THE Bureau of Internal Revenue (BIR) recently issued Revenue Regulations (RR) No. 15-2015 amending subsection (S) of RR No. 16-2005. The new RR stated that transport of passengers and cargoes by international carriers doing business in the Philippines are exempt from VAT. It is further clarified that transport of cargoes by international carriers doing business in the Philippines are subject to the percentage tax on common carriers under Section 118 of the National Internal Revenue Code (NIRC).
Previously, Section 4.108-5(b)(6) of RR No. 16-2005 subjected gross receipts of international air and sea carriers doing business in the Philippines to common carriers tax of three percent as provided for in Section 118 of the Tax Code.
The new RR distinguished the tax treatment between the transport of passengers and cargoes by international carriers doing business in the Philippines.
Under the new Subsection (T), VAT exemption of sale, importation or lease of passenger or cargo vessels and aircraft for domestic or international transport operations shall now be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of the MARINA. Previously, the RR has specific weight and age limit requirements depending on the type of vessel to be VAT exempt.
Old Subsections (S) to (W) have been renumbered accordingly.
The RR was published on Dec. 29 and will take effect 15 days later.
Please be guided accordingly.
Source: P&A Grant Thornton
Certified Public Accountants
Punongbayan & Araullo (P&A) is the
Philippine member firm of
Grant Thornton International Ltd.