VAT Withholding by Government Agencies

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Republic Act No. 7649: VAT Withholding by Government Agencies

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Title Source: Supreme Court: VAT Withholding by Government Agencies

Law: Republic Act No. 7649

Decision Date: Apr 6, 1993

Republic Act No. 7649 mandates government entities to deduct and withhold VAT on purchases of goods and services, ensuring the collection of appropriate taxes and preventing tax evasion, with specific rates and remittance deadlines, as well as the repeal or amendment of inconsistent laws or regulations.

Rates and Basis of VAT Withholding

A withholding rate of 3% VAT on the gross payment for the purchase of goods.
A withholding rate of 6% VAT on the gross receipts for services rendered by contractors.
Withholding applies to every release or installment payment made by the government entities.

Crediting and Remittance of VAT Withheld

The VAT withheld is creditable against the VAT liability of the seller or contractor.
Government entities are required to remit the VAT withheld within ten (10) days following the end of the month in which the withholding occurred.

Implementation and Regulatory Authority

The Secretary of Finance, upon recommendation from the Commissioner of Internal Revenue, is tasked with promulgating the necessary rules and regulations to effectively implement the provisions of this law.

Repealing Clause

All laws, decrees, orders, rules, and regulations or other issuances that are inconsistent with this law are repealed or amended accordingly to ensure harmony and compliance.

Effectivity

The law takes effect fifteen (15) days after its complete publication in the Official Gazette or in at least two national newspapers of general circulation, whichever occurs earlier.

END