RMC No. 73-2004: Provides the guidelines and policies for the assessment and collection of Business Tax applicable to pawnshops

Summary

RMC No. 73-2004 provides policies and guidelines on assessing and collecting pawnshops’ VAT or Percentage Tax liabilities before January 1, 2005, and on the change of registration effective January 1, 2005.

Key points

1. Settlement of 1996 to 2002 VAT. Pawnshops may settle VAT for tax years 1996 to 2002 under the conditions of RMC No. 37-2004 up to December 15, 2004. After that, Revenue Officers apply the full force of the law and collect the full tax due and increments from those who did not avail.
2. Tax years 2003 to 2004. All sales of services and goods are subject to VAT. If gross annual sales or receipts do not exceed P 550, 000.00, they are subject to Percentage Tax of 3%.
3. Starting January 1, 2005. All sales of services and goods of pawnshops are subject to Gross Receipt Tax (GRT) under Section 122 of the NIRC of 1997, as amended by RA No. 9238. Pawnshops must issue Non-VAT invoices or receipts.
4. Registration update and inventory. VAT-registered pawnshops file BIR Form No. 1905 to convert to Non-VAT status on or before January 30, 2005. They also submit, by the same date, an inventory of unused VAT invoices and receipts as of December 31, 2004, with booklet counts and serial numbers.
5. Use of unused VAT receipts. Pawnshops may use inventoried unused VAT receipts up to March 31, 2005 if clearly stamped Non-VAT receipt and countersigned by an authorized officer. The cost of the unused invoices or receipts listed is deductible for Income Tax for taxable year 2004.
6. Advance payments and input tax. Advance payments received on or before December 31, 2004 for services rendered after that date are not income subject to GRT from January 1, 2005, having been subjected to VAT. Services rendered before December 31, 2004 but paid later and not in any VAT return are subject to GRT, and excess input tax credits are governed by Section 112 of the NIRC.

Who is affected

• Pawnshops
• VAT-registered pawnshops converting to Non-VAT status

Deadlines and effectivity

• VAT settlement for 1996 to 2002: up to December 15, 2004
• GRT applies starting January 1, 2005
• Registration update and inventory: on or before January 30, 2005
• Use of stamped unused VAT receipts: up to March 31, 2005

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