Académique Documents
Professionnel Documents
Culture Documents
I. PURPOSE
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process and approve/disapprove applications for VAT Zero-Rate.
10. The approved Application for VAT Zero-Rate shall be revoked in the
event that the taxpayer-applicant was found to have committed
misrepresentations on the application or the exporter was found to
have been erroneously endorsed for VAT zero-rating. The revocation
shall be retroactive to the date when the application was approved.
11. The AITEID shall maintain a record of all applications received and
approved/disapproved. Every application received shall be assigned
an Application Number (AN) while different set of control numbers
shall be assigned to all approved/disapproved applications.
13. The AITEID shall receive the official annual masterlist and/or
separate endorsement letters from concerned government regulatory
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agencies containing information on registered exporters entitled to
VAT zero-rated purchases. The AITIED shall furnish LTS with copy
of the masterlist/endorsement as reference in the processing of the
application under their jurisdiction.
III. PROCEDURES
A. Receiving Personnel
Example:
Office - Year - AN
AITEID - 2006 - 0001
The above serial number indicates that the application was the first
application received by the AITEID in the year 2006.
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4. Record the receipt of the application in the Logbook of Received
Applications for Zero-Rate by indicating the following information:
a. Date of receipt;
b. Application number;
f. Remarks
5. Forward the application form together with all the attachments to the
Revenue Officer for processing of the Applications for VAT
Zero-Rate.
B. Revenue Officer
1. Receive the Applications for VAT Zero-Rate together with all the
supporting documents from the Receiving Personnel.
Item No. 8 Indicate the legal basis for VAT zero-rating (i.e. the
specific law or international agreement that grants the
benefit of VAT zero-rating)
C. Section Chief
D. Division Chief
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provisions of the law.
E. Releasing Personnel
Example:
Office - Year - CN
AITEID - 2006 - 0001
The above serial number indicates that the application is the first
application approved by AITEID for the year 2006. The Control
Number will not necessarily match the Application Number referred
to in Procedure A.3 above.
c. Application Number
e. TIN of seller/applicant
g. TIN of purchaser
a. Control Number
e. Effectivity date
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C. At the Assessment Service
All other existing issuances or portions thereof inconsistent with this Order
are hereby repealed or modified accordingly.
V. EFFECTIVITY
ANNEX A
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ANNEX B
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ANNEX B1
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ANNEX B2
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ANNEX C
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ANNEX D
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(2)
December 8, 1998
(i) religious;
(ii) charitable;
(iii) scientific;
(iv) athletic;
(v) cultural;
no part of the net income or asset of which shall belong to or inure to the benefit of
any member, organizer, officer or any specific person.
(i) Which, not later than the fifteenth (15th) day of the third month
after the close of the NGO's taxable year in which contributions
are received, makes utilization directly for the active conduct of
the activities constituting the purpose or function for which it is
organized and operated, unless an extended period is granted by
the Secretary of Finance, upon recommendation of the
Commissioner;
(ii) Any amount paid to acquire an asset used, or held for use,
directly in carrying out one or more purposes for which the
accredited NGO was created or organized; or
(iii) Any amount set aside for a specific project which comes within
one or more purpose or purposes for which the accredited NGO
was created, but only if at the time such amount is set aside, the
accredited NGO has established to the satisfaction of the
Commissioner of Internal Revenue that the amount will be
utilized for a specific project within a period not to exceed five
(5) years, and the project is the one which can be better
accomplished by setting aside such amount than by immediate
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payments of funds: Provided, That, the utilization requirements
prescribed under Sec. 5 of these Regulations shall be complied
with; or
(h) "Character building and youth and sports development (or athletic)
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purposes" shall refer to and include conducting basic and applied research on
youth development, initiating and establishing youth organizations to promote and
develop youth activities, including the establishment of summer camps or centers
for leadership training, conducting a program on physical fitness and amateur
sports development for the country; developing and maintaining recreational
facilities, playgrounds and sports centers; and conducting training programs for the
development of youth and athletes for national and international competitions. cdll
(iii) providing for the rehabilitation of the youth and disabled adults,
released prisoners, drug addicts, alcoholics, mentally retarded,
hansenites and similar cases; and
(m) "Health purposes" shall refer to include the pursuit of any of the
following:
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non-profit corporations and NGOs as a pre-requisite for their registration with the
BIR as qualified-donee institutions under Section 34 (H)(1) and (2)(c) of the Tax
Code.
(iv) Duly audited financial statements for the past two (2) years
showing the assets, liabilities, receipts and disbursements of
existing organizations, or financial projections for the first two
(2) years for newly-organized non-stock, non-profit
corporations/NGOs. prLL
(ii) Resources
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The criterion focuses on the adequacy of the resources and the
effectiveness of the structure and systems of the non-stock, non-profit
corporation/NGO. Areas that should be evaluated under this criterion
include the organization structure, human, financial and physical resources.
Evaluation shall take into account the names, positions and qualifications of
the individuals or committee members who manage and make decisions for
the non-stock, non-profit corporation/NGO, its sources of funds and
distribution of financial resources, and the following exhibits at the time of
examination, among others:
1. Organizational plan
2. Monitoring and evaluation tools
(g) The Accrediting Entity shall deny the applications of any non-stock,
non-profit corporation/NGO which does not meet the criteria for accreditation.
The Private Accrediting Entity shall notify the non-stock, non-profit
corporation/NGO of the denial of the application, the reasons therefor, and the
evaluators' recommendation in order that the non-stock, non-profit
corporation/NGO may meet the criteria for accreditation. A non-stock, non-profit
corporation/NGO whose application for accreditation has been denied by the
Private Accrediting Entity shall have one (1) year within which to implement the
evaluator's recommendations. After the one-year implementation period, the
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non-stock, non-profit corporation/NGO may re-apply for accreditation.
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justice to another accredited NGO to be used in such
manner as in the judgment of said court shall best
accomplish the general purpose for which the dissolved
organization was organized. llcd
The application for the Commissioner's prior approval must contain the
following:
(a) the nature and purpose of the specific project and the amount
programmed therefor;
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amount to be set aside will actually be disbursed for the specific
project within five (5) years from the date of approval by the
Commissioner, unless the nature of the project is such that the
five-year period is impracticable.
(b) Place of Filing. The income tax return and/or the annual
information return of the donor or of the accredited non-stock, non-profit
corporation/NGO shall be filed in the Revenue District Office where the place of
business of the donor or the donee, as the case may be, is located.
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SECTION 8. Substantiation Requirements.
On the other hand, donors claiming exemption from donor's tax on their
donations and contributions to accredited non-stock, non-profit
corporations/NGOs should submit evidences or proofs showing the amount of
donation, if in cash; if real property, the zonal value thereof at the time of
donation; and if personal property, the acquisition cost thereof, but if said personal
property had already been used at the time of donation, the depreciated or book
value thereof.
(i) A list of the donations and income received during the year,
showing the name and address of the donors; the sources of
income; the amount or market value of each donation and items
of income and the disposition thereof;
(c) Selling any part of the security or other property for less than
adequate consideration in money or money's worth;
(e) Using any part of its property, income or seed capital for any
purpose other than that for which the corporation was created or
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organized; or
(a) The Accrediting Entity shall have the authority to withdraw the
Certificate of Accreditation which it issued to a non-stock, non-profit
corporation/NGO upon a determination that the latter no longer meets the criteria
for accreditation under Sec. 2 (c) of these Regulations. The Private Accrediting
Entity concerned shall inform the Legal Service of the National Office or the
concerned division of the Regional Offices of the withdrawal of the Certificate of
Accreditation and recommend to the BIR the revocation of the Certificate of
Registration of the non-stock, non-profit corporation/NGO concerned.
Recommending Approval:
(3)
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"xxx xxx xxx
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SECTION 3. Repealing Clause. All rules and regulations or any
part thereof inconsistent with the provisions of these Regulations are hereby
amended or repealed accordingly.
Recommending Approval:
ANNEX A
SWORN DECLARATION
Date _________________
_______________________
Name of Hospital/Clinic
Administrator
(4)
1998
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by the Department of Energy."
Recommending Approval:
(5)
(B) Foreign Currency Deposit Unit (FCDU) shall refer to that unit of a
local bank or of a local branch of a foreign bank authorized by the Bangko Sentral
Ng Pilipinas (BSP) to engage in foreign currency-denominated transactions,
pursuant to the provisions of R.A. 6426, as amended. ("Local bank" shall refer to a
thrift bank or a commercial bank organized under the laws of the Republic of the
Philippines. "Local branch of a foreign bank" shall refer to a branch of a foreign
bank doing business in the Philippines, pursuant to the provisions of R.A. No. 337
, as amended).
(E) Deposits shall mean funds in foreign currencies which are accepted
and held by an Offshore Banking Unit or Foreign Currency Deposit Unit in the
regular course of business, with the obligation to return an equivalent amount to
the owner thereof, with or without interest.
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permanently residing therein; or
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of the following:
(D) Illustration.
Mr. Juan de la Cruz, a Filipino citizen who is residing in the Philippines has
a US dollar account with ABC Bank. His gross interest earnings from his bank
deposit for the first quarter of 1998 (i.e. from January 1 to March 31, 1998)
amounted to US$1,000.00. This gross interest earning shall be considered as
constructively received by Mr. De la Cruz during the first quarter of 1998 and
shall be subject to a seven and one-half percent (7.5%) final withholding tax. The
7.5% final withholding tax which is due thereon is US$75.00.
The person making the income payment shall withhold and remit the tax
withheld pursuant to the provisions of Sections 57 and 58 of the Code. Thus, in the
case of interest payment by a resident of the Philippines on a foreign currency loan
from an OBU or an FCDU, the withholding agent shall be the said resident.
The Depository Bank shall submit with its quarterly withholding tax
remittance prescribed under Sec. 58(A) of the Code a list of all persons and
corporations who were given exemption from the tax on interest income on foreign
currency deposits.
To avail of the exemption from the tax on interest income from foreign
currency deposit, the depositor is required to execute a written permission
allowing its depository bank to inform the Commissioner of Internal Revenue that
as a non-resident, the depositor is exempt from the tax. A depositor who fails to
comply with this requirement, which constitutes a limited waiver of the
confidentiality of foreign currency deposits, shall not be entitled to the exemption
privilege.
Recommending Approval:
(6)
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Sec. 2.27(E) MINIMUM CORPORATE INCOME TAX (MCIT) ON
DOMESTIC CORPORATIONS
For purposes of these Regulations, the term, "normal income tax" means the
income tax rates prescribed under Sec. 27(A) and Sec. 28(A)(1) of the
Code at 34% on January 1, 1998; 33% effective January 1, 1999; and at 32%
effective January 1, 2000 and thereafter.
Excess of MCIT
Normal Income Over the Normal
Year Tax MCIT Income Tax
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Amount of tax payable P100,000
Less:
1998 excess MCIT (25,000)
1999 excess MCIT (40,000) P65,000
Net amount of tax payable P35,000
The taxpayer shall pay the MCIT whenever it is greater than the regular or
normal corporate income tax which is imposed under Sec. 27(A) of the Code. The
comparison between the normal income tax payable by the corporation and the
MCIT shall be made at the end of the taxable year. Thus, under the example, the
taxpayer will pay the MCIT of P75,000.00 since this amount is greater than the
normal income tax of P50,000.00 in 1998.
In 1999, the firm will also pay the MCIT since the MCIT of P100,000.00 is
greater than the normal income tax of P60,000.00.
In the year 2000, where the normal or regular corporate income tax of
P100,000.00 is greater than the MCIT of P60,000.00, the firm will pay the normal
income tax.
The corporation can credit the excess of its MCIT over the normal income
tax for 1998 (i.e. P25,000) and 1999 (i.e. P40,000), or a total amount of P65,000
from the amount of normal income tax which is payable by the firm in the year
2000. Thus, the amount of income tax payable by the firm is P35,000 after
deducting P65,000 from P100,000.
The excess MCIT is creditable against the normal income tax within the
next three (3) years from payment thereof. Thus, in the illustration above where
the corporation had an excess MCIT of P25,000 over its normal income tax in
1998, the P25,000 can be claimed as a tax credit against the normal income tax up
to the year 2001 and only when the normal income tax is greater than the MCIT.
The excess MCIT cannot be claimed as a credit against the MCIT itself or against
any other losses.
(3) Relief from the Minimum Corporate Income Tax under Certain
Conditions The Secretary of Finance, upon recommendation of the
Commissioner, may suspend imposition of the MCIT upon submission of proof by
the applicant-corporation, duly verified by the Commissioner's authorized
representative, that the corporation sustained substantial losses on account of a
prolonged labor dispute or because of "force majeure" or because of legitimate
business reverses.
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(a) "Gross Income" defined For purposes of the minimum corporate
income tax prescribed under this Subsection, the term "gross income" means gross
sales less sales returns, discounts and allowances and cost of goods sold. "Gross
sales" shall include only sales contributory to income taxable under Sec. 27(A) of
the Code. "Cost of goods sold" shall include all business expenses directly
incurred to produce the merchandise to bring them to their present location and
use.
Passive incomes which have been subject to a final tax at source shall not
form part of gross income for purposes of the minimum corporate income tax.
In the case of sales of services, the term "gross income" means gross
receipts less sales returns, allowances, discounts and cost of services. "Cost of
services" means all direct costs and expenses necessarily incurred to provide the
services required by the customers and clients including (a) salaries and employee
benefits of personnel, consultants and specialists directly rendering the service,
and (b) cost of facilities directly utilized in providing the service such as
depreciation or rental of equipment used and cost of supplies: Provided, however,
that "cost of services" shall not include interest expense except in the case of banks
and other financial institutions. The term "gross receipts" as used herein means
amounts actually or constructively received during the taxable year; Provided, that
for taxpayers employing the accrual basis of accounting, the term "gross receipts"
shall mean amounts earned as gross income.
(b) The term "substantial losses from a prolonged labor dispute" means
losses arising from a strike staged by the employees which lasted for more than six
(6) months within a taxable period and which has caused the temporary shutdown
of business operations.
(c) The term "force majeure" means a cause due to an irresistible force as
by "Act of God" like lightning, earthquake, storm, flood and the like. This term
shall also include armed conflicts like war or insurgency.
(d) The term "legitimate business reverses" shall include substantial losses
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sustained due to fire, robbery, theft or embezzlement, or for other economic reason
as determined by the Secretary of Finance.
For purposes of the MCIT, the taxable year in which business operations
commenced shall be the year in which the domestic corporation registered with the
Bureau of Internal Revenue (BIR).
Firms which were registered with BIR in 1994 and earlier years shall be
covered by the MCIT beginning January 1, 1998.
Firms which were registered with BIR in any month in 1998 shall be
covered by the MCIT three calendar years thereafter (i.e. after the lapse of three
calendar years from 1998). For example, a firm which was registered in May 1998
shall be covered by the MCIT in 2002.
The reckoning point for firms using the fiscal year shall also be 1998. For
example, a firm which registered with the BIR on July 1, 1998 shall be subject to
an MCIT on his gross income earned for the entire fiscal year ending in the year
2002.
Transitory Rule for determining the MCIT for 1998 on firms which are
taxable on a fiscal year basis. For firms using the fiscal year basis and whose first
taxable period under the minimum corporate income tax covers month/months in
1997 (i.e. prior to the imposition of MCIT under RA 8424), the MCIT which is
due for 1998 shall be computed using an apportionment formula. The ratio to be
applied is the number of months in 1998 to twelve (12) months (i.e. the total
number of months in a fiscal year). cda
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Multiply: 2% (i.e. MCIT tax rate)
(6) Manner of filing and payment The minimum corporate income tax
(MCIT) shall be paid on a taxable year basis. It shall be covered by a tax return
designed for the purpose which will be submitted together with the corporation's
annual final adjustment income tax return. Domestic corporations shall not be
required to pay the minimum corporate income tax on a quarterly basis, the
provisions of Sec. 75 of the Code notwithstanding.
EXCESS OF
MCIT OVER
NORMAL INCOME NORMAL
YEAR TAX MCIT INCOME TAX
In this case, ABC Corporation shall not be allowed to carry forward and
credit the 1998 excess MCIT against the income tax liability for 1999 since the
1999 MCIT is greater than the normal income tax for said year. However, for year
2000, where the normal income tax is greater than the computed MCIT, ABC
Corporation shall be allowed to apply the excess MCIT of 1998 and 1999
amounting to P95,000 (P75,000 plus P20,000) against the normal income tax
liability of P200,000.
The excess MCIT for the year 2001 (P300,000) may only be credited
against normal income tax liabilities for the succeeding three years from 2002 to
2004. However, since the normal income tax liabilities for these succeeding years
are lesser than the respective MCITs, the excess MCIT for the year 2001 of
P300,000 loses its creditability by the year 2005 hence, must be removed and
deducted from "Deferred charges-MCIT" account and charged to "Retained
Earnings" account. cdll
(a) For taxable year 1998 when MCIT is greater than the normal income
tax liability of the company
1998
(b) For taxable year 2000 when excess MCIT (1998 and 1999) is applied
against normal income tax liability
2000
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(2) Debit: Income tax payable P95,000
Credit: Deferred Charges-MCIT
(P75,000 plus P20,000) P95,000
To record application of excess MCIT against normal income tax liability for
taxable year 2000
(c) For taxable year 2005 when the expired portion of excess MCIT
(P300,000) for taxable year 2001 is closed to the retained earnings account due to
its non-application.
2005
(8) Exceptions The minimum corporate income tax (MCIT) shall apply
only to domestic corporations subject to the normal corporate income tax
prescribed under these Regulations. Accordingly, the minimum corporate income
tax shall not be imposed upon any of the following:
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ten percent (10%) of such income.
(d) Firms that are taxed under a special income tax regime such as
those in accordance with RA 7916 and 7227 (the PEZA law and
the Bases Conversion Development Act, respectively).
In computing for the minimum corporate income tax due from a resident
foreign corporation, the rules prescribed under Sec. 2.27(E) of these Regulations
shall apply: Provided, however, that only the gross income from sources within the
Philippines shall be considered for such purposes.
(d) Firms that are taxed under a special income tax regime such as
those in accordance with RA 7916 and 7227 (the
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PEZA law and the Bases Conversion Development Act,
respectively). cda
Recommending Approval:
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TO : All Internal Revenue Officers and Others Concerned
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A. Upon the following values of real property, where the
seller/transferor is habitually engaged in the real estate
business as per proof of registration with the HLURB
or HUDCC:
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other issuance of the Bureau of Internal Revenue inconsistent with these
Regulations are hereby repealed, amended, or modified accordingly. cdll
Recommending Approval:
(7)
July 9, 1998
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SECTION 1. Forfeiture of Cash Refund. A refund check or warrant
issued in accordance with the pertinent provisions of the Code, which shall remain
unclaimed or uncashed within five (5) years from the date the said warrant or
check was mailed or delivered, shall be forfeited in favor of the Government, and
the amount thereof shall revert to the General Fund.
EDGARDO B. ESPIRITU
Secretary
Department of Finance
Recommending Approval:
BEETHOVEN L. RUALO
Commissioner
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Bureau of Internal Revenue
EDGARDO B. ESPIRITU
Secretary
Department of Finance
Recommending Approval:
BEETHOVEN L. RUALO
Commissioner
Bureau of Internal Revenue
(8)
June 9, 1998
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SUBJECT : Implementing Section 21 of Republic Act No. 8479 Entitled
"An Act Deregulating the Downstream Oil Industry, and
For Other Purposes"
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(c) COA Refers to the Commission on Audit.
(f) The concerned Oil Company shall secure from the Large
Taxpayers Division (LTD), BIR National Office, or the
concerned Revenue District Office which has jurisdiction over
its principal place of business an Authority To Accept Payment
for Excise Tax (ATAPET) for the total amount of specific tax
due inclusive of the amount to be paid through the
aforementioned "Reimbursement Certificate."
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(h) The "Reimbursement Certificate" herein provided shall not be
transferable by the Oil Company in whose name the same has
been duly issued by the DOE.
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue
(9)
February 5, 1998
SECTION 1. Purpose.
SECTION 2. Policies.
SECTION 4. Responsibilities.
Original -
AGDB Branch
Duplicate -
Regional Treasurer
Triplicate FE -
Quadruplicate -
BIR collection agent/other
concerned NCO for
submission to the
concerned Chief, Finance
Division, Revenue Region/
Chief Accountant
Quintuplicate - BIR collection agent/other
concerned NCO's file
Sixtuplicate - BIR collection agent/other
concerned NCO for
submission to the BIR/
other concerned NCO
Regional Auditor
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concerned
f.2. FE
4. The FE shall:
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue
(10)
The tax imposed under Sec. 33 of the Code shall be treated as a final
income tax on the employee which shall be withheld and paid by the employer on
a calendar quarterly basis as provided under Sec. 57 (A) (Withholding of Final Tax
on certain Incomes) and Sec. 58 A (Quarterly Returns and Payments of Taxes
Withheld) of the Code.
The grossed-up monetary value of the fringe benefit represents the whole
amount of income realized by the employee which includes the net amount of
money or net monetary value of property which has been received plus the amount
of fringe benefit tax thereon otherwise due from the employee but paid by the
employer for and in behalf of his employee, pursuant to the provisions of this
Section.
Coverage These Regulations shall cover only those fringe benefits given
or furnished to managerial or supervisory employees and not to the rank and file.
The term, "RANK AND FILE EMPLOYEES" means all employees who
are holding neither managerial nor supervisory position. The Labor Code of the
Philippines, as amended, defines "managerial employee" as one who is vested with
powers or prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
"Supervisory employees" are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. cdtai
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Fringe benefits which have been paid prior to January 1, 1998 shall not be
covered by these Regulations.
(1) Housing;
(5) Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted;
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(10) Life or health insurance and other non-life insurance premiums
or similar amounts in excess of what the law allows.
For this purpose, the guidelines for valuation of specific types of fringe
benefits and the determination of the monetary value of the fringe benefits are
given below. The taxable value shall be the grossed-up monetary value of the
fringe benefit.
WHERE:
MV = MONETARY VALUE
FMV = FAIR MARKET VALUE
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cost, exclusive of interest. The monetary value of fringe
benefit shall be fifty per cent (50%) of the value of the
benefit.
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(b) If the employer provides the employee with cash for the
purchase of a motor vehicle, the ownership of which is
placed in the name of the employee, the value of the
benefits shall be the amount of cash received by the
employee. The monetary value of the fringe benefit shall
be the entire value of the benefit regardless of whether
the motor vehicle is used by the employee partly for his
personal purpose and partly for the benefit of his
employer, unless the same was subjected to a
withholding tax as compensation income under Revenue
Regulations No. 2-98.
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MV = [(A)/5] X 50%
where:
MV = Monetary value
A = acquisition cost
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(c) This regulation shall apply to installment payments or
loans with interest rate lower than twelve per cent (12%)
starting January 1, 1998. prcd
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the travel of the family members of the employee shall
be treated as taxable fringe benefits of the employee.
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(C) Fringe Benefits Not Subject to Fringe Benefits Tax In
general, the fringe benefits tax shall not be imposed on the
following fringe benefits:
The exemption of any fringe benefit from the fringe benefit tax
imposed under this Section shall not be interpreted to mean
exemption from any other income tax imposed under the Code
except if the same is likewise expressly exempt from any other
income tax imposed under the Code or under any other existing
law. Thus, if the fringe benefit is exempted from the fringe
benefits tax, the same may, however, still form part of the
employee's gross compensation income which is subject to
income tax, hence, likewise subject to a withholding tax on
compensation income payment.
The term "DE MINIMIS" benefits which are exempt from the
fringe benefit tax shall, in general, be limited to facilities or
privileges furnished or offered by an employer to his employees
that are of relatively small value and are offered or furnished by
the employer merely as a means of promoting the health,
goodwill, contentment, or efficiency of his employees such as
the following:
(1) During the year 1998, ABC Corporation paid for the
monthly rental of a residential house of its branch
manager (Mr. Dela Cruz) amounting to P66,000.00.
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Corporation shall take up the foregoing in its books of accounts,
as follows:
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TRANSITORY PROVISIONS No penalty shall be imposed for late
payment of the fringe benefit tax for the first quarter ending March 1998:
Provided, however, that the withholding tax return for the first quarter shall be
filed and the tax is paid not later than July 25, 1998. LLjur
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue
(11)
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relation to Sections 57 to 59, Sections 78 to 83, Section 114(C) and Sections, 116
to 127 of Republic Act 8424, these regulations are hereby promulgated which shall
govern the collection at source on income paid on or after January 1, 1998 and
prescribing the Revised Withholding Tax Tables on compensation.
(A) Final Withholding Tax. Under the final withholding tax system the
amount of income tax withheld by the withholding agent is constituted as a full
and final payment of the income tax due from the payee on the said income. The
liability for payment of the tax rests primarily on the payor as a withholding agent.
Thus, in case of his failure to withhold the tax or in case of under withholding, the
deficiency tax shall be collected from the payor/withholding agent. The payee is
not required to file an income tax return for the particular income. LLpr
The finality of the withholding tax is limited only to the payee's income tax
liability on the particular income. It does not extend to the payee's other tax
liability on said income, such as when the said income is further subject to a
percentage tax. For example, if a bank receives income subject to final withholding
tax, the same shall be subject to a percentage tax. cdasia
(1) Interest from any peso bank deposit, and yield or any other
monetary benefit from deposit substitutes and from trust funds
and similar arrangements; royalties (except on books as well as
other literary works and musical compositions), prizes (except
prizes amounting to ten thousand pesos (P10,000.00) or less
which shall be subject to tax under Sec. 24 (A) of the Code) and
other winnings (except Philippine Charity Sweepstakes
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winnings and lotto winnings) derived from sources within the
Philippines Twenty percent (20%).
(6) On capital gains presumed to have been realized from the sale,
exchange or other disposition of real property located in the
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Philippines, classified as capital assets, including pacto de retro
sales and other forms of conditional sales based on the gross
selling price or fair market value as determined in accordance
with Sec. 6(E) of the Code (i.e. the authority of the
Commissioner to prescribe the real property values), whichever
is higher Six percent (6%).
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(e) Prizes (except prizes amounting to ten thousand pesos
(P10,000.00) or less subject to tax under Sec. 25 (A) (1)
of the Code for the normal rates of income tax for
individuals) and other winnings (except Philippine
Charity Sweepstakes winnings and lotto winnings);
(3) On capital gains presumed to have been realized from the sale
exchange or other disposition of real property located in the
Philippines, classified as capital assets, including pacto de retro
sales and other forms of conditional sales based on the gross
selling price or fair market value as determined in accordance
with Sec. 6(E) of the Code (i.e. the authority of the
Commissioner to prescribe zonal values), whichever is higher
Six percent (6%).
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Philippines based on the following amounts and at the rates prescribed therefor:
(1) On the gross amount of income derived from all sources within
the Philippines by a non-resident alien individual who is not
engaged in trade or business in the Philippines as interest, cash
and/or property dividends, rents, salaries, wages, premiums,
annuities, compensation, remuneration, emoluments, or other
fixed or determinable annual or periodic or casual gains, profits
and income and capital gains Twenty five percent (25%). Cdpr
(2) On capital gains presumed to have been realized from the sale,
exchange or other disposition of real property located in the
Philippines, classified as capital assets, including pacto de retro
sales and other forms of conditional sales based on the gross
selling price or fair market value as determined in accordance
with Sec. 6(E) of the Code (i.e. the authority of the
Commissioner to prescribe the real property values), whichever
is higher Six percent (6%).
The same tax treatment shall apply to Filipinos employed and occupying
the same as those of alien employed by these multinational companies.
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(E) Income Derived by Alien Individuals Employed by Offshore Banking
Units. A final withholding tax equivalent to fifteen (15%) shall be withheld by
the withholding agent from the gross income of alien individuals occupying
managerial or technical positions in offshore banking units established in the
Philippines, as salaries, wages, annuities, compensations, remuneration and other
emoluments such as honoraria and allowances, received from such offshore
banking units. cdphil
The same tax treatment shall apply to Filipinos employed and occupying
the same positions as those of aliens who are employed by these offshore banking
units.
The same tax treatment shall apply to Filipinos who are employed and
occupying the same positions as those of aliens employed by a foreign petroleum
service contractor or subcontractor.
(1) Interest from any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust fund
and similar arrangements derived from sources within the
Philippines Twenty Percent (20%).
(5) On capital gains presumed to have been realized from the sale,
exchange or other disposition of real property located in the
Philippines classified as capital assets, including pacto de retro
sales and other forms of conditional sales based on the gross
selling price or fair market value as determined in accordance
with Sec. 6(E) of the Code, whichever is higher Six percent
(6%).
(3) Interest on any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust funds
and similar arrangements and royalties derived from sources
within the Philippines Twenty percent (20%).
(I) Income Derived From all Sources Within the Philippines by Non-
Resident Foreign Corporation. The following shall be subject to final
withholding tax based on the gross amount of income and at the rate of tax
prescribed therefor:
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(2) Gross income from all sources within the Philippines derived by
non-resident cinematographic film owners, lessors or
distributors Twenty five percent (25%).
(J) Fringe Benefits Granted to the Employee (Except Rank and File
Employee). There shall be imposed a final tax of 34% beginning January 1,
1998; 33% beginning January 1, 1999 and 32% beginning January 1, 2000 and
thereafter, on the grossed-up monetary value of fringe benefits, granted or
furnished by the employer to his employees (except rank and file as defined in the
Code). Fringe benefits however, which are required by the nature of or necessary
to the trade, business or profession of the employer, or where such fringe benefit is
for the convenience and advantage of the employer shall not be subject to the
fringe benefits tax. prcd
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The term fringe benefit means any good, service or other benefit furnished
or granted in cash or in kind by an employer to an individual employee (except
rank and file employees) such as but not limited to, the following:
(1) Housing;
(2) Expense account;
(3) Vehicle of any kind;
(4) Household personnel, such as maid, driver and others;
(5) Interest on loan at less than market rate to the extent of the
difference between the market rate and actual rate granted;
(6) Membership fees, dues and other expenses borne by the
employer for the employee in social and athletic clubs or other
similar organizations;
(7) Expenses for foreign travel;
(8) Holiday and vacation expenses;
(9) Educational assistance to the employee or his dependents; and
(10) Life or health insurance and other non-life insurance premiums
or similar amounts in excess of what the law allows.
Fringe benefits granted to the following employees and taxable under Sec.
25 (B), (C), (D) and (E) shall also be subject to the fringe benefit tax to wit:
The computation and the scheme for withholding the tax on fringe benefits
shall be governed by such revenue orders that the Commissioner shall issue as
guidelines and clarifications for its proper and consistent implementation.
(A) Professional fees, talent fees, etc., for services rendered by individuals
On the gross professional, promotional and talent fees or any other form of
remuneration for the services of the following individuals Ten percent (10%);
(9) Fees of directors who are not employees of the company paying
such fees, whose duties are confined to attendance at and
participation in the meetings of the board of directors.
The amounts subject to withholding under this paragraph shall include not
only fees, but also per diems, allowances and any other form of income payments.
In the case of professional entertainers, athletes, and all recipient of talent fees, the
amount subject to withholding tax shall also include amounts paid to them in
consideration for the use of their names or pictures in print, broadcast, or other
media or for public appearances, for purposes of advertisements or sales
promotion.
(B) Professional fees, talent fees, etc. for services of taxable juridical
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persons On the gross professional, promotional and talents fees, or any other
form of remuneration enumerated in the preceding subparagraph for the services of
taxable juridical persons Five percent (5%).
(C) Rentals On gross rental for the continued use or possession of real
property used in business which the payor or obligor has not taken or is not taking
title, or in which he has no equity Five percent (5%).
(b) Railroads;
(d) Tunnels;
(j) Excavating;
(k) Trenching;
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(m) Surfacing work.
Real property, other than capital asset, by an individual, estate, trust, trust
fund or pension fund or by a corporation who is not habitually engaged in the real
estate business Seven and one-half percent (7.5%). LLphil
Gross selling price shall mean the consideration stated in the sales
document or the fair market value determined in accordance with Section 6 (E) of
the Code, as amended, whichever is higher. In an exchange, the fair market value
of the property received in exchange, as determined in the Income Tax Regulations
shall be used.
For this purpose, the importers, shipping and airline companies or their
agents, shall be the withholding agents of the Government;
(M) Income payments made by the top five thousand (5,000) corporations.
Income payments made by any of the top five thousand (5,000) corporations, as
determined by the Commissioner, to their local supplier of goods One percent
(1%);
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(4) The withholding agent shall submit on a semestral basis a list of
its regular suppliers of goods to the Revenue District Office
(RDO) having jurisdiction over the withholding agent's
principal place of business on or before July 31 and January 31
of each year.
(b) For large taxpayers, the filing of the return and the payment of
tax shall be made within twenty five (25) days after the end of
each month.
(c) The return for final withholding taxes on interest from any
currency bank deposit and yield or any other monetary benefit
from deposit substitutes and from trust funds and similar
arrangements shall be filed and the payment made within
twenty five (25) days from the close of each calendar quarter.
(B) Withholding tax statement for taxes withheld Every payor required
to deduct and withhold taxes under these regulations shall furnish each payee,
whether individual or corporate, with a withholding tax statement, using the
prescribed form (BIR Form 2307) showing the income payments made and the
amount of taxes withheld therefrom, for every month of the quarter within twenty
(20) days following the close of the taxable quarter employed by the payee in
filing his/its quarterly income tax return. Upon request of the payee, however, the
payor must furnish such statement to the payee simultaneously with the income
payment. For final withholding taxes, the statement should be given to the payee
on or before January 31 of the succeeding year. dctai
(C) Annual information return for income tax withheld at source. The
payor is required to file with the Commissioner, Revenue Regional Director,
Revenue District Officer, Collection Agent in the city or municipality where the
payor has his legal residence or principal place of business, where the government
office is located in the case of a government agency, on or before January 31 of
the following year in which payments were made, an Annual Information Return
of Income Tax Withheld at Source (Form No. 1604), showing among others the
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following information:
(A) The amount of creditable tax withheld shall be allowed as a tax credit
against the income tax liability of the payee in the quarter of the taxable year in
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which income was earned or received.
(B) Claims for tax credit or refund of any creditable income tax which was
deducted and withheld on income payments shall be given due course only when it
is shown that the income payment has been declared as part of the gross income
and the fact of withholding is established by a copy of the withholding tax
statement duly issued by the payor to the payee showing the amount paid and the
amount of tax withheld therefrom.
(1) If in lieu of the automatic application of his excess credit, the taxpayer
wants a cash refund or a tax credit certificate for use in payment of his other
national internal revenue tax liabilities, he shall make a written request therefor,
within two years after the payment of the tax (Ref. Secs. 204(c) and 229 of the
Code), provided however, that if the taxpayer has indicated in his income tax
return his option for either a cash refund or a tax credit certificate, such indication
shall be considered sufficient for the purpose. Upon filing of his request, the
taxpayer's income tax return showing the excess expanded withholding tax credits
shall be examined. The excess expanded withholding tax so determined, shall be
refunded/credited to the taxpayer.
Taxable Period
Less: Tax
Withheld (1,500) (500) (300) 0
Net Tax
Payable/
Creditable (500) (300) (100) 500
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In the above illustration, there is an excess credit in 1997 that can be
applied to the subsequent quarter. And if the option to apply the excess credit is
initiated in the first quarter of 1998, the taxpayer cannot avail of a refund/tax credit
certificate of the excess credit of P500 in 1997.
It shall be the duty of tax officials to accept the income tax return or other
documents submitted under oath.
(B) The recipient/payee failed to report the income on the due date
thereof, but the withholding agent/taxpayer pays the tax,
including the interest incident to the failure to withhold the tax
and surcharges, if applicable, at the time of the original audit
and investigation;
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bonafide ordinary and necessary expenses incurred or
reasonably expected to be incurred by the employee in the
performance of his duties are not compensation subject to
withholding, if the following conditions are satisfied:
(a) Retirement benefits received under Republic Act under 7641 and those
received by officials and employees of private firms, whether individual or
corporate, under a reasonable private benefit plan maintained by the employer
which meet the following requirements:
(iii) The retiring official or employee must have been in the service
of the same employer for at least ten (10) years and is not less
than fifty (50) years of age at the time of retirement; and
The phrase "for any cause beyond the control of the said official or
employee" connotes involuntariness on the part of the official or employee. The
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separation from the service of the official or employee must not be asked for or
initiated by him. The separation was not of his own making. Whether or not the
separation is beyond the control of the official or employee, being essentially a
question of fact, shall be determined on the basis of prevailing facts and
circumstances. It shall be duly established by the employer by competent evidence
which should be attached to the monthly return for the period in which the amount
paid due to the involuntary separation was made.
(e) Payments of benefits made under the Social Security System Act of
1954 as amended; and
(f) Benefits received from the GSIS Act of 1937, as amended, and the
retirement gratuity received by government officials and employees.
(a) Remuneration for services which constitute agricultural labor and paid
entirely in products of the farm where the labor is performed is not subject to
withholding. In general, however, the term, "agricultural labor" does not include
services performed in connection with forestry, lumbering or landscaping.
(b) Remuneration paid entirely in products of the farm where the labor is
performed by an employee of any person in connection with any of the following
activities is excepted as remuneration for agricultural labor:
(c) The remuneration paid entirely in products of the farm where labor is
performed for the following services in the employ of the owner or tenant or other
operator of one or more farms is not considered as remuneration for agricultural
labor, provided the major part of such services is performed on a farm:
The services described in (i) above may include for example, services
performed by carpenters, painters, mechanics, farm supervisors, irrigation
engineers, bookkeepers, and other skilled or semi-skilled workers, which
contribute in any way to the conduct of the farm or farms, as such, operated by the
person employing them, as distinguished from any other enterprise in which such
person may be engaged. Since the services described in this paragraph must be
performed in the employ of the owner or tenant or other operator of the farm, the
exception does not extend to remuneration paid for services performed by
employees of a commercial painting concern, for example, which contracts with a
farmer to renovate his farm properties. cdasia
All payments made in cash or other forms other than products of the farm
where labor is performed, for services constituting agricultural labor as explained
above, are not within the exception.
The remuneration paid for the services above enumerated which are
performed in or about rooming or lodging houses, boarding houses, clubs, hotels,
hospitals or commercial offices or establishments is considered as compensation;
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Remuneration paid for services performed as a private secretary, even if
they are performed in the employer's home is considered as compensation;
Any remuneration paid for casual labor, that is, labor which is occasional,
incidental or irregular, but which is rendered in the course of the employer's trade
or business, is considered as compensation.
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arising out of or related to an employer-employee relationship.
(7) Life Insurance. The proceeds of life insurance policies paid to the
heirs or beneficiaries upon the death of the insured, whether in a single sum or
otherwise, provided however, that interest payments agreed under the policy for
the amounts which are held by the insured under such an agreement shall be
included in the gross income.
(10) Income exempt under treaty. Income of any kind to the extent
required by any treaty obligation binding upon the Government of the Philippines.
(a) Thirteenth (13th) month pay equivalent to the mandatory one (1)
month basic salary of officials and employees of the
government, (whether national or local), including
government-owned or controlled corporations, and or private
offices received after the twelfth (12th) month pay; and
The above stated exclusions (a) and (b) shall cover benefits paid or accrued
during the year provided that the total amount shall not exceed thirty thousand
pesos (P30,000.00) which may be increased through rules and regulations issued
by the Secretary of Finance, upon recommendation of the Commissioner, after
considering, among others, the effect on the same of the inflation rate at the end of
the taxable year.
(12) GSIS, SSS, Medicare and other contributions. GSIS, SSS, Medicare
and Pag-Ibig contributions, and union dues of individual employees.
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SECTION 2.78.2. Payroll Period. The term "payroll period" means the
period of services for which a payment of compensation is ordinarily made to an
employee by his employer. It is immaterial that the compensation is not always
paid at regular intervals.
For the purpose of determining the tax, an employee can have but one
payroll period with respect to the compensation paid by any one employer. Thus,
if an employee is paid a regular compensation for the weekly payroll and in
addition thereto is paid supplemental compensation (for example taxable bonuses)
determined with respect to a different period, the payroll period is the weekly
payroll period.
In general, the relationship of the employer and employee exists when the
person for whom services were performed has the right to control and direct the
individual who performs the services, not only as to the result to be accomplished
by the work but also as to the details and means by which the result is
accomplished. An employee is subject to the will and control of the employer not
only as to what shall be done, but how it shall be done. In this connection, it is not
necessary that the employer actually directs or controls the manner in which the
services are performed. It is sufficient that he has the right to do so.
SECTION 2.78.4. Employer. The term employer means any person for
whom an individual performs or performed any service, of whatever nature, under
an employer-employee relationship. It is not necessary that the services be
continuing at the time the wages are paid in order that the status of employer may
exist. Thus for purposes of withholding, a person for whom an individual has
performed past services and from whom he is still receiving compensation is an
"employee".
(A) Person for whom the services are or were performed does not have
control. The term "employer" also refers to the person having control of the
payment of the compensation in cases where the services are or were performed
for a person who does not exercise such control. For example, where
compensation, such as certain types of pensions or retirement pay, are paid by a
trust and the person for whom the services were performed has no control over the
payment of such compensation, the trust is deemed to be the "employer".
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or prepare the statements required under the law. Nevertheless, the legal
responsibility for withholding, paying and returning the tax and furnishing such
statements rests with the corporate employer.
In any such case, each employer shall be liable for the return and payment
of a pro-rata portion of the tax so determined in accordance with the ratio of the
amount contributed by each employer relative to the aggregate of such
compensation.
A fiduciary, agent, or other person acting for two or more employers may
be authorized to withhold the tax under these regulations with respect to the wages
of the employees of such employers. Such fiduciary, agent, or other person may
also be authorized to make and file returns of the tax withheld at source on such
compensation and to furnish the receipts required under these Regulations.
Application for the authorization to perform such act should be addressed to the
Commissioner or his duly authorized representative. If such authority is granted by
the Commissioner, all provisions of the law (including penalties) and regulations
prescribed in pursuance of the law applicable in respect of an employer for whom
such fiduciary, agent or other person acts shall remain subject to all provisions of
law (including penalties) and regulations prescribed in pursuance of the law
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applicable in respect of employers.
Where the employee has opted to have his compensation income subjected
to withholding so as to be relieved of the obligation of filing an annual income tax
return and paying his tax due on a lump sum basis, he shall execute a waiver in a
prescribed BIR form of his exemption from withholding which shall constitute the
authority for the employer to apply the withholding tax table provided under these
Regulations.
The employee who opts to file the Income Tax Return shall file the same
not later than April 15 of the year immediately following the taxable year.
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(1) Use of Withholding Tax Tables. In general, every employer making
payment of compensation shall deduct and withhold from such compensation a tax
determined in accordance with the prescribed new withholding tax tables effective
January 1, 1998 (Annex A) of these Regulations.
The numerals (1-4) affixed to the status symbols "ME" and HF" represent
the number of qualified legitimate, illegitimate, or legally adopted children;
Step 1. Use the appropriate tables for the payroll period; monthly
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semi-monthly weekly or daily as the case may be.
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EXAMPLE III: Mrs. C, married with two (2) qualified dependent children
receives P5,500.00 as regular monthly compensation. Mr. C, her husband is also
employed and claims for the additional exemptions.
EXAMPLE IV: Mr. D, married with two (2) qualified dependent children
receives P3,550.00 as regular semi-monthly compensation. Mrs. D, his wife is also
employed. Mr. D did not waive his right in favor of the wife to claim for the
additional exemptions.
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EXAMPLE V: Mr. E, married with two (2) qualified dependent children
receives P3,300.00 as regular semi-monthly compensation. Mrs. E, his wife is not
employed.
COMPUTATION:
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Withholding tax for the month of June P 6,716.67
* gross benefit of P31,000 less the maximum total exemptions of the gross benefit
of P30,000
Step 4. Multiply the tax computed in Step No. (3) by the number of
payroll period to which it relates;
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used for the remaining payroll period/s of the same calendar year.
COMPUTATION:
3. For January
Tax on P5,500.00 (Line C.3, Col. 3) P 41.67
Tax on excess (P750.00 x 10%) 75.00
Tax on P6,250.00 P 116.67
For February
Tax on P5,500 (line C.3, col. 3) P 41.67
Tax on excess (P750.00 x 10%) 75.00
Tax on P6,250 P 116.67
For March
Tax on P5,500 (line C.3, col. 3) P 41.67
Tax on excess (P500.00 x 15%) 50.00
Tax on P6,000.00 P 91.67
COMPUTATION:
3. For January
Tax on P5,167.00 (line A4, col. 4) P 208.33
Tax on excess (P833.00 x 15%) P 124.95
Tax on P6,000.00 P 333.28
For February
Tax on P5,167.00 (line A4, col. 4) P 208.33
Tax on excess (P1,083.00 x 15%) P 162.45
Tax on P6,250.00 P 370.78
For March
Tax on P5,167.00 (line A 4 col. 4) P 208.33
Tax on excess (P1,666.33 x 15%) P 249.95
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Tax on P6,833.33 P 458.28
COMPUTATION:
Step 1
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For August 46,000 + 10,000 = 56,000.00
Step 2
Step 3
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Tax on P7,600 = P728.33
Step 5
For July P3,982.93 - 2,899.68 = P1,083.26
For August P5,066.24 - 3,982.93 = P1,083.31
For Sept. P6,149.52 - 5,066.24 = P1,083.28
For October P7,283.30 - 6,149.52 = P1,133.78
For Nov. P8,491.67 - 7,283.30 = P1,208.37
Step 2. If the employee has previous employment/s within the year, add
the amount of taxable regular and supplementary compensation paid to the
employee by the previous employer doing the annualized computation to the
taxable compensation income received from previous employer/s during the
calendar year:
Total family income includes primary income and other income from
sources received by all members of the nuclear family, i.e., father, mother,
unmarried children living together as one household, or a single parent with
children. A single person living alone is considered as a nuclear family.
The spouse claiming the additional exemptions for the qualified dependent
children shall be the same spouse to claim the deductions for premium payments.
The excess tax (when the amount of cumulative tax already deducted and
withheld is greater than the tax computed in Step 5) shall be credited or refunded
to the employee not later than January 25 of the following year. However, in case
of termination of employment before December, the refund shall be given to the
employee at the payment of the last compensation during the year. In return, the
employer is entitled to deduct the amount refunded from the remittable amount of
taxes withheld from compensation income in the current month in which the
refund was made, and in the succeeding months thereafter until the amount
refunded by the employer is fully repaid.
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4. Mrs. N, married, whose husband is also working received the
following:
1. Mr. K
Received
Compensation for the year Non-Taxable Taxable
* Tax Due is computed by using the rates prescribed in Sec. 24 (A), NIRC
(refer to schedule on page 43 of these regulations)
2. Mr. L
Received
Compensation for the year Non-Taxable Taxable
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Totals P90,500 P12,500 P 78,000.00
Total compensation
Received for the year Non-Taxable Taxable
(3) Segregate the taxable fringe benefit and subject the same to
withholding pursuant to Subsection D of these section of the Regulations;
(1) Final withholding tax on Fringe Benefits paid to employees other than
rank and file. There shall be imposed a final tax of 34% beginning January 1,
1998, 33% beginning January 1, 1999 and 32% beginning January 1, 2000 and
thereafter, on the grossed-up monetary value of fringe benefits pursuant to Sec. 33
of the Code and its implementing regulations, granted or furnished by the
employer to his employees (except rank and file employees) unless the fringe
benefit is required by the nature of or necessary to the trade, business or profession
of the employer, and when the fringe benefit is for the convenience and advantage
of the employer.
The fringe benefit tax shall be paid by the employer in the same manner as
provided in Sec. 2.58 of these Regulations. It shall not form part of the gross
income of the employee. The imposition of the fringe benefits tax should be the
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subject of a separate set of rules and regulations which shall be issued for the
purpose.
(a) In general the grossed-up monetary value of the fringe benefit shall be
determined by dividing the monetary value of the fringe benefit by sixty six
percent (66%) in 1998; sixty seven percent (67%) in 1999; and sixty eight percent
(68%) in 2000 and thereafter.
(3) Non-taxable Fringe Benefits. The following fringe benefits are not
subject to the fringe benefits tax.
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2.79 (B) of these Regulations.
The term "de minimis benefits" which is exempt from the fringe benefit tax
shall, in general, be limited to facilities or privileges (such as entertainment,
Christmas party and other cases similar thereto; medical and dental services; or the
so-called courtesy discount on purchases), furnished or offered by an employer to
his employees, provided such facilities or privileges are of relatively small value
and are offered or furnished by the employer merely as a means of promoting the
health, goodwill, contentment, or efficiency of his employees. LLpr
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(H) Non-deductibility of Tax and Credit for Tax Withheld. The tax
deducted and withheld at source on compensation income shall neither be allowed
as a deduction from the employer's gross income nor from the recipient's gross
compensation income. The entire amount of the compensation from which the tax
is withheld shall be included in gross income to be reported in the return required
to be made by the recipient of the income without deduction for such tax. The
creditable tax withheld at source, however, is allowable as a credit against the tax
imposed by the NIRC to the recipient of the income. Any excess of the tax
withheld at source, over the tax ascertained to be due on the income tax return
shall be refunded or automatically credited, at the taxpayer's option, to the
recipient of the income. Such refund or credit shall be without prejudice to
whatever adjustments may be proper after field investigation or upon information
relative to the taxpayer's income tax liability under the main provisions of the
Code, as amended. If the tax has actually been withheld at source, a credit or a
refund shall be made to the recipient of the income even though such withheld tax
has not been paid to the government by the employer. For the purpose of the
credit, the recipient of the income is the person subject to tax, on whose
compensation the tax was withheld. cdtai
Any excess of the tax which was withheld on compensation over the tax
due from the taxpayer shall be returned not later than July 15 of the following
year. Refunds made after such time shall earn interest at the rate of six percent
(6%) per annum, starting after the lapse of the three month period up to the date
when the refund is made.
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(1) Personal and additional exemptions.
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number of dependents for which additional exemptions may be claimed shall not
exceed four (4) dependents. The additional exemptions for qualified dependent
children shall be claimed by only one of the spouses in the case of married
individuals. LLpr
The husband shall be the proper claimant of the additional exemption for
qualified dependent children unless he explicitly waives his right in favor of his
wife in the application for registration (BIR Form 1902) or in the withholding
exemption certificate (BIR Form 2305). Provided, however, that where the spouse
of the employee is unemployed or is a non-resident citizen deriving income from
foreign sources, the employed spouse within the Philippines shall be automatically
entitled to claim the additional exemptions for children.
(A) Employee.
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(a) Husband is unemployed;
(6) Required forms and attachments. Upon filing the Application for
registration (BIR Form No. 1902), the taxpayer is required to attach any of the
following documents to establish the status of the taxpayer, if applicable, to the
application:
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(7) Concurrent multiple employments. An employee who is employed
concurrently by two or more employers within the same period of time during the
taxable year shall file the Application (BIR Form No. 1902) with his main
employer (employer paying the higher/est wage) and shall furnish a copy of the
duly received Application with his secondary employers (2nd, 3rd, etc. employers).
The employed husband and wife shall each file a separate application with their
respective employers;
(C) Procedures for the filing of the Application (Form No. 1902)
(a) All employees who have not filed the Application for
Registration (BIR Form 1902), as of December 31, 1997, shall
accomplish and file the application with their employers not
later than April 30, 1998;
(2) The employer shall transmit both the original and duplicate copies of
the Application or Certificate (after accomplishing the portion for Employer's
information of either forms) to the Revenue District Officer of the City or
Municipality where the employer has his legal residence or place of business
within thirty (30) days following its receipt from the employee. The duplicate copy
duly stamped received by the BIR shall be given to the employee.
(3) The employer shall review the exemptions of the employees and shall,
in the computation of taxes required to be withheld on the compensation of
employees, apply the correct and applicable exemptions as provided in these
regulations.
(4) In case the husband waives his right to claim the additional exemptions
of children in favor of his wife, he shall accomplish a waiver form (BIR Form No.
____) in accordance with the following procedures:
(a) Fill up three (3) copies of the prescribed waiver form (BIR
Form No. ____)
(b) Submit to his employer within ten (10) days from employment,
together with the BIR Form 1902 said waiver form for
acknowledgment in the space provided for that purpose.
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The employer of the wife shall:
(c) The employed husband and wife shall apply the waiver in the
computation of their respective taxable income in the income
tax return required to be filed by them following the procedure
for filing the waiver under Section 2.79.1 (C)(4) of these
regulations, that is, the husband shall not deduct exemptions of
children from his compensation income because he has waived
the same (exemptions of children) in favor of his wife who will
now deduct said exemptions from her income in computing her
tax due.
Waiver exercised during the calendar year shall be made only once in a
calendar year and shall take effect for the present calendar year and succeeding
year/s until revoked by the husband. Any waiver/revocation of such waiver shall
take effect only starting the succeeding calendar year. In no case should an
employer of the wife deduct exemptions of children from the wife's income unless
the waiver by the husband has been duly acknowledged by the employer of the
husband.
SECTION 2.79.4. Husband and Wife. Where both husband and wife are
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each recipients of compensation either from the same or different employers, taxes
to be withheld shall be determined on the following basis:
(B) In general, taxes shall be withheld from the wages of the wife in
accordance with the schedule for a married person without any
qualified dependent.
(A) Employer.
(1) In general, the employer shall be responsible for the withholding and
remittance of the correct amount of tax required to be deducted and withheld from
the compensation income of his employees. If the employer fails to withhold and
remit the correct amount of tax, such tax shall be collected from the employer
together with the penalties or additions to the tax otherwise applicable.
(2) The employer who required to collect, account for and remit any tax
imposed by the NIRC, as amended, who willfully fails to collect such tax, or
account for and remit such tax or willfully assist in any manner to evade any
payment thereof, shall in addition to other penalties, provided for in the Code, as
amended, be liable, upon conviction, to a penalty equal to the amount of the tax
not collected nor accounted for or remitted. Cdpr
(a) Failure to file any return and pay the tax due thereon as
required under the provisions of the Code or these regulations
on the date prescribed; or
(c) Failure to pay the deficiency tax within the time prescribed for
its payment in the notice of assessment; or
(d) Failure to pay the full or part of the amount of tax shown on
any return required to be filed under the provisions of the Code
or these regulations, or the full amount of tax due for which no
return is required to be filed, or before the date prescribed for
its payment; or
(e) In case of willful neglect to file the return within the period
prescribed by the Code or regulations, or in case a false or
fraudulent return is willfully made, the penalty to be imposed
shall be fifty percent (50%) of the deficiency tax, in case any
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payment has been made on the basis of such return before the
discovery of the falsity or fraud.
(3) Deficiency Interest Any deficiency in the basic tax due, as the term
is defined in the Code, shall be subject to the interest prescribed in paragraph (a)
hereof, which interest shall be assessed and collected from the date prescribed for
its payment until the full payment thereof. Cdpr
(D) Failure to File Certain Information Returns (Sec. 250 of the Code).
In the case of each failure to file an information return, statement or list, or keep
any record, or supply any information required by this Code or by the
Commissioner on the date prescribed therefor, unless it is shown that such failure
is due to reasonable cause and not to willful neglect, there shall, upon notice and
demand by the Commissioner, be paid by the person failing to file, keep or supply
the same, one thousand pesos (P1,000) for each such failure: Provided, however,
That the aggregate amount to be imposed for all such failures during a calendar
year shall not exceed twenty-five thousand pesos (P25,000).
(1) Failure to file return, supply correct and accurate information, pay
tax, withhold and remit tax and refund excess tax withheld on compensation (Sec.
255 of the Code). Any person required under the Code, as amended, or by
regulations to pay any tax, make a return, keep any record/s, or supply correct and
accurate information, who willfully fails to pay such tax, make such return, keep
any record/s, or supply correct and accurate information, or withhold or remit
taxes withheld, or refund excess taxes withheld on compensation, at the time or
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times required by law, shall in addition to the other penalties provided by law,
upon conviction thereof, be fined not less than ten thousand pesos (P10,000) and
imprisonment of not less than one (1) year but not more than the (10) years.
(a) Those who fail or cause the failure to deduct and withhold any
internal revenue tax under any of the withholding tax laws and
implementing regulations;
(b) Those who fail or cause the failure to remit taxes deducted and
withheld within the time prescribed by law, and implementing
regulations; and
(c) Those who fail or cause the failure to file a return or statement
within the time prescribed, or render or furnish a false or
fraudulent return or statement required under the withholding
tax laws and regulations.
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The specific schedule of penalties shall be provided in a separate regulation.
If the person required to withhold and pay the tax is a corporation, the
return shall be made in the name of the corporation and shall be signed and
verified by the president, vice-president, or authorized officers.
The employer shall furnish each employee with the original and duplicate
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copies of Form No. 2316 showing the name and address of the employer;
employer's TIN; name and address of the employee; employee's TIN; amount of
exemptions claimed; amount of premium payments on medical insurance not
exceeding P2,400.00, if any; the sum of compensation paid including the
non-taxable benefits; the amount of tax due; the amount of tax withheld during the
calendar year and such other information as may be required. The statement must
be signed by both the employer or other authorized officer and the employee, and
shall contain a written declaration that it is made under the penalties of perjury. If
the employer is the Government of the Philippines, its political subdivision,
agency or instrumentality or government-owned or controlled corporation, the
statement shall be signed by the duly designated officer or employee.
(3) (a) Taxable 13th month pay/Other benefits for the rank and file
employees
(8) Tax withheld by all present employers for calendar year; and
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individuals, however, are still required to file their income tax returns:
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must be credited or set apart for the employee without any substantial limitation or
restriction as to time or manner of payment or condition upon which payment is to
be made, and must be made available to him so that it may be drawn upon at any
time, and its payment brought with his control and disposition. A book entry, if
made, should indicate an absolute transfer from one account to another. If the
income is not credited, but it is set apart, such income must be unqualifiedly
subject to the demand of the taxpayer. Where a corporation contingently credits its
employees with a bonus stock, which is not available to such employees until some
future date, the mere crediting on the books of the corporation does not constitute
payment. LexLib
In general, value-added tax due on sales of goods and services are not
subject to withholding since the tax is not determinable at the time of sale.
However, sale of goods and services to the government subject to VAT shall be
subject to withholding pursuant to Sec. 114 (C) of RA 8424.
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On gross payment for the purchase of goods - 3%
On gross payment for services rendered - 6%
The required return shall be filed and payments made within ten (10) days
following the end of the month the withholding was made except taxes withheld
for the 3rd month of the quarter which shall be remitted through a Quarterly
Value-Added Tax Return (BIR Form 2550Q) to be filed not later than the 25th day
after the end of the calendar quarter. cda
(a) Fails or causes the failure to deduct and withhold any internal
revenue tax covered by these regulations;
(b) Fails or causes the failure to remit the taxes deducted and
withheld within the time prescribed therein;
(c) Fails or causes the failure to file the return or issue certificate
required.
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cooperatives Three percent (3%) Cdpr
(4) Franchises
(b) On dividends 0%
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(6) Finance companies
However the following shall not be included in the taxable receipts and
consequently not subject to withholding tax:
(b) reinsurance premiums where the tax has previously been paid;
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(8) Agents of foreign insurance companies
(10) Sale, barter or exchange of shares of stock listed and traded through
the local stock exchange. On the gross selling price or gross value in money
derived on every sale, barter or other disposition of shares of stock listed and
traded through the local stock exchange other than the sale by a dealer in securities
One-half of one percent (1/2 of 1%)
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(11) Shares of stock sold or exchanged through initial public offering.
On the gross selling price or gross value in money derived on every sale, barter,
exchange or other disposition through initial public offering of shares of stock in
closely held corporations in accordance with the proportion of such shares to the
total outstanding shares of stock after the listing in the local stock exchange at the
rates herein prescribed:
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the additions to the tax prescribed in Sec. 247 of the Code.
(a) Fails or causes the failure to deduct and withhold any internal
revenue tax covered by these regulations;
(b) Fails or causes the failure to remit the taxes deducted and
withheld within the time prescribed therein;
(c) Fails or causes the failure to file the return or issue certificate
required.
MILWIDA M. GUEVARA
Acting Secretary
Department of Finance
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue
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April 8, 1998
SECTION 2. Coverage.
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by the Commissioner of Internal Revenue of its status as such,
shall be covered by these Regulations, and shall fall under the
jurisdiction of the Large Taxpayers Offices that shall be created
in other areas. cdlex
1. As to tax payment:
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of at least P100,000 per quarter; or
All Large Taxpayers shall file all internal revenue tax returns,
information returns or declarations, and other required
documents at the Large Taxpayers Division, Ground Floor, BIR
National Office Building; and pay the taxes thereon at either the
Development Bank of the Philippines (DBP) or the Land Bank
of the Philippines (LBP) branches located at the same place.
This constitutes an exception to the place of filing and payment
as provided for in Sections 58, 77, 81, 114,
128, 130 and 200 of the NIRC.
2. Modes of Payment:
a. Month covered;
a. Quarter/period covered;
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3.8.1 Large Taxpayers (Individuals) shall file capital
gains and withholding tax returns, and pay the
corresponding taxes, for gains from the sale or
exchange of shares of stock not traded thru a local
stock exchange as prescribed under Section 24(C)
of the NIRC, within thirty (30) days
following each transaction, and a final
consolidated return on or before April 15, of each
year covering all stock transactions of the
preceding taxable year.
MILWIDA M. GUEVARA
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Acting Secretary
Department of Finance
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue
(12)
December 9, 1995
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SECTION 4.99-1. Persons Liable. Any person who, in the course of his
trade or business, sells, barters, exchanges or leases goods or properties, or renders
services, and any person who imports goods shall be liable to VAT imposed in
Sections 100 to 102 of the Code.
"In the course of trade or business" means the regular conduct or pursuit of
a commercial or economic activity, including transactions incidental thereto, by
any person regardless of whether or not the person engaged therein is a non-stock,
non-profit private organization (irrespective of the disposition of its net income
and whether or not it sells exclusively to members or their guests), or government
entity.
"Gross selling price" means the total amount of money or its equivalent
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which the purchaser pays or is obligated to pay to the seller in consideration of
the sale, barter or exchange of the goods or properties, excluding the value-added
tax. The excise tax, if any, on such goods or properties shall form part of the gross
selling price. In the case of sale, barter or exchange of real property subject to
VAT, gross selling price shall mean the consideration stated in the sales document
or the zonal value whichever is higher. Provided however, in the absence of zonal
value, gross selling price refers to the market value shown in the latest tax
declaration or the consideration whichever is higher.
"Taxable sale" refers to the sale, barter, exchange and/or lease of goods or
properties, including transactions "deemed sale" and the performance of service
for a consideration, all of which are subject to tax under Sections 100 and
102 of the Code.
Any person otherwise required to register for VAT purposes who fails to
register shall also be liable to VAT on his sale of taxable goods or properties as
defined in the preceding paragraph. The sale of goods subject to excise tax is also
subject to VAT, except manufactured petroleum products (other than lubricating
oil, processed gas, grease, wax and petrolatum).
"Goods or properties" refer to all tangible and intangible objects which are
capable of pecuniary estimation and shall include:
4. The right or the privilege to use motion picture films, film tapes
and discs; and
Sale of real properties held primarily for sale to customers or held for lease
in the ordinary course of trade or business of the seller shall be subject to VAT.
In the case of sale of real properties on the installment plan, the real estate
dealer shall be subject to VAT on the installment payments, including interest and
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penalties, actually and/or constructively received on or after January 1, 1996.
"Sale of real property on the installment plan" means sale of real property
by a real estate dealer, the initial payments of which in the year of sale do not
exceed twenty-five percent (25%) of the gross selling price.
Initial payments do not include the amount of mortgage on the real property
sold except when such mortgage exceeds the cost or other basis of the property to
the seller, in which case, the excess shall be considered part of the initial
payments.
"Real estate dealer" includes any person engaged in the business of buying,
developing, selling, exchanging real properties as principal and holding himself
out as a full or part-time dealer in real estate.
Any enterprise whose export sales exceed 70% of the total annual
production of the preceding taxable year shall be considered an
export-oriented enterprise upon accreditation as such under the provisions of
the Export Development Act (R.A. 7844) and its implementing rules and
regulations.
(5)
Those considered export sales under Articles 23
and 77 of Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other special laws, e.g.
Republic Act No. 7227, otherwise known as the Bases
Conversion and Development Act of 1992.
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"Considered export sales under Executive Order No. 226 "
shall mean the Philippine port F.O.B. value, determined from invoices, bills
of lading, inward letters of credit, landing certificates, and other
commercial documents, of export products exported directly by a registered
export producer or the net selling price of export products sold by a
registered export producer to another export producer, or to an export
trader that subsequently exports the same: Provided, That sales of export
products to another producer or to an export trader shall only be deemed
export sales when actually exported by the latter, as evidenced by landing
certificates or similar commercial documents: Provided, further, That
without actual exportation the following shall be considered constructively
exported for purposes of these provisions: (1) sales to bonded
manufacturing warehouses of export-oriented manufacturers; (2) sales to
export processing zones; (3) sales to registered export traders operating
bonded trading warehouses supplying raw materials in the manufacture of
export products under guidelines to be set by the Board in consultation with
the Bureau of Internal Revenue and the Bureau of Customs; (4) sales of
foreign military bases, diplomatic missions and other agencies and/or
instrumentalities granted tax immunities, of locally manufactured,
assembled or repacked products whether paid for in foreign currency or not:
Provided, further, that export sales of registered export traders may include
commission income: and Provided, finally, that exportation of goods on
consignment shall not be deemed export sales until the export products
consigned are in fact sold by the consignee.
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Authority (CDA), R.A. No. 7916, Philippine Economic Zone
Authority (PEZA), or international agreements, e.g. Asian
Development Bank (ADB), International Rice Research Institute (IRRI), etc.
to which the Philippines is a signatory effectively subject such sales to
zero-rate.
(b) Not subject to output tax. The VAT shall not apply to goods or
properties existing as of the occurrences of the following:
"Output tax" means the value-added tax due on the sale or lease of taxable
goods or properties or services by any person registered or required to register
under Section 107.
Where the gross selling price stated in the invoice is unreasonably lower
than the actual market value, the Commissioner shall by regulations determine the
appropriate tax base.
In computing the taxable base during the month or quarter, the following
shall be allowed as deductions from gross selling price:
(A) Discounts determined and granted at the time of sale which are
expressly indicated in the invoice, and the amount thereof forming part of the
gross sales duly recorded in the books of accounts.
Sales discount indicated in the invoice at the time of sale and the
grant of which does not depend upon the happening of a future event may be
excluded from the gross sales within the same month/quarter it was given.
(B) Sales returns and allowances for which a proper credit or refund
was made during the month or quarter to the buyer for sales previously
recorded as taxable sales.
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shall be the acquisition cost or the current market price of the goods, whichever is
lower.
(b) Applicability and Payment. The rates prescribed under Section 101
(a) shall be applicable to all importations withdrawn from customs custody.
"Importer" refers to any person who brings goods into the Philippines,
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whether or not made in the course of his trade or business. It includes non-exempt
persons or entities who acquire tax-free imported goods from exempt persons,
entities or agencies.
4) warehousing services;
9) dealers in securities;
12) utility cars for rent or hire driven by the lessees (rent-a-car
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companies), tourist buses;
13) other common carriers by land, air, and sea relative to their
transport of goods or cargoes;
(1) The lease or the use of or the right privilege to use any
copyright, patent, design or model, plan, secret formula or process,
goodwill, trademark, trade brand or other like property or right;
(2) The lease or the use of, or the right to use any industrial,
commercial or scientific equipment;
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industrial or commercial undertaking, venture, project or scheme;
(7) The lease of motion picture films, film tapes and discs;
(8) The lease or the use of or the right to use radio, television,
satellite transmission and cable television time.
"Real estate lessor" includes any person engaged in the business of leasing
or subleasing real property.
Lease of property shall be subject to VAT regardless of the place where the
contract of lease or licensing agreement was executed if the property leased or
used is in the Philippines.
(c) In a lease contract, the advance payment by the lessee may be: (i) a
loan to the lessor from the lessee, or (ii) an option money for the property, or (iii) a
security deposit to insure the faithful performance of certain obligations of the
lessee to the lessor, or (iv) pre-paid rental.
If the advance payment is, in fact, a pre-paid rental, then such payment is
taxable to the lessor in the month or quarter when received regardless of the
accounting methods used.
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(d) Non-life insurance companies including surety, fidelity, indemnity and
bonding companies are now subject to VAT. They are no longer liable to the
payment of the premium tax under Section 121 of the Code.
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account of the contractor.
(g) A person engaged in milling for others (except palay into rice, corn
into corn grits, and sugarcane into raw sugar) is subject to VAT on sale of services.
If the miller is paid in cash for his services, the VAT shall be based on his gross
receipts during the month or quarter. If he receives a share of the milled products,
instead of cash, the VAT shall be based on the actual market value of his share in
the milled products. Sale by the owner or the miller of his share of the milled
product (except rice, corn grits and raw sugar) shall be subject to VAT on sale of
goods.
Operators of taxicabs, utility cars for rent or hire driven by lessee, and
tourist buses, shall be subject to VAT but not to the percentage tax imposed under
Section 115 of the Code.
3. keeping and storing goods for others, as a business and for use.
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signatory effectively subjects the supply of such services to zero-rate;
The person making the exempt sale of good, properties or services shall not
bill any output tax to his customers because the said transaction is not subject to
VAT. On the other hand, a VAT-registered purchaser of VAT-exempt
goods/properties or services which are exempt from VAT is not entitled to any
input tax on such purchase despite the issuance of a VAT invoice or receipt.
(b) Sale of cotton and cotton seeds in their original state; and copra
Livestock shall include cows, bulls and calves, pigs, sheep, goats and
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rabbits. Poultry shall include fowls, ducks, geese and turkey. (It does not
include fighting cocks, race horses, zoo animals and other animals generally
considered as pets.)
Marine food products shall include fish and crustaceans, such as, but
not limited to, eels, trout, lobsters, shrimps, prawns, oysters, mussels and
clams.
Meat, fruit, fish, vegetables and other agricultural and marine good
products, shall be considered in their original state even if they have
undergone the simple processes of preparation or preservation for the
market, such as freezing, drying, salting, smoking or stripping,
including those using advanced technological means of packaging, such as
shrink wrapping in plastics, vacuum packing, tetra-pak, and other similar
packaging methods.
Polished and/or husked rice, corn grits and locally produced raw cane
sugar and ordinary salt shall be considered as agricultural food products in
their original state.
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(g) Importation of passenger and/or cargo vessel of more than five
thousand tons, whether coastwise or ocean going, including engine and spare
parts of said vessel to be used by the importer himself as operator thereof;
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3. P.D. No. 972 Operators of Coal Mines;
TAX CREDITS
1. For sale; or
(b) Purchase of real properties for which a VAT has actually been paid;
(d) Transactions "deemed sale" under Section 100 (b) of the Code;
SECTION 4.104-2. Persons who Can Avail of the Input Tax Credit.
The input tax credit on purchase of goods or properties or services shall be
creditable:
The claim for tax credit shall include not only those filed with the Bureau
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of Internal Revenue but also those filed with the Department of Finance, the Board
of Investments and the Bureau of Customs.
If at the end of any taxable quarter, the output tax exceeds the input tax, the
excess shall be paid by the VAT-registered person. This is termed as the VAT
payable. If, however, the input tax exceeds the output tax, the excess shall be
carried over the succeeding months or quarters.
(b) Input tax on importations shall be supported with the import entry or
other equivalent document showing actual payment of VAT on the imported
goods.
(d) Input tax on "deemed sale" transactions shall be substantiated with the
required invoices.
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copy of the VAT declaration/return filed by the resident licensee/lessee in behalf
of the non-resident licensor/lessor evidencing remittance of the VAT due.
However, in the case of real estate dealers, the basis of the presumptive
input tax shall be the improvements, such as buildings, roads, drainage systems,
and other similar structures, constructed on or after the effectivity of E.O. 273
(January 1, 1988).
The transitional input tax shall be 8% of the value of the inventory or actual
VAT paid, whichever is higher, which amount may be allowed as tax credit
against the output tax of the VAT-registered person.
The value allowed for income tax purposes on inventories shall be the basis
for the computation of the 8% excluding goods that are exempt from VAT under
Sec. 103. Only VAT-registered persons shall be entitled to presumptive input tax
credits.
Refund of input taxes on capital goods shall be allowed only to the extent
that such capital goods are used in VAT taxable business. If it is also used in
exempt operations; the input tax refundable shall only be the ratable portion
corresponding to the taxable operations.
Refund of input taxes on land shall be allowed only to the extent that such
land is used in VAT taxable business.
(c) Period within which refund or tax credit of input taxes shall be made.
In proper cases, the Commissioner shall grant a tax credit/refund for creditable
input taxes within sixty (60) days from the date of submission of complete
documents in support of the application filed in accordance with subparagraphs (a)
and (b) above.
In case of full or partial denial of the claim for tax credit/refund as decided
by the Commissioner of Internal Revenue, the taxpayer may appeal to the Court of
Tax Appeals within thirty (30) days from the receipt of said denial, otherwise the
decision will become final. However, if no action on the claim for tax
credit/refund has been taken by the Commissioner of Internal Revenue after the
sixty (60)-day period from the date of submission of the application but
before the lapse of the two (2)-year period from the date of filing of the VAT
return for the taxable quarter, the taxpayer may appeal to the Court of Tax
Appeals.
COMPLIANCE REQUIREMENTS
"Principal place of business" refers to the place where the head or main
office is located as appearing in the corporation's Articles of Incorporation. In the
case of an individual, the principal place of business shall be the place where the
head or main office is located and where the books of accounts are kept.
"Warehouse" means the place or premises where the inventory of goods for
sale are kept and from which such goods are withdrawn for delivery to customers,
dealers, or persons acting in behalf of the business.
Any person who maintains a head or main office and branches in different
places shall register with the Revenue District Office which has jurisdiction over
the place wherein the main or head office or branch is located. However, the
registration fee shall be paid to any accredited bank in the Revenue District where
such person is registered provided that in areas where there are no accredited
banks, the same shall be paid to the Revenue District Officer, collection agent, or
duly authorized treasurer of the municipality where each place of business or
branch is situated.
(b) Mandatory:
5) Export seller of cotton and cotton seeds in their original state; and
copra.
Once registered as a VAT person, the taxpayer shall be liable to output tax
and be entitled to input tax credit in accordance with the provisions of Secs. 104
and 105 of the Tax Code.
(d) Application for effective zero-rating. Except for actual export sale,
other cases of zero-rated sales in Sec. 4.100-3 and Sec. 4.102-2 (c) shall require
prior application with the Revenue District Office for effective zero-rating.
Without an approved application for effective zero-rating, the transaction
otherwise entitled to zero-rating shall be considered exempt.
1. VAT-exempt persons under Section 103 (a), (b), (c), (d) and (t)
of the Code who did not opt to register as VAT
taxpayers;
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SECTION 4-107-5. Posting of Registration Certificate. Every
registered taxpayer shall post or exhibit his Registration Certificate and duly
validated Registration Fee Return at a conspicuous place in his principal place of
business and at each branch in such a way that is clearly and easily visible to the
public.
Upon cancellation of registration under (9) and (10) above, the taxpayer
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shall become liable to the percentage tax imposed in Section 112 of the
Code. A final VAT return for the remaining period that he was registered shall be
filed within twenty (20) days from the date of cancellation of his registration.
For purposes of the percentage tax, the taxpayer shall file quarterly return
corresponding to the quarter of the taxable year adopted by him for income tax
purposes. An initial return shall be filed corresponding to the period from the date
of cancellation of his registration up to the end of his initial quarter.
2. date of transaction;
In the case of sale of real property subject to VAT and where the zonal or
market value is higher than the actual consideration, the VAT shall be separately
indicated in the invoice or receipt.
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"VAT Invoice". All purchases covered by invoices other than "VAT Invoice" shall
not give rise to any input tax.
An invoice shall be prepared for the entire inventory, which shall be the
basis of the entry into the subsidiary sales journal. The invoice need not enumerate
the specific items appearing in the inventory, but it must show the total amount. It
is sufficient to just make a reference to the inventory regarding the description of
the goods. However, the sales invoice number should be indicated in the inventory
filed and a copy thereof shall form part of this invoice. If the business is to be
continued by the new owners or successors, the entire amount of output tax on the
amount deemed sold shall be allowed as input taxes. If the business is to be
liquidated and the goods in the inventory are sold or disposed of to VAT-registered
buyers, an invoice or instrument of sale or transfer shall be prepared, citing the
invoice number wherein the tax was imposed on the deemed sale. At the same time
the tax paid corresponding to the goods sold should be separately indicated in the
instrument of sale.
B) Payment of VAT. All persons liable to VAT shall pay the tax
monthly based on the taxable sales/receipts for the month, using the monthly VAT
declaration form within twenty five (25) days after the end of the month.
The declaration shall be accomplished only for the first two months of each
calendar quarter.
The VAT payable (output tax less input tax) for each calendar quarter shall
be reduced by the total amount of the tax(es) previously paid for the preceding two
months and/or the sum of the excess input taxes allowed under Title IV of the
Code.
All persons first registered under Sections 4.107-1(b)(3) and 4.107-1 (c) of
these Regulations shall be liable to VAT on the effective date of registration stated
in their Certificates of Registration; i.e., the first day of the month following their
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registration. If the effective date of registration falls on the first or second month of
a calendar quarter, the initial VAT monthly declaration shall be filed within twenty
five (25) days after the end of the month, and the initial quarterly return
shall be filed on or before the 20th day after the end of the calendar quarter.
On the other hand, if the effective date of registration falls on the third month of
the calendar quarter, the quarterly return shall be filed on or before the 20th day
of the month following the end of the quarter, and no VAT monthly
declaration need be filed.
In cases where there are no duly accredited agent banks within the
municipality or city, the monthly VAT declaration and quarterly VAT return, shall
be filed with and any amount due shall be paid to the Revenue District Officer,
Collection Agent or duly authorized Treasurer of the Municipality where such
taxpayer has his principal place of business.
In areas where there are accredited banks, the quarterly VAT return, where
no payment is involved shall be filed with any accredited bank in the Revenue
District where the principal place of business of the taxpayer is registered.
However, the monthly VAT declaration, where no payment is involved, shall be
filed with the Revenue District Officer where the principal place of business of the
taxpayer is registered.
Any person who shall secure more than one TIN or who fails to indicate his
correct TIN as required in the foregoing paragraph, shall be criminally liable under
the provision of Section 274 of the Code.
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period shall be exempt from the payment of VAT and from any percentage tax
imposed under the NIRC.
TRANSITORY PROVISIONS
(i) For goods, materials or supplies not for sale but purchased for
use in business in their present condition, which are not
intended for further processing and are on hand as of December
31, 1995, a presumptive input tax equivalent to 8% of the value
of the goods or properties shall be allowed.
(iii) For real estate dealers, the presumptive input tax of 8% of the
book value of improvements constructed on or after January 1,
1988 (the effectivity of E.O. 273) shall be allowed.
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annual registration fee.
iii) VAT taxpayers who cease to become VAT liable under RA 7716.
These who have not applied for cancellation of their VAT
registration and have not register as Non-VAT taxpayer shall
apply for cancellation of their VAT registration, register as
Non-VAT taxpayer and pay the applicable registration fee.
However, those who have already applied for cancellation of
their VAT registration and registered as Non-VAT taxpayer
need not register anew, in which case, the registration fee
already paid shall be automatically credited against the 1996
annual registration fee.
(ii) The seller billed the unpaid amount not later than December 31,
1995, and a copy of such billing is attached to the information
return required in (i) hereof;
(iii) The seller has recorded in his books of accounts for the year
1995 the amount receivable; and
(iv) The seller files not later than January 20, 1996, or on or before
the 20th day after each calendar quarter, the regular percentage
tax return for the payment of the percentage tax on payments
received in 1996.
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or after January 1, 1996, be subject to VAT. On the other hand, importation of
goods previously taxable but are now exempt under RA 7716 shall, upon
withdrawal from customs custody on or after January 1, 1996, be exempt from
VAT.
Effectivity. These Regulations shall take effect fifteen (15) days after
publication in a newspaper of general circulation in the Philippines. Provided,
however, that the provisions of these Regulations shall be implemented beginning
January 1, 1996.
ROBERTO F. DE OCAMPO
Secretary of Finance
Recommending Approval:
LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue
Executive Order No, 273 (VAT) Republic Act No. 7716 (EVAT)
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Sec. 99. Persons Liable. Any person who, Sec. 99. Persons Liable Any person
in the course of trade or business, sells, who, in the course of trade or business,
barters or exchanges goods, renders sells, barters, exchanges, leases goods or
services, or engaged in similar transactions properties, renders services, and any
and any person who imports goods shall person who imports goods shall be liable to
be subject to VAT imposed in Sec. the VAT imposed in Sec. 100 to
100 to 102 of this Code. 102 of this Code.
Sec. 100. Value added tax on goods. Sec. 100 Value-added tax on sale of
a) Rate and base of tax. There shall goods or properties. a) Rate and base
be levied, assessed and collected on every of tax. There shall be levied, assessed
sale, barter or exchange of goods, a VAT and collected on every sale, barter or
equivalent to 10% of the gross selling price exchange of goods or properties, a
or gross value in money of the goods sold, VAT equivalent to 10% of the gross selling
bartered or exchanged, such tax to be paid price or gross value in money of the goods
by the seller or transferor, Provided, that or properties sold, bartered or exchange,
the following sales by VAT-registered such tax to be paid by the seller or
persons shall be subject to 0%. transferor.
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b) Transactions deemed sale. b) Transactions deemed sale. The
The following transactions shall be following transactions shall be deemed sale;
deemed sale; 1) Transfer, use or consumption noting
1) Transfer, use or consumption the course of business of goods or
not in the course of business of goods properties originally intended for sale or for
originality intended for sale or for use use in the course of business.
in the course of business. 2) Distribution or transfer to:
2) Distribution or transfer to: a) shareholders or investors as share
a) shareholders or investors in the profits of the VAT-registered
as share in the profits of the VAT persons; or
registered person; or b) Creditors in payment of debt.
b) creditors in payment of debt 3) Consignment of goods if actual sale
3) Consignment of goods if actual is not made within 60 days following
sale is into made within 60 days following the date such goods were consigned.
the date such goods were consigned. 4) Retirement from or cessation of
4) Retirement from or cessation business, with respect to inventories of
of business, with respect to inventories taxable goods existing as of such
of taxable goods existing as of such retirement or cessation.
retirement or cessation.
Sec. 102. Value-added tax on sale of Sec. 102. Value-added tax on sale of
services. (a) Rate and base of tax. services and use or lease of properties.
There shall be levied, assessed and (a) Rate and base of tax. There
collected a VAT equivalent to 10% shall be levied, assessed and collected
of gross receipts derived by any person a VAT equivalent to 10% of gross
engaged in the sale of services. The receipts derived from the sale or exchange
phrase 'sale of services' means the of services, including the use or lease
performance of all kinds of services for of properties.
others for a fee, remuneration or
consideration, including those performed The phrase "sale or exchange of
or rendered by construction and service services" means the performance of
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contractors; stock, real estate, all kinds of services in the Phils. for
commercial, others for a fee, remuneration or
customs and immigration brokers; consideration, including those performed or
lessors of personal property; lessors or rendered by construction; and service
distributors of cinematographic films; contractors; stock, real estate, commercial,
persons engaged in milling, processing, customs and immigration brokers; lessors
manufacturing or repacking goods for of property, whether personal or real;
other; and similar services regardless warehousing services; lessors or
of whether or not the performance distributors of cinematographic films;
thereof calls for the exercise or use persons engaged in milling, processing,
the physical or mental faculties; manufacturing or repacking goods for
Provided, That the following services other, proprietors, operators or keepers
performed in the Phils. by VAT- of hotels, motels, resthouses, pension
registered persons shall be subject to 0%: houses, in as, resorts; proprietors or
operators of restaurants, refreshment
1) Processing, manufacturing or parlors, cafes and other eating places
repacking goods for other persons doing including clubs and caterers; dealers in
business outside the Phils. which goods securities; lending investors; operators
are subsequently exported, where the of taxicabs; utility cars for rent or hire
services are paid for in acceptable driven by the lessees (rent a car
foreign currency, inwardly remitted to companies), tourist buses; and other
the Phils. and accounted for in common carriers by land, air,
accordance with the rules and and sea relative to their transport
regulations of the Central Bank. of goods or cargoes; services of
2) Services other than those franchise grantees of telephone
mentioned in the proceeding sub and telegraph, radio and television
-paragraph, the consideration for broadcasting and all other franchise
which is paid for in acceptable grantees except those under Section
foreign currency which is remitted 117 of this Code; services of banks,
inwardly to the Phils. and accounted non-bank financial intermediaries and
for in accordance with the rules and finance companies; and non-life
regulations of the CB. insurance companies (except their
3) Services rendered to persons or crop insurance) including surety,
entities whose exemption under special fidelity, indemnity and bonding companies;
laws or international agreement to and similar services regardless of whether
which the Phils. is a signatory effectively or not the performance thereof calls for
subjects the supply of such services to the exercise or use of the physical or
zero rate. mental faculties. The phrase 'sale or
exchange of services' shall likewise include:
"Gross receipts" means the total 1) The lease or the use of or the right
amount of money or its equivalent or privilege to use any copyright,
representing the contract price, patent, design or model, plan, secret
compensation or service fee, including formula or process, goodwill, trademark,
the amount charged for materials supplied trade brand or other like property or right;
with the services and deposits or advance 2) The lease or the use of, or the right
payments actually or constructively to use of any industrial, commercial
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received during the taxable quarter or scientific equipment;
for the services performed or to be 3) The supply of scientific, technical,
performed for another person, excluding industrial or commercial knowledge
VAT. or information;
(b) Determination of the tax. (1) 4) The supply of any assistance that
Tax billed as a separate item in the is ancillary and subsidiary to and is
invoice. If the tax is billed as a separate furnished as a means of enabling the
item in the invoice, the tax shall be application or enjoyment of any such
based on the gross receipts, including property or right as is mentioned in
the tax. subpar. (2) or any such knowledge
(2) Tax not billed separately or or information as is mentioned in sub-par.
is billed erroneously in the invoice. 3; or
If the tax is not billed separately or 5) The supply of services by a
is billed erroneously in the nonresident person or his employee is
invoice, the tax shall be determined connection with the use of property or
by multiplying the gross receipts rights belonging to, or the installation
(including the amount intended to or operation of any brand, machinery,
cover the tax or the tax billed or other apparatus purchased from such
erroneously) by 1/11. nonresident person;
6) The supply of technical advice,
assistance or services rendered in
connection with technical management or
administration of any scientific, industrial
or commercial undertaking, venture,
project or scheme;
7) The lease of motion picture films,
films, tapes and discs; and
8) The lease or the use of or the right to
use radio, television, satellite transmission
and cable television time.
Sec. 104. Tax Credits (a) Sec. 104. Tax Credits (a)
Creditable input tax Any input Creditable input tax. Any
tax on the: input tax evidenced by a VAT
(1) purchase or importation of goods: invoice or official receipt issued in
a) for sale or for conversion into accordance with Sec. 108 hereof on the
or intended to form part of a finished ff. transactions shall be creditable
products for sale or for use in the against the output tax:
course of business; or (1) Purchase or importation of goods:
b) for use a supplies in the course a) For sale; or
of business; b) For conversion into or intended
c) for use as materials supplied to form part of a finished product
in the sale of service; or for sale including packaging materials; or
d) for use in trade or business for c) For use as supplies in the course
which deduction for depreciation is of business; or
allowed under Sec. 29(1) of this d) For use as materials supplied in
Code; and the sale of service; or
(2) Services performed by a e) for use in trade or business
VAT-registered person shall be credited for which deduction for depreciation
against the output tax payable by the or an amortization is allowed under this
VAT registered person; Provided, Code, except automobiles, aircrafts
that in the case of a domestic and yachts.
purchase of goods or services, (2) Purchase of services on which a
the invoice or receipt was issued VAT has been actually paid.
therefor by a VAT-registered person
in a manner prescribed in Section 108. "The input tax on domestic purchase
of goods or properties shall be creditable:
(A) Total input tax which can be (BB) To the importer upon payment
directly attributed to transactions of the VAT prior to the release of the
subject to VAT; and goods from the custody of the Bureau
B) A ratable portion of any input of Customs.
tax which cannot be directly attributed
to either activity. However, in the case of purchaser of
"Input tax" means the value-added services, lease or use of properties the
tax paid by a VAT-registered person input tax shall be creditable to the
in the course of his trade or business purchaser, lessee or licensee upon
on importation of goods or services payment of the compensation, rental,
from a VAT-registered person. It royalty or fee.
shall also include the transitional input
tax determined accordance with Sec. A VAT-registered person who is also
105 of this Code and other transitional engaged in transactions not subject to
input taxes as prescribed by regulations. VAT shall be allowed input tax as follows:
a) Total input tax which can be
In case tax exempt products of directly attributed to transactions subject
a pioneer enterprise registered with to VAT; and
the BOI as of Aug. 1, 1986 are sold b) A ratable portion of any input
domestically to VAT-registered person, tax which cannot be directly attributed
the VAT otherwise due on such to either activity.
products shall also be considered as
input tax creditable against the The term "input tax" means the
output tax payable. Value-added tax due from or paid
by a VAT-registered person in the
The term "output tax" means course of his trade or business, on
the VAT due on the sale of taxable importation of goods or local purchase
goods or services by any person of goods or services, including lease
register or required to register under or use of property, from a VAT-
Sec. 107 of this Code. registered person. It shall also include
the transitional input tax determined
(b) Excess output or input tax. in accordance with Sec. 105 of this Code.
If at the end of any taxable quarter the
output tax exceeds the input tax, the The term "output tax" means
excess shall be paid by the VAT the value-added tax due on the sale
-registered person. If the input tax or lease of taxable goods or properties
exceeds the output tax, the excess or services by any person registered
shall be carried over the succeeding or required to register under Sec. 107
quarter or quarters. Any input tax of this Code.
attributable to the purchase of capital
goods or to zero-rated sales by a (b) Excess output or input tax.
VAT-registered person may at this If at the end of the any taxable quarter
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option be refunded or creditable against the output tax exceeds the input tax,
other internal revenue taxes, subject to the excess shall be paid by the VAT
the provisions of Sec. 106. -registered person. If the input tax exceeds
the output tax, the excess shall be carried
over to the succeeding quarters. Any input
tax attributable to the purchase of capital
goods or to zero-rated sales by a VAT-
registered person may at his option be
refunded or credited against other internal
revenue taxes, subject to the provisions of
Sec. 106.
(c) Determination of creditable input
tax. The sum of the excess input tax
carried over from the preceding month or
quarter and the input tax creditable to a
VAT-registered person during the taxable
month or quarter shall be reduced by the
amount of claim for refund or tax credit for
VAT and other adjustments, such as
purchase returns or allowances and input
tax attributable to exempt sale.
e) Period within which refund of (d) Period within which refund or tax
input taxes may be made by the credit of input taxes shall be made.
Commissioner The Commissioner In proper cases, the Commissioner shall
shall refund input taxes within 60 grant a refund or issue the tax credit
days from the date the application for creditable input taxes within sixty
for refund was filed with him or his (60) days from the date of submission
duly authorized representative. No of complete documents in support of
refund of input taxes shall be the application filed in accordance with
allowed unless the VAT-registered sub-paragraphs (a) and (b) hereof. In
person files an application. case of full or partial denial of the claim
for.
(c) Cancellation of Registration. (e) Cancellation of Registration.
The registration of any person The registration of any person who ceases
who ceases to be liable to the VAT to be liable to the VAT shall be cancelled
shall be cancelled by the Commissioner by the Commissioner upon filing of an
upon filing of an application for application for cancellation of registration.
cancellation of registration. Any person Any person who opted to be registered
who opted to be registered under under par.(d) of this section may, under
par (d) of this section may, under regulation of the Sec. of Finance, apply for
regulations of the Sec. of Finance, cancellation of such registration.
apply for cancellation of such
registration.
Sec. 108. Invoicing and accounting Sec. 108. Invoicing and accounting
requirements for VAT-registered requirements for VAT-registered persons
persons. (a) Invoicing requirements. (a) Invoicing requirements. A VAT-
A VAT-registered person shall, registered person shall, for every sale,
for every sale, issue an invoice or issue an invoice or receipt. In addition to
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receipt. In addition to the information the information required under Sec. 238,
required under Sec. 238, the ff. the ff. information shall be indicated
information shall be indicated in the in the invoice or receipt:
invoice or receipt: (1) A statement that the seller is a
VAT-registered person, followed by his
(1) The VAT registration No. TIN: and
(2) If the seller bills the tax as a (2) The total amount which the purchaser
separate item in the invoice. pays or is obligated to pay to the
(A) the amount of gross selling price seller which the indication that such
or gross receipts on which the amount includes the VAT.
value-added tax is based;
(B) the amount of VAT determined by
multiplying the amount of gross selling
price or gross receipts by the rate of
tax; and
(C) the sum of (i) the gross selling
price or gross receipts and (ii) the
VAT which the purchaser pays or is
obligated to pay to the vendor.
(3) If the seller elects not to bill
the tax as a separate item in the
invoice or receipt the total amount
charged against the buyer.
1 (Popup - Popup)
Annex A
Annex B
Annex B1
Annex B2
Annex C
Annex D
2 (Popup - Popup)
RA 8424
3 (Popup - Popup)
Annex A
4 (Popup - Popup)
RA 8479
5 (Popup - Popup)
RA 8424
6 (Popup - Popup)
RA 8424
7 (Popup - Popup)
RA 8424
8 (Popup - Popup)
RA 8479
9 (Popup - Popup)
RA 6734
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10 (Popup - Popup)
RA 8424
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RA 8424
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PD 1158
13 (Popup - Popup)
* Note from the Publisher: Copied verbatim from the official copy.
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