GCRO eVer. 1.0 – February 2021 Module 150.

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GCRO eVer. 1.0 – February 2021 Module 150.01
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 Background of Value-Added Tax
1. Value-Added Tax (VAT) is a business tax levied on the sale of
goods, properties and services and on importation of goods;
2. VAT is a universal taxation system;
3. VAT has various major and most controversial amendments;
Effectivity
 E.O. 273 - VAT Law (1988) Jan. 1, 1988
 RA 7716 - Expanded Value-Added Tax Jan. 1, 1996
(E-VAT), Implemented by RR 7-95
 RA 8241 - Improved Value-Added Tax Jan. 1, 1997
I-VAT), Implemented by RR 6-97
 RA 8424 - Tax Reform Act as of 1997 Jan. 1, 1998

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 Background of Value-Added Tax
 RA 9337 − known as the New Expanded VAT Law
− signed into law on May 24, 2005
− implementation withheld due to Temporary
Restraining Order (TRO)
− TRO lifted by the Supreme Court on Oct. 18, 2005
− became effective Nov. 1, 2005
− Implementing Rules and Regulation RR 14-2005 was
superseded by RR 16-2005

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 Background of Value-Added Tax
 RA 10963 − known as the Tax Reform for Acceleration and
Inclusion (TRAIN) Law
− signed into law on December 19, 2017
− became effective Jan. 1, 2018
− Amended portions of the provisions of RA 9337 on
VAT and Percentage Tax
− Implementing Rules and Regulation RR 13-2018

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 Background of Value-Added Tax
 RA 11467 − signed into law on January 22, 2020
− became effective January 27, 2020
− amended portion of the provision of RA 9337 & 10963
on VAT, where sale or importation of prescription
drugs and medicines for diabetes, high cholesterol,
and hypertension is classified as VAT exempt
− implementing Rules and Regulation RR 18-2020

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 Background of Value-Added Tax
 RA 11534 − known as the Corporate Recovery and Tax
Incentives for Enterprises Act (CREATE) Law
− signed into law on March 27, 2021
− became effective April 11, 2021 (however, there are
certain retroactive provisions)
− amended portion of the provision of RA 9337 & 10963
− implementing Rules and Regulation RR 4-2021

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 Objectives of Value-Added Tax

1. Broaden Tax Base

2. Provide an audit trail
3. Simplify business taxation

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 VAT Coverage: Persons Liable
 Sellers of Goods or
Properties Where Gross Sales
or Gross Receipts
 Sellers of Services >3,000,000.00 in
and/or Use or Lease of any 12-month
Properties period

 Importers

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 VAT Rates

 10% (up to January 31, 2006);

 12% (effective February 1, 2006);

and

 0%

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 Basis of VAT
 Sale of goods/Properties > Gross Sales

 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.

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 Basis of VAT
Importation

Total value used by the Bureau of Customs in

determining tariff and custom duties, plus custom
duties, excise taxes, if any, and other charges paid
by the importer prior to the release of such goods
from customs custody.

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 Basis of VAT
Sale of Service/Lease of Properties > Gross Receipt.

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 period for
the services performed or to be performed for
another person, excluding VAT (RR 16-2005).

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 Transactions Covered by VAT
A. Sale or Exchange of Goods or Properties
B. Importation
C. Sale or Exchange of Services
D. Transactions Deemed Sales
E. Zero-Rated Sale of Goods or Properties
F. Effectively Zero-Rated Transactions

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