Beruflich Dokumente
Kultur Dokumente
2
MIDTERMS
REVIEWER
Sources:
National
Internal
Revenue
Code
De
Leon-
Class
Notes
Prepared
by:
B2015
Academics
Committee
Tax
2
Reviewer
Ops
MODULE
1
decedent,
it
shall
include
only
property
situated
in
the
Philippines.
TRANSFER
TAXES
Classification
of
decedent
those
imposed
upon
the
gratuitous
disposition
SEC.
85.
Gross
Estate.
-
the
value
of
the
gross
estate
of
private
property
of
the
decedent
shall
be
determined
by
including
the
taxes
levied
on
the
transmission
of
property
value
at
the
time
of
his
death
of
all
property,
real
or
from
a
decedent
or
deceased
to
his
heirs
or
from
personal,
tangible
or
intangible,
wherever
situated:
a
donor
to
a
donee
Provided,
however,
that
in
the
case
of
a
nonresident
decedent
who
at
the
time
of
his
death
was
not
a
1.
Estate
taxation
citizen
of
the
Philippines,
only
that
part
of
the
entire
2.
Donors
tax
gross
estate
which
is
situated
in
the
Philippines
shall
be
included
in
his
taxable
estate.
I.
ESTATE
TAXATION
(A)
Decedent's
Interest.
-
To
the
extent
of
the
interest
therein
of
the
decedent
at
the
time
of
his
death;
A.)
BASIC
PRINCIPLES
OF
ESTATE
TAX
(B)
Transfer
in
Contemplation
of
Death.
-
To
the
extent
of
any
interest
therein
of
which
the
decedent
Estate
tax
is
the
tax
on
the
right
to
transmit
has
at
any
time
made
a
transfer,
by
trust
or
otherwise,
property
at
death
and
on
certain
transfers
which
in
contemplation
of
or
intended
to
take
effect
in
are
made
by
the
statute
the
equivalent
of
possession
or
enjoyment
at
or
after
death,
or
of
which
testamentary
dispositions.
he
has
at
any
time
made
a
transfer,
by
trust
or
otherwise,
under
which
he
has
retained
for
his
life
or
Estate
Tax
is
a
tax
imposed
in
the
privilege
that
a
for
any
period
which
does
not
in
fact
end
before
his
person
is
given
in
controlling
to
a
certain
extent,
death
(1)
the
possession
or
enjoyment
of,
or
the
right
the
disposition
of
his
property
to
take
effect
upon
to
the
income
from
the
property,
or
(2)
the
right,
death.
It
is
an
excise
tax
imposed
on
the
act
of
either
alone
or
in
conjunction
with
any
person,
to
passing
the
ownership
of
property
at
the
time
of
designate
the
person
who
shall
possess
or
enjoy
the
property
or
the
income
therefrom;
except
in
case
of
a
death
and
not
on
the
value
of
the
property
or
bonafide
sale
for
an
adequate
and
full
consideration
in
right.
Estate
tax
should
not
be
construed
as
a
money
or
money's
worth.
direct
tax
on
the
property
of
the
decedent
although
the
tax
is
based
thereon.
(C)
Revocable
Transfer.
-
(1)
To
the
extent
of
any
interest
therein,
of
which
the
Purpose
and
Justification
decedent
has
at
any
time
made
a
transfer
(except
in
case
of
a
bona
fide
sale
for
an
adequate
and
full
1)
Benefit-received
theory-considers
the
services
consideration
in
money
or
money's
worth)
by
trust
or
rendered
by
the
government
in
the
distribution
otherwise,
where
the
enjoyment
thereof
was
subject
of
the
estate
of
decedent,
collected
as
tax
at
the
date
of
his
death
to
any
change
through
the
exercise
of
a
power
(in
whatever
capacity
2)
Privilege
theory/State
partnership
theory-
exerciseable)
by
the
decedent
alone
or
by
the
inheritance
is
not
a
right
but
a
privilege
granted
decedent
in
conjunction
with
any
other
person
by
the
State
(passive
and
silent
partner
in
the
(without
regard
to
when
or
from
what
source
the
accumulation
of
property)
decedent
acquired
such
power),
t
o
alter,
amend,
3)Ability
to
pay
theory-
receipt
of
inheritance
revoke,
or
terminate,
or
where
any
such
power
is
places
assets
in
the
hands
of
the
heirs
and
relinquished
in
contemplation
of
the
decedent's
death.
beneficiaries,
creating
an
ability
to
pay
tax
(2)
For
the
purpose
of
this
Subsection,
the
power
to
4)
Redistribution
of
wealth
theory-
the
receipt
of
alter,
amend
or
revoke
shall
be
considered
to
exist
on
income
contributes
to
inequalities
in
wealth
and
the
date
of
the
decedent's
death
even
though
the
incomes,
the
tax
bringing
more
equality
to
exercise
of
the
power
is
subject
to
a
precedent
giving
of
notice
or
even
though
the
alteration,
amendment
or
distribution
of
wealth
revocation
takes
effect
only
on
the
expiration
of
a
stated
period
after
the
exercise
of
the
power,
whether
B.)
DETERMINATION
OF
GROSS
ESTATE
or
not
on
or
before
the
date
of
the
decedent's
death
GROSS
ESTATE
-
is
the
total
value
of
all
property,
notice
has
been
given
or
the
power
has
been
whether
real
or
personal,
tangible
or
intangible,
exercised.
In
such
cases,
proper
adjustment
shall
be
belonging
to
the
decedent
at
the
time
of
his
death,
made
representing
the
interests
which
would
have
situated
within
or
outside
the
Philippines,
where
been
excluded
from
the
power
if
the
decedent
had
such
decedent
was
a
resident
or
citizen
of
the
lived,
and
for
such
purpose
if
the
notice
has
not
been
Philippines.
in
case
of
a
non-resident
alien
given
or
the
power
has
not
been
exercised
on
or
Classification
of
Taxpayers
and
Composition
before
the
date
of
his
of
Gross
Estate
death,
such
notice
shall
be
considered
to
have
been
given,
or
the
power
exercised,
on
the
date
of
his
death.
Gross
Estate
Composition
(D)
Property
Passing
Under
General
Power
of
(Sec.
85,
NIRC)
Appointment.
-
To
the
extent
of
any
property
passing
under
a
general
power
of
appointment
exercised
by
Decedent
Gross
Estate
the
decedent:
(1)
by
will,
or
(2)
by
deed
executed
in
contemplation
of,
or
intended
to
take
effect
in
Resident
citizen
1.
)
Real
property
possession
or
enjoyment
at,
or
after
his
death,
or
(3)
Nonresident
citizen
wherever
situated
by
deed
under
which
he
has
retained
for
his
life
or
any
Resident
alien
2.)Tangible
personal
period
not
ascertainable
without
reference
to
his
property
wherever
situated
death
or
for
any
period
which
does
not
in
fact
end
3.)
Intangible
personal
property
before
his
death
(a)
the
possession
or
enjoyment
of,
or
wherever
situated
the
right
to
the
income
from,
the
property,
or
(b)
the
right,
either
alone
or
in
conjunction
with
any
person,
to
designate
the
persons
who
shall
possess
or
enjoy
Nonresident
alien
1)
Real
property
situated
in
the
the
property
or
the
income
therefrom;
except
in
case
Philippines
of
a
bona
fide
sale
for
an
adequate
and
full
2)
Tangible
personal
property
consideration
in
money
or
money's
worth.
situated
in
the
Philippines
3)
Intangible
personal
property
(E)
Proceeds
of
Life
Insurance.
-
To
the
extent
of
the
with
situs
in
the
Philippines,
amount
receivable
by
the
estate
of
the
deceased,
his
unless
excluded
in
the
basis
of
executor,
or
administrator,
as
insurance
under
reciprocity
policies
taken
out
by
the
decedent
upon
his
own
life,
irrespective
of
whether
or
not
the
insured
retained
the
power
of
revocation,
or
to
the
extent
of
the
amount
receivable
by
any
beneficiary
designated
in
Velilla
v
Posadas
the
policy
of
insurance,
except
when
it
is
expressly
SUMMARY:
Arthur
Graydon
Moody
was
an
stipulated
that
the
designation
of
the
beneficiary
is
American
resident
who
lived
and
maintained
irrevocable.
business
in
the
Philippines.
He
became
inflicted
with
leprosy
and
for
fear
of
being
confined
in
(F)
Prior
Interests.
-
Except
as
otherwise
specifically
the
Cullion
Leper
Colony,
he
surreptitiously
left
provided
therein,
Subsections
(B),
(C)
and
(E)
of
this
the
Philippines.
He
stayed
in
Paris
for
three
Section
shall
apply
to
the
transfers,
trusts,
estates,
months
for
treatment,
and
then
moved
in
interests,
rights,
powers
and
relinquishment
of
powers,
as
severally
enumerated
and
described
Calcutta,
India.
From
Calcutta,
he
wrote
a
letter
therein,
whether
made,
created,
arising,
existing,
to
Harry
Wendt
in
Manila
offering
to
sell
his
exercised
or
relinquished
before
or
after
the
shares
in
a
domestic
company.
He
stated
in
the
effectivity
of
this
Code.
letter
that
certainly
Ill
never
return
there
to
live
or
enter
business
again.
He
died
of
his
(G)
Transfers
of
Insufficient
Consideration.
-
If
any
one
disease
in
Calcutta.
His
estate
consisted
of
the
transfers,
trusts,
interests,
rights
or
powers
principally
of
bonds
and
shares
of
stock
of
enumerated
and
described
in
Subsections
(B),
(C)
and
domestic
corporations,
bank
deposits
and
(D)
of
this
Section
is
made,
created,
exercised
or
other
intangible
personal
property.
During
the
relinquished
for
a
consideration
in
money
or
money's
probate
of
his
will,
the
CIR
assessed
worth,
but
is
not
a
bona
fide
sale
for
an
adequate
and
full
consideration
in
money
or
money's
worth,
there
inheritance
and
income
taxes.
The
defense
of
shall
be
included
in
the
gross
estate
only
the
excess
of
his
estate
was
that
Moody
was
a
non-resident
the
fair
market
value,
at
the
time
of
death,
of
the
alien
so
his
personal
property
is
not
taxable
in
property
otherwise
to
be
included
on
account
of
such
the
Philippines.
The
Supreme
Court
ruled
that
transaction,
over
the
value
of
the
consideration
the
CIR
properly
assessed
his
taxes
because
the
received
therefor
by
the
decedent.
situs
of
his
properties
was
the
Philippines
and
Maams
notes>>>
has
to
be
in
contemplation
of
death
he
was
domiciled
in
the
Philippines
until
his
death.
(H)
Capital
of
the
Surviving
Spouse.
-
The
capital
of
the
surviving
spouse
of
a
decedent
shall
not,
for
the
DOCTRINE:
To
effect
the
abandonment
of
ones
purpose
of
this
Chapter,
be
deemed
a
part
of
his
or
her
domicile,
there
must
be
a
deliberate
and
gross
estate.
provable
choice
of
a
new
domicile,
coupled
with
actual
residence
in
the
place
chosen,
with
a
declared
and
provable
intent
that
it
should
be
transfer
or
death
taxes
of
every
character
or
ones
fixed
and
permanent
place
of
abode,
description
in
respect
of
intangible
personal
ones
home. property
owned
by
citizens
of
the
Philippines
not
residing
in
that
foreign
country.
The
term
'deficiency'
means:
(a)
the
amount
by
which
tax
imposed
by
this
Chapter
exceeds
the
amount
Coll
v
Lara
shown
as
the
tax
by
the
donor
upon
his
return;
but
the
SUMMARY:
Miller
was
an
american
citizen
who
amount
so
shown
on
the
return
shall
first
be
had
to
stay
in
the
Phiilppines
due
to
his
work.
increased
by
the
amount
previously
assessed
(or
During
his
stay
in
the
Phil,he
acquired
shares
of
Collected
without
assessment)
as
a
deficiency,
and
stock
in
domestic
corporations.
When
Miller's
decreased
by
the
amounts
previously
abated,
will
was
admitted
to
probate,
both
in
the
US
and
refunded
or
otherwise
repaid
in
respect
of
such
tax,
or
in
the
Phil.,
the
ancillary
administrator
filed
for
(b)
if
no
amount
is
shown
as
the
tax
by
the
donor,
then
taxes.
The
CIR
assessed
the
estate
of
esteate
and
the
amount
by
which
the
tax
exceeds
the
amounts
inheritance
tax
on
the
premise
that
Miller
was
a
previously
assessed,
(or
collected
without
assessment)
as
a
deficiency,
but
such
amounts
resident
of
the
Philippines
at
the
time
of
his
previously
assessed,
or
collected
without
assessment,
death.
The
SC
ruled
that
Miller
was
a
resident
of
shall
first
be
decreased
by
the
amount
previously
the
US
at
the
time
of
his
death.
abated,
refunded
or
otherwise
repaid
in
respect
of
such
tax.
DOCTRINE:
at
the
time
that
The
National
Internal
Revenue
Code
was
promulgated
in
1939,
the
Reciprocity
clause
prevailing
construction
given
by
the
courts
to
the
The
NIRC
excludes
intangible
personal
"residence"
was
synonymous
with
domicile.
and
property
with
situs
in
the
Philippines
from
the
that
the
two
were
used
intercnangeably
gross
estate
of
a
non-resident
alien
decedent
if
there
is
reciprocity.
There
is
reciprocity
if:
a)
The
Rule
of
Reciprocity
decedent
at
the
time
of
his
death
was
a
resident
SEC.
104.
Definitions.
-
For
purposes
of
this
Title,
the
citizen
of
a
foreign
country
which
at
the
time
of
terms
'gross
estate'
and
'gifts'
include
real
and
his
death
did
not
impose
an
estate
tax
of
any
personal
property,
whether
tangible
or
intangible,
or
character
in
respect
of
intangible
personal
mixed,
wherever
situated:
Provided,
however,
That
where
the
decedent
or
donor
was
a
nonresident
alien
property
of
citizens
of
the
Philippines
not
at
the
time
of
his
death
or
donation,
as
the
case
may
residing
in
that
foreign
country;
OR
b)
the
laws
of
be,
his
real
and
personal
property
so
transferred
but
the
foreign
country
of
which
the
decedent
was
a
which
are
situated
outside
the
Philippines
shall
not
be
resident
citizen
at
the
time
of
his
death
allow
a
included
as
part
of
his
'gross
estate'
or
'gross
gift':
similar
exemption
from
estate
taxes
of
every
Provided,
further,
That
franchise
which
must
be
character,
in
respect
of
intangible
personal
exercised
in
the
Philippines;
shares,
obligations
or
property
owned
by
citizens
of
the
Philippines
not
bonds
issued
by
any
corporation
or
sociedad
anonima
residing
in
that
foreign
country.
organized
or
constituted
in
the
Philippines
in
accordance
with
its
laws;
shares,
obligations
or
bonds
Situs
or
location
of
property,
Sec
104:
by
any
foreign
corporation
eighty-five
percent
(85%)
of
the
business
of
which
is
located
in
the
Philippines;
*Real
and
personal
property,
whether
tangible
or
shares,
obligations
or
bonds
issued
by
any
foreign
intangible,
or
mixed,
wherever
situated,
provided
corporation
if
such
shares,
obligations
or
bonds
have
that
where
the
decedent
(or
donor)
was
a
non-
acquired
a
business
situs
in
the
Philippines;
shares
or
resident
alien
at
the
time
of
his
death
(or
rights
in
any
partnership,
business
or
industry
donation),
his
real
and
personal
property
so
established
in
the
Philippines,
shall
be
considered
as
transferred
but
which
are
situated
outside
the
situated
in
the
Philippines:
Provided,
still
further,
Philippines
shall
not
be
included
as
part
of
his
that
no
tax
shall
be
collected
under
this
Title
in
gross
estate.
(DeLeon)
respect
of
intangible
personal
property:
(a)
if
the
decedent
at
the
time
of
his
death
or
the
donor
at
Intangible
Assets
with
Situs
Within
the
the
time
of
the
donation
was
a
citizen
and
resident
of
a
foreign
country
which
at
the
time
of
his
death
Philippines
(Sec.
104,
NIRC)
or
donation
did
not
impose
a
transfer
tax
of
any
1.
Franchise
which
must
be
exercised
in
the
character,
in
respect
of
intangible
personal
Philippines.
property
of
citizens
of
the
Philippines
not
residing
2.
Shares,
obligations
or
bonds
issued
by
any
in
that
foreign
country,
or
(b)
if
the
laws
of
the
corporation
or
sociedad
anonima
organized
or
foreign
country
of
which
the
decedent
or
donor
constituted
in
the
Philippines
in
accordance
with
was
a
citizen
and
resident
at
the
time
of
his
death
its
laws.
or
donation
allows
a
similar
exemption
from
3.
Shares,
obligations
or
bonds
issued
by
any
the
taxable
estate
under
the
provisions
of
foreign
corporation
85%
of
the
business
of
which
402(c)
of
the
Revenue
Act
of
1918,
40
Stat.
1057,
is
located
in
the
Philippines.
1097.
The
amount
of
the
additional
tax
was
paid
4.
Shares,
obligations,
or
bonds
issued
by
any
by
the
executors
and
claim
for
refund
was
filed.
foreign
corporation
if
such
shares,
obligations
or
The
claim
having
been
rejected,
the
executors
bonds
have
acquired
a
business
situs
in
the
brought
this
suit
in
the
Court
of
Claims
to
recover
Philippines.
the
amount
paid.
The
Court
of
Claims
decided
in
5.
Shares
or
rights
in
any
partnership,
business
favor
of
the
executors
or
industry
established
in
the
Philippines.
DOCTRINE:
Whether
a
gift
inter
vivos
was
made
SPECIFIC
ITEMS
INCLUDED
in
the
GROSS
"in
contemplation
of
death"
within
the
meaning
ESTATE
of
the
Revenue
Act
of
1918
depends
upon
the
donor's
motive,
to
be
determined
in
each
case
Property
owned
by
the
decedent
actually
and
from
the
circumstances,
including
his
bodily
and
physically
present
in
his
estate
at
the
time
of
his
mental
condition.
A
gift
is
made
"in
death
such
as
land,
buildings,
shares
of
stock,
contemplation
of
death"
when
the
motive
vehicles,
bank
deposit,
and
the
like.
inducing
it
is
of
the
sort
that
leads
to
1. Decedent's
Interest
testamentary
disposition,
but
not
when
the
refers
to
the
extent
of
equity
or
ownership
motive
is
merely
to
attain
an
object
desirable
to
participation
of
the
decedent
on
any
property
the
donor
in
his
life,
as
where
the
immediate
and
physically
existing
and
present
in
the
gross
moving
cause
of
transfers
was
the
carrying
out
of
estate,
whether
or
not
in
his
possession,
control
a
policy,
long
followed
by
the
decedent
in
dealing
or
dominion.
It
also
refers
to
the
value
of
any
with
his
children,
of
making
liberal
girts
to
them
interest
in
property
owned
or
possessed
by
the
during
his
lifetime.
A
transfer
may
be
"in
decedent
at
the
time
of
his
death
(interest
having
contemplation
of
death"
though
not
induced
by
a
value
or
capable
of
being
valued
or
transferred).
fear
that
death
is
near
at
hand.
Property
not
physically
in
the
estate
(these
have
already
been
transferred
during
the
lifetime
Dizon
vs.
Posadas
of
the
decedent
but
are
still
subject
to
payment
of
SUMMARY:
estate
tax)
such
as:
After
the
death
of
his
father,
Luis
Dison
was
charged
Php
2,808
as
inheritance
tax
by
the
CIR,
2. Transfer
in
Contemplation
of
Death.
w/c
he
paid
under
protest.
Alleging
that
the
-includes
donation
mortis
cause
property
he
received
from
his
deceased
father
-include
in
the
gross
estate
the
value
of
property
was
donated
to
him
by
virtue
of
a
gift
intervivos,
transferred
y
the
decedent
during
his
lifetime
in
and
not
an
inheritance,
he
sought
to
recover
anticipation
of
his
death
such
as:
what
he
paid.
LC
ruled
in
favor
of
the
CIR,
so
he
a.
Transfer
of
property
in
favor
of
another
person,
appealed
to
the
SC
Held:
The
gift
to
Dison,
who
but
the
transfer
was
intended
to
take
effect
only
was
a
forced
heir,
was
considered
an
upon
the
transferors
death
advancement.
Under
Sec.
1540
such
gifts
is
b.
Transfer
by
gift
intended
to
take
effect
at
death,
subject
to
tax.
or
after
death,
or
under
which
the
donor
reserved
the
income
or
the
right
to
designate
the
DOCTRINE:
persons
who
should
enjoy
the
income.
The
law
presumes
that
such
gifts
(made
to
those
(Note:
There
is
no
transfer
in
contemplation
of
who
shall
prove
to
be
the
heirs,
devisees,
legatees
death
when
the
transfer
of
property
is
a
bona
or
donees
mortis
causa
of
the
donor)
have
been
fide
sale
for
an
adequate
and
full
consideration
in
made
in
anticipation
of
inheritance
to
EVADE
tax.
money
or
moneys
worth.)
Thus,
to
prevent
this,
they
are
added
to
the
resulting
amount
of
the
inheritance
tax.
US
vs.
Wells
SUMMARY:
John
W.
Wells,
a
resident
of
3. Revocable
Transfer.
-
Menominee,
Michigan,
died
on
August
17,
1921.
-It
is
a
transfer
where
the
terms
of
enjoyment
of
The
Commissioner
of
Internal
Revenue
assessed
the
property
may
be
altered,
amended,
revoked
additional
estate
taxes,
upon
the
ground
that
or
terminated
by
the
decedent.
It
is
sufficient
that
certain
transfers
by
the
decedent
within
two
the
decedent
had
the
power
to
revoke
though
he
years
prior
to
his
death,
were
made
in
did
not
exercise
the
power.
contemplation
of
death
and
should
be
included
in
(These
transfers
do
not
actually
convey
full
ownership
over
the
property
transferred.
Hence,
Del
Val
vs.
Del
Val
they
are
still
part
of
the
gross
estate
of
the
SUMMARY:
Decedent
Gregorio
took
out
a
life
transferor).
insurance
policy
on
his
life
and
designated
Andres
as
beneficiary.
Gregorio
died
intestate.
4. Property
Passing
Under
General
Power
of
His
other
heirs
claim
that
the
proceeds
of
the
Appointment
insurance
policy
should
be
included
in
Gregorios
-The
power
of
appointment
is
general
when
the
estate.
The
Court
held
that
the
proceeds
belong
power
of
appointment
authorizes
the
donee
of
to
the
beneficiary
as
his
separate
property
and
the
power
to
appoint
any
person
he
pleases.
The
should
excluded
from
the
estate
of
the
insured-
donee
of
a
general
power
of
appointment
holds
decedent.
the
appointed
property
with
all
the
attributes
of
ownership
thus,
the
appointed
property
shall
DOCTRINE:
Proceeds
of
an
insurance
policy
form
part
of
the
gross
estate
of
the
donee
belong
exclusively
to
the
beneficiary
and
not
to
(beneficiary)
upon
his
death.
the
estate
of
the
person
whose
life
was
insured.
The
civil
code
does
not
apply
because
the
5. Proceeds
of
Life
Insurance.
contract
of
life
insurance
is
a
special
contract
and
-Proceeds
of
life
insurance
taken
out
by
the
the
destination
of
the
proceeds
is
determined
by
decedent
on
his
own
life
should
be
included
in
special
laws
which
deal
exclusively
with
the
the
gross
estate
if
the
following
requisites
are
subject.
present:
**When
taxable
a.
It
must
be
an
insurance
on
the
a)
Beneficiary
is
estate
of
deceased-
amount
life
of
the
decedent.
receivable
by
the
estat,
his
executor,
or
b.
The
beneficiary
must
be
either
administrator
as
insurance
under
policies
taken
of
the
following:
out
by
the
decedent
upon
his
own
life,
His
estate
irrespective
of
whether
or
not
the
insured
His
executor
retained
the
power
of
revocation
His
administrator
b)
Beneficiary
other
than
decedent-
amount
Any
third
person
provided
that
the
designation
receivable
by
any
beneficiary
except
when
it
is
is
not
irrevocable
(If
silent,
the
designation
of
the
expressly
stipulated
that
the
designation
of
beneficiary
is
assumed
to
be
revocable.
beneficiary
is
irrevocable
Irrevocable
designation
of
the
beneficiary
is
never
assumed.)
6. Prior
Interests.
Except
as
otherwise
specifically
provided
therein,
Subsections
(B),
(C)
and
(E)
of
Section
86
shall
Proceeds
apply
to
the
transfers,
trusts,
estates,
interests,
of
Life
rights,
powers
and
relinquishment
of
powers,
as
Insurance
severally
enumerated
and
described
therein,
Beneficiary
Designation
Gross
whether
made,
created,
arising,
existing,
Estate
exercised
or
relinquished
before
or
after
the
Estate
Revocable
or
Included
effectivity
of
this
Code.
irrevocable
Executor
Revocable
or
Included
7. Transfers
of
Insufficient
Consideration.
-
irrevocable
When
a
sale
or
transfer
(other
than
a
bona
fide
or
Administrator
Revocable
or
Included
valid
sale)
was
made
for
a
price
less
than
it
FMV
irrevocable
at
the
time
of
sale
or
transfer,
the
excess
of
the
3rd
Party
(i.e.
Revocable
Included
FMV
of
the
transferred
property
at
the
time
of
wife)
Irrevocable
death
over
the
value
of
the
consideration
3rd
Party
Excluded
received
should
be
included
in
the
gross
estate.
For
this
purpose,
the
following
FMVs
shall
be
used:
Art.
116,
Family
Code.
All
property
acquired
during
a.
FMV
of
the
property
at
the
time
of
transfer
if
the
marriage,
whether
the
acquisition
appears
to
have
the
consideration
received
is
substantially
the
been
made,
contracted
or
registered
in
the
name
of
same
with
the
FMV
at
the
time
of
transfer,
such
one
or
both
spouses,
is
presumed
to
be
conjugal
sale
or
transfer
is
considered
a
bona
fide
sale,
unless
the
contrary
is
proved.
hence,
not
subject
to
estate
tax.
b.
FMV
of
the
property
at
the
time
of
death
If
(1)
Those
acquired
by
onerous
title
during
the
the
consideration
received
is
substantially
lower
marriage
at
the
expense
of
the
common
fund,
whether
or
for
less
than
full
and
adequate
consideration
the
acquisition
be
for
the
partnership,
or
for
only
one
compared
to
the
FMV
at
the
time
of
the
sale
or
of
the
spouses;
(2)
Those
obtained
from
the
labor,
industry,
work
or
transfer,
such
sale
or
transfer
was
made
for
profession
of
either
or
both
of
the
spouses;
insufficient
consideration.
In
such
case,
the
(3)
The
fruits,
natural,
industrial,
or
civil,
due
or
excess
of
the
FMV
at
the
time
of
death
over
the
received
during
the
marriage
from
the
common
FMV
at
the
time
of
sale
or
transfer
should
be
property,
as
well
as
the
net
fruits
from
the
exclusive
included
in
the
gross
estate
of
the
decedent.
property
of
each
spouse;
-
If
there
was
no
consideration
received
at
the
(4)
The
share
of
either
spouse
in
the
hidden
treasure
date
of
transfer
and
such
transfer
was
made
in
which
the
law
awards
to
the
finder
or
owner
of
the
contemplation
of
death,
the
FMV
of
the
property
property
where
the
treasure
is
found;
at
the
date
of
death,
not
at
the
date
of
transfer,
(5)
Those
acquired
through
occupation
such
as
fishing
should
be
included
in
the
gross
estate
of
the
or
hunting;
(6)
Livestock
existing
upon
the
dissolution
of
the
decedent.
partnership
in
excess
of
the
number
of
each
kind
-
If
there
was
no
consideration
received
at
the
brought
to
the
marriage
by
either
spouse;
and
date
of
transfer
and
such
transfer
was
not
made
(7)
Those
which
are
acquired
by
chance,
such
as
in
contemplation
of
death,
such
transfer
shall
winnings
from
gambling
or
betting.
However,
losses
be
considered
donation
inter-vivos
subject
to
therefrom
shall
be
borne
exclusively
by
the
loser-
donors
tax
base
on
the
FMV
of
the
property
at
spouse.
the
date
the
donation
was
made.
Art.
109
FC.
The
following
shall
be
the
exclusive
8. Capital
of
the
Surviving
Spouse.
property
of
each
spouse:
The
capital
of
the
surviving
spouse
of
a
(1)
That
which
is
brought
to
the
marriage
as
his
or
her
own;
decedent
shall
not,
for
the
purpose
of
this
(2)
That
which
each
acquires
during
the
marriage
by
Chapter,
be
deemed
a
part
of
his
or
her
gross
gratuitous
title;
estate.
(3)
That
which
is
acquired
by
right
of
redemption,
by
barter
or
by
exchange
with
property
belonging
to
only
Claims
against
insolvent
persons
one
of
the
spouses;
and
A
judicial
declaration
of
insolvency
is
not
(4)
That
which
is
purchased
with
exclusive
money
of
required
but
the
incapacity
of
the
debtor
to
pay
the
wife
or
of
the
husband.
his
obligation
should
be
proven.
-As
a
rule
regardless
of
the
amount
the
debtor
is
Art.
88
FC.
The
absolute
community
of
property
unable
to
pay,
the
full
amount
of
the
claim,
between
spouses
shall
commence
at
the
precise
moment
that
the
marriage
is
celebrated.
Any
against
the
insolvent
person
should
be
included
stipulation,
express
or
implied,
for
the
in
the
gross
estate
of
the
decedent.
The
portion
of
commencement
of
the
community
regime
at
any
other
the
claim
which
is
not
collectible
should
be
time
shall
be
void.
allowed
as
a
deduction
from
the
gross
estate.
Art.
92
FC.
The
following
shall
be
excluded
from
the
Properties
of
spouses
community
property:
(1)
Property
acquired
during
the
marriage
by
Sec
85
(H)
,
NIRC.
Capital
of
the
Surviving
Spouse.
-
gratuitous
title
by
either
spouse,
and
the
fruits
as
well
The
capital
of
the
surviving
spouse
of
a
decedent
shall
as
the
income
thereof,
if
any,
unless
it
is
expressly
not,
for
the
purpose
of
this
Chapter,
be
deemed
a
part
provided
by
the
donor,
testator
or
grantor
that
they
of
his
or
her
gross
estate.
shall
form
part
of
the
community
property;
(2)
Property
for
personal
and
exclusive
use
of
either
Art.
75.
Family
Code.
The
future
spouses
may,
in
the
spouse.
However,
jewelry
shall
form
part
of
the
marriage
settlements,
agree
upon
the
regime
of
community
property;
absolute
community,
conjugal
partnership
of
gains,
(3)
Property
acquired
before
the
marriage
by
either
complete
separation
of
property,
or
any
other
regime.
spouse
who
has
legitimate
descendants
by
a
former
In
the
absence
of
a
marriage
settlement,
or
when
the
marriage,
and
the
fruits
as
well
as
the
income,
if
any,
regime
agreed
upon
is
void,
the
system
of
absolute
of
such
property.
community
of
property
as
established
in
this
Code
shall
govern.
Art.
117
FC.
The
following
are
conjugal
partnership
properties:
C.
VALUATION
OF
THE
GROSS
ESTATE
schools
in
the
area
increased
the
land
value,
made
it
a
choice
for
setting
up
residences,
and
In
General-
Fair
market
Value
at
the
time
of
showed
increase
in
population
upon
the
news
death
spreading
that
the
train
station
is
going
to
be
built
there
whereas
the
values
of
the
lots
in
Real
Property
question
were
originally
very
cheap
because
they
were
mere
agricultural
lots,
some
not
even
tilled
The
higher
value
between:
because
they
owners
did
not
have
farm
animals.
FMV
determined
by
the
Commissioner;
and
The
issue
at
hand
is
whether
the
court
can
FMV
as
shown
in
the
schedule
of
values
fixed
by
substitute
its
own
judgment
for
the
findings
of
the
provincial
and
city
assessors.
the
commissioners,
or
subject
their
report
to
review.
If
there
is
no
zonal
value,
the
taxable
base
is
the
FMV
that
appears
in
the
latest
tax
declaration.
DOCTRINE:
"Compensation"
means
an
equivalent
for
the
If
there
is
an
improvement,
the
value
of
value
of
the
land
(property)
taken.
Anything
improvement
is
the
construction
cost
per
beyond
that
is
more
and
anything
short
of
that
is
building
permit
or
the
FMV
per
latest
tax
less
than
compensation.
To
compensate
is
to
declaration
render
something
which
is
equal
in
value
to
that
taken
or
received.
The
word
"just"
is
used
to
Personal
Property
intensify
the
meaning
of
the
word
FMV
at
the
time
of
death
"compensation;"
to
convey
the
idea
that
the
equivalent
to
be
rendered
for
the
property
taken
Shares
of
stock
shall
be
real,
substantial,
full,
ample.
"Just
Unlisted
common
share:
Book
value
per
share
of
compensation."
therefore,
as
used
in
section
246
the
issuing
corporation.
(Appraisal
surplus
shall
of
the
Code
of
Civil
Procedure,
means
a
fair
and
not
be
considered,
as
well
as
the
assigned
full
equivalent
for
the
loss
sustained.
amount
to
preference
share,
if
any).
There
is
ample
authority
in
the
statute
to
authorize
the
courts
to
change
or
modify
the
Unlisted
preference
share:
Par
value
per
share
report
of
the
commissioners
by
increasing
or
decreasing
the
amount
of
the
award,
if
the
facts
Listed
share:
FMV
shall
be
the
arithmetic
mean
of
the
case
will
justify
such
change
or
between
the
highest
and
lowest
quotation
at
a
modification.
date
nearest
the
date
of
death,
if
none
is
available
Evidence
of
other
sales
made
in
good
faith
is
on
the
date
of
death
itself
competent
if
the
character
of
such
parcels
as
sites
for
business
purposes,
dwellings,
or
for
whatever
Right
to
usufruct,
use
or
habitation,
other
use
which
enhances
the
pecuniary
value
of
In
accordance
with
the
latest
Basic
Standard
the
condemned
land
is
sufficiently
similar
to
the
Mortality
Table
and
annuity
taking
into
account
latter
that
it
may
be
reasonably
assumed
that
the
the
probable
life
of
the
beneficiary,
to
be
price
of
the
condemned
land
would
be
approved
by
the
Secretary
of
Finance
upon
approximately
near
the
price
brought
by
the
recommendation
of
the
Insurance
Commissioner
parcels
sold.
The
market
value
of
the
condemned
land
is
all
Manila
Railroad
Co.
vs.
Velasquez
that
the
owner
is
entitled
to.
Evidence
that
the
SUMMARY:
Manila
Railroad
Company
wanted
locality
may
become
a
business
or
a
choice
adjoining
pieces
of
land
to
be
expropriated
to
the
residential
district
when
its
history
over
a
period
government
for
their
use
in
line
with
the
of
years
shows
that
there
are
large
tracts
of
constriction
of
a
railroad
station
at
the
site
of
agricultural
land
in
the
vicinity
which
have
never
Lucena,
Province
of
Tayabas.
The
company
in
been
appropriated
for
any
of
those
purposes,
question
is
contesting
the
P81k
just
does
not
justify
appraising
such
land
at
figures
compensation
amount
arrived
at
by
the
which
would
be
worth
it
if
such
development
commissioners.
[The
court
here
discusses
the
were
an
actual
fact
modes
of
arriving
at
such
amount].
The
lower
court
relied
upon
the
finding
of
the
commissioners,
which
MRC
feels
to
be
greatly
in
excess
of
its
value
because
the
construction
of
EXCLUSIONS
AND
EXEMPTIONS
FROM
THE
2.
Benefits
received
by
members
from
the
SSS
by
GROSS
ESTATE
reason
of
death
(RA
1792).
3.
Amounts
received
from
Philippine
and
US
A.
Exclusions
under
Secs.
85
and
86,
NIRC
governments
for
war
damages.
4.
Amounts
received
from
the
US
Veterans
1.
Exclusive
property
of
the
surviving
spouse
Administration.
5.
Benefits
received
from
the
Philippines
and
US
In
case
of
married
decedents,
the
composition
of
government
for
damages
suffered
during
WW
II
the
gross
estate
shall
be:
(RA
4917).
6.
Retirement
benefits
of
officials/
employees
of
a
private
firm
(RA
4917).
Particulars
Gross
7.
Payments
from
the
Philippines
of
US
Estate
government
to
the
legal
heirs
of
the
deceased
of
Exclusive
properties
of
the
decedent
Included
WW
II
Veterans
and
deceased
civilian
for
supplies/
services
furnished
to
the
US
and
Exclusive
properties
of
the
surviving
Excluded
Philippine
Army
(RA
136).
spouse
8.
Life
insurance
proceeds
on
life
insurance
policy
taken
out
by
the
decedent
himself,
upon
Common
properties
of
the
decedent
Included
his
own
life,
where
the
beneficiary
is
a
third
and
the
surviving
spouse
person
and
is
irrevocably
designated.
9.
Life
insurance
proceeds
on
Insurance
policy
(group
insurance)
taken
out
by
employer
on
the
2.
Property
outside
the
Philippines
of
a
non- employees
life,
whoever
the
beneficiary
maybe,
resident
alien
decedent
whether
the
designation
as
beneficiary
is
Sec.
85,
NIRC
Provided,
however,
that
in
the
case
of
a
revocable
or
irrevocable.
nonresident
decedent
who
at
the
time
of
his
death
was
not
a
citizen
of
the
Philippines,
only
that
part
of
the
entire
gross
estate
which
is
situated
in
the
TAX
RATES
of
ESTATE
TAX
under
Section
84
Philippines
shall
be
included
in
his
taxable
estate.
There
shall
be
levied,
assessed,
collected
and
3.
Intangible
personal
property
in
the
Philippines
paid
upon
the
transfer
of
the
net
estate
as
of
a
non-resident
alien
under
the
Reciprocity
Law.
determined
in
accordance
with
Sections
85
and
86
of
every
decedent,
whether
residenr
or
B.
Exemption
under
Sec.
87,
NIRC
nonresident
of
the
Philippines,
a
tax
based
on
the
SEC.
87
Exemption
of
Certain
Acquisitions
and
value
of
such
net
estate,
as
computed
in
Transmissions.
accordance
with
the
ff.
Schedule:
The
following
shall
not
be
taxed:
(A)
The
merger
of
usufruct
in
the
owner
of
the
If
net
estate
is:
naked
title;
OVER
BUT
NOT
THE
TAX
PLUS
(B)
The
transmission
or
delivery
of
the
inheritance
OVER
SHALL
BE
or
legacy
by
the
fiduciary
heir
or
legatee
to
the
fideicommissary;
-
P
200,000
Exempt
-
(C)
The
transmission
from
the
first
heir,
legatee
or
donee
in
favor
of
another
beneficiary,
in
accordance
P
200,000
500,000
P
0
5%
of
excess
with
the
desire
of
the
predecessor;
and
over
P200,000
(D)
All
bequests,
devises,
legacies
or
transfers
to
social
welfare,
cultural
and
charitable
institutions,
P
500,000
2,000,000
15,000
8%
of
excess
no
part
of
the
net
income
of
which
insures
to
the
over
P500,000
benefit
of
any
individual:
Provided,
however,
That
not
more
than
thirty
percent
(30%)
of
the
said
bequests,
devises,
legacies
or
transfers
shall
be
used
P2,000,000
5,000,000
135,000
11%
of
excess
by
such
institutions
for
administration
purposes.
over
P2,000,000
P
5,000,000
10,000,000
465,000
15%
excess
over
C.
Exclusions
under
special
laws
P
5,000,000
1.
Proceeds
of
life
insurance
and
benefits
received
by
members
of
GSIS
(RA
728).
10,000,000
-
1,215,000
20%
of
excess
P
200,000
threshold
be
allowed
to
be
claimed
as
over
P
a
deduction
under
claims
against
estate
P10,000,000
-Funeral
expenses
also
include:
-Mourning
apparel
of
the
surviving
spouse
and
unmarried
minor
children
of
the
deceased
bought
and
used
on
the
occasion
of
the
burial
D.
DEDUCTIONS
FROM
GROSS
ESTATE
-Expenses
of
the
wake
preceding
the
burial
including
food
Summary
-Fees
for
religious
rites
and
ceremonies
prior
to
Allowable
Deductions
interment
from
the
Gross
Estate
-Cost
of
burial
plot,
tombstone,
mausoleum,
but
not
their
upkeep
-Publication
and
telecommunication
charges
for
Citizen
and
Nonresident
Alien
Decedents
death
notices
Resident
-Interment
and/
or
cremation
charges
Decedents
-All
other
expenses
incurred
for
the
performance
of
the
rites
and
ceremonies
incident
to
the
I.
ORDINARY
I.
ORDINARY
DEDUCTIONS:
DEDUCTIONS:
1.
Proportionate
Deductions
for
interment
1.
Expenses,
Losses,
Expenses,
Losses,
Indebtedness,
(Note:
Medical
expenses
as
of
the
last
illness
will
Indebtedness,
Taxes,
Taxes,
etc.
(ELITe)
computed
as:
not
form
part
of
funeral
expenses
but
should
be
etc.
claimed
as
medical
expenses)
a.
Funeral
Expenses
Gross
Estate
(Phils.)
x
ELITe
b.
Judicial
expenses
(world)
2.
Judicial
expenses
c.
Claims
against
the
Gross
Estate
(World)
-administration
expenses
essential
in
the
estate
settlement
of
the
estate
or
necessarily
incurred
d.
Claims
against
the
2.Transfer
for
public
use
for
but
not
limited
to:
a)
collection
of
the
assets
insolvent
person
3.Vanishing
deduction
of
the
estate;
b)
payment
of
debts;
and
c)
e.
Taxes
4.RA
4917
Not
allowed
f.
Losses
distribution
of
the
remainder
among
those
2.
Transfer
for
public
entitled
thereto.
These
expenses
should
be
use
supported
by
receipts,
invoices
or
by
a
sworn
3.
Vanishing
statement
of
account
issued
and
signed
by
the
deduction
creditor.
4.
RA
4917
-other
judicial
expenses:
-actual
judicial
or
court
expenses
II.
SPECIAL
III.
SPECIAL
DEDUCTIONS:
-attorneys
fees
DEDUCTIONS
-Not
allowed
-expenses
of
administration
such
as,
but
not
1.
Standard
Deduction
limited
to
2.
Family
Home
-inventory
taking
of
assets
comprising
3.
Medical
Expenses
the
gross
estate
-payment
of
debts
of
the
estate
-distribution
of
the
estate
among
the
ORDINARY
DEDUCTIONS
heirs
A.
ELITE
-accountants
fee
(Expenses,
Losses,
Indebtedness,
Taxes,
etc.)
-clerks
hire
-cost
of
preserving
and
distributing
the
1.
Funeral
expenses
estate
-Actual
funeral
expenses
(paid
or
unpaid)
up
to
-cost
of
string
or
maintaining
the
the
time
of
interment,
or
an
amount
equal
to
5%
property
of
the
estate
of
the
gross
estate,
whichever
is
lower,
but
in
no
-brokerage
fees
case
to
exceed
p
200,000.
-To
be
considered
actual,
the
funeral
expenses
3.
Indebtedness
or
claims
against
the
estate
must
be
paid
out
of
the
estate,
not
by
somebody
-Requisites
for
deductibility:
or
out
of
contributions
from
friends
and
relatives
a.
It
must
be
valid
in
law
and
enforceable
in
court
-Any
amount
in
excess
of
P
200,000
shall
not
be
against
him
(decedent)
when
he
was
alive.
allowed
as
a
deduction
as
funeral
expenses.
Neither
shall
the
unpaid
portion
in
excess
of
the
b.
It
must
not
have
been
condoned
by
the
schedule
of
its
receivable
showing
the
unpaid
creditor
or
the
action
to
collect
from
the
balance
of
the
decedent-debtor.
decedent
must
not
have
been
prescribed.
d)
Where
the
settlement
is
made
through
the
c.
If
the
indebtedness
arises
from
a
debt
Court
in
a
testate
or
intestate
proceeding,
instrument,
it
must
be
notarized,
except
for
loans
pertinent
documents
filed
with
the
Court
granted
by
financial
institutions
where
evidencing
the
claims
against
the
estate,
and
the
notarization
is
not
part
of
the
business
practice/
Court
Order
approving
the
said
claims,
if
already
policy
of
the
financial
institution-lender.
issued.
d.
If
contracted
within
3
years
before
the
death
of
the
decedent,
a
statement
under
oath
(by
4.
Claims
against
an
insolvent
person
executor/
administrator)
must
be
executed
and
-Requisites
for
deductibility
must
be
attached
therewith
a
statement
showing
For
purposes
of
estate
taxation,
a
judicial
the
disposition
of
the
proceeds
of
the
loan.
declaration
of
insolvency
is
not
required
but
(Note:
Unpaid
funeral
and
medical
expenses
shall
a)
The
incapacity
of
the
debtor
to
pay
his
not
be
deductible
under
this
category.)
obligation
should
be
proven.
b)
The
full
amount
owed
by
the
insolvent
must
Substantiation
Requirements
first
be
included
in
the
decedents
gross
estate.
In
case
of
simple
loan
(including
advances):
c)
If
the
insolvent
could
only
pay
partial
amount,
a)
The
debt
instrument
must
be
duly
notarized
at
the
full
amount
owed
shall
be
included
in
the
the
time
the
indebtedness
was
incurred,
such
as
gross
estate,
and
the
amount
uncollectible
shall
promissory
note
or
contract
of
loan,
except
for
be
allowed
as
a
deduction.
loans
granted
by
financial
institutions
where
notarization
is
not
part
of
the
business
practice/
5.
Unpaid
mortgages
or
indebtedness
on
policy
of
the
financial
institution-lender
property
b)
Duly
notarized
Certification
from
the
creditor
-To
be
allowed
as
a
deduction,
the
decedents
as
to
the
unpaid
balance
of
the
debt,
uncludign
gross
estate
must
include
the
FMV
of
the
interest
as
of
the
time
of
death.
property
encumbered.
The
amount
allowed
as
a
c.)
In
accordance
with
the
requirements
as
deduction
would
be
the
outstanding
debt
or
prescribed
in
existing
internal
revenue
issuances,
mortgage.
proof
of
financial
capacity
of
the
creditor
to
lend
-In
case
unpaid
mortgage
payable
is
being
the
amount
at
the
time
the
loan
was
granted,
as
claimed
by
the
estate,
verification
must
be
made
well
as
its
latest
audited
balance
sheet
with
a
as
to
who
was
the
beneficiary
of
the
loan
detailed
schedule
of
its
receivable
showing
the
proceeds.
If
the
loan
is
found
to
be
merely
an
unpaid
balance
of
the
decedent-debtor.
accommodation
loan,
the
value
of
the
unpaid
d)
A
statement
under
oath
executed
by
the
loan
must
be
included
as
receivable
of
the
estate.
administrator
or
executor
of
the
estate
reflecting
-If
there
is
legal
impediment
to
recognize
the
the
disposition
of
the
proceeds
of
the
loan
if
said
same
as
receivable
of
the
estate,
said
unpaid
loan
was
contracted
within
3
years
prior
to
the
obligation/
mortgage
payable
shall
not
be
death
of
the
decedent.
allowed
as
a
deduction
from
the
gross
estate.
-In
all
instances,
the
mortgaged
property,
to
the
If
the
unpaid
obligation
arose
from
purchase
of
extent
of
the
decedents
interest
therein,
should
good
or
services:
always
form
part
of
the
gross
estate.
a)
Pertinent
documents
evidencing
the
purchase
of
goods
or
service,
such
as
sales
invoice/
6.
Taxes
delivery
receipt
(for
sale
of
goods),
or
contract
-unpaid
taxes
that
accrued
prior
to
the
death
of
for
the
services
agreed
to
be
rendered
(for
sale
of
the
decedent.
However
the
following
are
not
service),
as
duly
acknowledged,
executed
and
allowed
as
a
deduction:
signed
by
decedent-debtor
and
creditor,
and
-income
tax
on
income
received
after
death
statement
of
account
given
by
the
creditor
as
-property
taxes
accrued
after
death
duly
received
by
the
decedent-debtor.
-estate
tax
b)
Duly
notarized
Certification
from
the
creditor
as
to
the
unpaid
balance
of
the
debt,
including
interest
as
of
the
time
of
death.
C
c)
Certified
true
copy
of
the
latest
audited
balance
sheet
of
the
creditor
with
a
detailed
7.
Losses
determined
and
paid
by
the
prior
decedent
or
by
-amount
deductible
is
the
value
of
the
property
the
donor
as
the
case
may
be
lost
6.
No
previous
vanishing
deduction
on
the
Requisites
for
deductibility:
property
a)
Arising
exclusively
from:
-no
such
deduction
on
the
property,
or
the
i.
Acts
of
God
such
as
fire,
storm,
property
given
in
exchange
therefore,
was
shipwreck
and
other
similar
casualty
allowed
in
determining
the
value
of
the
net
estate
ii.
Acts
of
man
such
as
robbery,
theft,
of
the
prior
decedent
embezzlement
b)
Not
compensated
by
insurance
or
otherwise
Vanishing
Deduction
Rates
c)
Not
claimed
as
a
deduction
in
an
income
tax
Period
from
receipt
to
Rate
%
return
of
the
estate
subject
to
income
tax
decedents
death
d)
Occurred
during
the
settlement
of
the
estate
e)
Occurred
before
the
last
day
for
the
payment
Within
one
year
100
of
estate
tax
(6
months
after
the
death
of
decedent)
Beyond
one
year
to
2
years
80
B.
Transfer
for
Public
Use
Beyond
2
years
to
3
years
60
-dispositions
in
a
last
will
and
testament
or
transfers
to
take
effect
after
the
death
in
favor
of
Beyond
3
years
to
4
years
40
the
government
of
the
Philippines
or
any
political
subdivision
thereof.
Beyond
4
years
to
5
years
20
-Before
it
is
allowed
as
a
deduction
from
the
gross
estate,
same
amount
shall
be
included
first
D.
Amounts
received
by
heirs
under
RA
4917
in
the
computation
of
the
gross
estate
-Any
amount
received
by
the
heir(s)
from
the
decedents
employer
as
a
consequence
of
the
C.
Vanishing
Deductions
death
of
the
decedent-employee
in
accordance
-deduction
for
property
previously
taxed
with
RA
4917,
provided
that
the
amount
of
-Allowed
as
a
deduction
to
minimize
the
effect
of
separation
benefit
is
included
as
part
of
the
gross
or
as
a
remedy
against
double
taxation
estate
of
the
decedent.
Requisites
for
deductibility:
SPECIAL
DEDUCTIONS
1.
Death
-the
present
decedent
died
within
5
years
from
A.
Standard
Deduction
the
date
of
death
of
the
prior
decedent
or
date
of
-The
law
allows
a
standard
deduction
of
P
gift
1,000,000.
No
qualification,
condition
nor
2.
Identity
of
property
requisite
whatsoever.
-the
property
with
respect
to
which
deduction
is
sought
can
be
identified
as
the
one
received
from
B.
Family
Home
the
prior
decedent,
or
from
the
donor,
or
as
the
-The
amount
of
family
home
allowable
as
property
acquired
in
exchange
for
the
original
deduction
would
be
whichever
is
lower
of
P
property
so
received
1,000,000
or
FMV
at
the
time
of
the
decedents
3.
Located
in
the
Philippines
death,
of
the
family
home
and
the
land
on
which
-the
property
on
which
vanishing
deduction
is
it
stands.
being
claimed
must
be
located
in
the
Philippines
-For
purposes
of
regulations,
actual
occupancy
of
4.
Inclusion
of
property
the
house
or
house
and
lot
as
the
family
-the
property
must
have
formed
part
of
the
gross
residence
shall
not
be
considered
interrupted
or
estate
situated
in
the
Philippines
of
the
prior
abandoned
in
such
cases
as
temporary
absence
decedent
or
have
been
included
in
the
total
from
the
constituted
family
home
due
to
travel
amount
of
the
gifts
of
the
donor
made
within
5
studies
or
work
abroad.
years
prior
to
the
present
decedents
death
5.
Previous
taxation
of
the
property
Unmarried
Head
of
a
Family
-the
estate
tax
on
the
prior
succession,
or
the
-An
unmarried
man
or
woman
with
one
or
both
donors
tax
on
the
gift
must
have
been
finally
parents,
or
with
one
or
more
brothers
or
sisters,
or
with
one
or
more
legitimate,
recognized
natural
or
legally
adopted
children
living
with
C.
Medical
Expenses
and
dependent
upon
him
or
her
for
the
chief
-All
medical
expenses
(cost
of
medicines,
hospital
support
bills,
doctors
fees,
etc.)
incurred
(whether
paid
-where
such
brothers
or
sisters
or
children
are
or
unpaid)
within
1
year
before
the
death
of
the
not
more
than
21
years
old,
unmarried
and
not
decedent
shall
be
allowed
as
a
deduction,
gainfully
employed
or
where
such
children,
provided:
brothers
or
sisters,
regardless
of
age
are
-that
the
same
are
duly
substantiated
with
incapable
of
self-support
because
of
mental
or
official
receipts
for
services
rendered
by
the
physical
defect,
OR
decedents
attending
physicians,
invoices,
-any
of
the
beneficiaries
mentioned
in
Art.
154
of
statement
of
account
duly
certified
by
the
the
Family
Code
who
is
living
in
the
family
home
hospital,
and
such
other
documents
in
support
and
dependent
upon
the
head
of
the
family
for
thereof
legal
support
-and
provided
further,
that
the
total
amount
thereof,
whether
paid
or
unpaid,
does
not
exceed
Beneficiaries
of
family
home:
P
500,000
-Husband
and
wife,
or
the
head
of
a
family;
and
Requisites
for
deductibility:
-Their
parents,
ascendants,
descendants
1.
Incurred
by
the
decedent
within
1
year
prior
to
including
legally
adopted
children,
brothers
and
his
death
sisters,
whether
the
relationship
be
legitimate
or
2.
Substantiated
by
receipts
illegitimate,
who
are
living
in
the
family
home
and
who
depend
upon
the
head
of
the
family
for
NET
SHARE
OF
THE
SURVIVING
SPOUSE
legal
support
-The
amount
deductible
is
the
net
share
of
the
surviving
spouse
in
the
conjugal
partnership
Limitation
property.
Net
share
of
the
surviving
spouse
is
-For
purposes
of
availing
of
family
home
neither
an
ordinary
or
special
deduction.
deduction
to
the
extent
allowable,
a
person
may
-The
net
share
is
equivalent
to
50%
of
the
constitute
only
one
family
home.
conjugal
property
after
deducting
the
obligations
chargeable
to
such
property.
Requisites
for
deductibility
-The
share
of
the
surviving
spouse
must
be
1.
The
decedent
was
married
or
if
dingle,
was
removed
to
ensure
that
only
the
decedents
head
of
the
family
interest
in
the
estate
is
taxed.
2.
Along
with
the
decedent,
any
of
the
beneficiaries
must
be
dwelling
in
the
family
ALLOWABLE
DEDUCTIONS
FOR
NONRESIDENT
home
ALIEN
DECEDENT
3.
The
family
home
as
well
as
the
land
on
which
it
-The
value
of
the
net
estate
of
a
stands
must
be
owned
by
the
decedent.
decedent
who
is
a
non-resident
alien
in
the
Therefore,
the
FMV
of
the
family
home
should
Philippines
shall
be
determined
by
deducting
have
been
included
in
the
computation
of
the
from
the
value
of
that
part
of
his
gross
estate
decedents
gross
estate.
which
at
the
time
of
his
death
is
situated
in
the
4.
The
family
home
must
be
the
actual
residential
Philippines
the
following
items
of
deduction:
home
of
the
decedent
and
his
family
at
the
time
of
his
death,
as
certified
by
the
Barangay
Captain
F.)
TAX
CREDIT
FOR
FOREIGN
ESTATE
of
the
locality
where
the
family
home
is
situated.
TAXATION
5.
The
total
value
of
the
family
home
must
be
included
as
part
of
the
gross
estate
of
the
Section
86
E)
Tax
Credit
for
Estate
Taxes
paid
to
a
decedent;
and
Foreign
Country.
6.
Allowable
deduction
must
be
in
an
amount
(1)
In
General.
-
The
tax
imposed
by
this
Title
shall
equivalent
to
the
current
FMV
of
the
family
home
be
credited
with
the
amounts
of
any
estate
tax
as
declared
or
included
in
the
gross
estate,
or
the
imposed
by
the
authority
of
a
foreign
country.
(2)
Limitations
on
Credit.
-
The
amount
of
the
credit
extent
of
the
decedents
interest
(whether
taken
under
this
Section
shall
be
subject
to
each
of
conjugal/
community
or
exclusive
property),
the
following
limitations:
whichever
is
lower,
but
not
exceeding
P
(a)
The
amount
of
the
credit
in
respect
to
the
tax
1,000,000.
paid
to
any
country
shall
not
exceed
the
same
proportion
of
the
tax
against
which
such
credit
is
taken,
which
the
decedent's
net
estate
situated
within
such
country
taxable
under
this
Title
bears
to
his
entire
net
estate;
and
six
(6)
months
from
the
decedent's
death.
(b)
The
total
amount
of
the
credit
shall
not
exceed
A
certified
copy
of
the
schedule
of
partition
and
the
the
same
proportion
of
the
tax
against
which
such
order
of
the
court
approving
the
same
shall
be
credit
is
taken,
which
the
decedent's
net
estate
furnished
the
Commissioner
within
thirty
(30)
after
situated
outside
the
Philippines
taxable
under
this
the
promulgation
of
such
order.
Title
bears
to
his
entire
net
estate.
G.
NOTICE
OF
DEATH,
RETURN,
PAYMENT
of
(C)
Extension
of
Time.
-
The
Commissioner
shall
TAX,
SANCTIONS
have
authority
to
grant,
in
meritorious
cases,
a
reasonable
extension
not
exceeding
thirty
(30)
days
for
filing
the
return.
SEC.
89.
Notice
of
Death
to
be
Filed.
-
In
all
cases
of
transfers
subject
to
tax,
or
where,
though
exempt
(D)
Place
of
Filing.
-
Except
in
cases
where
the
from
tax,
the
gross
value
of
the
estate
exceeds
Commissioner
otherwise
permits,
the
return
Twenty
thousand
pesos
(P20,000),
the
executor,
required
under
Subsection
(A)
shall
be
filed
with
an
administrator
or
any
of
the
legal
heirs,
as
the
case
authorized
agent
bank,
or
Revenue
District
Officer,
may
be,
within
two
(2)
months
after
the
decedent's
Collection
Officer,
or
duly
authorized
Treasurer
of
death,
or
within
a
like
period
after
qualifying
as
the
city
or
municipality
in
which
the
decedent
was
such
executor
or
administrator,
shall
give
a
written
domiciled
at
the
time
of
his
death
or
if
there
be
no
notice
thereof
to
the
Commissioner.
legal
residence
in
the
Philippines,
with
the
Office
of
the
Commissioner.
SEC.
90.
Estate
Tax
Returns.
-
(A)
Requirements.
-
In
all
cases
of
transfers
subject
SEC.
91.
Payment
of
Tax.
-
to
the
tax
imposed
herein,
or
where,
though
exempt
(A)
Time
of
Payment.
-
The
estate
tax
imposed
by
from
tax,
the
gross
value
of
the
estate
exceeds
Two
Section
84
shall
be
paid
at
the
time
the
return
is
hundred
thousand
pesos
(P200,000),
or
regardless
filed
by
the
executor,
administrator
or
the
heirs.
of
the
gross
value
of
the
estate,
where
the
said
estate
consists
of
registered
or
registrable
property
(B)
Extension
of
Time.
-
When
the
Com
such
as
real
property,
motor
vehicle,
shares
of
stock
missioner
finds
that
the
payment
on
the
due
date
of
or
other
similar
property
for
which
a
clearance
the
estate
tax
or
of
any
part
thereof
would
impose
from
the
Bureau
of
Internal
Revenue
is
required
as
undue
hardship
upon
the
estate
or
any
of
the
heirs,
a
condition
precedent
for
the
transfer
of
ownership
he
may
extend
the
time
for
payment
of
such
tax
or
thereof
in
the
name
of
the
transferee,
the
executor,
any
part
thereof
not
to
exceed
five
(5)
years,
in
case
or
the
administrator,
or
any
of
the
legal
heirs,
as
the
the
estate
is
settled
through
the
courts,
or
two
(2)
case
may
be,
shall
file
a
return
under
oath
in
years
in
case
the
estate
is
settled
extrajudicially.
In
duplicate,
setting
forth:
such
case,
the
amount
in
respect
of
which
the
(1)
The
value
of
the
gross
estate
of
the
decedent
at
extension
is
granted
shall
be
paid
on
or
before
the
the
time
of
his
death,
or
in
case
of
a
nonresident,
not
date
of
the
expiration
of
the
period
of
the
extension,
a
citizen
of
the
Philippines,
of
that
part
of
his
gross
and
the
running
of
the
Statute
of
Limitations
for
estate
situated
in
the
Philippines;
assessment
as
provided
in
Section
203
of
this
Code
(2)
The
deductions
allowed
from
gross
estate
in
shall
be
suspended
for
the
period
of
any
such
determining
the
estate
as
defined
in
Section
86;
and
extension.
(3)
Such
part
of
such
information
as
may
at
the
time
Where
the
taxes
are
assessed
by
reason
of
be
ascertainable
and
such
supplemental
data
as
negligence,
intentional
disregard
of
rules
and
may
be
necessary
to
establish
the
correct
taxes.
regulations,
or
fraud
on
the
part
of
the
taxpayer,
no
Provided,
however,
That
estate
tax
returns
showing
extension
will
be
granted
by
the
Commissioner.
a
gross
value
exceeding
Two
million
pesos
If
an
extension
is
granted,
the
Commissioner
may
(P2,000,000)
shall
be
supported
with
a
statement
require
the
executor,
or
administrator,
or
duly
certified
to
by
a
Certified
Public
Accountant
beneficiary,
as
the
case
may
be,
to
furnish
a
bond
in
containing
the
following:
(a)
Itemized
assets
of
the
such
amount,
not
exceeding
double
the
amount
of
decedent
with
their
corresponding
gross
value
at
the
tax
and
with
such
sureties
as
the
Commissioner
the
time
of
his
death,
or
in
the
case
of
a
nonresident,
deems
necessary,
conditioned
upon
the
payment
of
not
a
citizen
of
the
Philippines,
of
that
part
of
his
the
said
tax
in
accordance
with
the
terms
of
the
gross
estate
situated
in
the
Philippines;
(b)
Itemized
extension.
deductions
from
gross
estate
allowed
in
Section
86;
and
(c)
The
amount
of
tax
due
whether
paid
or
still
(C)
Liability
for
Payment
-
The
estate
tax
imposed
due
and
outstanding.
by
Section
84
shall
be
paid
by
the
executor
or
administrator
before
delivery
to
any
beneficiary
of
(B)
Time
for
filing.
-
For
the
purpose
of
his
distributive
share
of
the
estate.
Such
beneficiary
determining
the
estate
tax
provided
for
in
Section
shall
to
the
extent
of
his
distributive
share
of
the
84
of
this
Code,
the
estate
tax
return
required
under
estate,
be
subsidiarily
liable
for
the
payment
of
such
the
preceding
Subsection
(A)
shall
be
filed
within
portion
of
the
estate
tax
as
his
distributive
share
bears
to
the
value
of
the
total
net
estate.
mortgage,
by
way
of
gifts
inter
vivos
or
mortis
For
the
purpose
of
this
Chapter,
the
term
'executor'
causa,
legacy
or
inheritance,
unless
a
certification
or
'administrator'
means
the
executor
or
from
the
Commissioner
that
the
tax
fixed
in
this
administrator
of
the
decedent,
or
if
there
is
no
Title
and
actually
due
thereon
had
been
paid
is
executor
or
administrator
appointed,
qualified,
and
show,
and
they
shall
immediately
notify
the
acting
within
the
Philippines,
then
any
person
in
Commissioner,
Regional
Director,
Revenue
District
actual
or
constructive
possession
of
any
property
of
Officer,
or
Revenue
Collection
Officer
or
Treasurer
the
decedent.
of
the
city
or
municipality
where
their
offices
are
located,
of
the
non-payment
of
the
tax
discovered
SEC.
92.
Discharge
of
Executor
or
Administrator
by
them.
Any
lawyer,
notary
public,
or
any
from
Personal
Liability.
-
If
the
executor
or
government
officer
who,
by
reason
of
his
official
administrator
makes
a
written
application
to
the
duties,
intervenes
in
the
preparation
or
Commissioner
for
determination
of
the
amount
of
acknowledgment
of
documents
regarding
partition
the
estate
tax
and
discharge
from
personal
liability
or
disposal
of
donation
inter
vivos
or
mortis
causa,
therefore,
the
Commissioner
(as
soon
as
possible,
legacy
or
inheritance,
shall
have
the
duty
of
and
in
any
event
within
one
(1)
year
after
the
furnishing
the
Commissioner,
Regional
Director,
making
of
such
application,
or
if
the
application
is
Revenue
District
Officer
or
Revenue
Collection
made
before
the
return
is
filed,
then
within
one
(1)
Officer
of
the
place
where
he
may
have
his
principal
year
after
the
return
is
filed,
but
not
after
the
office,
with
copies
of
such
documents
and
any
expiration
of
the
period
prescribed
for
the
information
whatsoever
which
may
facilitate
the
assessment
of
the
tax
in
Section
203
shall
not
notify
collection
of
the
aforementioned
tax.
Neither
shall
a
the
executor
or
administrator
of
the
amount
of
the
debtor
of
the
deceased
pay
his
debts
to
the
heirs,
tax.
The
executor
or
administrator,
upon
payment
legatee,
executor
or
administrator
of
his
creditor,
of
the
amount
of
which
he
is
notified,
shall
be
unless
the
certification
of
the
Commissioner
that
discharged
from
personal
liability
for
any
deficiency
the
tax
fixed
in
this
Chapter
had
been
paid
is
shown;
in
the
tax
thereafter
found
to
be
due
and
shall
be
but
he
may
pay
the
executor
or
judicial
entitled
to
a
receipt
or
writing
showing
such
administrator
without
said
certification
if
the
credit
discharge.
is
included
in
the
inventory
of
the
estate
of
the
deceased.
SEC.
93.
Definition
of
Deficiency.
-
As
used
in
this
Chapter,
the
term
'deficiency'
means:
SEC.
96.
Restitution
of
Tax
Upon
Satisfaction
of
(a)
The
amount
by
which
the
tax
imposed
by
this
Outstanding
Obligations.
-
If
after
the
payment
of
Chapter
exceeds
the
amount
shown
as
the
tax
by
the
estate
tax,
new
obligations
of
the
decedent
shall
the
executor,
administrator
or
any
of
the
heirs
upon
appear,
and
the
persons
interested
shall
have
his
return;
but
the
amounts
so
shown
on
the
return
satisfied
them
by
order
of
the
court,
they
shall
have
shall
first
be
increased
by
the
amounts
previously
a
right
to
the
restitution
of
the
proportional
part
of
assessed
(or
collected
without
assessment)
as
a
the
tax
paid.
deficiency
and
decreased
by
the
amount
previously
abated,
refunded
or
otherwise
repaid
in
respect
of
SEC.
97.
Payment
of
Tax
Antecedent
to
the
such
tax;
or
Transfer
of
Shares,
Bonds
or
Rights.
-
There
shall
(b)
If
no
amount
is
shown
as
the
tax
by
the
executor,
not
be
transferred
to
any
new
owner
in
the
books
of
administrator
or
any
of
the
heirs
upon
his
return,
or
any
corporation,
sociedad
anonima,
partnership,
if
no
return
is
made
by
the
executor,
administrator,
business,
or
industry
organized
or
established
in
or
any
heir,
then
the
amount
by
which
the
tax
the
Philippines
any
share,
obligation,
bond
or
right
exceeds
the
amounts
previously
assessed
(or
by
way
of
gift
inter
vivos
or
mortis
causa,
legacy
or
collected
without
assessment)
as
a
deficiency;
but
inheritance,
unless
a
certification
from
the
such
amounts
previously
assessed
or
collected
Commissioner
that
the
taxes
fixed
in
this
Title
and
without
assessment
shall
first
be
decreased
by
the
due
thereon
have
been
paid
is
shown.
amounts
previously
abated,
refunded
or
otherwise
If
a
bank
has
knowledge
of
the
death
of
a
person,
repaid
in
respect
of
such
tax.
who
maintained
a
bank
deposit
account
alone,
or
jointly
with
another,
it
shall
not
allow
any
SEC.
94.
Payment
before
Delivery
by
Executor
or
withdrawal
from
the
said
deposit
account,
unless
Administrator.
-
No
judge
shall
authorize
the
the
Commissioner
has
certified
that
the
taxes
executor
or
judicial
administrator
to
deliver
a
imposed
thereon
by
this
Title
have
been
paid:
distributive
share
to
any
party
interested
in
the
Provided,
however,
That
the
administrator
of
the
estate
unless
a
certification
from
the
Commissioner
estate
or
any
one
(1)
of
the
heirs
of
the
decedent
that
the
estate
tax
has
been
paid
is
shown.
may,
upon
authorization
by
the
Commissioner,
withdraw
an
amount
not
exceeding
Twenty
SEC.
95.
Duties
of
Certain
Officers
and
Debtors.
-
thousand
pesos
(P20,000)
without
the
said
Registers
of
Deeds
shall
not
register
in
the
Registry
certification.
For
this
purpose,
all
withdrawal
slips
of
Property
any
document
transferring
real
shall
contain
a
statement
to
the
effect
that
all
of
the
property
or
real
rights
therein
or
any
chattel
joint
depositors
are
still
living
at
the
time
of
withdrawal
by
any
one
of
the
joint
depositors
and
-
the
value
of
the
gross
estate
of
the
decedent
at
such
statement
shall
be
under
oath
by
the
said
the
time
of
his
death,
or
in
case
of
a
non-resident
depositors.
foreigner,
of
that
part
of
his
gross
estate
situated
in
the
Philippines
Notice
of
Death:
-the
deductions
allowed
therefrom;
and
WHEN:
in
all
cases
of
transfers
subject
to
tax
or
-such
other
information
as
may
be
necessary
to
where,
though
exempt
from
tax,
the
gross
value
establish
the
correct
taxes
of
the
estate
exceeds
P20,000
CERTIFICATION
BY
A
CERTIFIED
PUBLIC
WHO:
the
executor,
administrator
or
any
of
the
ACCOUNTANT
-
where
the
value
of
the
gross
legal
heirs
estate
exceeds
P2
Million,
the
estate
tax
return
WHEN:
within
2
months
after
the
decedents
shall
be
supported
with
a
statement
duly
death
or
within
a
like
period
after
qualifying
as
certified
by
certified
public
accountant
such
executor
or
administrator
containing
the
following:
WHAT:
give
a
written
notice
to
the
-itemized
assets
of
the
decedent
with
their
Commissioner
corresponding
gross
valu
at
the
time
of
his
death,
or
in
the
case
of
a
non-resident
foreigner,
of
the
De
Leon
notes
part
of
his
gross
estate
situated
in
the
Estate
Tax
Returns
Philippines;
BY
WHOM
-
an
estate
tax
return
under
oath
is
-itemized
deductions
allowed
therefrom;
and
required
by
law
to
be
filed
by
the
executor,
-the
amount
of
tax
due
whether
paid
or
still
due
administrator
or
any
of
the
legal
heirs
and
outstanding
-
Where
the
gross
value
of
the
estate
exceeds
COPIES
-
the
return
shall
be
filed
in
triplicate,
2
P200,000
though
exempt
from
the
estate
tax
or
copies
for
the
BIR
and
1
copy
for
the
taxpayer.
-
Regardless
of
the
gross
value
of
the
estate,
where
the
said
estate
consists
of
registered
or
registerable
real
property,
such
as
real
property,
motor
vehicle,
shares
of
stock
or
other
similar
property
for
which
a
clearance
from
the
Bureau
of
Internal
Revenue
is
required
as
a
condition
precedent
for
the
transfer
of
ownership
hereof
in
the
name
of
the
transferee
WHEN
-
the
return
shall
be
filed
within
6
months
from
the
decendents
death.
the
tax
shall
be
paid
at
the
time
the
return
is
filed
by
the
executor,
administrator
or
the
heirs,
or
within
such
extension
as
may
be
granted
by
the
Commissioner,
but
not
to
exceed
5
years
in
case
the
estate
is
settled
through
the
courts,
or
2
years
in
case
the
estate
is
settled
extra-judicially.
The
executor,
administrator
or
any
of
the
legal
heirs,
as
the
case
may
be,
is
required
to
give
a
written
notice
of
death
to
the
Commissioner
within
2
months
after
the
decedents
death
or
after
qualifying
as
such
executor
or
administrator
WHERE
-
Except
in
cases
where
the
Commissioner
of
Internal
Revenue
otherwise
permits,
the
return
shall
be
filed
with
an
authorized
or
Accredited
Agent
Bank
or
Revenue
District
Officer,
Revenue
Collection
Officer,
or
duly
authorized
treasurer
of
the
city
or
municipality
where
the
decedent
was
domiciled
at
the
time
of
his
death,
or
if
there
be
no
legal
residence
in
the
Philippines,
with
the
Office
of
the
Commissioner
of
Internal
Revenue
CONTENTS
-
the
return
shall
set
forth:
MODULE
2-
whether
such
imported
goods
are
for
use
in
business
or
not.
VALUE
ADDED
TAX
Essential
Features
of
VAT
A.
Concept
of
VAT
Nature
1)
It
is
a
privilege
tax
imposed
directly
not
on
Sec
4.105-2,
RR
16-2005
the
thing
or
service
but
on
the
act
of
the
seller,
Nature
and
Characteristics
of
VAT.
VAT
is
a
tax
on
transferor,
importer,
or
lessor
who
is
exclusively
consumption
levied
on
the
sale,
barter,
exchange
or
lease
of
goods
or
properties
and
services
in
the
made
liable
for
its
payment,
although
the
burden
Philippines
and
on
importation
of
goods
into
the
of
the
tax
is
borne
ultimately
by
the
consumer
Philippines.
The
seller
is
the
one
statutorily
liable
for
2)
It
is
an
ad
valorem
tax,
the
amount
or
sale
the
payment
of
the
tax
but
the
amount
of
the
tax
may
being
based
on
the
gross
selling
price
or
gross
be
shifted
or
passed
on
to
the
buyer,
transferee
or
value
in
money
of
goods
or
properties,
or
gross
lessee
of
the
goods,
properties
or
services.
This
rule
receipts
from
performance
of
services
shall
likewise
apply
to
existing
contracts
of
sale
or
3)
It
is
an
indirect
tax.
It
may
be
shifted
to
the
lease
of
goods,
properties
or
services
at
the
time
of
the
consumer
in
the
absence
of
any
showing
that
the
effectivity
of
RA
No.
9337.
However,
in
the
case
of
latter
is
exempt
from
indirect
tax
importation,
the
importer
is
the
one
liable
for
the
VAT.
a)
Party
statutorily
liable
is
the
seller,
and
hence
he
cannot
claim
exemption
because
the
Contex
Corp
v
CIR
consumer
is
tax
exempt
SUMMARY:
Contex
Corp,
a
Non-VAT
taxpayer
b)Seller
may
choose
to
absorb
the
VAT
and
not
under
RA
7227,
filed
an
application
for
refund
pass
it
on
to
his
buyers
to
make
his
prices
or
tax
credit
of
the
input
VAT
it
paid
when
it
competitive
purchased
supplies
and
materials
necessary
for
its
business.
Advantages
of
VAT
1)
Eliminates
cascading
problem
under
the
old
DOCTRINE:
VAT
is
an
indirect
tax.
As
such,
the
sales
tax
amount
of
tax
paid
on
the
goods,
properties
or
2)It
is
a
neutral
between
different
goods,
services
bought,
transferred,
or
leased
may
be
properties,
and
services
or
businesses,
therefore
shifted
or
passed
on
by
the
seller,
transferor,
or
more
equitable;
applies
to
all
persons
lessor
to
the
buyer,
transferee
or
lessee.
An
3)
Establishes
wider
tax
base;
taxation
is
more
indirect
tax,
such
as
the
VAT,
is
a
tax
on
fair
and
equitable
consumption
of
goods,
services,
or
certain
4)
Simple
and
easy
to
administer
(only
2
tax
transactions
involving
the
same.
rates)
Petitioners
claim
for
exemption
from
VAT
for
5)
Expected
to
generate
larger
revenues
its
purchases
of
supplies
and
raw
materials
is
incongruous
with
its
claim
that
it
is
VAT- Important
features
Exempt,
for
only
VAT-Registered
entities
can
1)
All
persons
liable
to
VAT
shall
register
with
claim
Input
VAT
Credit/Refund.
While
it
is
true
the
appropriate
RDO
that
the
petitioner
should
not
have
been
liable
2)
Provides
for
2
rates:
0%
for
export
sales
and
for
the
VAT
inadvertently
passed
on
to
it
by
its
sales
and
services
that
are
0
rated
or
effectively
supplier
since
such
is
a
zero-rated
sale
on
the
zero-rated
part
of
the
supplier,
the
petitioner
is
not
the
3)
VAT
registered
person
is
entitled
to
credit
proper
party
to
claim
such
VAT
refund.
Rather,
input
taxes
(VAT
invoice
or
OR)
it
is
the
petitioners
suppliers
who
are
the
4)
Consumption
type
VAT
proper
parties
to
claim
the
tax
credit
and
5)
All
goods,
properties,
and
services
are
subject
accordingly
refund
the
petitioner
of
the
VAT
to
tax
at
all
levels
of
distribution
erroneously
passed
on
to
the
latter.
6)
Total
value
of
the
goods
is
subject
to
tax
only
once
Definition
7)
CIR
may
determine
the
appropriate
tax
base
in
Value-added
tax
is
a
consumption
tax
imposed
at
certain
cases
every
stage
of
the
distribution
process
on
the
8)
CIR
may
suspend
or
temporarily
close
sale,
barter,
exchange,
or
lease
of
goods
or
businesses
for
violations
of
VAT
law/regulations
properties
and
rendition
of
services
in
the
course
9)
Returns
shall
be
filed
with
and
the
tax
paid
to
of
trade
or
business,
or
the
importation
of
goods,
duly
authorized
agent
banks
in
acceptable
foreign
currency
and
accounted
for
in
Constitutionality
of
VAT
accordance
with
the
rules
and
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP);
Juan
David
v
Exec
Sec
and
CIR
(3)
Sale
of
raw
materials
or
packaging
materials
to
export-oriented
enterprise
whose
export
sales
exceed
(missing
digest)
seventy
percent
(70%)
of
total
annual
production;
(4)
Sale
of
gold
to
the
Bangko
Sentral
ng
Pilipinas
B.
TAXABLE
TRANSACTIONS
(BSP);
and
(5)
Those
considered
export
sales
under
Executive
Sale
of
goods-
SECTION
106
NIRC
Order
NO.
226,
otherwise
known
as
the
Omnibus
SEC.
106,
NIRC.
.
Value-Added
Tax
on
Sale
of
Goods
Investment
Code
of
1987,
and
other
special
laws;
and
or
Properties.
-
(6)
The
sale
of
goods,
supplies,
equipment
and
fuel
to
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
persons
engaged
in
international
shipping
or
assessed
and
collected
on
every
sale,
barter
or
international
air
transportation
exchange
of
goods
or
properties,
value-added
tax
equivalent
to
ten
percent
(10%)
of
the
gross
selling
(b)
Foreign
Currency
Denominated
Sale.
-
The
phrase
price
or
gross
value
in
money
of
the
goods
or
'foreign
currency
denominated
sale'
means
sale
to
a
properties
sold,
bartered
or
exchanged,
such
tax
to
be
nonresident
of
goods,
except
those
mentioned
in
paid
by
the
seller
or
transferor.
Sections
149
and
150,
assembled
or
manufactured
in
(1)
The
term
'goods'
or
'properties'
shall
mean
all
the
Philippines
for
delivery
to
a
resident
in
the
tangible
and
intangible
objects
which
are
capable
of
Philippines,
paid
for
in
acceptable
foreign
currency
pecuniary
estimation
and
shall
include:
and
accounted
for
in
accordance
with
the
rules
and
(a)
Real
properties
held
primarily
for
sale
to
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP).
customers
or
held
for
lease
in
the
ordinary
course
of
trade
or
business;
(c)
Sales
to
persons
or
entities
whose
exemption
(b)
The
right
or
the
privilege
to
use
patent,
copyright,
under
special
laws
or
international
agreements
to
design
or
model,
plan,
secret
formula
or
process,
which
the
Philippines
is
a
signatory
effectively
goodwill,
trademark,
trade
brand
or
other
like
subjects
such
sales
to
zero
rate.
property
or
right;
(c)
The
right
or
the
privilege
to
use
in
the
Philippines
(B)
Transactions
Deemed
Sale.
-
The
following
of
any
industrial,
commercial
or
scientific
equipment;
transactions
shall
be
deemed
sale:
(d)
The
right
or
the
privilege
to
use
motion
picture
(1)
Transfer,
use
or
consumption
not
in
the
course
of
films,
tapes
and
discs;
and
business
of
goods
or
properties
originally
intended
for
(e)
Radio,
television,
satellite
transmission
and
cable
sale
or
for
use
in
the
course
of
business;
television
time.
(2)
Distribution
or
transfer
to:
(a)
Shareholders
or
investors
as
share
in
the
profits
of
The
term
'gross
selling
price'
means
the
total
the
VAT-registered
persons;
or
amount
of
money
or
its
equivalent
which
the
(b)
Creditors
in
payment
of
debt;
purchaser
pays
or
is
obligated
to
pay
to
the
seller
in
(3)
Consignment
of
goods
if
actual
sale
is
not
made
consideration
of
the
sale,
barter
or
exchange
of
the
within
sixty
(60)
days
following
the
date
such
goods
goods
or
properties,
excluding
the
value-added
tax.
were
consigned;
and
The
excise
tax,
if
any,
on
such
goods
or
properties
(4)
Retirement
from
or
cessation
of
business,
with
shall
form
part
of
the
gross
selling
price.
respect
to
inventories
of
taxable
goods
existing
as
of
such
retirement
or
cessation.
(2)
Zero-rated
Sales
of
Goods
or
Properties.
The
following
sales
by
VAT-registered
persons
shall
be
(C)
Changes
in
or
Cessation
of
Status
of
a
VAT-
subject
to
zero
percent
(0%)
rate:
registered
Person.
-
The
tax
imposed
in
Subsection
(A)
of
this
Section
shall
also
apply
to
goods
disposed
of
or
(a)
Export
Sales.
-
The
term
'export
sales'
means:
existing
as
of
a
certain
date
if
under
circumstances
to
(1)
The
sale
and
actual
shipment
of
goods
from
the
be
prescribed
in
rules
and
regulations
to
be
Philippines
to
a
foreign
country,
irrespective
of
any
promulgated
by
the
Secretary
of
Finance,
upon
shipping
arrangement
that
may
be
agreed
upon
which
recommendation
of
the
Commissioner,
the
status
of
a
may
influence
or
determine
the
transfer
of
ownership
person
as
a
VAT-registered
person
changes
or
is
of
the
goods
so
exported
and
paid
for
in
acceptable
terminated.
foreign
currency
or
its
equivalent
in
goods
or
services,
and
accounted
for
in
accordance
with
the
rules
and
(D)
Sales
Returns,
Allowances
and
Sales
Discounts.
-
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP);
The
value
of
goods
or
properties
sold
and
(2)
Sale
of
raw
materials
or
packaging
materials
to
a
subsequently
returned
or
for
which
allowances
were
nonresident
buyer
for
delivery
to
a
resident
local
granted
by
a
VAT-registered
person
may
be
deducted
export-oriented
enterprise
to
be
used
in
from
the
gross
sales
or
receipts
for
the
quarter
in
manufacturing,
processing,
packing
or
repacking
in
which
a
refund
is
made
or
a
credit
memorandum
or
the
Philippines
of
the
said
buyer's
goods
and
paid
for
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
"The
phrase
'sale
or
exchange
of
services'
means
the
future
event
may
be
excluded
from
the
gross
sales
performance
of
all
kinds
of
services
in
the
Philippines
within
the
same
quarter
it
was
given.
for
others
for
a
fee,
remuneration
or
consideration,
including
those
performed
or
rendered
by
(E)
Authority
of
the
Commissioner
to
Determine
the
construction
and
service
contractors;
stock,
real
Appropriate
Tax
Base.
-
The
Commissioner
shall,
by
estate,
commercial,
customs
and
immigration
brokers;
rules
and
regulations
prescribed
by
the
Secretary
of
lessors
of
property,
whether
personal
or
real;
Finance,
determine
the
appropriate
tax
base
in
cases
warehousing
services;
lessors
or
distributors
of
where
a
transaction
is
deemed
a
sale,
barter
or
cinematographic
films;
persons
engaged
in
milling,
exchange
of
goods
or
properties
under
Subsection
(B)
processing,
manufacturing
or
repacking
goods
for
hereof,
or
where
the
gross
selling
price
is
others;
proprietors,
operators
or
keepers
of
hotels,
unreasonably
lower
than
the
actual
market
value.
motels,
rest-houses,
pension
houses,
inns,
resorts;
proprietors
or
operators
of
restaurants,
refreshment
Importation
parlors,
cafes
and
other
eating
places,
including
clubs
and
caterers;
dealers
in
securities;
lending
investors;
SEC.
107.
Value-Added
Tax
on
Importation
of
Goods,
transportation
contractors
on
their
transport
of
goods
NIRC.
or
cargoes,
including
persons
who
transport
goods
or
cargoes
for
hire
and
other
domestic
common
carriers
(A)
In
General.
-
There
shall
be
levied,
assessed
and
by
land
relative
to
their
transport
of
goods
or
cargoes;
collected
on
every
importation
of
goods
a
value-added
common
carriers
by
air
and
sea
relative
to
their
tax
equivalent
to
ten
percent
(10%)
based
on
the
total
transport
of
passengers,
goods
or
cargoes
from
one
value
used
by
the
Bureau
of
Customs
in
determining
place
in
the
Philippines
to
another
place
in
the
tariff
and
customs
duties
plus
customs
duties,
excise
Philippines;
sales
of
electricity
by
generation
taxes,
if
any,
and
other
charges,
such
tax
to
be
paid
by
companies,
transmission,
and
distribution
companies;
the
importer
prior
to
the
release
of
such
goods
from
services
of
franchise
grantees
of
electric
utilities,
customs
custody:
Provided,
That
where
the
customs
telephone
and
telegraph,
radio
and
television
duties
are
determined
on
the
basis
of
the
quantity
or
broadcasting
and
all
other
franchise
grantees
except
volume
of
the
goods,
the
value-added
tax
shall
be
those
under
Section
119
of
this
Code
and
non-life
based
on
the
landed
cost
plus
excise
taxes,
If
any.
insurance
companies
(except
their
crop
insurances),
including
surety,
fidelity,
indemnity
and
bonding
(B)
Transfer
of
Goods
by
Tax-exempt
Persons.
-
In
the
companies;
and
similar
services
regardless
of
whether
case
of
tax-free
importation
of
goods
into
the
or
not
the
performance
thereof
calls
for
the
exercise
Philippines
by
persons,
entities
or
agencies
exempt
or
use
of
the
physical
or
mental
faculties.
The
phrase
from
tax
where
such
goods
are
subsequently
sold,
'sale
or
exchange
of
services'
shall
likewise
include:
transferred
or
exchanged
in
the
Philippines
to
non-
(1)
The
lease
or
the
use
of
or
the
right
or
privilege
to
exempt
persons
or
entities,
the
purchasers,
use
any
copyright,
patent,
design
or
model
plan,
secret
transferees
or
recipients
shall
be
considered
the
formula
or
process,
goodwill,
trademark,
trade
brand
importers
thereof,
who
shall
be
liable
for
any
internal
or
other
like
property
or
right;
revenue
tax
on
such
importation.
The
tax
due
on
such
(2)
The
lease
or
the
use
of,
or
the
right
to
use
of
any
importation
shall
constitute
a
lien
on
the
goods
industrial,
commercial
or,
scientific
equipment;
superior
to
all
charges
or
liens
on
the
goods,
(3)
The
supply
of
scientific,
technical,
industrial
or
irrespective
of
the
possessor
thereof.
commercial
knowledge
or
information;
(4)
The
supply
of
any
assistance
that
is
ancillary
and
Sale
of
Services
subsidiary
to
and
is
furnished
as
a
means
of
enabling
SEC.
108,
NIRC.
Value-added
Tax
on
Sale
of
Services
the
application
or
enjoyment
of
any
such
property,
or
and
Use
or
Lease
of
Properties.
right
as
is
mentioned
in
subparagraph
(2)
or
any
such
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
knowledge
or
information
as
is
mentioned
in
assessed
and
collected,
a
value-added
tax
equivalent
subparagraph
(3);
to
ten
percent
(10%)
of
gross
receipts
derived
from
(5)
The
supply
of
services
by
a
nonresident
person
or
the
sale
or
exchange
of
services,
including
the
use
or
his
employee
in
connection
with
the
use
of
property
lease
of
properties:
Provided,
That
the
President,
or
rights
belonging
to,
or
the
installation
or
operation
upon
the
recommendation
of
the
Secretary
of
Finance,
of
any
brand,
machinery
or
other
apparatus
shall,
effective
January
1,
2006,
raise
the
rate
of
value- purchased
from
such
nonresident
person;
added
tax
to
twelve
percent
(12%),
after
any
of
the
(6)
The
supply
of
technicai
advice,
assistance
or
following
conditions
has
been
satisfied:
services
rendered
in
connection
with
technical
(i)
Value-added
tax
collection
as
a
percentage
of
Gross
management
or
administration
of
any
scientific,
Domestic
Product
(GDP)
of
the
previous
year
exceeds
industrial
or
commercial
undertaking,
venture,
two
and
four-fifth
percent
(2
4/5%);
or
project
or
scheme;
(ii)
National
government
deficit
as
a
percentage
of
(7)
The
lease
of
motion
picture
films,
films,
tapes
and
GDP
of
the
previous
year
exceeds
one
and
one-half
discs;
and
percent
(1
1/2%).
(8)
The
lease
or
the
use
of
or
the
right
to
use
radio,
Meaning
of
In
the
Course
of
Trade
or
Business.
The
television,
satellite
transmission
and
cable
television
term
in
the
course
of
trade
or
business
means
the
time.
regular
conduct
or
pursuit
of
a
commercial
or
economic
activity,
including
transactions
incidental
"Lease
of
properties
shall
be
subject
to
the
tax
herein
thereto,
by
any
person
regardless
of
whether
or
not
imposed
irrespective
of
the
place
where
the
contract
the
person
engaged
therein
is
a
non-stock,
non-profit
of
lease
or
licensing
agreement
was
executed
if
the
private
organization
(irrespective
of
the
disposition
of
property
is
leased
or
used
in
the
Philippines.
its
net
income
and
whether
or
not
it
sells
exclusively
"The
term
'gross
receipts'
means
the
total
amount
of
to
members
or
their
guests),
or
government
entity.
money
or
its
equivalent
representing
the
contract
Non-resident
persons
who
perform
services
in
the
price,
compensation,
service
fee,
rental
or
royalty,
Philippines
are
deemed
to
be
making
sales
in
the
including
the
amount
charged
for
materials
supplied
course
of
trade
or
business,
even
if
the
performance
of
with
the
services
and
deposits
and
advanced
services
is
not
regular.
payments
actually
or
constructively
received
during
the
taxable
quarter
for
the
services
performed
or
to
be
CIR
v
CA
242
scra
289
performed
for
another
person,
excluding
value-added
Summary:
CIR
was
trying
to
tax
Atlas
Mining
tax.
manufacturers
and
contractors
tax
for
lending
its
steel
balls
and
leasing
dumptrucks
(B)
Transactions
Subject
to
Zero
Percent
(0%)
Rate.
-
respectively
The
following
services
performed
in
the
Philippines
by
VAT-registered
persons
shall
be
subject
to
zero
percent
(0%)
rate:
Doctrine:
To
be
liable
for
both
taxes,
one
must
(1)
Processing,
manufacturing
or
repacking
goods
for
be
doing
busines.
The
intent
just
has
to
be
for
other
persons
doing
business
outside
the
Philippines
profit
and/or
that
it
may
be
considered
the
which
goods
are
subsequently
exported,
where
the
first
of
many
transactions.
Steel
balls
were
just
services
are
paid
for
in
acceptable
foreign
currency
to
accommodate
so
it
was
not
considered
for
and
accounted
for
in
accordance
with
the
rules
and
profit.
Dumptrucks
continuously
gave
profit
as
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP);
shown
in
the
books.
(2)
Services
other
than
those
mentioned
in
the
preceding
paragraph
rendered
to
a
person
engaged
in
CIR
v
CA
329
scra
237
business
conducted
outside
the
Philippines
or
to
a
nonresident
person
not
engaged
in
business
who
is
SUMMARY:
Commonwealth
Management
and
outside
the
Philippines
when
the
services
are
Services
Corporation
was
organized
by
performed,
the
consideration
for
which
is
paid
for
in
Philamlife
to
perform
collection,
consultative
acceptable
foreign
currency
and
accounted
for
in
and
other
technical
services,
including
accordance
with
the
rules
and
regulations
of
the
functioning
as
its
internal
auditor,
and
that
of
Bangko
Sentral
ng
Pilipinas
(BSP);
its
other
affiliates.
BIR
assessed
COMASERCO
(3)
Services
rendered
to
persons
or
entities
whose
for
deficiency
VAT
for
the
year
1988.
exemption
under
special
laws
or
international
COMASERCO
protested
claiming
that
it
is
not
agreements
to
which
the
Philippines
is
a
signatory
engage
in
business
as
it
was
not
rendering
effectively
subjects
the
supply
of
such
services
to
zero
service
for
profit
but
instead
on
percent
(0%)
rate;
(4)
Services
rendered
to
persons
engaged
in
reimbursement-of-cost
basis
only.
CTA
agreed
international
shipping
or
international
air
transport
with
the
CIR.
However,
on
appeal,
CA
sided
operations,
including
leases
of
property
for
use
with
COMASERCO
and
ruled
that
it
was
not
thereof;
liable
to
pay
VAT
for
it
was
not
engaged
in
the
(5)
Services
performed
by
subcontractors
and/or
business
of
selling
services.
SC
reversed
the
CA
contractors
in
processing,
converting,
or
ruling
and
reinstate
the
CTA
ruling
because
manufacturing
goods
for
an
enterprise
whose
export
profit
is
not
a
factor
in
determining
whether
sales
exceed
seventy
percent
(70%)
of
total
annual
one
is
engaged
in
business
or
not.
production;
(6)
Transport
of
passengers
and
cargo
by
air
or
sea
DOCTRINE:
The
term
"in
the
course
of
trade
or
vessels
from
the
Philippines
to
a
foreign
country;
and
(7)
Sale
of
power
or
fuel
generated
through
renewable
business"
requires
the
regular
conduct
or
sources
of
energy
such
as,
but
not
limited
to,
biomass,
pursuit
of
a
commercial
or
an
economic
solar,
wind,
hydropower,
geothermal,
ocean
energy,
activity,
regardless
of
whether
or
not
the
entity
and
other
emerging
energy
sources
using
technologies
is
profit-oriented.
VAT
is
a
tax
on
transactions,
such
as
fuel
cells
and
hydrogen
fuels.
imposed
at
every
stage
of
the
distribution
process
on
the
sale,
barter,
exchange
of
goods
Concept
of
in
the
course
of
trade
or
business
or
property,
and
on
the
performance
of
Sec
4.105-3,
RR
16-2005
services,
even
in
the
absence
of
profit
SEC.
105,
NIRC.
Persons
Liable.
-
Any
person
who,
in
attributable
thereto.
the
course
of
trade
or
business,
sells
barters,
A
domestic
corporation
that
provided
exchanges,
leases
goods
or
properties,
renders
technical,
research,
management
and
technical
services,
and
any
person
who
imports
goods
shall
be
assistance
to
its
affiliated
companies
and
subject
to
the
value-added
tax
(VAT)
imposed
in
Sections
106
to
108
of
this
Code.
received
payments
on
a
reimbursement-of-cost
The
value-added
tax
is
an
indirect
tax
and
the
amount
basis,
without
any
intention
of
realizing
profit,
of
tax
may
be
shifted
or
passed
on
to
the
buyer,
is
subject
to
VAT
on
services
rendered
transferee
or
lessee
of
the
goods,
properties
or
services.
This
rule
shall
likewise
apply
to
existing
CS
Garments
v
CIR
contracts
of
sale
or
lease
of
goods,
properties
or
SUMMARY:
Petitioner
CS
Garments
received
services
at
the
time
of
the
effectivity
of
Republic
Act
an
assessment
notice
from
CIR
requiring
it
to
No.
7716.
pay
VAT
for
the
sale
of
its
motor
vehicle
to
its
The
phrase
'in
the
course
of
trade
or
business'
means
General
Manager.
Petitioner
filed
a
written
the
regular
conduct
or
pursuit
of
a
commercial
or
an
protest
with
the
CIR.
When
the
latter
failed
to
economic
activity,
including
transactions
incidental
rule
on
the
protest
within
the
prescribed
thereto,
by
any
person
regardless
of
whether
or
not
the
person
engaged
therein
is
a
non-stock,
nonprofit
period,
petitioner
appealed
to
CTA
for
the
private
organization
(irrespective
of
the
disposition
of
cancellation
of
the
assessment
notice.
its
net
income
and
whether
or
not
it
sells
exclusively
Petitioner
argued
that
the
proceeds
of
the
sale
to
members
or
their
guests),
or
government
entity.
of
its
motor
vehicle
to
its
General
Manager
The
rule
of
regularity,
to
the
contrary
cannot
be
subject
to
VAT
since
it
was
not
made
notwithstanding,
services
as
defined
in
this
Code
in
the
ordinary
conduct
of
its
trade
or
business
rendered
in
the
Philippines
by
nonresident
foreign
considering
that
petitioner
is
primarily
persons
shall
be
considered
as
being
course
of
trade
engaged
in
the
manufacture
and
sale
of
or
business.
garments
for
export.
The
sale
of
the
Mercedez
Benz
was
an
isolated
transaction
and
Sec
4.106-9,
RR
16-2005
undertaken
only
once
in
order
to
dispose
SEC.
4.106-9.
Allowable
Deductions
from
Gross
Selling
petitioner's
capital
asset.
The
CTA
however
Price.
In
computing
the
taxable
base
during
the
found
the
sale
of
the
motor
vehicle
subject
to
month
or
quarter,
the
following
shall
be
allowed
as
VAT,
it
being
an
incidental
transaction
under
deductions
from
gross
selling
price:
(a)
Discounts
determined
and
granted
at
the
time
of
Sec.
105
of
the
NIRC.
sale,
which
are
expressly
indicated
in
the
invoice,
the
amount
thereof
forming
part
of
the
gross
sales
duly
DOCTRINE:
Transactions
that
are
made
recorded
in
the
books
of
accounts.
incidental
to
the
pursuit
of
a
commercial
or
Sales
discount
indicated
in
the
invoice
at
the
time
of
economic
activity
are
also
considered
as
sale,
the
grant
of
which
is
not
dependent
upon
the
entered
into
in
the
course
of
trade
or
business.
happening
of
a
future
event,
may
be
excluded
from
the
"Incidental"
means
something
else
as
primary;
gross
sales
within
the
same
month/quarter
it
was
something
necessary,
appertaining
to,
or
given.
depending
upon
another,
which
is
termed
the
(b)
Sales
returns
and
allowances
for
which
a
proper
principal.
Hence,
an
isolated
transaction
is
not
credit
or
refund
was
made
during
the
month
or
quarter
to
the
buyer
for
sales
previously
recorded
as
necessarily
disqualified
from
being
made
taxable
sales.
incidentally
in
the
course
of
trade
or
business.
Once
an
activity
has
been
identified
as
a
D.
TAX
on
SALE
OF
GOODS
AND
PROPERTIES
business,
any
supply[sales]
made
while
-->
covers
both
actual
sale
and
deemed
sale
carrying
it
on
is
likely
to
be
made
in
the
course
why
deemed
sale?-
in
order
to
plug
a
leakage
or
furtherance
of
business.
No
distinction
is
for
VAT
purposes
because
Government
is
made
between
capital
and
revenue
items.
Thus,
effectively
short
changed.
a
supply[
sales]
in
the
course
or
furtherance
of
business
includes:
(1)
the
disposition
of
the
Sec
106
NIRC
see
provision
under
B.
taxable
assets
and
liabilities
of
a
business;
(2)
the
transactions
disposition
of
a
business
as
going
concern;
and
(3)
anything
done
in
connection
with
the
termination
or
intended
termination
of
a
Sec
4.106-1,
RR
16-2005
SEC.
4.106-1.
VAT
on
Sale
of
Goods
or
Properties.
business.
VAT
is
imposed
and
collected
on
every
sale,
barter
or
exchange,
or
transactions
deemed
sale
of
taxable
C.
PERSONS
LIABLE
goods
or
properties
at
the
rate
of
10%
of
the
gross
selling
price
or
gross
value
in
money
of
the
goods
or
tax,
if
any,
on
such
goods
or
properties
shall
form
part
properties
sold,
bartered,
or
exchanged,
or
deemed
of
the
gross
selling
price
sold
in
the
Philippines.
Sec
4.106-3
and
9,
RR
16-2005
Concept
of
goods/properties
SEC.
4.106-3.
Sale
of
Real
Properties.
Sale
of
real
Section
106
(A)
(1)
properties
held
primarily
for
sale
to
customers
or
held
(1)
The
term
'goods'
or
'properties'
shall
mean
all
for
lease
in
the
ordinary
course
of
trade
or
business
of
tangible
and
intangible
objects
which
are
capable
of
the
seller
shall
be
subject
to
VAT.
pecuniary
estimation
and
shall
include:
In
the
case
of
sale
of
real
properties
on
the
installment
(a)
Real
properties
held
primarily
for
sale
to
plan,
the
real
estate
dealer
shall
be
subject
to
VAT
on
customers
or
held
for
lease
in
the
ordinary
course
of
the
installment
payments,
including
interest
and
trade
or
business;
penalties,
actually
and/or
constructively
received
by
(b)
The
right
or
the
privilege
to
use
patent,
copyright,
the
seller.
design
or
model,
plan,
secret
formula
or
process,
goodwill,
trademark,
trade
brand
or
other
like
Sale
of
residential
lot
exceeding
P1,500,000.00,
property
or
right;
residential
house
and
lot
or
other
residential
(c)
The
right
or
the
privilege
to
use
in
the
Philippines
dwellings
exceeding
P2,500,000.00,
where
the
of
any
industrial,
commercial
or
scientific
equipment;
instrument
of
sale
(whether
the
instrument
is
(d)
The
right
or
the
privilege
to
use
motion
picture
nominated
as
a
deed
of
absolute
sale,
deed
of
films,
tapes
and
discs;
and
conditional
sale
or
otherwise)
is
executed
on
or
after
(e)
Radio,
television,
satellite
transmission
and
cable
July
1,
2005,
shall
be
subject
to
10%
VAT.
television
time.
Installment
sale
of
residential
house
and
lot
or
other
residential
dwellings
exceeding
P1,000,000.00,
where
the
instrument
of
sale
(whether
Sec
4.106-2
and
3,
RR-16-2005
the
instrument
is
nominated
as
a
deed
of
absolute
SEC.
4.106-2.
Meaning
of
the
Term
Goods
or
sale,
deed
of
conditional
sale
or
otherwise)
was
Properties.
The
term
goods
or
properties
refers
to
executed
prior
to
July
1,
2005,
shall
be
subject
to
10%
all
tangible
and
intangible
objects
which
are
capable
VAT.
of
pecuniary
estimation
and
shall
include,
among
others:
Sale
of
real
property
on
installment
plan
means
sale
(1)
Real
properties
held
primarily
for
sale
to
of
real
property
by
a
real
estate
dealer,
the
initial
customers
or
held
for
lease
in
the
ordinary
course
of
payments
of
which
in
the
year
of
sale
do
not
exceed
trade
or
business;
twenty-five
percent
(25%)
of
the
gross
selling
price.
(2)
The
right
or
the
privilege
to
use
patent,
copyright,
design
or
model,
plan,
secret
formula
or
process,
However,
in
the
case
of
sale
of
real
properties
on
the
goodwill,
trademark,
trade
brand
or
other
like
deferred-payment
basis,
not
on
the
installment
plan,
property
or
right;
the
transaction
shall
be
treated
as
cash
sale
which
(3)
The
right
or
the
privilege
to
use
any
industrial
makes
the
entire
selling
price
taxable
in
month
of
sale.
commercial
or
scientific
equipment;
(4)
The
right
or
the
privilege
to
use
motion
picture
Sale
of
real
property
by
a
real
estate
dealer
on
a
films,
films,
tapes
and
discs;
and
deferred
payment
basis,
not
on
the
installment
plan
(5)
Radio,
television,
satellite
transmission
and
cable
means
sale
of
real
property,
the
initial
payments
of
television
time.
which
in
the
year
of
sale
exceed
twenty-five
percent
(25%)
of
the
gross
selling
price.
Requirements
for
taxability
of
transactions
1.
there
must
be
a
sale
either
actual
or
deemed
Initial
payments
means
payment
or
payments
which
sale
the
seller
receives
before
or
upon
execution
of
the
2.
must
be
in
the
course
of
trade/business
instrument
of
sale
and
payments
which
he
expects
or
3.
for
use
or
consumption
in
the
Philippines
is
scheduled
to
receive
in
cash
or
property
(other
than
4.
not
exempt
under
international
law,
treaty.
evidence
of
indebtedness
of
the
purchaser)
during
the
Check
if
exempt
under
section
109
year
when
the
sale
or
disposition
of
the
real
property
was
made.
It
covers
any
down
payment
made
and
includes
all
payments
actually
or
constructively
received
during
the
year
of
sale,
the
aggregate
of
Meaning
of
Gross
Selling
Price
which
determines
the
limit
set
by
law.
Sec
106
(A)
(1)
The
term
'gross
selling
price'
means
the
total
amount
Initial
payments
do
not
include
the
amount
of
of
money
or
its
equivalent
which
the
purchaser
pays
mortgage
on
the
real
property
sold
except
when
such
or
is
obligated
to
pay
to
the
seller
in
consideration
of
mortgage
exceeds
the
cost
or
other
basis
of
the
the
sale,
barter
or
exchange
of
the
goods
or
property
to
the
seller,
in
which
case,
the
excess
shall
properties,
excluding
the
value-added
tax.
The
excise
be
considered
part
of
the
initial
payments.
out
of
retained
earnings
on
or
after
January
1,
1996
Also
excluded
from
initial
payments
are
notes
or
other
and
distributed
by
the
company
to
its
shareholders
evidence
of
indebtedness
issued
by
the
purchaser
to
shall
be
subject
to
VAT
based
on
the
zonal
value
or
fair
the
seller
at
the
time
of
the
sale.
market
value
at
the
time
of
distribution,
whichever
is
applicable.
Pre-selling
of
real
estate
properties
by
real
estate
ii.
Creditors
in
payment
of
debt
or
obligation.
dealers
shall
be
subject
to
VAT
in
accordance
with
(3)
Consignment
of
goods
if
actual
sale
is
not
made
rules
prescribed
above.
within
60
days
following
the
date
such
goods
were
consigned.
Consigned
goods
returned
by
the
Real
estate
dealer
includes
any
person
engaged
in
consignee
within
the
60-day
period
are
not
deemed
the
business
of
buying,
developing,
selling,
exchanging
sold;
real
properties
as
principal
and
holding
himself
out
as
(4)
Retirement
from
or
cessation
of
business
with
a
full
or
part-time
dealer
in
real
estate.
respect
to
all
goods
on
hand,
whether
capital
goods,
stock-in-trade,
supplies
or
materials
as
of
the
date
of
Transmission
of
property
to
a
trustee
shall
not
be
such
retirement
or
cessation,
whether
or
not
the
subject
to
VAT
if
the
property
is
to
be
merely
held
in
business
is
continued
by
the
new
owner
or
successor.
trust
for
the
trustor
and/or
beneficiary.
However,
if
The
following
circumstances
shall,
among
others,
give
the
property
transferred
is
one
for
sale,
lease
or
use
in
rise
to
transactions
deemed
sale
for
purposes
of
this
the
ordinary
course
of
trade
or
business
and
the
Section;
transfer
constitutes
a
completed
gift,
the
transfer
is
subject
to
VAT
as
a
deemed
sale
transaction
pursuant
i.
Change
of
ownership
of
the
business.
There
is
a
to
Sec.
4.106-7(a)(1)
of
these
Regulations.
The
change
in
the
ownership
of
the
business
when
a
single
transfer
is
a
completed
gift
if
the
transferor
divests
proprietorship
incorporates;
or
the
proprietor
of
a
himself
absolutely
of
control
over
the
property,
i.e.,
single
proprietorship
sells
his
entire
business.
irrevocable
transfer
of
corpus
and/or
irrevocable
designation
of
beneficiary.
ii.
Dissolution
of
a
partnership
and
creation
of
a
new
partnership
which
takes
over
the
business.
(b)
The
Commissioner
of
Internal
Revenue
shall
Transactions
Deemed
Sale
determine
the
appropriate
tax
base
in
cases
where
a
Sec
106
(B)
NIRC
transaction
is
deemed
a
sale,
barter
or
exchange
of
(B)
Transactions
Deemed
Sale.
-
The
following
goods
or
properties
under
Sec.
4.106-7
paragraph
(a)
transactions
shall
be
deemed
sale:
hereof,
or
where
the
gross
selling
price
is
(1)
Transfer,
use
or
consumption
not
in
the
course
of
unreasonably
lower
than
the
actual
market
value.
The
business
of
goods
or
properties
originally
intended
for
gross
selling
price
is
unreasonably
lower
than
the
sale
or
for
use
in
the
course
of
business;
actual
market
value
if
it
is
lower
by
more
than
30%
of
(2)
Distribution
or
transfer
to:
the
actual
market
value
of
the
same
goods
of
the
same
(a)
Shareholders
or
investors
as
share
in
the
profits
of
quantity
and
quality
sold
in
the
immediate
locality
on
the
VAT-registered
persons;
or
or
nearest
the
date
of
sale.
(b)
Creditors
in
payment
of
debt;
(3)
Consignment
of
goods
if
actual
sale
is
not
made
For
transactions
deemed
sale,
the
output
tax
shall
be
within
sixty
(60)
days
following
the
date
such
goods
based
on
the
market
value
of
the
goods
deemed
sold
were
consigned;
and
as
of
the
time
of
the
occurrence
of
the
transactions
(4)
Retirement
from
or
cessation
of
business,
with
enumerated
in
Sec.
4.106-7(a)(1),(2),
and
(3)
of
these
respect
to
inventories
of
taxable
goods
existing
as
of
Regulations.
However,
in
the
case
of
retirement
or
such
retirement
or
cessation.
cessation
of
business,
the
tax
base
shall
be
the
acquisition
cost
or
the
current
market
price
of
the
Sec
4.106-7,
RR
16-2005
goods
or
properties,
whichever
is
lower.
Transactions
Deemed
Sale.
(a)
The
following
transactions
shall
be
deemed
sale
In
the
case
of
a
sale
where
the
gross
selling
price
is
pursuant
to
Sec.
106
(B)
of
the
unreasonably
lower
than
the
fair
market
value,
the
Tax
Code:
actual
market
value
shall
be
the
tax
base.
(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.
Transfer
of
E.
Tax
on
Importation
goods
or
properties
not
in
the
course
of
business
can
take
place
when
VAT-registered
person
withdraws
SEC.
107,
NIRC.
Value-Added
Tax
on
Importation
of
goods
from
his
business
for
his
personal
use;
Goods.
-
(2)
Distribution
or
transfer
to:
(A)
In
General.
-
There
shall
be
levied,
assessed
and
i.
Shareholders
or
investors
share
in
the
profits
of
collected
on
every
importation
of
goods
a
value-added
VAT-registered
person;
tax
equivalent
to
ten
percent
(10%)
based
on
the
total
Property
dividends
which
constitute
stocks
in
trade
or
value
used
by
the
Bureau
of
Customs
in
determining
properties
primarily
held
for
sale
or
lease
declared
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
(c)
Sale,
transfer
or
exchange
of
imported
goods
by
customs
custody:
Provided,
That
where
the
customs
tax-exempt
persons.
In
the
case
of
goods
imported
duties
are
determined
on
the
basis
of
the
quantity
or
into
the
Philippines
by
VAT-exempt
persons,
entities
volume
of
the
goods,
the
value-added
tax
shall
be
or
agencies
which
are
subsequently
sold,
transferred
based
on
the
landed
cost
plus
excise
taxes,
If
any.
or
exchanged
in
the
Philippines
to
non-exempt
persons
or
entities,
the
latter
shall
be
considered
the
(B)
Transfer
of
Goods
by
Tax-exempt
Persons.
-
In
the
importers
thereof
and
shall
be
liable
for
VAT
due
on
case
of
tax-free
importation
of
goods
into
the
such
importation.
The
tax
due
on
such
importation
Philippines
by
persons,
entities
or
agencies
exempt
shall
constitute
a
lien
on
the
goods,
superior
to
all
from
tax
where
such
goods
are
subsequently
sold,
charges/or
liens,
irrespective
of
the
possessor
of
said
transferred
or
exchanged
in
the
Philippines
to
non- goods.
exempt
persons
or
entities,
the
purchasers,
transferees
or
recipients
shall
be
considered
the
Requirements
for
taxability
of
Transactions
importers
thereof,
who
shall
be
liable
for
any
internal
1.
must
be
on
importation
revenue
tax
on
such
importation.
The
tax
due
on
such
2.
need
not
be
in
the
course
of
trade
or
business
importation
shall
constitute
a
lien
on
the
goods
superior
to
all
charges
or
liens
on
the
goods,
irrespective
of
the
possessor
thereof.
F.
TAX
ON
SERVICES
SEC.
108,
NIRC.
Value-added
Tax
on
Sale
of
Services
and
Use
or
Lease
of
Properties.
Sec
4.107-1,
RR
16-2005
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
VAT
on
Importation
of
Goods.
assessed
and
collected,
a
value-added
tax
equivalent
(a)
In
general.
VAT
is
imposed
on
goods
brought
into
to
ten
percent
(10%)
of
gross
receipts
derived
from
the
Philippines,
whether
for
use
in
business
or
not.
the
sale
or
exchange
of
services,
including
the
use
or
The
tax
shall
be
based
on
the
total
value
used
by
the
lease
of
properties:
Provided,
That
the
President,
BOC
in
determining
tariff
and
customs
duties,
plus
upon
the
recommendation
of
the
Secretary
of
Finance,
customs
duties,
excise
tax,
if
any,
and
other
charges,
shall,
effective
January
1,
2006,
raise
the
rate
of
value-
such
as
postage,
commission,
and
similar
charges,
added
tax
to
twelve
percent
(12%),
after
any
of
the
prior
to
the
release
of
the
goods
from
customs
following
conditions
has
been
satisfied:
custody.
(i)
Value-added
tax
collection
as
a
percentage
of
Gross
Domestic
Product
(GDP)
of
the
previous
year
exceeds
In
case
the
valuation
used
by
the
BOC
in
computing
two
and
four-fifth
percent
(2
4/5%);
or
customs
duties
is
based
on
volume
or
quantity
of
the
(ii)
National
government
deficit
as
a
percentage
of
imported
goods,
the
landed
cost
shall
be
the
basis
for
GDP
of
the
previous
year
exceeds
one
and
one-half
computing
VAT.
Landed
cost
consists
of
the
invoice
percent
(1
1/2%).
amount,
customs
duties,
freight,
insurance
and
other
charges.
If
the
goods
imported
are
subject
to
excise
"The
phrase
'sale
or
exchange
of
services'
means
the
tax,
the
excise
tax
shall
form
part
of
the
tax
base.
performance
of
all
kinds
of
services
in
the
Philippines
for
others
for
a
fee,
remuneration
or
consideration,
The
same
rule
applies
to
technical
importation
of
including
those
performed
or
rendered
by
goods
sold
by
a
person
located
in
a
Special
Economic
construction
and
service
contractors;
stock,
real
Zone
to
a
customer
located
in
a
customs
territory.
estate,
commercial,
customs
and
immigration
brokers;
lessors
of
property,
whether
personal
or
real;
No
VAT
shall
be
collected
on
importation
of
goods
warehousing
services;
lessors
or
distributors
of
which
are
specifically
exempted
under
Sec.
109
(1)
of
cinematographic
films;
persons
engaged
in
milling,
the
Tax
Code.
processing,
manufacturing
or
repacking
goods
for
others;
proprietors,
operators
or
keepers
of
hotels,
(b)
Applicability
and
payment.
The
rates
prescribed
motels,
rest-houses,
pension
houses,
inns,
resorts;
under
Sec.
107
(A)
of
the
Tax
proprietors
or
operators
of
restaurants,
refreshment
Code
shall
be
applicable
to
all
importations
parlors,
cafes
and
other
eating
places,
including
clubs
withdrawn
from
customs
custody.
and
caterers;
dealers
in
securities;
lending
investors;
transportation
contractors
on
their
transport
of
goods
The
VAT
on
importation
shall
be
paid
by
the
importer
or
cargoes,
including
persons
who
transport
goods
or
prior
to
the
release
of
such
goods
from
customs
cargoes
for
hire
and
other
domestic
common
carriers
custody.
by
land
relative
to
their
transport
of
goods
or
cargoes;
common
carriers
by
air
and
sea
relative
to
their
Importer
refers
to
any
person
who
brings
goods
into
transport
of
passengers,
goods
or
cargoes
from
one
the
Philippines,
whether
or
not
made
in
the
course
of
place
in
the
Philippines
to
another
place
in
the
his
trade
or
business.
It
includes
non-exempt
persons
Philippines;
sales
of
electricity
by
generation
or
entities
who
acquire
tax-free
imported
goods
from
companies,
transmission,
and
distribution
companies;
exempt
persons,
entities
or
agencies.
services
of
franchise
grantees
of
electric
utilities,
telephone
and
telegraph,
radio
and
television
and
accounted
for
in
accordance
with
the
rules
and
broadcasting
and
all
other
franchise
grantees
except
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP);
those
under
Section
119
of
this
Code
and
non-life
(2)
Services
other
than
those
mentioned
in
the
insurance
companies
(except
their
crop
insurances),
preceding
paragraph
rendered
to
a
person
engaged
in
including
surety,
fidelity,
indemnity
and
bonding
business
conducted
outside
the
Philippines
or
to
a
companies;
and
similar
services
regardless
of
whether
nonresident
person
not
engaged
in
business
who
is
or
not
the
performance
thereof
calls
for
the
exercise
outside
the
Philippines
when
the
services
are
or
use
of
the
physical
or
mental
faculties.
The
phrase
performed,
the
consideration
for
which
is
paid
for
in
'sale
or
exchange
of
services'
shall
likewise
include:
acceptable
foreign
currency
and
accounted
for
in
(1)
The
lease
or
the
use
of
or
the
right
or
privilege
to
accordance
with
the
rules
and
regulations
of
the
use
any
copyright,
patent,
design
or
model
plan,
secret
Bangko
Sentral
ng
Pilipinas
(BSP);
formula
or
process,
goodwill,
trademark,
trade
brand
(3)
Services
rendered
to
persons
or
entities
whose
or
other
like
property
or
right;
exemption
under
special
laws
or
international
(2)
The
lease
or
the
use
of,
or
the
right
to
use
of
any
agreements
to
which
the
Philippines
is
a
signatory
industrial,
commercial
or,
scientific
equipment;
effectively
subjects
the
supply
of
such
services
to
zero
(3)
The
supply
of
scientific,
technical,
industrial
or
percent
(0%)
rate;
commercial
knowledge
or
information;
(4)
Services
rendered
to
persons
engaged
in
(4)
The
supply
of
any
assistance
that
is
ancillary
and
international
shipping
or
international
air
transport
subsidiary
to
and
is
furnished
as
a
means
of
enabling
operations,
including
leases
of
property
for
use
the
application
or
enjoyment
of
any
such
property,
or
thereof;
right
as
is
mentioned
in
subparagraph
(2)
or
any
such
(5)
Services
performed
by
subcontractors
and/or
knowledge
or
information
as
is
mentioned
in
contractors
in
processing,
converting,
or
subparagraph
(3);
manufacturing
goods
for
an
enterprise
whose
export
(5)
The
supply
of
services
by
a
nonresident
person
or
sales
exceed
seventy
percent
(70%)
of
total
annual
his
employee
in
connection
with
the
use
of
property
production;
or
rights
belonging
to,
or
the
installation
or
operation
(6)
Transport
of
passengers
and
cargo
by
air
or
sea
of
any
brand,
machinery
or
other
apparatus
vessels
from
the
Philippines
to
a
foreign
country;
and
purchased
from
such
nonresident
person;
(7)
Sale
of
power
or
fuel
generated
through
renewable
(6)
The
supply
of
technical
advice,
assistance
or
sources
of
energy
such
as,
but
not
limited
to,
biomass,
services
rendered
in
connection
with
technical
solar,
wind,
hydropower,
geothermal,
ocean
energy,
management
or
administration
of
any
scientific,
and
other
emerging
energy
sources
using
technologies
industrial
or
commercial
undertaking,
venture,
such
as
fuel
cells
and
hydrogen
fuels.
project
or
scheme;
(7)
The
lease
of
motion
picture
films,
films,
tapes
and
Sec
4.108-1,
RR
16-2005
discs;
and
VAT
on
the
Sale
of
Services
and
Use
or
Lease
of
(8)
The
lease
or
the
use
of
or
the
right
to
use
radio,
Properties.
Sale
or
exchange
of
services,
as
well
as
television,
satellite
transmission
and
cable
television
the
use
or
lease
of
properties,
as
defined
in
Sec.
108
time.
(A)
of
the
Tax
Code
shall
be
subject
to
VAT,
equivalent
to
10%
of
the
gross
receipts
(excluding
VAT).
"Lease
of
properties
shall
be
subject
to
the
tax
herein
imposed
irrespective
of
the
place
where
the
contract
of
lease
or
licensing
agreement
was
executed
if
the
Meaning
of
Sale
or
Exchange
of
Services
property
is
leased
or
used
in
the
Philippines.
"The
term
'gross
receipts'
means
the
total
amount
of
Sec
4.108-2
and
3,
RR
16-2005
money
or
its
equivalent
representing
the
contract
SEC.
4.108-2.
Meaning
of
Sale
or
Exchange
of
price,
compensation,
service
fee,
rental
or
royalty,
Services.
The
term
sale
or
exchange
of
services
including
the
amount
charged
for
materials
supplied
means
the
performance
of
all
kind
of
services
in
the
with
the
services
and
deposits
and
advanced
Philippines
for
others
for
a
fee,
remuneration
or
payments
actually
or
constructively
received
during
consideration,
whether
in
kind
or
in
cash,
including
the
taxable
quarter
for
the
services
performed
or
to
be
those
performed
or
rendered
by
the
following:
performed
for
another
person,
excluding
value-added
(1)
construction
and
service
contractors;
tax.
(2)
stock,
real
estate,
commercial,
customs
and
immigration
brokers;
(B)
Transactions
Subject
to
Zero
Percent
(0%)
Rate.
-
(3)
lessors
of
property,
whether
personal
or
real;
The
following
services
performed
in
the
Philippines
(4)
persons
engaged
in
warehousing
services;
by
VAT-registered
persons
shall
be
subject
to
zero
(5)
lessors
or
distributors
of
cinematographic
films;
percent
(0%)
rate:
(6)
persons
engaged
in
milling,
processing,
(1)
Processing,
manufacturing
or
repacking
goods
for
manufacturing
or
repacking
goods
for
others;
other
persons
doing
business
outside
the
Philippines
(7)
proprietors,
operators,
or
keepers
of
hotels,
which
goods
are
subsequently
exported,
where
the
motels,
rest
houses,
pension
houses,
inns,
resorts,
services
are
paid
for
in
acceptable
foreign
currency
theaters,
and
movie
houses;
(8)
proprietors
or
operators
of
restaurants,
SEC.
4.108-3.
Definitions
and
Specific
Rules
on
refreshment
parlors,
cafes
and
other
eating
places,
Selected
Services.
including
clubs
and
caterers;
a.
Lessors
of
Property.
All
forms
of
property
for
(9)
dealers
in
securities;
lease,
whether
real
or
personal,
are
liable
to
VAT
(10)
lending
investors;
subject
to
the
provisions
of
Sec.
4.109-1(B)(1)(v)
of
(11)
transportation
contractors
on
their
transport
of
these
Regulations.
goods
or
cargoes,
including
persons
who
transport
goods
or
cargoes
for
hire
and
other
domestic
common
Real
estate
lessor
includes
any
person
engaged
in
carriers
by
land
relative
to
their
transport
of
goods
or
the
business
of
leasing
or
subleasing
real
property.
cargoes;
(12)
common
carriers
by
air
and
sea
relative
to
their
Lease
of
property
shall
be
subject
to
VAT
regardless
of
transport
of
passengers,
goods
or
cargoes
from
one
the
place
where
the
contract
of
lease
or
licensing
place
in
the
Philippines
to
another
place
in
the
agreement
was
executed
if
the
property
leased
or
Philippines;
used
is
located
in
the
Philippines.
(13)
sales
of
electricity
by
generation,
transmission,
and/or
distribution
companies;
VAT
on
rental
and/or
royalties
payable
to
non-
(14)
franchise
grantees
of
electric
utilities,
telephone
resident
foreign
corporations
or
owners
for
the
sale
of
and
telegraph,
radio
and/or
television
broadcasting
services
and
use
or
lease
of
properties
in
the
and
all
other
franchise
grantees,
except
franchise
Philippines
shall
be
based
on
the
contract
price
agreed
grantees
of
radio
and/or
television
broadcasting
upon
by
the
licensor
and
the
licensee.
The
licensee
whose
annual
gross
receipts
of
the
preceding
year
do
shall
be
responsible
for
the
payment
of
VAT
on
such
not
exceed
Ten
Million
Pesos
(P10,000,000.00),
and
rentals
and/or
royalties
in
behalf
of
the
non-resident
franchise
grantees
of
gas
and
water
utilities;
foreign
corporation
or
owner
in
the
manner
(15)
non-life
insurance
companies
(except
their
crop
prescribed
in
Sec.
4.114-2(b)
hereof.
insurances),
including
surety,
fidelity,
indemnity
and
bonding
companies;
and
Non-resident
lessor/owner
refers
to
any
person,
(16)
similar
services
regardless
of
whether
or
not
the
natural
or
juridical,
an
alien,
or
a
citizen
who
performance
thereof
calls
for
the
exercise
or
use
of
establishes
to
the
satisfaction
of
the
Commissioner
of
the
physical
or
mental
faculties.
Internal
Revenue
the
fact
of
his
physical
presence
abroad
with
a
definite
intention
to
reside
therein,
and
The
phrase
sale
or
exchange
of
services
shall
who
owns/leases
properties,
real
or
personal,
likewise
include:
whether
tangible
or
intangible,
located
in
the
(1)
The
lease
or
the
use
of
or
the
right
or
privilege
to
Philippines.
use
any
copyright,
patent,
design
or
model,
plan,
secret
formula
or
process,
goodwill,
trademark,
trade
In
a
lease
contract,
the
advance
payment
by
the
lessee
brand
or
other
like
property
or
right;
may
be:
(2)
The
lease
or
the
use
of,
or
the
right
to
use
any
(i)
a
loan
to
the
lessor
from
the
lessee,
or
industrial,
commercial
or
scientific
equipment;
(ii)
an
option
money
for
the
property,
or
(3)
The
supply
of
scientific,
technical
industrial
or
(iii)
a
security
deposit
to
insure
the
faithful
commercial
knowledge
or
information;
performance
of
certain
obligations
of
the
lessee
to
the
(4)
The
supply
of
any
assistance
that
is
ancillary
and
lessor,
or
subsidiary
to
and
is
furnished
as
a
means
of
enabling
(iv)
pre-paid
rental.
the
application
or
enjoyment
of
any
such
property,
or
right
as
is
mentioned
in
subparagraph
(2)
hereof
or
If
the
advance
payment
is
actually
a
loan
to
the
lessor,
any
such
knowledge
or
information
as
is
mentioned
in
or
an
option
money
for
the
property,
or
a
security
subparagraph
(3)
hereof;
deposit
for
the
faithful
performance
of
certain
(5)
The
supply
of
services
by
a
non-resident
person
or
obligations
of
the
lessee,
such
advance
payment
is
not
his
employee
in
connection
with
the
use
of
property
subject
to
VAT.
However,
a
security
deposit
that
is
or
rights
belonging
to,
or
the
installation
or
operation
applied
to
rental
shall
be
subject
to
VAT
at
the
time
of
of
any
brand,
machinery
or
other
apparatus
its
application.
purchased
from
such
nonresident
person;
If
the
advance
payment
constitutes
a
pre-paid
rental,
(6)
The
supply
of
technical
advice,
assistance
or
then
such
payment
is
taxable
to
the
lessor
in
the
services
rendered
in
connection
with
technical
month
when
received,
irrespective
of
the
accounting
management
or
administration
of
any
scientific,
method
employed
by
the
lessor.
industrial
or
commercial
undertaking,
venture,
project
or
scheme;
(b)
Warehousing
service
means
rendering
personal
(7)
The
lease
of
motion
picture
films,
films,
tapes,
and
services
of
a
warehouseman
such
as:
discs;
and
(1)
engaging
in
the
business
of
receiving
and
storing
(8)
The
lease
or
the
use
of,
or
the
right
to
use,
radio,
goods
of
others
for
compensation
television,
satellite
transmission
and
cable
television
or
profit;
time.
(2)
receiving
goods
and
merchandise
to
be
stored
in
RA
No.
9136
(EPIRA).
They
shall
include
all
his
warehouse
for
hire;
or
Independent
Power
Producers
(IPPs)
and
NPC/Power
(3)
keeping
and
storing
goods
for
others,
as
a
business
Sector
Assets
and
Liabilities
Management
Corporation
and
for
use.
(PSALM)-owned
generation
facilities.
(c)
A
miller,
who
is
a
person
engaged
in
milling
for
Transmission
companies
refers
to
any
person
or
others
(except
palay
into
rice,
corn
into
corn
grits,
and
entity
that
owns
and
conveys
sugarcane
into
raw
sugar),
is
subject
to
VAT
on
sale
of
electricity
through
the
high
voltage
backbone
system
services.
If
the
miller
is
paid
in
cash
for
his
services,
and/or
subtransmission
assets,
e.g.
NPC
or
TRANSCO.
VAT
shall
be
based
on
his
gross
receipts
for
the
month
Subtransmission
assets
shall
refer
to
the
facilities
or
quarter.
If
he
receives
a
share
of
the
milled
related
to
the
power
delivery
service
below
the
products
instead
of
cash,
VAT
shall
be
based
on
the
transmission
voltages
and
based
on
the
functional
actual
market
value
of
his
share
in
the
milled
assignment
of
asset
including,
but
not
limited
to
step-
products.
Sale
by
the
owner
or
the
miller
of
his
share
down
transformers
used
solely
by
load
customers,
of
the
milled
product
(except
rice,
corn
grits
and
raw
associated
switchyard/substation,
control
and
sugar)
shall
be
subject
to
VAT.
protective
equipment,
reactive
compensation
equipment
to
improve
power
factor,
overhead
lines,
(d)
All
receipts
from
service,
hire,
or
operating
lease
of
and
the
land
where
such
facilities/equipments
are
transportation
equipment
not
subject
to
the
located.
These
include
NPC
assets
linking
the
percentage
tax
on
domestic
common
carriers
and
transmission
system
and
the
distribution
system
keepers
of
garages
imposed
under
Sec.
117
of
the
Tax
which
are
neither
classified
as
generation
or
Code
shall
be
subject
to
VAT.
transmission.
Common
carrier
refers
to
persons,
corporations,
Distribution
companies
refer
to
persons
or
entities
firms
or
associations
engaged
in
the
business
of
which
operate
a
distribution
system
in
accordance
carrying
or
transporting
passengers
or
goods
or
both,
with
the
provisions
of
the
EPIRA.
They
shall
include
by
land,
water,
or
air,
for
compensation,
offering
their
any
distribution
utility
such
as
an
electric
cooperative
services
to
the
public
and
shall
include
transportation
organized
pursuant
to
Presidential
Decree
No.
269,
as
contractors.
amended,
and/or
under
RA
No.
6938,
or
as
otherwise
provided
in
the
EPIRA,
a
private
corporation,
or
a
Common
carriers
by
land
with
respect
to
their
gross
government-owned
utility
or
existing
local
receipts
from
the
transport
of
passengers
including
government
unit
which
has
an
exclusive
franchise
to
operators
of
taxicabs,
utility
cars
for
rent
or
hire
operate
a
distribution
system
in
accordance
with
the
driven
by
the
lessees
(rent-a-car
companies),
and
EPIRA.
tourist
buses
used
for
the
transport
of
passengers
shall
be
subject
to
the
percentage
tax
imposed
under
For
this
purpose,
a
distribution
system
refers
to
the
Sec.
117
of
the
Tax
Code,
but
shall
not
be
liable
for
system
of
wires
and
associated
facilities
belonging
to
a
VAT.
franchised
distribution
utility
extending
between
the
delivery
points
on
the
transmission
or
(e)
Domestic
common
carriers
by
air
and
sea
are
subtransmission
system
or
generator
connection
and
subject
to
10%
VAT
on
their
gross
receipts
from
their
the
point
of
connection
to
the
premises
of
the
end-
transport
of
passengers,
goods
or
cargoes
from
one
users.
place
in
the
Philippines
to
another
place
in
the
Philippines.
Gross
Receipts
under
this
Subsection
(f)
shall
refer
to
the
following:
(f)
Sale
of
electricity
by
generation,
transmission,
and
distribution
companies
shall
be
subject
to
10%
VAT
(a)
Total
amount
charged
by
generation
companies
on
their
gross
receipts;
Provided,
That
sale
of
power
for
the
sale
of
electricity
and
related
ancillary
or
fuel
generated
through
renewable
sources
of
services;
and/or
energy
such
as,
but
not
limited
to,
biomass,
solar,
wind,
hydropower,
geothermal,
ocean
energy,
and
(b)
Total
amount
charged
by
transmission
companies
other
emerging
energy
sources
using
technologies
for
transmission
of
electricity
and
related
ancillary
such
as
fuel
cells
and
hydrogen
fuels
shall
be
subject
services;
and/or
to
0%
VAT.
(c)
Total
amount
charged
by
distribution
companies
Generation
companies
refers
to
persons
or
entities
and
electric
cooperatives
for
distribution
and
supply
authorized
by
the
Energy
of
electricity,
and
related
electric
service.
The
Regulatory
Commission
(ERC)
to
operate
facilities
universal
charge
passed
on
and
collected
by
used
in
the
generation
of
electricity.
For
this
purpose,
distribution
companies
and
electric
cooperatives
shall
generation
of
electricity
refers
to
the
production
of
be
excluded
from
the
computation
of
the
Gross
electricity
by
a
generation
company
or
a
co- Receipts.
generation
facility
pursuant
to
the
provisions
of
the
(g)
Dealers
in
securities
and
lending
investors
shall
be
(i)
Non-life
insurance
companies
including
surety,
subject
to
VAT
on
the
basis
of
their
gross
receipts.
fidelity,
indemnity
and
bonding
companies
are
subject
However,
for
Dealer
in
Securities,
the
term
gross
to
VAT.
They
are
not
liable
to
the
payment
of
the
receipts
means
gross
selling
price
less
cost
of
the
premium
tax
under
Sec.
123
of
the
Tax
Code.
securities
sold..
Non-life
insurance
companies
including
surety,
Dealer
in
securities
means
a
merchant
of
stock
or
fidelity,
indemnity
and
bonding
securities,
whether
an
individual
partnership
or
companies,
shall
include
all
individuals,
partnerships,
corporation,
with
an
established
place
of
business,
associations,
or
corporations,
including
professional
regularly
engaged
in
the
purchase
of
securities
and
reinsurers
defined
in
Sec.
280
of
PD
612,
otherwise
their
resale
to
customers,
that
is,
one
who
as
a
known
as
The
Insurance
Code
of
the
Philippines,
merchant
buys
securities
and
sells
them
to
customers
mutual
benefit
associations
and
government-owned
with
a
view
to
the
gains
and
profits
that
may
be
or
controlled
corporations,
engaging
in
the
business
of
derived
therefrom.
property
insurance,
as
distinguished
from
insurance
on
human
lives,
health,
accident
and
insurance
Lending
investor
includes
all
persons
other
than
appertaining
thereto
or
connected
therewith
which
banks,
non-bank
financial
intermediaries,
finance
shall
be
subject
to
the
percentage
tax
under
Sec.
123
companies
and
other
financial
intermediaries
not
of
the
Tax
Code.
performing
quasi-banking
functions
who
make
a
practice
of
lending
money
for
themselves
or
others
at
The
gross
receipts
from
non-life
insurance
shall
mean
interest.
total
premiums
collected,
whether
paid
in
money,
notes,
credits
or
any
substitute
for
money.
(h)
Services
of
franchise
grantees
of
telephone
and
telegraph,
radio
and/or
television
broadcasting,
toll
Non-life
reinsurance
premiums
are
subject
to
VAT.
road
operations
and
all
other
franchise
grantees,
Insurance
and
reinsurance
commissions,
whether
life
except
gas
and
water
utilities,
shall
be
subject
to
VAT
or
non-life,
are
subject
to
VAT.
in
lieu
of
franchise
tax,
pursuant
to
Sec.
20
of
RA
No.7716,
as
amended.
However,
franchise
grantees
of
VAT
due
from
the
foreign
reinsurance
company
is
to
radio
and/or
television
broadcasting
whose
annual
be
withheld
by
the
local
insurance
company
and
to
be
gross
receipts
of
the
preceding
year
do
not
exceed
Ten
remitted
to
the
BIR
in
accordance
with
Sec.
4.114-
Million
Pesos
(P10,000,000.00)
shall
not
be
subject
to
2(b)(2)
hereof
by
filing
the
Monthly
Remittance
VAT,
but
to
the
three
percent
(3%)
franchise
tax
Return
of
Value-Added
Tax
Withheld
(BIR
Form
imposed
under
Sec.
119
of
the
Tax
Code,
subject
to
the
1600).
optional
registration
provisions
under
Sec.
9.236-1(c)
hereof.
(j)
Pre-need
Companies
are
corporations
registered
with
the
Securities
and
Exchange
Likewise,
franchise
grantees
of
gas
and
water
utilities
Commission
and
authorized/licensed
to
sell
or
offer
shall
be
subject
to
two
percent
for
sale
pre-need
plans,
whether
a
single
plan
or
(2%)
franchise
tax
on
their
gross
receipts
derived
multi-plan.
They
are
engaged
in
business
as
seller
of
from
the
business
covered
by
the
law
granting
the
services
providing
services
to
plan
holders
by
franchise
pursuant
to
Sec.
119
of
the
Tax
Code.
managing
the
funds
provided
by
them
and
making
payments
at
the
time
of
need
or
maturity
of
the
Gross
receipts
of
all
other
franchisees,
other
than
contract.
those
covered
by
Sec.
119
of
the
Tax
Code,
regardless
of
how
their
franchises
may
have
As
service
providers,
the
compensation
for
their
been
granted,
shall
be
subject
to
the
10%
VAT
services
is
the
premiums
or
payments
received
from
imposed
under
Sec.
108
of
the
Tax
Code.
This
includes
the
plan
holders.
among
others,
the
Philippine
and
Amusement
Gaming
Corporation
(PAGCOR),
and
its
licensees
or
(k)
Health
Maintenance
Organizations
(HMOs)
are
franchisees.
entities,
organized
in
accordance
with
the
provisions
of
the
Corporation
Code
of
the
Philippines
and
Franchise
grantees
of
telephone
and
telegraph
shall
licensed
by
the
appropriate
government
agency,
be
subject
to
VAT
on
their
gross
receipts
derived
from
which
arranges
for
coverage
or
designated
managed
their
telephone,
telegraph,
telewriter
exchange,
care
services
needed
by
plan
holders/members
for
wireless
and
other
communication
equipment
fixed
prepaid
membership
fees
and
for
a
specified
services.
However,
amounts
received
for
overseas
period
of
time.
dispatch,
message,
or
conversation
originating
from
the
Philippines
are
subject
to
the
percentage
tax
HMOs
gross
receipts
shall
be
the
total
amount
of
under
Sec.
120
of
the
Tax
Code
and
hence
exempt
money
or
its
equivalent
representing
the
service
fee
from
VAT.
actually
or
constructively
received
during
the
taxable
period
for
the
services
performed
or
to
be
performed
for
another
person,
excluding
the
value-added
tax.
The
compensation
for
their
services
representing
preservation
for
the
market,
such
as
freezing,
their
service
fee,
is
presumed
to
be
the
total
amount
drying,
salting,
broiling,
roasting,
smoking
or
received
as
enrollment
fee
from
their
members
plus
stripping.
Polished
and/or
husked
rice,
corn
grits,
other
charge
received.
raw
cane
sugar
and
molasses,
ordinary
salt,
and
copra
shall
be
considered
in
their
original
state;
Requirements
for
taxability
of
service
transactions
(B)
Sale
or
importation
of
fertilizers;
seeds,
seedlings
and
fingerlings;
fish,
prawn,
livestock
and
1.
service
must
be
performed
in
the
Philippines
poultry
feeds,
including
ingredients,
whether
locally
2.
must
be
in
the
course
of
trade
or
business
produced
or
imported,
used
in
the
manufacture
of
3.
must
be
for
a
valuable
consideration
actually
finished
feeds
(except
specialty
feeds
for
race
or
constructively
received
horses,
fighting
cocks,
aquarium
fish,
zoo
animals
4.
not
exempt
and
other
animals
generally
considered
as
pets);
Meaning
of
Gross
Receipts
(C)
Importation
of
personal
and
household
effects
belonging
to
the
residents
of
the
Philippines
Sec
4.108-4,
RR
16-2005
returning
from
abroad
and
nonresident
citizens
Definition
of
Gross
Receipts.
-Gross
receipts
refers
to
coming
to
resettle
in
the
Philippines:
Provided,
That
the
total
amount
of
money
or
its
equivalent
such
goods
are
exempt
from
customs
duties
under
representing
the
contract
price,
compensation,
service
the
Tariff
and
Customs
Code
of
the
Philippines;
fee,
rental
or
royalty,
including
the
amount
charged
for
materials
supplied
with
the
services
and
deposits
(D)
Importation
of
professional
instruments
and
applied
as
payments
for
services
rendered
and
implements,
wearing
apparel,
domestic
animals,
advance
payments
actually
or
constructively
received
and
personal
household
effects
(except
any
vehicle,
during
the
taxable
period
for
the
services
performed
vessel,
aircraft,
machinery,
other
goods
for
use
in
or
to
be
performed
for
another
person,
excluding
VAT.
the
manufacture
and
merchandise
of
any
kind
in
commercial
quantity)
belonging
to
persons
coming
Constructive
receipt
occurs
when
the
money
to
settle
in
the
Philippines,
for
their
own
use
and
consideration
or
its
equivalent
is
placed
at
the
control
not
for
sale,
barter
or
exchange,
accompanying
such
of
the
person
who
rendered
the
service
without
persons,
or
arriving
within
ninety
(90)
days
before
restrictions
by
the
payor.
The
following
are
examples
or
after
their
arrival,
upon
the
production
of
of
constructive
receipts:
evidence
satisfactory
to
the
Commissioner,
that
(1)
deposit
in
banks
which
are
made
available
to
the
such
persons
are
actually
coming
to
settle
in
the
seller
of
services
without
restrictions;
Philippines
and
that
the
change
of
residence
is
bona
(2)
issuance
by
the
debtor
of
a
notice
to
offset
any
fide;
debt
or
obligation
and
acceptance
thereof
by
the
seller
as
payment
for
services
rendered;
and
(E)
Services
subject
to
percentage
tax
under
Title
V;
(3)
transfer
of
the
amounts
retained
by
the
payor
to
the
account
of
the
contractor.
(F)
Services
by
agricultural
contract
growers
and
milling
for
others
of
palay
into
rice,
corn
into
grits
and
sugar
cane
into
raw
sugar;
G.
EXEMPT
TRANSACTIONS
(G)
Medical,
dental,
hospital
and
veterinary
services
Categories
of
exempt
transactions
except
those
rendered
by
professionals;
1.
Transaction
specific
(H)
Educational
services
rendered
by
private
viewed
from
the
perspective
of
the
transaction
educational
institutions,
duly
accredited
by
the
itself
Department
of
Education
(DEPED),
the
Commission
on
Higher
Education
(CHED),
the
Technical
Education
And
Skills
Development
Authority
SEC.
109.
Exempt
Transactions.
-
(1)
Subject
to
the
(TESDA)
and
those
rendered
by
government
provisions
of
subsection
(2)
hereof,
the
following
educational
institutions;
transactions
shall
be
exempt
from
the
value-added
tax:
(I)
Services
rendered
by
individuals
pursuant
to
an
(A)
Sale
or
importation
of
agricultural
and
marine
employer-employee
relationship;
food
products
in
their
original
state,
livestock
and
poultry
of
a
kind
generally
used
as,
or
yielding
or
(P)
Sale
of
real
properties
not
primarily
held
for
producing
foods
for
human
consumption;
and
sale
to
customers
or
held
for
lease
in
the
ordinary
breeding
stock
and
genetic
materials
therefor.
course
of
trade
or
business,
or
real
property
utilized
Products
classified
under
this
paragraph
shall
be
for
low-cost
and
socialized
housing
as
defined
by
considered
in
their
original
state
even
if
they
have
Republic
Act
No.
7279,
otherwise
known
as
the
undergone
the
simple
processes
of
preparation
or
Urban
Development
and
Housing
Act
of
1992,
and
other
related
laws,
residential
lot
valued
at
One
members
as
well
as
sale
of
their
produce,
whether
in
million
five
hundred
thousand
pesos
(P1,500,000)
its
original
state
or
processed
form,
to
non-members;
and
below,
house
and
lot,
and
other
residential
their
importation
of
direct
farm
inputs,
machineries
dwellings
valued
at
Two
million
five
hundred
and
equipment,
including
spare
parts
thereof,
to
be
thousand
pesos
(P2,500,000)
and
below:
Provided,
used
directly
and
exclusively
in
the
production
and/or
That
not
later
than
January
31,
2009
and
every
processing
of
their
produce;
three
(3)
years
thereafter,
the
amounts
herein
stated
shall
be
adjusted
to
their
present
values
(M)
Gross
receipts
from
lending
activities
by
credit
or
using
the
Consumer
Price
Index,
as
published
by
the
multi-purpose
cooperatives
duly
registered
with
the
National
Statistics
Office
(NSO);
Cooperative
Development
Authority;
(Q)
Lease
of
a
residential
unit
with
a
monthly
rental
(N)
Sales
by
non-agricultural,
non-electric
and
non-
not
exceeding
Ten
thousand
pesos
(P10,000)
credit
cooperatives
duly
registered
with
the
Provided,
That
not
later
than
January
31,
2009
and
Cooperative
Development
Authority:
Provided,
That
every
three
(3)
years
thereafter,
the
amount
herein
the
share
capital
contribution
of
each
member
does
stated
shall
be
adjusted
to
its
present
value
using
not
exceed
Fifteen
thousand
pesos
(P15,000)
and
the
Consumer
Price
Index
as
published
by
the
regardless
of
the
aggregate
capital
and
net
surplus
National
Statistics
Office
(NSO);
ratably
distributed
among
the
members;
(O)
Export
sales
by
persons
who
are
not
VAT- (S)
Sale,
importation
or
lease
of
passenger
or
cargo
registered;
vessels
and
aircraft,
including
engine,
equipment
and
spare
parts
thereof
for
domestic
or
international
(R)
Sale,
importation,
printing
or
publication
of
transport
operations;
books
and
any
newspaper,
magazine,
review
or
(T)
Importation
of
fuel,
goods
and
supplies
by
persons
bulletin
which
appears
at
regular
intervals
with
engaged
in
international
shipping
or
air
transport
fixed
prices
for
subscription
and
sale
and
which
is
operations;
not
devoted
principally
to
the
publication
of
paid
advertisements;
(U)
Services
of
banks,
non-bank
financial
intermediaries
performing
quasi-banking
functions,
(V)
Sale
or
lease
of
goods
or
properties
or
the
and
other
non-bank
financial
intermediaries;
performance
of
services
other
than
the
transactions
mentioned
in
the
preceding
paragraphs,
the
gross
(2)
A
VAT-registered
person
may
elect
that
Subsection
annual
sales
and/or
receipts
do
not
exceed
the
(1)
not
apply
to
its
sale
of
goods
or
properties
or
amount
of
One
million
five
hundred
thousand
pesos
services:
Provided,
That
an
election
made
under
this
(P1,500,000):
Provided,
That
not
later
than
January
Subsection
shall
be
irrevocable
for
a
period
of
three
31,
2009
and
every
three
(3)
years
thereafter,
the
(3)
years
from
the
quarter
the
election
was
made.
amount
herein
stated
shall
be
adjusted
to
its
present
value
using
the
Consumer
Price
Index
as
SIMPLIFIED:
published
by
the
National
Statistics
Office
(NSO);
VAT
transactions
are
classified
as
follows
1.
TAXABLE
TRANSACTION-
a.)
Rate
12%-
sale,
barter,
exchanges
of
goods
or
2.Entity
Specific-
properties,
leases
goods
or
properties,
services
viewed
from
the
perspective
of
the
parties
to
and
importation
are
transactions
subject
to
VAT
the
transaction
at
rate
of
12%
output
tax.
b.)
Rate
0%-
sales
by
VAT-registered
person
Section
109
NIRC.
subject
to
zero-percentage
called
the
zero-rated
(J)
Services
rendered
by
regional
or
area
sale
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
2.EXEMPT
TRANSACTIONS-
an
exempt
Region
and
do
not
earn
or
derive
income
from
the
transaction
means
that
the
transaction
though
Philippines;
involving
sale,
barter,
exchanges
of
goods
or
properties,
leases
of
goods
or
properties,
services
(K)
Transactions
which
are
exempt
under
and
importation
are
not
subject
to
VAT.
There
is
international
agreements
to
which
the
Philippines
is
a
no
output
tax,
the
seller
is
not
liable
and
at
the
signatory
or
under
special
laws,
except
those
under
same
time
not
allowed
any
tax
credit
on
VAT
or
Presidential
Decree
No.
529;
input
tax.
(L)
Sales
by
agricultural
cooperatives
duly
registered
with
the
Cooperative
Development
Authority
to
their
H.
Computation
of
Tax
Meaning
of
output
tax,
input
tax,
course
of
his
trade
or
business
on
importation
of
excess
output/
input
goods
or
local
purchase
of
goods
or
services,
including
lease
or
use
of
property,
from
a
VAT-
registered
person.
It
shall
also
include
the
Section
110.
Tax
Credits.
-
transitional
input
tax
determined
in
accordance
with
Section
111
of
this
Code.
A.
Creditable
Input
Tax.
-
The
term
'output
tax'
means
the
value-added
tax
(1)
Any
input
tax
evidenced
by
a
VAT
invoice
or
due
on
the
sale
or
lease
of
taxable
goods
or
official
receipt
issued
in
accordance
with
Section
properties
or
services
by
any
person
registered
or
113
hereof
on
the
following
transactions
shall
be
required
to
register
under
Section
236
of
this
Code.
creditable
against
the
output
tax:
(B)
Excess
Output
or
Input
Tax.
-
If
at
the
end
of
any
(a)
Purchase
or
importation
of
goods:
taxable
quarter
the
output
tax
exceeds
the
input
tax,
the
excess
shall
be
paid
by
the
Vat-registered
(i)
For
sale;
or
person.
If
the
input
tax
exceeds
the
output
tax,
the
excess
shall
be
carried
over
to
the
succeeding
(ii)
For
conversion
into
or
intended
to
form
part
of
a
quarter
or
quarters.
any
input
tax
attributable
to
finished
product
for
sale
including
packaging
the
purchase
of
capital
goods
or
to
zero-rated
sales
materials;
or
by
a
VAT-registered
person
may
at
his
option
be
refunded
or
credited
against
other
internal
revenue
(iii)
For
use
as
supplies
in
the
course
of
business;
or
taxes,
subject
to
the
provisions
of
Section
112.
(iv)
For
use
as
materials
supplied
in
the
sale
of
(C)
Determination
of
Creditable
Input
Tax.
-
The
sum
service;
or
of
the
excess
input
tax
carried
over
from
the
preceding
month
or
quarter
and
the
input
tax
(v)
For
use
in
trade
or
business
for
which
deduction
creditable
to
a
VAT-registered
person
during
the
for
depreciation
or
amortization
is
allowed
under
taxable
month
or
quarter
shall
be
reduced
by
the
amount
of
claim
for
refund
or
tax
credit
for
value-
this
Code,
except
automobiles,
aircraft
and
yachts.
added
tax
and
other
adjustments,
such
as
purchase
returns
or
allowances
and
input
tax
attributable
to
(b)
Purchase
of
services
on
which
a
value-added
tax
exempt
sale.
has
been
actually
paid.
The
claim
for
tax
credit
referred
to
in
the
foregoing
(2)
The
input
tax
on
domestic
purchase
of
goods
or
paragraph
shall
include
not
only
those
filed
with
the
properties
shall
be
creditable:
Bureau
of
Internal
Revenue
but
also
those
filed
with
other
government
agencies,
such
as
the
Board
of
(a)
To
the
purchaser
upon
consummation
of
sale
Investments
the
Bureau
of
Customs.
and
on
importation
of
goods
or
properties;
and
(b)
To
the
importer
upon
payment
of
the
value-added
Section
110-6
and
7,
RR
16-2005
tax
prior
to
the
release
of
the
goods
from
the
custody
of
the
Bureau
of
Customs.
SECTION
4.110-6.
Determination
of
the
Output
Tax
and
VAT
Payable
and
Computation
of
VAT
Payable
However,
in
the
case
of
purchase
of
services,
lease
or
Excess
Tax
Credits.
In
a
sale
of
goods
or
or
use
of
properties,
the
input
tax
shall
be
creditable
properties,
the
output
tax
is
computed
by
to
the
purchaser,
lessee
or
licensee
upon
payment
multiplying
the
gross
selling
price
as
defined
in
of
the
compensation,
rental,
royalty
or
fee.
these
Regulations
by
the
regular
rate
of
VAT.
For
sellers
of
services,
the
output
tax
is
computed
by
(3)
A
VAT-registered
person
who
is
also
engaged
in
multiplying
the
gross
receipts
as
defined
in
these
transactions
not
subject
to
the
value-added
tax
shall
Regulations
by
the
regular
rate
of
VAT.
be
allowed
tax
credit
as
follows:
In
all
cases
where
the
basis
for
computing
the
(a)
Total
input
tax
which
can
be
directly
attributed
output
tax
is
either
the
gross
selling
price
or
the
to
transactions
subject
to
value-added
tax;
and
gross
receipts,
but
the
amount
of
VAT
is
erroneously
billed
in
the
invoice,
the
total
invoice
(b)
A
ratable
portion
of
any
input
tax
which
cannot
amount
shall
be
presumed
to
be
comprised
of
the
be
directly
attributed
to
either
activity.
gross
selling
price/gross
receipts
plus
the
correct
amount
of
VAT.
Hence,
the
output
tax
shall
be
The
term
'input
tax'
means
the
value-added
tax
due
computed
by
multiplying
the
total
invoice
amount
from
or
paid
by
a
VAT-registered
person
in
the
by
a
fraction
using
the
rate
of
VAT
as
numerator
and
one
hundred
percent
(100%)
plus
rate
of
VAT
amounting
to
40
is
carried
over
to
the
succeeding
as
the
denominator.
Accordingly,
the
input
tax
that
month.
can
be
claimed
by
the
buyer
shall
be
the
corrected
amount
of
VAT
computed
in
accordance
with
the
Output
Tax
Computation
formula
herein
prescribed.
Output
tax
the
VAT
due
on
sale,
leaser
or
There
shall
be
allowed
as
a
deduction
from
the
exchange
of
taxable
goods
or
properties
or
output
tax
the
amount
of
input
tax
deductible
as
determined
under
Sec.
4.110-1
to
4.110-5
of
these
services
by
any
person
registered
or
required
Regulations
to
arrive
at
VAT
payable
on
the
to
register
under
Sec
236
of
Tax
Code.
monthly
VAT
declaration
and
the
quarterly
VAT
returns,
subject
to
the
limitations
set
forth
in
Input
tax
the
VAT
due
on
or
paid
by
a
VAT-
Section
4.110-7.
registered
entity
on
importation
of
goods
or
local
purchase
of
goods
properties
or
services,
SECTION
4.110-7.
VAT
Payable
(Excess
Output)t
or
including
lease
or
use
of
property
in
the
course
Excess
Input
Tax.
of
his
trade
or
business.
It
shall
also
include
the
transitional
input
tax
determined
in
(a)
If
at
the
end
of
any
taxable
quarter
the
output
accordance
with
Sec
111
of
Tax
Code,
tax
exceeds
the
input
tax,
the
excess
shall
be
paid
by
presumptive
input
tax
and
deferred
input
tax
the
VAT-registered
person.
from
previous
period.
Illustration:
Basis
of
VAT
Nature
of
Tax
Base
For
a
given
taxable
quarter
ABC
Corp.
has
output
Transaction(s)
VAT
of
100
and
input
VAT
of
80.
Since
output
tax
Sale
of
goods
or
Gross
selling
price
exceeds
the
input
tax
for
such
taxable
quarter,
all
of
the
input
tax
may
be
utilized
to
offset
against
the
properties
output
tax.
Thus,
the
net
VAT
payable
is
100
minus
Sale
of
services
Gross
receipts
80
=
20.
Importation
Total
landed
cost
(1)
On
sale
of
goods,
properties
or
services
(b)
If
the
input
tax
inclusive
of
input
tax
carried
the
output
tax
on
sale
of
goods
as
well
as
sale
over
from
the
previous
quarter
exceeds
the
output
of
services
and
use
or
lease
of
properties
tax,
the
input
tax
inclusive
of
input
tax
carried
over
during
the
month
or
quarter
(taxable
period)
from
the
previous
quarter
that
may
be
credited
in
shall
be
computed
by
multiplying
the
total
every
quarter
shall
not
exceed
seventy
percent
amount
indicated
in
the
invoice
or
receipt
by
(70%)
of
the
output
tax;
Provided,
That,
the
excess
12%.
input
tax
shall
be
carried
over
to
the
succeeding
quarter
or
quarters;
Provided,
however,
that
any
input
tax
attributable
to
zero-rated
sales
by
a
VAT- (2)
General
formula
registered
person
may
at
his
option
be
refunded
or
applied
for
a
tax
credit
certificate
which
may
be
SALE
OF
GOODS
used
in
the
payment
of
internal
revenue
taxes,
Gross
sales
subject
to
the
limitations
as
may
be
provided
for
by
Less:
law,
as
well
as,
other
implementing
rules.
Sales
discounts
Sales
returns
Net
sales
Add:
Excise
tax,
if
any
Tax
Base
x
Vat
Rate
Illustration:
Output
VAT
For
a
given
taxable
quarter
XYZ
Corp.
has
output
Less:
Input
VAT
VAT
of
100
and
input
VAT
of
110.
Since
input
tax
VAT
Payable
(Excess
exceeds
the
output
tax
for
such
taxable
quarter,
the
input
tax)
70%
limitation
is
imposed
to
compute
the
amount
of
input
tax
which
may
be
utilized.
The
total
allowable
input
tax
which
may
be
utilized
is
70
(70%
of
the
output
tax).
Thus,
the
net
VAT
payable
SALE
OF
SERVICES
is
100
less
70
=
30.
The
unutilized
input
tax
Cash
received
(actual
or
constructive)
Section
106.
Value-Added
Tax
on
Sale
of
Goods
or
Deposits/
Advance
Properties.
-
payments
for
future
projects
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
Materials
charged
for
assessed
and
collected
on
every
sale,
barter
or
services
exchange
of
goods
or
properties,
value-added
tax
equivalent
to
ten
percent
(10%)
of
the
gross
selling
Gross
receipts
price
or
gross
value
in
money
of
the
goods
or
x
VAT
Rate
properties
sold,
bartered
or
exchanged,
such
tax
to
Output
VAT
be
paid
by
the
seller
or
transferor.
Less:
Input
VAT
VAT
Payable
(Excess
(1)
The
term
'goods'
or
'properties'
shall
mean
all
input
tax)
tangible
and
intangible
objects
which
are
capable
of
pecuniary
estimation
and
shall
include:
Note:
Receivables
(For
Sale
of
Services),
although
earned,
are
not
included
in
the
(a)
Real
properties
held
primarily
for
sale
to
computation
of
VAT
payable
customers
or
held
for
lease
in
the
ordinary
course
of
trade
or
business;
DEALER
IN
SECURITIES
AND
LENDING
(b)
The
right
or
the
privilege
to
use
patent,
INVESTORS
copyright,
design
or
model,
plan,
secret
formula
or
Gross
Selling
Price
process,
goodwill,
trademark,
trade
brand
or
other
Less:
Acquisition
cost
like
property
or
right;
of
securities
sold
for
the
month
or
quarter
(c)
The
right
or
the
privilege
to
use
in
the
Balance
Philippines
of
any
industrial,
commercial
or
Add:
Other
income
or
scientific
equipment;
incidental
income
Gross
Income
(d)
The
right
or
the
privilege
to
use
motion
picture
x
VAT
rate
films,
tapes
and
discs;
and
Output
VAT
Less:
Input
VAT
(e)
Radio,
television,
satellite
transmission
and
cable
television
time.
VAT
Payable
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
Excess
output/
input
tax
goods
or
properties,
excluding
the
value-added
tax.
1)
If
at
the
end
of
any
taxable
quarter
the
The
excise
tax,
if
any,
on
such
goods
or
properties
output
tax
exceeds
the
input
tax,
the
excess
shall
form
part
of
the
gross
selling
price.
shall
be
paid
by
the
VAT-registered
person.
(2)
The
following
sales
by
VAT-registered
persons
2)
If
the
input
tax
exceeds
the
output
tax,
the
shall
be
subject
to
zero
percent
(0%)
rate:
excess
shall
be
carried
over
to
the
succeeding
quarter
or
quarters.
Any
input
tax
attributable
(a)
Export
Sales.
-
The
term
'export
sales'
means:
to
zero-rated
sales
by
a
VAT-registered
person
may
at
his
option
be
refunded
or
applied
for
a
(1)
The
sale
and
actual
shipment
of
goods
from
the
tax
credit
certificate
which
may
be
used
in
the
Philippines
to
a
foreign
country,
irrespective
of
any
payment
of
internal
revenue
taxes,
subject
to
shipping
arrangement
that
may
be
agreed
upon
the
limitations
provided
in
Sec.
112
(G),
as
well
which
may
influence
or
determine
the
transfer
of
ownership
of
the
goods
so
exported
and
paid
for
in
as
other
implementing
rules.
acceptable
foreign
currency
or
its
equivalent
in
goods
or
services,
and
accounted
for
in
accordance
I. Rates
of
Vat
with
the
rules
and
regulations
of
the
Bangko
Sentral
Ten
Percent
(10%)
ng
Pilipinas
(BSP);
Section
106
(A),
NIRC
Section
108
(A),
NIRC
(2)
Sale
of
raw
materials
or
packaging
materials
to
a
nonresident
buyer
for
delivery
to
a
resident
local
export-oriented
enterprise
to
be
used
in
including
persons
who
transport
goods
or
cargoes
manufacturing,
processing,
packing
or
repacking
in
for
hire
another
domestic
common
carriers
by
land,
the
Philippines
of
the
said
buyer's
goods
and
paid
air
and
water
relative
to
their
transport
of
goods
or
for
in
acceptable
foreign
currency
and
accounted
cargoes;
services
of
franchise
grantees
of
telephone
for
in
accordance
with
the
rules
and
regulations
of
and
telegraph,
radio
and
television
broadcasting
the
Bangko
Sentral
ng
Pilipinas
(BSP);
and
all
other
franchise
grantees
except
those
under
Section
119
of
this
Code;
services
of
banks,
non-
(3)
Sale
of
raw
materials
or
packaging
materials
to
bank
financial
intermediaries
and
finance
export-oriented
enterprise
whose
export
sales
companies;
and
non-life
insurance
companies
exceed
seventy
percent
(70%)
of
total
annual
(except
their
crop
insurances),
including
surety,
production;
fidelity,
indemnity
and
bonding
companies;
and
similar
services
regardless
of
whether
or
not
the
(4)
Sale
of
gold
to
the
Bangko
Sentral
ng
Pilipinas
performance
thereof
calls
for
the
exercise
or
use
of
(BSP);
and
the
physical
or
mental
faculties.
The
phrase
'sale
or
exchange
of
services'
shall
likewise
include:
(5)
Those
considered
export
sales
under
Executive
Order
NO.
226,
otherwise
known
as
the
Omnibus
(1)
The
lease
or
the
use
of
or
the
right
or
privilege
Investment
Code
of
1987,
and
other
special
laws.
to
use
any
copyright,
patent,
design
or
model,
plan
secret
formula
or
process,
goodwill,
trademark,
trade
brand
or
other
like
property
or
right;
(b)
Foreign
Currency
Denominated
Sale.
-
The
phrase
'foreign
currency
denominated
sale'
means
sale
to
a
nonresident
of
goods,
except
those
(2)
The
lease
of
the
use
of,
or
the
right
to
use
of
any
mentioned
in
Sections
149
and
150,
assembled
or
industrial,
commercial
or
scientific
equipment;
manufactured
in
the
Philippines
for
delivery
to
a
resident
in
the
Philippines,
paid
for
in
acceptable
(3)
The
supply
of
scientific,
technical,
industrial
or
foreign
currency
and
accounted
for
in
accordance
commercial
knowledge
or
information;
with
the
rules
and
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(BSP).
(4)
The
supply
of
any
assistance
that
is
ancillary
and
subsidiary
to
and
is
furnished
as
a
means
of
(c)
Sales
to
persons
or
entities
whose
exemption
enabling
the
application
or
enjoyment
of
any
such
under
special
laws
or
international
agreements
to
property,
or
right
as
is
mentioned
in
subparagraph
which
the
Philippines
is
a
signatory
effectively
(2)
or
any
such
knowledge
or
information
as
is
subjects
such
sales
to
zero
rate.
mentioned
in
subparagraph
(3);
Section
108.
Value-added
Tax
on
Sale
of
Services
(5)
The
supply
of
services
by
a
nonresident
person
and
Use
or
Lease
of
Properties.
-
or
his
employee
in
connection
with
the
use
of
property
or
rights
belonging
to,
or
the
installation
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
or
operation
of
any
brand,
machinery
or
other
assessed
and
collected,
a
value-added
tax
equivalent
apparatus
purchased
from
such
nonresident
to
ten
percent
(10%)
of
gross
receipts
derived
from
person.
the
sale
or
exchange
of
services,
including
the
use
or
lease
of
properties.
(6)
The
supply
of
technical
advice,
assistance
or
services
rendered
in
connection
with
technical
The
phrase
'sale
or
exchange
of
services'
means
the
management
or
administration
of
any
scientific,
performance
of
all
kinds
or
services
in
the
industrial
or
commercial
undertaking,
venture,
Philippines
for
others
for
a
fee,
remuneration
or
project
or
scheme;
consideration,
including
those
performed
or
rendered
by
construction
and
service
contractors;
(7)
The
lease
of
motion
picture
films,
films,
tapes
stock,
real
estate,
commercial,
customs
and
and
discs;
and
immigration
brokers;
lessors
of
property,
whether
personal
or
real;
warehousing
services;
lessors
or
(8)
The
lease
or
the
use
of
or
the
right
to
use
radio,
distributors
of
cinematographic
films;
persons
television,
satellite
transmission
and
cable
engaged
in
milling
processing,
manufacturing
or
television
time.
repacking
goods
for
others;
proprietors,
operators
or
keepers
of
hotels,
motels,
resthouses,
pension
Lease
of
properties
shall
be
subject
to
the
tax
herein
houses,
inns,
resorts;
proprietors
or
operators
of
imposed
irrespective
of
the
place
where
the
restaurants,
refreshment
parlors,
cafes
and
other
contract
of
lease
or
licensing
agreement
was
eating
places,
including
clubs
and
caterers;
dealers
executed
if
the
property
is
leased
or
used
in
the
in
securities;
lending
investors;
transportation
Philippines.
contractors
on
their
transport
of
goods
or
cargoes,
The
term
'gross
receipts'
means
the
total
amount
of
(5)
Those
considered
export
sales
under
Executive
money
or
its
equivalent
representing
the
contract
Order
NO.
226,
otherwise
known
as
the
Omnibus
price,
compensation,
service
fee,
rental
or
royalty,
Investment
Code
of
1987,
and
other
special
laws.
including
the
amount
charged
for
materials
supplied
with
the
services
and
deposits
and
(b)
Foreign
Currency
Denominated
Sale.
-
The
advanced
payments
actually
or
constructively
phrase
'foreign
currency
denominated
sale'
means
received
during
the
taxable
quarter
for
the
services
sale
to
a
nonresident
of
goods,
except
those
performed
or
to
be
performed
for
another
person,
mentioned
in
Sections
149
and
150,
assembled
or
excluding
value-added
tax.
manufactured
in
the
Philippines
for
delivery
to
a
resident
in
the
Philippines,
paid
for
in
acceptable
foreign
currency
and
accounted
for
in
accordance
Zero
Percent
(0%)
with
the
rules
and
regulations
of
the
Bangko
Sentral
Section
106(A)(2),
NIRC
ng
Pilipinas
(BSP).
Section
108
(B),
NIRC
Section
4.106-5,
RR
16-2005
(c)
Sales
to
persons
or
entities
whose
exemption
Section
4.108-5,
RR
16-2005
under
special
laws
or
international
agreements
to
which
the
Philippines
is
a
signatory
effectively
Section
106.
Value-Added
Tax
on
Sale
of
Goods
or
subjects
such
sales
to
zero
rate.
Properties.
-
(A)
Rate
and
Base
of
Tax.
-
There
shall
be
levied,
assessed
and
collected
on
every
sale,
barter
or
Section
108.
Value-added
Tax
on
Sale
of
Services
exchange
of
goods
or
properties,
value-added
tax
and
Use
or
Lease
of
Properties.
-
equivalent
to
ten
percent
(10%)
of
the
gross
selling
price
or
gross
value
in
money
of
the
goods
or
(B)
Transactions
Subject
to
Zero
Percent
(0%)
Rate
-
properties
sold,
bartered
or
exchanged,
such
tax
to
The
following
services
performed
in
the
Philippines
be
paid
by
the
seller
or
transferor.
by
VAT-
registered
persons
shall
be
subject
to
zero
percent
(0%)
rate.
(2)
The
following
sales
by
VAT-registered
persons
shall
be
subject
to
zero
percent
(0%)
rate:
(1)
Processing,
manufacturing
or
repacking
goods
for
other
persons
doing
business
outside
the
(a)
Export
Sales.
-
The
term
'export
sales'
means:
Philippines
which
goods
are
subsequently
exported,
where
the
services
are
paid
for
in
acceptable
(1)
The
sale
and
actual
shipment
of
goods
from
the
foreign
currency
and
accounted
for
in
accordance
Philippines
to
a
foreign
country,
irrespective
of
any
with
the
rules
and
regulations
of
the
Bangko
Sentral
shipping
arrangement
that
may
be
agreed
upon
ng
Pilipinas
(BSP);
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
(2)
Services
other
than
those
mentioned
in
the
goods
or
services,
and
accounted
for
in
accordance
preceding
paragraph,
the
consideration
for
which
is
with
the
rules
and
regulations
of
the
Bangko
Sentral
paid
for
in
acceptable
foreign
currency
and
ng
Pilipinas
(BSP);
accounted
for
in
accordance
with
the
rules
and
regulations
of
the
Bangko
Sentral
ng
Pilipinas
(2)
Sale
of
raw
materials
or
packaging
materials
to
a
(BSP);
nonresident
buyer
for
delivery
to
a
resident
local
export-oriented
enterprise
to
be
used
in
(3)
Services
rendered
to
persons
or
entities
whose
manufacturing,
processing,
packing
or
repacking
in
exemption
under
special
laws
or
international
the
Philippines
of
the
said
buyer's
goods
and
paid
agreements
to
which
the
Philippines
is
a
signatory
for
in
acceptable
foreign
currency
and
accounted
effectively
subjects
the
supply
of
such
services
to
for
in
accordance
with
the
rules
and
regulations
of
zero
percent
(0%)
rate;
the
Bangko
Sentral
ng
Pilipinas
(BSP);
(4)
Services
rendered
to
vessels
engaged
(3)
Sale
of
raw
materials
or
packaging
materials
to
exclusively
in
international
shipping;
and
export-oriented
enterprise
whose
export
sales
exceed
seventy
percent
(70%)
of
total
annual
(5)
Services
performed
by
subcontractors
and/or
production;
contractors
in
processing,
converting,
of
manufacturing
goods
for
an
enterprise
whose
(4)
Sale
of
gold
to
the
Bangko
Sentral
ng
Pilipinas
export
sales
exceed
seventy
percent
(70%)
of
total
(BSP);
and
annual
production.
(b)
To
the
importer
upon
payment
of
the
value- SECTION
4.110-1.
Credits
For
Input
Tax.
"Input
added
tax
prior
to
the
release
of
the
goods
from
the
tax"
means
the
VAT
due
on
or
paid
by
a
VAT-
custody
of
the
Bureau
of
Customs.
registered
person
on
importation
of
goods
or
local
purchases
of
goods,
properties,
or
services,
including
lease
or
use
of
properties,
in
the
course
of
However,
in
the
case
of
purchase
of
services,
lease
his
trade
or
business.
It
shall
also
include
the
or
use
of
properties,
the
input
tax
shall
be
creditable
transitional
input
tax
and
the
presumptive
input
tax
to
the
purchaser,
lessee
or
licensee
upon
payment
determined
in
accordance
with
Sec.
111
of
the
Tax
of
the
compensation,
rental,
royalty
or
fee.
Code.
(1)
Persons
or
firms
engaged
in
the
processing
of
(a)
The
government
or
any
of
its
political
sardines,
mackerel
and
milk,
and
in
manufacturing
subdivisions,
instrumentalities
or
agencies,
refined
sugar
and
cooking
oil,
shall
be
allowed
a
including
government-owned
or
controlled
presumptive
input
tax,
creditable
against
the
output
corporations
(GOCCs)
shall,
before
making
payment
tax,
equivalent
to
one
and
one-half
percent
(1
on
account
of
each
purchase
of
goods
and/or
of
1/2%)
of
the
gross
value
in
money
of
their
services
taxed
at
10%
VAT
pursuant
to
Secs.
106
purchases
of
primary
agricultural
products
which
and
108
of
the
Tax
Code,
deduct
and
withhold
a
are
used
as
inputs
to
their
production.
final
VAT
due
at
the
rate
of
five
percent
(5%)
of
the
gross
payment
thereof.
As
used
in
this
Subsection,
the
term
'processing'
shall
mean
pasteurization,
canning
and
activities
The
five
percent
(5%)
final
VAT
withholding
rate
which
through
physical
or
chemical
process
alter
shall
represent
the
net
VAT
payable
of
the
seller.
the
exterior
texture
or
form
or
inner
substance
of
a
The
remaining
five
percent
(5%)
effectively
product
in
such
manner
as
to
prepare
it
for
special
accounts
for
the
standard
input
VAT
for
sales
of
use
to
which
it
could
not
have
been
put
in
its
goods
or
services
to
government
or
any
of
its
original
form
or
condition.
political
subdivisions,
instrumentalities
or
agencies
including
GOCCs,
in
lieu
of
the
actual
input
VAT
(2)
Public
works
contractors
shall
be
allowed
a
directly
attributable
or
ratably
apportioned
to
such
presumptive
input
tax
equivalent
to
one
and
one- sales.
Should
actual
input
VAT
exceed
five
percent
half
percent
(1
1/2%)
of
the
contract
price
with
(5%)
of
gross
payments,
the
excess
may
form
part
respect
to
government
contracts
only
in
lieu
of
of
the
sellers'
expense
or
cost.
On
the
other
hand,
if
actual
input
taxes
therefrom.
actual
input
VAT
is
less
than
5%
of
gross
payment,
the
difference
must
be
closed
to
expense
or
cost.
Section
114.
Return
and
Payment
of
Value-Added
Tax.
-
(b)
The
government
or
any
of
its
political
subdivisions,
instrumentalities
or
agencies,
(C)
Withholding
of
Creditable
Value-added
Tax.
-
including
GOCCs,
as
well
as
private
corporations,
The
Government
or
any
of
its
political
subdivisions,
individuals,
estates
and
trusts,
whether
large
or
instrumentalities
or
agencies,
including
non-large
taxpayers,
shall
withhold
ten
percent
government-owned
or
-controlled
corporations
(10%)
VAT
with
respect
to
the
following
payments:
(GOCCs)
shall,
before
making
payment
on
account
of
each
purchase
of
goods
from
sellers
and
services
(1)
Lease
or
use
of
properties
or
property
rights
rendered
by
contractors
which
are
subject
to
the
owned
by
non-residents;
value-added
tax
imposed
in
Sections
106
and
108
of
(2)
Services
rendered
to
local
insurance
companies,
paid
attributable
to
such
sales,
except
transitional
with
respect
to
reinsurance
premiums
payable
to
input
tax,
to
the
extent
that
such
input
tax
has
not
non-residents;
and
been
applied
against
output
tax:
Provided,
however,
That
in
the
case
of
zero-rated
sales
under
Section
(3)
Other
services
rendered
in
the
Philippines
by
106(A)(2)(a)(1),
(2)
and
(B)
and
Section
108
(B)(1)
non-residents.
and
(2),
the
acceptable
foreign
currency
exchange
proceeds
thereof
had
been
duly
accounted
for
in
accordance
with
the
rules
and
regulations
of
the
In
remitting
VAT
withheld,
the
withholding
agent
Bangko
Sentral
ng
Pilipinas
(BSP):
Provided,
shall
use
BIR
Form
No.
1600
Remittance
Return
of
further,
That
where
the
taxpayer
is
engaged
in
zero-
VAT
and
Other
Percentage
Taxes
Withheld.
rated
or
effectively
zero-rated
sale
and
also
in
taxable
or
exempt
sale
of
goods
of
properties
or
VAT
withheld
and
paid
for
the
non-resident
services,
and
the
amount
of
creditable
input
tax
due
recipient
(remitted
using
BIR
Form
No.
1600),
or
paid
cannot
be
directly
and
entirely
attributed
to
which
VAT
is
passed
on
to
the
resident
withholding
any
one
of
the
transactions,
it
shall
be
allocated
agent
by
the
non-resident
recipient
of
the
income,
proportionately
on
the
basis
of
the
volume
of
sales.
may
be
claimed
as
input
tax
by
said
VAT-registered
withholding
agent
upon
filing
his
own
VAT
Return,
(B)
Capital
Goods.
-
A
VAT-registered
person
may
subject
to
the
rule
on
allocation
of
input
tax
among
apply
for
the
issuance
of
a
tax
credit
certificate
or
taxable
sales,
zero-rated
sales
and
exempt
sales.
refund
of
input
taxes
paid
on
capital
goods
The
duly
filed
BIR
Form
No.
1600
is
the
proof
or
imported
or
locally
purchased,
to
the
extent
that
documentary
substantiation
for
the
claimed
input
such
input
taxes
have
not
been
applied
against
tax
or
input
VAT.
output
taxes.
The
application
may
be
made
only
within
two
(2)
years
after
the
close
of
the
taxable
Nonetheless,
if
the
resident
withholding
agent
is
a
quarter
when
the
importation
or
purchase
was
non-VAT
taxpayer,
said
passed-on
VAT
by
the
non- made.
resident
recipient
of
the
income,
evidenced
by
the
duly
filed
BIR
Form
No.
1600,
shall
form
part
of
the
(C)
Cancellation
of
VAT
Registration.
-
A
person
cost
of
purchased
services,
which
may
be
treated
whose
registration
has
been
cancelled
due
to
either
as
an
"asset"
or
"expense",
whichever
is
retirement
from
or
cessation
of
business,
or
due
to
applicable,
of
the
resident
withholding
agent.
changes
in
or
cessation
of
status
under
Section
106(C)
of
this
Code
may,
within
two
(2)
years
from
VAT
withheld
under
this
Section
shall
be
remitted
the
date
of
cancellation,
apply
for
the
issuance
of
a
within
ten
(10)
days
following
the
end
of
the
month
tax
credit
certificate
for
any
unused
input
tax
which
the
withholding
was
made.
may
be
used
in
payment
of
his
other
internal
revenue
taxes.
Section
111.
Transitional/Presumptive
Input
Tax
Credits.
-
(D)
Period
within
which
Refund
or
Tax
Credit
of
Input
Taxes
shall
be
Made.
-
In
proper
cases,
the
(A)
Transitional
Input
Tax
Credits.
-
A
person
who
Commissioner
shall
grant
a
refund
or
issue
the
tax
becomes
liable
to
value-added
tax
or
any
person
credit
certificate
for
creditable
input
taxes
within
who
elects
to
be
a
VAT-registered
person
shall,
one
hundred
twenty
(120)
days
from
the
date
of
subject
to
the
filing
of
an
inventory
according
to
submission
of
complete
documents
in
support
of
rules
and
regulations
prescribed
by
the
Secretary
of
the
application
filed
in
accordance
with
Subsections
finance,
upon
recommendation
of
the
(A)
and
(B)
hereof.
Commissioner,
be
allowed
input
tax
on
his
beginning
inventory
of
goods,
materials
and
In
case
of
full
or
partial
denial
of
the
claim
for
tax
supplies
equivalent
for
eight
percent
(8%)
of
the
refund
or
tax
credit,
or
the
failure
on
the
part
of
the
value
of
such
inventory
or
the
actual
value-added
Commissioner
to
act
on
the
application
within
the
tax
paid
on
such
goods,
materials
and
supplies,
period
prescribed
above,
the
taxpayer
affected
may,
whichever
is
higher,
which
shall
be
creditable
within
thirty
(30)
days
from
the
receipt
of
the
against
the
output
tax.
decision
denying
the
claim
or
after
the
expiration
of
the
one
hundred
twenty
day-period,
appeal
the
Section
112.
Refunds
or
Tax
Credits
of
Input
Tax.
-
decision
or
the
unacted
claim
with
the
Court
of
Tax
Appeals.-
(A)
Zero-rated
or
Effectively
Zero-rated
Sales.
-
any
VAT-registered
person,
whose
sales
are
zero-rated
(E)
Manner
of
Giving
Refund.
-
Refunds
shall
be
or
effectively
zero-rated
may,
within
two
(2)
years
made
upon
warrants
drawn
by
the
Commissioner
after
the
close
of
the
taxable
quarter
when
the
sales
or
by
his
duly
authorized
representative
without
were
made,
apply
for
the
issuance
of
a
tax
credit
the
necessity
of
being
countersigned
by
the
certificate
or
refund
of
creditable
input
tax
due
or
Chairman,
Commission
on
audit,
the
provisions
of
the
Administrative
Code
of
1987
to
the
contrary
(c)
Where
to
file
the
claim
for
refund/tax
credit
notwithstanding:
Provided,
That
refunds
under
this
certificate
paragraph
shall
be
subject
to
post
audit
by
the
Commission
on
Audit.
Claims
for
refunds/tax
credit
certificate
shall
be
filed
with
the
appropriate
BIR
office
(Large
SECTION
4.112-1.
Claims
for
Refund/Tax
Credit
Taxpayers
Service
(LTS)
or
Revenue
District
Office
Certificate
of
Input
Tax.
(RDO))
having
jurisdiction
over
the
principal
place
of
business
of
the
taxpayer;
Provided,
however,
that
(a)
Zero-rated
and
Effectively
Zero-rated
Sales
of
direct
exporters
may
also
file
their
claim
for
tax
Goods,
Properties
or
Services
credit
certificate
with
the
One
Stop
Shop
Center
of
the
Department
of
Finance;
Provided,
finally,
that
A
VAT-registered
person
whose
sales
of
goods,
the
filing
of
the
claim
with
one
office
shall
preclude
properties
or
services
are
zero-rated
or
effectively
the
filing
of
the
same
claim
with
another
office.
zero-rated
may
apply
for
the
issuance
of
a
tax
credit
certificate/refund
of
input
tax
attributable
to
such
(d)
Period
within
which
refund
or
tax
credit
sales.
The
input
tax
that
may
be
subject
of
the
claim
certificate/refund
of
input
taxes
shall
be
made
shall
exclude
the
portion
of
input
tax
that
has
been
applied
against
the
output
tax.
The
application
In
proper
cases,
the
Commissioner
of
Internal
should
be
filed
within
two
(2)
years
after
the
close
Revenue
shall
grant
a
tax
credit
certificate/refund
of
the
taxable
quarter
when
such
sales
were
made.
for
creditable
input
taxes
within
one
hundred
twenty
(120)
days
from
the
date
of
submission
of
In
case
of
zero-rated
sales
under
Secs.
complete
documents
in
support
of
the
application
106(A)(2)(a)(1)
and
(2),
and
Sec.
106(A)(2)(b)
and
filed
in
accordance
with
subparagraph
(a)
above.
Sec.
108(B)(1)
and
(2)
of
the
Tax
Code,
the
payments
for
the
sales
must
have
been
made
in
In
case
of
full
or
partial
denial
of
the
claim
for
tax
acceptable
foreign
currency
duly
accounted
for
in
credit
certificate/refund
as
decided
by
the
accordance
with
the
BSP
rules
and
regulations.
Commissioner
of
Internal
Revenue,
the
taxpayer
may
appeal
to
the
Court
of
Tax
Appeals
(CTA)
Where
the
taxpayer
is
engaged
in
both
zero-rated
within
thirty
(30)
days
from
the
receipt
of
said
or
effectively
zero-rated
sales
and
in
taxable
denial,
otherwise
the
decision
shall
become
final.
(including
sales
subject
to
final
withholding
VAT)
or
However,
if
no
action
on
the
claim
for
tax
credit
exempt
sales
of
goods,
properties
or
services,
and
certificate/refund
has
been
taken
by
the
the
amount
of
creditable
input
tax
due
or
paid
Commissioner
of
Internal
Revenue
after
the
one
cannot
be
directly
and
entirely
attributed
to
any
one
hundred
twenty
(120)
day
period
from
the
date
of
of
the
transactions,
only
the
proportionate
share
of
submission
of
the
application
with
complete
input
taxes
allocated
to
zero-rated
or
effectively
documents,
the
taxpayer
may
appeal
to
the
CTA
zero-rated
sales
can
be
claimed
for
refund
or
within
30
days
from
the
lapse
of
the
120-day
issuance
of
a
tax
credit
certificate.
period.
In
the
case
of
a
person
engaged
in
the
transport
of
(e)
Manner
of
giving
refund
passenger
and
cargo
by
air
or
sea
vessels
from
the
Philippines
to
a
foreign
country,
the
input
taxes
Refund
shall
be
made
upon
warrants
drawn
by
the
shall
be
allocated
ratably
between
his
zero-rated
Commissioner
of
Internal
Revenue
or
by
his
duly
sales
and
non-zero-rated
sales
(sales
subject
to
authorized
representative
without
the
necessity
of
regular
rate,
subject
to
final
VAT
withholding
and
being
countersigned
by
the
Chairman,
Commission
VAT-exempt
sales).
on
Audit
(COA),
the
provision
of
the
Revised
Administrative
Code
to
the
contrary
(b)
Cancellation
of
VAT
registration
notwithstanding;
Provided,
that
refunds
under
this
paragraph
shall
be
subject
to
post
audit
by
the
COA.
A
VAT-registered
person
whose
registration
has
been
cancelled
due
to
retirement
from
or
cessation
K.
Compliance
Requirements
of
business,
or
due
to
changes
in
or
cessation
of
Registration
with
the
BIR,
Section
status
under
Sec.
106
(C)
of
the
Tax
Code
may,
236,
NIRC
within
two
(2)
years
from
the
date
of
cancellation,
apply
for
the
issuance
of
a
tax
credit
certificate
for
any
unused
input
tax
which
he
may
use
in
payment
Record-keeping
requirements
of
his
other
internal
revenue
taxes;
Provided,
however,
that
he
shall
be
entitled
to
a
refund
if
he
Invoices
and
receipts,
Section
113
has
no
internal
revenue
tax
liabilities
against
which
(A);
Section
4.113-1
and
2,
RR
16-
the
tax
credit
certificate
may
be
utilized.
2005
Consequences
of
issuing
erroneous
the
Revenue
Collection
Officer,
or
duly
authorized
VAT
invoice
or
VAT
official
receipt,
Treasurer
of
the
city
of
municipality
where
each
Section
113,
D,
NIRC;
Section
4.113- place
of
business
or
branch
is
registered.
4,
RR
16-2005
(C)
Registration
of
Each
Type
of
Internal
Revenue
Filing
of
return
and
payment
of
tax,
Tax.
-
Every
person
who
is
required
to
register
with
the
Bureau
of
Internal
Revenue
under
Subsection
Section
114
(A)
and
(B),
NIRC
(A)
hereof,
shall
register
each
type
of
internal
In
general
file
quarterly
within
25
revenue
tax
for
which
he
is
obligated,
shall
file
a
days
from
close
of
quarter
return
and
shall
pay
such
taxes,
and
shall
updates
Pay
monthly
within
10
days
from
such
registration
of
any
changes
in
accordance
with
close
of
quarter
Subsection
(E)
hereof.
Where
AAB,
RCO,
Local
Treasurer
within
the
revenue
district
where
(D)
Transfer
of
Registration.
-
In
case
a
registered
taxpayer
is
registered
person
decides
to
transfer
his
place
of
business
or
his
head
office
or
branches,
it
shall
be
his
duty
to
update
his
registration
status
by
filing
an
Section
236.
Registration
Requirements.
-
application
for
registration
information
update
in
the
form
prescribed
therefor.
(A)
Requirements.
-
Every
person
subject
to
any
internal
revenue
tax
shall
register
once
with
the
(E)
Other
Updates.
-
Any
person
registered
in
appropriate
Revenue
District
Officer:
accordance
with
this
Section
shall,
whenever
applicable,
update
his
registration
information
with
the
Revenue
District
Office
where
he
is
registered,
(1)
Within
ten
(10)
days
from
date
of
employment,
specifying
therein
any
change
in
type
and
other
or
taxpayer
details.
The
registration
shall
contain
the
taxpayer's
name,
(G)
Persons
Commencing
Business.
-
Any
person,
style,
place
of
residence,
business
and
such
other
who
expects
to
realize
gross
sales
or
receipts
information
as
may
be
required
by
the
subject
to
value-added
tax
in
excess
of
the
amount
Commissioner
in
the
form
prescribed
therefor.
prescribed
under
Section
109(z)
of
this
Code
for
the
next
12-month
period
from
the
commencement
of
A
person
maintaining
a
head
office,
branch
or
the
business,
shall
register
with
the
Revenue
facility
shall
register
with
the
Revenue
District
District
Office
which
has
jurisdiction
over
the
head
Officer
having
jurisdiction
over
the
head
office,
office
or
branch
and
shall
pay
the
annual
brand
or
facility.
For
purposes
of
this
Section,
the
registration
fee
prescribed
in
Subsection
(B)
hereof.
term
'facility'
may
include
but
not
be
limited
to
sales
outlets,
places
of
production,
warehouses
or
(H)
Persons
Becoming
Liable
to
the
Value-added
Tax.
storage
places.
-
Any
person,
whose
gross
sales
or
receipts
in
any
12-month
period
exceeds
the
amount
prescribed
(B)
Annual
Registration
Fee.
-
An
annual
registration
under
Subsection
109(z)
of
this
Code
for
exemption
fee
in
the
amount
of
Five
hundred
pesos
(P500)
for
from
the
value-added
tax
shall
register
in
every
separate
or
distinct
establishment
or
place
of
accordance
with
Subsection
(A)
hereof,
and
shall
business,
including
facility
types
where
sales
pay
the
annual
registration
fee
prescribed
within
transactions
occur,
shall
be
paid
upon
registration
ten
(10)
days
after
the
end
of
the
last
month
of
that
and
every
year
thereafter
on
or
before
the
last
day
period,
and
shall
be
liable
to
the
value-added
tax
of
January:
Provided,
however,
That
cooperatives,
commencing
from
the
first
day
of
the
month
individuals
earning
purely
compensation
income,
following
his
registration.
whether
locally
or
abroad,
and
overseas
workers
are
not
liable
to
the
registration
fee
herein
imposed.
(I)
Optional
Registration
of
Exempt
Person.
-
Any
person
whose
transactions
are
exempt
from
value-
The
registration
fee
shall
be
paid
to
an
authorized
added
tax
under
Section
109(z)
of
this
Code;
or
any
agent
bank
located
within
the
revenue
district,
or
to
person
whose
transactions
are
exempt
from
the
value-added
tax
under
Section
109(a),
(b),
(c),
and
promulgated
by
the
Secretary
of
Finance,
upon
(d)
of
this
Code,
who
opts
to
register
as
a
VAT
recommendation
of
the
Commissioner.
taxpayer
with
respect
to
his
export
sales
only,
may
update
his
registration
information
in
accordance
In
cases
where
a
registered
taxpayer
dies,
the
with
Subsection
(E)
hereof,
not
later
than
ten
(10)
administrator
or
executor
shall
register
the
estate
days
before
the
beginning
of
the
taxable
quarter
of
the
decedent
in
accordance
with
Subsection
(A)
and
shall
pay
the
annual
registration
fee
prescribed
hereof
and
a
new
Taxpayer
Identification
Number
in
Subsection
(B)
hereof.
(TIN)
shall
be
supplied
in
accordance
with
the
provisions
of
this
Section.
In
any
case,
the
Commissioner
may,
for
administrative
reasons,
deny
any
application
for
In
the
case
of
a
nonresident
decedent,
the
executor
registration
including
updates
prescribed
under
or
administrator
of
the
estate
shall
register
the
Subsection
(E)
hereof.
estate
with
the
Revenue
District
Office
where
he
is
registered:
Provided,
however,
That
in
case
such
For
purposes
of
Title
IV
of
this
Code,
any
person
executor
or
administrator
is
not
registered,
who
has
registered
value-added
tax
as
a
tax
type
in
registration
of
the
estate
shall
be
made
with
the
accordance
with
the
provisions
of
Subsection
(C)
Taxpayer
Identification
Number
(TIN)
supplied
by
hereof
shall
be
referred
to
as
VAT-registered
person
the
Revenue
District
Office
having
jurisdiction
over
who
shall
be
assigned
only
one
Taxpayer
his
legal
residence.
Identification
Number.
Only
one
Taxpayer
identification
Number
(TIN)
(J)
Supplying
of
Taxpayer
Identification
Number
shall
be
assigned
to
a
taxpayer.
Any
person
who
(TIN).
-
Any
person
required
under
the
authority
of
shall
secure
more
than
one
Taxpayer
Identification
this
Code
to
make,
render
or
file
a
return,
statement
Number
shall
be
criminally
liable
under
the
or
other
document
shall
be
supplied
with
or
provision
of
Section
275
on
'Violation
of
Other
assigned
a
Taxpayer
Identification
Number
(TIN)
Provisions
of
this
Code
or
Regulations
in
General'.
which
he
shall
indicate
in
such
return,
statement
or
document
filed
with
the
Bureau
of
Internal
Revenue
Section
113.
Invoicing
and
Accounting
for
his
proper
identification
for
tax
purposes,
and
Requirements
for
VAT-Registered
Persons.
which
he
shall
indicate
in
certain
documents,
such
as,
but
not
limited
to
the
following:
(A)
Invoicing
Requirements.
-
A
VAT-registered
person
shall,
for
every
sale,
issue
an
invoice
or
(1)
Sugar
quedans,
refined
sugar
release
order
or
receipt.
In
addition
to
the
information
required
similar
instruments;
under
Section
237,
the
following
information
shall
be
indicated
in
the
invoice
or
receipt:
(2)
Domestic
bills
of
lading;
(1)
A
statement
that
the
seller
is
a
VAT-registered
(3)
Documents
to
be
registered
with
the
Register
of
person,
followed
by
his
taxpayer's
identification
Deeds
of
Assessor's
Office;
number
(TIN);
and
(4)
Registration
certificate
of
transportation
(2)
The
total
amount
which
the
purchaser
pays
or
is
equipment
by
land,
sea
or
air;
obligated
to
pay
to
the
seller
with
the
indication
that
such
amount
includes
the
value-added
tax.
(5)
Documents
to
be
registered
with
the
Securities
and
Exchange
Commission;
SECTION
4.113-1.
Invoicing
Requirements.
(7)
Application
for
loan
with
banks,
financial
(1)
A
VAT
invoice
for
every
sale,
barter
or
exchange
institutions,
or
other
financial
intermediaries;
of
goods
or
properties;
and
(8)
Application
for
mayor's
permit;
(2)
A
VAT
official
receipt
for
every
lease
of
goods
or
properties,
and
for
every
sale,
barter
or
exchange
of
(9)
Application
for
business
license
with
the
services.
Department
of
Trade
&
Industry;
and
Only
VAT-registered
persons
are
required
to
print
(10)
Such
other
documents
which
may
hereafter
be
their
TIN
followed
by
the
word
"VAT"
in
their
required
under
rules
and
regulations
to
be
invoice
or
official
receipts.
Said
documents
shall
be
considered
as
a
"VAT
Invoice"
or
VAT
official
receipt.
All
purchases
covered
by
invoices/receipts
be
duly
recorded
in
the
subsidiary
sales
journal.
The
other
than
VAT
Invoice/VAT
Official
Receipt
shall
total
amount
of
"deemed
sale"
shall
be
included
in
not
give
rise
to
any
input
tax.
the
return
to
be
filed
for
the
month
or
quarter.
VAT
invoice/official
receipt
shall
be
prepared
at
In
the
case
of
Sec.
4.106-7(a)
(4)
an
inventory
shall
least
in
duplicate,
the
original
to
be
given
to
the
be
prepared
and
submitted
to
the
RDO
who
has
buyer
and
the
duplicate
to
be
retained
by
the
seller
jurisdiction
over
the
taxpayer's
principal
place
of
as
part
of
his
accounting
records.
business
not
later
than
30
days
after
retirement
or
cessation
from
business.
(B)
Information
contained
in
VAT
invoice
or
VAT
official
receipt.
The
following
information
shall
An
invoice
shall
be
prepared
for
the
entire
be
indicated
in
VAT
invoice
or
VAT
official
receipt:
inventory,
which
shall
be
the
basis
of
the
entry
into
the
subsidiary
sales
journal.
The
invoice
need
not
(1)
A
statement
that
the
seller
is
a
VAT-registered
enumerate
the
specific
items
appearing
in
the
person,
followed
by
his
TIN;
inventory,
but
it
must
show
the
total
amount.
It
is
sufficient
to
just
make
a
reference
to
the
inventory
(2)
The
total
amount
which
the
purchaser
pays
or
is
regarding
the
description
of
the
goods.
However,
obligated
to
pay
to
the
seller
with
the
indication
the
sales
invoice
number
should
be
indicated
in
the
that
such
amount
includes
the
VAT;
Provided,
That:
inventory
filed
and
a
copy
thereof
shall
form
part
of
this
invoice.
If
the
business
is
to
be
continued
by
the
new
owners
or
successors,
the
entire
amount
of
(a)
The
amount
of
tax
shall
be
shown
as
a
separate
output
tax
on
the
amount
deemed
sold
shall
be
item
in
the
invoice
or
receipt;
allowed
as
input
taxes.
If
the
business
is
to
be
liquidated
and
the
goods
in
the
inventory
are
sold
(b)
If
the
sale
is
exempt
from
VAT,
the
term
"VAT- or
disposed
of
to
VAT-registered
buyers,
an
invoice
exempt
sale"
shall
be
written
or
printed
or
instrument
of
sale
or
transfer
shall
to
prepared
prominently
on
the
invoice
or
receipt;
citing
the
invoice
number
wherein
the
tax
was
imposed
on
the
deemed
sale.
At
the
same
time
the
(c)
If
the
sale
is
subject
to
zero
percent
(0%)
VAT,
tax
paid
corresponding
to
the
goods
sold
should
be
the
term
"zero-rated
sale"
shall
be
written
or
separately
indicated
in
the
instrument
of
sale.
printed
prominently
on
the
invoice
or
receipt;
Example:
"A",
at
the
time
of
retirement,
had
1,000
(d)
If
the
sale
involves
goods,
properties
or
services
pieces
of
merchandise
which
was
deemed
sold
at
a
some
of
which
are
subject
to
and
some
of
which
are
value
of
P20,000.00
with
an
output
tax
of
P2,000.00.
VAT
zero-rated
or
VAT-exempt,
the
invoice
or
After
retirement,
"A"
sold
to
"B",
500
pieces
for
receipt
shall
clearly
indicate
the
break-down
of
the
P12,000.00.
In
the
contract
of
sale
or
invoice,
"A"
sale
price
between
its
taxable,
exempt
and
zero- should
state
the
sales
invoice
number
wherein
the
rated
components,
and
the
calculation
of
the
VAT
on
output
tax
on
"deemed
sale"
was
imposed
and
the
each
portion
of
the
sale
shall
be
shown
on
the
corresponding
tax
paid
on
the
500
pieces
is
invoice
or
receipt.
The
seller
has
the
option
to
issue
P1,000.00,
which
is
included
in
the
P12,000.00,
or
separate
invoices
or
receipts
for
the
taxable,
he
should
indicate
it
separately
as
follows:
exempt,
and
zero-rated
components
of
the
sale.
Gross
selling
price
P11,000.00
(3)
In
the
case
of
sales
in
the
amount
of
one
thousand
pesos
(P1,000.00)
or
more
where
the
sale
VAT
previously
paid
on
"deemed
sale"
1,000.00
or
transfer
is
made
to
a
VAT-registered
person,
the
name,
business
style,
if
any,
address
and
TIN
of
the
purchaser,
customer
or
client,
shall
be
indicated
in
addition
to
the
information
required
in
(1)
and
(2)
of
this
Section.
Total
P12,000.00
SECTION
4.113-2.
Invoicing
and
Recording
In
this
case,
"B"
shall
be
entitled
only
to
P1,000
as
Deemed
Sale
Transactions.
In
the
case
of
Sec.
input
tax
and
not
1/11
of
P12,000.00
4.106-7(a)
(1)
of
these
Regulations,
a
memorandum
entry
in
the
subsidiary
sales
journal
to
record
Consequences
of
issuing
erroneous
VAT
withdrawal
of
goods
for
personal
use
is
required.
In
invoice
or
VAT
official
receipt,
Section
113,
D,
the
case
of
Sec.
4.106-7(a)
(2)
and
(3)
of
these
NIRC;
Section
4.113-4,
RR
16-2005
Regulations,
an
invoice
shall
be
prepared
at
the
time
of
the
occurrence
of
the
transaction,
which
Section
113.
Invoicing
and
Accounting
should
include,
all
the
information
prescribed
in
Requirements
for
VAT-Registered
Persons.
Sec.
4.113-1.
The
data
appearing
in
the
invoice
shall
(A)
Invoicing
Requirements.
-
A
VAT-registered
shall
be
liable
to
pay
VAT
thereon.
The
purchaser
person
shall,
for
every
sale,
issue
an
invoice
or
shall
be
entitled
to
claim
an
input
tax
credit
on
his
receipt.
In
addition
to
the
information
required
purchase.
under
Section
237,
the
following
information
shall
be
indicated
in
the
invoice
or
receipt:
Section
114.
Return
and
Payment
of
Value-Added
Tax.
(1)
A
statement
that
the
seller
is
a
VAT-registered
person,
followed
by
his
taxpayer's
identification
(A)
In
General.
-
Every
person
liable
to
pay
the
number
(TIN);
and
value-added
tax
imposed
under
this
Title
shall
file
a
quarterly
return
of
the
amount
of
his
gross
sales
or
(2)
The
total
amount
which
the
purchaser
pays
or
is
receipts
within
twenty-five
(25)
days
following
the
obligated
to
pay
to
the
seller
with
the
indication
close
of
each
taxable
quarter
prescribed
for
each
that
such
amount
includes
the
value-added
tax.
taxpayer:
Provided,
however,
That
VAT-registered
persons
shall
pay
the
value-added
tax
on
a
monthly
(B)
Accounting
Requirements.
-
Notwithstanding
the
basis.
provisions
of
Section
233,
all
persons
subject
to
the
value-added
tax
under
Sections
106
and
108
shall,
Any
person,
whose
registration
has
been
cancelled
in
addition
to
the
regular
accounting
records
in
accordance
with
Section
236,
shall
file
a
return
required,
maintain
a
subsidiary
sales
journal
and
and
pay
the
tax
due
thereon
within
twenty-five
(25)
subsidiary
purchase
journal
on
which
the
daily
days
from
the
date
of
cancellation
of
registration:
sales
and
purchases
are
recorded.
The
subsidiary
Provided,
That
only
one
consolidated
return
shall
journals
shall
contain
such
information
as
may
be
be
filed
by
the
taxpayer
for
his
principal
place
of
required
by
the
Secretary
of
Finance.
business
or
head
office
and
all
branches.
SECTION
4.113-4.
Consequences
of
Issuing
(B)
Where
to
File
the
Return
and
Pay
the
Tax.
-
Erroneous
VAT
Invoice
or
VAT
Official
Receipt.
Except
as
the
Commissioner
otherwise
permits,
the
return
shall
be
filed
with
and
the
tax
paid
to
an
authorized
agent
bank,
Revenue
Collection
Officer
(A)
Issuance
of
a
VAT
Invoice
or
VAT
Receipt
by
a
or
duly
authorized
city
or
municipal
Treasurer
in
non-VAT
person.
If
a
person
who
is
not
VAT- the
Philippines
located
within
the
revenue
district
registered
issues
an
invoice
or
receipt
showing
his
where
the
taxpayer
is
registered
or
required
to
TIN,
followed
by
the
word
"VAT",
the
erroneous
register.
issuance
shall
result
to
the
following:
(1)
The
non-VAT
person
shall
be
liable
to:
Input
Tax
Credit
Any
input
tax
evidenced
by
a
VAT
invoice
or
(i)
the
percentage
taxes
applicable
to
his
official
receipt
issued
by
a
VAT-registered
transactions;
person
in
accordance
with
SEC.
113
and
Sec
237
on
the
following
transactions
shall
be
(ii)
VAT
due
on
the
transactions
under
Sec.
106
or
creditable
against
the
output
tax:
108
of
the
Tax
Code,
without
the
benefit
of
any
(a)
purchase
or
importation
of
goods:
input
tax
credit;
and
(1)
for
sale;
or
(2)
for
conversion
into
or
intended
to
form
(iii)
a
50%
surcharge
under
Sec.
248
(B)
of
the
Tax
part
of
a
finished
product
for
sale
including
Code;
packaging
materials;
or
(3)
for
use
as
supplies
in
the
course
of
(2)
VAT
shall
be
recognized
as
an
input
tax
credit
to
business;
or
the
purchaser
under
Sec.
110
of
the
Tax
Code,
(4)
for
use
as
materials
supplied
in
the
sale
provided
the
requisite
information
required
under
Subsection
4.113
(B)
of
these
Regulations
is
shown
of
service;
or
on
the
invoice
or
receipt.
(5)
for
use
in
trade
or
business
for
which
deduction
for
depreciation
or
amortization
(B)
Issuance
of
a
VAT
Invoice
or
VAT
Receipt
on
an
is
allowed
under
Sec.
34
(F),
NIRC
Exempt
Transaction
by
a
VAT-registered
Person.
(b)
Purchase
of
real
properties
for
which
VAT
If
a
VAT-registered
person
issues
a
VAT
invoice
or
has
actually
been
paid
VAT
official
receipt
for
a
VAT-exempt
transaction,
(c)
Purchase
of
services
on
which
a
VAT
has
but
fails
to
display
prominently
on
the
invoice
or
actually
been
paid
receipt
the
words
"VAT-exempt
sale",
the
(d)
Transactions
deemed
sale
under
Sec.
106
transaction
shall
become
taxable
and
the
issuer
(B)
of
NIRC
(e)
Transitional
input
tax
allowed
under
Sec.
period,
or
who
voluntarily
register
even
if
111
(A)
of
NIRC
their
turnover
does
not
exceed
P
1,500,000
(f)
Presumptive
input
tax
allowed
under
Sec.
shall
be
entitled
to
a
transitional
input
tax
111
(B)
of
NIRC
on
the
inventory
on
hand
as
of
the
(g)
Transitional
input
tax
credits
allowed
effectivity
of
their
VAT
registration,
on
the
under
transitory
provisions
and
other
following:
provisions
of
Rev.
Regs.
No.
16-2005
a. goods
purchased
for
resale
in
their
present
condition
In
case
the
taxpayer
is
also
engaged
in
b. materials
purchased
for
further
transactions
not
subject
to
VAT,
a
ratable
processing,
but
which
have
not
yet
portion
of
any
input
tax
which
cannot
be
undergone
processing
directly
attributed
to
either
activity
will
be
c. goods
which
have
been
manufactured
computed
under
an
apportionment
formula.
by
the
taxpayer
d. goods
in
process
for
sale
Persons
who
can
avail
of
the
input
tax
e. goods
and
supplies
for
use
in
the
credit
course
of
the
taxpayers
trade
or
1.
Importer
upon
payment
of
the
VAT
prior
to
business
as
a
VAT-registered
person
the
release
of
goods
from
the
custody
of
2. The
transitional
input
tax
shall
be
2%
of
Bureau
of
Customs.
the
value
of
the
beginning
inventory
on
2.
Purchaser
of
the
domestic
goods
or
hand
or
actual
VAT
paid
on
such
goods,
properties
upon
consummation
of
sale
materials
and
supplies,
whichever
is
3.
Purchaser
of
services
or
the
lessee
or
higher,
which
amount
shall
be
creditable
licensee
upon
payment
of
the
compensation,
against
the
output
tax
of
the
VAT-
rental,
royalty
r
fee.
registered
person.
3. The
value
allowed
for
income
tax
purposes
Input
tax
attributable
to
VAT-exempt
on
inventories
shall
be
the
basis
for
the
transactions
cannot
be
credited
against
output
computation
of
the
2%
transitional
input
tax
but
should
be
treated
as
part
of
cost
or
tax,
excluding
goods
that
are
exempt
from
expense.
VAT
under
Sec.
109.
Presumptive
input
tax
credit
Taxpayers
required
to
register
under
VAT
Persons
or
firms
engaged
in
the
processing
of
1. Generally,
all
persons
engaged
in
the
sardines,
mackerel,
and
milk,
and
in
selling
of
goods
or
rendering
of
services.
manufacturing
of
refined
sugar,
cooking
oil,
2. Any
person
starting
a
business
with
and
packed
noodle-based
instant
meals
shall
expected
gross
sales
or
receipts
of
more
be
allowed
a
presumptive
input
tax,
creditable
than
P
1,500,00
in
the
next
12
months.
against
the
output
tax,
equivalent
to
4%
of
the
3. Franchise
grantees
of
radio/
television
gross
value
in
money
of
their
purchases
of
broadcasting
companies
whose
annual
preliminary
agricultural
products
which
are
gross
receipts
exceed
P
10,000,000.
used
as
inputs
to
their
production.
4. Any
person
engaged
in
business
with
gross
sales
or
receipts
of
more
than
1,500,000
in
The
term
processing
means
pasteurization,
any
of
the
12-month
period
covered.
canning,
and
activities
which
through
physical
or
chemical
process
alter
the
exterior
texture
In
relation
to
this
particular
case,
the
following
or
form
or
inner
substance
of
a
product
in
such
procedure
should
be
observed
relative
to
the
manner
as
to
prepare
it
for
special
use
to
registration:
which
it
could
not
have
been
put
in
its
original
a. The
annual
registration
fee
shall
be
payable
form
or
condition.
within
10
days
after
the
end
of
the
last
month
of
the
period
Transitional
input
tax
credit
on
beginning
b. Taxpayers
shall
be
liable
to
VAT
starting
inventories
the
first
day
of
the
month
following
the
1. Taxpayers
who
became
VAT-registered
registration
persons
upon
exceeding
the
minimum
turnover
of
P
1,500,000
in
any
12-month
Effects
of
failure
to
register
as
VAT
taxpayer
1. The
taxpayer
is
liable
to
pay
VAT
on
the
sale
of
goods
or
rendering
of
services.
2. The
VAT
paid
on
purchases
of
goods
or
services
cannot
be
deducted
on
VAT
imposed
on
sale
of
goods
or
services.
3. VAT
cannot
be
billed
separately
to
customers.
4. The
taxpayer
is
penalized
through
the
imposition
of
fines
and
penalties.
Filing
returns
and
payment
of
VAT
1. Imported
goods
payable
prior
to
the
release
of
imported
goods
from
the
custody
of
Bureau
of
Customs
2. On
sale
of
goods,
properties
or
services
payable
at
the
time
of
declaration
or
filing.
The
VAT
declaration
may
be:
a. Monthly
declaration
20
days
after
the
end
of
each
month
of
the
first
two
months
of
the
quarter.
b. Quarterly
declaration
15
days
after
the
end
of
the
quarter
covering
all
transactions
of
the
quarter
3. Excess
input
tax
of
the
first
month
of
the
quarter
shall
be
carried
as
tax
credit
on
the
second
month
and
shall
not
be
refundable.
4. Excess
input
tax
of
the
second
month
of
the
quarter
shall
be
carried
over
as
tax
credit
on
the
first
month
of
the
next
quarter
and
not
the
quarterly
return.
MODULE
3
a
tai
of
one-sixteenth
(1/16)
of
a
centavo
for
every
bottle
of
soft
drink
corked."
Municipal
OTHER
PERCENTAGE
Ordinance
No.
27
collects
"on
soft
drinks
produced
or
manufactured
within
the
TAXES
territorial
jurisdiction
of
this
municipality
a
tax
of
ONE
CENTAVO
(P0.01)
on
each
gallon
(128
fluid
ounces,
U.S.)
of
volume
capacity."
CFI
and
A. CONCEPT
OF
PERCENTAGE
TAX
SC
dismissd
the
complaint
and
found
all
of
Deleon
notes:
these
valid.
DEFINITION:
taxes
measured
by
a
DOCTRINE:
An
ordinance
which
prescribes
a
certain
percentage
of
the
gross
selling
set
ratio
between
the
amount
of
the
tax
and
the
price
or
gross
value
in
money
of
goods
volume
of
sale
of
the
taxpayer
is
an
example
of
sold,
bartered,
exchanged
or
imported
a
percentage
tax.
or
gross
receipts
or
earnings
derived
by
any
person
engaged
in
the
sale
of
services.
B. PERCENTAGES
IMPOSED
NATURE:
privilege
taxes,
imposed
on
1. Tax
on
persons
exempt
from
VAT
the
privilege
to
sell
commodities
or
SEC.
116.
Tax
on
Persons
Exempt
from
Value-
services
Added
Tax
(VAT).
-
Any
person
whose
sales
or
BASIS:
based
on
gross
receipts
except
receipts
are
exempt
under
Section
109(1)(V)
of
this
Code
from
the
payment
of
value-added
tax
and
who
where
the
basis
of
tax
is
the
total
is
not
a
VAT-registered
person
shall
pay
a
tax
premium
collected.
equivalent
to
three
percent
(3%)
of
his
gross
quarterly
sales
or
receipts:
Provided,
That
City
of
Manila
vs.
Intergas
Services,
Inc.
cooperatives
shall
be
exempt
from
the
three
percent
SUMMARY:
Respondent
sold
at
retail
in
Manila
(3%)gross
receipts
tax
herein
imposed.
cooking
appliances
and
LPGs
from
the
4th
quarter
of
1949
to
the
4th
quarter
of
1951.
In
2. Percentage
tax
on
domestic
carriers
and
accordance
with
Ordinance
No.
1925,
as
keepers
of
garages
amended
by
Ordinance
No.
3364,
it
paid
SEC.
117.
Percentage
Tax
on
Domestic
Carriers
quarterly
license
fees
to
the
City
Treasurer.
and
Keepers
of
Garages.
-
Cars
for
rent
or
hire
However,
in
the
computation
of
the
fees
due,
it
driven
by
the
lessee;
transportation
contractors,
did
not
include
its
sale
of
LPGs.
Petitioner
including
persons
who
transport
passengers
for
instituted
an
action
for
the
collection
of
a
sum
hire,
and
other
domestic
carriers
by
land
for
the
transport
of
passengers
(except
owners
of
bancas
of
money,
by
way
of
deficiency
municipal
tax,
and
owners
of
animal-drawn
two
wheeled
vehicle),
against
Respondent
before
CFI
Manila.
CFI
and
keepers
of
garages
shall
pay
a
tax
equivalent
to
ruled
in
favor
of
Petitioner
and
sentenced
three
percent
(3%)
of
their
quarterly
gross
receipts.
Respondent
to
pay
the
sum
of
8
361
as
deficiency
tax
dye
from
1952,
including
50
as
The
gross
receipts
of
common
carriers
derived
from
surcharge,
and
costs.
Respondent
appealed
the
their
incoming
and
outgoing
freight
shall
not
be
decision.
subjected
to
the
local
taxes
imposed
under
Republic
DOCTRINE:
Percentage
tax
is
based
on
a
given
Act
No.
7160,
otherwise
known
as
the
Local
ratio
between
the
gross
income
and
the
burden
Government
Code
of
1991.
imposed
upon
the
taxpayer.
It
is
different
from
In
computing
the
percentage
tax
provided
in
this
Section,
the
following
shall
be
considered
the
graduated
tax,
which
imposes
fixed
amounts
minimum
quarterly
gross
receipts
in
each
particular
for
corresponding
ranges
of
gross
sales.
case:
Pepsi
Cola
Bottling
Company,
Inc.
vs.
Mun.
Jeepney
for
hire
of
Tanauan
1.
Manila
and
other
cities:
P2,400
SUMMARY:
Pepsi-Cola
Bottling
Company
filed
2.
Provincial:
P1,200
a
complaint
to
declare
Section
2
of
the
Local
Public
utility
bus
Autonomy
Act
unconstitutional
as
an
undue
Not
exceeding
30
passengers:
P3,600
delegation
of
taxing
authority,
and
to
declare
Exceeding
30
but
not
exceeding
50:
P6,000
Ordinances
Nos.
23
and
27,
series
of
1962,
of
Exceeding
50
passenger:
P7,200
the
municipality
of
Tanauan,
Leyte,
null
and
Taxis
-
1.
Manila
and
other
cities:
P3,600
void.
Municipal
Ordinance
No.
23
collects
2.
Provincial:
P
2,400
"from
soft
drinks
producers
and
manufacturers
3. Percentage
tax
on
international
carriers
(1)
Government.
-
Amounts
paid
for
messages
(by
virtue
of
an
international
treaty)
transmitted
by
the
Government
of
the
Republic
of
SEC.
118
Percentage
Tax
on
International
the
Philippines
or
any
of
its
political
subdivisions
or
Carriers.
-
instrumentalities;
(A)
International
air
carriers
doing
business
in
the
(2)
Diplomatic
Services.
-
Amounts
paid
for
Philippines
shall
pay
a
tax
of
three
percent
(3%)
of
messages
transmitted
by
any
embassy
and
consular
their
quarterly
gross
receipts.
offices
of
a
foreign
government;
(B)
International
shipping
carriers
doing
business
(3)
International
Organizations.
-
Amounts
paid
for
in
the
Philippines
shall
pay
a
tax
equivalent
to
three
messages
transmitted
by
a
public
international
percent
(3%)
of
their
quarterly
gross
receipts.
organization
or
any
of
its
agencies
based
in
the
Philippines
enjoying
privileges,
exemptions
and
immunities
which
the
Government
of
the
4. Tax
on
franchises
Philippines
is
committed
to
recognize
pursuant
to
SEC.
119.
Tax
on
Franchises.
-
Any
provision
of
an
international
agreement;
and
general
or
special
law
to
the
contrary
(4)
News
Services.
-
Amounts
paid
for
messages
notwithstanding,
there
shall
be
levied,
assessed
and
from
any
newspaper,
press
association,
radio
or
collected
in
respect
to
all
franchises
on
radio
and/or
television
newspaper,
broadcasting
agency,
or
television
broadcasting
companies
whose
annual
newstickers
services,
to
any
other
newspaper,
press
gross
receipts
of
the
preceding
year
does
not
exceed
association,
radio
or
television
newspaper
Ten
million
pesos
(P10,000,000),
subject
to
Section
broadcasting
agency,
or
newsticker
service
or
to
a
236
of
this
Code,
a
tax
of
three
percent
(3%)
and
on
bona
fide
correspondent,
which
messages
deal
gas
and
water
utilities,
a
tax
of
two
percent
(2%)
on
exclusively
with
the
collection
of
news
items
for,
or
the
gross
receipts
derived
from
the
business
the
dissemination
of
news
item
through,
public
covered
by
the
law
granting
the
franchise:
Provided,
press,
radio
or
television
broadcasting
or
a
however,
That
radio
and
television
broadcasting
newsticker
service
furnishing
a
general
news
companies
referred
to
in
this
Section
shall
have
an
service
similar
to
that
of
the
public
press.
option
to
be
registered
as
a
value-added
taxpayer
and
pay
the
tax
due
thereon:Provided,
further,
That
6. Tax
on
banks
and
non-bank
financial
once
the
option
is
exercised,
said
option
shall
be
irrevocable.
intermediaries
performing
quasi-
banking
functions
(also
called
gross
The
grantee
shall
file
the
return
with,
and
pay
the
receipts
tax)
tax
due
thereon
to
the
Commissioner
or
his
duly
SEC.
121.
Tax
on
Banks
and
Non-Bank
Financial
authorized
representative,
in
accordance
with
the
Intermediaries
Performing
Quasi-Banking
provisions
of
Section
128
of
this
Code,
and
the
Functions.
-
There
shall
be
collected
a
tax
on
gross
return
shall
be
subject
to
audit
by
the
Bureau
of
receipts
derived
from
sources
within
the
Internal
Revenue,
any
provision
of
any
existing
law
Philippines
by
all
banks
and
non-bank
financial
to
the
contrary
notwithstanding.
intermediaries
in
accordance
with
the
following
schedule:
5. Tax
on
overseas
dispatch,
messages
or
(a)
On
interest,
commissions
and
discounts
from
conversation
originating
from
the
lending
activities
as
well
as
income
from
financial
Philippines
leasing,
on
the
basis
of
remaining
maturities
of
SEC.
120.
Tax
on
Overseas
Dispatch,
Message
or
instruments
from
which
such
receipts
are
derived:
Conversation
Originating
from
the
Philippines.
-
-
Maturity
Period
is
5
years
or
less:
5%
(A)
Persons
Liable.
-
There
shall
be
collected
upon
-
Maturity
Period
is
more
than
5
years:
1%
every
overseas
dispatch,
message
or
conversation
(b)
On
dividends
and
equity
shares
and
net
income
transmitted
from
the
Philippines
by
telephone,
of
subsidiaries
0%
telegraph,
telewriter
exchange,
wireless
and
other
(c)
On
royalties,
rentals
of
property,
real
or
communication
equipment
service,
a
tax
of
ten
personal,
profits,
from
exchange
and
all
other
items
percent
(10%)
on
the
amount
paid
for
such
treated
as
gross
income
under
Section
32
of
this
services.
The
tax
imposed
in
this
Section
shall
be
Code
7%
payable
by
the
person
paying
for
the
services
(d)
On
net
trading
gains
within
the
taxable
year
on
rendered
and
shall
be
paid
to
the
person
rendering
foreign
currency,
debt
securities,
derivatives,
and
the
services
who
is
required
to
collect
and
pay
the
other
similar
financial
instruments
7%
tax
within
twenty
(20)
days
after
the
end
of
each
quarter.
Provided,
however,
That
in
case
the
maturity
period
referred
to
in
paragraph
(a)
is
shortened
thru
pre-
termination,
then
the
maturity
period
shall
be
reckoned
to
end
as
of
the
date
of
pre-termination
(B)
Exemptions.
-
The
tax
imposed
by
this
Section
for
purposes
of
classifying
the
transaction
and
the
shall
not
apply
to:
correct
rate
of
tax
shall
be
applied
accordingly.
reinsurance
by
a
company
that
has
already
paid
the
Provided,
finally,
That
the
generally
accepted
tax;
nor
upon
doing
business
outside
the
accounting
principles
as
may
be
prescribed
by
the
Philippines
on
account
of
any
life
insurance
of
the
Bangko
Sentral
ng
Pilipinas
for
the
bank
or
non- insured
who
is
a
nonresident,
if
any
tax
on
such
bank
financial
intermediary
performing
quasi- premium
is
imposed
by
the
foreign
country
where
banking
functions
shall
likewise
be
the
basis
for
the
the
branch
is
established
nor
upon
premiums
calculation
of
gross
receipts.
collected
or
received
on
account
of
any
reinsurance
,
if
the
insured,
in
case
of
personal
insurance,
Nothing
in
this
Code
shall
preclude
the
resides
outside
the
Philippines,
if
any
tax
on
such
Commissioner
from
imposing
the
same
tax
herein
premiums
is
imposed
by
the
foreign
country
where
provided
on
persons
performing
similar
banking
the
original
insurance
has
been
issued
or
perfected;
activities."
nor
upon
that
portion
of
the
premiums
collected
or
received
by
the
insurance
companies
on
variable
contracts
(as
defined
in
section
232(2)
of
7. Tax
on
other
non-bank
financial
Presidential
Decree
No.
612),
in
excess
of
the
intermediaries
amounts
necessary
to
insure
the
lives
of
the
Sec.
122.
Tax
on
Other
Non-Bank
Financial
variable
contract
workers.
Intermediaries.
There
shall
be
collected
a
tax
of
five
percent
(5%)
on
the
gross
receipts
derived
by
Cooperative
companies
or
associations
are
such
other
nonbank
financial
intermediaries
doing
as
are
conducted
by
the
members
thereof
with
the
business
in
the
Philippines,
from
interest,
money
collected
from
among
themselves
and
solely
commissions,
discounts
and
all
other
items
treated
as
for
their
own
protection
and
not
for
profit.
gross
income
under
this
code:
Provided,
that
interests,
commissions
and
discounts
from
lending
9. Tax
on
agents
of
foreign
insurance
activities,
as
well
as
income
from
financial
leasing,
shall
be
taxed
on
the
basis
of
remaining
maturities
of
companies
the
instruments
from
which
such
receipts
are
derived,
SEC.
124.
Tax
on
Agents
of
Foreign
Insurance
in
accordance
with
the
following
schedule:
Companies.
-
Every
fire,
marine
or
miscellaneous
maturity
period
is
5
years
or
less:
5%
insurance
agent
authorized
under
the
Insurance
maturity
period
is
more
than
5
years:
1%
Code
to
procure
policies
of
insurance
as
he
may
have
previously
been
legally
authorized
to
transact
Provided,
however,
that
in
case
the
maturity
period
is
on
risks
located
in
the
Philippines
for
companies
shortened
thru
pretermination,
then
the
maturity
not
authorized
to
transact
business
in
the
period
shall
be
reckoned
to
end
as
of
the
dateof
Philippines
shall
pay
a
tax
equal
to
twice
the
tax
pretermination
for
purposes
of
classifying
the
imposed
in
Section
123:
Provided,
That
the
transaction
and
the
correct
rate
shall
be
applied
provision
of
this
Section
shall
not
apply
to
accordingly.
reinsurance:
Provided,
however,
That
the
provisions
of
this
Section
shall
not
affect
the
right
of
Provided,
finally,
that
the
generally
accepted
an
owner
of
property
to
apply
for
and
obtain
for
accounting
principles
as
may
be
prescribed
by
the
himself
policies
in
foreign
companies
in
cases
Securities
and
Exchange
Commission
for
other
non- where
said
owner
does
not
make
use
of
the
services
bank
financial
intermediaries
shall
likewise
be
the
of
any
agent,
company
or
corporation
residing
or
basis
for
the
calculation
of
gross
receipts.
doing
business
in
the
Philippines.
In
all
cases
where
owners
of
property
obtain
insurance
directly
with
Nothing
in
this
code
shall
preclude
the
Commissioner
foreign
companies,
it
shall
be
the
duty
of
said
from
imposing
the
same
tax
herein
provided
on
owners
to
report
to
the
Insurance
Commissioner
persons
performing
similar
financing
activities.
and
to
the
Commissioner
each
case
where
insurance
has
been
so
effected,
and
shall
pay
the
tax
of
five
percent
(5%)
on
premiums
paid,
in
the
8. Tax
on
life
insurance
premiums
manner
required
by
Section
123.
SEC.
123.
Tax
on
Life
Insurance
Premiums.
-
There
shall
be
collected
from
every
person,
10. Amusement
taxes
company
or
corporation
(except
purely
cooperative
SEC.
125.
Amusement
Taxes.
-
There
shall
be
companies
or
associations)
doing
life
insurance
collected
from
the
proprietor,
lessee
or
operator
of
business
of
any
sort
in
the
Philippines
a
tax
of
five
cockpits,
cabarets,
night
or
day
clubs,
boxing
percent
(5%)
of
the
total
premium
collected,
exhibitions,
professional
basketball
games,
Jai-Alai
whether
such
premiums
are
paid
in
money,
notes,
and
racetracks,
a
tax
equivalent
to:
credits
or
any
substitute
for
money;
but
premiums
refunded
within
six
(6)
months
after
payment
on
(a)
Eighteen
percent
(18%)
in
the
case
of
cockpits;
account
of
rejection
of
risk
or
returned
for
other
(b)
Eighteen
percent
(18%)
in
the
case
of
cabarets,
reason
to
a
person
insured
shall
not
be
included
in
night
or
day
clubs;
the
taxable
receipts;
nor
shall
any
tax
be
paid
upon
(c)
Ten
percent
(10%)
in
the
case
of
boxing
with
the
second
paragraph
hereof,
file
a
true
and
exhibitions:
Provided,
however,
That
boxing
correct
return
with
the
Commissioner
in
the
exhibitions
wherein
World
or
Oriental
manner
or
form
to
be
prescribed
by
the
Secretary
of
Championships
in
any
division
is
at
stake
shall
be
Finance,
and
pay
within
the
same
period
the
total
exempt
from
amusement
tax:
Provided,
further,
amount
of
tax
so
deducted
and
withheld.
That
at
least
one
of
the
contenders
for
World
or
Oriental
Championship
is
a
citizen
of
the
Philippines
12. Tax
on
sale,
barter
or
exchange
of
shares
and
said
exhibitions
are
promoted
by
a
citizen/s
of
of
stock
listed
and
traded
through
the
the
Philippines
or
by
a
corporation
or
association
at
local
stock
exchange
(also
called
stock
least
sixty
percent
(60%)
of
the
capital
of
which
is
transactions
tax)
or
through
initial
public
owned
by
such
citizens;
(d)
Fifteen
percent
(15%)
in
the
case
of
offering
(also
called
IPO
tax)
professional
basketball
games
as
envisioned
in
SEC.
127.
Tax
on
Sale,
Barter
or
Exchange
of
Presidential
Decree
No.
871:
Provided,
however,
Shares
of
Stock
Listed
and
Traded
through
the
That
the
tax
herein
shall
be
in
lieu
of
all
other
Local
Stock
Exchange
or
through
Initial
Public
percentage
taxes
of
whatever
nature
and
Offering.
-
description;
and
(A)
Tax
on
Sale,
Barter
or
Exchange
of
Shares
of
(e)
Thirty
percent
(30%)
in
the
case
of
Jai-Alai
and
Stock
Listed
and
Traded
through
the
Local
Stock
racetracks
of
their
gross
receipts,
irrespective,
of
Exchange.
-
There
shall
be
levied,
assessed
and
whether
or
not
any
amount
is
charged
for
collected
on
every
sale,
barter,
exchange,
or
other
admission.
disposition
of
shares
of
stock
listed
and
traded
through
the
local
stock
exchange
other
than
the
sale
For
the
purpose
of
the
amusement
tax,
the
term
by
a
dealer
in
securities,
a
tax
at
the
rate
of
one-half
"gross
receipts"
embraces
all
the
receipts
of
the
of
one
percent
(1/2
of
1%)
of
the
gross
selling
price
proprietor,
lessee
or
operator
of
the
amusement
or
gross
value
in
money
of
the
shares
of
stock
sold,
place.
Said
gross
receipts
also
include
income
from
bartered,
exchanged
or
otherwise
disposed
which
television,
radio
and
motion
picture
rights,
if
any.
A
shall
be
paid
by
the
seller
or
transferor.
person
or
entity
or
association
conducting
any
activity
subject
to
the
tax
herein
imposed
shall
be
(B)
Tax
on
Shares
of
Stock
Sold
or
Exchanged
similarly
liable
for
said
tax
with
respect
to
such
Through
Initial
Public
Offering.
-
There
shall
be
portion
of
the
receipts
derived
by
him
or
it.
levied,
assessed
and
collected
on
every
sale,
barter,
The
taxes
imposed
herein
shall
be
payable
at
the
exchange
or
other
disposition
through
initial
public
end
of
each
quarter
and
it
shall
be
the
duty
of
the
offering
of
shares
of
stock
in
closely
held
proprietor,
lessee
or
operator
concerned,
as
well
as
corporations,
as
defined
herein,
a
tax
at
the
rates
any
party
liable,
within
twenty
(20)
days
after
the
provided
hereunder
based
on
the
gross
selling
price
end
of
each
quarter,
to
make
a
true
and
complete
or
gross
value
in
money
of
the
shares
of
stock
sold,
return
of
the
amount
of
the
gross
receipts
derived
bartered,
exchanged
or
otherwise
disposed
in
during
the
preceding
quarter
and
pay
the
tax
due
accordance
with
the
proportion
of
shares
of
stock
thereon. sold,
bartered,
exchanged
or
otherwise
disposed
to
the
total
outstanding
shares
of
stock
after
the
listing
in
the
local
stock
exchange:
11. Tax
on
winnings
Up
to
25%:
4%
SEC.
126.
Tax
on
Winnings.
-
Every
person
who
Over
25%
but
not
over
33
1/3%:
2%
wins
in
horse
races
shall
pay
a
tax
equivalent
to
ten
Over
33
1/3%:
1%
percent
(10%)
of
his
winnings
or
'dividends',
the
The
tax
herein
imposed
shall
be
paid
by
the
issuing
tax
to
be
based
on
the
actual
amount
paid
to
him
for
corporation
in
primary
offering
or
by
the
seller
in
every
winning
ticket
after
deducting
the
cost
of
the
secondary
offering.
ticket:
Provided,
That
in
the
case
of
winnings
from
For
purposes
of
this
Section,
the
term
'closely
held
double,
forecast/quinella
and
trifecta
bets,
the
tax
corporation'
means
any
corporation
at
least
fifty
shall
be
four
percent
(4%).
In
the
case
of
owners
of
percent
(50%)
in
value
of
outstanding
capital
stock
winning
race
horses,
the
tax
shall
be
ten
percent
or
at
least
fifty
percent
(505)
of
the
total
combined
(10%)
of
the
prizes.
voting
power
of
all
classes
of
stock
entitled
to
vote
The
tax
herein
prescribed
shall
be
deducted
from
is
owned
directly
or
indirectly
by
or
for
not
more
the
'dividends'
corresponding
to
each
winning
than
twenty
(20)
individuals.
ticket
or
the
'prize'
of
each
winning
race
horse
For
purposes
of
determining
whether
the
owner
and
withheld
by
the
operator,
manager
or
corporation
is
a
closely
held
corporation,
insofar
as
person
in
charge
of
the
horse
races
before
paying
such
determination
is
based
on
stock
ownership,
the
dividends
or
prizes
to
the
persons
entitled
the
following
rules
shall
be
applied:
thereto.
(1)
Stock
Not
Owned
by
Individuals.
-
Stock
owned
The
operator,
manager
or
person
in
charge
of
horse
directly
or
indirectly
by
or
for
a
corporation,
races
shall,
within
twenty
(20)
days
from
the
date
partnership,
estate
or
trust
shall
be
considered
as
the
tax
was
deducted
and
withheld
in
accordance
being
owned
proportionately
by
its
shareholders,
C. COMPLIANCE
REQUIREMENTS
partners
or
beneficiaries.
SEC.
128.
Returns
and
Payment
of
Percentage
(2)
Family
and
Partnership
Ownerships.
-
An
Taxes.
-
individual
shall
be
considered
as
owning
the
stock
(A)
Returns
of
Gross
Sales,
Receipts
or
Earnings
and
owned,
directly
or
indirectly,
by
or
for
his
family,
or
Payment
of
Tax.
-
by
or
for
his
partner.
For
purposes
of
the
paragraph,
(1)
Persons
Liable
to
Pay
Percentage
Taxes.
-
Every
the
'family
of
an
individual'
includes
only
his
person
subject
to
the
percentage
taxes
imposed
brothers
and
sisters
(whether
by
whole
or
half-
under
this
Title
shall
file
a
quarterly
return**
of
the
blood),
spouse,
ancestors
and
lineal
descendants.
amount
of
his
gross
sales,
receipts
or
earnings
and
(3)
Option.
-
If
any
person
has
an
option
acquire
pay
the
tax
due
thereon
within
twenty-five
(25)
stock,
such
stock
shall
be
considered
as
owned
by
days
after
the
end
of
each
taxable
quarter:
Provided,
such
person.
For
purposes
of
this
paragraph,
an
That
in
the
case
of
a
person
whose
VAT
registration
option
to
acquire
such
an
option
and
each
one
of
a
is
cancelled
and
who
becomes
liable
to
the
tax
series
of
options
shall
be
considered
as
an
option
to
imposed
in
Section
116
of
this
Code,
the
tax
shall
acquire
such
stock.
accrue
from
the
date
of
cancellation
and
shall
be
(4)
Constructive
Ownership
as
Actual
Ownership.
-
paid
in
accordance
with
the
provisions
of
this
Stock
constructively
owned
by
reason
of
the
Section.
application
of
paragraph
(1)
or
(3)
hereof
shall,
for
(2)
Person
Retiring
from
Business.
-
Any
person
purposes
of
applying
paragraph
(1)
or
(2),
be
retiring
from
a
business
subject
to
percentage
tax
treated
as
actually
owned
by
such
person;
but
stock
shall
notify
the
nearest
internal
revenue
officer,
file
constructively
owned
by
the
individual
by
reason
of
his
return
and
pay
the
tax
due
thereon
within
the
application
of
paragraph
(2)
hereof
shall
not
be
twenty
(20)
days
after
closing
his
business.
treated
as
owned
by
him
for
purposes
of
again
(3)
Exceptions.
-
The
Commissioner
may,
by
rules
applying
such
paragraph
in
order
to
make
another
and
regulations,
prescribe:
the
constructive
owner
of
such
stock.
(a)
The
time
for
filing
the
return
at
intervals
other
than
the
time
prescribed
in
the
preceding
(C)
Return
on
Capital
Gains
Realized
from
Sale
of
paragraphs
for
a
particular
class
or
classes
of
Shares
of
Stocks.
-
taxpayers
after
considering
such
factors
as
volume
(1)
Return
on
Capital
Gains
Realized
from
Sale
of
of
sales,
financial
condition,
adequate
measures
of
Shares
of
Stock
Listed
and
Traded
in
the
Local
Stock
security,
and
such
other
relevant
information
Exchange.
-
It
shall
be
the
duty
of
every
stock
broker
required
to
be
submitted
under
the
pertinent
who
effected
the
sale
subject
to
the
tax
imposed
provisions
of
this
Code;
and
herein
to
collect
the
tax
and
remit
the
same
to
the
(b)
The
manner
and
time
of
payment
of
percentage
Bureau
of
Internal
Revenue
within
five
(5)
banking
taxes
other
than
as
hereinabove
prescribed,
days
from
the
date
of
collection
thereof
and
to
including
a
scheme
of
tax
prepayment.
submit
on
Mondays
of
each
week
to
the
secretary
of
(4)
Determination
of
Correct
Sales
or
Receipts.
-
the
stock
exchange,
of
which
he
is
a
member,
a
true
When
it
is
found
that
a
person
has
failed
to
issue
and
complete
return
which
shall
contain
a
receipts
or
invoices,
or
when
no
return
is
filed,
or
declaration
of
all
the
transactions
effected
through
when
there
is
reason
to
believe
that
the
books
of
him
during
the
preceding
week
and
of
taxes
accounts
or
other
records
do
not
correctly
reflect
collected
by
him
and
turned
over
to
the
Bureau
Of
the
declarations
made
or
to
be
made
in
a
return
Internal
Revenue.
required
to
be
filed
under
the
provisions
of
this
(2)
Return
on
Public
Offerings
of
Share
Stock.
-
In
Code,
the
Commissioner,
after
taking
into
account
case
of
primary
offering,
the
corporate
issuer
shall
the
sales,
receipts
or
other
taxable
base
of
other
file
the
return
and
pay
the
corresponding
tax
within
persons
engaged
in
similar
businesses
under
thirty
(30)
days
from
the
date
of
listing
of
the
similar
situations
or
circumstances,
or
after
shares
of
stock
in
the
local
stock
exchange.
In
the
considering
other
relevant
information
may
case
of
secondary
offering,
the
provision
of
prescribe
a
minimum
amount
of
such
gross
Subsection
(C)(1)
of
this
Section
shall
apply
as
to
receipts,
sales
and
taxable
base
and
such
amount
so
the
time
and
manner
of
the
payment
of
the
tax.
prescribed
shall
be
prima
facie
correct
for
purposes
of
determining
the
internal
revenue
tax
liabilities
of
(D)
Common
Provisions.
-
any
gain
derived
from
the
such
person.
sale,
barter,
exchange
or
other
disposition
of
shares
of
stock
under
this
Section
shall
be
exempt
from
the
(B)
Where
to
File.
-
Except
as
the
Commissioner
tax
imposed
in
Sections
24(C),
27(D)(2),
otherwise
permits,
every
person
liable
to
the
28(A)(7)(c),
and
28(B)(5)(c)
of
this
Code
and
from
percentage
tax
under
this
Title
may,
at
his
option,
the
regular
individual
or
corporate
income
tax.
Tax
file
a
separate
return
for
each
branch
or
place
of
paid
under
this
Section
shall
not
be
deductible
for
business,
or
a
consolidated
return
for
all
branches
income
tax
purposes.
or
places
of
business
with
the
authorized
agent
bank,
Revenue
District
Officer,
Collection
Agent
or
duly
authorized
Treasurer
of
the
city
or
municipality
where
said
business
or
principal
place
of
business
is
located,
as
the
case
may
be.
**Revenue
Regulations
4-2002
The
monthly
percentage
tax
returns
of
taxpayers
shall
be
filed,
and
taxes
paid,
not
later
than
the
20th
day
following
the
end
of
each
month
Deleon
notes
The
Commissioner
of
Internal
revenue
is
given
the
authority
to
prescribe,
by
rules
and
regulations,
other
than
as
stated,
in
meritorious
cases,
the
time
for
filing
percentage
tax
returns
for
a
particular
class
or
classes
of
taxpayers,
and
the
manner
and
time
of
payment
of
percentage
taxes
including
a
scheme
of
tax
prepayment
When
to
file:
o Formerly,
the
filing
of
the
quarterly
percentage
tax
return
of
the
amount
of
gross
sales,
receipts
or
earnings
and
the
payment
of
the
tax
due
thereon
must
be
made
within
25
days
after
the
end
of
each
taxable
quarter
(sec.
128[a])
o It
is
now
filed
monthly
except
in
the
case
of
Overseas
communication
tax
(sec.120)
and
amusement
tax
within
20
days
after
the
end
of
each
quarter
(sec.
125)
Tax
on
winnings
within
20
days
from
the
date
the
tax
was
deducted
and
withheld
(sec.126)
Tax
on
sale
etc.
of
shares
of
stock
listed
and
traded
in
the
local
stock
exchange
5
banking
days
from
the
date
of
collection
o Filed
not
later
than
the
20th
day
following
the
end
of
each
month
Where
to
file:
authorized
agent
bank,
the
revenue
district
officer,
revenue
collection
officer
or
duly
authorized
treasurer
of
the
city
or
municipality
where
said
business
or
principal
place
of
business
is
located
Persons
retiring
from
business
notify
the
nearest
internal
revenue
officer,
file
their
returns
and
pay
the
tax
due
thereon
within
20
days
after
closing
their
business.
MODULE
4
B. RATES
AND
BASIS
OF
TAXES
**
We
only
reproduced
in
this
reviewer
the
provisions
DOCUMENTARY
STAMP
that
maam
discussed
in
class
but
the
table
below
includes
all
the
documents
subject
to
tax
as
provided
TAXES
in
the
NIRC.
SEC.
174.
Stamp
Tax
on
Original
Issue
of
Shares
of
Stock.
-
On
every
original
issue,
whether
on
A. PRELIMINARY
TOPICS
organization,
reorganization
or
for
any
lawful
purpose,
of
shares
of
stock
by
any
association,
Definition
company
or
corporation,
there
shall
be
collected
a
SEC.
173.
Stamp
Taxes
Upon
Documents,
Loan
documentary
stamp
of
One
peso
(P1.00)
on
each
Agreements,
Instruments
and
Papers.
-
Upon
Two
hundred
pesos
(P200),
or
fractional
part
documents,
instruments,
loan
agreements
and
thereof,
of
the
par
value,
of
such
shares
of
stock:
papers,
and
upon
acceptances,
assignments,
sales
Provided,
That
in
the
case
of
the
original
issue
of
and
transfers
of
the
obligation,
right
or
property
shares
of
stock
without
par
value,
the
amount
of
the
incident
thereto,
there
shall
be
levied,
collected
and
documentary
stamp
tax
herein
prescribed
shall
be
paid
for,
and
in
respect
of
the
transaction
so
had
or
based
upon
the
actual
consideration
for
the
accomplished,
the
corresponding
documentary
issuance
of
such
shares
of
stock:Provided,
further,
stamp
taxes
prescribed
in
the
following
Sections
of
That
in
the
case
of
stock
dividends,
on
the
actual
this
Title,
by
the
person
making,
signing,
issuing,
value
represented
by
each
share.
accepting,
or
transferring
the
same
wherever
the
document
is
made,
signed,
issued,
accepted
or
SEC.
175.
Stamp
Tax
on
Sales,
Agreements
to
Sell.
transferred
when
the
obligation
or
right
arises
from
Memoranda
of
Sales,
Deliveries
or
Transfer
of
Philippine
sources
or
the
property
is
situated
in
the
Shares
or
Certificates
of
Stock.
-
On
all
sales,
or
Philippines,
and
the
same
time
such
act
is
done
or
agreements
to
sell,
or
memoranda
of
sales,
or
transaction
had:
Provided,
That
whenever
one
party
deliveries.
Or
transfer
of
shares
or
certificates
of
to
the
taxable
document
enjoys
exemption
from
the
stock
in
any
association,
company,
or
corporation,
tax
herein
imposed,
the
other
party
who
is
not
or
transfer
of
such
securities
by
assignment
in
exempt
shall
be
the
one
directly
liable
for
the
tax.
blank,
or
by
delivery,
or
by
any
paper
or
agreement,
or
memorandum
or
other
evidences
of
transfer
or
sale
whether
entitling
the
holder
in
any
manner
to
Nature
and
Purpose
the
benefit
of
such
stock,
or
to
secure
the
future
De
Leon
notes:
payment
of
money,
or
for
the
future
transfer
of
any
It
is
an
excise
or
privilege
tax
because
it
stock,
there
shall
be
collected
a
documentary
stamp
is
really
imposed
on
the
privilege
to
tax
of
Seventy-five-centavos
(P0.75)
on
each
Two
enter
into
a
transaction
rather
than
on
hundred
pesos
(P200),
or
fractional
part
thereof,
of
document.
the
document
is
only
taxed
the
par
value
of
such
stock:
Provided,
That
only
one
because
of
the
transaction
tax
shall
be
collected
on
each
sale
or
transfer
of
The
purpose
of
the
law
in
imposing
stock
from
one
person
to
another,
regardless
of
stamp
taxes
is
to
raise
revenue
whether
or
not
a
certificate
of
stock
is
issued,
indorsed,
or
delivered
in
pursuance
of
such
sale
or
It
may
be
a
tax
on
the
documents,
or
transfer:
and
Provided,
further,
That
in
the
case
of
the
transactions
themselves
stock
without
par
value
the
amount
of
the
documentary
stamp
tax
herein
prescribed
shall
be
Persons
Liable
equivalent
to
twenty-five
percent
(25%)
of
the
Section
173,
NIRC
see
provision
above
documentary
stamp
tax
paid
upon
the
original
issue
De
Leon
notes:
of
said
stock.
There
is
no
statutory
taxpayer.
Both
the
person
issuing
and
the
one
to
whom
Section
176.
Stamp
Tax
on
Bonds,
Debentures,
the
document
is
issued
may
be
made
Certificate
of
Stock
or
Indebtedness
Issued
in
Foreign
Countries.
-
On
all
bonds,
debentures,
liable
to
the
tax.
The
tax
is
imposed
certificates
of
stock,
or
certificates
of
indebtedness
against
the
person
making,
signing,
issued
in
any
foreign
country,
there
shall
be
issuing,
accepting
or
transferring
the
collected
from
the
person
selling
or
transferring
the
document
or
facility
evidencing
the
same
in
the
Philippines,
such
as
tax
as
is
required
transaction.
If
the
party
assuming
by
law
on
similar
instruments
when
issued,
sold
or
payment
is
tax
exempt,
the
other
party
transferred
in
the
Philippines.
in
the
document
who
is
not
exempt
becomes
liable.
If
both
of
them
are
Section
177.
Stamp
Tax
on
Certificates
of
Profits
exempt,
then
no
one
pays
the
tax.
or
Interest
in
Property
or
Accumulations.
-
On
all
certificates
of
profits,
or
any
certificate
or
memorandum
showing
interest
in
the
property
or
stamp
tax
of
Thirty
centavos
(P0.30)
on
each
Two
accumulations
of
any
association,
company
or
hundred
pesos
(P200),
or
fractional
part
thereof,
of
corporation,
and
on
all
transfers
of
such
certificates
the
face
value
of
any
such
bill
of
exchange
or
letter
or
memoranda,
there
shall
be
collected
a
of
credit,
or
the
Philippine
equivalent
of
such
face
documentary
stamp
tax
of
Fifty
centavos
(P0.50)
on
value,
if
expressed
in
foreign
currency.
each
Two
hundred
pesos
(P200),
or
fractional
part
thereof,
of
the
face
value
of
such
certificate
or
SEC.
186.
Stamp
Tax
on
Policies
of
Annuities
and
memorandum.
Pre-Need
Plans.
-
On
all
policies
of
annuities,
or
other
instruments
by
whatever
name
the
same
may
Section
178.
Stamp
Tax
on
Bank
Checks,
Drafts,
be
called,
whereby
an
annuity
may
be
made,
Certificates
of
Deposit
not
Bearing
Interest,
and
transferred
or
redeemed,
there
shall
be
collected
a
Other
Instruments.
-
On
each
bank
check,
draft,
or
documentary
stamp
tax
of
Fifty
centavos
(P0.50)
on
certificate
of
deposit
not
drawing
interest,
or
order
each
Two
hundred
pesos
(P200),
or
fractional
part
for
the
payment
of
any
sum
of
money
drawn
upon
thereof,
of
the
premium
or
installment
payment
or
or
issued
by
any
bank,
trust
company,
or
any
person
contract
price
collected.
On
pre-need
plans,
the
or
persons,
companies
or
corporations,
at
sight
or
documentary
stamp
tax
shall
be
Twenty
centavos
on
demand,
there
shall
be
collected
a
documentary
(P0.20)
on
teach
Two
hundred
pesos
(P200),
or
stamp
tax
of
One
peso
and
fifty
centavos
(P1.50).
fractional
part
thereof,
of
the
premium
or
contribution
collected.
SEC.
179.
Stamp
Tax
on
All
Debt
Instruments.
-
On
every
original
issue
of
debt
instruments,
there
shall
Section
187.
Stamp
Tax
on
Indemnity
Bonds.
-
On
be
collected
a
documentary
stamp
tax
on
One
peso
all
bonds
for
indemnifying
any
person,
firm
or
(P1.00)
on
each
Two
hundred
pesos
(P200),
or
corporation
who
shall
become
bound
or
engaged
as
fractional
part
thereof,
of
the
issue
price
of
any
such
surety
for
the
payment
of
any
sum
of
money
or
for
debt
instruments:
Provided,
That
for
such
debt
the
due
execution
or
performance
of
the
duties
of
instruments
with
terms
of
less
than
one
(1)
year,
any
office
or
position
or
to
account
for
money
the
documentary
stamp
tax
to
be
collected
shall
be
received
by
virtue
thereof,
and
on
all
other
bonds
of
of
a
proportional
amount
in
accordance
with
the
any
description,
except
such
as
may
be
required
in
ration
of
its
term
in
number
of
days
to
three
legal
proceedings,
or
are
otherwise
provided
for
hundred
sixty-five
(365)
days:
Provided,
further,
herein,
there
shall
be
collected
a
documentary
That
only
one
documentary
stamp
tax
shall
be
stamp
tax
of
Thirty
centavos
(P0.30)
on
each
Four
imposed
on
either
loan
agreement,
or
promissory
pesos
(P4.00),
or
fractional
part
thereof,
of
the
notes
issued
to
secure
such
loan.
premium
charged.
For
purposes
of
this
section,
the
term
debt
instrument
shall
mean
instruments
representing
Section
193.
Stamp
Tax
on
Powers
of
Attorney.
-
borrowing
and
lending
transactions
including
but
On
each
power
of
attorney
to
perform
any
act
not
limited
to
debentures,
certificates
of
whatsoever,
except
acts
connected
with
the
indebtedness,
due
bills,
bonds,
loan
agreements,
collection
of
claims
due
from
or
accruing
to
the
including
those
signed
abroad
wherein
the
object
of
Government
of
the
Republic
of
the
Philippines,
or
contract
is
located
or
used
in
the
Philippines,
the
government
of
any
province,
city
or
instruments
and
securities
issued
by
the
municipality,
there
shall
be
collected
a
documentary
government
of
any
of
its
instrumentalities,
deposit
stamp
tax
of
Five
pesos
(P5.00).
substitute
debt
instruments,
certificates
or
other
evidences
of
deposits
that
are
either
drawing
Section
194.
Stamp
tax
on
Leases
and
Other
interest
significantly
higher
than
the
regular
savings
Hiring
Agreements.
-
On
each
lease,
agreement,
deposit
taking
into
consideration
the
size
of
the
memorandum,
or
contract
for
hire,
use
or
rent
of
deposit
and
the
risks
involved
or
drawing
interest
any
lands
or
tenements,
or
portions
thereof,
there
and
having
a
specific
maturity
date,
orders
for
shall
be
collected
a
documentary
stamp
tax
of
Three
payment
of
any
sum
of
money
otherwise
than
at
pesos
(P3.00)
for
the
first
Two
thousand
pesos
sight
or
on
demand,
promissory
notes,
whether
(P2,000),
or
fractional
part
thereof,
and
an
negotiable
or
non-negotiable,
except
bank
notes
additional
One
peso
(P1.00)
for
every
One
issued
for
circulation.
Thousand
pesos
(P1,000)
or
fractional
part
thereof,
in
excess
of
the
first
Two
thousand
pesos
(P2,000)
Section
182.
Stamp
Tax
on
Foreign
Bills
of
for
each
year
of
the
term
of
said
contract
or
Exchange
and
Letters
of
Credit.
-
On
all
foreign
agreement.
bills
of
exchange
and
letters
of
credit
(including
orders,
by
telegraph
or
otherwise,
for
the
payment
Section
195.
Stamp
Tax
on
Mortgages,
Pledges
of
money
issued
by
express
or
steamship
and
Deeds
of
Trust.
-
On
every
mortgage
or
pledge
companies
or
by
any
person
or
persons)
drawn
in
of
lands,
estate,
or
property,
real
or
personal,
but
payable
out
of
the
Philippines
in
a
set
of
three
heritable
or
movable,
whatsoever,
where
the
same
(3)
or
more
according
to
the
custom
of
merchants
shall
be
made
as
a
security
for
the
payment
of
any
and
bankers,
there
shall
be
collected
a
documentary
definite
and
certain
sum
of
money
lent
at
the
time
or
previously
due
and
owing
of
forborne
to
be
paid,
proper
allowance
of
any
encumbrance,
does
not
being
payable
and
on
any
conveyance
of
land,
exceed
One
thousand
pesos
(P1,000)
fifteen
pesos
estate,
or
property
whatsoever,
in
trust
or
to
be
(P15.00).
sold,
or
otherwise
converted
into
money
which
(b)
For
each
additional
One
thousand
Pesos
shall
be
and
intended
only
as
security,
either
by
(P1,000),
or
fractional
part
thereof
in
excess
of
One
express
stipulation
or
otherwise,
there
shall
be
thousand
pesos
(P1,000)
of
such
consideration
or
collected
a
documentary
stamp
tax
at
the
following
value,
Fifteen
pesos
(P15.00).
rates:
When
it
appears
that
the
amount
of
the
(a)
When
the
amount
secured
does
not
exceed
Five
documentary
stamp
tax
payable
hereunder
has
thousand
pesos
(P5,000),
Twenty
pesos
(P20.00).
been
reduced
by
an
incorrect
statement
of
the
(b)
On
each
Five
thousand
pesos
(P5,000),
or
consideration
in
any
conveyance,
deed,
instrument
fractional
part
thereof
in
excess
of
Five
thousand
or
writing
subject
to
such
tax
the
Commissioner,
pesos
(P5,000),
an
additional
tax
of
Ten
pesos
provincial
or
city
Treasurer,
or
other
revenue
(P10.00).
officer
shall,
from
the
assessment
rolls
or
other
On
any
mortgage,
pledge,
or
deed
of
trust,
where
reliable
source
of
information,
assess
the
property
the
same
shall
be
made
as
a
security
for
the
of
its
true
market
value
and
collect
the
proper
tax
payment
of
a
fluctuating
account
or
future
advances
thereon.
without
fixed
limit,
the
documentary
stamp
tax
on
such
mortgage,
pledge
or
deed
of
trust
shall
be
Section
197.
Stamp
Tax
on
Charter
Parties
and
computed
on
the
amount
actually
loaned
or
given
at
Similar
Instruments.
-
On
every
charter
party,
the
time
of
the
execution
of
the
mortgage,
pledge
or
contract
or
agreement
for
the
charter
of
any
ship,
deed
of
trust,
additional
documentary
stamp
tax
vessel
or
steamer,
or
any
letter
or
memorandum
or
shall
be
paid
which
shall
be
computed
on
the
basis
other
writing
between
the
captain,
master
or
of
the
amount
advanced
or
loaned
at
the
rates
owner,
or
other
person
acting
as
agent
of
any
ship,
specified
above:
Provided,
however,
That
if
the
full
vessel
or
steamer,
and
any
other
person
or
persons
amount
of
the
loan
or
credit,
granted
under
the
for
or
relating
to
the
charter
of
any
such
ship,
vessel
mortgage,
pledge
or
deed
of
trust
shall
be
computed
or
steamer,
and
on
any
renewal
or
transfer
of
such
on
the
amount
actually
loaned
or
given
at
the
time
charter,
contract,
agreement,
letter
or
of
the
execution
of
the
mortgage,
pledge
or
deed
of
memorandum,
there
shall
be
collected
a
trust.
However,
if
subsequent
advances
are
made
on
documentary
stamp
tax
at
the
following
rates:
such
mortgage,
pledge
or
deed
of
trust,
additional
(a)
If
the
registered
gross
tonnage
of
the
ship,
vessel
documentary
stamp
tax
shall
be
paid
which
shall
be
or
steamer
does
not
exceed
one
thousand
(1,000)
computed
on
the
basis
of
the
amount
advanced
or
tons,
and
the
duration
of
the
charter
or
contract
loaned
at
the
rates
specified
above:
Provided,
does
not
exceed
six
(6)
months,
Five
hundred
pesos
however,
That
if
the
full
amount
of
the
loan
or
(P500);
and
for
each
month
or
fraction
of
a
month
credit,
granted
under
the
mortgage,
pledge
or
deed
in
excess
of
six
(6)
months,
an
additional
tax
of
Fifty
of
trust
is
specified
in
such
mortgage,
pledge
or
pesos
(P50.00)
shall
be
paid.
deed
of
trust,
the
documentary
stamp
tax
(b)
If
the
registered
gross
tonnage
exceeds
one
prescribed
in
this
Section
shall
be
paid
and
thousand
(1,000)
tons
and
does
not
exceed
ten
computed
on
the
full
amount
of
the
loan
or
credit
thousand
(10,000)
tons,
and
the
duration
of
the
granted.
charter
or
contract
does
not
exceed
six
(6)
months,
One
thousand
pesos
(P1,000);
and
for
each
month
Section
196.
Stamp
tax
on
Deeds
of
Sale
and
or
fraction
of
a
month
in
excess
of
six
(6)
months,
an
Conveyances
of
Real
Property.
-
On
all
additional
tax
of
One
hundred
pesos
(P100)
shall
be
conveyances,
deeds,
instruments,
or
writings,
other
paid.
than
grants,
patents
or
original
certificates
of
(c)
If
the
registered
gross
tonnage
exceeds
ten
adjudication
issued
by
the
Government,
whereby
thousand
(10,000)
tons
and
the
duration
of
the
any
land,
tenement,
or
other
realty
sold
shall
be
charter
or
contract
does
not
exceed
six
(6)
months,
granted,
assigned,
transferred
or
otherwise
One
thousand
five
hundred
pesos
(P1,500);
and
for
conveyed
to
the
purchaser,
or
purchasers,
or
to
any
each
month
or
fraction
of
a
month
in
excess
of
six
other
person
or
persons
designated
by
such
(6)
months,
an
additional
tax
of
One
hundred
fifty
purchaser
or
purchasers,
there
shall
be
collected
a
pesos
(P150)
shall
be
paid.
documentary
stamp
tax,
at
the
rates
herein
below
prescribed,
based
on
the
consideration
contracted
Section
198.
Stamp
Tax
on
Assignments
and
to
be
paid
for
such
realty
or
on
its
fair
market
value
Renewals
of
Certain
Instruments.
-
Upon
each
and
determined
in
accordance
with
Section
6(E)
of
this
every
assignment
or
transfer
of
any
mortgage,
lease
Code,
whichever
is
higher:
Provided,
That
when
one
or
policy
of
insurance,
or
the
renewal
or
of
the
contracting
parties
is
the
Government
the
tax
continuance
of
any
agreement,
contract,
charter,
or
herein
imposed
shall
be
based
on
the
actual
any
evidence
of
obligation
or
indebtedness
by
consideration.
altering
or
otherwise,
there
shall
be
levied,
collected
(a)
When
the
consideration,
or
value
received
or
and
paid
a
documentary
stamp
tax,
at
the
same
rate
contracted
to
be
paid
for
such
realty
after
making
as
that
imposed
on
the
original
instrument.
De
Leon
notes:
Documents
subject
to
tax:
Original
issue
of
P200.00,
or
fraction
part
thereof,
of
P1.00
shares
of
stock
with
the
par
value
of
such
shares
or
the
par
value
actual
consideration
received
in
case
of
no
par
value
shares
or
the
actual
value
represented
by
the
share
in
the
case
of
stock
dividends
Sales,
agreements
to
On
each
P200.00,
or
fractional
part
P1.50
sell,
memoranda
of
thereof,
of
the
par
value
of
such
stock
sales,
deliveries
or
transfer
of
shares
or
If
without
par
value
25%
of
the
tax
certificates
of
stock
paid
upon
original
issue
of
said
stock
Bonds,
debentures,
Such
tax
as
is
required
by
law
on
Same
as
those
required
by
certificates
of
stock
similar
instruments
when
issued,
sold,
law
on
instruments
or
indebtedness
or
transferred
in
the
Philippines
transacted
in
the
issued
in
foreign
Philippines
countries
Certificates
of
profits
On
each
P200.00,
or
fractional
part
P0.50
or
interest
in
thereof,
of
the
face
value
of
such
property
or
certificate
of
memorandum
accumulations
Bank
checks,
drafts,
P1.50
certificates
of
deposit
not
bearing
interest,
and
other
instruments
Debt
instruments
On
each
P200.00,
or
fractional
part
P1.00
thereof,
of
the
issue
price
of
every
original
issue
of
any
debt
instrument
Bills
of
exchange
or
On
each
200.00
or
fractional
part
P0.30
drafts
thereof,
of
the
face
value
Acceptance
of
bills
of
On
each
P200.00
or
fractional
part
P0.30
exchange
and
others
thereof,
of
the
face
value
of
any
such
bill
of
exchange
or
order,
or
the
Philippine
equivalent
of
such
value,
if
expressed
in
foreign
currency
Foreign
bills
of
On
each
P200.00,
or
fractional
part
P0.50
exchange
and
letters
thereof,
of
the
face
value
of
any
such
of
credit
bill
of
exchange
or
letter
of
credit,
or
the
Philippine
equivalent
of
such
face
value,
if
expressed
in
foreign
currency
Life
insurance
Amount
of
DST
rate
P1,000.00
policies
insurance
Does
not
exceed
Exempt
P100,000.00
Exceeds
P10.00
P100,000.00
but
does
not
exceed
P300,000.00
Exceeds
P25.00
P300,000.00
but
does
not
exceed
P500,000.00
Exceeds
P50.00
P500,000.00
but
does
not
exceed
P750,000.00
Exceeds
P75.00
P750,000.00
but
does
not
exceed
P1,000,000.00
Exceeds
P100.00
P1,000,000.00