RR No. 01-2003: Imposes Value-Added Tax (VAT) on sale of services by persons engaged in the practice of profession or calling and professional services rendered by general professional partnerships; services rendered by actors, actresses, talents, singers and emcees; radio and television broadcasters and choreographers; musical, radio, movie, television and stage directors; and professional athletes, as well as services rendered by customs, real estate, stock, immigration and commercial brokers, beginning January 1, 2003

Summary

RR No. 01-2003 imposes Value-Added Tax (VAT) beginning January 1, 2003 on the sale of services by professionals, general professional partnerships, entertainers, broadcasters, directors, professional athletes and certain brokers.

Key points

1. Services covered. The VAT applies to the practice of profession or calling and services of general professional partnerships, and to actors, actresses, talents, singers, emcees, radio and television broadcasters, choreographers, musical, radio, movie, television and stage directors, and professional athletes. Services of customs, real estate, stock, immigration and commercial brokers are included.
2. Governing rules. Beginning January 1, 2003, these persons are governed by RR No. 7-95, as amended, the Consolidated Value-Added Tax Regulations. A professional partnership is treated as a separate and distinct taxable person from its individual partners.
3. Registration and inventory of receipts. Affected taxpayers register as VAT taxpayers not later than January 31, 2003 without penalty. Those who changed from NON-VAT to VAT submit by that date an inventory of unused receipts as of December 31, 2002, with the number of booklets and serial numbers.
4. Services rendered up to December 31, 2002. Amounts due on services rendered on or before December 31, 2002 that become liable to VAT from January 1, 2003, with payments due on or after that date, are considered accrued as of December 31, 2002. This applies for VAT-exemption and any Percentage Tax, subject to the conditions in the Regulations, and failure to comply automatically subjects the gross receipts to VAT.
5. Presumptive and transitional input tax. For goods other than capital goods, and materials or supplies not for sale, on hand on December 31, 2002, a presumptive input tax of 8% of their value or the actual VAT paid, whichever is higher, is allowed, with an inventory filed with the Revenue District Office not later than January 31, 2003. Brokers may claim as transitional input tax any input tax outstanding as of December 31, 1999 that is still unused as of December 31, 2002.

Who is affected

• Persons in the practice of profession or calling
• General professional partnerships
• Actors, actresses, talents, singers, emcees, broadcasters, choreographers and directors
• Professional athletes
• Customs, real estate, stock, immigration and commercial brokers

Deadlines and effectivity

• VAT imposed beginning January 1, 2003
• Registration as VAT taxpayer: not later than January 31, 2003
• Inventories due: on or before January 31, 2003
• Inventories as of December 31, 2002

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