RR No. 10-2011: Amends certain provision of RR No. 16-2005, as amended by RR No. 4-2007, otherwise known as the “Consolidated Value-Added Tax Regulations of 2005”, as amended

Key points

1. Change of control. VAT does not apply to goods or properties originally intended for sale or business use when a corporation undergoes a change of control through acquisition of its controlling interest by another stockholder or group. The goods are not considered sold, bartered or exchanged despite the change in ownership interest.
2. Exception for share exchanges. An exchange of goods or properties, including real estate used in business or held for sale or lease, for shares of stocks is subject to VAT, whether or not it results in corporate control.
3. Change of name. A change in the trade or corporate name of the business is also a case where VAT does not apply.
4. Merger or consolidation. VAT does not apply on a merger or consolidation of corporations. The dissolved corporation’s unused input tax as of the date of merger or consolidation is absorbed by the surviving new corporation.

Who is affected

• Corporations undergoing change of control, name change, merger or consolidation