III.

VALUE-ADDED TAX

A. S105 – S115 of the Tax Code

B. RA No. 9238 as amended by RA No. 10963 (effective January 1, 2018)
C. Relevant VAT Regulations
1. RR 13-2018 (IRR under TRAIN Law)
2. RR 16-2005 as amended by RR 4-2007 (IRR under NIRC)
D. Nature, Characteristic and Purpose
1. Tolentino v. Sec of Finance GR No. 115455 Oct 30, 1995
2. Diaz vs. Sec. of Finance, GR No. 193007, July 19, 2011
3. VAT Ruling 040-98 Nov 23, 1998
4. http://money.cnn.com/2010/04/13/news/economy/new_zealand_vat.fortune/in
dex.htm
5. http://money.cnn.com/2008/12/01/news/economy/tully_vat.fortune/index.htm
?postversion=2008120209
E. Persons liable
1. S105
2. Commissioner of Internal Revenue vs. Court of Appeals, et al. G.R. No.
125355, March 30, 2000
F. Definition of
1. “in the course of trade of business”
2. “subsistence and livelihood”
G. VAT Tax Rates
1. 12%
2. Zero rated
3. Exempt
H. Vatable Activities
1. Sale of Goods or Properties S106
a. 12% S106(A)(1)
(1) Definitions
(a) Goods or properties
b. 0% S106(A)(2)
(1) Definitions
(a) RMC 17 - 96 (as amended by RR 6-97)
(b) Export sales
i RMO 9 - 2000 BOI-registered manufacturers-exporters
ii RMC 74 - 99 PEZA enterprises
(c) Foreign currency denominated sales
(d) Effectively-zero rate sales
c. Transactions deemed sale S106(B)
(1) “isolated transaction criteria” vs. “incidental transaction criteria”
BIR Ruling 113-98 July 23, 1998
(2) VAT Ruling 027-96 Sept 23, 1996
d. Changes in or Cessation of Status S106 (C)
e. Determination of Tax Base
Syllabus for Taxation II (SY 2019-2020) 4
Atty. Jon Ligon
 2. Importation of Goods
a. S107
b. Determination of Tax Base
3. Sale of Services and Use or Lease of Properties S108
a. 12% S108(A)
(1) Definitions
(a) RA No. 9238 (effective: January 1, 2004)
(b) Sale or exchange of services
(c) Situs-of-service criteria BIR Ruling 110-97 Oct 23, 1997
(2) CIR vs. CA & Commonwealth Mgt & Services Corp GR 125355 Mar
30, 2000
(3) BIR Ruling No. 213-2015
b. 0%
(1) S108(B)
c. Determination of Tax Base
d. Relevant issuances
(1) RMC 3-96/RR 13-2012 Sale/Lease of Real Property
(2) RMC 4-96 Media Business
(3) RMC 5-96 Franchise Grantees
(4) RMC 6-96 Common Carriers
(5) RMC 7-96 Hotels and Restaurants
(6) RMC 11-96 Non-Life Insurance Companies
(7) RMC 13-96 Dealers in Securities and Lending Investors
(8) RMC 23-96 Rental payable to non-resident foreign corporations
(9) RMC 28-2001 Movie Houses
(10) RMC 45-2001 Pawnshop Operators
(11) RMC 4-2003 HMOs
(12) RMC 6-2003 Professionals
(13) RMC 23-2003 Brokers
(14) RMC 39-2007
(15) RMC 77-2008 Director’s Fees
(16) RMC 63-2010 Tollway Operator
(17) RMC 39-2007 Security Agency
I. Exempt Transactions S109
1. Misamis Oriental Coco Traders vs. Sec of Finance 238 SCRA 63
2. RMC 7-94
3. Revenue Regulation 16-2011
4. Revenue Regulation 03-2012
5. St. Luke’s Medical Center vs. CIR CTA Case No. 5068 Mar 17, 1999
6. Tambunting Pawnshop, Inc. v. Commissioner of Internal Revenue, G.R. No.
179085, January 21, 2010
J. Tax Credit S110
1. Credits for Input Tax
2. Transitional Input Tax S111(A)
3. Presumptive Input Tax S111(B)
K. Computation of VAT Payable

Syllabus for Taxation II (SY 2019-2020) 5

Atty. Jon Ligon
 1. Output tax
2. Input tax
3. Excess Output over Input / Excess Input over Output
L. Refunds S112
M. Compliance Requirements
1. Registration
a. Persons Commencing Business S236 (G)
b. Persons Becoming Liable to VAT S236(H)
c. Atlas Consolidated Mining vs. CIR GR 134467 Nov. 17, 1999
d. Optional Registration S236(I)
e. Cancellation of Registration S236(F)
2. Invoicing and Accounting
a. S113
b. S237
c. RR 8-99
d. Last paragraph of S109
e. RMC 61-2003
3. Return and Payment of VAT S114
a. BIR Form 2550M
b. BIR Form 2550Q
4. Withholding VAT
a. Creditable S114(C)
b. Final
c. BIR Form 1600
5. Summary List of Sales and Purchases
N. Power of the Commissioner to Suspend Business Operations S115
a. RMO 3-2009 – Guidelines in the conduct of survellance

Syllabus for Taxation II (SY 2019-2020) 6

Atty. Jon Ligon