MODULE 8: OVERVIEW OF BUSINESS WRAP-UP Question No.

2
TAXES Value-added tax is a (an)
a. Indirect tax
b. Progressive tax
c. Direct tax
Nature and Characteristics of Value Added Tax d. Regressive tax
(VAT)
WRAP-UP Question No. 3
1. Business tax levied on the value-added on One of the following is not major business revenue
certain goods, properties and services in the taxes in the Tax Code
domestic market and/or importer of goods. a. Value Added Tax
b. Income tax
2. It is imposed not on the goods or services as c. Excise tax
such but on the privilege of selling or d. Percentage tax
importing of goods or rendering services for a
fee, remuneration or consideration, WRAP-UP Question No. 4
Which of the following shall be subject to Value-
3. It is an indirect tax and the amount of tax may Added Tax?
be shifted or passed on to the buyer, transferee a. Any person who, in the course of his trade or
or lessee of the goods, properties or services. business sells, barters, exchanges or leases
goods or properties
4. The party directly liable for the payment of the b. Any person who, in the course of his trade or
tax is the seller, importer or the service business, renders service
provider, although the burden of the tax may c. Any person who imports goods
be shifted or passed on the consumer. d. All of the choices

WHAT IS VAT? WRAP-UP Question No. 5

Who shall be statutory liable to pay for the tax on
 RA 9337 (Value Added Tax Reform Act) sale of goods or properties and sale of services and
lease of properties?
 Tax on value added to the purchase price or a. Buyer
cost in the cost in the sale or lease of goods, b. Consumer
property or services in the course of the trade c. Seller
or business d. None of the choices

 Indirect tax: burden may be shifted or passed WRAP-UP Question No. 6

on to the buyer, transferee or lessee of the Who shall carry the burden of VAT on sale of goods
goods, property or services. or properties and sale of services and lease of
properties?
 Threshold: P 3,000,000 (RA 10963) a. Buyer
b. Consumer
VAT TRANSACTIONS: c. Seller
VAT d. None of the choices
EXEMPT
12% VALUE-ADDED TAX (VAT)
0% Output VAT P XXX VAT on Sales
Input VAT ( XXX ) VAT on Purchases
WRAP-UP Question No. 1 VAT Payable P XXX
A tax on business is Or (VAT Refund)
a. Direct tax
b. Property tax Example:
c. Indirect tax Mr. Bee Enterprises, VAT-registered provided the
d. None of the above following:
Sales P 1,000,000
Purchases 500,000
Compute for the VAT payable (VAT Refund). (TRAIN LAW, RA 10963), for the past 12 months.

MR. BEE ENTERPRISES a. Radio and/or television broadcasting

Output VAT ( P 1,000,000 x 12%) P 120,000 VAT on Sales
companies
Input VAT ( P 500,000 x 12%) 60,000 VAT on Purchases

MR. BEE ENTERPRISES If Gross Receipts of the preceding exceed P

Output VAT ( P 1,000,000 x 12%) P 120,000 10,000,000 (TRAIN LAW, RA 10963), for
Input VAT ( P 500,000 x 12%) (60,000) the past 12 months.
VAT Payable P 60,000
a. A person required to register as VAT taxpayer
but failed to register
Output VAT < Input VAT
Output VAT > Input VAT
2. OPTIONAL REGISTRATION
VAT-Exempt or not required to register- may opt to
WRAP-UP Question No. 7
register
 Any person– shall not be allowed to cancel his
A VAT subject real estate dealer sold a residential
registration for the next three (3) years.
lot on January 15, 2021. The following information
 For Franchise grantees of radio and/or
was made available on terms of the sale:
television broadcasting- once exercised, shall
be irrevocable.
Gross selling price P 3,000,000
Note: VAT registration not later than 10 days before
Initial payments on January 15, 2021 (consisting of
the beginning of calendar year and shall pay
down payment and installments in the year of sale)
registration fee.
900,000
CANCELLATION OF VAT REGISTRATION
Balance to be paid in equal installment, installments
INSTANCES WHEN VAT-REGISTERED PERSON MAY
starting February 15, 2021 2,100,000
CANCEL HIS VAT REGISTRATION
The zonal value of the residential lot was P
1. If he makes a written application and can
2,800,000
demonstrate to the commissioner’s satisfaction
that his gross sales or receipts for the following
How much was the output tax on January 15,
twelve (12) months, other than those that are
2021 using 12% VAT?
exempt under Section 109 (A) to 109 (BB), as
a. P 360,000
amended, will not exceed P 3,000,000 as
b. P 108,00
amended
c. P 300,000
d. None
2. If he has ceased to carry his trade or business,
and does not expect to recommence any trade
WRAP-UP Question No. 8
or business within 12 months.
How much is the value-added tax in each of the
following cases?
NOTE: The cancellation for registration will be
a. Selling price, VAT not included, of P 150.
effective from the first day of the following month
b. Selling price, VAT included, P 280
the cancellation was approved.
c. Selling price of P 300, VAT not included and
VAT passed on to buyer of P 40 or a total billed
3. Power of the Commissioner to Suspend
to buyer of P 340.
Business Operations
- CIR or his authorized representative may
VAT REGISTRATION
order suspension or closure of business
establishments for a period of not less than
1. MANDATORY REGISTRATION
5 days:
a. Any person or entity- Ordinary course of
trade or business
GROUND:
If Gross Receipts or Gross Sales exceed P
1. Failure to issue receipts or invoices
3,000,000
2. Failure to file VAT return
3. Understatement of taxable sales or receipts by
30% or more of the correct taxable sales or
receipts for the taxable quarter.
4. Failure of any person to register as required
under the law.
MODULE 9: VAT-EXEMPT TRANSACTIONS
Section 109 of the Tax Code, as amended by TRAIN
Law and CREATE
Generally, all sale of goods, properties or services
including use or lease of properties are subject to
VAT, unless exempt under the law. VAT exempt
means the transaction is not subject to VAT (Output
Tax) and the seller or lessor is not allowed to any
tax credit on VAT on purchases (Input Tax).
VAT-EXEMPT TRANSACTIONS
1. Sale or importation of:
a. Agricultural and marine food product in
their original state
b. Livestock and poultry used as or
producing foods for human consumption
c. Breeding stocks and genetic materials
1. Sale or importation of:
a. Fertilizers
b. Seeds, seedlings and fingerlings
c. Fish , prawn, livestock and poultry feeds
d. Ingredients used in the manufacture of
finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium fish,
zoo animals and other animals generally
considered as pets)
3. Importation of personal and household effects
belonging to the
a. Residents of the Philippines returning
from abroad
b. Non-resident citizens coming to resettle
in the Philippines
NOTE: Such goods must exempt from customs
duties.
4. Importation of professional instruments and
implements, tools of trade, occupation or
employment, wearing apparel, domestic
animals and personal household effects,
provided:
a. It belongs to persons coming to settle in
the Philippines, or Filipinos or their
families and descendants who are now
residents or citizens of other countries
such parties therein referred to as
overseas Filipinos
b. In quantities and of the class suitable to
the profession, rank or position of the
persons importing said items.
c. For their own use and not for sale, barter
or exchange
d. Accompanying such persons, arriving
within a reasonable time.
5. Services subject to percentage tax
6. Services by agricultural contract growers and
milling for others of palay into rice, corn into
corn grits and sugarcane into raw sugar.
7. Medical, dental, hospital and veterinary
services except those rendered by
professionals.
8. Educational services rendered by
a. Private educational institutions
b. Government educational institutions
9. Services rendered by individuals under the EE-
ER relationship
10. Transactions that are exempt from under the
international agreements to which the
Philippines is a signatory oir under special
laws.
11. For agricultural cooperatives:
a. Sales to their members
b. Sales to non-members if the cooperative is
the producer (if not, subject to VAT)
c.Importation of:
- direct farm inputs, machineries and
equipment, including spare parts thereof
- to be used directly and exclusively in the
production and/or processing of their
produce.
12. Gross receipts from lending activities by credit
and multi-purpose cooperatives.
13. Sales by n on-agricultural, non-electric and
non-credit cooperatives, provided that the
share capital contribution of each member
does not exceed P 15,000.
NOTE:
Importation by non-agricultural, non-electric and
noncredit cooperatives of machineries and
equipment including spare parts thereof, to be used
by them are subject to VAT.
course of trade or business but the same is
used in trade or business of the seller, the sale
thereof. shall be subject to vat being a
transaction incidental to the taxpayer's main
business
2. Real property utilized for low-cost housing as
defined under RA No. 7279' (otherwise known
as the "Urban Development and Housing Act of
1992), as amended.

CONTRIBUTION TAX "Low-cost housing" refers to housing

ü Contribution per Exempt projects intended for homeless .low-income
member < P15,000 family beneficiaries, undertaken by the
ü Contribution per Subject to Vat Government or private developers, which
member > P15,000 may either be a subdivision or a
condominium, registered and licensed by the
Housing and Land Use Regulatory
14. Export sales by persons who are not VAT- Board/Housing (HLURB) under BP Big. 220,
registered PD 957, or any other similar law, wherein
the unit selling price is within the selling
EXPORT SALE price per unit as set by the Housing and
Urban Development Coordinating Council
By a Vat Registered By a Non-VAT Registered (HUDCC) pursuant to RA 7279, Otherwise
Exporter Exporter known as the "Urban Development and
(Subject to vat) (Exempt from Vat) Housing Act of 1992" and other laws
FORMULA: Output Vat None
Output Vat (@0%) P0 Input Vat*** N/A 3. Real property utilized for "socialized housing
Input Vat (xx) Vat Payable None as defined by Republic Act No. 7279, and other
Excess Input Vat** (Pxx)
related laws such as RA No. 7835 and RA No.
MAY BE:
*** attributable vat on 8763, wherein the price ceiling per unit is
1. Refunded purchases may P450,000 or as may from time to time be
2. Used as Tax Credit The be closed to expense determined by HUDCC and the NEDA and other
against output vat in or cost. related laws.
relation to sales
subjected to 12% vat Socialized housing refers to housing
(local sales) programs and projects covering houses and
lots or home lots only that are undertaken by
3. May be converted
into a tax credit the government or the private sector for the
certificate for underprivileged and homeless citizens, which
payment of any shall include sites and services development,
internal revenue long-term financing liberalized terms on
taxes BIR taxes interest payments and as such other benefits
in accordance with the provisions of
Republic Act 7279 otherwise known as the
"Urban Development and Housing Act of
15. SALE OF REAL PROPERTIES 1992 and RA No. 7835 and RA No. 8763
"Socialized Housing" shall also refer to
BEFORE JANUARY 1, 2021 projects intended for the underprivileged
and homeless wherein the housing package
1. Real properties not primarily held for sale to selling price is within the lowest interest
customers or held for lease in the ordinary rates under the Urban Home Lending
course of trade or business. However, even if Program (UHLP) or any equivalent housing
the real property is not primarily held for sale program of the Government, the private
to customers or held for lease in the ordinary sector or non-government organizations

4. Real properties primarily held for sale to
customers or held for lease in the ordinary
course of trade or business of:
i. Residential lot valued at not more than
P1,500,000* H. House and lot, and other
ii. Residential dwellings valued at not more than
P2,500,000*
NOTE:
The values above shall be adjusted using the 2010
Consumer Price Index (CPI) as illustrated in RR 16-
2011 as follows:
FORMULA for the Adjusted Value = Amount x CPI
2010/CPI 2005
CPI 2010 = 166.1.
CPI 2005=129.8
Adjusted Value of P1.5M = P1,500,000 x
166.1/129.8= P1,919,500*
Adjusted Value of P2.5M = P2,500,000 x
166.1/129.8= P3,199,200.
Consequently, the adjusted threshold to be used
shall be:
 Residential lot = P1,919,500
 Residential House and Lot and Other
Residential Dwellings = P3,199,200.
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 do not exceed
P1,919,500. Adjacent residential lots,
although covered by separate titles and/or
separate tax declarations, when sold to one
and the same buyer, whether covered by one
separate Deed of Conveyance, shall be
presumed as sale of one residential lot.
BEGINNING JANUARY 1, 2021 (TRAIN LAW)
Beginning January 1, 2021, the vat exemption shall
only apply to the following:
1. Sale of real properties not primarily held for
sale to customers or held for lease the ordinary
course of trade or business.
2. Sale of real property utilized for socialized
housing as defined under RA No 7279, as
amended; and
3. Sale of House and Lot and Other Residential
dwellings with selling price of no more than
Two Million Pesos [P2,000,000 as adjusted in
2011 using the 2010 consumer price index
(CPI)). The adjusted value for P2M using the
2010 C and the formula provided in RR 8-2021
issued on June 11, 2021, is P3,199,200
NOTE:
The provision of the CREATE law, increasing the
threshold for vat exemption of sale of resident
house and lot and other residential dwellings to
P4,200,000 was VETOED by President Duterte:
16. Lease of a residential unit with a monthly
rental not exceeding P15,000 regardless of the
amount of aggregated rentals received by the
lessor during the year.
NOTE:
 LEASE of RESIDENTIAL UNITS where the
monthly rental per unit exceeds P15,000 but
the aggregate of such rentals of the lessor
during the year do not exceed P3,000,000 shall
likewise be exempt from VAT, however, the
same shall be subjected to Percentage Tax
under Section 116 of the Tax Code, as amended
(RR 16-2011; RR 13-2018).
 In cases where a lessor has SEVERAL
RESIDENTIAL UNITS for LEASE, some are
leased out for a monthly rental per unit of not
exceeding P15,000 beginning Jan. 1, 2018,
while others are leased out for more than
P15,000 per unit, his tax liability will be:
 The gross receipts from rentals not exceeding
P15,000 per month per unit shall be exempt
from VAT regardless of the aggregate annual
gross receipts.
 The gross receipts from rentals exceeding
P15,000 per month per unit shall be subject to
VAT if the annual gross receipts (from said
units only not including the gross receipts from
units leased out for not more than P15,000)
exceed P3,000,000. Otherwise, the gross
receipts shall be subject to Percentage Tax
under Section 116 of the Tax Code, as amended
(RR 16-2011; RR 13-2018).
MONTHLY RENTAL
P 15,000
Exempt from
VAT
VAT
GROSS
RECEIPTS
P 3,000,000
OPT
Note: Regardless of the annual gross
receipts
17. (TRAIN Law) Sale, importation, printing or
publication of books and any newspaper,
magazine, review, or bulletin which appears at
regular intervals with fixed prices or
subscription and sale, and which is not devoted
principally to the publication of paid
advertisements.
AMENDED BY CREATE LAW AS FOLLOWS: Sale,
importation, printing or publication of books, and
any newspaper, magazine, journal, review bulletin,
or any such educational reading material covered
by the United Nations Educational, Scientific and
Cultural Organization (UNESCO) Agreement on the
importation of educational, scientific, and
cultural materials, including the digital or electronic
format thereof. Provided, That the materials
enumerated herein are not devoted principally to
the publication of paid advertisements. Provided
further, That the materials enumerated herein are
compliant with the requirements set forth by the
National Book Development Board pursuant to R.A.
No. 8047 (RR 4 2021).
18. Transport of passengers by international
carriers doing business in the Philippines. The
same shall not be subject to Other Percentage
Taxes as amended under RA10378 and
Transport of cargo by international carriers
doing business in the Philippines, as the same
is subject to 3% common carrier's tax (Other
Percentage Taxes) as amended under
RA10378 and (RR 15-2015).
19. Sale, importation or lease of passenger or
cargo vessels and aircraft, including engine,
equipment, and spare parts thereof for
domestic or international transport
operations, provided, that the exemption from
vat on the importation and local purchase of
passenger and/or cargo vessels shall be
subject to the requirements on restriction on
vessel importation and mandatory vessel
retirement program of MARINA (RR 15-2015).
20. Importation of fuel, goods and supplies by
persons engaged in international shipping or
air transport operations, provided that:
 Fuel, goods, and supplies shall be
exclusively or shall pertain to the
transport of goods and/or passenger from
a port in the Philippines directly to a
foreign port without stopping at any port
in the Philippines.
 Fuel, goods, or supplies is used for the
purposes other than that mentioned in the
preceding paragraph, such portion of fuel,
goods and supplies shall be subject to
12% vat.
21. Services of banks, non-bank financial
intermediaries performing quasi-banking
functions, and other non-bank financial
intermediaries such as money changers and
pawnshops, subject to percentage tax under
Sections 121 and 122, respectively, of the Tax
Code.
22. Sale or lease of goods and services to senior
citizens and persons with disabilities, as
provided under RA No. 9994 (Expanded Senior
Citizens Act of 2010) and RA No. 10754 (An
Act Expanding the Benefits and Privileges of
Persons with Disability (PWD), respectively.
23. Transfer of property pursuant to Section 40(C)
(2) of the Tax Code, as amended.
24. Association dues, membership fees, and other
assessments and charges collected on a purely
reimbursement basis by homeowners'
associations and condominium corporations
established under RA No. 9904 (Magna Carta
for Homeowners' and Homeowners
Association) and RA No. 4726 (Condominium
Act), respectively. This provision shall take
effect only beginning January 1, 2018, or upon
the effectivity of RA10963-TRAIN Law (new
provision).
25. Sale of Gold to the Bangko Sentral ng Pilipinas
(BSP). This provision shall take effect only
beginning January 1, 2018, or upon the
effectivity of RA10963-TRAIN Law (new
provision).
AA. (TRAIN Law) Sale of drugs and medicines
prescribed for diabetes, high cholesterol, and
hypertension beginning January 1, 2019.
AMENDED BY CREATE LAW AS FOLLOWS:
Sale or importation of prescription drugs and
medicines for:
i. Diabetes, high cholesterol, and hypertension
beginning January 1, 2020; and
ii. Cancer, mental illness, tuberculosis, and kidney
diseases beginning January 1, 2021.
The exemption from VAT under this subsection
shall only apply to the sale or importation by the
manufacturers, distributors, wholesalers and
retailer of drugs and medicines included in the "list
of approved drugs and medicines" issued by the
Department of Health (DOH) for this purpose (RR 4-
2021).
BB. [New provision under the CREATE Law;
(Refer also to RR 4-2021)]. Sale or importation of
the following beginning January 1, 2021, to
December 31, 2023:
i. Capital equipment, its spare parts, and raw
materials, necessary for the production of
personal protective equipment (PPE)
components such as coveralls, gown, surgical
cap, surgical mask, n-95 mask, scrub suits,
goggles and face shield, double or surgical
gloves, dedicated shoes, and shoe covers, for
COVID-19 prevention.
ii. All drugs, vaccines and medical devices
specifically prescribed and directly used for
the treatment of COVID-19; and
iii. Drugs for the treatment of COVID-19 approved
by the Food and Drug Administration (FDA) for
use in clinical trials, including raw materials
directly necessary for the production of such
drugs.
Provided, that the Department of Trade and
Industry (DTI) shall certify that such equipment,
spare parts, or raw materials for importation are
not locally available or insufficient in quantity, or
not in accordance with the quality or specification
required.
Provided further, that for item (II), within sixty (60)
days from the effectivity of the CREATE, and every
three (3) months thereafter, the Department of
Health (DOH) shall issue a list of prescription drugs
and medical devices covered by this provision.
Provided finally, that for items (i) and (iii) hereof,
on the sale or importation of equipment, spare parts
and raw materials for the production of PPE
components as well as the sale or importation of
raw materials directly necessary for the production
of drugs for the treatment of COVID-19, the
supplier/s or importer shall submit, for the purpose
of availing the exemption, the following:
1. Certified true copy of "License to Operate",
issued to the manufacturer-buyer by the DOH-
FDA authorizing the manufacture of medical
grade PPE components and drugs for the
treatment of COVID- 19; and
2. "Sworn Declaration" from the manufacturer-
buyer that the items shall be used for the
manufacture of the PPE components and drugs
for the treatment of COVID-19.
The exemption claimed under this subsection shall
be subject to post audit by the Bureau of Internal
Revenue (BIR) or the Bureau of Customs (BOC), as
may be applicable.
CC. (Previously under subparagraph BB) 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 do not exceed the amount of
P3,000,000, as amended.
For purposes of these Regulations, the P3,000,000
gross annual sales shall comprise of the business'
total revenues from sales of its products, which are
either goods or services, including non-refundable
advance deposits/payments for services, net of
discounts, sales returns, and allowances, covering
the calendar or fiscal year. Sales incidental to the
registered operations of the business shall also be
included pursuant to Section 105 of the Tax Code, as
amended (RR 4-2021).
VAT EXEMPT UNDER RA
11494-BAYANIHAN ACT II
(RR 28-2020)
Section 2(A) of RR 28-2020 provides that the
IMPORTATION from June 25, 2020, to December 19,
2020, of the goods enumerated below and identified
as critical products, essential goods, equipment or
supplies needed to contain and mitigate COVID-19,
subject to the limitations and restrictions
hereunder, SHALL BE EXEMPT FROM VAT, excise
tax and other fees:
1. Goods which may include personal protective
equipment (PPE) such as gloves, gowns, masks,
goggles, and face shields; surgical equipment
and supplies; laboratory equipment and its
reagents; medical equipment and devices;
support and maintenance for laboratory and
medical equipment, surgical equipment and
supplies; medical supplies, tools, and
consumables such as alcohol, sanitizers, tissue,
thermometers, hand soap, detergent, sodium
hypochlorite, cleaning materials, povidone
iodine, common medicines (e.g., paracetamol
tablet and suspension, mefenamic acid,
vitamins tablet and suspension, hyoscine tablet
and suspension, oral rehydration solution, and
cetirizine tablet and suspension); testing kits,
and such other supplies or equipment as
determined by the Department of Health
(DOH) and Department of Trade and Industry
(DTI).
VAT-EXEMPT TRANSACTIONS
1. Equipment for waste management, including,
but not limited to, waste segregation, storage,
collection, sorting, treatment, and
disposal services as approved by the Department of
Environment and Natural Resources (DENR), DOH
or other concerned regulatory agencies.
2. Inputs, raw materials, and equipment
necessary for the manufacture or production of
essential goods related to the containment or
mitigation of covid 19 enumerated in section
2(A)(1) of these Regulations.
NOTE:
 The SALE of finished goods / products under
Section 2(A)(1) of RR 28-2020, whether locally
manufactured or imported, is subject to value-
added tax. The sale of inputs, raw materials
and equipment referred to in Section 2(F) the
same regulation to a non-holder of "License to
Operate" issued by the FDA DOH is likewise
subject to value-added tax.
MODULE 10: VAT REGISTRATION
1) MANDATORY REGISTRATION
a. Any person or entity who, in the course of his
trade or business, sells, barters, exchanges,
leases goods or properties and renders
services subject to VAT, if the aggregate
amount of actual gross sales or receipts exceed
P3,000,000 (as amended) for the past 12
months (other than those that are exempt) OR
there are reasons to believe that the gross sales
or receipts for the next 12 months will exceed
P3,000,000.
b. Radio and/or television broadcasting
companies whose annual gross receipts of the
preceding year exceeds P10,000,000.
c. A person required to register as VAT taxpayer
but failed to register.
Penalty for non-registration of those required to
register as VAT? He shall be liable to pay the tax as if
he were a VAT-registered person but he cannot
avail the benefits of input tax credit for the period
he was not properly registered.
2) OPTIONAL REGISTRATION
Any person who is VAT-exempt or not required to
register for VAT may, in relation to number 1 above,
elect to be VAT-registered by registering with the
RDO that has jurisdiction over the head office of that
person, and pay the annual registration fee of
P500.00 for every separate and distinct
establishment. Any person who elects to register
under optional registration shall not be allowed to
cancel his registration for the next three (3) years.
Franchise grantees of radio and/or television
broadcasting whose annual gross receipts of the
preceding year do not exceed ten million pesos
(P10,000,000.00) derived from the business
covered by the law granting the franchise may opt
for VAT registration. This option, once exercised,
shall be irrevocable. (Sec. 119, Tax Code).
The above-stated taxpayers may apply for VAT
registration not later than ten (10) days before the
beginning of the calendar quarter and shall pay the
registration fee unless they have already paid at the
beginning of the year. In any case, the
Commissioner of Internal Revenue may, for
administrative reason deny any application for
registration. Once registered as a VAT person, the
taxpayer shall be liable to output tax and be entitled
to input tax credit beginning on the first day of the
month following registration.
3) CANCELLATION OF VAT REGISTRATION
Instances when a VAT-registered person may cancel
his VAT registration:
1. If he makes a written application and can
demonstrate to the commissioner's satisfaction
that his gross sales or receipts for the following
twelve (12) months, other than those that are
exempt under Section 109(A) to 109(BB), as
amended, will not exceed P3,000,000, as
amended; or
2. If he has ceased to carry on his trade or
business, and does not expect to recommence
any trade or business within the next twelve
(12) months. The cancellation for registration
will be effective from the first day of the
following month the cancellation was
approved.
3. POWER OF THE COMMISSIONER TO
SUSPEND BUSINESS
OPERATIONS: The Commissioner of the Internal
Revenue or his authorized representative may
order suspension or closure of business
establishment for a period of not less than 5 days
for any of the following violations:
1. Failure to issue receipts or invoices
2. Failure to file vat return
3. Understatement of taxable sales or receipts by
30% or more of the correct taxable sales or
receipts for the taxable quarter.
4. Failure of any person to register as required
under the law.
TRANSITORY PROVISIONS UNDER THE CREATE
LAW (RR 4-2021)
1. A VAT-registered taxpayer who opted to
register as non-VAT as a result of the
additional VAT-exempt provisions under
Sections 109(1)(R), 109(1)(AA), and 109(1 of
the Tax Code, as amended by CREATE Act and
provided that it did not meet the threshold set
under Section 109(1 thereof, shall:
a. Submit an inventory list of unused
invoices and/or receipts as of the date of
filing of application for update of
registration from VAT to Non-VAT,
indicating the number of booklets and its
corresponding serial numbers; and
b. Surrender the said invoices and/or
receipts for cancellation.
2. The taxpayer shall treat the resulting excess
taxes paid due to the inclusion in the items
exempt from VAT or adjustment in percentage
tax rates, as the case may be, in the following
manner:
a. Unutilized VAT paid on local purchases
and importation under subsections
4.1091(B)(aa)(ii) and 4.109-1 hereof from
their specified effectivity under R.A. No.
11534 on January 1, 2021 until the
effectivity of these Regulations may be
carried-over to the succeeding taxable
quarter/s or be charged as part of cost,
pursuant to Section 110 of the Tax Code.
Input VAT which are directly attributable to goods
now classified as VAT - exempt may be allowed as
part of cost. For input VAT that cannot be attributed
to goods now classified as VAT-exempt, only a
ratable portion thereof shall be charged to cost.
b. Excess percentage tax payments as a
result of the decrease of tax rate from 3%
to 1% starting July 1, 2020 until the
effectivity of these Regulations may be
carried forward to the succeeding taxable
quarter/s by reflecting the excess
percentage tax payment under Line 17 of
the Quarterly Percentage Tax Return (BIR
Form No. 255 IQ), "Other Tax
Credit/Payment", specifying therein as
"Carry-Over Excess Percentage Taxes Paid
from Previous Quarter/s".
3. Excess/Unutilized input taxes as a result of the
change of status from VAT to Non-VAT
registration, under Sec. 112(B) of the Tax Code
of 1997, as amended, may be subject to refund
or the issuance of Tax Credit Certificate (TCC),
at the option of the taxpayer.