revenue regulations 1

7/29/2019 Revenue Regulations 1

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own disbursement functions, with information as to their respective business addresses, agency

codes and Taxpayer Identification Numbers (TINs).

All NGAs notified thru the Notification Letter shall enroll in the eTRA System by

enrolling first with the BIRs eFPS facility. As part of the enrollment procedures, NGAs shall be

required to submit to the Revenue District Office (RDO) where they are registered the names of

two (2) authorized officers designated to file the required tax returns pursuant to Section 52 (A)

of the Tax Code. In addition, NGA shall also enroll with any Authorized Agent Bank (AAB)

where it intends to pay through the bank debit system, in cases of remittance of withheld taxeson

funds not coming from the DBM or the payment of internal revenue taxes thru cash and notthru

TRA.

NGAs mandated to file electronically thru the issuance of the Notification Letter shall file

their tax returns enumerated under Section 2.12 of this Regulations, via the eFPS, whether ornot

payment shall make use of eTRA.

The staggered filing of returns allowed for withholding agents/taxpayers enrolled in the

BIR eFPS facility shall not apply in the case of the NGAs. All tax returns must be electronically

filed (e-filed) following the due dates prescribed in the table under Section 7 of this Regulations.

Payment of the tax due must also be made on the same day the return is e-filed byaccomplishing

on-line the TRA.

The use of eTRA as payment is limited only to the NGAs tax liabilities arising from the

use of funds co ming from the DBM. NGAs tax liabilities arising from the use of funds other

than those coming from DBM based on the NGAs Annual Budget, as approved under the

General Appropriation Act (GAA) must be paid using cash through the bank debit system of the


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AAB where the NGA shall enrol for this purpose. A separate tax return must be accomplished forthese tax liabilities since a particular fund is required to have a separate branch code. In the

absence of a separate branch code of the fund, the NGA shall secure the same from the

concerned RDO following existing procedures in registration.

The concerned RDO shall conduct the mandatory briefing to the concerned NGAs on the

eTRA System. Notified NGAs are required to attend the said briefing on eTRA, which is aprerequisite to enrollment in the eFPS.

The BIR, through its Information Systems Group, shall generate report of NGAs

remitted withheld taxes using TRA based on cut-off dates to be defined under a separaterevenue

issuance. The report generated shall be submitted by the BIRs Revenue Accounting Division to

the Bureau of Treasury and shall be used by the latter in recording and crediting the same as

BIRs tax collections.

For the pilot roll-out of the eTRA, the Withholding Tax Division shall conduct the eTRA

briefing with the selected NGAs. All NGAs which will not be given Notification Letter shall

continue to file their tax returns manually by accomplishing the appropriate tax returns and

attaching thereto the corresponding TRAs before having these documents received by the RDOs

where the NGAs are registered. RDOs shall process these tax returns and report the collections

thru TRAs following existing procedures.

REVENUE REGULATIONS NO. 3-2013 issued on February 14, 2013 prescribes the use of

electronic Official Register Books (eORB) System by manufacturers of cigarettes, cigars and

cigarette papers, including traders/dealers of whole leaf tobacco and partially manufacturedleaf

tobacco.

For purposes of enrollment in the eORB System, all manufacturers of cigarettes, cigars


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and cigarette papers, including traders/dealers of whole leaf tobacco and partiallymanufactured

leaf tobacco (i.e., L-3, L3R, L and L6), shall initially file with the Chief, Excise Large

Taxpayers Field Operations Division a written request for access to the system, together with a

duly notarized Board Resolution, in case the taxpayer is a juridical entity, or an affidavit, in case

of a sole proprietor, stating, among others, the names of its representatives authorized toregister

and maintain a user account, either as an encoder or as an authorized officer, in the system. For

this purpose, an encoder authorized by the taxpayer to finalize an encoded transaction shall be

required to be enrolled in the system, which can be accessed thru the eORB icon in the BIR

website (www.bir.gov.ph). After completion of the enrollment process, the taxpayers

authorized

officer and/or encoder shall receive an email notification validating the email account provided.

In the initial use of the eORB System, the synchronization process of data shall be undertaken by

the authorized officer and encoder in order that all the functionalities of the system can be

utilized. Thereafter, this process shall be initiated regularly in order to have an updatedreference

values in the database of the taxpayers installed system.

In order to gain access into the system, the authorized officer shall create encoder user

accounts and authorized officer user account using the User Management module of the system

under which assessment numbers assigned to the designated encoders and authorized officer of

the excise taxpayer shall be subject to approval by the BIR. The authorized officer shall be

responsible for the activation and deactivation of user accounts, including the finalization of

each

encoded transaction, as well as the generation and submission of the eORB Forms. The encoders

shall not be allowed to create other user accounts nor submit the ORB Forms.

For expediency on the part of the excise taxpayer, encoding of transactions of the


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taxpayer operations can be made off-line, without the need of connecting to the eORB System:

Provided, however, That, for purposes of initially generating the eORB Forms, whether by the

taxpayer or by the BIR, there is a need to finalize the encoded transactions and, therefore, the

proper connection with the eORB System shall be made.

All excise taxpayers who are covered by the eORB System shall transmit automatically

the duly accomplished eORB Forms within five (5) calendar days immediately after the end of

the month of operation. Any amendment in the entries of the ORBs that have been submittedby

the authorized officer of the excise taxpayer shall be made anytime within the year of the

taxpayers operations but not later than January 31 of the immediately succeeding year of the

taxpayers operations: Provided , however, That amendments shall be made only once for each

reference document: Provided, finally, That every amendment shall be subject to the approvalof

the Chief, Excise LT Field Operations Division through an email notification.

In cases where a tax payers own computerized accounting system has the capability to

automatically generate and print the ORBs, the taxpayer shall coordinate with the BIR for

purposes of determining the manner on how the taxpayer can submit the ORB electronically

through the eORB System. The submission of ORB to the BIR through external storage facilities

such as, but not limited to, magnetic disks, memory sticks or cards, external hard drives, etc.

shall not be allowed.

The BIR shall be immediately notified in writing, for purposes of re-evaluation and

approval, prior to any change or enhancement of the computerized accounting system that will

affect any transaction covered by the eORB System.The preparation of manual ORBs andsubmission of transcripts thereof to the BIR shall

be terminated upon effectivity of the Regulations: Provided, however, that all transactions

engaged by all concerned excise taxpayers beginning February 1, 2013 shall already be encoded

into the eORB System with the duly accomplished eORB Form for the month of February, 2013


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transmitted, through the eORB homepage thereof, on or before March 5, 2013: Provided,further,

That, for purposes of expediency, the eORB System shall be initially implemented for use by the

major tobacco industry players identified by the BIR and a proper prior notice shall be issued for

the implementation thereof to the other tobacco industry players.

REVENUE REGULATIONS NO. 5-2013 issued on April 22, 2013 prescribes the tax treatment

of sale of jewelry, gold and other metallic minerals to a non-resident alien individual notengaged

in trade or business within the Philippines or to a non-resident foreign corporation.

The following taxes are imposed:

a. On the sale of gold and other metallic minerals as prescribed under Revenue

Regulations (RR) No. 6-2012.

i. Excise Tax Two Percent (2%) Excise Tax rate based on either the actual market

value of the gross output at the time of removal, in the case of those locally

extracted or produced; or the value used by the Bureau of Customs (BOC) in

computing tariff and duties, in the case of importations. Possessors of gold and

other metallic minerals must show proof that the Excise Tax has been paid

thereon; otherwise, they shall be assessed and be held liable for the payment

thereof. Gold and other metallic minerals discovered in the possession of the

persons who cannot show proof of payment of Excise Taxes thereon are presumed

to have been removed on the day of discovery. Accordingly, possessors of gold

and other metallic minerals, whether imported or local, must be able to show

certified true copy of the following: 1) Authority to Release Imported Goods and

Import Entry and Internal Revenue Declaration and Official Receipt issued by the


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BOC, for imported goods; and 2) Excise Tax Return (BIR Form No. 2200M) and

machine validated deposit slip of the bank where the payment and filing has been

made, for locally bought gold and other metallic minerals. Absent the said proof,

possessors of gold and other metallic minerals shall be held liable for the Excise

Taxes due thereon.

ii. Value-Added Tax/Percentage Tax - Sales of gold and other metallic minerals to

persons and entities, except sale of gold to the Bangko Sentral ng Pilipinas, is

subject to 12% VAT if the gross selling price thereof exceeds the threshold set by

the Tax Code and existing issuances, currently in the amount of P 1,919,500

pursuant to RR No. 3-2012. Otherwise, it shall be subject to 3% Percentage Tax.

iii. Income Tax- Sellers are subject to Income Tax at the rate prescribed under

Sections 24 and 25, in case of individual taxpayers, and under Sections 27 and 28

of the Tax Code, in case of corporations. Further, sellers of said gold and other

metallic minerals are required to pay the Income Tax in advance (creditable) to

the government.

b. On the sale of jewelry

i. Value-Added Tax/Percentage Tax- Sales of jewelry to persons and entities is

subject to 12% VAT if the gross selling price thereof exceeds the threshold set by

the Tax Code and existing issuances, currently in the amount of P 1,919,500

pursuant to RR No. 3-2012. Otherwise, it shall be subject to 3% Percentage Tax.

ii. Income Tax- Sellers are subject to Income Tax at the rate prescribed under

Sections 24 and 25, in case of individual taxpayers, and under Sections 27 and 28

of the Tax Code, in case of corporations. Further, sellers of said jewelry are

required to pay the Income Tax in advance (creditable) to the government.

Sellers of jewelry, gold, and other metallic minerals are hereby required to pay business


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tax (VAT or Percentage Tax), Income Tax and Excise Tax, if applicable, in advance through the

assigned Revenue Collection Officers (RCO) of the Revenue District Office (RDO) having

jurisdiction over the place where the subject transaction occurs regardless of whether or notsaid

sellers are duly registered with the BIR.a. Advance payment of VAT at the rate of 12% on grossselling price or Percentage Tax

at the rate of 3% on gross sales, as the case may be.

b. Advance payment of Income Tax at the rate of 5% on gross payment.

c. Actual payment of Excise Tax at the rate of 2% based on either the actual market

value of the gross output at the time of removal, in the case of those locally extracted

or produced; or the value used by the BOC in computing tariff and duties, in the case

of importations. For purposes of these Regulations, the actual market value shall refer

to the actual consideration paid by the buyer to the seller.

Existing issuances to the contrary notwithstanding, RCOs are authorized to receive

advance payments of business (VAT or Percentage Tax) and Income Taxes and actual payment

of Excise Tax due from subject sellers and to issue the corresponding Revenue Official Receipt

(ROR), regardless of whether or not the sellers are registered with their respective RDOs.

The advance payments shall be credited against the actual business tax (VAT or

Percentage Tax, as the case may be) and Income Tax due from such persons for the taxable

period for which such advance payments were remitted to the BIR.

If the seller of jewelry, gold and other metallic minerals is a non-VAT taxpayer whose

gross sales/receipts does not exceed the threshold amount of P 1,919,500 in any 12-month

period

and therefore, liable to the 3% Percentage Tax imposed under Section 116 of the Tax Code, such

advance business tax paid shall be credited against the Percentage Tax due from such seller for

the month for which such advance payment was collected. If the seller of jewelry, gold andother


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metallic minerals, on the other hand, is a VAT registered taxpayer, in addition to the input tax

credits allowed by the Tax Code, the amount of advance VAT paid shall be allowed as credit

against the VAT liability or payable by the sellers.

The amount of advance Income Tax paid shall be credited against the Income Tax due

from the seller when he files his quarterly and annual Income Tax Return. The advance payment

of business tax and Income Tax shall be evidenced by duly validated copy of BIR Form No.

0605 and ROR issued by the RCOs, which shall constitute as the proof for credit of the advance

payment of taxes. Without such proof attached to the tax returns, any claim on account thereof

shall be disallowed and the assessment of taxes shall correspondingly be made.

The implementing guidelines relative to the conduct of tax enforcement as well as the

duties and obligations of non-resident alien individual not engaged in trade or business withinthe

Philippines or non-resident foreign corporation; and of owners and operators of hotels, inns, or

establishments where the alien individuals or foreign corporation buyers conduct the subject

transaction are specified in the Regulations.

REVENUE REGULATIONS NO. 6-2013 issued on April 22, 2013 amends certain provision

of Revenue Regulations No. 6- 2008 entitled Consolidated Regulations Prescribing the Rules on

the Taxation of Sale, Barter, Exchange or Other Disposition of Shares of Stock Held as Capital

Assets.

Section 7 of RR No. 6-2008 is hereby amended to read as follows

"SEC. 7. Sale, Barter or Exchange of Shares of Stock Not Traded Through a

Local Stock Exchange Pursuant to Secs. 24 (C), 25 (A)(3), 25 (B), 27 (D) (2), 28

(A) (7) (C), 28 (B) (5) (C) of The Tax Code, as Amended.

xxx xxx xxx

(c.2) Definition of "fair market value" of the Shares of Stock. For purposes


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of this Section, "fair market value" of the shares of stock sold shall be:

(c.2.1) x x x

(c.2.2) In the case of shares of stock not listed and traded in the local stock

exchanges, the value of the shares of stock at the time of sale shall be the fair

market value. In determining the value of the shares, the Adjusted Net Asset

Method shall be used whereby all assets and liabilities are adjusted to fair market

values. The net of adjusted asset minus the liability values is the indicated value

of the equity. For purposes of this section, the appraised value of real property at

the time of sale shall be the higher of

(1) The fair market value as determined by the Commissioner, or

(2) The fair market value as shown in the schedule of valued fixed by the

Provincial and City Assessors, or

(3) The fair market value as deter mined by Independent Appraiser.

REVENUE REGULATIONS NO. 7-2013 issued on April 29, 2013 prescribes the policies and

guidelines for the abatement of surcharges, interests and compromise penalties in relation tothe

filing of 2012 tax returns of Philippine nationals and alien individuals employed by foreign

governments/embassies/diplomatic missions and international organizations situated in the

Philippines.

The foreign governments/embassies/diplomatic missions and international organizations,

as employers of the concerned individuals, shall submit to the Office of the Commissioner of

Internal Revenue (OCIR) a Summary List of Employees as of December 31, 2012 (using the

prescribed format) on or before May 10, 2013. Only those employees who are included in the

said list may avail of abatement of surcharges, interests and compromise penalties under the


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Regulations.

International organizations whose non-Filipino employees enjoy immunity from taxation

in accordance with the provisions of related international agreements or domestic laws neednot

submit information on their non-Filipino employees.

Employees-taxpayers covered by Revenue Memorandum Circular No. 31-2013 who

failed to file their returns and/or declare the correct amount of income on his/her originalreturns

covering taxable year 2012 may file their original or amended returns, as the case may be, and

pay the tax due thereon on or before May 15, 2013. No surcharges and interests, as mandated

under Sections 248 and 249 of the Tax Code, shall be imposed. Further, no compromise penalty

prescribed under Revenue Memorandum Order No. 19-2007 shall be assessed upon filing

thereof. The abatement of surcharges, interests and compromise penalties are subject to the

following conditions:

a. The taxpayer must have duly registered with the BIR under the procedures prescribed

in pertinent issuances;

b. The taxpayer is included in the Summary List of Employees as of December 31, 2012

submitted by Foreign Governments/Embassies/Diplomatic Missions and International

Organizations;

c. The return must be filed and the basic tax due thereon must be fully paid not later

than May 15, 2013. In lieu of full payment, the taxpayer has the option to pay the tax

due on installment basis under Section 56 (A)(2) of Tax Code.

d. On or before May 15, 2013, the taxpayer shall file a Declaration of Availment of

Abatement (in triplicate copies) under these Regulations with the following

attachments:

i. Photocopy of the return filed together with attachments required under pertinent


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revenue issuances;

ii. Proof of full payment of taxes or, in the case of payment by installment, proof of

partial payment of taxes; and

iii. Notarized certificate issued by taxpayers employe r and duly confirmed by the

employee containing the monthly breakdown of salaries, emoluments and

monetary benefits received by the taxpayer during the 2012 calendar year.

e. No Letter of Authority, Tax Verification Notice, Audit Notice, Letter Notice, or

discrepancy notices of whatever nature has/have been served on the taxpayer

concerned covering the 2012 calendar year pursuant to Section 6(A) of the Tax Code;

and

f. The taxpayer is not the subject of any pending criminal case for tax evasion and other

criminal offenses under the Tax Code covering the 2012 calendar year, whether filed

in court or in the Department of Justice or subject of final and executory judgment by

court.The filing of original returns or amended returns, as the case may be, and the payment of

deficiency taxes made pursuant to the Regulations presupposes full and accurate disclosure by

the concerned employees. It shall not preclude the BIR from investigating the correctness of such

returns or sufficiency of the attachments, and/or availing the remedies provided for under the

Tax Code.

The Commissioner shall constitute a Technical Working Committee (TWC) for the

review of all Declaration of Availment of Abatement filed by availing taxpayers. The TWC shall

send a notification to the concerned taxpayer that the availment of abatement under the

Regulations was approved/disapproved by the Commissioner. In case of approval or disapproval,

the TWC shall issue a certification of the acceptance and approval or a notice of disapproval

thereof.

REVENUE REGULATIONS NO. 8-2013 issued on May 10, 2013 amends certain provisions


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of Revenue Regulations No. 7-2013, which provides for the policies and guidelines for the

abatement of surcharges, interests and compromise penalties in relation to the filing of the2012

tax returns of Philippine nationals and alien individuals employed by foreign

governments/embassies/diplomatic missions and international organizations situated in the

Philippines.

Section 2 of RR 7-2013 was amended to read as follows:

Section 2. Mandatory Requirement - The employee-taxpayer covered by RMC

31-2013 shall secure from his/her employer (Foreign Governments/

Embassies/Diplomatic Missions and International Organizations), a Summary List

of Employees as of December 31, 2012 in the format prescribed in ANNEX A

hereto. International organizations whose non-Filipino employees enjoy immunity

from taxation in accordance with the provisions of related international

agreements or domestic laws need to provide information on their non-Filipino

employees

In lieu of the Summary List of Employees, the employee-taxpayer may obtain a

Certificate of Employment from his/her employer disclosing information on

his/her position or rank, period of employment for 2012, and monthly salaries,

emoluments and monetary benefits.

The Summary List of Employees or the Certificate of Employment shall be

attached to the Declaration of Availment of Abatement (Annex B) which is

pre scribed from to be used in applying for abatement under these Regulations.

Section 3 (ii) of RR 7-2013 was amended to read as follows:

ii. In case a Summary List of Employees is submitted by the taxpayer, he or she

must be included in the list as one of the employees, diplomatic agents, staff

members or officials of the Foreign Government/Embassy/Diplomatic


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Mission and International Organization. If a Certificate of Employment was

submitted, such certificate must clearly state the taxpayers position or rank,

period of employment for 2012, and monthly salaries, emoluments and

monetary benefits.

REVENUE REGULATIONS NO. 9-2013 issued on May 10, 2013 amends certain provisions

of Revenue Regulations No. 30-2002 relative to the payment of the amount offered as

compromise settlement pursuant to Section 204 of the Tax Code, as amended.

Section 6 of Revenue Regulations No. 30-2002 shall now read as follows:

SEC. 6. APPROVAL OF OFFER OF COMPROMISE. - Except for offers of

compromise where the approval is delegated to the REB pursuant to the

succeeding paragraph, all compromise settlements within the jurisdiction of the

National Office (NO) shall be approved by a majority of all the members of

the NEB composed of the Commissioner and the four (4) Deputy

Commissioners. All decisions of the NEB, granting the request of the

taxpayer or favorable to the taxpayer, shall have the concurrence of the

Commissioner.

xxx xxx xxx

The compromise offer shall be paid by the taxpayer upon filing of the application

for compromise settlement. No application for compromise settlement shall be

processed without the full settlement of the offered amount. In case of

disapproval of the application for compromise settlement, the amount paid upon

filing of the aforesaid application shall be deducted from the total outstanding tax

liabilities.

xxx xxx xxx


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REVENUE REGULATIONS NO. 10-2013 issued on June 6, 2013 amends further pertinent

provisions of Revenue Regulations (RR) No. 2-98, as last amended by RR No. 30-2003, which

provides for the inclusion of real estate service practitioners (i. e. real estate consultant,appraiser

and broker) who passed the licensure examination given by the Real Estate Service under the

Professional Regulations Commission (as defined in Republ ic Act No. 9646, The Real Estate

Service Act of the Philippines) as among those professionals falling under Section 2.57.2(A)(1)

of RR No. 2-98, as amended, and RR No. 14-2002 as regards income payments to certain

brokers and agents.

Section 2.57.2(A)(1) of RR No. 2-98, as last amended by RR No. 30-2003, is hereby

further amended to read as follows:

Section 2.57.2. Income payments subject to creditable withholding

tax and rates prescribed thereon. - xxx xxx

(A)Professional fees, talent fees, etc., for services rendered by

individuals. On the gross professional, promotional and talent fees or

any other form of remuneration for the services of the following

individuals Fifteen percent (15%), if the gross income for the current

year exceeds P 720,000; and Ten percent (10%), if otherwise:

(1) Those individually engaged in the practice of profession or callings:

xxx designers, real estate service practitioners (RESPs), (i. e. real estate

consultants, real estate appraisers and real estate brokers) requiring

government licensure examination given by the Real Estate Service

pursuant to Republic Act No. 9646 and all other profession requiring

government licensure examination regulated by the Professional

Regulations Commission, Supreme Court, et c. xxx

Section 2.57.2(G) of RR No. 2-98, as last amended by RR No. 14-2002, is hereby further


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amended to read as follows:

Section 2.57.2. Income payments subject to creditable withholding

tax and rates prescribed thereon. - xxx xxx

xxx xxx xxx

(G) Income payments to certain brokers and agents. - On gross

commissions of customs, insurance, stock, immigration and commercial brokers,

fees of agents of professional entertainers and real estate service practitioners

(RESPs), (i. e. real estate consultants, real estate appraisers and real estate

brokers) who failed or did not take up the licensure examination given by and not

registered with the Real Estate Service under the Professional Regulations

Commission. Ten percent (10%).

xxx xxx xxx

The Regulations shall take effect June 1, 2013 and shall cover income payments to be

paid or payable starting June 1, 2013, which are required to be remitted within the month of July,

2013.

REVENUE REGULATIONS NO. 12-2013 issued on July 12, 2013 further amends Section

2.58.5 of Revenue Regulations (RR) No. 2-98, as amended, to read as follows:

Section 2.58.5 Requirements for Deductibility. Any income payment which is

otherwise deductible under the Code shall be allowed as a deduction from the

payors gross income only if it shown that the income tax required to be withheld

has been paid to the Bureau in accordance with Secs. 57 and 58 of the Code.

No deduction will also be allowed notwithstanding payments of withholding tax at

the time of the audit investigation or reinvestigation/reconsideration in cases where

no withholding of tax was made in accordance with Secs. 57 and 58 of the Code.

REVENUE REGULATIONS NO. 16-2011 issued on October 28, 2011 increases the amount of


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threshold amounts for sale of residential lot, sale of house and lot, lease of residential unit andsale

or lease of goods or properties or performance of services covered by Section 109 (P), (Q) and (V)

of the Tax Code of 1997, as amended, thereby amending certain provisions of RevenueRegulations

No. 16- 2005, as amended, otherwise known as the Consolidated Value -Added Tax (VAT)

Regulations of 2005.

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

Section Amount in Pesos

(2005)

Adjusted threshold

amounts

Section 109 (P) 1,500,000 1,919,500.00

Section 109 (P) 2,500,000 3,199,200.00

Section 109 (Q) 10,000 12,800.00

Section 109 (V) 1,500,000 1,919,500.00

Sale of residential lot with gross selling price exceeding P 1,919,500.00, residential house

and lot or other residential dwellings with gross selling price exceeding P 3,199,200.00, wherethe

instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of

conditional sale or otherwise) is executed on or after November 1, 2005, shall be subject to 10%

output VAT, and starting February 1, 2006, to 12% output VAT.

Sale or lease of goods or properties or the performance of services of non-VAT-registered

persons, other than the transactions mentioned in paragraphs (A) to (U) of Sec. 109(1) of theTax

Code, the gross annual sales and/or receipts of which does not exceed the amount of

P 1,919,500.00, is subject to Percentage Tax.


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Sale of residential lot valued at P 1,919,500.00 and below, or house and lot and other

residential dwellings valued at P 3,199,200.00 and below, where the instrument of

sale/transfer/disposition was executed on or after July 1, 2005 is exempt from VAT.

Provided, That every 3 years thereafter, the aforesaid threshold amounts shall be adjusted to

its present value using the Consumer Price Index, as published by the National Statistics Office

(NSO); Provided, further, that such adjustment shall be published through revenue regulationsto be

issued not later than March 31 of each year;

If two or more adjacent residential lots are sold or disposed in favor of one buyer, for the

purpose of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the

aggregate value of the lots do not exceed P 1,919,500.00. Adjacent residential lots, although

covered by separate titles and/or separate tax declarations, when sold or disposed to one andthe

same buyer, whether covered by one or separate Deed of Conveyance, shall be presumed as asale

of one residential lot.

Lease of residential units with a monthly rental per unit not exceeding P 12,800.00,

regardless of the amount of aggregate rentals received by the lessor during the year is alsoexempt

from VAT; Provided, every 3 years thereafter, the amount shall be adjusted to its present value

using the Consumer Price Index, as published by the NSO; Provided, further, that suchadjustment

shall be published through revenue regulations to be issued not later than March 31 of eachyear.

The foregoing notwithstanding, lease of residential units where the monthly rental per unit

exceeds P 12,800.00 but the aggregate of such rentals of the lessor during the year do notexceed

P 1,919,500.00 shall likewise be exempt from VAT, however, the same shall be subjected to 3%


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Percentage Tax.

In cases where a lessor has several residential units for lease, some are leased out for a

monthly rental per unit not exceeding P12,800.00 while others are leased out for more than

P 12,800.00 per unit, his tax liability will be as follows: a. The gross receipts from rentals notexceeding P 12,800.00 per month per unit shall be

exempt from VAT regardless of the aggregate annual gross receipts.

b. The gross receipts from rentals exceeding P 12,800.00 per month per unit shall be

subject to VAT if the aggregate annual gross receipts from said units only (not including

the gross receipts from units leased for not more than P 12,800.00) exceeds

P 1,919,500.00. Otherwise, the gross receipts will be subject to the 3% tax imposed

under Section 116 of the Tax Code.

Sale or lease of goods or properties or the performance of services other than the

transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts donot

exceed the amount of P 1,919,500.00 is exempt from VAT; Provided, every 3 years thereafter,the

amount shall be adjusted to its present value using the Consumer Price Index, as published bythe

NSO; Provided, further, that such adjustment shall be published through revenue regulations tobe


For purposes of the threshold of P 1,919,500.00, the husband and the wife shall be

considered separate taxpayers. However, the aggregation rule for each taxpayer shall apply. For

instance, if a professional, aside from the practice of his profession, also derives revenue fromother

lines of business which are otherwise subject to VAT, the same shall be combined for purposesof

determining whether the threshold has been exceeded. Thus, the VAT-exempt sales shall not be


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included in determining the threshold.

These Regulations shall take effect starting January 1, 2012.

REVENUE REGULATIONS NO. 16-2011 issued on October 28, 2011 increases the amount of

threshold amounts for sale of residential lot, sale of house and lot, lease of residential unit andsale

or lease of goods or properties or performance of services covered by Section 109 (P), (Q) and (V)

of the Tax Code of 1997, as amended, thereby amending certain provisions of RevenueRegulations

No. 16- 2005, as amended, otherwise known as the Consolidated Value -Added Tax (VAT)

Regulations of 2005.

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

Section Amount in Pesos

(2005)

Adjusted threshold

amounts

Section 109 (P) 1,500,000 1,919,500.00

Section 109 (P) 2,500,000 3,199,200.00

Section 109 (Q) 10,000 12,800.00

Section 109 (V) 1,500,000 1,919,500.00

Sale of residential lot with gross selling price exceeding P 1,919,500.00, residential house

and lot or other residential dwellings with gross selling price exceeding P 3,199,200.00, where

the

instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of

conditional sale or otherwise) is executed on or after November 1, 2005, shall be subject to 10%

output VAT, and starting February 1, 2006, to 12% output VAT.


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Sale or lease of goods or properties or the performance of services of non-VAT-registered

persons, other than the transactions mentioned in paragraphs (A) to (U) of Sec. 109(1) of theTax

Code, the gross annual sales and/or receipts of which does not exceed the amount of

P 1,919,500.00, is subject to Percentage Tax.

Sale of residential lot valued at P 1,919,500.00 and below, or house and lot and other

residential dwellings valued at P 3,199,200.00 and below, where the instrument of

sale/transfer/disposition was executed on or after July 1, 2005 is exempt from VAT.

Provided, That every 3 years thereafter, the aforesaid threshold amounts shall be adjusted to

its present value using the Consumer Price Index, as published by the National Statistics Office

(NSO); Provided, further, that such adjustment shall be published through revenue regulationsto be


If two or more adjacent residential lots are sold or disposed in favor of one buyer, for the

purpose of utilizing the lots as one residential lot, the sale shall be exempt from VAT only if the

aggregate value of the lots do not exceed P 1,919,500.00. Adjacent residential lots, although

covered by separate titles and/or separate tax declarations, when sold or disposed to one andthe

same buyer, whether covered by one or separate Deed of Conveyance, shall be presumed as asale

of one residential lot.

Lease of residential units with a monthly rental per unit not exceeding P 12,800.00,

regardless of the amount of aggregate rentals received by the lessor during the year is also

exempt

from VAT; Provided, every 3 years thereafter, the amount shall be adjusted to its present value

using the Consumer Price Index, as published by the NSO; Provided, further, that suchadjustment


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shall be published through revenue regulations to be issued not later than March 31 of eachyear.

The foregoing notwithstanding, lease of residential units where the monthly rental per unit

exceeds P 12,800.00 but the aggregate of such rentals of the lessor during the year do notexceed

P 1,919,500.00 shall likewise be exempt from VAT, however, the same shall be subjected to 3%

Percentage Tax.

In cases where a lessor has several residential units for lease, some are leased out for a

monthly rental per unit not exceeding P12,800.00 while others are leased out for more than

P 12,800.00 per unit, his tax liability will be as follows: a. The gross receipts from rentals not

exceeding P 12,800.00 per month per unit shall be

exempt from VAT regardless of the aggregate annual gross receipts.

b. The gross receipts from rentals exceeding P 12,800.00 per month per unit shall be

subject to VAT if the aggregate annual gross receipts from said units only (not including

the gross receipts from units leased for not more than P 12,800.00) exceeds

P 1,919,500.00. Otherwise, the gross receipts will be subject to the 3% tax imposed

under Section 116 of the Tax Code.

Sale or lease of goods or properties or the performance of services other than the

transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts donot

exceed the amount of P 1,919,500.00 is exempt from VAT; Provided, every 3 years thereafter,the

amount shall be adjusted to its present value using the Consumer Price Index, as published bythe

NSO; Provided, further, that such adjustment shall be published through revenue regulations tobe


For purposes of the threshold of P 1,919,500.00, the husband and the wife shall be


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considered separate taxpayers. However, the aggregation rule for each taxpayer shall apply. For

instance, if a professional, aside from the practice of his profession, also derives revenue fromother

lines of business which are otherwise subject to VAT, the same shall be combined for purposesof

determining whether the threshold has been exceeded. Thus, the VAT-exempt sales shall not be

included in determining the threshold.

These Regulations shall take effect starting January 1, 2012.

revenue regulations 1

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