RMC No. 34-2011: Circularizes relevant excerpts from the En Banc Supreme Court Decision in GR No. 193007, on the imposition of Value-Added Tax on Toll Fees

Key points

1. Imposing VAT on tollway operations. The Court held that the Commissioner of Internal Revenue did not usurp legislative prerogative or expand VAT coverage in imposing VAT on tollway operations.
2. Basis in the Code. Section 108(A) subjects services of all other franchise grantees to VAT, except as provided under Section 119. Tollway operators are not franchise grantees subject to franchise tax under Section 119, and their services are not among the VAT-exempt transactions under Section 109.
3. No exemption. Tax exemptions must rest on a clear statutory grant. Any perceived burden from enforcing the law must be referred to Congress, and the executive is suited to deal with the practical consequences of VAT imposition.

Who is affected

• Tollway operators

Deadlines and effectivity

• Decision promulgated July 19, 2011