Earlier on, we discussed Revenue Regulations (RR) No. 13-2018,implementing the value-added tax (VAT) and percentage tax provisions of Republic Act (RA) No. 10963, the “Tax Reform for Acceleration and Inclusion” (Train) Law. RR No. 13-2018 took effect January 1, 2018, the effectivity date of the Train Law.

With the passage of the Train Law, a ceiling or threshold, which has been set at p3,000,000, has been fixed to determine whether one may register as a VAT taxpayer or a Non-VAT taxpayer. If you will recall, the same p3,000,000 VAT threshold is used to determine the income tax liability of self-employed individuals and/or professionals. Under RR 8-2018 (Income Tax Regulations), individuals earning income purely from self-employment and/or practice of profession whose gross sales/receipts do not exceed the VAT threshold shall have the option to avail of:

The new graduated income tax rates; OR

An 8 percent tax on gross sales or receipts in excess of p250,000 in lieu of the graduated income tax rates and the percentage tax under Section 116 of the Tax Code.

If you’re an existing VAT-registered taxpayer, and your gross sales/receipts in the preceding taxable year did not exceed the VAT threshold of p3,000,000, could you still continue to be a VAT-registered taxpayer? Of course, you can. You just have to avail of the “Optional Registration for Value-Added Tax of Exempt Person,” file a BIR Application for Registration Update (BIR Form No. 1905), and submit the same with the accompanying documentary requirements with the BIR. Note that once you’ve availed of this option, you may not cancel your VAT registration for the next three (3) years.

What if you’re an existing VAT-registered taxpayer, and your gross sales/receipts in the preceding taxable year did not exceed the VAT threshold of p3,000,000 and you’ve decided to be a Non-VAT registered taxpayer, what are you supposed to do?

Under RR 13-2018, a taxpayer should file a BIR Application for Registration Update (BIR Form No. 1905) for an update of registration from VAT to Non-VAT and accomplish the following requirements:

– submit an inventory list of unused invoices and/or receipts as of the date of filing of BIR Form No. 1905, indicating the number of booklets and its corresponding serial numbers; and

– Surrender the said invoices and/or receipts for cancellation.

Alternatively, upon approval of the BIR, a number of unused VAT invoices/receipts may still be allowed for use, provided the phrase “Non-VAT registered as of (date of filing of BIR Form No. 1905). Not valid for claim of input tax.” shall be stamped on the face of each and every copy, until new registered non-VAT invoices or receipts have been printed and received by the taxpayer.

Quite recently, the Department of Finance (DoF) through the BIR, has issued RR No. 19-2018 which provides for a deadline, or until August 31, 2018 for taxpayers to use the VAT invoices/receipts as discussed above. Particularly, taxpayers have until August 31, 2018, or until receipt of newly-printed registered non-VAT invoices or receipts, whichever comes earlier, to use the VAT invoices/receipts. Upon receipt of the newly-printed registered non-VAT invoices or receipts, the taxpayer shall submit, on the same day, a new inventory list of all unused previously-stamped invoices/receipts, and surrender them to the BIR for cancellation.

With the issuance of RR No. 20-2018, your favorite beverage, instead of giving you the short burst of energy that only a sugar rush can give, will instead leave a bitter taste in the mouth.

Manila Times Source

ATTY. PEACHES ARANAS

Managing Partner LMA LAW