RR No. 3 – 2024

RR No. 3 – 2024 Ease of Paying Taxes on the Relevant Provision of Value-Added Tax (VAT) and Percentage Tax 

The Bureau of Internal Revenue issued RR No. 3-2024 to implement the amendments on Title IV – VAT and Title IV – Percentage Tax of the NIRC 1997, as amended and introduced in Republic Act No. 11976, otherwise known as the “Ease of Paying Taxes Act”  

Summary:  

1. Sale or Exchange of Services (Section 108 of the Tax Code) 

  • VAT on sale of services and lease of properties is set at 12% of gross sales. 
  • Definition of “Gross Sales” includes total amount of money representing contract price, service fee, rental, or royalty, excluding VAT. 
  • Allowable deductions from gross sales include refunds and sales discounts. 

2. VAT-Exempt Transactions 

  • VAT-exempt threshold for gross annual sales is set at three million pesos (P3,000,000.00), adjusted every three years using the Consumer Price Index (CPI) by the Philippine Statistics Authority (PSA). 
  • Self-employed individuals and professionals availing the 8% tax on gross sales and non-operating income are exempt from 12% VAT. 

3. Output VAT Credit on Uncollected Receivables 

  • Sellers can deduct output VAT on uncollected receivables in the next quarter after the payment period lapses, provided VAT on the transaction is fully paid and not claimed as a deduction. 
  • Specific conditions must be met for VAT credit eligibility, such as written agreement on credit terms and proper documentation. 

4. Claims for Refund/Tax Credit Certificate of Input Tax 

  • VAT-registered persons with zero-rated or effectively zero-rated sales can apply for a refund of input tax attributable to such sales within two years after the close of the taxable quarter. 
  • Input tax must be allocated proportionately if the taxpayer is involved in both zero-rated and non-zero-rated sales. 

5. Invoice and Billing Changes 

  • Transition from cash basis to accrual basis mandates a single “INVOICE” document for both goods and services sales. 
  • References to receipts/payments for service sales are now termed “BILLING” or “BILLED.” 

6. Filing and Payment 

  • Tax returns must be filed electronically, but manual filing is allowed if electronic platforms are unavailable. Payments can also be made electronically or manually at authorized banks and revenue collection officers. 

7. General Provisions 

  • These amendments streamline VAT and percentage tax processes to ease compliance and ensure clarity in tax administration. The changes emphasize proper documentation, accurate reporting, and adherence to specified conditions for claiming tax credits and refunds. 

These updates reflect the government’s effort to simplify tax procedures and enhance the ease of doing business in the Philippines. 

See below:

RR No. 3 – 2024

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