Key Definitions
- Government: includes all departments, agencies, instrumentalities, local government units, and GOCCs with their branches
- Contractor: sellers of services to the government subject to 10% VAT under Section 102 of the NIRC
- Head of Office: highest executive officers of government entities, e.g., secretaries, regional directors, presidents, governors
General Provisions on VAT Withholding
- VAT on general sales is not subject to withholding as tax amount is not determinable at sale time
- Sales to government subject to VAT are subject to withholding pursuant to RA 7649
Withholding Agents and Responsibility
- Local government treasurers and national government chief accountants or equivalent officials act as withholding agents
- Withholding and remittance cannot be delegated to subordinates
- Withholding may be decentralized for government branches and regional offices
Rates and Computation of Creditable VAT Withheld
- Goods: 3% withholding on gross payments exclusive of 10% VAT
- Services: 6% withholding on gross payments exclusive of 10% VAT
- Computation applies whether VAT is separately billed or not, with illustrative formulas for partial payments
Filing of Returns and Remittance Procedures
- Withholding agents to file monthly returns (BIR form) within 10 days after month-end
- Remittance to accredited banks or authorized officers where banks unavailable
- Returns filed in triplicate
Issuance of Certificates for VAT Withheld
- Certificates (BIR form) to be issued to sellers in quadruplicate
- First three copies to sellers by 15th day of following month, fourth copy retained by withholding agent
Nature and Creditability of Withheld VAT
- Withheld VAT payments are creditable against sellers' VAT liabilities
- Creditable only if payments included in the sellers’ tax returns as declared sales/receipts
Duties of Heads of Offices
- Submit names of treasurers and chief accountants to Revenue District Officer within 30 days of effectivity
- Update submissions within 15 days upon personnel changes
Liability and Penalties for Designated Officers
- Officers who fail to withhold/remit taxed liable for tax additions under NIRC Sections 248, 249, and 247
- Penalties include fines (P5,000 to P50,000), imprisonment (6 months to 2 years), or both for failure to withhold, remit, file returns, or issue certificates
- Lesser fines or imprisonment for violations without specific penalties
Repealing Clause
- Revokes or modifies inconsistent existing rules and regulations
Effectivity
- Regulations effective July 1, 1993
Adoption and Approval
- Adopted June 16, 1993 by Officer-in-Charge Undersecretary of Finance
- Recommended for approval by Commissioner of Internal Revenue