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Technical Assitance on Regulatory & Operational Enhancements of the Telecommunications Industry

Technical Assitance on Regulatory & Operational Enhancements of the Telecommunications Industry

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Published by: epra on Aug 22, 2008
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02/01/2013

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TECHNICAL ASSISTANCE ON
REGULATORY AND OPERATIONAL
ENHANCEMENTS OF THE
TELECOMMUNICATION INDUSTRY

Atty. Rachel P. Follosco, FMH
November 2007
DISCLAIMER
\u201cThe views expressed in this report are strictly those of the authors and do not necessarily reflect those of
the United States Agency for International Development (USAID) and the Ateneo de Manila University\u201d.
WORKING DRAFT 2-16Oct07
FOR DISCUSSION PURPOSES ONLY
ATTY. RACHEL P. FOLLOSCO, FMH, Consultant

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INTERNAL REVENUE

REVENUE REGULATIONS NO.__________
SUBJECT: Taxation of Mobile Telecommunications Companies and Their

Transactions
TO: All Internal Revenue Officers and Others Concerned
Section 1.Purpose of the Regulations. \u2013 These Regulations are being issued to lay down

uniform treatment, for tax purposes, of various transactions of public mobile
telecommunications companies (Mobile Telcos) and thereby confirm, correct, or amend (as
necessary) existing industry practice to ensure fairness and equality in the treatment of
transactions across the industry and among subscribers of Mobile Telco service and
consistency with the provisions of the National Internal Revenue Code of 1997, as amended
(NIRC). These Regulations are further intended to address the issues and ambiguities in the
application/applicability of existing Regulations in view of recent developments in the
Mobile Telco industry, particularly, the fast expanding service offerings of Mobile Telcos, as
propelled by significant technological advancement in the industry.1The intention is to
subsequently align the tax treatment of transactions of Mobile Telcos with those of landline
telecommunications service providers to the extent that the transactions are similar or
comparable.

Section 2.Scope. \u2013 Pursuant to the provisions of Section 244 of the NIRC, these

Regulations are hereby promulgated to clearly define the applicable taxes on various
transactions of all duly authorized Mobile Telcos and to establish a practical mechanism for
their effective collection.

1 These Regulations shall, to the extent possible, prescribe applicable tax treatment of Mobile Telco transactions

guided by the policy that Mobile Telco transactions shall be treated similarly as transactions of fixed-line
telecommunications companies, thus, regardless of the underlying technology used (i.e., it is intended to be
technology-neutral). Accordingly, taxation of prepaid services shall be the same as postpaid services; landline
calls should be taxed in exactly the same manner as wireless calls; internet to mobile phones and mobile phones
to internet should be taxed as similarly as possible as regular SMS/calls, to the extent that there is a termination
fee. Likewise, telephone services availed using prepaid airtime load, whether purchased through Prepaid Cards
or E-load should have the same tax implications/consequences.

With respect to activities of Mobile Telcos which are outside of their usual scope of activities as telcos,
such as e-money issuance and remittance service, Mobile Telcos should be placed on equal footing with non-
telecommunication businesses organized principally to offer the same services (such as remittance companies in
the case of remittance service or credit card companies in the case of e-money issuance).

Economic Policy Reform and Advocacy
Ateneo de Manila University-USAID

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