross sales earned during the first semester of 2008, instead of the old rate of 10 percent OSD.

It was further explained that taxpayers cannot also use the itemized deductions for the first half of the year to escape payment of higher income tax and the OSD for the second semester.

“It is either itemized or OSD scheme,” the BIR chief said.

Meanwhile, BIR Deputy Commissioner for Legal Service Gregorio Cabantac launched Thursday his book “International Tax Treaty Practices and Rulings (The RP-US Tax Treaty) during a tax symposium held at the BIR Training Center in Quezon City.

Cabantac said the book will serve as a vital reference for deeper understanding of the bilateral tax policies between Manila and Washington.

Business leaders, government dignitaries and officials, and members of various professional and civic groups attended the launching rites.