Amendments to VAT Regulations, 1994

Encompasses regular commercial or economic activities, including incidental transactions.
Applies to all persons including non-stock, non-profit private organizations and government entities.
Businesses with gross sales or receipts not exceeding ₱100,000 in a 12-month period are considered for subsistence/livelihood and not in the course of trade.
Services rendered by non-resident foreign persons in the Philippines are considered rendered in the course of trade or business.

Includes persons (excluding banks, finance companies, non-bank financial intermediaries) who regularly lend money for themselves or others at interest.

VAT applies on installment payments (including interest and penalties) on real property sales from October 1, 1994.
Sales on a deferred-payment basis, not installment plan, are subject to VAT on the entire purchase price from October 1, 1994.
Subsequent payments on deferred payment sales are not subject to VAT as they are equivalent to cash.

Franchise grantees of telephone and telegraph services are subject to VAT on gross receipts derived from such services.
Percentage tax under Section 118 of the Code shall no longer be collected from service availing persons.

Gross receipts from printing and publication of newspapers, magazines, reviews, or bulletins are subject to VAT, except for receipts from circulation.
Circulation refers to outright sales or subscriptions of publications issued regularly and not mainly devoted to advertisements.

Zero-rated sales by VAT-registered persons include:
- Export sales as defined in the regulations.
- Non-BOI-registered enterprises with export sales exceeding 70% of total production certified by Export Development Council.
- Sales to persons/entities exempted under special laws or international agreements (e.g., SBMA, CDA, ADB, IRRI).
Zero-rated services include international shipping services and accredited subcontractors/manufacturers processing for export enterprises.
Effectively zero-rated sales refer to local sales to persons/entities with indirect tax exemptions.

Educational services provided by government or accredited private institutions are exempt.
Sale or lease of real property not held primarily for sale or lease in the ordinary course of business is exempt, subject to conditions on input tax recognition.
Leases of residential units, boarding houses, dormitories, etc. with rent not exceeding rent control limits are exempt.
Cooperatives (excluding electric cooperatives) conducting business with members or non-members are subject to VAT.

Donations and sales of religious articles to be used exclusively for religious purposes and not in the ordinary trade are exempt.

Applicable to taxpayers who registered for VAT due to R.A. No. 7716 or exceeded minimum turnover.
Presumptive input tax credit pertains to inventory on hand as of September 30, 1994.

VAT-exempt persons who did not opt to register.
Persons engaged in trade or business not subject to VAT or other percentage taxes.
Businesses with gross sales or receipts not exceeding ₱100,000 in any 12-month period considered subsistence and exempt from registration fee.
Non-stock, non-profit organizations with gross receipts not exceeding ₱500,000.

VAT-registered persons must issue duly registered receipts or sales invoices for every sale or lease.
Receipts/invoices must be at least in duplicate, with original to buyer and duplicate retained by seller.
When selling to another VAT-registered person, invoice must indicate purchaser's registered name, TIN, and address.

Government and its subdivisions, including GOCCs, must withhold VAT on purchases of goods and services at rates of 3% and 6%, respectively.
Withholding applies to payments exceeding ₱1,000.
VAT payment for lease/use of properties paid to non-resident owners is subject to withholding tax.

Businesses with gross sales or receipts not exceeding ₱100,000 in a 12-month period are exempt from VAT and percentage tax.

Persons retiring or whose registration is cancelled must file final quarterly VAT returns and pay tax within 20 days after quarter end.

Specific guidelines for filing short quarter percentage tax and VAT returns apply for persons transitioning to VAT liability starting October 1, 1994.
Presumptive input tax credit of 8% allowed on eligible goods and improvements held as of September 30, 1994.
Unused invoices must be inventoried and stamped appropriately; use allowed only until December 31, 1994.
Penalties apply for failure to register on time including VAT liability without ability to pass on or claim input tax credits.
Overpayment of registration fee allows automatic tax credit against future fees upon proof.

Enterprises registered under EO 226 before October 1, 1994 continue enjoying benefits; those registered after are subject to VAT on imported capital equipment and services.
These regulations supersede RR No. 11-94.
Effective 15 days after publication.