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February 7, 2007 REVENUE REGULATIONS NO. 04-07 SUBJECT : Amending Certain Provisions of Revenue Regulations No.

16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of 2005 TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope. — Pursuant to the provisions of Sec. 244 and 245 of the National Internal Revenue Code of 1997, as amended, in relation to Title IV of the same Tax Code, these Regulations are hereby promulgated to amend certain provisions of Revenue Regulations (RR) No. 16-2005, as amended, otherwise known as the Consolidated Value-Added Tax Regulations of 2005. aDATHC SECTION 2. VAT on Sale of Goods or Properties. — Sec. 4.106-1 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-1. VAT on Sale of Goods or Properties. — VAT is imposed and collected on every sale, barter or exchange, or transactions "deemed sale" of taxable goods or properties at the rate of twelve percent (12%) (starting February 1, 2006) of the gross selling price or gross value in money of the goods or properties sold, bartered, or exchanged, or deemed sold in the Philippines." SECTION 3. Sale of Real Properties. — Sec. 4.106-3 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-3. Sale of Real Properties. — Sale of real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business of the seller shall be subject to VAT. Sale of residential lot with gross selling price exceeding P1,500,000.00, residential house and lot or other residential dwellings with gross selling price exceeding P2,500,000.00, where the instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of conditional sale or otherwise) is executed on or after Nov. 1, 2005, shall be subject to ten percent (10%) output VAT, and starting Feb. 1, 2006, to twelve percent (12%) output VAT . Installment sale of residential house and lot or other residential dwellings with gross selling price exceeding P1,000,000.00, where the instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of conditional sale or otherwise) was executed prior to November 1, 2005, shall be subject to ten percent (10%) output VAT. Sale of real property on installment plan means sale of real property by a real estate dealer, the initial payments of which in the year of sale do not exceed twenty-five (25%) of the gross selling price. In case of installment sale, the seller shall be subject to output VAT on the installment payments received, including the interests and penalties for late payment, actually and/or constructively received, subject to the provisions of Sec. 4.106-4 hereof. Correspondingly, the buyer of the property can claim the input tax in the same period as the seller recognized the output tax. Installment payments, including interests and penalties, actually and/or constructively received starting February 1, 2006 shall be subject to twelve percent (12%) output VAT. Sale of real property by a real estate dealer on a deferred payment basis not on the installment plan means sale of real property, the initial payments of which in the year of sale exceed twenty-five percent (25%) of the gross selling price. DCAEcS "Initial payments" means payment or payments which the seller receives before or upon execution of the instrument of sale and payments which he expects or is scheduled to receive in cash or property (other than evidence of indebtedness of the purchaser) during the taxable 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 which determines the limit set by law. Initial payments do not include the amount of mortgage on the real property sold except when such mortgage exceeds the cost or other basis of the property to the seller, in which case the excess shall be considered part of the initial payments.

Also excluded from the initial payments are notes or other evidence of indebtedness issued by the purchaser to the seller at the time of the sale. In the case of sale of real properties on a deferred-payment basis not on the installment plan, the transaction shall be treated as cash sale which makes the entire selling price taxable in the month of sale. Output tax shall be recognized by the seller and input tax shall accrue to the buyer at the time of the execution of the instrument of sale. Payments subsequent to "initial payments" shall no longer be subject to output VAT, in the case of sale on a deferred payment basis. Pre-selling of real estate properties by real estate dealers shall be subject to VAT in accordance with the rules prescribed above. Real estate dealer includes any person engaged in the business of buying, developing, selling, exchanging real properties as principal and holding himself out as a full or part-time dealer in real estate. Transmission of property to a trustee shall not be subject to VAT if the property is to be merely held in trust for the trustor and/or beneficiary. However, if the property transferred is one for sale, lease or use in the ordinary course of trade or business and the transfer constitutes a completed gift, the transfer is subject to VAT as a deemed sale transaction pursuant to Section 4.106-7(a)(1) of these Regulations. The transfer is a completed gift if the transferor divests himself absolutely of control over the property, i.e., irrevocable transfer of corpus and/or irrevocable designation of beneficiary." SECTION 4. Gross Selling Price. — Sec. 4.106-4 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-4. Meaning of the Term 'Gross Selling Price'. — 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 goods or properties, excluding VAT. The excise tax, if any, on such goods or properties shall form part of the gross selling price. In the case of sale, barter or exchange of real property subject to VAT, gross selling price shall mean the consideration stated in the sales document or the fair market value whichever is higher. If the VAT is not billed separately in the document of sale, the selling price or the consideration stated therein shall be deemed to be inclusive of VAT. The term 'fair market value' shall mean whichever is higher of: 1) the fair market value as determined by the Commissioner/zonal value, or 2) the fair market value as shown in schedule of values of the Provincial and City Assessors (real property tax declaration). However, in the absence of zonal value/fair market value as determined by the Commissioner, gross selling price refers to the market value shown in the latest real property tax declaration or the consideration, whichever is higher. If the gross selling price is based on the zonal value or market value of the property, the zonal or market value shall be deemed exclusive of VAT. Thus, the zonal value/market value, net of the output VAT, should still be higher than the consideration in the document of sale, exclusive of the VAT. aSTAIH If the sale of real property is on installment plan where the zonal value/fair market value is higher than the consideration/selling price, exclusive of the VAT, the VAT shall be based on the ratio of actual collection of the consideration, exclusive of the VAT, against the agreed consideration, exclusive of the VAT, appearing in the Contract to Sell/Contract of Sale applied to the zonal value/fair market value of the property at the time of the execution of the Contract to Sell/Contract of Sale at the inception of the contract. Thus, since the output VAT is based on the market value of the property which is higher than the consideration/selling price in the sales document, exclusive of the VAT, the input VAT that can be claimed by the buyer shall be the separately-billed output VAT in the sales document issued by the seller. Therefore, the output VAT which is based on the market value must be billed separately by the seller in the sales document with specific mention that the VAT billed separately is based on the market value of the property. Illustration:

ABC Corporation sold a parcel of land to XYZ Company on July 2, 2006 for P1,000,000.00, plus the output VAT, with a monthly installment payment of P10,000.00, plus the output VAT. The zonal value of the subject property at the time of sale amounted to P1,500,000.00. Compute for the output tax due on the installment payment. Formula: Actual collection (exclusive of the VAT) x Zonal value x 12% ——————————————— Agreed consideration (exclusive of the VAT) P10,000.00 x P1,500,000.00 = P15,000.00 ————— P1,000,000.00 P15,000.00 x 12% = P1,800.00 ======= Selling price is the amount of consideration in a contract of sale between the buyer and seller or the total price of the sale which may include cash or property and evidence of indebtedness issued by the buyer, excluding the VAT." SECTION 5. Zero-Rated Sales. — Sec. 4.106-5 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-5. Zero-Rated Sales of Goods or Properties. — . . . . The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales. — . . . . (5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. "Considered export sales under Executive Order No. 226" shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That pursuant to EO 226 and other special laws, even without actual exportation, the following shall be considered constructively exported: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones pursuant to Republic Act (RA) Nos. 7916, as amended, 7903, 7922 and other similar export processing zones; (3) sale to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority pursuant to RA 7227; (4) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); (5) sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not. xxx xxx xxx. (6) The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations; Provided, that the same is limited to goods, supplies, equipment and fuel pertaining to or attributable to the transport of goods and passengers from a port in the Philippines directly to a foreign port, or vice versa, without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers and/or cargoes bound for abroad; Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other than that mentioned in this paragraph, such portion of fuel goods and supplies shall be subject to twelve

percent (12%) output VAT starting February 1, 2006. aDECHI (b) Foreign Currency Denominated Sale. — . . . xxx xxx xxx. (c) Sales to Persons or Entities Deemed Tax-exempt Under Special Law or International Agreement. — Sale of goods or property to persons or entities who are tax-exempt under special laws or international agreements to which the Philippines is a signatory, such as, Asian Development Bank (ADB), International Rice Research Institute (IRRI), etc., shall be effectively subject to VAT at zerorate." SECTION 6. Effectively Zero-Rated. — Sec. 4.106-6 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-6. Meaning of the term 'Effectively Zero-Rated Sale of Goods and Properties'. — The term 'effectively zero-rated sale of goods and properties' shall refer to the local sale of goods and properties by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws or international agreement." SECTION 7. Transactions Deemed Sale. — Sec. 4.106-7 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.106-7. Transactions Deemed Sale. — . . . xxx xxx xxx. (b) The Commissioner of Internal Revenue shall determine the appropriate tax base in cases where a transaction is deemed a sale, barter or exchange of goods or properties under Sec. 4.106-7 paragraph (a) hereof, or where the gross selling price is unreasonably lower than the actual market value. The gross selling price is unreasonably lower than the actual market value if it is lower by more than 30% of the actual market value of the same goods of the same quantity and quality sold in the immediate locality on or nearest the date of sale. Nonetheless, if one of the parties in the transaction is the government as defined and contemplated under the Administrative Code, the output VAT on the transaction shall be based on the actual selling price. xxx xxx xxx." SECTION 8. Change or Cessation of Status as VAT-Registered Person. — Sec. 4.106-8 of RR No. 162005 is hereby amended to read as follows: "SEC. 4.106-8. Change or Cessation of Status as VAT-registered Person. — . . . . (b) Not subject to output tax The VAT shall not apply to goods or properties existing as of the occurrence of the following: (1) Change of control of a corporation by the acquisition of the controlling interest of such corporation by another stockholder or group of stockholders. The goods or properties used in business or those comprising the stock-in-trade of the corporation, having a change in corporate control, will not be considered sold, bartered or exchanged despite the change in the ownership interest in the said corporation. Illustration: Abel Corporation is a merchandising concern and has an inventory of goods for sale amounting to Php 1 million. Nel Corporation, a real estate developer, exchanged its real estate properties for the shares of stocks of Abel Corporation resulting to the acquisition of corporate control. The inventory of goods owned by Abel Corporation (Php 1 million worth) is not subject to output tax despite the change in corporate control because the same corporation still owns them. This is in recognition of the separate and distinct personality of the corporation from its stockholders. However, the exchange of real estate properties held for sale or for lease, for shares of stocks, whether resulting to corporate control or not, is subject to VAT, subject to exceptions provided under Section 4.106-3 hereof. On the other hand, if the transferee of the transferred real property by a real estate dealer is another real estate dealer, in an exchange where the transferor gains control of the transfereecorporation, no output VAT is imposable on the said transfer. (2) Change in the trade or corporate name of the business;

(3) Merger or consolidation of corporations. The unused input tax of the dissolved corporation, as of the date of merger or consolidation, shall be absorbed by the surviving or new corporation." SECTION 9. VAT on the Sale of Services and Use or Lease of Properties. — Sec. 4.108-1 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.108-1. VAT on the Sale of Services and Use or Lease of Properties. — Sale or exchange of services, as well as the use or lease of properties, as defined in Sec. 108(A) of the Tax Code shall be subject to VAT, equivalent to twelve percent (12%) of the gross receipts (excluding VAT) starting February 1, 2006." SEAHID SECTION 10. Definitions and Specific Rules on Selected Services. — Sec. 4.108-3 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.108-3. Definitions and Specific Rules on Selected Services. — xxx xxx xxx. (e) Domestic common carriers by air and sea are subject to twelve percent (12%) VAT on their gross receipts from their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines starting Feb. 1, 2006. (f) Sale of electricity by generation, transmission, and distribution companies shall be subject to twelve percent (12%) VAT on their gross receipts starting Feb. 1, 2006; Provided, that sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels shall be subject to 0% VAT. xxx xxx xxx. (h) Services of franchise grantees . . . . Gross receipts of all other franchisees, other than those covered by Sec. 119 of the Tax Code, regardless of how their franchises may have been granted, shall be subject to the twelve percent (12%) VAT imposed under Sec. 108 of the Tax Code starting Feb. 1, 2006. This includes among others, the Philippine and Amusement Gaming Corporation (PAGCOR), and its licensees or franchisees. xxx xxx xxx. (i) Non-life insurance companies including surety, fidelity, indemnity and bonding companies are subject to VAT. They are not liable to the payment of the premium tax under Sec. 123 of the Tax Code. 'Non-life insurance companies' including surety, fidelity, indemnity and bonding companies, shall include all individuals, partnerships, associations, or corporations, including professional reinsurers defined in Sec. 280 of PD 612, otherwise known as the Insurance Code of the Philippines, mutual benefit associations and government-owned or controlled corporations, engaging in the business of property insurance, as distinguished from insurance on human lives, health, accident and insurance appertaining thereto or connected therewith which shall be subject to the percentage tax under Sec. 123 of the Tax Code. The gross receipts from non-life insurance shall mean total premiums collected whether paid in money, notes, credits or any substitute for money. Non-life insurance premiums are subject to VAT whereas non-life reinsurance premiums are not subject to VAT, the latter being already subjected to VAT upon receipt of the insurance premiums. Insurance and reinsurance commissions, whether life of non-life, are subject to VAT. (j) Pre-need Companies . . . . xxx xxx xxx." SECTION 11. Gross Receipts. — Sec. 4.108-4 of RR No. 16-2005 is hereby amended to read as follows: "SEC. 4.108-4. Definition of Gross Receipts. — 'Gross receipts' refers to the total amount of money or its equivalent representing the contract price, compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits applied as payments for services rendered and advance payments actually or constructively received during the taxable

2006. 16-2005 is hereby amended to read as follows: "SEC. the aforementioned "another party") for the sale of goods or services by the former to the latter.g. which obligation is evidenced by the sales invoice/official receipt issued by said third party to the obligor/debtor (e.108-6 of RR No.e. partners. including leases of property for use thereof. — Sec. . — Sec. their importation of direct farm inputs. VAT-Exempt Transactions. customer or client of the payor of the obligation). goods or cargoes from one place in the Philippines to another place in the Philippines. customer or client.) issuance by the debtor of a notice to offset any debt or obligation and acceptance thereof by the seller as payment for services rendered.) transfer of the amounts retained by the payor to the account of the contractor.. Zero-Rated Sale of Services." SECTION 14. Meaning of the term 'Effectively Zero-Rated Sale of Services'. xxx xxx xxx.109-2 hereof. — . The following are examples of constructive receipts: (1. trustee or beneficiary. (I) Sales by agricultural cooperatives duly registered and in good standing with the Cooperative Development Authority (CDA) to their members.109-1. 4. and trust fund where the taxpayer is the trustor. except those amounts earmarked for payment to unrelated third (3rd) party or received as reimbursement for advance payment on behalf of another which do not redound to the benefit of the payor." SECTION 13. 4. For this purpose 'unrelated party' shall not include taxpayer's employees. that the services referred to herein shall not pertain to those made to common carriers by air and sea relative to their transport of passengers.) deposits in banks which are made available to the seller of services without restrictions. — xxx xxx xxx.108-5.period for the services performed or to be performed for another person. The term 'effectively zero-rated sales of services' shall refer to the local sale of services by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws or international agreement. to non-members. affiliates (parent. .g. the same being subject to twelve percent (12%) VAT under Sec. subsidiary and other related companies). An advance payment is an advance payment on behalf of another if the same is paid to a third (3rd) party for a present or future obligation of said another party which obligation is evidenced by a sales invoice/official receipt issued by the obligee/creditor to the obligor/debtor (i.109-1(B)(1) of RR No. — Sec. VAT-Exempt Transactions. even if covered by an agreement to the contrary." SECTION 12. 1. 108 of the Tax Code starting Feb. relatives by consanguinity or affinity within the fourth (4th) civil degree.. the following transactions shall be exempt from VAT: xxx xxx xxx. (2. A payment is a payment to a third (3rd) party if the same is made to settle an obligation of another person. however.108-5(b)(4) of RR No. whether in its original state or processed form. 4. to the said third party. (b) Transactions Subject to Zero Percent (0%) VAT Rate. machineries . — xxx xxx xxx. (4) Services rendered to persons engaged in international shipping or air transport operations.108-6. excluding the VAT. Zero-Rated Sale of Services. 4. 4.. and (3. 16-2005 is hereby amended to read as follows: "SEC. (B) Exempt transactions. Effectively Zero-Rated Sale of Services. — Subject to the provisions of Sec. aHcACT 'Constructive receipt' occurs when the money consideration or its equivalent is placed at the control of the person who rendered the service without restrictions by the payor. 16-2005 is hereby amended to read as follows: "SEC. Provided. 4. 4. as well as sale of their produce. e.

per person in the case of dormitories. repair.. trader). even if the real property is not primarily held for sale to customers or held for lease in the ordinary course of trade or business but the same is used in the trade or business of the seller. (w) Services of banks. including spare parts thereof. 121 and 122. and other non-bank financial intermediaries. the sale thereof shall be subject to VAT being a transaction incidental to the taxpayer's main business. hotel rooms. pursuant to Subsection (a) hereof. 2006. lodging houses. the gross annual sales and/or receipts do not exceed the amount of One Million Five Hundred Thousand Pesos (P1. that not later than January 31. such as money changers and pawnshops. then only those sales to its members shall be exempted from VAT. Provided.. Provided.. (t) Importation of life-saving equipment. (v) Importation of fuel. such portion of fuel. steel plates and other metal plates including marine-grade aluminum plates. that sale or importation of agricultural food products in their original state is exempt from VAT irrespective of the seller and buyer thereof.g. goods and supplies shall be used exclusively or shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a foreign port.. steel plates and other metal plates including marine-grade aluminum plates to be used in the construction. (u) Importation of capital equipment. subject to percentage tax under Secs. It is to be reiterated however. goods and supplies shall be subject to twelve percent (12%) VAT starting February 1. inns and pension houses. (p) The following sales of real properties are exempt from VAT. xxx xxx xxx. Sale by agricultural cooperatives to non-members can only be exempted from VAT if the producer of the agricultural products sold is the cooperative itself.000. dormitories. rooms and bed spaces) except motels. Provided. and per room in case of rooms for rent. motel rooms. 9295. used for shipping transport operations. that if any portion of such fuel. respectively. xxx xxx xxx. without docking or stopping at any other port in the Philippines unless the docking or stopping at any other Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad. goods and supplies by persons engaged in international shipping or air transport operations. or vice versa.00 shall be adjusted to its . namely: (1) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business. boarding houses and bed spaces. of the Tax Code. that the exemption shall be subject to the provisions of Section 19 of Republic Act No.000. or to load passengers and/or cargoes bound for abroad.and equipment. spare parts. Provided. AISHcD xxx xxx xxx. house in the case of residential houses. and buildings or parts or units thereof used solely as dwelling places (e. goods or supplies is used for purposes other than that mentioned in this paragraph. otherwise known as 'The Domestic Shipping Development Act of 2004'. life-saving and navigational equipment.g. The term 'residential units' shall refer to apartments and houses & lots used for residential purposes. Provided. 9295. that the exemption shall be subject to the provisions of Section 4 of Republic Act No. otherwise known as ‘The Domestic Shipping Development Act of 2004'.500. (q) . and (x) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs. If the cooperative is not the producer (e. 2009 and every three (3) years thereafter.. machinery. hotels. safety and rescue equipment and communication and navigational safety equipment. further.00). non-bank financial intermediaries performing quasi-banking functions. The term 'unit' shall mean an apartment unit in the case of apartments. the amount of P1. renovation or alteration of any merchant marine vessel operated or to be operated in the domestic trade.500. to be used directly and exclusively in the production and/or processing of their produce. that the said fuel. However.

" SECTION 15. Until such time the construction has been completed.00). if a professional. 4. The aggregate acquisition cost of depreciable assets in any calendar month refers to the total price. excluding the VAT. 4. 4. 4. However. 9. excluding the VAT. (a) . xxx xxx xxx. upon completion. — . 34(F) of the Tax Code. VAT Registered Person may Elect that Exempt Transactions Under Sec. elect that the exemption in Sec. input tax credit on the labor contracted shall still be recognized on the month the payment was made based on a progress billings .109-1 be Registered for VAT Purposes.00.00) where the option becomes perpetually irrevocable.500. — Sec." SECTION 16. it shall be irrevocable for a period of three (3) years counted from the quarter when the election was made except for franchise grantees of radio and TV broadcasting whose annual gross receipts for the preceding year do not exceed ten million pesos (P10.000. Once the election is made.110-3. cEAIHa Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed one million pesos (P1. the VAT-exempt sale shall not be included in determining the threshold. Exempt Transactions May be Registered for VAT Purposes. as published by the NSO. aside from the practice of his profession. For purposes of the threshold of P1. Capital goods or properties refers to goods or properties with estimated useful life greater than one (1) year and which are treated as depreciable assets under Sec. the aggregation rule for each taxpayer shall apply. .. — A VAT-registered person may. Thus. In case of contract for the sale of service where only the labor will be supplied by the contractor and the materials will be purchased by the contractee from other suppliers.000. in which case. will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed P1.110-3 of RR No. — Sec. that an official receipt of payment has been issued based on the progress billings. CIP is not depreciated until the asset is placed in service. the total input taxes will be allowable as credit against output tax in the month of acquisition. 16-2005 is hereby amended to read as follows: "SEC. Claim for Input Tax on Depreciable Goods. CIP is considered. Thus.000. for instance.000. (b) If the estimated useful life of a capital good is less than five (5) years — The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of a capital good. Normally.000. the husband and the wife shall be considered separate taxpayers. the value of which shall be determined based on the progress billings. in relation to Sec. . a CIP item is reclassified and the reclassified asset is capitalized and depreciated. 4.109-2. input tax credit on such transaction can be recognized in the month the payment was made.000. used directly or indirectly in the production or sale of taxable goods or services.present value using the Consumer Price Index..000.236-1(c) of these Regulations. for purposes of claiming input tax.109-2 of RR No.00. 16-2005 is hereby amended to read as follows: "SEC. Provided. as a purchase of service.1091(B) hereof shall not apply to his sales of goods or properties or services. Input Tax on Depreciable Goods. agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. The claim for input tax credit shall commence in the month that the capital goods were acquired.000. 4. also derives revenue from other lines of business which are otherwise subject to VAT.00.000. an asset acquired on installment for an acquisition cost of more than P1.. the same shall be combined for purposes of determining whether the threshold has been exceeded. Construction in progress (CIP) is the cost of construction work which is not yet completed. it will not qualify as capital goods as herein defined.

that input taxes that can be directly attributable to VAT taxable sales of goods and services to the Government or any of its political subdivisions. instrumentalities or agencies.000. of Finance should be deducted from the allowable input tax that are attributable to zero-rated sales.000. and One-Stop-Shop and Duty Drawback Center of the Dept.000.110-4. The input tax attributable to sales to private entities subject to 12%.000.000. 2.000.00 Sale to gov't.00 Input tax on sale of exempt goods 2. Provided.00 Input tax on zero-rated sales 3. for the month. . EHSADa Claims for VAT refund/Tax Credit Certificate (TCC) with the Bureau of Internal Revenue. subjected to 5% final VAT Withholding 100.00 X P20.000.00 ======== A. Board of Investment." SECTION 17.00 Total input tax attributable to sales to private entities . Once the input tax has already been claimed while the construction is still in progress.00 Input tax on sale to government 4.000.00 ————— Total Sales for the month P400.000. — .while input tax on the purchase of materials shall be recognized at the time the materials were purchased..00 Sale of exempt goods 100. 4. 1. .00 Sale to private entities subject to 0% 100. 4. .000.00 ========= The following input taxes were passed on by its VAT suppliers: Input tax on taxable goods 12% P5.00 — P5.00 Ratable portion of the input tax not directly attributable to any activity: Taxable sales (12%) x Amount of Total Sales input tax not directly attributable to any activity P100. including government-owned or controlled corporations (GOCCs) shall not be credited against output taxes arising from sales to non-Government entities.110-4 of RR No. Illustration: ERA Corporation has the following sales during the month: Sale to private entities subject to 12% P100.000.000.000. shall be computed as follows: Input tax directly attributable to sale subject to 12% P5.000. .00 400. 16-2005 is hereby amended to read as follows: "SEC. — Sec. Apportionment of Input Tax on Mixed Transactions. All the input taxes that can be directly attributed to transactions subject to VAT may be recognized for input tax credit. no additional input tax can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated.. Input Tax on Mixed Transactions.000.00 Input tax on depreciable capital good not attributable to any specific activity (monthly amortization for 60 months) P20.

P 4.000 10.00 X P20.00 ======== B. The input tax attributable to zero-rated sales for the month shall be computed as follows: Input tax directly attributable to zero-rated sale — P 3.00 ======= D.00 Total input tax attributable to VAT-exempt sales — P7. — P9.000 0 0 0 .000.00 Ratable portion of the input tax not directly attributable to any activity: VAT-exempt sales x Amount of Total Sales input tax not directly attributable to any activity P100.00 Total input tax attributable to zero-rated sales for the month P8.000.000.for the month — P10.000 10.000.00 400.000.000.000. The input tax attributable to sales to government for the month shall be computed as follows: Input tax directly attributable to sale to gov't.000.00 The table below shows a summary of the foregoing transactions of ERA Corporation: Input VAT not Creditable Excess Unrecoverable Output Input VAT directly Total Input Net VAT Input Input Input VAT directly Attributable Input VAT Payable VAT for VAT for VAT Attributable to any Activity VAT carry-over refund Sale Subject to 12% VAT 12.000.000.00 X P20.000 5.00 Ratable portion of the input tax not directly attributable to any activity: Taxable sales (0% ) x Amount of Total Sales input tax not directly attributable to any activity P100.000.000 5. The input tax attributable to VAT-exempt sales for the month shall be computed as follows: Input tax directly attributable to VAT-exempt sale — P 2.000.000.00 400.000.00 Ratable portion of the input tax not directly attributable to any activity: Taxable sales to government x Amount of Total Sales input tax not directly attributable to any activity P100.000.000.00 — P5.000.00 400.00 Total input tax attributable to sale to gov't.00 — P5.000.00 — P5.00 X P20.00 ======= C.000.000 2.

4.00 In this case.000*** 0 0 2." SECTION 18. as last amended by RR No.110-5 of these Regulations to arrive at VAT payable on the monthly declaration and the quarterly VAT returns. .114-2(a).000 0 0 8.00. — Sec.000* Sale to Government subject to 5% Final withholding VAT 12. Invoicing and Recording Deemed Sale Transactions.00.110-7 of RR No. "B" shall be entitled only to P1.00.110-6. 2-2007. *** Withheld by Government entity as Final Withholding VAT.000 7. In the contract of sale or invoice.000. other implementing rules. Filing of Return and Payment of VAT.00 VAT previously paid on "deemed sale" 1. VAT Payable (Excess Output) or Excess Input Tax.000. Invoicing and Recording Deemed Sale Transactions.000 7.000 8. that any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or applied for a tax credit certificate which may be used in the payment of internal revenue taxes. 16-2005 is hereby amended to read as follows: "SEC.000 pieces of merchandise which was deemed sold at a value of P20. 4. — Sec.000** 5. .000.) If the input tax inclusive of input tax carried over from the previous quarter exceeds the output tax. . "A" should state the sales invoice number wherein the output tax on "deemed sale" was imposed and the corresponding tax paid on the 500 pieces is P1.000 as input tax and not 12/112 x 12.000. VAT Payable (Excess Output) or Excess Input Tax. 4. ** Standard input VAT of 7% on sales to Government as provided in SEC.000.Sale Subject to 0% VAT 0 3.113-2 of RR No. Determination of the Output Tax and VAT Payable and Computation of VAT Payable or Excess Tax Credits. xxx xxx xxx.000* * These amounts are not available for input tax credit but may be recognized as cost or expense. 16-2005 is hereby amended to read as follows: "SEC.000 0 0 0 0 7. subject to the limitations as may be provided for by law. xxx xxx xxx. 4.00 with an output tax of P2.000.000 9. — .000. which is included in the P12. 4. however. or he should indicate it separately as follows: Gross selling price P11. 4. 4. had 1.000 4. the excess input tax shall be carried over to the succeeding quarter or quarters. is hereby further amended to read as follows: "SEC. xxx xxx xxx. Illustration: For a given taxable quarter. (b." SECTION 20.00 ————— Total P12. "A" sold to "B".00.110-6 of RR No. Since input tax exceeds the output tax for such taxable quarter.000 5. XYZ Corporation has output VAT of 100 and input VAT of 110. as well as. . Filing of Return and Payment of VAT.113-2.000.000 5.000 8.114-1. 500 pieces for P12.000 0 Sale of Exempt Goods 0 2. .000." DAETHc SECTION 21.110-1 to 4. Provided. — Sec. After retirement. — (A) Filing of Return. There shall be allowed as a deduction from the output tax the amount of input tax deductible as determined under Sec. Example: "A" at the time of retirement. .110-7." HICSaD SECTION 19. — SEC.000 5. there is an excess input tax at the end of the quarter of 10 which may be carried over to the next quarter or quarters. 4. 4. . 4. 16-2005.114-1 is hereby amended to read as follows: "SEC. Determination of the Output Tax and VAT Payable and Computation of VAT Payable or Excess Tax Credits.

..00 per 50 kg. — (a) The government or any of its political subdivisions.. (c) Basis for Determining the Amount of Advance VAT Payment. before making payment on account of each purchase of goods and/or of services taxed at twelve percent (12%) VAT pursuant to Secs.. — .. — The amount of advance VAT payment shall be determined by applying VAT rate of 12% on the applicable base price of P850. 2006. . bag for refined sugar produced by a sugar refinery... estates and trusts. .. individuals. — i. Tax Base. (e) .. 4. (d) Basis of Determining the Amount of Advance VAT Payment. ii. (b) ... . the excess may form part of the sellers' expense or cost.. instrumentalities or agencies including GOCCs. Base Price.. . . . — xxx xxx xxx. — The amount of advance VAT payment shall be determined by applying VAT rate of 12% on the tax base. (C) .. Sale of Flour (a) . (b) The government or any of its political subdivisions. The remaining seven percent (7%) effectively accounts for the standard input VAT for sales of goods or services to government or any of its political subdivisions. and P760. as well as private corporation. instrumentalities or agencies including government-owned or controlled corporations (GOCCs) shall. 4. Should actual input VAT attributable to sale to government exceeds seven percent (7%) of gross payments. Determination of advance VAT.. bag for refined sugar produced by a sugar mill." SECTION 22. (d) . (f) . whether large or non-large taxpayers. the difference must be closed to expense or cost.. 16-2005 is hereby amended to read as follows: "SEC. Subsequent tax base adjustments. if actual input VAT attributable to sale to government is less than seven percent (7%) of gross payment. .. . . . . (D) . Withholding of VAT on Government Money Payments and Payments to NonResidents. 106 and 108 of the Tax Code.. Sale of Refined Sugar (a) . ii. — Sec. (b) .. On the other hand... 1..00 per 50 kg.....xxx xxx xxx. — i.. instrumentalities or agencies including GOCCs in lieu of the actual input VAT directly attributable or ratably apportioned to such sales... — . (f) . starting February 1.114-2 of RR No. iii.. with respect to the following payments: .. deduct and withhold a final VAT due at the rate of five percent (5%) of the gross payment thereof. aIcDCH The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller.114-2. 2.. Subsequent Base Price Adjustments. — . (B) Payment of VAT I. (c) . . Advance Payment.. (e) . Withholding of VAT. shall withhold twelve percent (12%) VAT.

whose gross annual receipt for the preceding taxable year exceeded P10.000) and which do not opt to be VAT registered.000. — Sec.236-2 of RR No. Issuance of TCC shall be limited to the unutilized advance VAT payment and shall not include excess input tax. to read as follows: "SEC. Registration of Non-VAT or Exempt Taxpayer.229-1 is hereby added to the provisions of RR 16-2005. 5) Radio and TV broadcasting whose gross annual receipts do not exceed ten million pesos (P10." SECTION 25. Advanced VAT payments which remained unutilized for more than one (1) year prior to the effectivity of these regulations may. be available for the issuance of TCC upon application duly filed with the BIR by the seller/owner or importer/miller within two (2) years from the date of filing of the 4th quarter VAT return of the year such advance payments were made. 9. 9. CDcaSA Advance VAT payments which have been the subject of an application for the issuance of TCC shall not be allowed as carry-over nor credited against the output tax of the succeeding quarter/year. (c) Optional VAT Registration: xxx xxx xxx. (b) Mandatory: xxx xxx xxx. — The advance payments made by the seller/owner of refined sugar and importer/miller of wheat/flour shall be allowed as credit against their output tax on the actual gross selling price of refined sugar/flour. at the option of the seller/owner of the refined sugar or importer/miller of wheat/flour. may." SECTION 24. 9. and (2) Other services rendered in the Philippines by non-residents. Registration of VAT Taxpayers.000. 8. Issuance of TCC for input tax attributable to zero-rated sales shall be covered by a separate application for TCC following applicable rules. In any case. or if filed out of time. 16-2005 is hereby amended to read as follows: "SEC. Issuance of Tax Credit Certificate for Unutilized Advance VAT Payments.00 shall register within thirty (30) days from the end of the taxable year. — Sec. be the subject of application for TCC to be filed within two (2) years from the date of filing of the last quarterly VAT return where the unutilized advance VAT payments appeared.236-1(b) and (c) of RR No. at the option of the owner/seller/taxpayer or importer/miller/taxpayer. for administrative reason deny any application for registration. However. Registration. 7.236-1. 6. . or if filed out of time. . — Sec." SECTION 23. — xxx xxx xxx. Moreover. franchise grantees of radio and television broadcasting. 8. 9. 16-2005 is hereby amended to read as follows: "SEC. the Commissioner of Internal Revenue may. Registration of Non-VAT or Exempt Taxpayer. from the last day prescribed by law for filing the return. advance payments which remains unutilized at the end of taxpayer's taxable year where the advance payment was made. from the last day prescribed by law for filing the return. Issuance of Tax Credit Certificates for Unutilized Advance VAT Payments. .) PEZA and other ecozone registered enterprises enjoying the preferential tax rate of 5% in lieu of all taxes.000. unless they have already paid at the beginning of the year. —. xxx xxx xxx.(1) Lease or use of properties or property rights owned by non-residents.229-1. which is tantamount to excess payment.) SBMA and other free port zone-registered enterprises enjoying the preferential tax rate of 5% in . Once registered as VAT person. the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.236-2. The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the taxable quarter and shall pay the registration fee prescribed under sub-paragraph (a) of this Section.

SBL/SLTs under these Regulations involve the lending of fixed income debt securities as identified in Section 3 (f) hereof. For the duration of the SBL/SLT. 05-07 March 6. the Lender temporarily transfers title over the securities lent but retains a contractual right to receive all benefits accruing to the securities. Concept of Securities Borrowing and Lending (SBL). had the securities not been lent. shall be covered by separate Regulations. aSACED SBL or SLT of securities administered by other Exchanges other than PDEx. 9243. — Securities Borrowing and Lending (SBL) or Securities Lending Transactions (SLTs) is an important element in securities trading and capital market development among emerging markets. ("Lent/Borrowed Securities") by the Lender. the Borrower is contractually required to pass on the same to the Lender. thereby putting the Lender in the same economic position as if the Lent/Borrowed Securities "never left his hands". — Pursuant to the provisions of Sections 244 and 245 of the Tax Code of 1997 (Tax Code) and Section 9 (C) of Republic Act (RA) No. — The provisions of RR 16-2005 and all other issuances inconsistent herewith are hereby repealed. EIaDHS SECTION 27. for purposes of these Regulations. in exchange for collateral and the promise to return the equivalent securities on or before the end of the Borrowing Period. 2007 REVENUE REGULATIONS NO. these Regulations are hereby promulgated to prescribe the guidelines and conditions for the tax treatment of Securities Borrowing and Lending (SBL) transactions under the Securities Lending Transactions (SLT) Program of the Philippine Dealing & Exchange Corp. SBL/SLTs shall be limited to borrowing and lending of securities under the Fixed-Income Securities Lending Program of PDEx as identified in Section 3 (f) hereof. — These Regulations shall take effect after fifteen (15) days following its publication in any newspaper of general circulation or in the Official Gazette. Effectivity. SECTION 2." SECTION 26. Repealing Clause. (PDEx) TO : All Internal Revenue Officers and Others Concerned SECTION 1. BUÑAG Commissioner of Internal Revenue Copyright 2007 CD Technologi es Asia Inc 03-06-2007 Revenue Regulations No.) MARGARITO B. such as coupon payments paid by the Issuer to the Borrower on the Lent/Borrowed Securities during the duration of the SBL/SLT.) JOSE MARIO C. who owns or controls them. modified or amended accordingly. (PDEx). TIaDHE (SGD. The objective is to put the Lender in the same economic position as the Lender would have. though duly registered with the SEC. deliberate strategic positions or to prevent securities settlement failures. to the Borrower who is driven by its needs to source specific securities to cover "short" or "oversold" securities positions from market-making activities. TEVES Secretary Department of Finance Recommending Approval: (SGD. 05-07 SUBJECT : Prescribing the Guidelines and Conditions for the Tax Treatment of Securities Borrowing and Lending (SBL) or Securities Lending Transactions (SLTs) Involving the Fixed-Income Securities Lending Program of the Philippine Dealing & Exchange Corp. It is a vital facility behind the efficient trading settlements and growth of derivatives and options market. This means that in case of corporate actions. In . and other benefits accruing in the same period.lieu of all taxes. Scope. DAESTI Specifically. unless declared to be ineligible by the Securities and Exchange Commission (SEC) for borrowing and lending under the said SLT Program.

which period. but not limited to. For purposes of these Regulations. and iv. 3. which shall refer only to the following — 1. which shall hold the same in recognition of the Lender's security interest therein until the loan is repaid. Securities issued by Municipal or Local Government Units of the Republic of the Philippines . however. 2. Equity Instruments (Php-Denominated) — Equities listed as components of the Philippine Stock Exchange Composite Index (PHISIX) 4. shall in no case exceed one (1) year from the date of execution of the SLT Confirmation Notice allowed under the Fixed-Income Securities Lending Program of PDEx. government or equity securities. Exchange — An entity that provides a venue for the dealing/exchange of fixed-income securities and is duly authorized by the SEC to engage in such activity. Private Corporate Debt Securities listed in PDEx. Fixed-Income Instruments (Php-Denominated): i. returns the collateral put up by the Borrower. Securities issued by the Bangko Sentral ng Pilipinas (BSP). On or before the end of the Borrowing Period. instead of cash. as prescribed under the Fixed-Income Securities Lending Program of PDEx. Securities issued by the Bangko Sentral ng Pilipinas (BSP). and the Lender must return the Borrower's Collateral. the type of securities borrowed and the terms of borrowing. Collateral — Assets delivered to the Lending Pool System Operator. the term shall only refer to the Philippine Dealing & Exchange Corp. Securities issued by the Republic of the Philippines (RoP Debt). in such amount as is required under the said Program or securities with the same International Securities Identification Number (ISIN) and same tax treatment as the Lent/Borrowed Security. the Borrower shall deliver the collateral in the manner prescribed in the Program Rules of PDEx to secure the return of the Lent/Borrowed Securities according to the tenor of the SBL/SLT. what is borrowed are securities and what is provided as collateral is either cash. Fixed-Income Instruments (PhP-Denominated) i. AaEDcS d. Confirmation Notice — A notice in the format prescribed by PDEx but pre-cleared with the BIR which is issued and sent by the Lending Pool System Operator to the Lender and the Borrower to indicate the details of the SBL/SLT including. and ii. Cash c. — a. Fixed-Income Securities — Types of debt securities that are acceptable to the Lending Pool System for lending under the Fixed-Income Securities Lending Program of PDEx. In effect. Securities issued by the Republic of the Philippines Bureau of Treasury. or a guaranteed letter of credit or such assets as are admitted under these Regulations as eligible collateral. the Borrower is obligated to return equivalent securities and the Lender. (PDEx). Fixed-Income Instruments (USD-Denominated) i. However. Private Corporate Debt Securities listed in PDEx. SECTION 3. the Borrower must return to the Lender the equivalent securities borrowed. in turn. Equivalent Securities — Securities recognized in the Registry of Scripless Securities and/or listed in the Exchange as the equivalent of the Lent Securities. The following are the only types of Collateral that may be delivered into the Collateral Management System under the said Program: 1. f. Definition of Terms. iii. Securities issued by the Republic of the Philippines Bureau of Treasury. e. ii. ii.exchange for such securities. Borrowing Period — The period agreed upon by the parties during which an SBL/SLT should be outstanding. b. an SBL/SLT is similar to a simple collateralized cash loan transaction. Securities issued by Municipal or Local Government Units of the Republic of the Philippines and as listed in PDEx. At the end of this period. iii.

in accordance with the requirements provided under the Fixed-Income Securities Lending Program of PDEx. Master Securities Lending Agreement (MSLA) — A written contract between the Borrower and the Lender (or the Lending Agent) embodying the general terms and conditions for the conduct of SBL/SLT transactions under the Fixed-Income Exchange Program of PDEx. Short Sale or Short Selling — Any sale of Lent/Borrowed Securities not yet in the possession of the seller. n. the entity accredited by PDEx which is capable of operating a Lending Pool System and which accepts all securities intended for transactions under its Fixed-Income Securities Lending Program and delivers the same to Borrowers upon execution of an SBL/SLT. Failed Settlement — In the context of regular sales of securities. The Lending Pool System Operator shall have such other functions as are defined under such Program. Mark-to-Market — The practice of periodically re-valuing the securities on loan against the value of the Collateral based on the valuation methodology agreed upon by the Borrower and the Lender under the Fixed-Income Securities Lending Program of PDEx. shall consist of both or any one of the following: 1) interest income or coupon payment received from the Lent/Borrowed Securities arising from corporate action of the Issuer thereof. Lender/Lending Agent — Any person or entity that lends securities from its pool of assets as principal or from the assets of its client/s in case of a Lending Agent. or 2) interest income that has accrued and received by the Borrower from its sale of the Lent/Borrowed Securities which the Borrower is obliged to pass on to the Lender during the life of the SBL/SLT. A foreign lender is required to deal through a Lending Agent for the purpose of these Regulations. e. Private Corporate Debt Securities listed in PDEx. iv. Lender and Lending Agent. Lending Agent. 2. — is an institution accredited by the BSP or the SEC and qualified by PDEx that lends securities from the assets of its clients for SBL/SLTs under the Fixed-Income Securities Lending Program of PDEx. SECTION 4. in accordance with the terms of the agreement. d. Borrower — is a duly admitted Trading Participant of PDEx that is qualified in accordance with the latter's Fixed-Income Securities Lending Program who obtains securities from a Lender's portfolio under a Master Securities Lending Agreement (MSLA) strictly for any of the purposes specified under Section 6 (f) hereof and within the purposes of such Program. Fixed-Income Instruments (USD-denominated): i.and listed in PDEx. Lender — is any institution qualified by PDEx under its Fixed-Income Securities Lending Program. Securities Return — The obligation of the Borrower to return the equivalent of the Lent/Borrowed Securities on or before the expiration of the Borrowing Period. Manufactured Income/Substitute Payment — Otherwise referred to as "Pass-through Payment". Parties to an SBL/SLT. h. Lending Pool System Operator — refers to the Philippine Depository and Trust Corporation (PDTC). — The parties to an SBL/SLT are as follows: a. Securities issued by the Republic of the Philippines (RoP Debt). the entity also accredited by PDEx which is capable of operating a Collateral Management System and which accepts all assets intended as . c. m. g. Collateral Management System Operator — refers to PDTC. Participation Agreement — An agreement which signifies a party's undertaking and willingness to be bound by the Program Rules of PDEx and the MSLA. i. failed settlement means the failure of the seller to deliver to the buyer the securities subject of the transaction within the required period for settlement. Private Corporate Debt Securities listed in PDEx. b. as a Borrower. or both as applicable. l. who lends securities from his/its pool of assets or the assets of his/its clients (in the case of Lending Agents). CcaASE j. k. ii.

However. c. Master Securities Lending Agreement. and holds the same for the benefit of Lenders during the Borrowing Period. Instead. the Lender of the Collateral in respect thereof shall not be subject to DST. General Tax Treatment for Manufactured Income The receipt of Manufactured Income by the Lender from the Borrower shall only be subject to the applicable taxes on the interest income or coupon payment or other benefits paid by the issuer and accruing thereon during the Borrowing Period of the Lent/Borrowed Securities as prescribed by law. such as the right to receive interest income. Regs. 2. Entitlement of Borrower to All Income on Collateral — While there is transfer of title over the Collateral to the Lender. (c) the Program is administered. Taxes on the Manufactured Income shall be as follows: 1. supervised by PDEx. the Borrower merely puts up Collateral as identified in Section 3 (b) to guarantee . DSEIcT SECTION 5. and other taxes. A valid MSLA shall contain the following features: a. Entitlement of Lender to All Income on Lent/Borrowed Securities — While there is transfer of title of the Lent/Borrowed Securities to the Borrower. (a) a valid MSLA is executed by the parties and registered with and approved by the BIR. Regs. which the Borrower is obliged to pass on to the Lender. such as the right to receive interest income or cash stock/dividends which the Lender is obliged to pass on to the Borrower. such as cash loans. Payment of the Manufactured Income to the Lender derived by the Borrower from the sale of the Lent/Borrowed Securities or from a coupon payment by the Issuer of such Securities shall not be treated as a tax-deductible expense. Regs. Basic Requirements. and return by. as amended by Rev. the borrowing and lending of securities under a FixedIncome Securities Lending Program of PDEx shall not be subject to the documentary stamp tax under Section 175 of the Tax Code. if otherwise applicable. Manufactured Income Arising from Accrued Interest Income of Lent/Borrowed Securities received from sale of such Securities and from Corporate Action of the Issuer received by the Borrower. the Lender continues to retain all the rights accruing thereto. as amended. 12-80. Furthermore. Likewise. Provided that. and (d) the terms and conditions of these Regulations and the subsequent issuance/s to be issued to implement these Regulations are complied with. — Prior to any borrowing of debt securities as identified in Section 3(f) hereof by the Borrower and negotiating the terms of an SBL/SLT. c. the Borrower continues to retain ownership and all the rights accruing to the Collateral. if the terms and conditions of these Regulations and the subsequent issuance/s to be issued to implement these Regulations are not strictly complied with. b.) No. the parties must have entered into an MSLA through execution of their respective Participation Agreements. b. an SBL/SLT shall also not involve any regular banking unit transactions. The receipt of interest income by the Borrower accruing on the Collateral shall be subject to withholding tax under Section 57 of the Tax Code of 1997.collateral for transactions under its Fixed-Income Securities Lending Program. it is understood that an SBL/SLT conducted under a Fixed-Income Securities Lending Program of PDEx shall be treated as a deposit substitute transaction or a "sale transaction" and shall be subject to the applicable taxes on the transaction as prescribed by law. Rev. SECTION 6. Regs. as amended by RA 9243. 8-81. except as otherwise provided in these Revenue Regulations. the income of which are subject to the appropriate taxes imposed under the Tax Code of 1997. 3-97. capital gains or income tax. The SBL/SLTs under a Fixed-Income Securities Lending Program of PDEx should not fall within the classification of "deposit substitutes" under Section 2 (g) of Revenue Regulations (Rev. (b) the SBL/SLT involving the Fixed-Income Securities Lending Program of PDEX are in accordance with the rules and regulations of the SEC. Tax Treatment of an SBL/SLT under these Regulations. as amended. the delivery to. 17-84 and Rev. — a. For purposes of these Regulations. d. Collateral Requirement — There is no consideration involved unlike a regular buy and sell transaction.

Any excess in the Collateral required may be released to the Borrower. of the previously borrowed securities in accordance with the Fixed-Income Securities Lending Program. Securities may be borrowed to avoid failure to deliver for the settlement of a sale. as securities carrying the same rights are fungible. superceded. Settlement of a future sale whether agreed or not at the time the borrowing is effected. the subsequent Borrower must use the Borrowed securities for any of the Specified Purpose specified herein. Because of the practical difficulties an intermediary could face in determining how the subsequent Borrower had used the securities. 2. On-lending of borrowed securities to another Borrower who has effected another SBL/SLT agreement. the specific SBL/SLT transaction is likewise ended. the BIR shall look at an intermediary's borrowings and on-lendings separately. and Provided further. provided an intermediary borrows for the purpose of on-lending. in accordance with the terms of the MSLA. Concomitantly. However.his obligations under and in accordance with the MSLA. this period shall in no case exceed one (1) year from the date of execution of SLT Confirmation Notice. e. his borrowing transaction will qualify under a conditional taxfree status. Securities may be borrowed in advance of a sale if it is anticipated that the borrowed securities will be required for settlement of the said future sale such as in a short sale. — a. In this regard. Return of Borrowed Securities and Collateral — On or before the expiration of the Borrowing Period. that the MSLA shall in no case be construed to be coterminous with any SBL/SLT and/or Participation Agreement. HEaCcD 4. the MSLA may refer to the Specified Purposes within . Where an early return of Lent Securities is required under the Fixed-Income Securities Lending Program of PDEx. The Borrower must obtain the securities for one or more of the Specified Purposes as defined in Section 6 (f) of these Regulations. ECTIHa d. would need to borrow in order to fulfill his settlement obligations. Settlement of sale of Philippine securities effected in the Philippines. 5. Other purposes similar or analogous to the foregoing. Other Authorized Specified Purposes. or consistent with the objectives of the SBL/SLT program as may be determined by the BIR upon favorable recommendation of PDEx. it is not necessary to match each of an intermediary's SBL/SLT with each of his on-lendings on a case-by-case basis. the Borrower is bound to return the equivalent of the Lent/Borrowed Securities. or otherwise terminated in effect by the act of the Exchange. the Lent/Borrowed Securities and the Collateral shall be valued periodically using a valuation methodology agreed upon by the parties in the MSLA. which must be any of the following: 1. where such an arrangement is authorized under the Fixed-Income Securities Lending Program of PDEx. in accordance with the requirements provided under the Fixed-Income Securities Lending Program of PDEx. Any shortfall shall be replenished by the Borrower. This occurs when an SBL/SLT is made by an Agent for on-lending to another Borrower who also effects an SBL/SLT. As it is in the nature of securities to fluctuate in value. or part only. Furthermore. the Lender is required to return or cause the return of the Collateral. The MSLA shall be valid for as long as the same shall not have been revoked. 3. Replacement in whole or in part of securities obtained by the Borrower under another SBL/SLT agreement. Guidelines in the Execution of the MSLA. Thus. The replacement borrowing may be for the whole. This happens when the seller cannot deliver what he owns on time (failed settlement) and therefore. Specified Purpose(s) — The purpose or purposes for which the securities will be used are specified in and accordingly limited by the MSLA. a Borrower without sufficient quantity on hand of the securities can borrow additional securities from a third party to repay the Lender. Borrowing Period — The period agreed upon by the parties and in accordance with the FixedIncome Securities Lending Program of PDEx during which the specific SBL/SLT transaction under the MSLA is made effective and upon the termination of which. f. A condition applying to such an arrangement is that the initial borrowing must itself be an SBL/SLT within the meaning of these Regulations. However. SECTION 7.

PDEx must provide the BIR with the following: a. Duly executed Participation Agreement with the conformity of the Exchange. Prior to entering into an SBL/SLT under a Fixed-Income Securities Lending Program of PDEx. only securities. Registration of the duly accomplished Participation Agreement should be made within two (2) weeks if executed in the Philippines and within one (1) month if executed outside the Philippines before an SBL/SLT can be effected. However. Requirements.00 for every Participation Agreement on a per capacity basis. The Exchange shall register the MSLA with the Bureau of Internal Revenue (BIR). SECTION 8. The Participation Agreement under the SBL/SLT Program shall be individually registered by each Participant with the BIR upon execution thereof and prior to the first SBL/SLT transaction under the Participation Agreement. c. an MSLA which permits securities to be borrowed for some other purposes not defined or authorized by these Regulations shall not qualify as a valid MSLA. such undertaking shall be covered by a separate Participation Agreement which requires compliance with the registration requirements as stated herein. The Participation Agreement signifies the enrollment of the Participant under the Fixed-Income Securities Lending Program of PDEx and its agreement to abide and be bound by the MSLA and the said Fixed-Income Securities Lending Program. The Participation Agreement shall remain in full force and effect until the same is revoked in accordance with the Program Rules. b. The Borrower and Lender must provide the BIR with the following: a. securities not listed and/or traded through PDEx do not fall within the scope of these Regulations.000. 1. Securities not listed in and/or traded through PDEx are not eligible for SBL/SLT transactions. as the case may be. and c. Three certified true copies of its MSLA. with payment of applicable fees thereon. The Borrower's and Lender's copy of the Participation Agreement endorsed with a registration number and duly stamped to acknowledge payment of registration fee. Should the same party desire to participate as a Lender. within ten (10) working days from receipt thereof The Participation Agreement shall not bind PDEx until the Participant shall have submitted the BIR-registered Participation Agreement with PDEx. Thus. aDACcH 2. The MSLA shall be registered initially prior to operation of the Fixed-Income Securities Lending Program of PDEx and for every amendment thereafter. Other documents and information that the BIR may require. Provided further. Registration of the MSLA and Participation Agreements. A specimen of the Participation Agreement. Except to the extent provided for under the Fixed-Income Securities Lending Program. ScHAIT b. b. A single MSLA may provide for the borrowing and lending of more than one type of securities and shall cover all securities borrowing and lending transaction of the participant under the FixedIncome Securities Lending Program of PDEx. a participant who undertakes to be a Borrower shall register the Agreement and pay the prescribed fee thereon. that registration fees due thereon shall be paid every year by the Borrower and/or Lender as the case may be. b. The MSLA and the Participation Agreement shall be registered at the Law Division of the BIR National Office or in such other office which the Commissioner of Internal Revenue may hereafter direct upon filing of Registration Form and payment of the registration fee for the Participation Agreement with the General Services Division at the BIR National Office. will be returned to the Borrower and Lender endorsed with the approval or denial of the BIR. the sale and purchase of which are subject to the rules of PDEx. Place and Time of Registration. Provided however. However. and c. are eligible for SBL/SLT transactions under such Program. in such form as the latter shall prescribe. . The prescribed registration fee of Php 5. — The following guidelines shall govern the registration of the MSLA and Participation Agreements: a.the meaning of these Regulations.

where proper. — An SBL/SLT is deemed as a "Deposit Substitute". b. Keep SBL/SLT ledgers and other books of account in the form prescribed by the Commissioner of Internal Revenue. The transaction itself involves regular banking unit transactions that are subject to the appropriate taxes under the Tax Code of 1997. Prepare and keep an SBL/SLT Report for each specific SBL/SLT. The parties to the transaction are not registered as a securities lender and/or borrower with the BIR as evidenced by their respective Participation Agreements. . 28(A)(7)(a) and 28(B) (1) of the Tax Code of 1997. c. SECTION 10. and 28(B) of the Tax Code of 1997. 2. 3. The Borrower or Lender fails to comply with the essential features of a valid MSLA. have been used other than for any of the Specified Purpose in these Regulations. The Borrower or Lender fails to comply with the essential features of a valid MSLA. caADIC c. 25(B). if otherwise applicable. There is no return of the Lent Securities or Collateral at the end of the Borrowing Period. if otherwise applicable. 25(A)(2). The BIR may require submission of information from PDEx. — An SBL/SLT is deemed as sale and purchase of the borrowed securities. as amended. and the Collateral as well. to monitor compliance of the parties with the conditions herein prescribed. Provide the BIR with reports of SBL/SLT transactions and the accompanying Confirmation Notices and Securities Returns. assessment of the taxes against the parties found to have entered into an SBL/SLT transaction in violation of these Regulations. as amended and to other taxes. when any of the following circumstances is present: a. SBL/SLT Deemed as a Deposit Substitute. PDTC and/or any third-party service provider or collateral management system operator to validate the report of the Borrower and Lender or for such other purpose/s as it may deem necessary to monitor SBL/SLTs under these Regulations. when any of the following circumstances is present: a. SECTION 9. d. Failure to Register. or part of it. c. and 4. 27(A). b. Approval of MSLA and Participation Agreement. 25(B). to recommend to the Commissioner of Internal Revenue the approval or denial of the MSLA and Participation Agreement registration. DHIcET The SBL/SLT transaction deemed as deposit substitute shall be subject to the applicable taxes on a deposit substitute imposed under Sections 24(B)(1). Duty of the BIR. Any actual sale of debt securities subject of the SBL/SLT such as a short sale. Record Keeping and Reporting — The Borrower and the Lender who have entered into an SBL/SLT transaction are required to: 1. Enter required particulars of SBL/SLT transactions and Securities Returns into that ledger. It shall be the duty of the Law Division of the BIR National Office to determine whether or not the registered MSLA and Participation Agreement conforms with the requirements herein imposed. as amended and to other taxes. SBL/SLT Deemed as Sale. — a.that any interruption/changes in the Participation Agreement shall be subject to registration and payment of fees. as amended. Only SBL/SLTs under an MSLA and Participation Agreement duly registered and approved by the BIR pursuant to these Regulations shall be entitled to the tax treatment provided under Section 5 of these Regulations. The Participation Agreement/s relied upon by the party/ies to the transaction is/are not registered with the BIR. Failure to register the MSLA and/or Participation Agreement will make the SBL/SLT transaction and the Collateral provided either a sale and purchase transaction or a deposit substitute and therefore subject to the applicable taxes on the type of transaction imposed under the Tax Code of 1997. The borrowed securities. SECTION 11. 27(D)(1). d. Compliance Requirements. e. d. The SBL/SLT deemed as a sale shall be subject to the applicable taxes on the sale and purchase of securities imposed under Sections 24(C). and to recommend.

in addition to the tax required to be paid. in the same manner and as part of the tax. Penalties. or failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of the Tax Code or of these Regulations. Interest — There shall be assessed and collected on any unpaid amount of tax. Filing of Annual Reports of Liquidated SBL/SLT Transactions. there shall be assessed and collected on the unpaid amount. — In addition to the bi-annual summary report. In addition to the civil and criminal liabilities of the taxpayer for violation of the provision of Sec. Recording Format — The SBL/SLT ledgers shall be kept in a written form or electronic form where the relevant information can be supplied in a legible hard copy format. such taxpayer will be subject to the penalties provided under this Section. interest at the rate of twenty percent (20%) per annum. 127 (A) and Sec. Failure to File Certain Information Returns — In case of each failure to file an information return. 25% surcharge — In case of any failure to make and file a return and pay the tax due thereon as required by these Regulations on the date prescribed. cDTSHE 2. which interest shall form part of the tax. which interest shall be assessed and collected from the date prescribed for its payment until the full payment thereof. 50% surcharge — In case of willful neglect to file the return and/or to pay the tax due within the period prescribed by the Tax Code or these Regulations. or a deficiency tax. Surcharges 1. or such higher rate as may be prescribed by the rules and regulations. filing a return with an internal revenue officer other than those with whom the return is required to be filed. These penalties will attach irrespective of whether or not the transaction involving the Lent/Borrowed Securities qualifies as an SBL/SLT or not. SECTION 12. interest at the rate of the twenty percent (20%) per annum until the amount is fully paid. The ledger with respect to each SBL/SLT transaction and related Securities Return should be in a format prescribed by the BIR which shall be subsequently covered by another BIR issuance. Delinquency interest — In case of failure to pay the amount of the tax due on the return required to be filed. must be prepared by PDTC every six months and filed with the Law Division of the BIR National Office within one (1) month after the end of the covered period. a report of all liquidated SBL/SLTs as of December 31 of each year must be prepared in the format prescribed by the BIR and likewise filed by PDTC with the Law Division of the BIR National Office within one month after such date. the following administrative penalties incident to the delinquency or deficiency prescribed under Secs. 248 and 249 of the same Code shall be imposed which shall be collected at the same time. — A bi-annual summary report of outstanding SBL/SLTs and Securities Returns. or full amount of the tax due for which no return is required to be filed on or before the date prescribed for its payment. from the date prescribed for its payment until the full payment hereof. or supply any information required by these Regulations . a. — In the event that the appropriate taxes and/or tax returns are not paid and/or filed by the taxpayer concerned in the SBL/SLT. or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner of Internal Revenue. 175 of the Tax Code of 1997. or in case a false or fraudulent return is willfully made. Deficiency interest — Any deficiency in the tax due shall be subjected to interest at the rate of twenty percent (20%). d. the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax. c. statement or list. a surcharge equivalent to twenty-five percent (25%) of the amount due. there shall be imposed. in case any payment has been made on the basis of such return before the discovery of the falsity or fraud. 1. or keep any record. cTIESD c. b. or failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. in the format prescribed by the BIR. or unless otherwise authorized by the Commissioner of Internal Revenue.b. Filing of Bi-Annual Summary Report of Outstanding SBL/SLT Transactions and Securities Returns. 2.

4. — Pursuant to the provisions of Sections 6 and 244. — For purposes of these regulations the following terms will be construed to mean: a) Refined sugar — refers to sugar whose content of sucrose by weight. (c) to provide for the monitoring system for the processing of raw sugar into refined sugar intended for the World Market ("D" sugar) or classified as "E" sugar or "A" sugar and the withdrawal thereof from the sugar refineries/mills. in relation to Executive Order No. or (3) product of a production line of a sugar mill accredited by the Bureau of Internal Revenue (Bureau or BIR may be used interchangeably in these regulations) to be producing and/or capable of producing sugar with polarimeter reading of 99. One Thousand Pesos (Php 1.on the date prescribed therefore. (2) products of a Sugar Refinery. that the aggregate amount to be imposed for all such failures during a calendar year shall not exceed Twenty Five Thousand Pesos (Php 25. 2007 REVENUE REGULATIONS NO. be paid by the person failing to file. 06-07 SUBJECT : Consolidated Regulations on Advance Value Added Tax on the Sale of Refined Sugar.5° and above. THIECD SECTION 2. these regulations are hereby promulgated (a) to prescribe the updated policies and procedures for the advance payment of value added tax (VAT) on the sale of refined sugar. Amending and/or Revoking All Revenue Issuances Issued to this Effect. and (e) for other related purposes. ADCTac SECTION 13. in relation to Sections 106. there shall upon notice and demand by the Commissioner of Internal Revenue.5° and above. as last amended by Republic Act No. and Sugar Order No. 18 dated May 28. Effectivity. ADCEaH (SGD. as amended by Sugar Order No. (d) to provide for the tax treatment of the raw sugar processed into refined sugar intended for the World Market ("D" sugar) or classified as "E" sugar or "A" sugar.) JOSE MARIO C. in the dry state. Cane sugar produced from the following shall be presumed. keep or supply the same. and 111(B)(1) all of the National Internal Revenue Code of 1977 (Code).000) for each such failure: Provided. 9337. (b) to prescribe policies and procedures for the classification of sugar and sugar products. 06-07 March 21. 109. including those made by a duly accredited and registered agricultural cooperative of good standing. Series of 2006-2007 (Conversion of "C" or Reserve Sugar into "D" or World Market Sugar and the Revised Sugar Classification and Percentage Allocation). unless it is shown that such failure is due to reasonable cause and not to willful neglect.000). Definition of Terms. 4-A. TEVES Secretary of Finance Recommending Approval: (SGD. Scope. 1 issued every crop year to allocate the volume of and classifying the cane sugar produced each production year. BUÑAG Commissioner of Internal Revenue Copyright 2007 CD Technologi es Asia Inc 03-21-2007 Revenue Regulations No. — These Regulations shall take effect after fifteen (15) days from publication in the Official Gazette or in any newspaper of general circulation. 110. 1986 ("Creating A Sugar Regulatory Administration"). and for which the quedan issued therefore as verified by the Sugar Regulatory Administration (SRA) identifies the produced sugar to be . and for Other Related Purposes TO : All Internal Revenue Officers and Others Concerned SECTION 1.) MARGARITO B. Sugar Order No. corresponds to a polarimeter reading of 99. to be refined sugar: (1) product of a refining process. for internal revenue purposes. however.

(2) "B" is raw sugar which is intended for the Domestic Market. the Revenue District Office (RDO) having jurisdiction over the physical location of the sugar mill shall accredit the sugar mill production line as to their capability of producing sugar with a polarimeter reading of 99. HDAaIc In cases where ownership of refined sugar is transferred by a cooperative to a buyer other than a cooperative. (4) "D" is raw sugar which is intended for export to the World Market. Nonetheless. through Excise Tax Area (EXTA). or LTDO having jurisdiction over the Sugar Refinery/Mill. the advance VAT on the sale of refined sugar provided for under Sec. the withdrawal is not . The Sugar Refinery/Mill shall be required to submit Monthly Report on the Quantity of Refined Sugar Milled/Produced and the Amount of Advance VAT Paid and Duly Remitted (Annex "J") in order to confirm and/or verify that the requirements of this Section are complied with. The Bureau shall likewise monitor the volume of each class of sugar produced through the sugar quedans issued. or by any owner to another person but the transaction would not qualify for the exemption provided for under Sec. sugar produced from sugar production lines accredited by the Bureau to be capable of producing sugar with polarimeter reading of 99. The result of said accreditation shall be published in a newspaper of general circulation. Requirement to Pay in Advance VAT on Sale of Refined Sugar. 4 hereof. c) Sugar Refinery/Mill includes refiner and/or miller of refined sugar as defined in Subsection(a) hereof. b) Raw Sugar — refers to sugar whose content of sucrose by weight in dry state. For this purpose. shall be paid in advance by the owner/seller before the refined sugar is withdrawn from any sugar refinery/mill.5° or above shall be prima facie presumed to be refined sugar. corresponds to a polarimeter reading of less than 99. whether manually or through Electronic Filing and Payment System (EFPS) of the Bureau. the advance VAT on the sale of refined sugar shall be paid by the buyer to the Bureau through the Authorized Agent Bank (AAB).5° and above. before any refined sugar can be withdrawn from any Sugar Refinery/Mill. — The provisions of the foregoing Section to the contrary notwithstanding. 8 hereof.of a polarimeter reading of 99. (5) "E" is reclassified "D" sugar for sale to Customs Bonded Warehouse (CBW) Food Processors/Exporters. the Bureau shall require all sugar refineries/mills to submit a Production Report (Annex "G") every month indicating the volume of each sugar classification produced as certified by the SRA.5º. (3) "C" is raw sugar which is reserved for but have not yet matured for release to the Domestic Market. SECTION 3. Cane sugar produced each production year shall be classified. For this purpose. Exemption from the Payment of the Advance VAT. The transferor/seller shall be required to submit monthly report of sugar sold (List of Buyers of Sugar marked as Annex "H" hereof) in order to confirm and/or verify that the requirements of this Section are complied with. for internal revenue purposes. — In the event the refined sugar is owned and withdrawn from the Sugar Refinery/Mill by a duly accredited and registered agricultural cooperative of good standing with the Cooperative Development Authority (CDA). SECTION 4. the following withdrawals shall be exempt from the advance VAT: (a) Withdrawal of Refined Sugar by Duly Accredited and Registered Agricultural Cooperative of Good Standing. refined sugar shall not be released unless the owner first secures a Certificate of Advance Payment of VAT (Annex "E") from the concerned RDO/Large Taxpayers Service (LTS). as verified by the SRA. as follows: (1) "A" is raw sugar which is intended for export to the United States Market.5° or above. For this purpose. or to the Revenue Collection Officer (RCO) or deputized/authorized City or Municipal Treasurer in places where there are no AABs. which cooperative is the producer of the sugar. — In general.

109(L) of the Tax Code. Upon presentation of the Authorization Allowing the Release of Refined Sugar (Annex "A") and other documents prescribed in Sec. Upon presentation of the Authorization Allowing the Release of Refined Sugar (Annex "A") and other documents prescribed in Sec. through EXTA.subject to the payment of advance VAT. (b) Withdrawal of Refined Sugar by Duly Accredited and Registered Agricultural Cooperative which is sold to another Agricultural Cooperative. it is to be repeatedly emphasized that when the purchaser-cooperative of the refined sugar which was not subjected to advance VAT subsequently sells the same to another. It is hereby made clear that if the refined sugar is owned and withdrawn from the Sugar Refinery/Mill by a duly accredited cooperative of good standing with the CDA. Moreover. be subject to advance payment of VAT. unless the latter is a direct exporter. which has been classified as "A" and "D" sugar by the SRA. is further processed into refined sugar. if the seller-cooperative is not a producer but merely purchases the sugar cane from planter-members. (c) Withdrawal of Refined Sugar Sold to Direct Exporter. or LTDO or the assigned duty officer having jurisdiction over the Sugar Refinery/Mill of the time and date of the release of the sugar from the Sugar Refinery/Mill and the names and plate numbers of the sugarcarrying vehicles/trucks so that the release can be given proper supervision and that the advance VAT is collected from the transferee should evidence show that the refined sugar has already been sold by the cooperative. the Sugar Refinery/Mill shall release the same but only after notifying the RDO/LTS. shall present the Authorization Allowing the Release of Refined Sugar (Annex "B") and other documents prescribed in Sec. — If the owner of the refined sugar as reflected in the quedan is an agricultural cooperative which is a producer of sugar. "D" sugar. or "E" sugar. the Sugar Refinery/Mill shall release the same but only after notifying the RDO/LTS.. the refined "A" sugar or "D" sugar can be withdrawn from any Sugar Refinery/Mill without the imposition of the advance VAT on the sale of refined sugar if its transferee or buyer is a direct exporter (e.g. 5 hereof. whether or not a cooperative. through EXTA. aHADTC The owner of the refined sugar processed from the raw sugar classified as either "A" sugar. 5 hereof. the sale is always subject to VAT. However. or LTDO or the assigned duty officer having jurisdiction over the Sugar Refinery/Mill of the time and date of the release of the sugar from the Sugar Refinery/Mill and the names and plate numbers of the sugar-carrying vehicles/trucks so that the release can be given proper supervision and that the advance VAT is collected from the transferee should evidence show that the refined sugar has already been sold by the buyer cooperative to another taxable entity. 5 hereof. — Where the raw sugar previously classified as "D" sugar is reclassified as "E" sugar and is further processed into refined sugar. to the Sugar Refinery/Mill and the latter shall release the same but only after notifying the RDO/LTS. withdrawal of refined sugar by the above-mentioned cooperative and sold to a trader is subject to VAT. through EXTA. or LTDO Division Chief or the assigned duty officer having jurisdiction over the refinery/mill of the time and date of release of the sugar from the refinery/mill and the names and plate numbers of the sugar-carrying vehicles/trucks so that the . — In instances where the raw sugar. or to an Enterprise Located Within a Special Export Processing Zone. in all instances. which cooperative is not the producer of sugar. the refined "E" sugar can be withdrawn from any Sugar Refinery/Mill without the imposition of the advance VAT on the sale of refined sugar if the transferee or buyer is — a Customs Bonded Warehouse (CBW) food processor/exporter. However. Registered Sugar Trader) of the refined "A" and/or "D" sugar under the classification made by SRA. the sale to another agricultural cooperative is not subject to VAT pursuant to Sec. the withdrawal of the refined sugar shall. or is located within a special export processing zone. respectively. its sale to another agricultural cooperative is subject to VAT and its withdrawal from the Sugar Refinery/Mill will only be allowed upon payment of the advance VAT. (d) Withdrawal of Refined Sugar Sold to Customs Bonded Warehouse Food Processor/Exporter.

or LTDO having jurisdiction over the physical location of the Sugar Refinery/Mill shall issue a Certificate of Advance Payment of the VAT (Annex "E") as required under Sec. In addition. the proprietor or operator of a Sugar Refinery/Mill shall not allow any withdrawal of refined sugar from its premises without the advance payment of VAT required under Sec. The failure of the Sugar Refinery/Mill to comply with the foregoing shall be a ground for the imposition of deficiency VAT on the withdrawal of the aforesaid refined sugar processed from "A" sugar. further that. when the refined sugar is processed from the raw sugar which has been classified as "A" sugar. — Except in cases of exempt withdrawals as provided in Sec. the Authorization Allowing the Release of Refined Sugar (Annex "B") and the Sworn Statement (Annex "D") provided in these regulations shall be presented to the Sugar Refinery/Mill. through EXTA. SECTION 5. and for "E" sugar is a CBW food processor/exporter. or LTDO having jurisdiction over the Sugar Refinery/Mill. Provided. — The concerned RDO/LTS. no refined sugar shall be released without the presentation of the Certificate of Advance Payment of VAT (Annex "E") duly issued by the BIR together with proof of payments. — If a duly accredited and registered agricultural cooperative of good standing which is allowed to withdraw refined sugar without advance payment of VAT claims ownership of the refined sugar stocked in the Sugar Refinery/Mill. what shall be submitted to the Sugar Refinery/Mill is the evidence of ownership of the refined sugar. This certificate shall serve as the authority of the Sugar Refinery/Mill to release the refined sugar described therein. that. Documents Required as a Condition for Withdrawal or Transfer of Ownership of Refined Sugar. In securing such authorization. as the case may be. photo copies of which shall be retained on file by the seller/transferor and be made available for tax audit purposes. market or world market). the Revenue Officer assigned on premise (ROOP) by the EXTA Head shall monitor and ensure compliance thereof. "D" sugar or "E" sugar allocation by the SRA. will be submitted as proof of ownership and classification of the raw sugar processed. and the Sworn Statement (Annex "C") prescribed for cooperatives. through EXTA. if the withdrawal is made by a duly accredited and registered agricultural cooperative of good standing which is allowed to withdraw refined sugar without payment of advance VAT. The Regional Director. the quedan of the "A" sugar. as discussed in the preceding paragraphs. SECTION 7. 0605 or its equivalent) and the BIR-prescribed deposit slip duly validated by the AAB (manual/EFPS) or the Revenue Official Receipt (ROR) issued by the RCO or the deputized/authorized City or Municipal Treasurer.release can be given proper supervision and that the advance VAT is collected from the transferee should evidence show that the refined sugar has already been sold by the owner to buyers other than the persons referred to in subsections (c) and (d) of this Section. LTS. Proof of Exemption from the Advance Payment. However. for taxpayers under the jurisdiction of the LTS. SECTION 6. In all cases where ownership of refined sugar is transferred and the transfer does not qualify for the exemption from payment of advance VAT. Any person making the withdrawal or transfer shall submit proof of such payment as prescribed in Sec. Provided. the Authorization Allowing the Release of Refined Sugar (Annex "A"). shall serve as proof of the payment for the advance VAT which can be credited against the VAT liability/payable in the Monthly VAT declaration or Quarterly VAT return to be filed. the cooperative shall. Proof of Advance Payment. 3 hereof. and together with the Payment Form (BIR Form No. "D" sugar or "E" sugar per classification made by the SRA and the transferee or buyer of the "A" and "D" refined sugar is a direct exporter (to the U. upon the recommendation of the concerned RDO having jurisdiction over the Sugar Refinery/Mill. or is located within a special export processing zone. the latter shall not release the said refined sugar unless an Authorization Allowing the Release of Refined Sugar (Annex "A") is first secured from the concerned RDO. 3 hereof. 4 hereof. "D" sugar or "E" sugar from which the refined sugar is processed. 6 hereof. may assign a Revenue Officer to be present during the withdrawal of refined sugar from the premises of the refinery/mill to ensure compliance with the requirements of this Section. in .S.

or mill producing sugar with polarimeter reading of 99. equivalent to four (4%) percent of the gross value in money of their purchases of primary agricultural products which are used as inputs to their production. Credit for Advance VAT Payments. 20-2001. — The amount of advance VAT payment shall be determined by applying the VAT rate of 12% on the applicable base price of P850. SECTION 9. and c) Amount of advance VAT paid. and P760.addition to that of satisfying VAT-exemption requirements under RR No. — a) Base Price. b) Number of bags of refined sugar released. Presumptive Input Tax. at anytime prior to the removal from the refinery/mill. or LTDO having jurisdiction over the said Sugar Refinery/Mill which issues the Certificate of Advance Payment of VAT (Annex "E") or Authorization Allowing the Release of Refined Sugar (Annex "A") not later than the 10th day following the end of the month. — The advance payment shall be made by the owner-seller of the refined sugar before the refined sugar is withdrawn and remit the same to any AAB (manual/EFPS) or RCO or deputized/authorized City or Municipal Treasurer of the RDO having jurisdiction over the Sugar Refinery/Mill. aTDcAH SECTION 8. the Sugar Refinery/Mill shall require the submission of the Authorization Allowing the Release of Refined Sugar (Annex "B"). Cooperatives. 4 hereof. through EXTA. the remittance shall only be done through the EFPS or made to an AAB authorized to receive payment from large taxpayers to ensure proper crediting of payment. The Certificate of Advance Payment of the VAT (Annex "E") issued under Sec. SECTION 10. sold or otherwise transferred in ownership. If the cooperative invokes ownership over the sugar cane and the refined/milled sugar. and the quedan. b) Subsequent Base Price Adjustments. However. ECcDAH . Primary agricultural products shall be limited to sugar cane and other agricultural products which are the main raw materials for the production of sugar.00 per 50 kg. if the owner-seller of the refined sugar is under the jurisdiction of the LTS or LTDO. Basis for Determining the Amount of Advance VAT Payment. — In addition to the input tax credits allowed under Section 110 of the Code. — The base price upon which the advance payment of VAT will be computed under the preceding paragraph shall be adjusted when deemed necessary by the Commissioner. SECTION 12. the duly accomplished Sworn Statement (Annex "D") specifying therein the transferee. — Persons or firms engaged in the production and manufacturing of refined sugar for their own account shall be allowed a presumptive input tax.5° or above. The aforesaid Information Return shall reflect the following information: a) Name. 6 hereof shall be attached to the Monthly VAT declaration/Quarterly VAT return to support the claim for credit of advance VAT payment. SECTION 11. which is creditable against the output tax. bag for refined sugar produced by a Sugar Mill. upon consultation with the Chairman of the SRA. Place and Time of Remittance of Advance Payment of VAT. — Every proprietor or operator of a Sugar Refinery/Mill with production line accredited by the Bureau to be capable of producing sugar with a polarimeter reading of 99.00 per 50 kg. bag for refined sugar produced by a Sugar Refinery. For exempt withdrawals under Sec. Information Returns to be Filed by the Proprietor or Operator of a Sugar Refinery/Mill. and (b) The refined sugar is the property of the cooperative at the time of removal and it will not charge advance VAT or any other tax to the future buyer. and CBW Food Processors/Exporters and Others. the amount of advance payments made by sellers of refined sugar under these regulations shall be allowed as credit against their output tax on the actual gross selling price of refined sugar. submit to the concerned RDO a Sworn Statement (Annex "C") to the effect that: (a) The refined sugar has not been bidded. to a trader or another entity.5° or above shall render an Information Return (Annex "F") to the RDO/LTS. Address. the sugar quedans must be in the name of the duly registered cooperative. TIN and RDO number of the owner of the refined sugar.

"D" or "E" sugar processed. c) Amount of sales. "D" or "E" sugar. However. "D" or "E" sugar which shall reflect the following information: a) Name. "D" or "E" sugar quedan not liquidated in accordance with the provisions mandated by the BOC and the SRA. address/location of importer/buyer. and d) Amount of Advance VAT paid. through EXTA. b) Volume of exportation of refined sugar processed from raw "A". or LTDO having jurisdiction over the said refinery/mill which issues the Authorization Allowing the Release of Refined Sugar (Annex "B") not later than the 10th day following the end of the month. "D" or "E" sugar are required to liquidate their exports in the same manner as prescribed by the Bureau of Customs (BOC) and the SRA for duty. d) Total base price subjected to advance payment of VAT. — The advance payments made by the seller/owner of refined sugar shall be allowed as credit against their output tax on the actual gross selling price of refined sugar. TIN and RDO number of the owner of the "A". Address. "D" or "E" sugar. Address. "D" or "E" sugar classification processed. which shall reflect the following information: a) Volume of acquisition of refined sugar processed from raw "A". if any. through EXTA. TIN and RDO number of the buyer of sugar. not later than the 10th day following the end of the month. together with a copy of the Certificate of Advance Payment of VAT (Annex "E") made by each of the respective buyer appearing in the list. TIN and RDO number of the owner of the refined sugar. or LTDO where it is registered a List of Buyers of Sugar (Annex "H"). advance VAT shall be collected from the transferee of the "A". All CBW food processors/exporters to whom the refined sugar processed from "A". and e) Total base price not subjected to advance payment of VAT. through EXTA. "D" or "E" sugar classification. Issuance of Tax Credit Certificate for Unutilized Advance VAT Payments. SECTION 13. copy furnished the RDO/LTS or LTDO having jurisdiction over the Sugar Refinery/Mill which processed the raw "A". or LTDO having jurisdiction over the Sugar Refinery/Mill which issues the Certificate of Advance Payment of VAT (Annex "E") or Authorization Allowing the Release of Refined Sugar (Annex "A") not later than the 10th day following the end of the month which shall reflect the following information: a) Name. or LTDO having jurisdiction over the exporter. "D" or "E" sugar into refined sugar.and VAT-free importation. "D" or "E" sugar classification processed. "D" or "E" sugar classification shall submit an Information Return (Annex "I") to the RDO/LTS. advance payments which remain . and d) Quedan for the "A". and d) Name. Furthermore. every duly accredited and registered agricultural cooperative of good standing shall submit to the RDO/LTS. b) Number of bags of refined sugar sold/LKG. through EXTA. Likewise. ITDHSE Any exporter of refined sugar processed from the raw "A". not later than the 10th day following the end of the month with the following information: a) Name. c) Amount of sales. The Sugar Refinery/Mill shall also be required to submit Monthly Report on the Quantity of Refined Sugar Milled/Produced and the Amount of Advance VAT Paid and Duly Remitted (Annex "J") to the RDO/LTS. Address. c) Number of bags of refined sugar produced.In case of refined sugar processed from "A". c) Amount of advance VAT paid/collected. "D" or "E" sugar is transferred by its owner. a Production Report (Annex "G") on the processing of the "A". every proprietor or operator of Sugar Refinery/Mill shall likewise submit to the RDO/LTS. and all export food processors which acquired the refined sugar processed from "A". b) Number of bags of refined sugar tolled/produced. b) Volume of "A".

Effectivity. Issuance of TCC for input tax attributable to zero-rated sales shall be covered by a separate application for TCC following applicable rules. — Any violation of the provisions of these regulations shall be subject to penalties provided in Sections 254 and 275. cEaSHC (SGD. at the option of the seller/owner of the refined sugar be the subject of application for TCC to be filed within two (2) years from the date of filing of the last quarterly VAT return where the unutilized advance VAT payments appeared. Advance VAT payments which remained unutilized for more than one (1) year prior to the effectivity of these regulations may. SECTION 14. or if filed out of time. as amended. please be informed that authorization is hereby allowed for the release of — __________________ LKG refined sugar processed from _____________ of the above-named cooperative without payment of the advance VAT. BUÑAG Commissioner of Internal Revenue ANNEX "A" AUTHORIZATION ALLOWING THE RELEASE OF REFINED SUGAR Date ________________ The President ______________________ ______________________ Greetings! With reference to the letter dated ____________ of ____________________ requesting the issuance of clearance to effect withdrawal of refined sugar by ______________________________________________ (name of cooperative) ____________________________ without payment of the advance value added tax (VAT) in conformity with the tax exemption granted by our Office under BIR Ruling No. pursuant to Republic Act No. __________________ . 20 . However. and other pertinent provisions of the Code. ICacDE SECTION 15. ICTcDA Very truly yours.2001 dated ______________ and the National Internal Revenue Code of 1997. or if filed out of time. — These regulations shall take effect after fifteen (15) days following its publication in a newspaper of general circulation. TEVES Secretary of Finance Recommending Approval: (SGD. ______________________ dated _________________. 6938 and the pertinent provisions of Revenue Regulations No. from the last day prescribed by law for filing the return.) MARGARITO B. from the last day prescribed by law for filing the return. Issuance of TCC shall be limited to the unutilized advance VAT payment and shall not include excess input tax. as amended. be available for the issuance of TCC upon application duly filed with the BIR by the seller/owner within two (2) years from the date of filing of the 4th quarter VAT return of the year such advance payments were made.unutilized at the end of taxpayer's taxable year where the advance payment was made. it is required that every withdrawal shall be covered with prior approval of this Office. Penalty Clause. SECTION 16. Advance VAT payments which have been the subject of an application for the issuance of TCC shall not be allowed as carry-over nor credited against the output tax of the succeeding quarter/year. Repealing Clause. — The provisions of all internal revenue issuances inconsistent herewith are hereby amended or revoked accordingly. which is tantamount to excess payment. may. at the option of the owner/seller.) JOSE MARIO C.

after being sworn to in accordance with law. That the cooperative desires to withdraw the above refined sugar (describe the quantity. _________. Very truly yours. it is required that every withdrawal shall be covered with prior approval of this Office. That the Cooperative will not collect any advance VAT or any other form of tax from the future buyer of the above-described sugar. __________________ Name and Signature of Approving Officer Original : Sugar Refinery/Mill Duplicate : Owner of refined sugar Triplicate : Issuing RDO Quadruplicate : Home RDO of the Sugar Refinery/Mill where it is registered ANNEX "C" SWORN STATEMENT KNOW ALL MEN BY THESE PRESENTS: THAT I. I have hereunto set my hands this ___ day of _____.Name and Signature of Approving Officer Original : Sugar Refinery/Mill Duplicate : Cooperative Triplicate : Issuing RDO Quadruplicate : Home RDO of the Sugar Refinery/Mill where it is registered ANNEX "B" AUTHORIZATION ALLOWING THE RELEASE OF REFINED SUGAR Date ________________ The President ______________________ ______________________ Greetings! With reference to the letter dated _______________ of _________________________ requesting the issuance of clearance to effect withdrawal of refined sugar by ____________________________(name of owner)_________________________________ without payment of the advance value added tax (VAT) in conformity with Sections 4. sold or otherwise transferred in ownership to a trader or other entity. _______________________ Filipino. 2. However. as amended. of legal age. please be informed that authorization is hereby allowed for the release of — __________________ LKG refined sugar processed from ____________ of the above-named establishment without payment of the advance VAT. hereby depose and state — 1. and with business address at ______________________________. 4. . IN WITNESS WHEREOF. 3. That the Cooperative is the owner of ___(description and quantity of sugar)__ now stored at _____(name of Sugar Refinery/Mill/Warehouse)______ and covered by Sugar Quedan No. 200___ at ____________________________. That said sugar has not been bidded. 5 and 6 of Revenue Regulations No. and 5. if partial) from the refinery/mill/warehouse without payment of the advance VAT as it is exempt from the VAT. in my capacity as __________________ of the _____(Name of Cooperative)_____ . _______ dated ___________ and the pertinent provisions of the National Internal Code of 1997. That this sworn statement is executed to attest to the veracity of the above statements.

That the Company will not collect any advance VAT or any other form of tax from the buyer of the above-described sugar. 6. HDAaIS 3. IN WITNESS WHEREOF. release of refined sugar as described above is hereby authorized. in my capacity as __________________ of the _____(Name of Owner)_____ . if partial) from the refinery/mill without payment of the advance VAT in accordance with the provisions of Section 4. That the _______________ is the owner of (description and quantity of sugar) now stored at ____(name of Sugar Refinery/Mill/Warehouse)_____ and covered by Sugar Quedan No. of legal age.________________________ (Signature over Printed Name) SUBSCRIBED AND SWORN to before me this ____ day of ________ 200___ at ______________________________. That said sugar will be sold to ___(name of buyer)_____. hereby depose and state — 1. Market sugar. and with business address at ______________________________. sold or otherwise transferred in ownership to a trader or entity other than the above. ( ) "D" or World Market sugar. _________. ( ) "E" or reclassified "D" sugar (check classification) has been processed into refined sugar by __(name of Sugar Refinery/Mill)___. _______________________ Filipino. 200_ at ____________________________. Administering Officer ANNEX "E" CERTIFICATE OF ADVANCE PAYMENT OF VAT (Authorizing the release of Refined Sugar subject to the Advance VAT) ______________________________________________ ______________________ NAME OF OWNER OF REFINED SUGAR/PAYOR TIN: ____________________________________________________________________ ADDRESS ____________________________________________________________________ Payor has made the advance payment in the amount of ________________ for the withdrawal of ____(quantity in words)____________ (_______) LKGs of __(class of refined sugar)___ refined sugar covered by Sugar Quedan No. which is (check description) a ( ) direct exporter. That the said raw ( ) "A" or U. That this sworn statement is executed to attest to the veracity of the above statements. 5 and 6 of RR No. ________________________ (Signature over Printed Name) SUBSCRIBED AND SWORN to before me this ____ day of ________ 200___ at ______________________________.S. That said sugar has not been bidded. as amended. ( ) locator of special export processing zone. That the Company desires to withdraw the above refined sugar (describe the quantity. Administering Officer ANNEX "D" SWORN STATEMENT KNOW ALL MEN BY THESE PRESENTS: THAT I. I have hereunto set my hands this ___ day of _____. and 7. ____________ issued by ___(name of Sugar Refinery/Mill)___. Accordingly. 2. 5. Particulars Drawee Bank Number Date Amount Cash Check . after being sworn to in accordance with law. 4. _____ and pertinent provisions of the National Internal Revenue Code of 1997. ( ) CBW food processor/exporter.

(Per Classification) (Per Classification) * Indicate "Exempt" if it is the case. . "D" OR "E" SUGAR VOLUME OF "A". NUMBER OF QUEDAN "D" OR "E" BAGS OF FOR THE SUGAR REFINED "A".Bank Debit Memo Tax Debit Memo Name of AAB _______________________ Name of RCO/DMT __________________ Date of Payment _____________________ _________________________ _________________________ Name of Issuing Officer Signature __________________________ __________________________ Position/Title Date Original : Sugar Refinery/Mill Duplicate : Sugar seller/owner. copies to be attached to VAT declaration/return Triplicate : File copy of the issuing RDO Quadruplicate : Home RDO of the Sugar Refinery/Mill ANNEX "F" INFORMATION RETURN (On Release of Refined Sugar) For the Month of _____________ Name of Sugar Refinery/Mill ________________________ TIN _______________ Address ____________________________________________________________ OWNER OF REFINED SUGAR NO. OF BAGS OF AMOUNT OF REFINED SUGAR ADVANCE VAT RELEASED PAID* NAME AND ADDRESS TIN RDO NO. ADEacC Certified correct: ______________________ (Signature over Printed Name) ______________________ (Designation) Original : Issuing RDO Duplicate : Sugar Refinery/Mill/Cooperative/CBW/Others Triplicate : Home RDO of the Sugar Refinery/Mill where it is registered ANNEX "G" PRODUCTION REPORT For the Month of _____________ Name of Sugar Refinery/Mill _________________________ TIN _______________ Address _____________________________________________________________ OWNER OF "A". "D" OR CLASSIFICATION SUGAR "E" SUGAR NAME AND TIN RDO PROCESSED PRODUCED PROCESSED ADDRESS NO.

"D" or SUGAR "E" SUGAR NAMEADDRESS/LOCATION * Exporter can be a direct exporter. if any NAME AND TIN RDO (Per Classification) ADDRESS NO. CBW food processor/exporter or locator of special export processing zone. "D" or "E" Sugar) For the Month of _____________ Name of Sugar Exporter *___________________________ TIN _______________ Address ____________________________________________________________ IMPORTER/BUYER OF "A". FROM RAW "D" or "E" "A". OF BAGS AMOUNT OFAMOUNT OF OF SUGAR SALES ADVANCE VAT SOLD/LKG (Per Classification) PAID. "D" or "E" VOLUME OF VOLUME OF AMOUNT SUGAR ACQUISITION EXPORTATION OF SALES OF REFINED OF REFINED SUGAR SUGAR PROCESSED PROCESSED FROM "A".Certified correct: ______________________ (Signature over Printed Name) ______________________ (Designation) Original : Home RDO of the Sugar Refinery/Mill Duplicate : Sugar Refinery/Mill Triplicate : Home RDO of the Sugar Buyer where it is registered ANNEX "H" LIST OF BUYERS OF SUGAR For the Month of _____________ Name of Cooperative _____________________________ TIN _______________ Address ___________________________________________________________ BUYER OF SUGAR NO. Certified correct: ______________________ (Signature over Printed Name) ______________________ (Designation) Original : Issuing RDO Duplicate : Cooperative Triplicate : Home RDO of the Sugar Buyer where it is registered ANNEX "I" INFORMATION RETURN (On the Export of "A". AaCEDS .

21-2002.Certified correct: ______________________ (Signature over Printed Name) ______________________ (Designation) Original : Home RDO of the Exporter where it is registered Duplicate : Sugar Exporter Triplicate : Home RDO of the Sugar Refinery/Mill where it is registered ANNEX "J" Monthly Report on the Quantity of Refined Sugar Milled/Produced and the Amount of Advance VAT Paid and Duly Remitted For the Month of _____________. Authorizing the Commissioner of Internal Revenue to Prescribe Additional Procedural and/or Documentary Requirements in Connection with the Preparation and Submission of Financial Statements Accompanying the Tax Returns TO : All Internal Revenue Officers and Others Concerned Pursuant to Section 244 of the Tax Code of 1997. 2007 REVENUE REGULATIONS NO. 21-2002 prescribing the manner of compliance with any documentary and/or procedural . 07-07 July 9. 07-07 SUBJECT : Amending Certain Provisions of Revenue Regulations No. in relation to Section 6 (H) of the Same Code. _____ Name of Sugar Refinery/Mill _________________________ TIN _______________ Address _____________________________________________________________ OWNER OF REFINED SUGAR NO. Certified correct: ______________________ (Signature over Printed Name) ______________________ (Designation) Original : Issuing RDO Duplicate : Sugar Refinery/Mill/Cooperative/CBW/Others Triplicate : Home RDO of the Sugar Refinery/Mill where it is registered Copyright 2007 CD Technologi es Asia Inc 07-09-2007 Revenue Regulations No. Classification)PAYMENT PAYMENT ADDRESS OF VAT OF VAT * Indicate "Exempt" if it is the case. these Regulations are hereby promulgated to amend certain provisions of Revenue Regulations No. as amended. OF BAGS OF AMOUNT OFTOTAL BASE TOTAL BASE REFINED SUGAR ADVANCE PRICE PRICE NOT TOLLED/ VAT PAID/ SUBJECTED SUBJECTED PRODUCED (Per COLLECTED* TO TO Classification)(Per ADVANCE ADVANCE NAME AND TIN RDO NO. Implementing Section 6 (H) of the Tax Code of 1997.

IC and other regulatory bodies shall likewise be the accounts to be used by individual taxpayers who are engaged in business or in the exercise of profession. Moreover. and e) * Schedules attached to the afore-cited statements. BSP.e. Bangko Sentral ng Pilipinas (BSP). HTcDEa SECTION 1. comprising a summary of significant accounting policies and other explanatory notes. The accounts prescribed in the reports required by the SEC. with breakdown of the specific accounts. etc. 232 of the Tax Code of 1997. general. All the financial statements filed with accompanying auditor's certificate as cited above shall show the comparative figures of the current year and the previous year. c) Statement of Changes in Equity. The submission of the above statements is mandatory even if there is no income.requirements in connection with the preparation and submission of financial statements accompanying the tax returns. other than those arising from transactions with equity holders acting in their capacity as equity holders. — The Financial Statements shall be composed of the following: a) Balance Sheet. etc. Coverage. Other Expenses (Note: Items I. V and VI should be fully explained in the Notes to the Financial Statements. The account titles to be used must be specific and not control accounts which must be completely enumerated in the financial statements and these accounts must conform to the basic framework of the financial reporting standards promulgated by the Financial Reporting Standards Council (FRSC) of the Philippines which are the Generally Accepted Accounting Principles in the Philippines which include Philippine Accounting Standards (PAS) and Philippine Financial Reporting Standards (PFRS) and the refinements introduced thereon in respect to certain types of industries as well as to the rules and requirements of regulatory agencies that have supervision over them such as the Securities and Exchange Commission (SEC). V. it is the responsibility of the taxpayer to reflect in its books of accounts (i. Financial Expenses.. — The Financial Statements with accompanying Auditor's Certificate attached to the Annual Income Tax Return. Thus. thru its collection agents including Accredited Agent Banks. Other Income. or Annual Information Return for tax exempt persons. shall present/state the accounts therein in a very descriptive fashion such that the nature of the specific transactions entered in the accounts are known to the reader. III. Correspondingly. Items II and III should be supported by Schedules) SECTION 2. as amended. The Profit and Loss Statement/Income Statement shall show separately by segment (there should be proper labeling). e) Notes. IV. the following: HCDAcE I. except for accounts that are peculiar to corporations and other juridical persons. subsidiary ledgers. need not be presented in comparative format. Sales/Revenues II. showing either: • All changes in equity • Changes in equity. as the case may be. Insurance Commission (IC). if any. EIcTAD d) Statement of Cash Flow. Financial Statements with no required Auditors Certificate as enunciated in Sec. retained earnings. IV. Cost of Goods Sold (for seller of goods)/Cost of Services (for seller of services). all the necessary working papers prepared by the taxpayer pertinent to the year-end . b) Income Statement/Profit and Loss Statement. Contents and Format of Financial Statements to be Attached to the Annual Income Tax Return or Information Return. and VI. and journals) the adopted/accepted year-end adjusting entries made corollary to the preparation and filing of its audited financial statements and annual income tax returns. Selling and Administrative Expenses. to be filed with the Bureau of Internal Revenue.

— The Philippines has adopted the International Financial Reporting Standards (IFRS) as the Philippine Financial Reporting Standards (PFRS) that should be . SECTION 5. SECTION 3. 08-07 SUBJECT : Additional Compliance Requirements of Concerned Taxpayers in the Light of Mandatory Adoption of the Philippine Financial Reporting Standards TO : All Internal Revenue Officers and Others Concerned SECTION 1. 08-07 July 3. whichever comes later. SECTION 6. — Unless a longer period of retention is required under the Tax Code or other relevant laws (e. — All existing rules. — These Regulations shall take effect after fifteen (15) days following complete publication in a newspaper of general circulation in the Philippines. TEVES Secretary of Finance Recommending Approval: (SGD. repealed or revoked accordingly.) MARGARITO B. Responsibility of External Auditors. these Regulations are hereby issued to prescribe additional compliance requirements from taxpayers mandated to adopt the Philippine Financial Reporting Standards (PFRS) in recording business transactions and preparing financial statements. aIETCA SECTION 4. including exhibits. 5.g. willfully falsifies any report or statement bearing on any examination or audit. the Philippine Accountancy Act of 2004. deduction and/or exemption of his client. the independent CPA who audited the records and certified the financial statements of the taxpayer. Additional Compliance Requirements of Concerned Taxpayers in the Light of Mandatory Adoption of the Philippine Financial Reporting Standards in Recording and Presenting Business Transactions and Results. in relation to Sec. including generally accepted auditing standards. — Any independent Certified Public Accountant who. schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices. statements.adjustments shall. Applicability of these Regulations. and shall be subject to the applicable penalty provisions of RR No. both of the National Internal Revenue Code (NIRC) of 1997. Scope. nevertheless be made available to the investigating officers of the Bureau upon audit and/or verification. certifies financial statements of a business enterprise containing a material misstatement of facts or material omission in respect of the transactions. regulations and other issuances or portions thereof inconsistent with the provisions of these Regulations are hereby modified. 11-2006. — These Regulations shall apply to all Income Tax and Information Returns to be filed hereafter.) LILIAN B. jurisprudence. — Pursuant to Section 244. or. has the responsibility to maintain and preserve copies of the audited and certified financial statements for a period of three (3) years from the due date of filing the annual income tax return or the actual date of filing thereof. and applicable. shall be dealt with in accordance with Section 257 of the Tax Code. etc. as amended.). (SGD. SECTION 7. as amended. Effectivity Clause. and implementing regulations. Penal Provisions. Repealing Clause. HEASaC SECTION 2. equally as the taxpayer. taxable income. or renders a report. in his capacity as external auditor. HEFTI OIC-Commissioner of Internal Revenue Copyright 2007 CD Technologi es Asia Inc 07-03-2007 Revenue Regulations No. 2007 REVENUE REGULATIONS NO. This is in addition to all other responsibilities of the independent CPA under other pertinent provisions of the Tax Code.

SECTION 4. 2007 and all fiscal years ending not later than June 30. Under the PFRS. — Pursuant to Section 244 of the National Internal Revenue Code of 1997 (Code). and keepers of garages shall pay a tax equivalent to three percent (3%) of their quarterly gross receipts. DcaSIH SECTION 2. the recording and the recognition of business transactions for financial accounting purposes. including persons who transport passengers for hire. transportation contractors. Accordingly. and taxable base of persons subject to other percentage taxes under Title V of the Code. receipts or other taxable base of other persons engaged in similar businesses under similar situations or circumstances. Hence. — The provisions of internal revenue issuances inconsistent herewith are hereby repealed. after taking into account the sales.observed by big corporate taxpayers in the recording of their business transactions and preparation of Financial Statements starting year 2005. 09-07 SUBJECT : Prescribing the Updated Minimum Monthly/Quarterly Gross Receipts in Computing the Percentage Tax of Domestic Carriers and Keepers of Garages TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope. or after considering other relevant information. as amended by RA 9337. in relation to Section 128 of the same Code which provides the Commissioner the power to prescribe the minimum amount of gross receipts. TEcCHD SECTION 3. 09-07 July 4. these Regulations are hereby promulgated to update the minimum monthly/quarterly gross receipts of domestic carriers and keepers of garages subject to the three percent (3%) percentage tax imposed under Section 117 of the Code. ETDAaC (SGD. TEVES Secretary of Finance Recommending Approval: (SGD. and further amended by RA 9361. sales. differ from the application of tax rules on the same transactions resulting to disparity of reports for financial accounting vis-a-vis tax accounting. providing in sufficient detail the computation of the differences and the reasons therefor aimed at bringing into agreement the PFRS and ITR figures. HEFTI OIC-Commissioner of Internal Revenue Copyright 2007 CD Technologi es Asia Inc 07-04-2007 Revenue Regulations No. in a majority of situations. SECTION 5. . 2007 REVENUE REGULATIONS NO. For this purpose 'taxable year 2007' shall mean calendar year ending December 31. — The keeping of books and records for the reconciling items referred to in the preceding Section shall start for taxable year 2007. — These regulations shall take effect after fifteen (15) days following publication in newspaper of general circulation. there is a need to reconcile the disparity in a systematic and clear manner to avoid irritants between the taxpayer and the tax enforcer. Minimum Gross Receipts of Domestic Land Carriers and Keepers of Garages. The recording and presentation of the reconciling items in such books and records shall be done in such a manner that would facilitate the understanding by the examiners/auditors of the Bureau of Internal Revenue tasked to undertake audit/investigation functions. modified or amended accordingly. — Cars for rent or hire driven by the lessee. concerned taxpayers are hereby mandated to maintain books and records that would reflect the reconciling items between Financial Statements figures and/or data with those reflected/presented in the filed Income Tax Return (ITR). Effectivity Clause.) LILIAN B. Start of Keeping of Books and Records. and other domestic carriers by land for the transport of passengers (except owners of animal-drawn two-wheeled vehicle).) MARGARITO B. Repealing Clause. 2008.

Provincial 1.200.00 P32.00 P65.600. 2007.00 P82. Manila and other cities P2.00 (3) Year 2006 P174. Manila and other cities P3.00 P98.600.00 For clarification.800.00 ========= ========= Thus.900.00 P16.00 21.400. as shown in the sample computation illustrated below: HAaDcS (a) Average Consumer Price Indices where Year 2000 is considered as the international base year: (1) Year 1978 P6.00 2.00 2. whichever . it is apparent that the minimum gross receipts per unit of carrier set under Section 117 of the Code.680.000.200.38 (2) Year 2000 P100. the formula to arrive at the present value is as follows: 2006 Gross Receipts = 1978 Gross Receipts x CPI 2006 –––––––––––––––––––––––––– CPI 1978 (c) Sample Computation IcAaEH Jeepneys in Manila and Other Cities — 2006 Gross Receipts = P2.00 65. — These Regulations shall take effect beginning August 1.400 x P174.60 (b) Using the average consumer price index (CPI) provided in item (a) above.00 P49.400.00 164.38 = P65.00 P32.600.434.600. the updated minimum gross receipts per unit of carrier for purposes of computing the percentage tax provided in Section 117 of the Code as of year 2006 price index shall be as follows: Year 1978 Year 2006 Year 2006 Old Updated Updated Minimum Minimum Minimum DOMESTIC CARRIERS Gross Gross Gross Quarterly Quarterly Monthly Receipts Receipts Receipts Jeepney for hire — 1.00 Exceeding 50 passengers 7.00 32. Effectivity Clause.367.00 65.00 P98.900.Using the average consumer price index (CPI) for the transportation and communication sector in Year 2006.00 Car for hire (with chauffeur) P3.200.25 ~ P65.00 Car for hire (without chauffeur) P1.00 P21.733. ECcTaH SECTION 3.00 Public Utility Bus — Not exceeding 30 passengers P3.867.100.00 Taxis — 1.00 Exceeding 30 passengers but not exceeding 50 passengers 6.60 –––––––––––––––– P6.967.00 197.100.700. after considering the foregoing relevant information.867. common carriers which ply the routes from/to Metro Manila and/or other cities in the country shall be covered by the prescribed minimum gross receipts for Manila and other cities. or after fifteen (15) days following complete publication in a newspaper of general circulation.300.000.00 10.700.700. Provincial 2.00 P27. which figures were originally fixed in Year 1978.900.00 54. are no longer reflective of the true value of the minimum gross receipts that are being derived by domestic land carriers.700.

398 as implemented by RR 3-2005. Non-large taxpayers. Coverage. 10-07 July 18. 9-2001. — 2. Definition of Terms. as last amended by RR No. to file their returns and pay their taxes thru EFPS. — Section 3 of Revenue Regulations (RR) No.14 Complete computerized system — refers to the books of accounts and other accounting records in electronic form.comes later.00) and above. SHIETa 2. 5-2004.000. . 2.3.13 Paid-up capital stock — shall mean that portion of the authorized capital stock which has been both subscribed and paid. 2-2002. Other Taxpayers — 3. .000. however. 3. However.. — The following Non-Large Taxpayers including their branches located in the computerized revenue district offices shall file their returns and pay their taxes thru EFPS. — . 10-07 SUBJECT : Amending Further Section 3 of Revenue Regulations (RR) No. Corporations with complete computerized system. these regulations are hereby promulgated in order to further amend Section 3 of RR No.000. to wit: ECSHAD 3. 9-2002 and 5-2004. by expanding the coverage thereof to include: (i) corporations with paid-up capital stock of Ten Million Pesos (P10.3. in accordance with Revenue Regulations No. 2007 REVENUE REGULATIONS NO. Corporations with paid-up capital stock of Ten Million Pesos (P10. net of treasury stock.1 . xxx xxx xxx" . HEFTI OIC-Commissioner of Internal Revenue Copyright 2007 CD Technologi es Asia Inc 07-18-2007 Revenue Regulations No. as last amended by RR No. and (iii) all government bidders pursuant to Executive Order No. The volunteering two hundred (200) or more Non-Large Taxpayers previously identified by the BIR to have availed of the option to file their returns under EFPS shall nevertheless continue to file their returns under such method. is hereby further amended to read as follows: "Section 3.3 Taxpayers joining public bidding pursuant to Executive Order No. 16-2006. It should be emphasized. (SGD. TEVES Secretary of Finance Recommending Approval: (SGD. SECTION 3. 5-2004.2 .1. 9-2001. Scope.00) and above. 398 as implemented by RR 3-2005. Expanding the Coverage of Taxpayers Required to File Returns and Pay Taxes Through the Electronic Filing and Payment System (EFPS) of the Bureau of Internal Revenue TO : All Internal Revenue Officials and Others Concerned SECTION 1..2. 3. that non-stock non-profit corporations are excluded from the coverage of this regulations. (ii) corporations with complete computerized system... STHAID 3.) LILIAN B.1.000. 2. 9-2001. It also refers to the amount paid for the subscription of stock in a corporation including the amount paid in excess of par value. as amended by RR Nos.2. — Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997. Coverage. 9337. aEHTSc SECTION 2.3. including their branches located in the computerized revenue district offices. it becomes mandatory for them. upon their receipt of a notification letter duly signed by the Commissioner of Internal Revenue.3. as amended by Republic Act No.) MARGARITO B.2. 3.

and to introduce improved version of the Regulations to properly address the problems of the sugar industry and collect the correct taxes due from there. 92002. 11-07 August 15. — These Regulations shall take effect after fifteen days following publication in any newspaper of general publication. stating that the crop year is already approaching and that. HEFTI OIC. Commissioner of Internal Revenue Published in The Philippine Star on August 3.SECTION 4. 2007 or after fifteen (15) days following publication in a newspaper of general circulation. these Regulations are hereby promulgated to suspend. 11-07 SUBJECT : Suspension of the Implementation of Revenue Regulations No. CIaHDc SECTION 2. the implementation of Revenue Regulations No. particularly the planters. — These Regulations shall take effect on all returns to be filed in October. These regulations provide for a) updated policies and procedures for the payment of the advance VAT on the sale of refined sugar.) LILIAN B. some provisions are still not so clear or not well-explained and thereby causing fear of possible non-compliance. SECTION 1. — Pursuant to the provisions of Section 244 of the National Internal Revenue Code (NIRC) of 1997. 6-2007. 2007 REVENUE REGULATIONS NO. b) classification of sugar and sugar products. c) the monitoring system for the processing of raw sugar into refined sugar intended for the world market and d) the tax treatment of raw sugar processed into refined sugar intended for the world market or the sugar classified as "E" sugar or "A" sugar. The purpose of the suspension is to give time to both the Bureau of Internal Revenue (BIR) and the sugar industry to thresh out unclear provisions in RR 6-2007. Suspension. TEVES Secretary of Finance RECOMMENDING APPROVAL: (SGD. 6-2007 TO : All Internal Revenue Officers and Others Concerned BACKGROUND: The regulations and issuances on the collection of advance VAT on the sale of refined sugar have been consolidated under Revenue Regulations No. SECTION 5. 6-2007. and for Other Related Purposes". until further notice. AHaDSI (SGD. 9-2001.) LILIAN B. Effectivity. — The provisions of Revenue Regulations No. Effectivity Clause. Repealing Clause. whichever comes later. 2-2002. including those made by a duly accredited and registered cooperative in good standing. modified or amended accordingly. Copyright 2007 CD Technologi es Asia Inc 08-15-2007 Revenue Regulations No. HEFTI OIC-Commissioner of Internal Revenue . Amending and/or Revoking All Revenue Issuances Issued to this Effect. (SGD.) MARGARITO B. entitled "Consolidated Regulations on Advance Value Added Tax on the Sale of Refined Sugar. 2007. 5-2004 and all other revenue issuances inconsistent herewith are hereby repealed. CHcETA The sugar industry. sent numerous requests to the Department of Finance (DOF) asking for the immediate suspension of the said regulations. to them. TEVES Secretary of Finance Recommending Approval: (SGD.) MARGARITO B.

000 3rd 250. 9-98 are hereby amended to read as follows: "Sec.000 2nd 120. DcICEa Notwithstanding the above provision. the computation and the payment of MCIT shall likewise apply at the time of filing the quarterly corporate income tax as prescribed under Section 75 and Section 77 of the Tax Code. 27 (E).27 (E) of Revenue Regulations No. and 28 (A) (2) of the 1997 National Internal Revenue Code (Tax Code).Copyright 2007 CD Technologi es Asia Inc 10-10-2007 Revenue Regulations No.000 10. in the computation of the tax due for the taxable quarter. 2.000 30. 9-98 Relative to the Due Date Within Which to Pay Minimum Corporate Income Tax (MCIT) Imposed on Domestic Corporations and Resident Foreign Corporations Pursuant to Section 27 (E) and Section 28 (A) (2) of the 1997 National Internal Revenue Code. in relation to Section 245 thereof which requires that the rules and regulations of the Bureau of Internal Revenue shall stipulate the manner in which internal revenue taxes shall be paid.000 For the 1st quarter. TaEIcS Example: Panday Corporation computed normal income tax and MCIT. 2. Scope. 12-07 October 10.000 4th 200. Expanded withholding tax quarterly corporate income tax payments under the normal income tax.000 P30. 9-98. — Pertinent portions of Sec. 2007 REVENUE REGULATIONS NO.000 35. and the MCIT paid in the previous taxable quarter/s are allowed to be applied against the quarterly MCIT due. — Pursuant to the provisions of Sections 244.27(E) Minimum Corporate Income Tax (MCIT) on Domestic Corporations. if the computed quarterly MCIT is higher than the quarterly normal income tax the tax due to be paid for such taxable quarter at the time of filing the quarterly corporate income tax return shall be the MCIT which is two percent (2%) of the gross income as of the end of the taxable quarter. SECTION 1.000 80. Amendatory Provision.000 20. as amended. 77 of the same Tax Code. these Regulations are hereby promulgated to amend Revenue Regulations No. however.000 40. The MCIT shall be imposed whenever such corporation has zero or negative taxable income or whenever the amount of minimum corporate income tax is greater than the normal income tax due from such corporation. Thus.000 250. — "(1) Imposition of the Tax. In the payment of said quarterly MCIT. excess MCIT from the previous taxable year/s shall not be allowed to be credited. the quarterly income tax payable by Panday Corporation shall be computed as . 12-07 SUBJECT : Amending Certain Provisions of Revenue Regulations No. and creditable income taxes withheld for the 1st to 4th quarters including excess MCIT and excess withholding taxes from prior year/s are as follows: Excess Excess Normal Taxes MCIT Taxes W/Tax Quarter Income Tax MCIT Withheld Prior Year Prior Year 1st 100. — A minimum corporate income tax (MCIT) of two percent (2%) of the gross income as of the end of the taxable year (whether calendar or fiscal year.000 100. 75 and Sec. in order to align the time of payment of minimum corporate income tax (MCIT) imposed on domestic corporations and resident foreign corporations with the mandatory quarterly filing of normal corporate income tax returns pursuant to Sec. depending on the accounting period employed) is hereby imposed upon any domestic corporation beginning on the fourth (4th) taxable year immediately following the taxable year in which such corporation commenced its business operations. as amended. cDCaTS SECTION 2. TO : All Internal Revenue Officers and Others Concerned.000 100. as Amended.

000 80.000 2nd 120.000 250.000 10.000 30. 1st quarter — normal income tax P40.000 430.000 10.000 3rd 250.000 250. 2nd quarter — MCIT P230.000 ====== ====== ===== Quarterly corporate income tax due ESITcH (higher amount between normal income tax and MCIT) — MCIT P330.000 ====== ====== ===== Quarterly corporate income tax due (higher amount between normal income tax and MCIT) — Normal Income Tax P470.000 –––––– —–––––– Net Income Tax Due.000 Excess MCIT prior year 30.000 ====== For the 2nd quarter.000 –––––– –––––– ––––– Total 470.000 –––––– –––––– –––––– Total 220.000 2nd 120.000 50. the quarterly income tax payable by Panday Corporation shall be computed as follows: Normal Taxes MCIT Taxes W/Tax Quarter Income Tax MCIT Withheld Prior Year Prior Year 1st 100.000 20.000 Taxes Withheld — 1st qtr 20.000 60.000 ======= For the 3rd quarter.000 Taxes Withheld — 2nd qtr 30.000 20.000 Less: Taxes Withheld — Prior Year 10.000 Taxes Withheld — 2nd qtr 30.000 90.000 Net income tax payment — 1st qtr 40 000 100.000 Net income tax payment — 1st qtr 40.follows: Quarterly corporate income tax due (higher amount between normal income tax and MCIT) — normal income tax P100.000 P30.000 Taxes Withheld — 3rd qtr 40.000 Less: Taxes Withheld — Prior Year 10.000 80.000 30. the quarterly income tax payable by Panday Corporation shall be computed as follows: Excess Excess Normal Taxes MCIT Taxes W/Tax Quarter Income Tax MCIT Withheld Prior Year Prior Year 1st 100.000 Taxes Withheld — 1st qtr 20.000 –––––– ––––––– Net Income Tax Due.000 MCIT paid in the 2nd quarter230.000 Taxes Withheld — 1st qtr 20.000 Less: Taxes Withheld — Prior Year 10.000 40.000 100.000 330.000 P30.000 .

then computation of the income tax liability of Panday Corporation shall be as follows: CDScaT .000 125.000 Excess MCIT in prior year 30.000 4th 200.000 Taxes Withheld — 3rd qtr 40. in addition to the quarterly MCIT paid and quarterly normal income tax payments in the taxable quarters of the same taxable year excess MCIT in the prior year/s (subject to the prescriptive period allowed for its creditability).000 250. Thus. Excess MCIT from the previous taxable year/s shall not be allowed to be credited therefrom as the same can only be applied against normal income tax.000 10. the quarterly normal income tax payments in the quarters of the current taxable year.000 Taxes Withheld — 1st qtr 20. suppose the MCIT at year end is higher than the normal income tax.000 –––––– ––––––– Net Income Tax Due.000 Less: Taxes Withheld — Prior Year 10.000 MCIT paid in the 2nd quarter230.000 Taxes Withheld — 2nd qtr 30. the computed annual MCIT due appears to be higher than the annual normal income tax due. the computation of the annual income tax payable by Panday Corporation shall be computed as follows: TSacID Excess Excess Normal Taxes MCIT Taxes W/Tax Quarter Income Tax MCIT Withheld Prior Year Prior Year 1st 100.000 Net income tax payment — 3rd qtr 70.000 3rd 250. Moreover.000 530.000 35.000 –––––– –––––– –––––– Total 670.000 P30. the expanded withholding taxes in the current year and excess expanded withholding taxes in the prior year.000 40.000 Taxes Withheld — 4th qtr 35. what may be credited against the annual MCIT due shall only be the quarterly MCIT payments of the current taxable quarters. if in the computation of the annual income tax due.000 100.000 80. 3rd quarter — Normal Income Tax P70.000 20.000 505.000 400.000 2nd 120. in the above illustration. quarterly MCIT paid on the Quarterly Income Tax Return shall be credited against the normal income tax at year end if in the preparation and filing of the annual income tax return and in the final computation of the annual income tax due. AIDcTE However. it appears that the normal income tax title is higher than the computed annual MCIT.000 ====== ====== ====== Annual corporate income tax due (higher amount between normal income tax and MCIT) — Normal Income Tax P670.Excess MCIT in prior year 30.000 –––––––– –––––––– Annual Net Income Tax Due — Normal Income Tax P165. expanded withholding taxes in the current year and excess expanded withholding taxes in the prior year shall be allowed to be credited against the annual income tax computed under the normal income tax rules.000 ======= At year end.000 30.000 Net income tax payment — 1st qtr 40.000 100.000 ======== As can be seen from the above illustrative computation.

Provided. "normal income tax" means the income tax rates prescribed under Sec. however.000 ====== "For purposes of these Regulation of the term.000 P25.000 "Less: "1998 excess MCIT (25.000 Taxes Withheld — 2nd qtr 30.000 4th 50.000 "1998 amount of tax payable P75.000 80. 28 (A) (1) of the Code at 34% on January l.000 120. 1998.000 ––––––— "1999 P60. 1999.Excess Excess Normal Taxes MCIT Taxes W/Tax Quarter Income Tax MCIT Withheld Prior Year Prior Year 1st 100.000 100.000 35.000 P30.000 ––––––— "2000 P100.000 10.000 Taxes Withheld — 1st qtr 20. 2005 and thereafter.000 MCIT paid in the 2nd quarter230. pursuant to RA No.000 Taxes Withheld — 4th qtr 35.000 Net income tax payment — 1st qtr 40. 33% effective January l.000 2nd 120.000 125.000 ––––––– ––––––– Annual Net Income Tax Due — MCIT P75.000 30.000) . 9337.000 ====== ====== ====== Annual corporate income tax due (higher amount between normal income tax and MCIT) — MCIT P550.000 Taxes Withheld — 3rd qtr 40.000 475.000 P75.000 Less: Taxes Withheld — Prior Year 10.000 P100.000 ––––––– ––––––– –––––– Total 520.000 "1999 amount of tax payable P100. 2009 the rate of income tax shall be thirty percent (30%).000 3rd 250.000 "Computation of Net Amount of Tax Payable in 2000: "Amount of tax payable P100. 27 (A) and Sec.000 550.000 40. "In the case of a domestic corporation xxx xxx xxx "(2) Carry forward of excess minimum corporate income tax — AcHSEa xxx xxx xxx "Illustration on how to carry forward excess minimum corporate income tax presented on annualized basis — "Excess of MCIT "Normal Income Over the Normal "Year Tax MCIT Income Tax "1998 P50.000 250.000 P60.000 20.000 P40. at 32% effective January 1. that effective January 1.000 Net income tax payment — 3rd qtr 70. 2000 and 35% effective November 1.

as amended. 77 of the Code in relation to Section 245 of the same Code. "xxx xxx xxx" SECTION 3. This means that the term "gross income" will also include all items of gross income enumerated under Section 32(A) of the Tax Code. pursuant to the provisions of Sec. 27 (A). in case of sale of services. 27 (A) and Sec. the taxpayer should have paid the MCIT of P75. Gross Revenue shall include income from sale of services. 75 and Sec. This rule. xxx xxx xxx "(5) Specific Rules for Determining the Period When a Corporation Becomes Subject to the MCIT — xxx xxx xxx "(6) Manner of filing and payment — The minimum corporate income tax (MCIT) shall be paid in the sane manner prescribed for the payment of the normal corporate income tax which is on a quarterly and on a yearly basis. discounts. EcAISC "Passive incomes which are subject to final tax at source shall not form part of gross income for purposes of minimum corporate income tax. the same items must be included as part of the taxpayer's gross income for computing MCIT. likewise. 27 (A) of the Code. if apart from deriving income from these core business activities there are other items of gross income realized or earned by the taxpayer during the taxable period which are subject to the normal corporate income tax. Thus. "Gross sales" shall include only sales contributory to income taxable under Sec. AaCcST "xxx xxx xxx "(3) Relief from the Minimum Corporate income Tax under Certain Conditions — "xxx xxx xxx "(4) Definition of Terms "(a) "Gross income" defined — For purposes of the minimum corporate income tax prescribed under this Subsection. the computation of the MCIT shall be done on cumulative basis covering not only the current taxable quarter but also the previous . except income exempt from income tax and income subject to final withholding tax described in the succeeding subparagraph. taxable under Sec. The final comparison between the normal income tax payable by the corporation and the MCIT shall be made at the end of the taxable year and the payable or excess payment in the Annual Income Tax Return shall be computed taking into consideration corporate income tax payment made at the time of filing of quarterly corporate income tax returns whether this be MCIT or normal income tax. in case of sale of goods.000 —–––––– "The taxpayer shall pay the MCIT whenever it is greater than the regular or normal corporate income tax which is imposed under Sec.00 in 1998."1999 excess MCIT (40.000 —–––––– "Net amount of tax payable P35.000.00 since this amount is greater than the normal income tax of P50. Cost of Services or Direct Cost of Services shall include business expenses directly incurred or related to the gross revenue from rendition of services. — In the filing of the quarterly income tax return for the taxable quarter which is due for filing after the effectivity of these Regulations. and allowances and cost of goods sold. Transitory Provisions. It shall be covered by a tax return designed for the purpose which will be submitted together with the corporation's annual final adjustment income tax return. 28 (A) (1) of the Code. discounts. as amended. notwithstanding. allowances and cost of services/direct cost. under the example. the term "gross income" means gross sales less sales returns.000) P65." "Cost of goods sold" shall include all business expenses directly incurred to produce the merchandise to bring them to their present location and use.000. Domestic corporations shall be required to pay the minimum corporate income tax on a quarterly basis. or gross revenue less sales returns.

SECTION 4. — The provisions of Revenue Regulations No. 108. whereupon the higher amount between the two shall be the basis of the quarterly income tax payment to be made for said taxable quarter. Scope. 109 and 110. the gross income for the 1st and 2nd quarters shall be added to the gross income for the quarter ended September 2007. aEDCAH (SGD. — Pursuant to the provisions of Section 6 and 244. — The value added tax on transport of naturally grown and planted timber products shall be paid in advance by the owner/seller to the Bureau of Internal Revenue through the Authorized Agent Banks (AABs). Requirement to Pay Advance VAT on Transport of Naturally Grown and Planted Timber Products.taxable quarters of the same taxable year. 9-98 and all other internal revenue issuances inconsistent herewith are hereby repealed. or agreements entered into with. modified or amended accordingly. these Regulations are hereby promulgated to prescribe the policies and procedures for the advance payment of value added tax (VAT) on the transport of naturally grown and planted timber products for purposes of consummating a sale. TcEDHa Thus. the Department of Environment and Natural Resources (DENR). HEFTI Commissioner of Internal Revenue Copyri ght 2004 CD Technologi es Asia 10-15-2007 Revenue Regulations No.) MARGARITO B. TEVES Secretary of Finance Recommending Approval: (SGD. 2007 REVENUE REGULATIONS NO. or to the Revenue Collection Officers (RCOs) or deputized City or Municipal Treasurers. — These Regulations shall take effect after fifteen (15) days following publication in a newspaper of general circulation. whether natural or juridical. Such computed MCIT shall be compared with the cumulative normal income tax. 2007. SECTION 3. Persons Liable to Pay the Advance VAT on Naturally Grown and Planted Timber Products. before transporting them from place of production or concession. as amended. SECTION 5. in places where there are no AABs. — Owners/sellers of naturally grown and planted timber products. Excess normal income tax carried over from previous taxable year and payments made for the previous quarters of the same taxable year. in relation to Sections 106. for those using calendar year basis accounting period. Repealing Clause. including withholding tax credits claimed for said previous quarters of same taxable year shall be credited against the computed tax due in the cumulative quarterly tax return. who are holders of permits issued by. 13-07 SUBJECT : Prescribing the Rules on the Advance Payment of Value Added Tax/Percentage Tax on the Transport of Naturally Grown and Planted Timber Products TO : All Internal Revenue Officers and Others Concerned SECTION 1.) LILIAN B. all of the National Internal Revenue Code of 1997 (Code). 13-07 October 15. Effectivity Clause. These permits and agreements are the following: . are liable to pay the advance VAT on naturally grown and planted timber products harvested prior to its transport for purposes of consummating a sale. cDIaAS SECTION 2. the total of which shall be the basis of the 2% MCIT which shall then be compared with the computed cumulative normal income tax. The cumulative MCIT for the three (3) said quarters shall be paid in case the same appears to be higher than the normal income tax computed for the same period. in the filing of the quarterly income tax return for the third quarter ended September 2007 which is due for filing on or before November 29.

00/cm 1.500.00/cm 1.500.) Industrial Forest Management Agreements c. Philippine Mahogany Group. Lesser-Used 700.425.00/cm 1. SECTION 5. together with the BIR payment form and documents issued by the DENR.00/cm 950.00/cm 715.00/cm 1. as the authority to transport the naturally grown and planted timber products from cutting area to any destination which will be presented upon inspection by proper authorities. Yakal Group 1. Self Monitoring Form (SMF).00/cm Palosapis Group.000.00/cm 1.00/cm 1.425.400.400. 3. or similar required certificate/form.425.) Tree Farm Lease Agreements d. Basis for Determining the Amount of Advance VAT Payment.) Socialized Industrial Forest Management Program AEScHa g. including officers and agents of the Department of Environment and Natural Resources (DENR) and Bureau of Internal Revenue (BIR). Nato 1.00/cm 1.260.425.425.00/cm b.530.400.400. chip wood and 95. after payment of the Advance VAT as required in Section 3 of these Regulations.400. A separate Revenue Memorandum Order (RMO) will be issued to prescribe the details and specific manner in the issuance of Certificate of Advance Payment of VAT and reports to be submitted for .425.00/cm 1. Proof of Advance VAT Payment.400.00/cm 950.400.00/cm 1.00/cm 1.260.00/cm Manggachapui Group. — The valuation upon which the advance payment of VAT is computed under the preceding paragraph shall be adjusted when deemed necessary by the Commissioner of Internal Revenue upon prior consultation with the Secretary of the Department of Environment and Natural Resources.00/cm d.00/cm 1.00/cm Pulpwood.000.00/cm 1.00/cm c.400.00/cm 700. Furniture/Construction 950.400.00/cm 3.275. Solfwood Species except Igem 715.275. Premium species. allowed cut.275. Igem 1.00/cm 1.400. Certificate of Lumber Origin (CLO). 1. — a. 1.00/cm 1.00/cm 1.00/cm 1.00/cm and i.000. — The concerned Revenue District Office or the duly constituted unit in its place shall issue a Certificate of Advance Payment of the VAT (Annex A).00/cm 1. This certificate shall serve.a.) Community-Based Forest Management Program h.00/cm 3.00/cm g.260.00/cm Guijo Group 1.00/cm 1.400.00/cm 95. 1.00/cm Matchwood species (per cubic meter) TCcIaA b.00/cm e.00/cm 1. 1. Apitong Group 1.00/cm f.00/cm Hardwood h.) Timber License agreements b.1.00/cm 95.00/cm 700.) Base price — The amount of advance payment shall be determined by applying the VAT rate of 12% on the corresponding value per cubic meter of the different species of naturally grown and planted timber products in accordance with the following schedule: LUZON VISAYAS MINDANAO a.00/cm 1.00/cm 715.00/cm Narig Group. SECTION 4.000.) Agro-Forestry Farm Lease Agreements e.000.) Subsequent price adjustment. like Certificate of Timber Origin (CTO).400.000.) Timber Cutting/Salvage & Related Permits Naturally grown and planted timber products harvested from industrial tree plantations and in private lands covered by existing land titles and approved land applications are also subject to advance VAT.00/cm Manggasinoro Group.) Private Forest Development Agreements f.

the advance payment shall be credited to the monthly/quarterly percentage tax return.5 M. Penalty Clause. — Any violation of the provisions of these Regulations shall be subject to the penalties provided for in Sections 254. 2303) and proof of payment of the advance 3% percentage tax shall serve as the authority to transport the naturally grown/planted timber products. if the aggregate value of the products to be transported exceeds P1. (SGD. the amount of advance VAT payments made by sellers/owners of naturally grown and planted timber products shall be allowed as credits against their output VAT on the actual gross selling price of the timber products. shall be exempt from payment of advance VAT but should pay the advance 3% percentage tax as provided in these regulations. — These Regulations shall take effect after fifteen (15) days following its publication in a newspaper of general circulation. TEVES Secretary of Finance Recommending Approval: (SGD. In the case of advance 3% percentage tax. who can present a Certificate of Registrations (BIR Form No. 2303) showing that the owner is subject only to 3% percentage tax.) LILIAN B. The Certificate of Advance Payment of the VAT or Percentage Tax issued under Section 5 hereof shall be attached to the Monthly VAT Declaration/Quarterly VAT Return or Percentage Tax Return to support the claim for credit of advance VAT or Percentage Tax payment. _____ CERTIFICATE OF ADVANCE PAYMENT OF VAT/3% PERCENTAGE TAX (Authorizing the transport of forest products & planted species) ____________________________________________________________________ Name of Owner/Transporter of Forest and Planted Timber Products TIN: ____________________________________________________________________ . 275 and other pertinent provisions of the Code. HEFTI Commissioner of Internal Revenue ANNEX A CAP VAT NO._____ REPUBLIKA NG PILIPINAS KAGAWARAN NG PANANALAPI KAWANIHAN NG RENTAS INTERNAS Revenue Region No.monitoring purposes. the same shall be subject to the advance VAT. Prohibition of Withdrawal. An internal revenue officer. HSaEAD SECTION 8. Such Certificate of Registrations (BIR Form No. to be assigned by the Revenue Regional Director upon the recommendation of the Revenue District Officer (RDO) of the district having jurisdiction over the physical location where the naturally grown and planted timber products are cut may be present during the removal/transport of the said products from the premises of the cutting areas in order to ensure that the requirements of this Section are all complied with. Effectivity. — In addition to the input tax credits allowed under Section 110 of the Code. however that despite the presentation of the COR herein mentioned. SECTION 7. DTaAHS Absence of proof of payment of advance VAT will authorize the agents of DENR and BIR to hold in abeyance transport/sale of naturally grown and planted timber products. as amended. An owner of naturally grown and planted timber products. _____ Revenue District No. SECTION 6. Provided. — The owner/concessionaire/seller of the naturally grown or private timber products shall not allow any transport of said timber products from the cutting area without the advance payment of the VAT.) MARGARITO B. SECTION 9. Credit for Advance VAT Payments.

— A. Background. there is a need to clarify the tax treatment of profits on microfinance activities derived by these entities which enjoy tax exemption under existing laws and regulations. Accordingly. of cubic meters) of ________________________. Definition of Terms. transport of forest and planted timber (name of specie) products described above under Certificate of Timber Origin No. . It involves the use of viable alternative credit schemes and savings programs including the extension of small loans. ___________ dated ________________ is hereby authorized. — Pursuant to the provisions of Sec. these Regulations are hereby issued to rationalize the tax exemptions of these entities based on existing laws and regulations and the relevant tax treatment of the profits derived in relation to their delivery of microfinance services. Purpose.Address: ____________________________________________________________________ Payor has made the advance payment of VAT/30% Percentage Tax in the amount of _______________________ (P ______) for the transport of ____________________ (no. Microfinance — is a credit and savings mobilization program exclusively intended for the poor to improve the asset base of households and expand the access to savings of the poor. SECTION 3. otherwise known as the Social Reform and Poverty Alleviation Act. 244 of the National Internal Revenue Code of 1997. particularly in carrying out the objectives of Republic Act 8425 (RA 8425). cECaHA Particulars Drawee Bank Number Date Amount Cash ____________ ____________ ____________ ____________ Check ____________ ____________ ____________ ____________ BIR Form 0605 ____________ ____________ ____________ ____________ Official Receipt ____________ ____________ ____________ ____________ Name of AAB ________________ Name of RCO/DMT ________________ Date of Payment ________________ _____________________________ ____________________________ Name of Authorized Revenue Officer Signature _____________________________ ____________________________ Position/Title Date Original copy : Taxpayer Duplicate copy : File copy of issuing RDO Triplicate copy : Copy for Authorized Revenue Officer ECaAHS Copyri ght 2004 CD Technologi es Asia 12-11-2007 Revenue Regulations No. 2007 REVENUE REGULATIONS NO. as amended. cICHTD SECTION 2. With the increasing number of NGOs and cooperatives engaging in microfinance activities. 14-07 SUBJECT : Tax on Non-governmental Organizations (NGOs) and Cooperatives Engaged in Microfinance Activities TO : All Internal Revenue Officers and Others Concerned SECTION 1. — The government has recognized the role of microfinance institutions in its poverty alleviation programs. 14-07 December 11.

majority of which are poor.00. DISHEA SECTION 4. Duly registered cooperatives dealing/transacting business with both members and nonmembers a. Duly registered credit cooperatives dealing/transacting with members only shall be exempt from paying the following taxes for which they are directly liable: a. Income tax from operations.000.000. Exemption from income tax for a period of 10 years from the date of registration with the CDA. and other similar activities. c.000. this also includes the amount arising from the net surplus or any portion thereof which the cooperative is unable to divide because the General Assembly of the cooperative has not been convened for more than two (2) years. EaTCSA C. access to resources. patronage refund. research. b. . minimum requirements for savings. collateral-free arrangements. subject to periodic determination of the Department of Trade and Industry to reflect economic changes. alternative loan repayments. the maximum individual loan amount provided for microfinance loans is P150. Multipurpose Cooperative — is a type of cooperative which combines two (2) or more of the business activities of the different types of cooperatives. training. group character loans.000. reserve refund. optional fund or any other statutory reserve. as amended. as enumerated in paragraph A of this Section. E. education and training fund. Annual Registration Fee of P500. composed of at least fifteen (15) persons. e. exemption from taxes for which they are directly liable.00) — i. 20-2001. nonprofit organizations focusing on the upliftment of the basic or disadvantaged sectors of society by providing advocacy. Non-governmental organizations (NGOs) — Refers to duly registered nonstock. refers to the amount of accrued sum of money annually retained and deducted from the net surplus which is not intended for allocation and distribution to the members. For credit cooperatives with accumulated reserves and undivided net savings of more than Ten Million Pesos (P10.simplified loan application procedures. Credit cooperative — is a type of cooperative which provides thrift among its members and creates funds in order to grant loan for productive and provident purposes. and small denominated savers' instruments. Documentary stamp tax (DST) imposed under Title VII of the Tax Code of 1997. Cooperative — refers to associations duly registered with the Cooperative Development Authority (CDA). D. Tax Treatment of Microfinance Services Rendered by Cooperatives. community organizing. who voluntarily join together to achieve a lawful common social and economic end. F. and d.00) — i. the tax treatment for credit cooperatives on transactions related to its microfinance activities is as follows — A. For cooperatives with accumulated reserves and undivided net savings of not more than Ten Million Pesos (P10. having a common bond of interest. Accumulated Reserves — commonly referred to as the General Reserve Fund. provided.00 B. however. Value-added tax (VAT). G. Consistent with the provisions of RA 8425.000. that the other party to the taxable document/transaction who is not exempt shall be the one directly liable for the tax. B. DcSTaC b. 3% percentage tax under Section 116 of the Tax Code of 1997. usually deposited in the bank for the protection of and stability of the cooperative. — Consistent with the provisions of Revenue Regulations No. Undivided Net Savings — refers to the amount arising from net surplus or any portion thereof which the Board of Directors or the General Assembly of the cooperative decides not to divide or make available to members in the form of interest on share capital. It is organized by the members who equitably contribute the required share capital and accept a fair share of the risks and benefits of their undertaking in accordance with the universally accepted corporate principles and practices.

— These Regulations shall take effect fifteen (15) days after publication in the Official Gazette or newspaper of general circulation. income of such NGOs from microfinance activities. 2007 . Repealing Clause. ITHADC (SGD. as amended. 1997) After the lapse of such ten year period. Subject to all other internal revenue taxes unless otherwise provided by law. whether dealing purely with members or both members and non-members. they shall be subject to income tax at the full rate on the amount allocated for interests on capital. — All NGOs falling under the enumeration of Section 30 of the Tax Code of 1997. are considered as withholding agents and are required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding. EacHCD SECTION 6. 1987 (i. Tax Treatment of Microfinance Services Rendered by Non-governmental Organizations. The tax base for credit cooperatives liable to income tax shall be the net surplus arising from business transactions with non-members. both of the Tax Code. — These Regulations shall be read in consonance with Revenue Regulations No. Effectivity. and which are not in respect of their registered activities covered by Section 30 of the Tax Code of 1997. provided that the same is not consequently imposed on interest individually received by members. 76-2003. all cooperatives. are still also required to file withholding tax returns and remit withholding taxes on all income payments that are subject to withholding as specified in Revenue Memorandum Circular No. non-profit NGOs. as amended.e.provided. are exempt from income taxes.) MARGARITO B. as amended. as amended. issuances or parts thereof which are inconsistent with these Regulations insofar as microfinance activities of cooperatives and NGOs are concerned are hereby amended or repealed accordingly. after deducting the amounts from the statutory reserve funds as provided for in the Cooperative Code and other laws. Moreover. This is applicable to all cooperatives. For cooperatives whose exemption were removed by Executive Order No. that at least twenty five percent of the net income of the cooperative is returned to the members in the form of interest and/or patronage fund. 76-2003. all income of cooperatives which undertake microfinance activities in addition to their registered purpose except credit cooperatives and multi-purpose cooperatives which have one of its business activities as those performed by credit cooperatives. the ten year period shall be reckoned from March 10. whether or not engaged in microfinance activities. whichever comes first. non-stock. as amended. Exemption from VAT under Section 109 (M) and 3% tax under Section 116. shall be subject to appropriate taxes under the Tax Code of 1997. including those arising from all microfinance activities. in respect of income received by them as such. iii. TEVES Secretary of Finance Copyri ght 2004 CD Technologi es Asia 11-29-2007 Revenue Regulations No. shall be subject to tax under the Tax Code of 1997. regardless of classification. All revenue rulings. SECTION 7. SECTION 5. 15-07 Regulations Allowing for the Abatement of Penalties/Surcharges and Interest on Disputed/Litigated Assessments November 29. regardless of the disposition made of such income. Similarly. However.. 93. 20-2001 and Revenue Memorandum Circular No. Notwithstanding the foregoing. the tax exemption is valid only up to March 10. cDCaHA ii.

involving taxable year ending December 31. 2005 and prior years. Coverage. This Abatement Program is also aimed to substantially reduce the Bureau's rising inventory of disputed/litigated assessments by adopting a more pragmatic and expedient approach to convert these accounts into much needed revenue. shall be excluded: a) Cases involving issues decided by the Supreme Court with finality unless the issues involved difficult question of law or issues without established precedent ruling or Supreme Court Decision at the time of the transaction. Revenue District Office.. 2007. b) Cases where the Presidential Commission on Good Government (PCGG) has an interest and/or there is a need to coordinate with the PCGG. Accordingly. 1upnar08 The following cases. 15-07 SUBJECT : Regulations Allowing for the Abatement of Penalties/Surcharges and Interest on Disputed/Litigated Assessments TO : All Internal Revenue Officers and Others Concerned SECTION 1. Enforcement Service and other Offices in the National Office. consisting of a letter request by the taxpayer for abatement of penalties and interest. as amended. the imposition of penalties at this stage appears to be unjust and/or makes the assessment excessive. be forwarded to the appropriate Technical Working Committee (TWC) mentioned in Section 5 hereof for its review and evaluation. herein program of abatement of penalties would encourage taxpayers to pay the basic tax assessed as soon as possible to avoid the rigors of a protracted protest/litigation process. b) Concerned Group of the Large Taxpayers Service (LTS) — For Large Taxpayers Cases under the jurisdiction of the concerned group of the Large Taxpayers Service. however. and b) Civil tax cases being disputed before the Department of Justice and the courts. — All applications. Large Taxpayer's Service (LTS). Place for Filing Application for Abatement of Penalties and Interest. Purpose.g. including cases with decision which are not yet final and executory. SECTION 2. shall be covered hereof: a) Cases under administrative protest pending in the Regional Office. The abatement docket or record consisting of the "Application for Abatement of Penalties and Interest" together with the copy of Assessment Notice and duly validated payment form/proof of payment (BIR Form No. the Commissioner is authorized to abate or cancel tax liability and/or the penalties thereon when the tax or any portion thereof appears to be unjustly or excessively assessed. with duly issued Assessment Notice as of November 29.REVENUE REGULATIONS NO. However. HAaDTE Before an assessment reaches finality. disputed/protested administratively or judicially. duly accomplished Application for Abatement Form (Annex "A"). if the case is under judicial protest. as amended. as well as copy of the Pre-assessment Notice (PAN) or Final Assessment Notice (FAN) being the subject of application for abatement. This paves the legal avenue for the abatement thereof because pursuant to Section 204 (B) of the Code. or the administration and collection costs involved do not justify the collection of the amount due. shall be filed with the following offices: a) Revenue District Office (RDO) — For Regional Office Cases under the jurisdiction of the concerned district. and c) Withholding tax cases. e. CTA. — Pursuant to Section 204 (B) of the National Internal Revenue Code (Code) of 1997. SECTION 3. these Regulations are hereby promulgated in order to give the taxpayers the opportunity to settle their preliminary or final assessments. the liability of the taxpayer is not yet certain and. thereafter. CA and SC. by way of application for payment of basic tax and abatement or cancellation of all penalties. RTC. 0618) of basic tax shall. — The following cases. MTC. Collection Service. a photocopy of the Application for Abatement as well as of the payment form shall be given to the concerned Legal Office for its information/coordination with appropriate . Legal Service. including surcharge and interest. therefore.

Processing Time. the tax case is accordingly terminated through the issuance of a Termination Letter (Annex "B"). with the Accredited Agent Bank (AAB) of the RDO/LTS/Large Taxpayers District Office (LTDO) that has jurisdiction over the taxpayer. In the absence of an AAB. — The application for abatement or cancellation of penalties and/or interest. penalties and/or interest pursuant to Section 204 (B). both of the National Internal Revenue Code of 1997. who shall constitute a TWC for the evaluation of application for abatement of penalties and interest on protested/disputed/litigated assessments of taxpayers under the jurisdiction of the Large Taxpayers Service. cCEAHT (SGD. this program covers just the abatement of penalties and interest. SECTION 4. that with respect to abatement of penalties and interest on protested/disputed assessments of taxpayers under the LTS. through a majority vote of all the members. — The filing of the application and payment of an amount equal to One Hundred Percent (100%) of the Basic Tax assessed shall be made not later than February 29. and Authority to Cancel Assessment (ATCA) pertinent to that portion of the assessment (i. The recommendation of the aforementioned Officials. Time for Payment of the 100% Basic Tax Assessed. Approval of Abatement. IDaCcS SECTION 6. payment may be made with the Revenue Collection Officer/Deputized Treasurer of the concerned BIR Office that has jurisdiction over the taxpayer. however. Effectivity Clause.. — The Commissioner has the sole authority to abate or cancel internal revenue taxes. 2008. Upon approval by the Commissioner. 3 hereof to the respective TWCs within five (5) days from receipt by said office. Provided. HEFTI Commissioner of Internal Revenue ANNEX A APPLICATION FOR ABATEMENT PROGRAM (Under Revenue Regulations No. Nonetheless. through their respective TWCs.) LILIAN B. The Termination Letter and the Authority to Cancel Assessment shall be signed by the BIR Official who signs the same on audit cases that have been protested administratively or judicially. the penalties/interest) abated. should be transmitted by the concerned Offices mentioned in Sec. TEVES Secretary of Finance Recommending Approval: (SGD. Payment Form). _________) _____________ (Date) The Commissioner of Internal Revenue . who shall constitute a TWC for the evaluation and review of any application for abatement or cancellation of penalties and/or interest on disputed assessments/protested cases of taxpayers under the jurisdiction of the Region. through the concerned TWC. shall be the basis of the approval or disapproval by the Commissioner of the application. the concerned Officials. SECTION 7. b) The Assistant Commissioner/concerned Head Revenue Executive Assistant of the LTS. unless extended by the Commissioner on meritorious grounds. together with complete supporting documents (Assessment Notice. and the processing of the cases shall be coursed through the following officials: a) The Deputy Commissioner-Operations Group. in relation to Section 7 (c). The concerned TWC has fifteen (15) days within which to act on the case. cTSDAH SECTION 5.collecting office/TWC. before the same is elevated to the Commissioner for appropriate action.) MARGARITO B. — These Regulation shall take effect after (15) days of publication in a newspaper of general circulation. shall first have its recommendation approved or disapproved by Management Committee (MANCOM).e.

______________________________ Taxpayer/Authorized Representative (Signature Over Printed Name) ______________________ Position Contact person/s: Name: __________________ Telephone No. surcharge and interest. and implemented by Revenue Regulations No. : _________ _________ _________ DATE OF ASSESSMENT : _________ _________ _________ PERIOD COVERED : _________ _________ _________ TAX TYPE : _________ _________ _________ BASIC TAX : _________ _________ _________ SURCHARGE : _________ _________ _________ . Very truly yours._______________________________ _______________________________ _______________________________ Dear Sir/Madam: Please consider this as an application for abatement under Revenue Regulations No. bearing on your internal revenue tax liabilities. as amended. The following is/are my/our deficiency tax/es or assessment/s: Name of Taxpayer : ____________________________ Address : ____________________________ TIN : ____________ Taxable Year Covered: ____________ Assessment Notice No. NAME OF TAXPAYER : _________________________________ ADDRESS : _________________________________ TIN : _________________________________ ASSESSMENT NO. ________. _____. pursuant to the provisions of Section 204 (B) of the Tax Code. _______) Case No. 0618) reflecting payment of 100% of the basic tax due in the amount of P___________.: ___________ E-mail Address: ___________ ANNEX B QUEZON CITY TERMINATION LETTER (Abatement Program Under RR No. to wit. _____________ ________________ (Date) S i r / Madam: This refers to your availment of the ADMINISTRATIVE ABATEMENT of all penalties. : ________ ________ ________ Type of Tax : ________ ________ ________ Total Amount: ________ ________ ________ Basic ________ ________ ________ Surcharge ________ ________ ________ Interest ________ ________ ________ Compromise Penalty ________ ________ ________ Status of the Case : ____________________________ Attached is the triplicate copy of Abatement Program Payment Form (BIR Form No.

(if applicable) : _________ _________ _________ RCO NAME (if applicable) : _________ _________ _________ In this connection. ______________________________ Taxpayer/Authorized Representative (Signature Over Printed Name) ______________________ Position Copyri ght 2008 CD Technologi es Asia Inc .R. representing ONE HUNDRED PERCENT (100%) of the basic tax assessed under this ABATEMENT PROGRAM. NO. as amended. we are pleased to inform you that in view of your availment of the aforesaid benefits granted under the special provisions of Section 204 (B) of National Internal Revenue Code (NIRC). : _________ _________ _________ BANK BRANCH : _________ _________ _________ ROR NO.INTEREST : _________ _________ _________ COMPROMISE PENALTY : _________ _________ _________ TOTAL AMOUNT DUE : _________ _________ _________ AMOUNT PAID : _________ _________ _________ BANK O. and its implementing rules and regulations. Very truly yours. : _________ _________ _________ BANK VALIDATION NO. Agent at the end of the borrow . the tax liability stated above is hereby CLOSED and TERMINATED. and the payment of the total amount of ____________________________.