Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 7-2004)
The primary purpose is to implement Section 109 (bb) and (cc) of the National Internal Revenue Code, as amended by Republic Act No. 9238, excluding services rendered by doctors of medicine registered with the Professional Regulatory Commission (PRC) and lawyers registered with the Integrated Bar of the Philippines (IBP) from the coverage of Value Added Tax (VAT).
Beginning January 1, 2004, medical services by duly registered doctors of medicine with the PRC and legal services by duly registered lawyers with the IBP are exempted from VAT.
The exemption is limited to individual doctors of medicine duly licensed and in good standing with the PRC, or general professional partnerships solely composed of such doctors organized exclusively for the practice of medicine.
Legal services must be rendered by individual lawyers duly registered and of good standing with the IBP, or by general professional partnerships solely composed of such lawyers organized for the sole and exclusive practice of law.
Professional partnerships are treated as separate taxable persons from their individual partners. Gross receipts from services rendered by partners in the partnership's name are taxable to the partnership, while services rendered individually by partners are taxed individually.
They must update their registration with the RDO by June 20, 2004, using BIR Form No. 1905 to convert their status from VAT to NON-VAT or to non-percentage tax taxpayer status if their services were not subject to VAT but to percentage tax.
They must submit an inventory of unused receipts to the BIR by June 30, 2004, and stamp these receipts with the phrase "NON-VAT registered as of ___________". These stamped receipts can be used until July 31, 2004.
Yes, any revenue issuance inconsistent with this regulation is amended, revoked, modified, or repealed accordingly as stated in Section 5.
The regulations took effect immediately on adoption on May 7, 2004, unless otherwise provided in Republic Act No. 9238.