506

VALUE ADDED TAX IN THE l'1111.114)INES

the commencement of his business, or whenever he transfers to

another revenue district, (a) register with the appropriate revenue
office within ten (10) days from the commencement of business or
transfer in the manner prescribed under this section and (b) pay the
applicable registration fee of Five hundred pesos (P500.00) for every
separate or distinct establishment or place of business, if he has not
paid the registration fee in the beginning of the taxable year.
The head or main office and each of its branches located in
different places must be registered with the Revenue District Office
where the head or main office or branch is located."
The following common carriers are required to register without
paying the annual registration fee of P500.00:
a.Terminals and sub-terminals not generating sales;
b.Satellite offices; and
c.Garages that do not sell tickets but are merely used for
the purpose of filling in gasoline or repair/maintenance work.
The above offices/terminals are required to register in the RDO
where said offices/terminals are located.
Previously registered VAT taxpayer under the old VAT Law
may change his status to non-VAT taxpayer by making a written
application, filing BIR Form 1905, and by demonstrating to the
Commissioner's satisfaction that his gross sales or receipts for the
following twelve (12) months, other than those that are exempt under
Section 109 (A) to (U), will not exceed One million nine hundred
nineteen thousand five hundred pesos (P1,919,500).
Optional VAT Registration

A VAT-registered person may, in relation to Section 9.236-1(C) of

these Regulations, elect that the exemption in Section 4.109-1(B)
hereof shall not apply to his sales of goods or properties or services.in
"Sec. 9.236-1, Rev. Regs. No. 7-95, December 9, 1995.
The business of an international sea carrier is exempt from VAT because this
is a service subject to percentage tax. If the main business (international shipping) is
exempt from VAT, the VAT-exempt person cannot elect that its exempt business/es be
placed under the VAT system. The option to be subject to VAT on its exempt transactions is
available only to a VAT-registered person (A7, RMC 31-2008, January 30. 2008). It
cannot elect that said principal exempt business be subject to VAT even if
15

Once the election is made, it shall he irrevocable for a period of

three (3) years counted from the quarter when the election was

( 'I IAl9'I l(8

507

ADMINISTRATIVE lilq/lIIREMENTS

made, except for franchise grantees of radio and TV

broadcasting whose annual gross receipts for the
preceding year do not exceed ten million pesos (P10,000,000),, where
the option becomes perpetually irrevocable.' 6
There are some taxpayers who are engaged in businesses that
are exempt from value added under existing law (RA. 9337), but are
given the option to register as VAT taxpayers. These include:
(1)Any person who is VAT-exempt under Section 4.109-1(B) (1)
(V) not required to register for VAT may, in relation to Section 4.1092, elect to be VAT-registered by registering with the RDO that has
jurisdiction over the head office of that person, and pay the annual
registration fee of P500 for every separate and distinct establishment.
(2)Any person who is VAT-registered but enters into
transactions which are exempt from VAT (mixed transactions) may
opt that the VAT apply to his transactions which would have been
exempt under Section 109(1) of the Tax Code, as amended.
(3)Franchise grantees of radio and/or television broadcasting,
whose annual gross receipts of the preceding year do not exceed Ten
million pesos (P10,000,000) derived from the business covered by
the law granting the franchise, may opt for VAT registration. This
option, once exercised, shall be irrevocable.
(5)Radio and TV broadcasting whose gross annual receipts do
not exceed P10 million and which do not opt to be VAT registered;
(6)PEZA and other ecozone registered enterprises enjoying the
preferential tax rate of 5%, in lieu of all taxes;
(7)SBMA and other Freeport zone-registered enterprises
enjoying the preferential tax rate of 5%, in lieu of all taxes.
Any person who elects to register under subsections (1) and
12) above shall not be allowed to cancel his registration for the next
secondary businesses are subject to VAT (A37, RMC 31-2008 and A6, RMC 46-2008,
February 1, 2008). In determining main or principal business of a taxpayer, we ap ply
the predominance test (51% or more of its gross receipts). If his main business is
not within the VAT system, he can be considered as a VAT person eligible for elec tion
under Sec. 109(2) of the Tax Code.
' 6 Sec. 15, Rev. Regs. No. 4-2007, February 7, 2007.