TAXATION II Francisco B. Gonzalez V1st semester 2015-2016 IIId

THE VALUE ADDED TAX (SEC 105-118, NIRC)PLEASE NOTE THAT THIS COVERS ONLY SEC. 105 TO 108 OF THE NIRC.

PLS CONSIDER THE DATES OF THE RULINGS AS A FACTOR IN YOUR STUDIES

Republic Act 8241 which was incorporated into RA 8424 or the National Internal Revenue Code of 1997.

Republic Act 9238 amending the provisions of Section 108, 109, 121 and 122 of the NIRC of 1997.

Republic Act 9337 amending the provisions of Section 106, 107, 108, 109, 110, 111, 112, 113, 114, 116 of the NIRC of 1997.

Republic Act 10378 amending the provisions of Section 28, 109, 118, 236, of the NIRC of 1997.

Tolentino v. CIR G.R. No. 115455. August 25, 1994

Destination Principle BIR Ruling 032-98 (shimizu)CIR vs Burmeister Wain GR153205 Jan 22 2007CIR vs American Express GR 152609, 29

June 2005Refutation of destination principle

CIR vs. Placer Dome GR164365 June 8 2007

Revenue Regulation 16-2005 Consolidated Value-Added Tax Regulation of 2005 as amended by Revenue Regulation 4-2007.

Sec. 105: Persons liable

Distinguish a direct tax from an indirect tax. BIR Ruling 88-243 (shifting of HDMF) BIR Ruling 91-151 purchase of prime commodities from CDA; CIR vs. Gotamco Feb 27, 1987Contex vs. CIR GR 151135 July 2, 2004

Definition of the term “Business” : Sec 22 (S); CIR vs. Magsaysay Lines July 28, 2006 GR 146984; Revenue Audit Memorandum Order 1-86 (branch operations of foreign

corp. in the phil. ; Imperial vs. Collector, 97 Phil. 992 (isolated transactions)BIR ruling

113-98(sale by libertry broadcasting of microwave backbone); Vat ruling 012-02 (sale not subject to VAT when not in business);

Manila Polo Club vs. Meer 106 Phil. 885 (when there is no profit involved);

See section 109 as implemented by 16-2005 however please see RR 4-2007 Section 14 amending Sec. 4.109-1(B)(1) subsection (p)

BIR Ruling/s: 276-07(when real properties were not considered goods subject to vat)

Bir Ruling 024-05(real property and personal property are not subject to vat under a 40 ( c ) (2) exchange;

BIR Ruling 218-06 (incidental sale)Itad ruling 29-02 (proctor and gamble international and phil); ITAD ruling 93-05 (onshore offshore production);CIR vs CA Commonwealth GR No. 125355 March 30, 2000 doing

businessCommissioner of Internal Revenue vs. Sony

Philippines, Inc. (November 17, 2010)

RMC 15-2011 incidental sales of goods not normally held for sale

Sec. 106:VAT on Sale of Goods or Properties

Rate and Base of TaxGoods or properties

a) Real Properties: See Rev. Regulation 16-2005 as amended by 4-2007; 174-98 (Sale of fish); VAT Ruling 037-01 (lease of dormitory space), RR 4-2007

b) patents, copyrights, design model, etc.129-98(royalty payments us-phil tax treaty warner studios subject to vat), 104-98 (royalty payments not subject to vat because of peza)

c) use in the Philippines industrial, commercial, scientific equipment

d) motion picturese) Radio, television satellite and cable television time

BIR ruling 14-98( govt airtime is subject to VAT);38-98 (PLDT IT trunkline services),88-59(advertising agencies gross billings subject to vat),88-85 (advertising agencies)

f) OTHERSBIR Ruling 27-98 (purchase of electric cooperative is subject to vat although their service is vat exempt)CIR vs. Magsaysay Lines July 28, 2006 GR 146984;

Gross Selling Price: How is it computed

Zero Rated Sales: automatic vs. effectively zero rated RR 16-2005 Sec 4.106-5 and Sec. 4.106-6 as amended by RR 4-2007

a) export sales: BIR Ruling 113 –94(sale of gold):88-182;87-170 and RMC 7-94 (ice and bottled water);88-182(export of minerals); CIR vs. Toshiba Information Equipment GR No. 150154 Aug 9, 2005

b) Foreign currency denominated saleBIR Ruling DA 119-06 (sale of goods online for delivery to the Philippines);033-98( sale to peza enterprise); RMC 74-99 (SALE TO PEZA ENTERPRISES); BIR 321-88 (ADB); BIR ruling 65-99; CIR vs Burmeister Wain GR153205 Jan 22 2007;CIR vs American Express GR 152609, 29 June 2005,

c) exemption under special laws:BIR Ruling DA 277-07 (sale to peza enterprises)

Transactions deemed saleBIR Ruling 063-93Merger & consolidations; 472-93, and Sec. 4.100.5

Rev. Reg. 7-95 but see Revenue Memorandum Circular 19-99

Determination of the taxHow to show VAT as part of the bill RR No. 16-2005

Commissioner of Internal Revenue vs. SM Prime Holdings, Inc. (February 26, 2010)Diaz vs. Secretary of Finance (July 19, 2011)

Sec. 107 VAT on Importation

In General: RR 16-2005 Sec 4.107-1

Transfers of Goods by Tax exempt entities: RR 16-2005 Sec 4.107-1 (c) BIR Ruling 100-95 (toyota corrolla)

Sec. 108 VAT on Sale of Services

Rate and Base of TaxSale or exchange of service RR 16-2005 Sec 4.108-1, 2 and 3

RMC 77-2008VAT ruling 003-88 (airline tickets)RMC 46-2008

Zero Rated Sales: automatic vs. effectively zero rated RR 16-2005 Sec 4.108-5 and Sec. 4.108-6 as amended by RR 4-2007

BIR ruling 377-05BIR Ruling DA 012-05RMO 7-2006CIR vs. Amexco G.R. No. 152609 June 29, 2005CIR vs Burmeister Wain GR153205 Jan 22 2007CIR vs. Placer Dome GR164365 June 8 2007

Zero Rated Vs. exempt transactions: CIR vs. Seagate Technology (Phils) Gr. 153866 Feb 11, 2005

How is it computed: RR 16-2005 sec. 4.108-4

Invoicing requirements RR 16-2005 Sec. 4.113-1

Change of status: RR 16-2005 Sec 9.236-6

Determination of the taxHow to show VAT as part of the bill RR No. 16-2005

Sec. 109 Exempt transactions RR 16-2005 Sec. 4.109-1RA10378 amending Sec. 28(A)(3)(a), 109,118 and 236 of the NIRC

Tambunting Pawnshop, Inc. vs. Commissioner of Internal Revenue (January 21, 2010)Commissioner of Internal Revenue vs. Philippine Health Care Providers, Inc. (April 24, 2007)Accenture, Inc. vs. Commissioner of Internal Revenue (July 11, 2012)Commissioner of Internal Revenue vs. Sekisui Jushi Philippines, Inc. (July 21, 2006)Commissioner of Internal Revenue vs. Seagate Technology (February 11, 2005)Commissioner of Internal Revenue vs. Toshiba Information Equipment (August 9, 2005)Commissioner of Internal Revenue vs. Contex Corporation (July 2, 2004)

Special topicsEffect of issuing erroneous receipt Sec. 113 NIRC RR 16-2005 Sec. 4.113-4VAT receipt vs. VAT invoice Kepco Phil. Corp vs.CIR Gr 181858 Nov. 24,

2011Joint ventures BIR Ruling 140-00Subsistence level RMC 4-98Withholding tax on VAT RR 16-2005 Sec 4.114 -2 as amended by RR 4-2007When to pay RR 16-2005 Sec 4.114-1Royalties 104-98Professional Services 88-250Vat Exempt cooperatives 122-98Dwelling below 1.0 m 152-98Treatment of VAT exempt transactions, supplies passed on to VAT exempt Lease of Dormitory spaces VAT Ruling 037-01VAT/Percentage tax on tiangge RR No. 16- 2003Power of Commissioner to suspend business operations RR 16-2005 Sec.

4.115-1