The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) 09-2021 on June 11, 2021, which implements the imposition of 12 percent Value-Added Tax (VAT) on certain previously zero-rated goods and services. This amendment to RR 16-2005, as earlier amended by RR 13-2008 and RR 26-2018, has been signed following the fulfillment of the conditions set under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (Train) Law.
The following transactions are now subject to 12 percent VAT:
Sale of goods or properties considered as export sale:
1) The sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing, or repacking in the Philippines of the said buyer’s goods, paid for in acceptable foreign currency, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)
2) The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70 percent) of total annual production
3) All other transactions considered export sales under Executive Order 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws
Sale of services and lease of properties:
1) Processing, manufacturing, or repacking goods for other persons doing business outside the Philippines, which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP
2) Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70 percent of the total annual production
RR 09-2021 will be effective 15 days from publication in leading newspapers of general circulation.
Please be guided accordingly.
P&A Grant Thornton
Certified Public Accountants
June 22, 2021
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