Amends Certain Provisions of Revenue Memorandum Circular Nos. 11-2024, 12-2024, 13-2024 and 19-2024, Provide Clarifications/ Transitory Provisions and to Align them with the Provisions of Republic Act No. 11976, otherwise known as the “Ease of Paying Taxes Act”, its Implementing Rules and Regulations and other Issuances.
Coverage:
Amendments/Alignment with EOPT Act:
CLARIFICATIONS/TRANSTORY PROVISIONS:
I. RMC No. 12-2024 (FOREX TRANSACTIONS)
II. RMC NO. 13-2024 (RETIREMENT BENEFITS)
IV. GENERAL TRANSITORY PROVISIONS The taxpayer using official receipts (manual, POS, CRM, CAS, etc.) shall comply with the provisions of Revenue Regulations No. 7-2024 dated March 22, 2024 and other related issuances.
All revenue issuances and BIR Rulings inconsistent herewith are hereby considered amended, modified or revoked accordingly.
Implementing Section 32 (B)(5) of the National Internal Revenue Code of 1997, as amended by Republic Act. No. 12066, or the CREATE MORE Act
Section 1 Purpose – Pursuant to the provisions of Sections 244 and 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, in relation to Section 32 of Republic Act (RA) No. 12066 or the CREATE MORE (Maximize Opportunities for Reinvigorating the Economy) Act, these Regulations are hereby promulgated to implement Section 32(B)(5) of the NIRC, as amended by the said Act which now reads:
“SEC. 32. Gross Income.-
(B) Exclusions from Gross Income. – The following items shall not be Included in the gross income and shall be exempt from taxation under this Title
(5) Income Exempt under Treaty.- Income of any kind, to the extent required by any treaty obligation, including agreements entered into by the President with economies and administrative regions, subject to the concurrence of the Senate, binding upon the Government of the Philippines.
Section 2 Background – Power of the President of the Philippines to Enter into Treaties and International Agreements. – The power of the President of the Philippines to enter into treaties and International agreements is based on the following legal provisions:
Section 3 Definition of Terms- Words and/or phrases used under these Regulations shall mean:
Section 4 Income Exempt under Treaties and International Agreements – Pursuant to Section 32 (B)(5) of the NIRC, as amended by RA No. 12066 or the CREATE MORE Act, income of any kind shall be excluded from the computation of gross income, as defined under Section 32(A) of the NIRC, and shall upon the Government of the Philippines or his/her authorized representative(s), with economies and administrative regions, and duly concurred in by the least two-thirds of all the members of the Senate.
Nothing in these Regulations shall be constructed as recognizing the statehood of such economies and administrative regions, and derogating from whatever policy that the Philippines has agreed to adopt and implement.
Section 5 List of Economies and Administrative Regions – The President or his/her authorized representative(s) shall only negotiate with economies and administrative regions as contained in the list provided by the Department of Foreign Affairs (DFA). The indicative list of such economies and administrative regions is attached hereto as Annex “A” and forms an integral part of these Regulations.
Such list shall be regularly updated and/or communicated by the DFA to the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) as the former deems necessary.
Republic of the Philippines
Congress of the Philippines
Metro Manila
Nineteenth Congress
Third Regular Session
Begun and held in Metro Manila, on Monday, the twenty-second day of July, two thousand twenty-four.
[REPUBLIC ACT NO. 12066]
AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57,106, 108, 109, 112, 135, 237, 237-A, 269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 27 (A) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 27. Rates of Income Tax on Domestic Corporations. –
(A) In General. – Except as otherwise provided in this Code, an income tax rate of twenty-five percent (25%) effective July 1, 2020 is hereby imposed upon the taxable income derived during each taxable year from all sources within and without the Philippines by every corporation, as defined in Section 22(B) of this Code and taxable under this Title as a corporation, organized in, or existing under the laws of the Philippines: Provided, That corporations with net taxable income not exceeding Five million pesos (P5,000,000) and with total assets not exceeding One hundred million pesos (P100,000,000), excluding land on which the particular business entity’s office, plant, and equipment are situated during the taxable year for which the tax is imposed, shall be taxed at twenty percent (20%): Provided, further, That registered business enterprises under the enhanced deductions regime as provided in Section 294(C) of this Code shall be taxed at a rate equivalent to twenty percent (20%) on their taxable income derived from registered projects or activities during each taxable year.
xxx.”
SEC. 2. Section 28 (A)(1) of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 28. Rates of Income Tax on Foreign Corporations. –
(A) Tax on Resident Foreign Corporations. –
(1) In General. – Except as otherwise provide in this Code, a corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be subject to an income tax equivalent to twenty-five (25%) of the taxable income derived in the preceding taxable year from all sources within the Philippines effective July 1, 2020: Provided, That the registered business enterprises under the enhanced deductions regime as provided in Section 294(C) of this Code, shall be subject to a tax rate equivalent to twenty percent (20%) of their taxable income derived from registered projects or activities during each taxable year.
x x x.
(B) Tax on Non-resident Foreign Corporation. –
(1) In General. – x x x.”
SEC. 3. Section 32 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 32. Gross Income. –
(A) General Definition. – x x x
(B) Exclusion from Gross Income. – The following items shall not be included in the gross income and shall be exempt from taxation under this Title:
(1) x x x;
(2) x x x;
(3) x x x;
(4) x x x;
(5) Income Exempt under Treaty. – Income of any kind, to the extent required by any treaty obligation, including agreements entered into by the President with economies and administrative regions, subject to the concurrence of the Senate, binding upon the Government of the Philippines.
(6) x x x; and
(7) x x x.”
SEC. 4. Section 34 of the National Internal Revenue Code of 1997, as amended, is hereby further emended to read as follows:
“SEC. 34. Deductions from Gross Income. –
x x x
(B) Interest. – x x x
(C) Taxes. – x x x
(1) In General. – x x x
(2) Limitations on Deductions. – x x x
(3) Credit Against Tax for Taxes of Foreign Countries – x x x
(4) Limitations on Credit. – x x x
(5) Adjustments on Payment Incurred Taxes. – x x x
(6) Year in Which Credit Taken – x x x
(7) Proof of Credits – x x x
(8) Input Tax Attributable to VAT-Exempt Sales. – Input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer.
x x x.”
SEC. 5. Section 57 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 57. Withholding of Tax at Source.-
(A) Withholding of Final Tax on Certain Incomes. – x x x
(B) Withholding of Creditable Tax at Source. – The Secretary of Finance may, upon the recommendation of the Commissioner, require the withholding of a tax on the items of income payable to natural or juridical persons, residing in the Philippines, by payor-corporation/persons as provided for by law, at the rate of not more than fifteen percent (15%) thereof, which shall be credited against the income tax liability of the taxpayer for the taxable year.
(C) Tax-free Covenant Bonds. – x x x
SEC. 6. Section 106 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 106. Value-Added Tax on Sale of Goods or Properties.-
(A) Rate and Base of Tax. – x x x.
(1) ‘Goods or Properties.’ The term ‘goods’ or ‘properties’ x x x;
(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:
(a) Export Sales. – The term ‘export sales’ means:
(2) Sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer’s goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
(3) Sale of goods to an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year: Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the Department of Trade and Industry (DTI) shall determine compliance with the aforementioned threshold. Any export-oriented enterprise that fails to meet the threshold shall be disqualified from availing of VAT zero-rating on local purchases in the immediately succeeding year: Provided, finally, That input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer. For this purpose, ‘directly attributable’ shall refer to goods and services that are incidental to and reasonably necessary for the export activity of the export-oriented enterprise, including janitorial, security, financial, consultancy, marketing and promotion services, and services rendered for administrative operations such as human resources, legal, and accounting;
(4) The sale of goods, supplies, equipment, and fuel to persons engaged in international shipping or international air transport operations; Provided, That the goods, supplies, equipment, and fuel shall be used for international shipping or air transport operations; and
(5) Sales to bonded manufacturing warehouses of export-oriented enterprises.
The Department of Finance (DOF) shall establish a VAT refund center in the Bureau of Internal Revenue (BIR) and in the Bureau of Customs (BOC) that will handle the electronic processing and granting of cash refunds of creditable input tax.
An amount equivalent to five percent (5%) of the total VAT collection of the BIR and the BOC from the immediately preceding year shall be treated as a special account in the General Fund or as trust receipts for the purpose of funding claims for VAT refund: Provided, That any unused fund, at the end of the year shall revert to the General Fund: Provided, further, That the BIR and the BOC shall be required to submit to the Congressional Oversight Committee on the Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all pending claims for refund and any unused fund.
(b) x x x;
(c) x x x; and
(d) Those sales subject to zero percent (0%) VAT under special laws.
SEC. 7. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. –
(A) Rate and Base of Tax.- x x x
(B) Transactions Subject to Zero Percent (0%) Rate.- The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:
(5) Services performed for an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year: Provided, That such services are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the DTI shall determine compliance with the aforementioned threshold. Any export-oriented enterprise that fails to meet the threshold shall be disqualified from availing of VAT zero-rating in the immediately succeeding year: Provided, finally, That input tax otherwise due on VAT zero-rated local purchases attributable to VAT-exempt sales shall be paid and deductible from the gross income of the taxpayer. For this purpose, ‘directly attributable’ shall follow the same definition under Section 106 of this Code.
(6) x x x;
(7) x x x; and
(8) Sales subject to zero percent (0%) VAT under special laws.
The DOF shall establish a VAT refund center in the BIR and in the BOC that will handle the electronic processing and granting of cash refunds of creditable input tax.
SEC. 8 Section 109 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 109. Exempt Transactions. –
(u) Importation of fuel, goods, and supplies used for international shipping or air transport operations;
(dd) Importation of goods by an export-oriented enterprise whose export sales is at least seventy percent (70%) of the total annual production of the preceding taxable year. Provided, That such goods are directly attributable to the export activity of the export-oriented enterprise: Provided, further, That the Export Marketing Bureau of the DTI shall determine the compliance with the aforementioned threshold. For this purpose, ‘directly attributable’ shall follow the same definition under Section 106 of this Code.”
SEC. 9. Section 112 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 112. Refunds or Tax Credits of Input Tax.-
The taxpayer shall have fifteen (15) days from receipt of the full or partial denial to file a request for reconsideration. The Commissioner shall decide on the request for reconsideration within fifteen (15) days from receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or failure on the part of the Commissioner to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the request for reconsideration, or after the expiration of the ninety (90)-day period to decide on the application for refund, or after the lapse of the fifteen (15)-day period to decide on the request for reconsideration in cases where no action is made by the Commissioner on the request for reconsideration, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application for VAT refund within the ninety (90)-day period and on the request for reconsideration within the fifteen (15)-day period shall be punishable under Section 269 of this Code.
SEC. 10. Section 135 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 135. – Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. – Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of the Philippine or foreign registry directly importing petroleum products, on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner:
Suppliers of petroleum products to international carriers shall be allowed to file a claim for refund of excise tax paid on such products, upon presenting proof that the petroleum products were sold to international carriers of Philippine or foreign registry, for their use or consumption outside the Philippines, following the procedure under Section 135-A of this Code.
(b) x x x
(c) x x x.”
SEC. 11. A new Section 135-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 135-A shall read as follows:
”SEC. 135-A. Refund of Excise Tax on Petroleum Products. – No refund or credit of excise tax paid by suppliers on otherwise exempt sales under Section 135 shall be allowed, unless the taxpayer files a written claim for refund with the Commissioner, within two (2) years after the payment of excise tax: Provided, however, That a return filed showing an overpayment shall be considered a written claim for refund.
The Commissioner shall process and decide the refund under this provision within ninety (90) days from the submission of complete documents supporting the application filed. Should the Commissioner deny the claim for refund in full or in part, the Commissioner shall communicate in writing to the taxpayer, the legal and/or factual basis for the denial.
The taxpayer shall have fifteen (15) days from the receipt of the denial to file a request for reconsideration, which shall be resolved by the Commissioner within fifteen (15) days from the receipt thereof. Failure to file a request for reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or failure on the part of the Commissioner to act on the application for refund or request for reconsideration within the periods prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the request for reconsideration, or after the lapse of the period to decide on the application for refund or request for reconsideration, in cases where no action is made by the Commissioner, appeal the decision with the Court of Tax Appeals.
Failure on the part of any official agent or employee of the BIR to process and decide on the application within the ninety (90)-day period and on the request for reconsideration within the fifteen (15)-day period shall be punishable under Section 269 of this Code.”
SEC. 12. Section 237 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 237. Issuance of Invoices. –
Upon the establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, taxpayers engaged in e-commerce, and taxpayers under the jurisdiction of the Large Taxpayers Service to issue electronic invoices, subject to rules and regulations to be issued by the Secretary of Finance upon recommendation of the Commissioner following a public hearing held for this purpose: Provided, That taxpayers not covered by the mandate of this provision may voluntarily issue electronic invoices: Provided, further, That the Secretary of Finance, upon the recommendation of the Commissioner , may require taxpayers to issue electronic invoices.
SEC. 13. Section 237-A of the National Internal Revenue Code of 1997, as amended, is hereby further amended, to read as follows:
“SEC. 237-A. Electronic Sales Reporting System. – Upon the establishment of a system capable of storing and processing the required data, the Bureau shall require taxpayers engaged in the export of goods and services, and taxpayers under the jurisdiction of the Large Taxpayer Service to electronically report their sales data to the Bureau through the use of electronic point of sale systems, subject to rules and regulations to be issued by the Secretary of Finance as recommended by the Commissioner of Internal Revenue: Provided, That the machines, fiscal devices, and fiscal memory devices shall be at the expense of the taxpayer: Provided, further, That the Secretary of Finance, upon the recommendation of the Commissioner, may require taxpayers to electronically report their sales data to the Bureau.
All taxpayers required to issue and those who voluntarily choose to issue electronic invoices and electronically report their sales data to the Bureau shall be granted, in addition to the allowable deduction provided under Section 34(A)(1), the following allowable deductions:
(1) For micro and small taxpayers as defined under Section 21(B) of this Code, an additional deduction from taxable income of one hundred percent (100%) of the total cost for setting up an electronic sales reporting system.
(2) For medium and large taxpayers as defined under Section 21(B) of this Code, an additional deduction from taxable income of fifty percent (50%) of the total cost for setting up an electronic sales reporting system.
The foregoing allowable deduction shall be availed of only once. The importation of such electronic sales reporting system shall also be exempt from taxes.
SEC. 14. Section 269(j) of the National Internal Revenue Code of 1997, as amended, is further amended to read as follows:
”SEC. 269. Violations Committed by Government Enforcement Officers. – Every official, agent, or employee of the BIR or any other agency of the Government charged with the enforcement of the provisions of this Code, who is guilty of any of the offense herein below specified shall, upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than ten (10) years but not more than fifteen (15) years and shall likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote, and to practice in any public election:
(j) Deliberate failure to act on the application for refunds within the prescribed period provided under Sections 112, 135-A, and 204 of this Act.
SEC. 15. Section 292 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 292. Extent of Authority to Grant Tax Incentives. – The Fiscal Incentives Review Board or the Investment Promotion Agency, shall grant the appropriate tax incentives provided in this Title to RBEs only to the extent of their approved registered project or activity under the Strategic Investment Priority Plan (SIPP), taking into consideration the infusion of investment capital, generation of direct local employment which takes into account Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’, and other standard and project-specific performance metrics of the registered project or activity that may be imposed by the Fiscal Incentives Review Board of the concerned Investment Promotion Agency.”
SEC. 16. Section 293 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC.293. Definitions. – When used in this Title:
SEC. 17. Section 294 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 294. Incentives.-Subject to the conditions and period of availment in Sections 295, 296, and 296-A, respectively, the following types of tax incentives may be granted to registered projects or activities:
SEC. 18. Section 295 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 295. Conditions of Availment. – The availment of tax incentive in the preceding section shall be governed by the following rules:
The elected incentive package shall be irrevocable for the entire duration for entitlement to such incentives under Sections 296 and 296-A of this Code: Provided, That in no case shall the EDR be granted simultaneously with the SCIT.
The elected incentive package shall be irrevocable for the entire duration for entitlement to such incentives under Sections 296 and 296-A of this Code.
The folowing conditions for the availment of each enhanced deduction shall be complied with:
The Department of Finance, in coordination with the BIR, Fiscal Incentives Review Board, and Investment Promotion Agencies, shall prescribe the terms and conditions on the grant of EDR under Section 294(C) and this Title.
An Investment Promotion Agency may authorize the importation of capital equipment, raw materials, spare parts, or accessories pending issuance of the certificate of registration, subject to the posting of a performance bond or bank guarantee equivalent to duties and taxes waived on such importations and other conditions as may be determined by the concerned Investment Promotion Agency and the BOC.
No taxes and duties shall be imposed on subsequent sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder within the first five (5) years from date of importation. The approval of the Investment Promotion Agency must be secured before the sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories, which were granted tax and customs duty exemption hereunder, and shall be allowed only under any of the following circumstances:
In case of subsequent sale, transfer, or disposition of tax and duty-free capital equipment, raw materials, spare parts, or accessories, within the first five (5) years from the date of importation and upon approval by the Investment Promotion Agency, there shall be taxes and duties assessed based on the net book value of the capital equipment, raw materials, spare parts, or accessories if:
Provided, That if the RBE sells, transfers, or disposes the aforementioned imported items without prior approval, the RBE and the vendee, transferee, or assignee shall be solidarily liable to pay twice the amount of the duty exemption that should have been paid during its importation: Provided, further, That the sale, transfer, or disposition, of the capital equipment, raw materials, spare parts, or accessories made after five (5) years from the date of importation shall require that prior notice be given by the RBE to the Investment Promotion Agency: Provided, furthermore, That even if the sale, transfer, or disposition of the capital equipment, raw materials, spare parts, or accessories was made after five (5) years from the date of importation with notice to the Investment Promotion Agency, the RBE is still liable to pay the duties based on the net book value of the capital equipment, raw materials, spare parts, or accessories if it violated any of its registration terms and conditions.
Provided, That the local sales of goods and/or services by an RBE, regardless of the income tax incentives regime and location, shall be subject to twelve percent (12%) VAT, unless otherwise exempt or zero-rated under Titles IV and XIII of this Code. For this purpose, ‘local sales’ shall cover sales of goods and services to domestic market enterprises or non-RBEs, regardless of whether the sale occurs within the freeport or economic zones: Provided, further, That the liability to pay and remit the VAT to the government rests with the buyer of the said goods or services.
Any registered export enterprise that fails to meet the seventy percent (70%) export sales threshold in the immediately preceding year or high-value domestic market enterprise that fails to meet the export sale or investment capital requirement shall be disqualified from availing of duty exemption on importation under Section 294(D), and VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) in the immediately succeeding year.
Notwithstanding the provisions in the preceding paragraphs, sales receipts and other income derived from non-registered project or activity shall be subject to appropriate taxes imposed under this Code.
Any law to the contrary notwithstanding, the importation of petroleum products by any person, including RBEs, shall be subject to the payment of applicable duties and taxes as provided under Republic Act No. 10863, otherwise known as the ‘Customs Modernization and Tariff Act’, and this Code, respectively, upon importation into the Philippine customs territory and/or into free zones as defined under Republic Act No. 10863: Provided, That the importation of petroleum products used in international shipping or air transport operations shall be covered by the provisions of Sections 109 (U) and 135(A) of this Code.
Provided, That applicable duties x x x
The tax shall be directly remitted by the RBE to the Treasurer’s office of the municipality or city where the enterprise is located.
Where two (2) or more local government units cover the same enterprise, the sharing between such local government units shall be as follows:
Fifty percent (50%) of the share of the municipality based on the foregoing allocation shall be remitted to the province where the said municipality is located: Provided, That cities shall retain one hundred percent (100%) of their share.
Local government units may reduce or waive the rate of tax, or their share thereof, in the case of two (2) or more local government units covering the same enterprise.
RBEs, whose performance commitments include job generation, shall maintain their employment levels to the extent practicable. In case of reduced employment or when the performance commitment for job generation is not met, the RBEs must submit to their respective Investment Promotion Agencies and the Fiscal Incentives Review Board their justifications for and plans to address the same in the succeeding year.”
SEC. 19. A new Section 295-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 295-A shall read as follows:
“SEC. 295-A. Registered Business Enterprises Taxpayer Service – A separate service within the BIR is hereby created to support the end-to-end tax compliance of RBEs. The Commissioner shall prescribe the manner and place of filing returns and payment of taxes by RBEs through the said service. For ease of compliance with tax rules and regulations, simplified filing and payment processes shall be implemented for RBEs.”
SEC. 20, Section 296 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 296. Period of Availment of Incentives for Projects or Activities Approved by the Investment Promotion Agencies – The period of availment of incentives granted by the Investment Promotion Agencies to RBEs shall be as follows:
(A) For export enterprise under the SIPP, ITH of four (4) to seven (7) years, depending on location and industry priorities as specified in this section, followed by SCIT or EDR for ten (10) years, or SCIT or EDR for a maximum period of fourteen (14) to seventeen (17) years, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall only be allowed for the same registered project or activity if such project or activity employs at least ten thousand (10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed five (5) years, subject to the performance review by the Investment Promotion Agency, Notwithstanding any provision to the contrary, no ITH shall be granted to registered export enterprises that applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of SCIT or EDR for eight (8) years, subject to the provisions of Sections 294(B) and (C), qualifications set forth in the SIPP, and performance review by the Investment Promotion Agency: Provided, That existing registered projects or activities prior to the effectivity of Republic Act No. 11534 otherwise known as the ‘Corporate Recovery and Tax Incentives for Enterprises Act’, may qualify to register on or before December 31, 2024 and avail of the incentives granted under Republic Act No. 11534 for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to duty exemption on importation, VAT exemption on importation, and VAT zero-rating on local purchases subject to the provisions of Sections 294(D) and (E), respectively.
A qualified expansion project or activity registered under this Act may qualify to avail of EDR for eight (8) years, subject to the provisions of Section 294(C), qualifications set forth in the SIPP and performance review by the Investment Promotion Agency or the Fiscal Incentives Review Board, as the case may be: Provided, That existing registered projects or activities prior to the effectivity of Republic Act No. 11534 may qualify to register on or before December 31, 2024 and avail of the incentives granted under Republic Act No. 11534 for the prescribed period, subject to the criteria and conditions set forth in the SIPP.
The period of availment of the foregoing income tax-based incentives shall commence from the actual start of commercial operations with the RBE availing of the tax incentives within three (3) years from the date of registration, unless otherwise provided in the SIPP and its corresponding guidelines.
The period of availment of incentives based on the combination of both location and industry priorities, as determined in the SIPP, shall be as follows:
For exporters:
For domestic market activities:
In addition to the incentives provided in the tiers above, projects or activities of registered business enterprises located in areas recovering from armed conflict or a major disaster, as determined by the Office of the President, shall be entitled to two (2) additional years of income tax-based incentives.
Projects or activities registered prior to the effectivity of this Act, or under the incentive system provided herein that shall, in the duration of their incentives, completely relocate from the National Capital Region, shall be entitled to three (3) additional years of income tax-based incentives: Provided, That the additional incentive shall commence at the completion of the relocation of operations.
RBEs may continue to avail of the VAT zero-rating on local purchases and VAT exemption on importation under Section 294(E), and duty exemption on importation under Section 294(D), for the entire registration period as an RBE, reckoned from the date of registration, if the RBEs continue to meet the terms and conditions of registration by their respective Investment Promotion Agencies and if the RBEs maintain at least seventy percent (70%) of total annual production or output as export sales for the immediately preceding year.
Registered domestic market enterprises may avail of duty exemption on importation from the date of registration until the expiration of the income tax-based incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local purchases and VAT exemption on importation under this Title, registered export enterprises may avail of the VAT zero-rating on local purchases and VAT exemption on importation under Sections 106, 108, and 109 of this Code: Provided, That they comply with the requirements set forth therein.”
SEC. 21. A new Section 296-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 296-A shall read as follows:
”SEC. 296-A. Period of Availment of Incentives for Projects or Activities Approved by the Fiscal Incentives Review Board. – The period of availment of incentives granted by the Fiscal Incentives Review Board to RBEs shall be as follows:
(A) For an export enterprise under the SIPP, ITH of four (4) to seven (7) years, depending on location and industry priorities as specified in this section, followed by SCIT or EDR for twenty (20) years, or SCIT or EDR for a maximum period of twenty-four (24) to twenty-seven (27) yeras, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall only be allowed for the same registered project or activity if such project or activity employs at least ten thousand (10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed ten (10) years, subject to the performance review by the Fiscal Incentives Review Borad. Notwithstanding any provision to the contrary, no ITH shall be granted to registered export enterprises that have applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of SCIT or EDR for thirteen (13) years, subject to the provisions of Sections 294(B) and (C), qualifications set forth in the SIPP and performance review by the Fiscal Incentives Review Board: Provided, That existing registered projects or activities prior to the effectivity of this Act may qualify to register and avail of the incentives granted under this Act for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) and duty exemption on importation under Section 294 (D).
(B) For domestic market enterprise under the SIPP, ITH of four (4) to seven (7) years, followed by EDR for twenty (20) years, or EDR for a maximum period of twenty-four (24) to twenty-seven (27) years, depending on location and industry priorities: Provided, That the application for extension of availment of incentives shall be allowed for the same registered project or activity only if employment level for such project or activity employs at least ten thousand(10,000) direct local employees and maintains the said number during its registration, even if the registered project or activity no longer complies with the conditions and qualifications set forth in the SIPP: Provided, further, That the extension of availment of incentives shall not exceed ten (10) years, subject to the performance review by the Fiscal Incentives Review Board. Notwithstanding any provision to the contrary, no ITH shall be granted to domestic market enterprises that have applied for extension of availment of incentives for the same project or activity.
A qualified expansion project or activity registered under this Act may qualify to avail of EDR for thirteen (13) years, subject to the provisions of Section 294(C), qualifications set forth in the SIPP, and performance review by the Investment Promotion Agency or Fiscal Incentives Review Board, as the case may be: Provided, That existing registered projects or activities prior to the effectivity of this Act may qualify to register and avail of the incentives granted under this Act for the prescribed period, subject to the criteria and conditions set forth in the SIPP. The qualified expansion project or activity may also be entitled to VAT exemption on importation and VAT zero-rating on local purchases under Section 294(E) and duty exemption on importation under Section 294(D).
The period availment of the foregoing income tax-based incentives shall commence from the actual start of commercial operations with the RBE availing of the tax incentives within three (3) years from the date of registration, unless otherwise provided in the SIPP and its corresponding guidelines.
RBEs may continue to avail of the VAT zer-rating on local purchases and VAT exemption on importation under Section 294(E), and duty exemption on importation under Section 294(D), for the entire registration period as an RBE, reckoned from the date of registration, if the RBEs continue to meet the terms and conditions of their registration with their respective Investment Promotion Agencies and if the following requirements are met for the immediately preceding year:
Registered domestic market enterprise may avail of duty exemption from the date of registration until the expiration of the income tax-based incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local purchases and VAT exemption on importation under this Title, registered export enterprises may avail of the VAT zero-rating on local purchases and VAT exemption on importation under Sections 106, 108, and 109 of this Code: Provided, That they comply with the requirements set forth therein.
Projects or activities registered prior to the effectivity of this Act or under the incentive system provided herein that completely relocate from the National Capital Region, within the duration of their incentives, shall be entitled to three (3) additional years of income tax-based incentives: Provided, That the additional incentive shall commence upon the completion of the relocation of operations.”
SEC. 22. Section 297 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“SEC. 297. Expanded Functions of the Fiscal Incentives Review Board. – The functions and powers of the Fiscal Incentives Review Board created under the Presidential Decree No. 776, as amended, shall be further expanded as follows:
(A) To exercise policy-making, oversight, regulatory, and quasi-judicial functions on the administration and grant of tax incentives by the Investment Promotion Agencies and other government agencies administering tax incentives. In particular, the Fiscal Incentives Review Board shall:
(1) Determine the target performance metrics as conditions to avail of tax incentives;
(2) Review and audit the compliance of Investment Promotion Agencies and other government agencies administering tax incentives, with respect to the administration and grant of tax incentives and impose sanctions such as, but not limited to, withdrawal, suspension, cancellation of their authority to grant tax incentives under this Title without prejudice to the conduct of inquiry, investigation, and filing of appropriate criminal and administrative cases against erring officials and employees in accordance with the procedures prescribed under existing laws;
(3) Conduct regular monitoring and evaluation of investment and non-investment tax incentives, such as using cost-benefit analysis to determine their impact on the economy and whether agreed performance targets are met; and prescribe data requirements, reporting standards, processes, and procedures for the application of incentives for the calculation of costs and benefits upon application;
(4) Check and verify, as necessary, the compliance of RBEs through the Investment Promotion Agencies, with the terms and conditions of their availment, in particular the agreed target performance metrics, rules and regulations of this Act, and other relevant laws or issuances;
(5) Provide Investment Promotion Agencies with capacity-building activities to ensure that they are equipped to comply with reportorial requirements; and
(6) Assess its organizational structure, focusing on the adequacy of its human resources for regulatory and quasi-judicial functions. If necessary, the Fiscal Incentives Review Board shall submit to the Department of Budget and Management the proposed organizational changes to strengthen its human resources in accordance with existing laws and regulations.
For this purpose, all Investment Promotion Agencies and other government agencies administering tax incentives shall annually furnish the Fiscal Incentives Review Board with all the issuances related to the grant and administration of incentives
(B) To approve or disapprove the grant of tax incentives to the extent of the registered project or activity listed in the SIPP upon the recommendation of the Investment Promotion Agency: Provided, That the application for tax incentives shall be duly accompanied by a cost-benefit analysis: Provided, further, That the Investment Promotion Agencies shall use the Fiscal Incentives Review Board-prescribed data requirements and methodologies for the application of incentives in calculating the costs and benefits upon application: Provided, further, That the Investment Promotion Agencies shall grant the tax incentives to registered projects or activities listed in the SIPP with investment capital of Fifteen Billion pesos (P15,000,000,000) and below: Provided, furthermore, That the Fiscal Incentives Review Board, in consultation with the Investment Promotion Agencies, may increase the threshold amount of Fifteen billion pesos (P15,000,000,000);
(C) To approve applications for tax subsidies to government-owned or –controlled corporations, government instrumentalities, government commissaries and state universities and colleges.
For this purpose, the other government agencies shall ensure complete submission of applications, documents, records, books, or other relevant data or material;
(D) To formulate additional time-bound or place-specified projects or activities for inclusion in the SIPP during periods of recovery from calamities and post-conflict situations and where the Fiscal Incentives Review Board determines that there is a need to attract many classes, firms, and other investors that would accelerate the growth of a region’s flagship industries in accordance with the Medium-Term Development Plan and Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’ and recommend incentives to the President;
(E) To cancel, suspend, or withdraw, after due process, the enjoyment of fiscal incentives of concerned RBEs on its own initiative or upon the recommendation of the Investment Promotion Agency for flagrant and material violations of any of the conditions imposed in the grant of fiscal incentives, including but not limited to, the non-compliance with the agreed performance commitments and endorse RBEs whose incentives are cancelled, suspended, or withdrawn to the concerned revenue agencies for the assessment and collection of taxes and duties due commencing from the first year of availment;
(F) x x x
(G) To require Investment Promotion Agencies and other government agencies administering tax incentives to submit, regularly or when requested, summaries of approved investment and incentives granted, and firm- or entity –level tax incentives and benefits data as input to the Fiscal Incentives Review Board’s review and audit function, and evaluation of performance of recipients of tax incentives. For this purpose, the Fiscal Incentives Review Board shall maintain a master list of registered products and services for export or domestic consumption that are entitled to incentives: Provided, That to facilitate compliance with the foregoing, the DTI, in coordination with relevant regulatory bodies, shall cause the registration and reporting by RBEs of the types of services rendered whether domestically or to foreign clients; types of products manufactured domestically, products imported and sold locally, and products exported;
(H) To publish regularly, per firm, the data pertaining to the amount of tax incentives, tax payments, and other related information, including benefits data, subject to the provisions of Chapter V of this Title;
(I) x x x
(J) x x x
(K) To decide on issues, on its own initiative or upon the recommendation of the Investment Promotion Agency after due hearing, concerning the approval, disapproval, cancellation, suspension, withdrawal, or forfeiture of tax incentives or tax subsidy in accordance with this Act. The Fiscal Incentives Review Board shall decide on the matter within ninety (90) days from the date when the Fiscal Incentives Review Board may, within thirty (30) days from receipt of the adverse decision, appeal the same to the Court of Tax Appeals;
(L) To promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Title. The Fiscal Incentives Review Board may use any electronic means of publication in the Official Gazette or its official website;
(M) x x x
(N) x x x
(O) To recommend policies to prevent abuse of fiscal incentives availment and tax evasion under this Code and smuggling activities; and
(P) To exercise all other powers necessary or incidental to attain the purposes of this Act and other laws vesting additional functions on the Fiscal Incentives Review Board.
SEC. 23. A new Section 297-A shall be introduced in the National Internal Revenue Code of 1997, as amended. The new Section 297-A shall read as follows:
”SEC. 297-A. Processing of Tax Incentive Applications. – The Fiscal Incentives Review Board and Investment Promotion Agencies shall issue a decision on applications for tax incentives within twenty (20) working days from the receipt of all required documents, in accordance with Section 9 of Republic Act No. 11032, otherwise known as the ‘Ease of Doing Business and Efficient Government Service Delivery Act of 2018’. An extension of the processing period may be permitted only once, and shall in no case exceed an additional twenty (20) working days.”
SEC. 24. Section 300 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 300. Strategic Investment Priority Plan. – The BOI, in consultation with the Fiscal Incentives Review Board, and the Investment Promotion Agencies, other government agencies administering tax incentives, and the private sector, shall formulate the SIPP to be submitted to the President for approval, which may contain recommendations for types of non-fiscal support needed to create high-skilled jobs to grow a local pool of enterprises, particularly micro, small and medium enterprises (MSMEs), that can supply to domestic and global value chains, to increase the sophistication of products and services that are produced and/or sourced domestically, to expand domestic supply and reduce dependence on imports, and to attract significant foreign capital or investment. The SIPP may include areas of investment that are specific to an area or region, taking into consideration the project or activity that the Investment Promotion Agencies in those areas or regions deem fit to promote, in order to foster regional growth and attract investments: Provided, That the project or activity identified by the Investment Promotion Agencies shall be consistent with the Philippine Development Plan and Republic Act No. 11962, otherwise known as the ‘Trabaho Para sa Bayan Act’. The SIPP shall be valid for a period of three (3) years, subject to review and amendment every three (3) years thereafter unless there would be a supervening event that would necessitate its review: Provided, That the BOI shall cause the publication of the rules and regulations implementing the SIPP, including any amendments thereof, in the Official Gazette or newspaper of general circulation, and on its official website, to be effective.
The SIPP shall contain the following:
(B) Scope and coverage of location and industry tiers in Section 296.
All sectors or industries that may be included in the SIPP shall undergo an evaluation to determine the suitability and potential of the industry or the sector in promoting long-term growth and sustainable development, and the national interest. In no case shall a sector or industry be included in the SIPP unless it is supported by a formal evaluation process or report.
In no case shall the Investment Promotion Agencies accept application unless the project or activity is listed in the SIPP. Projects or activities not listed in the SIPP shall be automatically disapproved.”
SEC. 25. Section 301 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 301. Power of the President to Grant Incentives. – Notwithstanding the provisions of Sections 295, 296, and 296-A, the President may, in the interest of national economic development, or upon the recommendation of the Fiscal Incentives Review Board, modify the mix, period or manner of availment of incentives provided under this Code or craft the appropriate fiscal and non-fiscal support package for a highly desirable project or a specific industrial activity based on defined development strategies for creating high-value jobs, building new industries to diversify economic activities, and attracting significant foreign and domestic capital or investment, and the fiscal requirements of the activity or project, subject to maximum incentive levels recommended by the Fiscal Incentives Review Board: Provided, That the grant of ITH shall not exceed ten (10) years followed by SCIT of five percent (5%) or EDR; or SCIT or EDR, which may be immediately granted at the start of commercial operations: Provided, further, That the total period of income tax-based inventive availment shall not exceed forty (40) years.
The Fiscal Incentives Review Board shall determine whether the benefits that the government may derive from such investment are clear and convincing and far outweigh the cost of incentives that will be granted in determining whether a project or activity is highly desirable.
The determination by the Fiscal Incentives Review Board shall guide the President in calibrating either or both the magnitude of the incentives to be granted and the agreed performance target corresponding to the grant.
The President may exercise the powers under this section: Provided, That the following conditions are satisfied:
Provided, That the threshold shall be subject to a periodic review by the Fiscal Incentives Review Board every three (3) years, taking into consideration international standards or other economic indicators: Provided, further, That if the project fails to substantially meet the projected impact on the economy and agreed performance targets, the Fiscal Incentives Review Board shall recommend to the President the cancellation of the tax incentive or fiscal and non-fiscal support package or the modified period or manner of availment of incentives, after due hearing and an adequate opportunity to substantially comply with the agreed performance targets and outputs.
For this purpose, the President may grant non-fiscal support package limited to the utilization of government resources such as use of land and budgetary support provision under the annual General Appropriations Act.
This power of the President, in as far as it commands additional public sector expenditures in support of investors, is suspended during fiscal years when, an unmanageable fiscal deficit is declared by the President on the advice of the Development Budget Coordination Committee with a consequence that even core budgetary obligations, such as but not limited to, mandatory revenue allotments for local government units and budget for the National Economic and Development Authority’s core public investments program, cannot be fully financed.
Notwithstanding the provisions in the preceding paragraphs, tax and duty incentives granted through legislative franchises shall be exempted from the foregoing powers of the President to review, withdraw, suspend, or cancel tax incentives and subsidies.”
SEC. 26. Section 308 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 308. Penalties for Noncompliance with Filing and Reportorial Requirements. – Any RBE or other registered enterprises, which fails to comply with filing and reportorial requirements with the appropriate Investment Promotion Agencies or other government agencies administering tax incentives and/or, which fails to show proof of filing of tax returns using the electronic system for filing and payment of taxes of the BIR under Section 305 hereof, shall be imposed the following penalties by the appropriate Investment Promotion Agency or other government agency administering tax incentives:
Provided, That if the failure to show such proof is not due to the fault of the RBEs or other registered enterprises, the same shall not be a ground for the suspension of the ITH and/or other tax incentives availment: Provided, further, That collections from the penalties shall accrue to the general fund.
After due process, the concerned Investment Promotion Agency may cancel the registration, suspend the enjoyment of inventive benefits of any registered enterprise, and/or require refund of incentives enjoyed by such enterprise, including interests and monetary penalties, for any willful and material misrepresentation of information or submission of falsified or misleading information or documents for the purpose of availing of more incentives that what is entitled to under this Code: Provided, further, That in case of cancellation of the certificate of registration, the project or activity of the RBE shall cease to be registered and the RBE shall be required to pay all appropriate taxes and duties from the date of cancellation order becomes final and executory.
Provided, That the Investment Promotion Agency, with the recommendation of the Commissioner, may revoke or suspend incentives granted by the Investment Promotion Agency, and/or order a business closure of the RBE that violated Title VI (Excise Taxes on Certain Goods) and Title X (Statutory Offenses and Penalties) of this Code and other related revenue regulations, order, or issuances of the government: Provided, further, That such authority shall cover the acts of the RBE committed even in the first year of availment of incentives. Notwithstanding the provisions of this section, the DOF, the BIR, and the BOC shall retain their respective mandates, powers and functions as provided for under this Act and related laws.
Any government official or employee who fails without justifiable reason to provide or furnish the required tax incentives report or other data or information as required under Sections 306 and 307 of the Act shall be penalized, after due process, by a fine equivalent to the official’s or employee’s basic salary for a period of one (1) month to six (6) months or by suspension from government service for not more than one (1) year, or both, in addition to any criminal and administrative penalties imposable under existing laws.”
SEC. 27. Section 309 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 309. Prohibition on Registered Activities. – Except as allowed under this provision, a qualified registered project or activity under an Investment Promotion Agency administering an economic zone or freeport shall be exclusively conducted or operated within the geographical boundaries of the zone or freeport being administered by the Investment Promotion Agency in which the project or activity is registered: Provided, That an RBE may conduct or operate more than one qualified registered project or activity within the same zone or freeport under the same Investment Promotion Agency: Provided, further, That any project or activity conducted or performed outside the geographical boundaries of the zone or freeport shall not be entitled to the incentives provided in this Act: Provided, furthermore, That RBEs may institute a ‘telecommuting’ program as defined under Republic Act No. 11165, otherwise known as the “Telecommuting Act”, including work-from-home arrangements, which shall not cover more than fifty percent (50%) of the total workforce, and shall be subject to the rule and regulations formulated by the Investment Promotion Agency. The RBEs shall continue to avail of all the incentives provided under this Act and under their registration with any applicable Investment Promotion Agency: Provided, finally, That double registration for purposes of availing of other incentives under special laws shall not be allowed.”
SEC. 28. Section 310 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 310. Establishment of One-Stop Action Center and Initial Point of Contact for Foreign Investment Leads. – All Investment Promotion Agencies shall establish a one-stop shop or one-stop action center that will facilitate and expedite, to the extent possible, the setting up and conduct of registered projects or activities, including assistance in coordinating with the local government units and other government agencies to comply with the Republic Act No. 11032, otherwise known as the ‘Ease of Doing Business and Efficient Government Service Delivery Act of 2018’: Provided, however, That the enterprises shall continue to avail of the one-stop shop facility notwithstanding the expiration of their incentives under this Code.
Unless otherwise provided under special laws, local government units may delegate to the concerned Investment Promotion Agency, through appropriate memoranda of agreement, the functions of accepting, processing, and granting business permits and licenses.
The Investment Promotion Agency may also assist RBEs in obtaining licenses and permits from national government agencies by accepting and submitting documentary requirements for such licenses and permits, on behalf of the RBEs to the appropriate national government agencies.
The Investment Promotion Agency may undertake activities necessary to perform the function as the initial point of contact for foreign investment leads. Such activities shall include assisting potential foreign investors in establishing their business enterprises in the concerned Investment Promotion Agency or in the economic zone best suited to their specific needs.”
SEC. 29. Section 311 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
”SEC. 311. Investments Prior to the Effectivity of Republic Act No. 11534. – RBEs with incentives granted prior to the effectivity of Republic Act No. 11534 shall be subject to incentives granted in their certificate of registration or certificate of registration and tax exemption, ad to the following rules:
SEC. 30. Appropriations. – The Secretary of Finance shall immediately include in the Department’s program the operationalization of the electronic processing of the VAT refund system, the funding of which shall be included in the annual General Appropriations Act.
SEC. 31. Transitory Provisions. – The following provisions shall apply prospectively to projects or activities granted with tax incentives under Republic Act No. 11534 upon the effectivity of this Act:
No tax refund or credit shall be granted to RBEs covered by Section 19 of this Act.
SEC. 32. Implementing Rules and Regulations. – Within ninety (90) days from the effectivity of this Act, the Secretary of Finance, upon the recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations for its effective implementation: Provided, That for the provisions under Title XIII of the National Internal Revenue Code of 1997, as amended, the Secretary of Finance and the Secretary of Trade and Industry shall jointly promulgate the necessary rules and regulations thereof within the same period, after due consultation with the BIR, the BOC, the BOI, and other Investment Promotion Agencies, for its effective implementation. Failure to promulgate the rules and regulations shall not prevent the implementation of this Act upon its effectivity.
SEC. 33. Separability Clause. – If any provisions of this Act is declared unconcstitutional, the remaining parts or provisions hereof not affected thereby shall remain in full force and effect.
SEC. 34. Repealing Clause. – All laws, decrees, executive orders, implementing rules and regulations, issuances, or any part thereof inconsistent with the provisions of this Act are deemed repealed, amended, or modified accordingly.
SEC. 35. Effectivity. – This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.
Approved,
(signed) (signed)
FERDINAND MARTIN G. ROMUALDEZ FRANCIS “CHIZ” G. ESCUDERO
Speaker of the House of Representatives President of the Senate
This Act, which is consolidation of Senate Bill No. 2762 and House Bill No. 9794, was passed by the Senate of the Philippines and the House of Representatives on September 10, 2024.
REGINALD S. VELASCO RENATO N. BANTUG JR.
Secretary General Secretary of the Senate
House of Representatives
Approved: Nov 08, 2024
(signed)
FERDINAND ROMUALDEZ MARCOS JR
President of the Philippines
Published in Business World
Clarifying the Provisions of Republic Act No. 11976, Otherwise Known as the “Ease of Paying Taxes Act”, Applicable to the Power Industry
This Revenue Memorandum Circular is issued in order to publish and clarify certain provisions of Revenue Regulations (RR) Nos. 3-2024 and 7-2024, implementing the National Revenue Code of 1997 (Tax Code), as amended by Republic Act (RA) No. 11976 or otherwise known as the “Ease of Paying Taxes (EOPT) Act”, affecting generation, transmission, and distribution companies, as well as electric cooperatives and retail electricity suppliers.
Clarification of Certain Policies and Procedures Relative to the Implementation of the Risk-based Approach in the Verification and Processing of Value-Added Tax (VAT) Refund Claims, as Introduced in Republic Act No. 11976, Otherwise Known as the “Ease of Paying Taxes Act”
This circular is being issued to clarify and address concerns in the risk-based approach verification and processing of VAT refund claims pursuant to Section 112 (A) of the National Internal Revenue Code of 1997 (Tax Code), as amended by Republic Act No. 11976 r the Ease of Paying Taxes (EOPT) Act, and as implemented by the Revenue Regulations (RR) No. 05-2024, and Revenue Memorandum Order (RMO) No. 23-2024, as amended by RMO No. 42-2024.
Example 2: The taxpayer-claimant submitted the following documents in support of its claim for VAT refund amounting to P 7,000,000.00:
By: Garry Pagaspas, CPA
With the advent of advanced technology, sales of goods and services has been automated online worldwide through digitalization without much interaction among buyers and sellers. For buyers, this gave much advantage for being able to acquire goods and services from outside the country, while local suppliers are challenged for competition within and outside Philippines. On the other side, it made the government realized the seemingly inequality on taxation between local suppliers paying taxes on sales while giving undue advantage for non-resident suppliers deriving income through digital platform from Philippine buyers without paying taxes on them in Philippines. These inequalities paved way to the legislation of Republic Act No, 12023 – Value Added Tax (VAT) on Digital Services Law in Philippines (RA 12023 -VAT on Digital Services Philippines) that is aimed to level the playing field among digital service providers – local and foreign. By this present, let us share the basic features of Republic Act No, 12023 – Value Added Tax (VAT) on Digital Services Law in Philippines as follows:
1. Classified and defined digital services and digital services providers
RA 12023 -VAT on Digital Services Philippines now classified digital services as among those services subject to 12% value added tax in Philippines. By definition, “digital services” shall refer to any service supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. Digital services shall include online search engines; online marketplace or e-marketplace; cloud services; online media and advertising; online platforms; or digital goods. For the purpose and by implication, digital service providers would refer to those who supply digital services subject to 12% value added tax in Philippines and is further classified as resident or non-resident – those that has no physical presence in Philippines.
In a Press Release of the Department of Finance dated September 28, 2024, it cited among digital service providers some popular streaming services such as Netflix, Disney+, and online shopping sites such as Shein, Temu and Amazon who will now have to pay for VAT on their digital services that are consumed in Philippines.
2. Imposed 12% VAT on non-resident digital services providers consumed in Philippines
Under RA 12023 – VAT on Digital Services Philippines, digital service providers are liable for 12% value added tax on their supply of digital services – whether residents on non-residents. This seems plain and simple for resident digital service providers who have a registered local entity in Philippines while for non-residents, this seems totally new, if not challenging. Accordingly, non-resident digital services providers are now subject to 12% VAT under RA 12023 – VAT on Digital Services Philippines and the following special rules apply:
RA 12023 -VAT on Digital Services Philippines specifically provides that non-resident digital service providers are not allowed to claim creditable input VAT.
Notably, prior to RA 12023 -VAT on Digital Services Philippines, 12% VAT on services of non-residents normally apply to those services being rendered in the Philippines, regardless of whether they are regularly rendered in Philippines. Under RA 12023 -VAT on Digital Services Philippines, digital services of non-residents through their digital platforms are considered services performed in Philippines if such services are consumed in the Philippines.
3. Imposed further tax compliance obligations on non-resident digital services providers
RA 12023 -VAT on Digital Services Philippines requires the following tax compliance obligations upon non-resident digital services providers:
Notably, penalties would be imposed for non-compliance of the above by the digital service providers in Philippines.
4. VAT exemption on digital services in Philippines
While RA 12023 -VAT on Digital Services Philippines imposes 12% VAT on digital services consumed in Philippines, it nevertheless imposed the following exemptions:
5. Ph local buyers’ obligation to withhold VAT on payments to digital service providers
Considering the peculiarity of non-residents who do not have physical presence, RA 12023 -VAT on Digital Services Philippines imposed the following withholding tax obligations to local buyers in the Philippines:
Notably, the above are added withholding tax obligations imposed under RA 12023 -VAT on Digital Services Philippines while the rest of the withholding VAT rules would seem to remain in place such as 5% creditable VAT on government money payments to local VAT suppliers.
6. Funding for the development of creative industry in Philippines
Under RA 12023 -VAT on Digital Services Philippines 5% of incremental VAT revenues on digital services for the first five (5) years from effectivity of the law will be allocated and exclusive used for the development of creative industries in the Philippines.
7. Eyed to generate PhP80B to PhP145 B of revenues for 2025 to 2028.
As Sec of Finance puts it during its Press Release dated Sept. 28, 2024, RA 12023 – VAT on Digital Services Law in Philippine projects around PhP80B to PhP145B of VAT revenues for the period 2025 to 2028, depending on the compliance of digital services providers and related taxpayers.
8. Power to block digital services of non-residents in coordination with DICT through NTC
RA 12023 -VAT on Digital Services Philippines provides that the power of the Commissioner of Internal Revenue to suspend operations shall include the blocking of digital services performed or rendered in the Philippines by a digital service provider which shall be implemented by the Department of Information and Communications Technology (DICT) through the National Telecommunications Commission (NTC).
Disclaimer.
The above features are lifted from the author’s understanding and personal take of the provisions of RA 12023 -VAT on Digital Services Philippines summarized for better appreciation of its provisions. The author suggests reading through the provisions of RA 12023 -VAT on Digital Services Philippines and watch-out for the implementing rules to be issued soon for further details.
Author’s Profile:
Garry Pagaspas, CPA is a currently the Managing and Tax Partner of G. Pagaspas Partners & Co. CPAs (independent member firm of Allinial Global, 2nd largest accounting association worldwide based on International Accounting Bulletin’s 2023 released survey) based in Makati City with Global Outsourcing offices in Kalibo, Aklan. He is likewise the President at Tax and Accounting Center, Inc., the training and consulting company he founded in relation to his passion for teaching and helping out Ph entrepreneurs and foreign investors to Philippines.
Views in this article is personal to the author, not equivalent to a professional opinion and does not represent that of the organizations he is connected with. For your feedback or related concerns on staff leasing or employer of record in Philippines, you may send mail at info(@)taxactgcenter.ph (please exclude open and close parenthesis on the @ sign.
H. No. 4122
S. No. 2528
[Republic Act No. 12023]
AN ACT AMENDING SECTIONS 105, 108, 109, 110, 113, 114, 115, 128, 236, AND 288 AND ADDING NEW SECTIONS 108-A AND 108-B OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled;
SEC 1. Section 105 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:
Sec. 105. Persons Liable. – Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, including digital services, and any person who imports goods shall be subject to the value-added tax imposed in Sections 106 to 108 of this Code. “The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. This rule shall likewise apply to existing contracts of sale or lease of goods, properties or services at the time of the effectivity of Republic Act No. 7716. “The phrase ‘in the course of trade or business’ means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity. “The rule of regularity, to the contrary notwithstanding, services as defined in this Code rendered in the Philippines by nonresident foreign persons shall be considered as being rendered in the course of trade or business: Provided, That digital services delivered by nonresident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines.”
Sec. 105. Persons Liable. – Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, including digital services, and any person who imports goods shall be subject to the value-added tax imposed in Sections 106 to 108 of this Code.
“The value-added tax is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. This rule shall likewise apply to existing contracts of sale or lease of goods, properties or services at the time of the effectivity of Republic Act No. 7716.
“The phrase ‘in the course of trade or business’ means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity.
“The rule of regularity, to the contrary notwithstanding, services as defined in this Code rendered in the Philippines by nonresident foreign persons shall be considered as being rendered in the course of trade or business: Provided, That digital services delivered by nonresident digital service providers shall be considered performed or rendered in the Philippines if the digital services are consumed in the Philippines.”
SEC 2. Section 108 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 108. Value-added Tax on the Sale of Services, Including Digital Services, and the Use or Lease of Properties. – “(A) Rate and Base of Tax. – There shall be levied, assessed and collected, a value-added tax equivalent to twelve percent (12%) of the gross sales derived from the sale or exchange of services, including digital services, and the use or lease of properties. “The phrase ‘sale or exchange of services’ means the performance of all kinds of services in the Philippines for others for a fee, remuneration, or consideration, including those performed or rendered by construction and service contractors; stock, real estate, commercial, customs and immigration brokers; lessors of property, whether personal or real; warehousing services; lessors or distributors of cinematographic films; persons engaged in milling, processing, manufacturing, or repacking goods for others; proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers; dealers in securities; lending investors; transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes; common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines; sales of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives; services of franchise grantees of electric utilities, telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of this Code, and non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; digital service providers,; and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. The phrase ‘sale or exchange of services’ shall likewise include: “(1) x x x; “(2) x x x; “(3) x x x; “(4) x x x; “(5) x x x; “(6) x x x; “(7) The supply of digital services; “(8) The lease of motion picture films, films, tapes, and discs; and “(9) The lease or the use of or right to use radio, television, satellite transmission, and cable television time. “Lease of properties shall be subject to the tax herein imposed irrespective of the place where the contract of lease or licensing agreement was executed if the property is leased or used in the Philippines. “x x x.”
“Sec. 108. Value-added Tax on the Sale of Services, Including Digital Services, and the Use or Lease of Properties. –
“(A) Rate and Base of Tax. – There shall be levied, assessed and collected, a value-added tax equivalent to twelve percent (12%) of the gross sales derived from the sale or exchange of services, including digital services, and the use or lease of properties.
“The phrase ‘sale or exchange of services’ means the performance of all kinds of services in the Philippines for others for a fee, remuneration, or consideration, including those performed or rendered by construction and service contractors; stock, real estate, commercial, customs and immigration brokers; lessors of property, whether personal or real; warehousing services; lessors or distributors of cinematographic films; persons engaged in milling, processing, manufacturing, or repacking goods for others; proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts; proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers; dealers in securities; lending investors; transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes; common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines; sales of electricity by generation companies, transmission by any entity, and distribution companies, including electric cooperatives; services of franchise grantees of electric utilities, telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of this Code, and non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies; digital service providers,; and similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties. The phrase ‘sale or exchange of services’ shall likewise include:
“(1) x x x;
“(2) x x x;
“(3) x x x;
“(4) x x x;
“(5) x x x;
“(6) x x x;
“(7) The supply of digital services;
“(8) The lease of motion picture films, films, tapes, and discs; and
“(9) The lease or the use of or right to use radio, television, satellite transmission, and cable television time.
“Lease of properties shall be subject to the tax herein imposed irrespective of the place where the contract of lease or licensing agreement was executed if the property is leased or used in the Philippines. “x x x.”
SEC. 3. A new section designated as Section 108-A under Chapter I, Title IV, of the National Internal Revenue Code of 1997, as amended, is hereby inserted to read as follows:
“Sec. 108-A. Liability of Persons Providing Digital Services. – The digital service provider, whether resident or nonresident, shall be liable for assessing, collecting, and remitting the value-added tax on the digital services consumed in the Philippines, subject to the provision on withholding of value-added tax on digital services under Section 114(D). “When used in this title: “(a) The term ‘digital service’ shall refer to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. Digital service shall include: “(1) Online search engine; “(2) Online marketplace or e-marketplace; “(3) Cloud service; “(4) Online media and advertising; “(5) Online platform; or “(6) Digital goods. “(B) The term ‘digital service provider’ refers to a resident or nonresident supplier of digital services to a consumer who uses digital services subject to value-added tax in the Philippines. “(C) The term ‘nonresidential digital service provider’ means a digital service provider that has no physical presence in the Philippines.”
“Sec. 108-A. Liability of Persons Providing Digital Services. – The digital service provider, whether resident or nonresident, shall be liable for assessing, collecting, and remitting the value-added tax on the digital services consumed in the Philippines, subject to the provision on withholding of value-added tax on digital services under Section 114(D).
“When used in this title:
“(a) The term ‘digital service’ shall refer to any service that is supplied over the internet or other electronic network with the use of information technology and where the supply of the service is essentially automated. Digital service shall include:
“(1) Online search engine;
“(2) Online marketplace or e-marketplace;
“(3) Cloud service;
“(4) Online media and advertising;
“(5) Online platform; or
“(6) Digital goods.
“(B) The term ‘digital service provider’ refers to a resident or nonresident supplier of digital services to a consumer who uses digital services subject to value-added tax in the Philippines. “(C) The term ‘nonresidential digital service provider’ means a digital service provider that has no physical presence in the Philippines.”
SEC. 4. A new section designated as Section 108-B under Chapter I, Title IV, of the National Internal Revenue Code of 1997, as amended, is hereby inserted to read as follows:
“Sec. 108-B. Liability of a Nonresident Digital Service Provider to Withhold and Remit Value-Added Tax. – A nonresident digital service provider required to be registered for value-added tax (VAT) under Section 236 (F) of this Code shall be liable for the remittance of value-added tax on the digital services that are consumed in the Philippines if the consumers are non-VAT registered: Provided, That if the consumers are VAT-registered, the provision of Section 114(D) shall apply. Ïf a VAT-registered nonresident digital service provider is classified as an online marketplace or e-marketplace, it shall also be liable to remit the value-added tax on the transactions of nonresident sellers that go through its platform: Provided, That it controls key aspects of the supply and performs any of the following: “(a) It sets, either directly or indirectly, any of the terms and conditions under which the supply of goods is made; or “(b) It is involved in the ordering or delivery of goods, whether directly or indirectly.
“Sec. 108-B. Liability of a Nonresident Digital Service Provider to Withhold and Remit Value-Added Tax. – A nonresident digital service provider required to be registered for value-added tax (VAT) under Section 236 (F) of this Code shall be liable for the remittance of value-added tax on the digital services that are consumed in the Philippines if the consumers are non-VAT registered: Provided, That if the consumers are VAT-registered, the provision of Section 114(D) shall apply.
Ïf a VAT-registered nonresident digital service provider is classified as an online marketplace or e-marketplace, it shall also be liable to remit the value-added tax on the transactions of nonresident sellers that go through its platform: Provided, That it controls key aspects of the supply and performs any of the following:
“(a) It sets, either directly or indirectly, any of the terms and conditions under which the supply of goods is made; or
“(b) It is involved in the ordering or delivery of goods, whether directly or indirectly.
SEC. 5. Section 109 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 109. Except Transaction. – “The following transactions shall be exempt from the value-added tax: “(A) x x x “(B) x x x “(C) x x x “(D) x x x “(E) x x x “(F) x x x “(G) x x x “(H) Educational services, including online courses, online seminars, and online trainings, rendered by private educational institutions, duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA), and those rendered by government educational institutions; and sale of online subscription-based services to DepEd, CHED, TESDA, and educational institutions recognized by said government agencies; “(I) x x x “(J) x x x “(K) x x x “(L) x x x “(M) x x x “(N) x x x “(O) x x x “(P) x x x “(Q) x x x “(R) x x x “(S) x x x “(T) x x x “(U) x x x “(V) Services of bank, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, including those rendered through different digital platforms; “(W) x x x “(X) x x x “(Y) x x x “(Z) x x x “(AA) x x x “(BB) x x x “(CC) x x x.”
“Sec. 109. Except Transaction. –
“The following transactions shall be exempt from the value-added tax:
“(A) x x x
“(B) x x x
“(C) x x x
“(D) x x x
“(E) x x x
“(F) x x x
“(G) x x x
“(H) Educational services, including online courses, online seminars, and online trainings, rendered by private educational institutions, duly accredited by the Department of Education (DepEd), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDA), and those rendered by government educational institutions; and sale of online subscription-based services to DepEd, CHED, TESDA, and educational institutions recognized by said government agencies;
“(I) x x x
“(J) x x x
“(K) x x x
“(L) x x x
“(M) x x x
“(N) x x x
“(O) x x x
“(P) x x x
“(Q) x x x
“(R) x x x
“(S) x x x
“(T) x x x
“(U) x x x
“(V) Services of bank, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries, including those rendered through different digital platforms;
“(W) x x x
“(X) x x x
“(Y) x x x
“(Z) x x x
“(AA) x x x
“(BB) x x x
“(CC) x x x.”
SEC. 6. Section 110 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
Sec. 110. Tax Credits. – “(A) Creditable Input Tax. – “(1) x x x “(2) The input tax on domestic purchase or importation of goods or properties by a VAT-registered person shall be creditable: “(a) To the purchaser upon consummation of sale and on importation of goods or properties; and “(b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs. “Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code shall be spread evenly over the month of acquisition and the fifty-nine(59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (P1,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, further, That the amortization of the input VAT shall be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, finally, That in the case of purchase of services, lease r use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee. “Notwithstanding the foregoing, nonresident digital service providers shall not be allowed to claim creditable input tax. “x x x.”
Sec. 110. Tax Credits. –
“(A) Creditable Input Tax. –
“(1) x x x
“(2) The input tax on domestic purchase or importation of goods or properties by a VAT-registered person shall be creditable:
“(a) To the purchaser upon consummation of sale and on importation of goods or properties; and
“(b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs.
“Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code shall be spread evenly over the month of acquisition and the fifty-nine(59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (P1,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, further, That the amortization of the input VAT shall be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, finally, That in the case of purchase of services, lease r use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee.
“Notwithstanding the foregoing, nonresident digital service providers shall not be allowed to claim creditable input tax.
“x x x.”
SEC. 7. Section 113 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. – “(A) Invoicing Requirement. – A VAT-registered person shall issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services: Provided, That a digital sales or commercial invoice shall be issued for every sale, barter, or exchange of digital services made by a VAT-registered nonresident digital service provider. “(B) Information Contained in the VAT Invoice. – x x x “(1) x x x “(2) x x x “(3) x x x “(4) x x x “(5) The digital sales or commercial invoice issued by a VAT-registered nonresident digital service provider shall indicate the following information in lieu of the requirements under Section 113, Subsection (b), paragraph 1 to 4: “(a) Date of the transaction; “(b) Transaction reference number; “(c) Identification of the customer “(d) Brief description of the transaction; and “(e) The total amount with the indication that such amount includes the value-added tax: “Provided, That if the sale of digital services includes some services which are subject to VAT, and some that are VAT zero-rated, or VAT-exempt, the invoice shall clearly indicate the breakdown of the sale price by its taxable, VAT-exempt, and VAT zero-rated components: Provided, further, That the calculation of the value-added tax on each portion of the sale shall be shown on the invoice. “(C) Accounting Requirements – Notwithstanding the provisions of Section 233, all persons subject to the value-added tax under Section 106 and 108 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain such information as may be required by the Secretary of Finance: Provided, That this subsection shall not apply to VAT-registered nonresident digital service providers. “(D) x x x “(E) x x x
“Sec. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. –
“(A) Invoicing Requirement. – A VAT-registered person shall issue a VAT invoice for every sale, barter, exchange, or lease of goods or properties, and for every sale, barter, or exchange of services: Provided, That a digital sales or commercial invoice shall be issued for every sale, barter, or exchange of digital services made by a VAT-registered nonresident digital service provider.
“(B) Information Contained in the VAT Invoice. – x x x
“(2) x x x
“(3) x x x
“(4) x x x
“(5) The digital sales or commercial invoice issued by a VAT-registered nonresident digital service provider shall indicate the following information in lieu of the requirements under Section 113, Subsection (b), paragraph 1 to 4:
“(a) Date of the transaction;
“(b) Transaction reference number;
“(c) Identification of the customer
“(d) Brief description of the transaction; and
“(e) The total amount with the indication that such amount includes the value-added tax:
“Provided, That if the sale of digital services includes some services which are subject to VAT, and some that are VAT zero-rated, or VAT-exempt, the invoice shall clearly indicate the breakdown of the sale price by its taxable, VAT-exempt, and VAT zero-rated components: Provided, further, That the calculation of the value-added tax on each portion of the sale shall be shown on the invoice.
“(C) Accounting Requirements – Notwithstanding the provisions of Section 233, all persons subject to the value-added tax under Section 106 and 108 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain such information as may be required by the Secretary of Finance: Provided, That this subsection shall not apply to VAT-registered nonresident digital service providers.
SEC. 8. Section 114 of the National Internal Revenue Code of the 1997, as amended, is hereby further amended to read as follows:
“Sec. 114. Return and Payment of Value-Added Tax. – “(A) In General. – x x x “(B) Where to Fil the Return and Pay the Tax. – x x x “(C) Withholding of Value-Added Tax. – The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or –controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and services which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of the gross payment thereof: Provided, That beginning January 1, 2021, the VAT withholding system under this subsection shall shift from final to a creditable system: Provided, further, That the payment for lease or use of properties or property rights to nonresident owners and payments for services to nonresident suppliers who are not registered under Section 236 shall be subject to twelve percent (12%) withholding tax at the time of payment: Provided, finally, That payments for purchases of goods and services arising from projects funded by Official Development Assistance (ODA) as defined under Republic Act No. 8182, otherwise known as the ‘Official Development Assistance Act of 1996” as amended, shall not be subject to the final withholding tax system as imposed in this subsection. For purposes of this section, the payor or person in control of the payment shall be considered as the withholding agent. “(D) Reverse Charge Mechanism in Digital Services. – A VAT-registered taxpayer shall be liable to withhold and remit the value-added tax due on its purchase of digital services consumed in the Philippines from nonresident digital service providers to the Bureau of Internal Revenue, within (10) days following the end of the month the withholding was made.”
“Sec. 114. Return and Payment of Value-Added Tax. –
“(A) In General. – x x x
“(B) Where to Fil the Return and Pay the Tax. – x x x
“(C) Withholding of Value-Added Tax. – The Government or any of its political subdivisions, instrumentalities or agencies, including government-owned or –controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and services which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold a final value-added tax at the rate of five percent (5%) of the gross payment thereof: Provided, That beginning January 1, 2021, the VAT withholding system under this subsection shall shift from final to a creditable system: Provided, further, That the payment for lease or use of properties or property rights to nonresident owners and payments for services to nonresident suppliers who are not registered under Section 236 shall be subject to twelve percent (12%) withholding tax at the time of payment: Provided, finally, That payments for purchases of goods and services arising from projects funded by Official Development Assistance (ODA) as defined under Republic Act No. 8182, otherwise known as the ‘Official Development Assistance Act of 1996” as amended, shall not be subject to the final withholding tax system as imposed in this subsection. For purposes of this section, the payor or person in control of the payment shall be considered as the withholding agent.
“(D) Reverse Charge Mechanism in Digital Services. – A VAT-registered taxpayer shall be liable to withhold and remit the value-added tax due on its purchase of digital services consumed in the Philippines from nonresident digital service providers to the Bureau of Internal Revenue, within (10) days following the end of the month the withholding was made.”
SEC. 9. Section 115 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 115. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. – x x x “(a) x x x – “(1) x x x “(2) x x x “(3) x x x “(b) Failure of any Person to Register as Required under Section 236. “The temporary closure of the establishment shall be for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order, “The power of the Commissioner to suspend shall include the blocking of digital services performed or rendered in the Philippines by a digital service provider. This shall be implemented by the Department of Information and Communications Technology (DICT), through the National Telecommunications Commission (NTC).”
“Sec. 115. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. – x x x
“(a) x x x –
“(b) Failure of any Person to Register as Required under Section 236.
“The temporary closure of the establishment shall be for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order,
“The power of the Commissioner to suspend shall include the blocking of digital services performed or rendered in the Philippines by a digital service provider. This shall be implemented by the Department of Information and Communications Technology (DICT), through the National Telecommunications Commission (NTC).”
SEC. 10. Section 128 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 128. Returns and Payment of Percentage Taxes. – “(A) Returns of Gross Sales or Earnings and Payment of Tax. – “(1) Persons Liable to Pay Percentage Taxes. – Every person subject to the percentage taxes imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of the person’s gross sales or earnings and pay, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer or authorized tax software provider, the tax due thereon within twenty-five (25) days after the end of each taxable quarter: Provided, That the Secretary of Finance may, upon the recommendation of the Commissioner, require the withholding of percentage taxes imposed under this Title: Provided, further, That in the case of a person whose VAT registration is cancelled and who becomes liable to the tax imposed in Section 116 of this Code, the tax shall accrue from the date of cancellation and shall be paid in accordance with the provisions of this section. “(2) Person Retiring from Business. – Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue officer, file, either electronically or manually, the person’s return and pay, either electronically or manually the tax due thereon within twenty (20) days after closing the business. “(3) Determination of Correct Sales. – When it is found that a person has failed to issue invoices, or when no return is filed, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales or other taxable base of other persons engaged in similar businesses under similar situations or circumstances, or after considering other relevant information, may prescribe a minimum amount of such gross sales and taxable base and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person. “(B) Where to File. – x x x”
“Sec. 128. Returns and Payment of Percentage Taxes. –
“(A) Returns of Gross Sales or Earnings and Payment of Tax. –
“(1) Persons Liable to Pay Percentage Taxes. – Every person subject to the percentage taxes imposed under this Title shall file, either electronically or manually, a quarterly return of the amount of the person’s gross sales or earnings and pay, either electronically or manually, to any authorized agent bank, Revenue District Office through Revenue Collection Officer or authorized tax software provider, the tax due thereon within twenty-five (25) days after the end of each taxable quarter: Provided, That the Secretary of Finance may, upon the recommendation of the Commissioner, require the withholding of percentage taxes imposed under this Title: Provided, further, That in the case of a person whose VAT registration is cancelled and who becomes liable to the tax imposed in Section 116 of this Code, the tax shall accrue from the date of cancellation and shall be paid in accordance with the provisions of this section.
“(2) Person Retiring from Business. – Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue officer, file, either electronically or manually, the person’s return and pay, either electronically or manually the tax due thereon within twenty (20) days after closing the business.
“(3) Determination of Correct Sales. – When it is found that a person has failed to issue invoices, or when no return is filed, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales or other taxable base of other persons engaged in similar businesses under similar situations or circumstances, or after considering other relevant information, may prescribe a minimum amount of such gross sales and taxable base and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person.
“(B) Where to File. – x x x”
SEC. 11. Section 236 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
Sec. 236. Registration Requirements. – “(A) x x x “(B) x x x “(C) x x x “(D) x x x “(E) x x x “(F) Persons Required to Register for Value-Added Tax. – “(1) Any person who, in the course of trade or business, sells, barters, exchanges, or leases goods or properties, including those digital in nature, any person who renders services, including digital services, or engages in the sale or exchange of services, shall be liable to register, either electronically or manually, for value-added tax if: “(a) The person’s gross sales for the past twelve (12) months, other than those that are exempt under Section 109 (A) to (CC), have exceeded the threshold as provided in Section 109 (CC); or “(b) There are reasonable grounds to believe that the gross sales for the next twelve (12) months, other than those that are exempt under Section 109 (A) to (CC), will exceed the threshold as provided in Section 109 (CC): “Provided, That the BIR shall establish a simplified automated registration system for nonresident digital service providers, which shall be prescribed by the Secretary of Finance, upon the recommendation of the Commissioner. “x x x.”
Sec. 236. Registration Requirements. –
“(F) Persons Required to Register for Value-Added Tax. –
“(1) Any person who, in the course of trade or business, sells, barters, exchanges, or leases goods or properties, including those digital in nature, any person who renders services, including digital services, or engages in the sale or exchange of services, shall be liable to register, either electronically or manually, for value-added tax if:
“(a) The person’s gross sales for the past twelve (12) months, other than those that are exempt under Section 109 (A) to (CC), have exceeded the threshold as provided in Section 109 (CC); or
“(b) There are reasonable grounds to believe that the gross sales for the next twelve (12) months, other than those that are exempt under Section 109 (A) to (CC), will exceed the threshold as provided in Section 109 (CC):
“Provided, That the BIR shall establish a simplified automated registration system for nonresident digital service providers, which shall be prescribed by the Secretary of Finance, upon the recommendation of the Commissioner.
SEC. 12. Section 288 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
“Sec. 288. Disposition of Incremental Revenues. – x x x “(H) Incremental Revenues from the Value-added Tax on Digital Service Providers. – Five percent (5%) of the incremental revenue from the value-added tax on digital service providers under Section 108 shall be allocated to and used exclusively for the development of creative industries, as defined under Republic Act No. 11904, otherwise known as the “Philippine Creative Industries Development Act,” for five (5) years from the effectivity of this Act “Upon the lapse of the five (5) year period, all such incremental revenues shall accrue to the General Fund.”
“Sec. 288. Disposition of Incremental Revenues. – x x x
“(H) Incremental Revenues from the Value-added Tax on Digital Service Providers. – Five percent (5%) of the incremental revenue from the value-added tax on digital service providers under Section 108 shall be allocated to and used exclusively for the development of creative industries, as defined under Republic Act No. 11904, otherwise known as the “Philippine Creative Industries Development Act,” for five (5) years from the effectivity of this Act
“Upon the lapse of the five (5) year period, all such incremental revenues shall accrue to the General Fund.”
SEC. 13. Mode of Correspondence. – Any communication, notice, or summons to a nonresident digital service provider can be made via electronic mail messaging.
SEC. 14. Transitory Clause. – Nonresident digital service providers shall immediately be subject to value-added tax under this Act after one hundred twenty (120) days from the effectivity of the implementing rules and regulations.
SEC. 15. Implementing Rules and Regulations. – The Department of Finance (DOF), upon the recommendation of the BIR, and in coordination with the DICT and the NTC, and upon consultation with the stakeholders, shall issue rules and regulation for the effective implementation of this Act not later than ninety (90) days from the effectivity of this Act.
SEC. 16. Separability Clause. – Should any provision of this Act or any part thereof be declared invalid, the other provisions, so far as they are separable from the invalid ones, shall remain in force and effect.
SEC. 17. Repealing Clause. – All laws, decrees, orders, and issuances, or portions thereof, which are inconsistent with the provisions of this Act, are hereby repealed, amended, or modified accordingly.
FRANCIS “CHIZ” G. ESCUDERO FERDINAND MARTIN G. ROMUALDEZ
President of the Senate Speaker of the House of Representatives
This Act, which is a consolidation of House Bill No. 4122 and Senate Bill No. 2528, was passed by the House of Representatives and the Senate of the Philippines on July 30, 2024, and July 29, 2024, respectively.
RENATO N. BANTUC JR. REGINALD S. VELASCO
Secretary of the Senate Secretary General, House of Representatives
Approved: October 02, 2024
Clarification on the Types of Checks Accepted for Payment for One-Time Transaction-Related Internal Revenue Taxes
This Circular is hereby issued to clarify the types of checks accepted in payment for One-Time Transaction (ONETT) – related internal revenue taxes, pursuant to Revenue Memorandum Order (RMO) No. 49-2018, as amended.
Section II of Revenue Memorandum Circular No. (RMC) No. 4- 2021 provides guidelines for payments of taxes through Authorized Revenue Collection Officers (RCOs), citing RMO No. 8-2009 as follows:
“4. The Issuance of RORs shall be limited to tax payments, in cash not exceeding the amount of twenty thousand pesos (Php 20,000.00) per return. However, there shall be no limit on the amount if payment is made thru checks.The following checks should be accepted in payment for internal revenue taxes:1. Manager’s or Cashier’s Checks;2. Checks drawn against a joint or multiple account for the purpose of tax payment of the personal tax liability of any of the members thereof provided that the name and TIN of the paying member/s shall be indicated on the back/face of the check;3. Checks drawn against the personal account of the owner of a single proprietorship in payment of the tax liability of his/her business;4. Checks drawn against the account of a single proprietorship in payment of the tax liability of the owner provided that the name and TIN of the owner are indicated at the face/back of the check;5. Checks issued by either of the spouses to pay their income tax liabilities.”
In relation thereto, this Office clarifies that for ONETT-related taxes, taxpayers may make payments over the counter using either cash or check at any Authorized Agents Banks (AABs) or RCOs. However, RCOs, can only accept cash payments up to twenty thousand pesos (P20,000.00). For payments by check, both AABs and RCOs are directed to accept only Manager’s or Cashier’s Check regardless of the amount to standardize the requirements and expedite the verification processes.
Prescribing the Presentation of Tax Clearance Prior to Final Settlement of Government Contracts
BackgroundSection 1 of Executive Order (E.O.) No. 398, s. of 2005 dated July 12, 2005, directs that:
“SECTION 1. All persons, natural or juridical, local or foreign, desiring to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall as a pre-condition, submit, along with their proposal and/or bid, a copy of their latest income and business tax returns duly stamped and received by the Bureau of Internal Revenue, and duly validated with the tax payment made thereon.
They shall also submit a tax clearance from the Bureau of Internal Revenue to prove full and timely payment of taxes.”
Pursuant thereto, Section 23 of Rule VIII-Receipt and Opening of Bid of the 2016 Revised Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 9184, otherwise known as the “The Government Procurement Reform Act”, provides that:
“Section 23. Eligibility Requirements for the Procurement of Goods and Infrastructure Projects
23.1. For purposes of determining the eligibility of bidders using the criteria stated in section 23.4 of this IRR, only the following documents shall be required by the BAC, using the forms prescribed in the Bidding Documents:
Moreover, Section 3 of the same E.O. mandates that:
“Sec. 3. To ensure continuing compliance with tax laws, all government contracts shall include a stipulation that the private contracting party shall pay taxes in full and on time and that failure to do so will entitle the government to suspend payment for any goods or service delivered by the private contracting party. (Underlining ours)
All government contracts shall likewise include a stipulation requiring the private contracting party to regularly present, within the duration of the contract, a tax clearance from the Bureau of Internal Revenue as well as a copy of its income and business tax returns duly stamped and received by the Bureau of Internal Revenue and duly validated with the tax payments made thereon.”(Underlining ours)
The above provisions clearly show that the BIR tax clearance is not only required to be submitted by the contractor during the procurement process as an eligibility requirement. In order to ensure payment of taxes in full and on time, the BIR tax clearance is also required to be presented by the contractor on a regular basis as proof of payment of taxes during the duration of the contract it entered into the government. Non-submission of such tax clearance entitles the government to suspend the payment for any goods or service, including infrastructure projects, delivered by the contractor.
Accordingly, in order to fully achieve the requirements and objectives of E.O. 398, s. of 2005, these Regulations are hereby issued.
Section 1. Scope – Pursuant to Sections 244 and 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, and taking into account the thrusts and objectives of E.O. No. 398, s. 2005, these Regulations are hereby promulgated to prescribe the presentation of BIR tax clearance prior to the final settlement of all government contracts.
Section 2. Presentation Of Updated Tax Clearance Prior to Final Settlement of Government Contracts – All persons, natural or juridical, local or foreign, who have existing contracts with the government, its departments, bureaus, offices and agencies, including, state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units for the supply of goods and services, including infrastructure projects, shall secure from the BIR an updated tax clearance certifying that they have no outstanding tax liabilities and that they have duly filed the latest income and business tax returns and paid the corresponding taxes due thereon. Such tac clearance shall be presented by the contractor to the concerned departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units prior to the final settlement of the contract it entered into with them.
Failure to secure and present the prescribed BIR tax clearance shall entitle the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government financial institutions and local government units to suspend the final settlement for any goods or services, including infrastructure projects, delivered by the contractor.
Section 3. Suspended Final Settlement and Retention Money as tax Lien – The amount of final settlement of the contract for any goods and services, including infrastructure projects, delivered by the contractor which was suspended by the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and local government units due to the failure to present the BIR tax clearance prescribed by these Regulations, including the retention money required pursuant to the provisions of R.A. No. 9184 and its implementing regulations, shall be subject to tax lien as may be warranted in favor of the government to satisfy the contractor’s outstanding tax liabilities. The existing guidelines and procedures governing distraint and garnishment shall be applied accordingly.
Section 4. Penalties – Any violation of these Regulations shall be subject to the corresponding penalties under the pertinent provisions of the NIRC of 1997, as amended, and applicable regulations issued by the BIR.
Section 5. Repealing Clause – All other issuances and rules and regulations or parts thereof which are contrary to and inconsistent with any provisions of these Regulations are hereby repealed, amended, or modified accordingly.
Section 6. Effectivity – These Regulations shall take effect fifteen (15) days following its publication in the Official Gazette or the BIR official website, whichever comes first.
Prescribing the Updated Floor Price for Cigarette, Heated Tobacco, and Vapor Products Pursuant to Sections 114(B) and (C) and 145 (C) of the NIRC of 1997, As Ammended
Section 1. Scope – Sections 144 (B) and (C), and 145 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended by the Republic Act (RA) Nos. 11346 and 11467, in the Products Regulation Act,” mandate the Bureau of Internal Revenue (BIR) to prescribe the floor price of Cigarettes, Heated Tobacco Products, and Vapor Products.
Pursuant to the provisions of the Sections 244 and 245 of the NIRC of 1997, as amended, these Regulations are hereby promulgated in order to update the floor price of Cigarette, Heated Tobacco, and Vapor Products prescribed in Revenue Memorandum Circular (RMC) No. 49-2023, which revised the floor prices set forth in Section 6 of revenue Regulations (RR) No. 14-2022 and RMC No. 79-2022.
Section 2. Definition of Terms – For purposes of these regulations, the words and phrases listed hereunder are defined as follows:
E-marketplace – refers to an online intermediary that allows participating merchants to exchange information about products or services into an electronic commerce transaction.
Floor Price – refers to the minimum price of cigarette, heated tobacco and vapor products per unit, which shall be equivalent to the total reasonable production cost/expenses of the cheapest brand per tobacco product in the sum of the excise tax and VAT.
Heated Tobacco Products (HTPs) – refer to tobacco products that may be consumed through heating tobacco, either electrically or through other means sufficiently to release an aerosol that can be inhaled, without burning or any combustion of the tobacco. Heated tobacco products include liquid solutions and gels that are part of the product and are heated to generate an aerosol.
Seller – a person engaged in the business of selling consumer products directly to consumers. It includes online sellers or merchants or any person or entity selling products or services to customers through an e-marketplace. It shall also include a supplier or distributor; (2) the seller interchanges personnel or maintains common or overlapping officers or directors with the supplier or distributor; or (3) the supplier or distributor provides or excises supervision, direction or control over the selling practices of the seller.
Vapor Products – shall mean Electronic Nicotine and Non- Nicotine Delivery systems (ENDS/ENNDS), which are combinations of (i) a liquid solution or gel, that transforms into an aerosol without combustion through the employment of a mechanical or electronic heating element, battery or circuit that can be used to heat such solution or gel, and includes, but is not limited to (ii) a cartridge, (iii) a tank, and (iv) the device without a cartridge or tank. It is commonly known as a nicotine salt/salt nicotine, and conventional ‘freebase’ or ‘classic’ nicotine, and other similar products. All vapor products shall be covered regardless of its nicotine content.
Section 3. Floor Price – Provided hereunder are the updated floor prices for the subject tobacco products:
A. Cigarettes
B. Heated Tobacco Products
C. Vapor Products1. Nicotine Salt or Salt Nicotine
2. Conventional ‘ Freebase’ or ‘Classic’ Nicotine
The above floor prices shall only be used as reference for taxation purposes in the absence of other documents/proof as to the actual price of the product that is higher than the identified floor price.
Section 4. Penalties – Selling of tobacco products at a price lower than the combined excise and value-added taxes imposed under the law shall be prohibited.
Under Section 145 (C) of the NIRC of 1997, as amended, the seller of such products shall be punished with a fine of not less than ten (10) times the amount of excise plus value-added taxes due but not less than Two hundred thousand pesos (P200,00.00) nor more than Five hundred thousand pesos (P500,000.00), and imprisonment of not less than four (4) years but not more than six (6) years.
Under Section 263-A of the same code, as amended, any person who sells heated tobacco products and vapor products at a price lower than the combined excise and value-added taxes shall be punished with a fine of not less than ten (10) times the amount of excise tax plus value-added tax due but not less than Two hundred thousand pesos (P200,000.00) nor more than Five hundred thousand pesos (P500,000.00), and imprisonment of not less than four (4) years but not more than six (6) years.
Section 5. Repealing/Amendatory Clause – All existing rules, regulations, issuances or parts thereof contrary to or inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.
Section 6. Separability Clause – If any of the provisions of these Regulations is subsequently declared unconstitutional or invalid, the validity of the remaining provisions hereof shall remain in full force and effect.
Section 7 Effectivity – These Regulations shall take effect fifteen days following the publication thereof in the Official Gazette or the BIR’s official website, whichever comes first.
Live Webinar 1 & 2: BIR Tax Compliance for VAT Entity
Live Webinar: Returns and Reports Preparation under eBIR Forms and Online Submissions
Onsite Training: PEZA Registered Entities: Taxation and Basic Reports
Live Webinar on Ph Payroll Computations and Taxation
Onsite Training: Basic Bookkeeping for Non-Accountants
Onsite Seminar: BIR Examination: Their Procedures and Our Defenses
Live Webinar: Winning BIR Tax Assessments Series: Process, Remedies & Writing Effective Protest
Live Webinar: Withholding Taxes, Subjects & Applications
Onsite Training: Basic Business Accounting & BIR Compliance VAT Entity
Live Webinar: Value Added Tax: In and Out
Revenue Memorandum Circular No. 34-2025
Revenue Memorandum Circular No. 32-2025
Republic Act No. 12079
2025 Filing of Annual Financial Statements and General Information Sheet
Revenue Regulations No. 012-2025
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