Scope of Transactions Covered
- Applies to sales or leases of goods or properties, and the performance of services not specifically mentioned in subparagraphs (a) to (s) of Section 103 of the Tax Code.
- Transactions with gross sales/receipts not exceeding the threshold amount qualify for VAT exemption.
Option for VAT Registration
- Persons otherwise exempted may opt to register as a VAT-registered person.
- Registration application must be filed at least ten (10) days before the start of a taxable quarter.
- Registrants must pay the annual registration fee as prescribed in Section 107(a) of the Tax Code.
Alternative Tax Payment for Exempt Persons
- Entities exempt due to the threshold are required to pay a percentage tax based on their gross quarterly sales/receipts.
- A tax rate of 3% applies upon the effectivity of R.A. No. 7716.
- The tax rate increases to 4% two (2) years after the effectivity of R.A. No. 7716.
Legal Authority and Effectivity
- The Executive Order derives authority from the powers vested in the President by law and the specific mandate under Section 103(t) of the Tax Code.
- Issued and effective from June 14, 1994.
This Executive Order is a critical legal instrument for regulating VAT obligations and exemptions, defining who qualifies under the threshold, and the procedural requirements for VAT registration and alternative tax payments.