Amendments to VAT Regulations on Change of Control

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BIR REVENUE REGULATIONS NO. 10-2011: Amendments to VAT Regulations on Change of Control

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Title Supreme Court: Amendments to VAT Regulations on Change of Control

Law: Bir Revenue Regulations No. 10-2011

Decision Date: Jul 1, 2011

BIR Revenue Regulations No. 10-2011 amends the Consolidated Value-Added Tax Regulations, clarifying that a change in corporate control does not trigger output tax on goods held by the corporation, while exchanges of real properties for shares remain subject to VAT.

revenue regulations

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Change or Cessation of Status as VAT-Registered Person

Revises Section 4.106-8 related to changes affecting VAT registration status.
Goods or properties originally intended for sale or business use at the time of certain occurrences are not subject to output tax.

Exceptions to Output Tax Application

No VAT on goods or properties despite a change in corporate control via acquisition of controlling interest by another stockholder or group.
The business inventory or properties held for lease remain with the same corporation, preserving corporate identity distinct from shareholders.
Exchange of goods or properties, including real estate held for business use or sale, for shares of stock is subject to VAT regardless of corporate control change.

Illustrative Example

Abel Corporation's inventory remains free from output tax after Nel Corporation acquires corporate control by exchanging real properties for shares.
Exchange of Nel Corporation's real properties for shares in Abel Corporation is VATable.

Additional Changes Not Subject to Output Tax

Change in trade or corporate name of the business does not trigger output tax.
Merger or consolidation of corporations results in the absorption of unused input tax by the surviving or new corporation.

Repealing Clause

Inconsistent provisions from Revenue Regulations No. 16-2005, Revenue Regulations No. 14-2007, and other issuances are repealed, amended, or modified accordingly to align with these Regulations.

Effectivity

The amended regulations take effect immediately upon adoption on July 1, 2011.

Signatories

Signed by Cesar V. Purisima, Secretary of Finance.
Recommended for approval by Kim S. Jacinto-Henares, Commissioner of Internal Revenue.

END