RMC No. 08-2006: Clarifies certain issues relating to the implementation of the increase in the VAT rate from 10% to 12%

Summary

RMC No. 8-2006 clarifies issues in implementing the VAT rate increase from 10% to 12% under Republic Act No. 9337.

Key points

1. Services rendered by January 31, 2006. Amounts due on services rendered on or before January 31, 2006 but paid on or after February 1, 2006 are treated as accrued as of January 31, 2006, on three conditions. The seller files an Information Return on or before February 28, 2006, billed the unpaid amount not later than January 31, 2006 with a copy attached, and recorded the receivable in the books as of January 31, 2006.
2. Failure to meet conditions. Gross receipts received on or after February 1, 2006 are automatically subject to 12% VAT.
3. CRM/POS systems. Taxpayers unable to adjust their CRM/POS systems at once must issue manual invoices or official receipts showing output VAT at 12%. They must reconfigure the machines to show the 12% output VAT separately as soon as it takes effect.
4. Systems still at 10%. If a taxpayer cannot issue manual invoices or receipts and keeps a CRM/POS program at 10% output VAT, the transactions are still subject to 12% output VAT even if only 10% is passed on to customers. The buyer’s claimable input VAT is the output VAT separately billed by the seller in the manual invoice or official receipt.

Who is affected

• Sellers of services rendered on or before January 31, 2006 and paid on or after February 1, 2006
• Taxpayers using CRM/POS systems

Deadlines and effectivity

• Services rendered on or before January 31, 2006
• Information Return on or before February 28, 2006
• Billing not later than January 31, 2006

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.