Republic of the Philippines
Congress of the Philippines
Metro, Manila
Second Regular Session
Begun and held in Metro, Manila, on Monday, the twenty sixth day of July, nineteen
hundred and ninety-three.
____
(REPUBLIC ACT NO. 7716)
“AN ACT RESTRUCTING THE VALUE ADDED TAX (VAT)
SYSTEM, WIDENING ITS TAX BASE 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"
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
SECTION 1. Section 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 sections 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 lessen of the goods, properties or
services. This rule shall 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 rule 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 the 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, on 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 arrangements 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 ng Pilipinas (BSP);
(iii) Sale of raw materials or packing materials to export-oriented
enterprise whose exports 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 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 effective subjects
such sales to zero-rate.
“(b) Transactions deemed sale. - The following transactions shall be
deemed sale:
“(1) Transfer, use, or consumption not in the course of business of goods
or properties originally intended for a sale or for use in the course of business.
“(2) distribution or transfer to:
“(A) Shareholder 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 inventories
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 deoend upon the happeniing of a future
event may be excluded from the gross sales within the same quarter it was given.
“(3) Authority of the Commisioner to determine the approximate tax
base. - The Commisioner shall, by regulations, determine the appropiate 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 service 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 service in the Philippines for others for a fee, renumeration or
consideration, including those performed or rendered by construction and service
contractors: stock, real state, commercial, customs and immigration brokers:
lessors or distributors of cinematographic films: persons engaged in milling,
processing, manufacturing or repacking goods for others; proprietors, operators
or keepers of hotels, motels, resthouses, pension houses, inns, resorts; proprietors
or operators of restaurants, refreshment parlors, cafes and other eating places,
including clubs and caterers; dealers in securities; lending investors; operators or
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; service 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, 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 or privilege to use any copyright,
patent, design or model, plan, secret formula or process, goodwill, trademark,
trade 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 arrangements 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, rental or
loyalty, 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) Transaction 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 exemptions 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 therefor.
“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 preservations 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) Sale 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
feeds 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,
except lubricating oil, processed gas, grease, wax, and petroleum:
“(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;
“(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
appatel, domestic animals, and personal household effects (except any vehicle,
vessel, 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 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 bonafide;
“(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 work of art, literary works, musical
compositions and similar creations, or his services performed for the productions;
“(o) Services rendered by individuals 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 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 1590, 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 not 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 regulations 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 whose issues a VAT invoice or receipt therefore 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. 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 products
for sale including packaging materials; or
“(C) For use as supplies in the course of business; or
“(E) For use in trade or business for which deduction for depreciation or
amortization is allowed under this Code, except automobiles, aircraft and yatchs.
“ (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 goods 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
transactions not subject to the value-added tax shall be allowed input 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 person 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 105 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 revenue 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 only those filed with the Bureau of Internal revenue (BIR) but also
those filed with the other government agencies, such as the Board of Investment
(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 effectivity 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 criditable input tax
due or paid attribute 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
engeged in zero-rated or effectivity zero-rated sale and also in taxable or exempt
sale of goods or properties or services, and the amount of creditible 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
imported 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 to retirement from or 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 payment of his other
internal revenue 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 of distinct establishment or place of business and every year thereafter on
of 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 (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 persons
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 purpose of this Title, any person registered in accordance with the
provisions of this Section shall be referred to as ‘VAT-registered person’. Each
VAT-registered person shall be assigned only one taxpayer’s identification
number.
“(e) 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); and
“(2) The total amount which the purchaser pays or is obligated to pay to
the seller with the identification that such amount includes the value-added tax.
“(b) Accounting requirements. - Notwithstanding the provision 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 purchasers 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 subdivisions, 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 the gross receipts for services rendered by contractors on every sale or
installment payment which shall be creditable against the value-added tax liability
of the seller or 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 further 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 further 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
transportation 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/out chauffeur)…………………………. 1,800”
SEC.12. Section 117 of the National Internal revenue Code, as amended, is
hereby further amended further 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 percent
(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 provision 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.”
SEC.13 The first paragraph of Section 121 of this Code is hereby 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 period insured shall not be included in the
taxable receipts; nor shall any tax be paid upon reinsurance by the 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 premiums 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 outside the Philippines, if
any tax on such premiums is imposed by the foreign country where the original
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 contracts workers.”
Sec.14. Section 236 of the National Internal revenue Code, as amended, is
hereby further amended further 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 Section 274 of this Code.”
Sec. 15. Section 237 of the National Internal revenue Code, as amended, is
hereby further amended further to read as follows:
“SEC.237 Registration of name or style with the revenue district officer
or collection agent. - Every person, other than persons required to be registered
under the provisions of Section 107 engaged in any business shall, on or before
the commencement of his business, or whenever he transfer 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
constituting 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 top the Commissioner.”
SEC. 16. Section 238 of the National Internal revenue Code, as amended, is
hereby further amended further 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 sale or commercial invoices, prepared at least duplicate,
showing the date of transaction, quantity, unit cost and description of
merchandise or nature of service: provided, however, That in the case of sales,
receipts or transfer in the amount of P100.00 or more, or, regardless of amount,
where the sale 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 purchaser.
“The original of each receipt or invoice 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 3 years from the close of the taxable year in
which such invoice or 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 original of each receipt or invoice 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 3 years from the close of the taxable year in
which such invoice or 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 provision 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
partnership; 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;
(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 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 provision 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 service so excluded.
SEC.18. Tax Administration Development Fund. - For the effective
implementation of this Act, there is hereby created a Tax Administration Development
Fund to be sourced from five percent (5%) of the increase in value-added tax collections
for 1995 over that of the immediately preceding year and annually thereafter for a period
of four (4) years five percent (5%) of the increase over the collection of the preceeding
year. Such amount which shall be retained by the Bureau of Internal Revenue shall be
considered receipts automatically appropriated for the first year. Disbursement 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.
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.
Paragraph (c), (d), and (e) of Article 39 of Executive Order No. 226, otherwise
known 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 Investment before the effectivity of
this Act.
Unless otherwise excluded by the President pursuant to Section 17 hereof,
Sections 119 and 120 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 or 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 newspaper of general circulation
whichever comes earlier.
Approved,
EDGARDO J. ANGARA JOSE DE VENECIA, JR
President of the Senate Speaker of the House of
Representatives
This Act. which is a consolidation of House Bill No. 11197 and Seante Bill No.
1630, was finally passed by the House of Representatives and the Senate on April 27,
1994 and May 2, 1994, respectively.
EDGARDO E. TUMANGAN ROBERTO P. NAZARENO
Secretary of the Senate Acting Secretary General
House of Representatives
Approved: 5 May 1994
FIDEL V. RAMOS
President of the Philippines