Part 2

In last week’s article, we discussed Revenue Regulations (RR) No. 13-2018, which implemented the value-added tax (VAT) and percentage tax provisions of Republic Act (RA) No. 10963, the “Tax Reform for Acceleration and Inclusion” (TRAIN) Law. Specifically, we touched on the amendments introduced by the TRAIN Law, specifically on transactions subject to VAT at a 0 percent rate.

We continue to discuss RR No. 13-2018, and look into VAT-exempt transactions, as well as input tax on depreciable goods.

The following are VAT-exempt transactions under RR No. 13-2018:

Importation of professional instruments, tools, and personal effects belonging to persons coming to settle in the Philippines shall be VAT-exempt. However, the importation of vehicles, machineries and other similar goods for use in manufacture, shall be subject to duties, taxes and other charges.

Sale of a residential lot valued at P1,500,000 and below, or house and lot valued at P2,500,000 and below, as adjusted in 2011 using the 2010 Consumer Price Index values (P1,919,500 for residential lot and P3,199,200 for house and lot) shall be VAT-exempt.

Lease of residential units with a monthly rental per unit exceeding P15,000, but the aggregate rentals do not exceed P3,000,000 is VAT-exempt, and shall instead be subject to the 3 percent percentage tax. If the lessor has several residential units, and the rentals do not exceed P15,000 per month per unit, it shall be exempt from VAT and 3 percent percentage tax regardless of the amount of the aggregate annual rentals.

The sale or lease of goods and services to senior citizens and persons with disabilities is VAT-exempt. Transfer of Property pursuant to Section 40(C)(2) of the Tax Code, as amended, is exempt from VAT.

Association dues, membership fees, and other assessments and charges collected on a purely reimbursement basis by homeowners’ associations and condominium corporations is VAT-exempt.

Beginning January 1, 2019, the sale of medicine prescribed for diabetes, high cholesterol, and hypertension as determined by the Department of Health shall be VAT-exempt.

Also exempt from VAT is the sale or lease of goods or properties or the performance of services other than the transactions mentioned above, whose gross annual sales do not exceed P3,000,000.

Self-employed individuals and professionals availing of the 8 percent tax on gross sales and/or receipts and other non-operating income are exempt from VAT.

A VAT-registered taxpayer may claim input VAT on depreciable goods provided that the amortization of the input VAT shall only be allowed until December 31, 2021. Taxpayers who still have unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized.

Beginning January 1, 2023, the filing and payment of VAT returns shall be done within 25 days following the close of each taxable quarter.

An existing VAT-registered taxpayer whose gross sales/receipts did not exceed P3,000,000 may continue to be VAT-registered taxpayer and avail of the “Optional Registration for Value-Added Tax of Exempt Person.” Once availed, the taxpayer shall not be entitled to cancel the VAT registration for the next 3years.

Those who opted to register as a non-VAT taxpayer as a result of the implementation of the TRAIN Law, shall immediately:

Submit to the BIR an inventory list of unused invoices and/or receipts, indicating the number of booklets and its corresponding serial numbers; and Surrender the said invoices and/or receipts for cancellation.

Manila Times Source

ATTY. PEACHES ARANAS

Managing Partner LMA LAW