Section 19Sec./Art. 19

Section 110 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 110. Tax Credits. -

(A) Creditable Input Tax. -

(1) Any input tax evidenced by a VAT invoice issued in accordance with Section 113 hereof on the following transaction shall be credible against the output tax:

(a) Purchase or importation of goods;

(i) For sale; or

(ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or

(iii) For use as supplies in the course of business; or

(iv) For use as materials supplied in the sale of service; or

(v) For use in trade or business.

(b) Purchase of services on which a value-added tax has accrued.

x x x

(D) Output VAT Credit on Uncollected Receivables. - A seller of goods or services may deduct the output VAT pertaining to uncollected receivables from its output VAT on the next quarter, after the lapse of the agreed upon period to pay:

Provided, That the seller has fully paid the VAT on the transaction: Provided, further, That the VAT component of the uncollected receivables has not claimed as allowable deduction under Section 34(E) of this Code.

In case of recovery of uncollected receivables, the output VAT pertaining thereto shall be added to the output VAT of the taxpayer during the period of recovery."