VAT Threshold Amounts Increased

In compliance with the Consolidated VAT Regulations of 2005, the threshold amounts to be subject to the value-added tax were adjusted to the present value using the Consumer Price Index as published by the National Statistics Office (NSO).

The threshold amounts rounded off to the nearest hundred are as follows:

Section	Amount in Pesos (2005)	Adjusted threshold amounts
Section 109 (P) – sale of residential lot	1,500,000	1,919,500
Section 109 (P) – sale of residential house and lot or other residential dwellings	2,500,000	3,199,200
Section 109 (Q) – lease of residential unit	10,000	12,800
Section 109 (V) – sale or lease of goods or properties or performance of services	1,500,000	1,919,500

This will take effect starting January 1, 2012.

(Revenue Regulations No. 16-2011, October 27, 2011)

Income Tax Exemption does not Extend to VAT

Q: Will a non-stock, non-profit corporation under Section 30 of the Tax Code be exempt from payment of VAT?

A: No. A corporation organized for charitable purposes as contemplated under Section 30 of the Tax Code is exempt from the payment of income tax on income received by it as such organization. However, the tax exemption granted to it as a non-stock, non-profit corporation covers only income taxes for which it is directly liable.

It should be noted that VAT is an indirect tax payable by the seller and not by the purchaser of goods. Being an indirect tax, it can be shifted or passed on to the buyer/purchaser, transferee or lessee of the goods, properties or services. Once shifted to the buyer/customer as an addition to the cost of goods or services sold, it is no longer a tax but an additional cost which the buyer/customer has to pay in order to obtain the goods or services.

The shifting of the VAT to a tax-exempt organization does not make it the person directly liable and therefore, said organization cannot invoke its tax exemption privilege under Section 30 (E) of the Tax Code to avoid the passing on or shifting of the VAT. Hence, a charitable organization exempt from tax under Section 30 of the Tax Code, the acquisition of equipment shall nevertheless be subject to the 12% VAT pursuant to Section 108 of the said Code, as amended by Republic Act No. 9337.   

 (BIR Ruling [DA-(VAT-019) 119-10], July 9, 2010)

Input Tax may be Charged to Expense or Cost

Q: May input taxes shifted or passed-on to an ROHQ (most of its sales are subject to VAT at 0%) by its local value-added tax (VAT) registered suppliers of goods, properties and services be recognized outright as an expense for income tax purposes, or be added to the acquisition cost upon purchase of the capital asset subject to depreciation?

A: Yes. Since it does not have other sales transactions subject to VAT against which their input taxes may be used in payment, then, it follows, that it is constituted as the final person against which the costs of the tax passed on shall legally stop and rest, hence, in this connection, the said input taxes may already be legally converted as cost available as deduction for income tax purposes.

This treatment shall likewise apply to situations involving input taxes sales already recognized in the books of the ROHQ where:

(1) the two (2) year prescriptive period had already lapsed without any claim for refund or credit having been filed;

(2) the claim for refund or credit was denied or rejected by the BIR for having been filed beyond the 2-year prescriptive period or for non-compliance with invoicing/substantiation requirements; or

(3) a claim for refund or credit is still pending with the BIR but is voluntarily withdrawn by JGC Manila ROHQ.

Provided, that in regard to input taxes attributable to the latter's zero-rated sales which it recognizes outright as an expense or charges to asset account subject to depreciation, as the case may be, (i) the input taxes shifted or passed-on to the ROHQ shall not be recorded as input tax in its books; (ii) the input taxes shifted or passed-on to it shall not be reflected/reported as input tax in its VAT returns; and (iii) the input taxes shifted or passed-on to the ROHQ shall not be claimed by the latter as tax refund or tax credit.

(BIR RULING [DA-(VAT-021) 121-10], July 9, 2010)


NOTE: BIR has new ruling in 2013 reversing this ruling.

Taxes on Foreclosed Property, When to Pay

Foreclosed asset of natural persons may be redeemed within one year from the date of registration of the sale in the Office of the Register of Deeds while those of juridical persons in an extrajudicial foreclosure may be redeemed until the registration of the certificate of foreclosure sale with the applicable Register of Deeds but not more than three (3) months after foreclosure, whichever is earlier.

Capital gains tax or Creditable withholding tax returns and payments are due within 10 days after the end of each month, except for taxes withheld for the month of December of each year which shall be filed on or before January 15 of the following year. Documentary Stamp Tax returns and payments are due within five days after the close of the month when the taxable document was made, signed, accepted, or transferred.

(Revenue Memorandum Circular No. 53-2011, November 4, 2011)

Hotel’s Other Services to Air Transport, Vatable

The BIR revoked its previous ruling in [DA-(VAT-057) 552-08] dated December 18, 2008 stating that services provided by hotels to persons engaged in international airport operations is subject to the value-added tax at zero percent (0%) rate.

The tax authority’s position with regard to this is now elucidated in BIR Ruling 099-2011 dated April 6, 2011 stating that the services provided by the Hotel to its clients engaged in international air transport operations pertain to room accommodations and food and beverage services. As they are rendered within the Hotel’s premises, they have no direct connection with the transport of goods or passengers, and as such, they cannot be considered as services directly attributable to the transport of goods and passengers from a Philippine port directly to a foreign port entitled to zero-rating, but is appropriately subject to 12% VAT.

(Revenue Memorandum Circular No. 31-2011, August 4, 2011)