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This page features the full text of
Republic Act No. 7716
AN
ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX
BASED
AND ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES AMENDING AND
REPEALING
THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED,
AND FOR OTHER PURPOSES.
REPUBLIC
ACT NO. 7716AN
ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX
BASED
AND ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES AMENDING AND
REPEALING
THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED,
AND FOR OTHER PURPOSES.
SECTION
1. Section 99 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:chanroblesvirtualawlibrary
"Sec.
99. Persons Liable. — Any person
who, in the course of trade or business, sells, barters, exchanges,
leases
goods or properties, renders services, and any person who imports goods
shall be liable to the value-added tax (VAT) imposed in Sections 100 to
102 of this Code.
chanrobles virtuallaw libraryred"The
value-added tax is an indirect tax and the amount of tax may be shifted
or passed on to the buyer, transferee or lessee of the goods,
properties
or services. This rules likewise apply to existing contracts of sale or
lease of goods, properties or services at the time of the effectivity
of
this Act.
chanrobles virtuallaw libraryred"The
phrase 'in the course of trade or business' means the regular conduct
or
pursuit of a commercial or an economic activity, including transactions
incident 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.chanrobles virtual law library
"The
rules of regularity, to the contrary, notwithstanding, services as
defined
in this Code rendered in the Philippines by nonresident foreign persons
shall be considered as being rendered in the course of trade or
business."
Sec.
2. Section 100 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
100. Value-added-tax on sale
of goods or properties. — (a) Rate and base of tax. — There shall be
levied,
assessed and collected on every sale, barter or exchange of goods or
properties,
a value-added tax equivalent to 10% of the gross selling price or gross
value in money of the goods, or properties sold, bartered or exchanged,
such tax to be paid by the seller or transferor.chanrobles virtual law library chanrobles virtuallaw libraryred
"(1) The
term 'goods or properties' shall mean all tangible and intangible
objects
which are capable of pecuniary estimation and shall include:"(A) Real
properties held primarily for sale to customers or held for lease in
the
ordinary course of trade or business;
chanrobles virtuallaw libraryred"(B) The
right or privilege to use patent, copyright, design or model, plan,
secret
formula or process, goodwill, trademark, trade brand or other like
property
or right; chanrobles virtuallaw libraryred"(C) The
right or the privilege to use in the Philippines of any industrial,
commercial
or scientific equipment;
"(D) The
right or the privilege to use motion picture films, films, tapes and
discs;
and
"(E) Radio,
television, satellite transmission and cable television time.
"The
term 'gross selling price' means the total amount of money or its
equivalent
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, one such goods or properties
shall
form part of the gross selling price.
"(2) The
following sales by VAT-registered persons shall be subject to 0%:chanroblesvirtualawlibrary
"(A) Export
sales. — The term `export sales' means: chanrobles virtuallaw libraryred
"(i) The
sale and actual shipment of goods from the Philippines to a foreign
country,
irrespective of any shipping arrangement that may be agreed upon which
may influence or determine the transfer of ownership of the goods so
exported
and paid for in acceptable foreign currency or its equivalent in goods
or services, and accounted for in accordance with the rules and
regulations
of the Bangko Sentral ng Pilipinas (BSP); chanrobles virtuallaw libraryred"(ii) Sale
of raw materials or packing materials to a nonresident buyer for
delivery
to a resident local export-oriented enterprise to be used in
manufacturing,
processing, packing or repacking in the Philippines of the said buyer's
goods and paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral
Pilipinas
(BSP);chanrobles virtuallaw libraryred
"(iii) Sale
of raw materials of packaging materials to export-oriented enterprise
whose
export sales exceed seventy percent (70%) of total annual
production;
"(iv) Sale
of gold to the Bangko Sentral ng Pilipinas (BSP); and
"(v) Those
considered export sales under Executive Order No. 226, otherwise known
as the Omnibus Investment Code of 1987, and other special laws.
"(B) Foreign
currency denominated sale. — The phrase `foreign currency denominated
sale'
means sale to a nonresident of goods, except those mentioned in
Sections
149 and 150, assembled or manufactured in the Philippines for delivery
to a resident in the Philippines, paid for in acceptable foreign
currency
and accounted for in accordance with the rules and regulations of the
Bangko
Sentral ng Pilipinas (BSP).
"(C) Sales
to persons or entities whose exemption under special laws or
international
agreements to which the Philippines is a signatory effectively subjects
such sales to zero-rate.
"(b) Transactions
deemed sale. — The following transactions shall be deemed sale: "(l) Transfer,
use, or consumption not in the course of business of goods or
properties
originally intended for sale or for use in the course of business.chanrobles virtual law library chanrobles virtuallaw libraryred
"(2) Distribution
or transfer to: "(A) Shareholders
or investors as share in the profits of the VAT-registered persons;
or chanrobles virtuallaw libraryred
"(B) Creditors
in payment of debt
"(3) Consignment
of goods if actual sale is not made within 60 days following the date
such
goods were consigned.
chanrobles virtuallaw libraryred"(4) Retirement
from or cessation of business, with respect to investment of taxable
goods
existing as of such retirement or cessation.chanrobles virtual law library "(c) Changes
in cessation of status of a VAT-registered person. — The tax imposed in
paragraph (a) of this section shall also apply to goods disposed of or
existing as of a certain date if under circumstances to be prescribed
in
regulations to be promulgated by the Secretary of Finance, the status
of
a person as a VAT-registered person changes or is terminated.chanrobles virtual law library chanrobles virtuallaw libraryred
"(d) Determination
of the tax. — (1) The tax shall be computed by multiplying the total
amount
indicated in the invoice by 1/11.
chanrobles virtuallaw libraryred"(2) Sales
returns, allowances and sales discounts. — The value of goods or
properties
sold and subsequently returned or for which allowances were granted by
a VAT-registered person may be deducted from the gross sales or
receipts
for the quarter in which a refund is made or a credit memorandum or
refund
is issued. Sales discount granted and 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
quarter
it was given.chanrobles virtual law library
"(3) Authority
of the Commissioner to determine the appropriate tax base. — The
Commissioner
shall, by regulations, determine the appropriate tax base in cases
where
a transaction is deemed a sale, barter or exchange of goods or
properties
under paragraph (b) hereof, or where the gross selling price is
unreasonably
lower than the actual market value.
Sec.
3. Section 102 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
102. Value-added tax on sale
of services and use or lease of properties. — (a) Rate and base of tax.
— There shall be levied, assessed and collected, a value-added tax
equivalent
to 10% of gross receipts derived from the sale or exchange of services,
including the use or lease of properties. chanrobles virtuallaw libraryredchanrobles virtuallaw libraryred
"The
phrase 'sale or exchange of services' means the performance of all
kinds
of services in the Philippines for others for a fee, remuneration or
consideration,
including those performed or rendered by construction and service
contractors;
stock, real estate, commercial, customs and immigration brokers;
lessors
of property, whether personal or real; warehousing services; lessors or
distributors of cinematographic films; persons engaged in milling,
processing,
manufacturing or repacking goods for others; proprietors, operators or
keepers of hotels, models, rest houses, pension houses, inns, resorts;
proprietors or operators of restaurants, refreshment parlors, cafes and
other eating places, including clubs and caterers; dealers in
securities;
landing investors; operators of taxicabs; utility cars for rent or hire
driven by the lessees (rent-a-car companies), tourist buses; and other
common carriers by land, air, and sea relative to their transport of
goods
or cargoes; services of franchise grantees of telephone and telegraph,
radio and television broadcasting and all other franchise grantees
except
those under Section 117 of this Code; services of banks, non-bank
financial
intermediaries and finance companies; and non-life insurance companies
(except their crop insurances) including surety, fidelity and indemnity
and bonding companies; and similar services regardless of whether or
not
the performance thereof calls for the exercise or use of the physical
or
mental faculties. The phrase `sale or exchange of services' shall
likewise
include:chanroblesvirtualawlibrary"(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; chanrobles virtuallaw libraryred
"(2) The
lease or the use of, or the right to use of any industrial, commercial
or scientific equipment; chanrobles virtuallaw libraryred"(3) The
supply of scientific, technical, industrial or commercial knowledge or
information;
"(4) The
supply of any assistance that is ancillary and subsidiary to and is
furnished
as a means of enabling the application or enjoyment of any such
property,
or right as is mentioned in subparagraph (2) or any such knowledge or
information
as is mentioned in subparagraph (3); or
"(5) The
supply of services by a nonresident person or his employee in
connection
with the use of property or rights belonging to, or the installation or
operation of any brand, machinery, or other apparatus purchased from
such
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.
"Lease
of properties shall be subject to the tax herein imposed irrespective
of
the place where the contract of lease or licensing agreement was
executed
if the property is leased or used in the Philippines. chanrobles virtuallaw libraryred
"The
term 'gross receipts' means the total amount of money or its equivalent
representing the contract price compensation, service fee, rentals or
royalty,
including the amount charged for materials supplied with the services
and
deposits and advanced payments actually or constructively received
during
the taxable quarter for the services performed or to be performed for
another
person, excluding value-added tax.
"(b) Transactions
subject to zero-rate. — The following services performed in the
Philippines
by VAT-registered persons shall be subject to 0%: "(1) Processing,
manufacturing or repacking goods for other persons doing business
outside
the Philippines which goods are subsequently exported, where the
services
are paid for in acceptable foreign currency and accounted for in
accordance
with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP). chanrobles virtuallaw libraryredchanrobles virtuallaw libraryred
"(2) Services
other than those mentioned in the preceding sub-paragraph, the
consideration
for which is paid for in acceptable foreign currency and accounted for
in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas
(BSP).chanrobles virtual law library chanrobles virtuallaw libraryred"(3) Services
rendered to persons or entities whose exemption under special laws or
international
agreements to which the Philippines is a signatory effectively subjects
the supply of such services to zero rate.chanrobles virtual law library
"(4) Services
rendered to vessels engaged exclusively in international shipping;
and
"(5) Services
performed by subcontractors and/or contractors in processing,
converting,
or manufacturing goods for an enterprise whose export sales exceed
seventy
percent (70%) of total annual production.
"(c) Determination
of the tax. — The tax shall be computed by multiplying the total amount
indicated in the official receipt by 1/11."
Sec.
4. Section 103 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
103. Exempt transactions. — The
following shall be exempt from the value-added tax:
"(a) Sale
of nonfood agricultural products; marine and forest products in their
original
state by the primary producer or the owner of the land where the same
are
produced; chanrobles virtuallaw libraryred
"(b) Sale
of cotton and cotton seeds in their original state; and copra; chanrobles virtuallaw libraryred"(c) Sale
or importation of agricultural and marine food products in their
original
state, except importation of meat, livestock and poultry of a kind
generally
used as, or yielding or producing foods for human consumption; and
breeding
stock and genetic materials therefor.chanrobles virtuallaw libraryred
"Products
classified under this paragraph and paragraph (a) 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. Polished and/or husked rice, corn grits, locally
produced raw cane sugar and ordinary salt shall be considered in their
original state:
"(d) State
or importation of fertilizers, seeds, seedlings and fingerlings; fish,
prawn, livestock and poultry feeds, including ingredients, whether
locally
produced or imported, used in the manufacture of finished feeds (except
specialty foods for race horses, fighting cocks, aquarium fish, zoo
animals
and other animals generally considered as pets);
"(e) Sale
or importation of petroleum products (except lubricating oil, processed
gas, grease wax, and petrolatum) subject to excise tax imposed under
Title
VI;
"(f) Sale
or importation of raw materials to be used by the buyer or importer
himself
in the manufacture of petroleum products subject to excise tax, except
lubricating oil, processed gas, grease, wax, and petrolatum.
"(g) Importation
of passenger and/or cargo vessels 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;
"(h) Importation
of personal and household effects belonging to the residents of the
Philippines
returning from abroad and nonresident citizens coming to resettle in
the
Philippines: Provided, That such goods are exempt from customs duties
under
the Tariff and Customs Code of the Philippines;
"(i) Importation
of professional instruments and implements, wearing apparel, domestic
animals,
and personal household effects (except any vehicle, vessels, aircraft,
machinery, other goods for use in the manufacture and merchandise of
any
kind in commercial quantity) belonging to persons coming to settle in
the
Philippines, for their own use and not for sale, barter or exchange,
accompanying
such persons, or arriving within ninety (90) days before or after their
arrival, upon the production of evidence satisfactory to the
Commissioner
of Internal Revenue, that such persons are actually coming to settle in
the Philippines and that the change of residence is bona fide;
"(j) Services
subject to percentage tax under Title V;
"(k) Services
by agricultural contract growers and milling for others of palay into
rice,
corn into grits and sugar cane into raw sugar;
"(l) Medical,
dental, hospital and veterinary services except those rendered by
professionals;
"(m) Educational
services rendered by private educational institutions, duly accredited
by the Department of Education Culture and Sports, and those rendered
by
government educational institutions;
"(n) Sale
by the artist himself of his works of art, literary works, musical
compositions
and similar creations, or his services performed for the production of
such works;
"(o) Services
rendered by individual pursuant to an employer-employee
relationship;
"(p) Services
rendered by regional or area headquarters established in the
Philippines
by multinational corporations which act as supervisory, communications
and coordinating centers for their affiliates, subsidiaries or branches
in the Asia-Pacific Region and do not earn or derive income from the
Philippines; chanrobles virtuallaw libraryred
"(q) Transactions
which are exempt under special laws, except those granted under
Presidential
Decree Nos. 66, 529, 972, 1491, and 1950, and non-electric cooperatives
under Republic Act No. 6938, or international agreements to which the
Philippines
is a signatory;
"(r) Export
sales by persons who are not VAT-registered;
"(s) Sale
of real properties are primarily held for sale to customers or held for
lease in the ordinary course of trade or business or real property
utilized
for low-cost and socialized housing as defined by Republic Act No.
7279,
otherwise known as the Urban Development and Housing Act of 1992, and
other
related laws;
"(t) Sale
or lease of goods or properties or the performance of services other
than
the transactions mentioned in the preceding paragraphs, the gross
annual
sales and/or receipts do not exceed the amount prescribed in regulation
to be promulgated by the President upon the recommendation by the
Secretary
of Finance which shall not be less than Four hundred eighty thousand
pesos
(P480,000.00) or more than Seven hundred twenty thousand pesos
(P720,000.00)
subject to tax under Section 112 of this Code.
"The
foregoing exemptions to the contrary notwithstanding any person whose
sale
of goods or properties or services which are otherwise not subject to
VAT,
but who issues a VAT invoice or receipt thereof shall, in addition to
his
liability to other applicable percentage tax, if any, be liable to the
tax imposed in Section 100 or 102 without the benefit of input tax
credit,
and such tax shall not, also be recognized as input tax credit to the
purchaser
under Section 104, all of this Code."
Sec.
5. Section 104 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
104. Tax Credits. — (a) Creditable
input tax. — Any input tax evidenced by a VAT invoice or official
receipt
issued in accordance with Section 108 hereof on the following
transactions
shall be creditable against the output tax:chanroblesvirtualawlibrary"(1) Purchase
or importation of goods: "(A) For
sale; or chanrobles virtuallaw libraryredchanrobles virtuallaw libraryred
"(B) For
conversion into or intended to form part of a finished product for sale
including packing materials; or chanrobles virtuallaw libraryred"(C) For
use as supplies in the course of business; or
"(D) For
use as materials supplied in the sale of service; or
"(E) For
use in trade or business for which deduction for depreciation or
amortization
is allowed under this Code, except automobiles, aircraft and yachts.
"(2) Purchase
of services on which a value-added tax has been actually paid.chanrobles virtual law library "The
input tax on domestic purchase of goods or properties shall be
creditable: "(AA) To
the purchaser upon consummation of sale and on importation of goods or
properties; chanrobles virtuallaw libraryred
"(BB) To
the importer upon payment of the value-added tax prior to the release
of
the good from the custody of the Bureau of Customs. chanrobles virtuallaw libraryredchanrobles virtuallaw libraryred"However,
in the case of purchase of services, lease or use of properties the
input
tax shall be creditable to the purchaser, lessee or licensee upon
payment
of the compensation, rental, royalty or fee.
"A
VAT-registered person who is also engaged in transactions not subject
to
the value-added tax shall be allowed input tax credit as follows:
"(A) Total
input tax which can be directly attributed to transactions subject to
value-added
tax; and chanrobles virtuallaw libraryred
"(B) A
ratable portion of any input tax which cannot be directly attributed to
either activity.
chanrobles virtuallaw libraryred"The
term 'input tax' means the value-added tax due from or paid by a
VAT-registered
persons in the course of his trade or business on importation of goods
or local purchase of goods or services, including lease or use of
property,
from a VAT-registered person. It shall also include the transitional
input
tax determined in accordance with Section 135 of this Code.
"The
term '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 of this Code.
"(b) Excess
output or input tax. — If at the end of the any taxable quarter the
output
tax exceeds the input tax, the excess shall be paid by the
VAT-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 revenues
taxes,
subject to the provisions of Section 106.chanrobles virtuallaw libraryred
"(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 value-added tax and other
adjustments,
such as purchase returns or allowances and input tax attributable to
exempt
sale.
chanrobles virtuallaw libraryred"The
claim for tax credit referred to in the foregoing paragraph shall
include
not those filed with the Bureau of Internal Revenue (BIR) but also
those
filed with the other government agencies, such as the Board of
Investments
(BOI) and the Bureau of Customs (BOC)." chanrobles virtuallaw libraryred
chan robles virtual law library
Sec.
6. Section 106 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:chanroblesvirtualawlibrary
"Sec.
106. Refunds or tax credits of
creditable input tax. — (a) Any VAT-registered person, whose sales are
zero-rated or effectively zero-rated, may, within two (2) years after
the
close of the taxable quarter when the sales were made, apply for the
issuance
of a tax credit certificate or refund of creditable input tax due or
paid
attributable to such sales, except transitional input tax, to the
extent
that such input tax has not been applied against output tax: Provided,
however, That in the case of zero-rated sales under Section
100(a)(2)(A)(i),
(ii) and (b) and Section 102(b)(1) and (2), the acceptable foreign
currency
exchange proceeds thereof had been duly accounted for in accordance
with
the regulations of the Bangko Sentral ng Pilipinas (BSP). Provided,
further, That where the taxpayer is engaged in zero-rated or
effectively
zero-rated sale and also in taxable or exempt sale of goods or
properties
or services, and the amount of creditable input tax due or paid cannot
be directly and entirely attributed to any one of the transactions, it
shall be allocated proportionately on the basis of the volume of sales. "(b) Capital
goods. — A VAT-registered person may apply for the issuance of a tax
credit
certificate or refund of input taxes paid on capital goods importer or
locally purchased, to the extent that such input taxes have not been
applied
against output taxes. The application may be made only within two (2)
years,
after the close of the taxable quarter when the importation or purchase
was made.chanrobles virtual law library chanrobles virtuallaw libraryred"(c) Cancellation
of VAT-registration. — A person whose registration has been cancelled
due
to retirement from a cessation of business, or due to changes in or
cessation
of status under Section 100(c) of this Code may, within two (2) years
from
the date of cancellation, apply for the issuance of a tax credit
certificate
for any unused input tax which may be used in pursuant of his other
internal
revenues taxes.
"(d) Period
within which refund or tax credit of input taxes shall be made. — In
proper
cases, the Commissioner shall grant a refund or issue the tax credit
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 sub-paragraphs (a) and (b) hereof. In case of full or partial
denial
of the claim for tax refund or tax credit, or the failure on the part
of
the Commissioner to act on the application within the period prescribed
above, the taxpayer affected may, within thirty (30) days from the
receipt
of the decision denying the claim or after the expiration of the
sixty-day
period, appeal the decision or the unacted claim with the Court of Tax
Appeals.
"(c) Manner
of giving refund. — Refund shall be made upon warrants drawn by the
Commissioner
or by his duly authorized representative without the necessity of being
countersigned by the Chairman Commission on Audit, the provisions of
the
revised Administrative Code, to the contrary notwithstanding: Provided,
That refunds under this paragraph shall be subject to post audit by the
Commission on Audit."
Sec.
7. Section 107 of the National
Internal Revenue Code, as amended is hereby further amended to read as
follows:
"Sec.
107. Registration of value-added
taxpayers. — (a) In General. — Any person subject to a value-added tax
under Sections 100 and 102 of this Code shall register with the
appropriate
Revenue District Officer and pay an annual registration fee in the
amount
of One thousand pesos (P1,000.00) for every separate or distinct
establishment
or place of business and every year thereafter on or before the last
day
of January. Any person just commencing a business subject to the
value-added
tax must pay the fee before engaging therein.chanrobles virtuallaw libraryredchanrobles virtuallaw libraryred
"A
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 is located. However, the
fee shall be paid to the Revenue District Officer, collection agent,
authorized
treasurer of the municipality where each place of business or branch is
situated.chanrobles virtuallaw libraryred"(b) Persons
commencing business. — Any person who expects to realize gross sales or
receipts subject to value-added tax in excess of the amount prescribed
under Section 103(t) of this Code for the next 12-month period from the
commencement of the business shall, within thirty (30) days before the
start of the said business, register with the Revenue District Officer
who has jurisdiction over his principal place of business and shall pay
the annual registration fee prescribed in the preceding paragraph.
"(c) Persons
becoming liable to the value-added tax. — Any person whose gross sales
or receipts in any 12-month period exceeds the amount prescribed under
Section 103(t) of this Code for exemption from the value-added tax
shall
register and pay the annual registration fee prescribed in paragraph
(a)
of this section within thirty (30) days after the end of the last month
of that period, and shall be liable to the value-added tax commencing
from
the first day of the month following his registration.
"(d) Optional
registration of exempt person. — Any person whose transactions are
exempt
from value-added tax under Section 103(t) of this Code, or any person
whose
transactions are exempt from value-added tax under Section 103(a), (b),
(c) and (d) of this Code with respect to his export sales only, may
apply
for registration as a VAT-registered person not later than ten (10)
days
before the beginning of the taxable quarter and shall pay the annual
registration
fee prescribed in sub-paragraph (a) of this section.
"In
any case, the Commissioner may, for administrative reason, deny any
application
for registration.
"For
purposes of this Title, any person registered in accordance with the
provision
of this section shall be referred to as `VAT-registered person.' Each
VAT-registered
person shall be assigned only one taxpayer's identification
number.
"(c) Cancellation
of Registration. — The registration of any person who ceases to be
liable
to the value-added tax shall be cancelled by the Commissioner upon
filing
of an application for cancellation of registration. Any person who
opted
to be registered under paragraph (d) of this section may, under
regulation
of the Secretary of Finance, apply for cancellation of such
registration."
Sec.
8. Section 108 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
108. Invoicing and accounting
requirements for VAT-registered persons. — (a) Invoicing requirements.
— A VAT-registered person shall, for every sale, issue an invoice or
receipt.
In addition to the information required under Section 238, the
following
information shall be indicated in the invoice or receipt: "(1) A
statement that the seller is a VAT-registered person, followed by his
taxpayer's
identification number (TIN); andchanrobles virtuallaw libraryredchanrobles virtuallaw libraryred
"(2) The
total amount which the purchaser pays or is obligated to pay to the
seller
with the indication that such amount includes the value-added tax.chanrobles virtual law library "(b) Accounting
requirements. — Notwithstanding the provisions of Section 223, all
persons
subject to the value-added tax under Sections 100 and 102 shall, in
addition
to the regular accounting records required, maintain a subsidiary sales
journal and subsidiary purchase journal on which the daily sales and
purchases
are recorded. The subsidiary journals shall contain such information as
may be required by the Secretary of Finance."
Sec.
9. Section 110(c) of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:chanroblesvirtualawlibrary
"(c) Withholding
of Creditable Value-Added Tax. — The government or any of its political
subdivision, instrumentalities or agencies, including government-owned
or -controlled corporations (GOCCs) shall, before making payment on
account
of its purchase of goods from sellers and services rendered by
contractors
which are subject to the value-added tax imposed in Sections 100 and
102
of this Code, deduct and withhold the value-added tax due at the rate
of
three percent (3%) of the gross payment for the purchase of goods and
six
percent (6%) on gross receipts for services rendered by contractors on
every sale or installments payment which shall be creditable against
the
value-added tax liability of the sellers on contractor: Provided,
however,
That the payment for lease or use of properties or property rights to
nonresident
owners shall be subject to ten percent (10%) withholding tax at the
time
of payment. For this purpose, the payor or person in control of the
payment
shall be considered as the withholding agent."
Sec.
10. Section 112 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
112. Tax on persons exempt from
value-added tax (VAT). — Any person whose sales or receipts are exempt
under Section 103(t) of this Code from the payment of value-added tax
and
who is not a VAT-registered person shall pay a tax equivalent to three
percent (3%) upon the effectivity of this Act and four percent (4%) two
(2) years thereafter, of his gross quarterly sales or receipts."
Sec.
11. Section 115 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:chanroblesvirtualawlibrary
"Sec.
115. Percentage tax on carriers
and keepers of garages. — Keepers of garages, and common carriers by
land,
air or water for the transport of passengers, except owners of bancas,
and owners of animal-drawn two-wheeled vehicles, shall pay a tax
equivalent
to three per centum (3%) of their quarterly gross receipts.
"The
gross receipts of common carriers derived from their incoming and
outgoing
freight shall not be subjected to the local taxes imposed under
Republic
Act No. 7160, otherwise known as the Local Government Code of
1991.chanrobles virtual law library "In
computing the percentage tax provided in this Section, the following
shall
be considered the minimum quarterly gross receipts in each particular
case:chanroblesvirtualawlibrary"Jeepney
for hire — 1. Manila
and other cities P2,400.00 chanrobles virtuallaw libraryred2. Provincial 1,200.00 "Public
utility bus — Not
exceeding 30 passengers P3,600.00 chanrobles virtuallaw libraryredExceeding
30 but not exceeding 50
passengers 6,000.00
Exceeding
50 passengers 7,200.00
"Taxis
— 1. Manila
and other cities P3,600.00 2. Provincial 2,400.00 Car
for hire (w/ chauffeur) 3,000.00Car
for hire (w/one chauffeur) 1,800.00"
Sec.
12. Section 117 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
117. Tax on franchises. — Any
provision of general or special law to the contrary notwithstanding
there
shall be levied, assessed and collected in respect to all franchises on
electric, gas and water utilities a tax of two (2%) on the gross
receipts
derived from the business covered by the law granting the franchise.chanrobles virtuallaw libraryred"The
grantee shall file the return with, and pay the tax due thereon to, the
Commissioner of Internal Revenue or his duly authorized representative
in accordance with the provisions of Section 125 of this Code and the
return
shall be subject to audit by the Bureau of Internal Revenue, any
provision
of any existing law to the contrary notwithstanding." chanrobles virtuallaw libraryred
Sec.
13. The first paragraph of Section
121 of this Code is hereby further amended to read as follows:
"Sec.
121. Tax on Life Insurance Premium.
— There shall be collected from every person, company, or corporation
(except
purely cooperative companies or associations) doing life insurance
business
of any sort in the Philippines a tax of five per centum (5%) of the
total
premium collected, whether such premiums are paid in money, notes,
credits
or any substitute for money, but premiums refunded within six months
after
payment on account of rejection of risk or returned for other reason to
a person insured shall not be included in the taxable receipts; nor
shall
any tax be paid upon reinsurance by a company that has already paid the
tax; nor upon premiums collected or received by any branch of a
domestic
corporation, firm or association doing business outside the Philippines
on account of any life insurance of the insured who is a nonresident,
if
any tax on such premium is imposed by the foreign country where the
branch
is established; nor upon premiums collected or received on account of
any
reinsurance, if the insured of personal insurance resides against
covered
property located outside the Philippines, if any tax on such provisions
is imposed by the foreign country where the original insurance has been
issued or perfected; nor upon that portion of the premiums collected or
received by the insurance companies on variable contracts (as defined
in
Sec. 232(2) of Presidential Decree No. 612), in excess of the amounts
necessary
to insure the lives of the variable contract workers."
Sec.
14. Section 236 of the National
Internal Revenue Code as amended, is hereby further amended to read s
follows:
"Sec.
236. Indication of taxpayer identification
number (TIN). — For tax identification purposes, any person required
under
the authority of this Code, to make, render, or file a return,
statement,
or a document, shall be supplied with or assigned a taxpayer
identification
number (TIN) which shall be indicated on such return, statement or
document.chanrobles virtual law library chanrobles virtuallaw libraryred"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 provisions of Section 274 of this Code."
Sec.
15. Section 237 of the National
Internal Revenue Code, as amended, is hereby further amended to read as
follows:
"Sec.
237. Registration of name or
style with the revenue district officer of collection agent. — Every
person,
other than persons required to the registration under the provisions of
Section 107 engaged in any business shall, on or before the
commencement
of his business, or whenever he transfers to another revenue district,
register with the Revenue District Officer concerned within 10 days
from
the commencement of business or transfer and shall pay the annual
registration
fee in the amount of one thousand pesos (P1,000.00) for every separate
or distinct establishment or place of business and every year
thereafter
on or before the last day of January. The fee shall be paid to the
Revenue
District Officer, collection agent, authorized treasurer of the
municipality
where each place of business or branch is situated. In cities or
municipalities
where no revenue district officer is stationed, such person shall
register
and pay the fee prescribed herein with the collection agent. The
registration
shall contain his name or style, place of residence, business, the
place
where such business is carried on and such other information as may be
required by the Commissioner in the form prescribed therefor. In the
case
of a firm, the names and residences of the various persons consisting
the
same shall also be registered. The Commissioner, after taking into
consideration
the volume of sales, financial condition and other relevant factors,
may
require the registrant to guarantee the payment of his taxes by way of
advance payment, or the posting or filing of a security, guarantee or
collateral
acceptable to the Commissioner."
Sec.
16. Section 238 of the National
Internal Revenue Code, as amended is hereby further amended to read as
follows:
"Sec.
238. Issuance of receipts or
sales or commercial invoices. — All persons subject to an internal
revenue
tax shall, for each sale or transfer of merchandise or for services
rendered
valued at P25.00 or more, issue duly registered receipts or sales or
commercial
invoices, prepared at least in duplicate, showing the date of
transaction,
quantity, unit cost and description of merchandise or nature of
service: Provided,
however, That in the cases of sales, receipts or transfers in the
amount
of P100.00 or more, or, regardless of amount, where the sales or
transfer
is made by a person liable to value-added tax to another person also
liable
to value-added tax; or, where the receipt is issued to cover payment
made
as rentals, commissions, compensations or fees, receipts or invoices
shall
be issued which shall show the name, business style, if any, and
address
of the purchaser, customer, or client: Provided, further, That
where
the purchaser is a VAT-registered person, in addition to the
information
herein required, the invoice or receipt shall further show the
taxpayer's
identification number of the purchaser.chanrobles virtuallaw libraryred"The
original of each receipt of invoices shall be issued to the purchaser,
customer or client at the time the transaction is effected, who, if
engaged
in business or in the exercise of profession, shall keep and preserve
the
same in his place of business for a period of receipt was issued, while
the duplicate shall be kept and preserved by the issuer, also in his
place
of business, for a like period. chanrobles virtuallaw libraryred
"The
Commissioner may, in meritorious cases, exempt any person subject to an
internal revenue tax from compliance with the provisions of this
section."
Sec.
17. Effectivity of the Imposition
of VAT on Certain Goods, Properties and Services. — The value-added tax
shall be levied assessed and collected on the following, two (2) years
after the effectivity of this Act:
(a) Services
performed in the exercise of profession or calling subject to the
professional
tax under the Local Government Code or Republic Act No. 7160, and
professional
services performed by registered general professional partnerships;
actors,
actresses, talents, singers and emcees; radio and television
broadcasters,
choreographers; musical, radio, movie, television and stage directors;
and professional athletes; chanrobles virtuallaw libraryred(b) Services
rendered by banks, non-bank financial intermediaries, finance companies
and other financial intermediaries not performing quasi-banking
functions;
(c) Freight
services rendered by international cargo vessels; and
(d) The
lease or use of sports facilities and equipment by amateur players, as
provided under Republic Act No. 6847, except sports facilities and
equipment
which are exclusively or mainly for the private use of shareholders or
members of the club or organization which owns or operates such sports
facilities and equipment.
Prior
to their inclusion in the coverage of the value-added tax, the above
services
shall continue to pay the applicable tax prescribed under the present
provisions
of the National Internal Revenue Code, as amended.
chanrobles virtuallaw libraryred
However,
when public interest so requires, the President, taking into account
the
impact on the prices of goods and services, may, upon the
recommendation
of the Secretary of Finance, exclude any of the above services from the
coverage of the value-added tax: Provided, however, That in the
event of the exclusion of any of the above services the existing
applicable
tax under the provisions of the National Internal Revenue Code, as
amended,
shall continue to be paid on the services so excluded.chanrobles virtual law library
Sec.
18. Tax Administration Development
Fund. — For the effective implementation of this Act, there is hereby
created
a Tax Administrative Development Fund to be sourced from five percent
(5%)
of the increase in value-added tax collectors for 1995 over that of the
immediately proceeding year and annually thereafter for a period of
four
(4) years five percent (5%) of the increase over the collection of the
preceding year. Such amount which shall be retained by the Bureau of
Internal
Revenue shall be considered receipts automatically appropriated for the
first year. Disbursements from this fund shall be subject to such rules
and guidelines as may be promulgated by the Department of Finance upon
recommendation of the Commissioner of Internal Revenue. These funds
shall
not be used for the purchase of vehicles, the payment of salaries and
incentives,
creation of regular positions, and construction of buildings and
offices.
Sec.
19. Rules and Regulations. —
For the effective implementation of this Act, the Secretary of Finance
shall, upon the recommendation of the Commissioner of Internal Revenue,
promulgate the necessary rules and regulations within ninety (90) days
from effectivity hereof.cralaw:red
Sec.
20. Repealing Clauses. — The
provisions of any special law relative to the rate of franchise taxes
are
hereby expressly repealed. Sections 113, 114 and 116 of the National
Internal
Revenue Code are hereby repealed. chanrobles virtuallaw libraryred
Paragraphs
(c), (d), and (e) of Article 39 of Executive Order No. 226, otherwise
as
the Omnibus Investment Code of 1987, are hereby repealed: Provided,
however,
That the benefits and incentives under said paragraphs shall continue
to
be enjoyed by enterprises registered with the Board of Investments
before
the effectivity of this Act.cralaw:red
Unless
otherwise excluded by the President pursuant to Section 17 hereof,
Sections
19 and 20 of the National Internal Revenue Code shall be repealed upon
the expiration of two (2) years from the effectivity of this Act.
During
the period that the freight services rendered by international cargo
vessels
are not covered by the value-added tax imposed under this Act, said
services
shall pay a tax at a rate of three per centum (3%) of their quarterly
gross
receipts derived from outgoing cargoes.
All
other laws, orders, issuances, rules and regulations of parts thereof
inconsistent
with this Act are hereby repealed, amended or modified
accordingly.cralaw:red
Sec.
21. This Act shall take effect
fifteen (15) days, after its complete publication in the Official
Gazette
or in at least two (2) national newspapers of general circulation
whichever
comes earlier.
Approved:
May
5, 1994
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