Article 43p. 43

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

assessment) as a deficiency, and decreased by the

amounts previously abated, refunded or otherwise

repaid in respect of such tax, or

(b) if no amount is shown as the tax by the donor,

then the amount by which the tax exceeds the

amounts previously assessed, (or collected without

assessment) as a deficiency, but such amounts

previously

assessed,

or

collected

without

assessment, shall first be decreased by the amount

previously abated, refunded or otherwise repaid in

respect of such tax.

TITLE IV VALUE ADDED TAX

(As Last Amended by RA Nos. 8761,9010,9238,9337 &

9361, 10963)

Revenue Regulation Implementing the VAT

Provisions of TRAIN Act

CHAPTER I IMPOSITION OF TAX

SEC. 105. 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 subject to the value-added tax

(VAT) imposed in Sections 106 to 108 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 rule

shall likewise apply to existing contracts of sale or lease of

goods, properties or services at the time of the effectivity

of Republic Act No. 7716.

The phrase " in the course of trade or business " means

the regular conduct or pursuit of a commercial or an

economic

activity,

including

transactions

incidental

thereto, by any person regardless of whether or not the

person engaged therein is a non-stock, nonprofit 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.

106.

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 twelve

percent (12%) 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. (as amended by RA No 10963)

(1)

"Goods or Properties." 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, 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 zero percent (0%)

rate:

(a) Export Sales. — The term 'export sales'

means:

(1) 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);

(2) Sale and delivery of goods to:

(i)

Registered

enterprises

within

a

separate customs territory as provided

under special laws; and

(ii) Registered enterprises within tourism

enterprise

zones

as

declared

by

the

Tourism

Infrastructure

and

Enterprise

Zone Authority (TIEZA) subject to the

provisions under Republic Act No. 9593 or

The Tourism Act of 2009.

(3)

Sale

of

raw

materials

or

packaging

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);

(4)

Sale

of

raw

materials

or

packaging

materials

to

export-oriented

enterprise

whose export sales exceed seventy percent

(70%) of total annual production;

(5)

Those

considered export sales under

Executive Order No. 226, otherwise known as

the Omnibus Investment Code of 1987, and

other special laws; and

(6) The sale of goods, supplies, equipment

and fuel to persons engaged in international

shipping

or

international

air

transport

operations:

Provided,

That

the

goods,

supplies, equipment and fuel shall be used

for international shipping or air transport

operations.

Provided, That subparagraphs (3), (4), and (5)

hereof shall be subject to the twelve percent

(12%)

value-added

tax

and

no

longer

be

considered export sales subject to zero percent

(0%) VAT rate upon satisfaction of the following

conditions:

(1)

The

successful

establishment

and

implementation of an enhanced VAT refund

system that grants refunds of creditable

input tax within ninety (90) days from the

© Compiled by RGL

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