TAXATION

II PART III
VALUE-ADDED TAX
Sections 105-115 of the NIRC, amended by
RA Nos. 9337 and 10378
Implemented by RR No. 16-05 as amended
by RR Nos. 4-07 and RR No. 16-2011 (among
others)

I.

PRELIMINARY MATTERS
a. Nature and characteristic of VAT in general
Sec. 4.105.-2 of RR No. 16-05
CIR vs. Magsaysay Lines GR No. 146984 dated July 28, 2006
CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
Concurring Opinion of Justice Abad Fort Bonifacio Development
Corp. vs. CIR, GR No. 173425 dated September 4, 2012.
b. VAT as an indirect tax
Contex vs. CIR GR No. 151135 dated July 2, 2004
c. Persons Liable (Sec. 105)
i. Persons liable in general
CIR vs. CA and Commonwealth Management Services GR No. 125355
dated March 30, 2000.
ii. Who are required to register for VAT (Sec. 236 G) [Sec. 9.236-1
of RR No. 16-05, consider threshold under RR No. 16-2011]
iii. Optional VAT Registration (Sec. 236 H) [Sec. 9.236-1 of RR No.
16-05, consider threshold under RR No. 16-2011]
d. Meaning of the phrase in the course of trade of business (Sec. 105)
Sec. 4.105-3 of RR No. 16-05
CIR vs. Magsaysay Lines GR No. 146984 dated July 28, 2006
Mindanao II Geothermal Partnership vs. CIR, GR No. 193301 dated
March 11, 2013
CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010
e. Exceptions to the Rule of Regularity
f. Output Tax vs. Input Taxes
i. Sources of Input Tax (Sec. 110 A)
ii. Excess Output or Input Tax (Sec. 111 B)
iii. Rule on Input Tax on Capital Goods (Sec. 110A) [Sec. 4.110-3 of
RR No. 16-05]
iv. Substantiation of Input Tax Credits (Sec. 4.110-8 of RR No. 1605)
CIR vs. Sony Phils, Inc. G.R. No. 178697, November 17, 2010

II.

VAT ON GOODS AND SERVICES

a. Definition of goods and services (Sec. 106 and Sec. 108)

b. VAT base for goods and services (Sec. 106 and Sec.108)
c. Meaning of gross selling price and gross receipts (Sec. 106 and
Sec.108)
i. Sec. 11 of RR No. 4-07
d. Rules on sales of Real Property
i. Rule on Sales on Instalment [RR No. Sec. 4.106-3 of RR No. 1605 as amended by Sec. 3 of RR No. 4-07]
ii. See also rule on sale of real property use in business (Sec. 14 (l)
of RR No. 4-07)
iii. Correlate with Sec. 109 on exempt sales of Real Property
e. VAT on Importations (Sec. 107)
i. Exempt Importations under Sec. 109
ii. Transfer of Goods by Tax-exempt Persons (Sec. 107 B)
f. Transactions deemed sale (Sec. 106 B)
i. Rationale of Imposition
ii. Enumeration Sec. 4.106-7 RR No. 16-05
iii. Tax Base of Transactions Deemed Sale
g. Rules for Certain Services
i. Common Carriers
1. Secs. 108, 109S 116, 117 and 118
2. Sec. 4.108-2 Nos. 11 and 12 of RR No. 16-05
3. Sec. 4.108-3 of RR No. 16-05
ii. Lease of Properties
1. Sec. 4.108-3 of RR No. 16-05
2. Lease of Residential Units [Sec. 4.109-1 (B)(q) of RR No.
16-05]
3. Secs. 109q, 109w, 116, 236G and 236H
iii. Professional Services
iv. Medical Services
1. Sec. 4.109-1 (B)(g) of RR No. 16-05
Philippine Healthcare Providers vs. CIR GR No. 168129 dated
April 24, 2007
v. Cinema Operators / Proprietors
CIR vs. SM Prime Holdings, Inc. GR No. 183505 dated February
26, 2010
vi. VAT on Toll Fees
Diaz vs. The Secretary of Finance and CIR, GR No. 193007. July
19, 2011
vii. Franchise Grantees (PAGCOR)
PAGCOR vs. The BIR, G.R. No. 172087. March 15, 2011
III.

ZERO RATED SALES OF GOODS AND SERVICES and VAT EXEMPT

SALES
a. Nature of Zero Rated Sales
b. Zero Rated Sale of Goods (Sec. 106)
c. Zero Rated Sale of Services (Sec. 108 B)
CIR vs. American Express GR No. 152609 dated June 29, 2005
CIR vs. Burmeister and Wain GR No. 153205 dated Jaunary22, 2007

CIR vs. Acesite GR No. GR No. 147295 dated February 16, 2007
d. Automatic zero-rate vs. Effectively zero-rate
CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9,
2005
e. Destination principle and cross border doctrine
CIR vs. American Express GR No. 152609 dated June 29, 2005
CIR vs. Toshiba Information Equipment GR No. 150154 dated August 9,
2005
Revenue Memorandum Circular No. 74-99
f.

Zero Rated Sales vs. Exempt Sales

CIR vs. Cebu Toyo Corp. GR No. 149073 dated February 16, 2005

g. Enumeration of Exempt Transactions (Sec. 109) Sec. 4.109-1 (B) of RR

No. 16-05
h. Exempt Persons vs. Exempt Transactions
CIR vs. Seagate Technology (Phils) GR No. 153866 February 11, 2005
IV.

TRANSITIONAL AND PRESUMPTIVE INPUT TAX

Sec. 111
Sec. 4.111-1 of RR No. 16-05
Fort Bonifacio Development vs. CIR GR No. 158885 dated April 2, 2009
Fort Bonifacio Development vs. CIR GR No. 175707 dated November 19,
2014

V.

VAT REFUND
a. Compare with Sec. 204 and 229
b. Grounds
c. Periods
RMC No. 54-2014
RMC No. 57-2013
Contex vs. CIR GR No. 151135 dated July 2, 2004
Atlas Consolidated Mining vs. CIR GR Nos. 141104 and 148763 dated June
8, 2007
CIR vs. Mirant Pagbilao Corp. GR No. 172129 dated September 12, 2008
CIR vs. Aichi Forging Company, GR No. 184823 dated September 6, 2010
CIR vs. San Roque Power (GR No. 187485 dated February 12, 2013) and
other cases
Mindanao II Geothermal Partnership vs. CIR, GR No. 193301 dated March
11, 2013
Pilipinas Total Gas, Inc. vs. CIR, GR No. 207112 dated December 8, 2015
Microsoft Phils., Inc. vs. CIR, GR No. 180173 dated April 6, 2011

VI.

OTHER MATTERS
a. Invoicing Requirements (Sec. 113) [Sec. 4.1113-1 of RR No. 16-05]
i. Authority to Print

Silicon Phils., Inc. vs. CIR, GR No. 172378 dated January 17, 2011
b. Information which must be contained (Sec. 113)
c. Consequences of Issuing Erroneous VAT Invoice (Sec. 113) [ RR No.
4.113-4 of RR No. 16-05]
d. Filing of Monthly and Quarterly VAT Returns and Payment of VAT (Sec.
114)
e. Withholding VAT (Sec. 114 C) [Sec. 4.114-2 of RR No. 16-05 as
amended by Sec. 22 of RR No. 4-07]
i. Government payments
ii. Services Rendered by Non-residents
iii. Withholding VAT Returns/Time of Payment
f. Power of the Commissioner to Suspend Business Operations (Sec. 5)
[Sec. 4.115-1 of RR No. 16-05]
g. VAT Exemption of Senior Citizens
i. RA No. 9994
h. VAT on Condominium Corporations and Homeowners Associations
i. RMC Nos. 65-2012 and 9-2013