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
Section 1. Sec. 99 of the National Internal Revenue Code,
as amended, is hereby further amended to read as follows:
"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 Section s 100 to 102 of
this Code.
"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.
"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.
"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.
"(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;
"(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;
"(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%:
"(A) Export sales. — The term `export sales' means:
"(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);
"(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);
"(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 Section s 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.
"(2) Distribution or transfer to:
"(A) Shareholders or investors as share in the
profits of the VAT-registered persons; or
"(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.
"(4) Retirement from or cessation of business, with
respect to investment of taxable goods existing as of such retirement
or cessation.
"(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.
"(d) Determination of the tax. — (1) The tax shall be
computed by multiplying the total amount indicated in the invoice by
1/11.
"(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.
"(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.
"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:
"(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 of
any industrial, commercial or scientific equipment;
"(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.
"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).
"(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).
"(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.
"(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;
"(b) Sale of cotton and cotton seeds in their
original state; and copra;
"(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 therefore.
"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;
"(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:
"(1) Purchase or importation of goods:
"(A) For sale; or
"(B) For conversion into or intended to form part of
a finished product for sale including packing materials; or
"(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.
"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;
"(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.
"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
"(B) A ratable portion of any input tax which cannot
be directly attributed to either activity.
"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.
"(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.
"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)."
Sec. 6. Section 106 of the National Internal
Revenue Code, as amended, is hereby further amended to read as
follows:
"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.
"(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
Section s 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.
"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.
"(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 Sec. 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);
and
"(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.
"(b) Accounting requirements. — Notwithstanding the
provisions of Sec. 223, all persons subject to the value-added tax
under Section s 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:
"(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 Section s 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."
SECTION 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."
SECTION 11. Section 115 of the National Internal
Revenue Code, as amended, is hereby further amended to read as
follows:
"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.
"In computing the percentage tax provided in this Section , the
following shall be considered the minimum quarterly gross receipts in
each particular case:
"Jeepney for hire —
1. Manila and other cities P2,400.00
2. Provincial 1,200.00
"Public utility bus —
Not exceeding 30 passengers P3,600.00
Exceeding 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) 3,000.00
Car for hire (w/one chauffeur) 1,800.00"
SECTION 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.
"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."
SECTION 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."
SECTION 14. Sec. 236 of the National Internal
Revenue Code as amended, is hereby further amended to read as 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.
"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 Sec. 274 of this Code."
SECTION 15. Sec. 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 therefore. 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."
SECTION 16. Sec. 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.
"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.
"The Commissioner may, in meritorious cases, exempt any person subject
to an internal revenue tax from compliance with the provisions of this
section."
SECTION 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;
(b) Services rendered by banks, non-bank financial
intermediaries, finance companies and other financial intermediaries
not performing quasi-banking functions;t
(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.
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.
SECTION 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.
SECTION 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.
Sec. 20. Repealing Clauses. — The provisions of
any special law relative to the rate of franchise taxes are hereby
expressly repealed. Section s 113, 114 and 116 of the National Internal
Revenue Code are hereby repealed.
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.
Unless otherwise excluded by the President pursuant to Section 17
hereof, Section s 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.
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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