Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 13-2007)
The Regulations prescribe the policies and procedures for the advance payment of value added tax (VAT) on the transport of naturally grown and planted timber products for purposes of consummating a sale, pursuant to specific provisions of the National Internal Revenue Code of 1997, as amended.
The owner/seller of the timber products, natural or juridical person, who holds permits or agreements with the Department of Environment and Natural Resources (DENR), are liable to pay the advance VAT before transport from the place of production or concession.
Permits or agreements issued or entered into with the DENR such as Timber License agreements, Industrial Forest Management Agreements, Tree Farm Lease Agreements, Agro-Forestry Farm Lease Agreements, Private Forest Development Agreements, Socialized Industrial Forest Management Program, Community-Based Forest Management Program, Timber Cutting/Salvage & Related Permits.
The amount is computed by applying the VAT rate of 12% on the applicable base price per cubic meter of the timber species, which varies according to region (Luzon, Visayas, Mindanao) and species classification as provided in the schedule under Section 4.
Yes, the Commissioner of Internal Revenue may adjust the valuation basis for advance VAT payment upon prior consultation with the Secretary of the Department of Environment and Natural Resources.
A Certificate of Advance Payment of the VAT issued by the concerned Revenue District Office along with the BIR payment form and documents from the DENR (Certificate of Timber Origin, Certificate of Lumber Origin, Self Monitoring Form, or equivalent) must be presented upon inspection.
No, transport of timber products from the cutting area without advance VAT payment is prohibited. Absence of proof will authorize DENR and BIR agents to hold the transport or sale in abeyance.
Yes, owners presenting a Certificate of Registration (BIR Form No. 2303) showing they are subject only to the 3% percentage tax may be exempt from advance VAT but must pay the advance 3% percentage tax. However, if the aggregate value exceeds P1.5 million, advance VAT applies.
Advance VAT payments shall be credited against output VAT on the actual gross selling price of the timber products. For those paying the 3% percentage tax, the advance payment shall be credited to the monthly/quarterly percentage tax return.
Violations shall be subject to penalties under Sections 254, 275, and other relevant provisions of the National Internal Revenue Code, as amended.
These Regulations took effect fifteen (15) days after their publication in a newspaper of general circulation following their adoption on October 15, 2007.