QuestionsQuestions (PRESIDENTIAL DECREE NO. 2006)
It aims to reduce the tax imposed on second and subsequent sales, distribute the tax burden more equitably at each subsequent sale stage, simplify tax administration, ensure voluntary compliance, and alleviate the tax burden on the agricultural sector.
Persons liable to sales tax on subsequent sale must file a monthly return of gross sales and pay the tax due within ten (10) days after the end of each month.
Sales on consignment are considered actually sold on the day of sale or sixty (60) days after the date consigned, whichever is earlier.
When the taxpayer fails to issue receipts/invoices, fails to file a return, or when books/records do not correctly reflect declarations; the Commissioner may base the minimum on comparable taxpayers or other relevant information. The prescribed amount is prima facie correct for determining correct tax liabilities.
A separate return must be filed with the Revenue District Officer, Collection Agent, or duly authorized Treasurer where each branch or distinct place of business is located. Exception: the taxpayer may elect to file a consolidated return for all branches/places within the same revenue district.
Percentage taxes under Sections 163-165(a)(1)-(3) are paid in advance by the importer before release from customs custody, based on Customs’ total value including duties and other charges. On the original sale by the importer, sales tax is levied on the gross value, but the advance tax paid is credited against the sales tax due.
It reduces the one percent (1%) sales tax on agricultural products to zero percent (0%).
A tax equivalent to 1.5% of the gross selling price or gross value in money is imposed on every subsequent sale, barter, exchange, or similar transaction intended to transfer ownership/title.
The subsequent sale of agricultural products in their original state is subject to a 0% rate.
Unless the tax is billed separately to the purchaser in the invoice, the amount intended to cover the sales tax is considered part of the gross selling price.
Excise, sales, or miller’s tax paid under Titles IV and V on domestically purchased or imported raw materials, parts, accessories intended to form part of finished products is credited against the sales tax due on the original sale of the finished product. Exception: agricultural products.
The amount of sales tax on domestically purchased raw materials, parts, or accessories must be separately indicated in the sales invoice.
Examples include: (1) Original sale by manufacturers/producers/importers of articles subject to excise tax or miller’s tax; (2) subsequent sale of manufactured oils and other fuels (with stated exceptions such as lubricating oil, processed gas, grease, wax, petrolatum); (3) sales of certain newspapers/magazine reviews/bulletins not primarily advertisements; (4) certain firearm/ammunition sales directly to the Armed Forces or relevant government instrumentalities; (5) shipments/exports by the manufacturer/trader irrespective of shipping arrangement.
In meritorious cases, the Commissioner may exempt any person subject to internal revenue tax from compliance with the provisions of Section 181 (receipts/invoice requirements).
The existing tax rates may be increased or decreased by not more than 50%. However, for sales tax on agricultural products sold in their original state or after simple processes, the existing rates may be increased to not more than 3%.
Five percent (5%) of the total tax collected on subsequent sale accrues to the city or municipality where the tax is collected; an additional five percent (5%) of the total annual tax collected on subsequent sales accrues to the Ministry of Education, Culture and Sports.
The BIR must update data of persons liable to sales tax on original and subsequent sale and require unregistered taxpayers to re-register under P.D. 1991 within a period to be prescribed by the Commissioner. The Minister of Finance must issue necessary regulations upon recommendation of the Commissioner.