Section 8Sec./Art. 8

Section 114 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 114. Return and payment of Value-Added Tax. -

"(A) In General - x x x

"(B) Where to File the Return and Pay the Tax. - x x x

"(C) Withholding of Value-Added Tax. - The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -cotrnolled corporations (GOCCs) shall, before making payment on account of each purchases of good and services which are subject to the value-added tax imposed in Section 106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of the gross payment thereof: Provided, That beginning January 1, 2021, the VAT withholding system under this subsection shall shift from final to a creditable system: Provided, further, That the payment for lease or use of properties or property rights to nonresident owners and payments for services to nonresident suppliers who are not registered under Section 236 shall be subject to twelve percent (12%) withholding tax at the time of payment: Provided, finally, That payments for purchases of goods and services arising from projects funded by Official Development Assistance (ODA) as defined under Republic Act No. 8182, otherwise known as the 'Official Development Assistance Act of 1996' as amended, shall not be suvbject to the final withholding tax system as imposed in this subsection.

The purposes of this section, the payor or person in control of the payment shall be considered as the withholding agent.

"(D) Reverse Charge Mechanism in Digital Services. - A VAT-registered taxpayer shall be liable to withhold and remit the value-added tax due on its purchase of digital services consumed in the Philippines from nonresident digital service providers to the Bureau of Internal Revenue, within ten (10) days following the end of the month the withholding was made."