Article 44p. 44

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

filing of the VAT refund application with the

Bureau: Provided, That, to determine the

effectivity of item no. 1, all applications filed

from January 1, 2018 shall be processed and

must be decided within ninety (90) days

from the filing of the VAT refund application;

and

(2) All pending VAT refund claims as of

December 31, 2017 shall be fully paid in cash

by December 31, 2019.

Provided, That the Department of Finance shall

establish a VAT refund center in the Bureau of

Internal Revenue (BIR) and in the Bureau of

Customs (BOC) that will handle the processing

and granting of cash refunds of creditable

input tax.

An amount equivalent to five percent (5%) of

the total VAT collection of the BIR and the BOC

from the immediately preceding year shall be

automatically appropriated annually and shall

be treated as a special account in the General

Fund or as trust receipts for the purpose of

funding claims for VAT refund: Provided, That

any unused fund, at the end of the year shall

revert to the General Fund.

Provided, further, That the BIR and BOC shall

be required to submit to the Congressional

Oversight Committee on the Comprehensive

Tax Reform Program (COCCTRP) a quarterly

report of all pending claims for refund and any

unused fund.

(b)

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.

(as amended by RA No 10963)

(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 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 sixty (60) days following the date such goods

were consigned; and

(4) Retirement from or cessation of business, with

respect to inventories of taxable goods existing as of

such retirement or cessation.

(C)

Changes

in

or

Cessation

of

Status

of

a

VAT-registered Person. - The tax imposed in Subsection

(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 rules and regulations to be promulgated by

the Secretary of Finance, upon recommendation of the

Commissioner, the status of a person as a VAT-registered

person changes or is terminated.

(D) 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.

(E) Authority of the Commissioner to Determine the

Appropriate Tax Base. - The Commissioner shall, by rules

and regulations prescribed by the Secretary of Finance,

determine the appropriate tax base in cases where a

transaction is deemed a sale, barter or exchange of goods

or properties under Subsection (B) hereof, or where the

gross selling price is unreasonably lower than the actual

market value.

SEC. 107. Value-Added Tax on Importation of Goods. -

(A) In General. - There shall be levied, assessed and

collected on every importation of goods a value-added

tax equivalent to twelve percent (12%) based on the total

value used by the Bureau of Customs in determining tariff

and customs duties, plus customs duties, excise taxes, if

any, and other charges, such tax to be paid by the

importer prior to the release of such goods from customs

custody: Provided, That where the customs duties are

determined on the basis of the quantity or volume of the

goods, the value-added tax shall be based on the landed

cost plus excise taxes, if any. (as amended by RA No

10963)

(B)

Transfer of Goods by Tax-exempt Persons. - In the

case of tax-free importation of goods into the Philippines

by persons, entities or agencies exempt from tax where

such

goods

are

subsequently

sold,

transferred

or

exchanged in the Philippines to non-exempt persons or

entities, the purchasers, transferees or recipients shall be

considered the importers thereof, who shall be liable for

any internal revenue tax on such importation. The tax due

on such importation shall constitute a lien on the goods

superior to all charges or liens on the goods, irrespective

of the possessor thereof

SEC. 108. 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 twelve

percent (12%) 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,

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;

transportation contractors on their transport of goods or

cargoes,

including

persons

who

transport

goods

or

cargoes for hire and other domestic common carriers by

land relative to their transport of goods or cargoes;

common carriers by air and sea relative to their transport

of passengers, goods or cargoes from one place in the

Philippines to another place in the Philippines; sales of

electricity by generation companies, transmission by any

entity,

and distribution companies, including electric

cooperatives; services of franchise grantees of electric

utilities, telephone and telegraph, radio and television

broadcasting and all other franchise grantees except

those

under

Section

119

of

this

Code

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 brand or

other like property or right;

© Compiled by RGL

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