ATENEO LAW SCHOOL

Rockwell Complex, Makati City

Syllabus on
VALUE-ADDED TAX
Atty. Carlos G. Baniqued
I.

TRANSACTIONS SUBJECT TO REGULAR VAT

A. In General
Sec. 105, NIRC
BIR Rul. 98-97, Aug. 28, 1997
BIR Rul. No. 18-05, Sept. 16, 2005
VAT Rul. No. 444-88
VAT Rul. No. 207-90, Nov. 8, 1990
BIR Rul. No. 10-98, Feb. 5, 1998
CIR v. Court of Appeals and Commonwealth Mgt. & Services Corp.,
G.R. No. 125355, March 30, 2000, 329 SCRA 237 (2000)
VAT Rul. No. 26-97, April 1, 1997
BIR Rul. No. 113-98, July 23, 1998
CIR v. Magsaysay Lines, Inc., 497 SCRA 63, 72-73 (2006)
CIR v. Benguet Corporation, 463 SCRA 28 (2005)
Abakada Guro Party List v. Ermita, 469 SCRA 1 (2005)
Diaz v Secretary of Finance, G.R. No. 193007, July 19, 2011, 654
SCRA 96, 117 (2011)
B. Sale of Goods or Properties
1.
Transactions Covered
a. Actual Sale
Sec. 106(A)(1), NIRC, as amended by Rep. Act. No. 9337
b. Transactions Deemed Sale
Sec. 106(B), NIRC, as amended by Rep. Act No. 9337
Sec. 4.106-7, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
Rev. Mem. Cir. No. 3-2014, Jan. 6, 2014
c. Changes in or Cessation of Status of a VAT-Registered Person
Sec. 106(C), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.106-8, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007 and later
by Rev. Regs. No. 10-2011, July 1, 2011
2.
Taxable Base
a. Gross Selling Price
Sec. 106(A)(1), 2nd par., NIRC, as amended by Rep. Act No.
9337
Sec. 4.106-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
b. Sales Discounts, Returns and Allowances
Sec. 106(D), NIRC, as amended by Rep. Act No. 9337
Sec. 4.106-9, Rev. Regs. No. 16-2005, Sept. 1, 2005
VAT Ruling No. 204-90, Oct. 16, 1990

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c. Taxable Base for Transactions Deemed Sale and Below Market
Gross Selling Price
Sec. 4.106-7(b), Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
C. Sale of Services
1.
Meaning of Sale or Exchange of Service
Sec. 108(A), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.108-2, Rev. Regs. No. 16-2005, Sept. 1, 2005
2.
Taxable Base: Gross Receipts Actually and Constructively
Received
Sec. 108(A), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.108-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
BIR Rul. No. 195-89, Sept. 8, 1989
VAT Rul. No. 111-88, April 25, 1989
VAT Rul. No. 205-90, Oct. 16, 1990
a. Amounts Earmarked for Payment to Third Parties
Sec. 4.108-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
CIR v. Tours Specialists, Inc., 183 SCRA 402 (1990)
BIR Rul. No. DA-069-2006, March 1, 2006
b. Reimbursement of Expenses
Sec. 4.108-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
VAT Rul. No. 283-88, July 4, 1988
VAT Rul. No. 87-88, April 14, 1988
VAT Rul. No. 97-88, April 15, 1988
D. Importation of Goods
Sec. 107, NIRC, as amended by Rep. Act. No. 9337
II. TRANSACTIONS SUBJECT TO ZERO-RATED VAT
A. Difference Between Zero-Rated and Exempt
Secs. 4.106-5, 1st par., and 4.108-5(a), Rev. Regs. No. 16-2005,
Sept. 1, 2005
Cf. Sec. 4.109-1(A), Rev. Regs. No. 16-2005, Sept. 1, 2005
CIR v. Cebu Toyo Corporation, 451 SCRA 447 (2005)
CIR v. Seagate Tech. (Phil.), 451 SCRA 133, 144 (2005)
CIR v. Toshiba Information Equipment (Phils.), Inc., 466 SCRA 211
(2005)
CIR v. Sekisui Jushi Philippines, Inc., 496 SCRA 206, 212-214 (2006)
Cf. Contex Corp. v. CIR, 433 SCRA 376 2004)
B. Automatically Zero-Rated Transactions
1.
Sale of Goods and Properties
Sec. 106(A)(2)(a)(1), (2), (4) and (b), NIRC, as amended by Rep.
Act. No. 9337
2.
Sale of Services
Sec. 108(B)(1), (2), (6) and (7), NIRC, as amended by Rep. Act.
No. 9337
CIR v. Placer Dome Technical Services (Phils.), Inc., 524 SCRA
271 (2007)

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CIR v. American Express Intl, Inc. (Phil. Branch), 462 SCRA 197
(2005)
CIR v. Burmeister & Wain Scandinavian Contractor Mindanao,
Inc., 512 SCRA 124, 134-140 (2007)
3.
Meaning of Accounted for in Accordance with the Rules and
Regulations of the BSP
BIR Rul. No. 176-94
VAT Rul. No. 47-00, Oct. 26, 2000
C. Effectively Zero-Rated Transactions
1.
Sale of Goods and Properties
Sec. 106(A)(2)(3), (5), (6) and (c), NIRC, as amended by Rep. Act
No. 9337
Sec. 4.106-6, Rev. Regs. No. 16-2005, Sept. 1, 2005
Atlas Consolidated Mining and Development Corporation v. CIR,
524 SCRA 73, 90-96 (2007) and 534 SCRA 51 (2007)
2.
Sale of Services
Sec. 106(B)(3), (4) and (5), NIRC, as amended by Rep. Act No.
9337
Sec. 4.108-6, Rev. Regs. No. 16-2005, Sept. 1, 2005
CIR v. Acesite (Philippines) Hotel Corporation, 516 SCRA 93, 98101 (2007)
CIR v. John Gotamco & Sons, Inc., 148 SCRA 36 (1987)
3.
Requirement to Obtain Approved Application for Effective
Zero-Rating: Deleted by Rev. Regs. No. 4-2007, Feb. 7, 2007
Sec. 4.106-6, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007 (which
deleted par. requiring approved application for effective zerorating)
Sec. 4.108-6, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007 (which
deleted par. requiring approved application for effective zerorating)
CIR v. Seagate Technology (Philippines), 451 SCRA 132, 157
(2005)
D. Printing of Words Zero-Rated on Invoices/Receipts
Microsoft Philippines, Inc. v. CIR, 647 SCRA 399, 406 (2011)
Panasonic Communications Imaging Corp. of the Philippines v. CIR,
612 SCRA 28 (2010)
Sillcon Philippines, Inc. v. CIR, G.R. No. 172378, Jan. 17, 2011, 639
SCRA 521 (2011)
Kepco Philippines Corp. v. CIR, G.R. No. 179961, Jan. 31, 2011, 641
SCRA 70 (2011)
Intel Technology Philippines, Inc. v. CIR, 522 SCRA 657 (2007)
III.

TRANSACTIONS EXEMPT FROM VAT

A. Coverage of Exemption
Sec. 109(1), NIRC, as amended by Rep. Act. No. 9337
Rev. Regs. No. 16-2011, Oct. 27, 2011
Rev. Regs. No. 13-2013, Sept. 20, 2013 (raw sugar: muscovado)

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Rev. Regs. No. 15-2015, Dec. 28, 2015 (Importation, Sale or Lease
of Passenger Vessels and Aircraft)
Rev. Mem. Cir. No. 36-2011, Aug. 26, 2011
Rev. Mem. Cir. No. 34-2011, Aug. 15, 2011
Rev. Mem. Cir. No. 55-2014, June 17, 2014 (ingredients for finished
feeds)
BIR Rul. No. 44-2014 (livestock feed)
BIR Rul. No. 069-2014 (raw chicken)
BIR Rul. Nos. 83-2014 and 102-2014 (publication materials)
BIR Rul. No.101-2014 (RHQ/ROHQ)
1. General Rule
Philippine Acetylene Co., Inc. v. CIR, 20 SCRA 1056 (1967)
CIR v. Philippine Health Care Providers, Inc, 522 SCRA 131
(2007)
First Planters Pawnshop, Inc. v. CIR, 560 SCRA 606 (2008)
CIR v. Michael J. Lhuillier Pawnshop, Inc., G.R. No. 150947, July
15, 2003, 406 SCRA 178 (2003)
PAGCOR v. The Bureau of Internal Revenue, et. al., G.R. No.
172087, March 15, 2011, 645 SCRA 338 (2011)
BIR Rul. No. 155-98, Oct. 21, 1998
BIR Rul. No. 47-99, April 13, 1999
2. Exception
CIR v. John Gotamco & Sons, Inc., 148 SCRA 36 (1987)
Maceda v. Macaraig, Jr., 223 SCRA 217 (1993)
B. Waiver of VAT Exemption/Election to be Subject to VAT
Sec. 109(2), NIRC, as amended by Rep. Act No. 9337
III. INPUT TAX CREDITS & REFUNDS
A. Input Tax Credit
Sec. 110, NIRC, as amended by Rep. Act. No. 9337, as further
amended by Rep. Act. No. 9361
Sec. 4.110-1, Rev. Regs. No. 16-2005, Sept. 1, 2005
1.
Persons Who Can Avail of the Input Tax Credit
Sec. 110(A)(1)(b) and (A)(2), NIRC, as amended by Rep. Act. No.
9337
Sec. 4.110-2, Rev. Regs. No. 16-2005, Sept. 1, 2005
2.
Special Rules on Amortization of Input Tax on Depreciable
Goods
Sec. 110(A), proviso, NIRC, as amended by Rep. Act. No. 9337
Sec. 4.110-3, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
Sillcon Philippines, Inc. v. CIR, supra
3.
Special Rules on Apportionment of Input Tax on Mixed
Transactions
Sec. 110(A)(3), NIRC, as amended by Rep. Act. No. 9337
Sec. 4.110-4, Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
4.
Substantiation of Input Tax Credits
Sec. Sec. 4.110-8, Rev. Regs. No. 16-2005, Sept. 1, 2005
BIR Rul. No. 61-00, Nov. 8, 2000

B.

C.
D.

E.

Atlas Consolidated Mining and Development Corporation v. CIR,

518 SCRA 425, 430-431 (2007)
Atlas Consolidated Mining and Development Corporation v. CIR,
546 SCRA 150 (2008) and 524 SCRA 73 (2007)
CIR v. Manila Mining Corporation, 468 SCRA 571, 584 (2005)
Intel Technology Philippines, Inc. v. CIR, supra
CIR v. Phil. Health Care Providers, Inc., 522 SCRA 131 (2007)
Transitional Input Tax
Sec. 111(A), NIRC, as amended by Rep. Act. No. 9337
Sec. Sec. 4.111-1(a), Rev. Regs. No. 16-2005, Sept. 1, 2005
Fort Bonifacio Development Corporation v. CIR, 583 SCRA 168, 192193 (2009)
Presumptive Input Tax
Sec. 111(B), NIRC, as amended by Rep. Act. No. 9337
Sec. Sec. 4.111-1(b), Rev. Regs. No. 16-2005, Sept. 1, 2005
Final Withholding VAT
Sec. 114(C), NIRC, as amended by Rep. Act. No. 9337
Sec. Sec. 4.114-2(a), Rev. Regs. No. 16-2005, Sept. 1, 2005, as
amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
See Illustration in Sec. Sec. 4.110-4, Rev. Regs. No. 16-2005, Sept.
1, 2005, as amended by Rev. Regs. No. 4-2007, Feb. 7, 2007
Claims for Refund or Issuance of Tax Credit Certificates
Sec. 112, NIRC, as amended by Rep. Act. No. 9337
1.
Zero-Rated or Effectively Zero-Rated Transactions
Sec. 112(A), NIRC, as amended by Rep. Act. No. 9337
2.
Cancellation of VAT Registration
Sec. 112(B), NIRC, as amended by Rep. Act. No. 9337
3.
Period within which Refund or Tax Credit of Input Tax shall
be Made
Sec. 112(C), NIRC, as amended by Rep. Act. No. 9337
Correlate with Sec. 229, NIRC
Rev. Mem. Cir. No. 54-2014, June 11, 2014
Atlas Consolidated Mining and Development Corporation v. CIR,
524 SCRA 73, 90-96 (2007)
CIR v. Mirant Pagbilao Corporation, G.R. No. 172129, Sept. 12,
2008, 565 SCRA 154 (2008)
CIR v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, Oct.
6, 2010, 632 SCRA 422 (2010)
Team Energy Corporation (formerly Mirant Pagbilao Corp.)
v.Commissioner of Internal Revenue, G.R. No. 190928, Jan. 13,
2014, 713 SCRA 104
Commissioner of Internal Revenue v. Mindanao II Geothermal
Partnership, G.R. No. 191498, Jan. 15, 2014, 713 SCRA 645
Commissioner of Internal Revenue v. Dash Engineering
Philippines, Inc., G.R. No. 184145, Dec. 11, 2013, 712 SCRA 347
Commissioner of Internal Revenue v. Burmeister and Wain
Scandinavian Contractor Mindanao, Inc., G.R. No. 190021,
October 22, 2014
Rev. Mem. Cir. No. 54-2014, June 11, 2014

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IV.

ADMINISTRATIVE REQUIREMENTS
A. Registration of VAT Taxpayers
Sec. 9.236-1 Sec. 9.236-6, Rev. Regs. No. 16-2005, Sept. 1, 2005
B. Invoicing and Bookkeeping Requirements
Sec. 4.113-1 Sec. 4.113-4, Rev. Regs. No. 16-2005, Sept. 1, 2005
C. Filing of VAT Returns and Payment of VAT
Sec. 4.114-1 Sec. 4.114-3, Rev. Regs. No. 16-2005, Sept. 1, 2005