RR No. 12-2003: Amends certain provisions of RR No. 18-99 which governs the imposition of VAT on services of banks, non-bank financial intermediaries and finance companies beginning January 1, 2003

Summary

RR No. 12-2003 amends provisions of RR No. 18-99 on the Value-Added Tax on services of banks, non-bank financial intermediaries and finance companies beginning January 1, 2003.

Key points

1. Output tax computation. Financial institutions are liable to VAT on gross receipts, or on gross selling price for certain transactions, from January 1, 2003. Gross receipts from financial intermediation services and financial leasing, monthly net forex gains, net gain from trading of securities, and gain on sales of Real and Other Properties Owned and Acquired are multiplied by 10%.
2. Sales of goods and other income. On sale of goods and properties, output tax is the invoice amount times the factor 1/11, or the gross selling price times the VAT rate of 10%. For all other income, VAT is the factor 1/11 on the total amount received, or 10% on gross receipts.
3. Input tax. A VAT-registered payor may claim the output tax paid as input tax credit, while a non-VAT payor treats it as cost. The financial institution credits input taxes evidenced by VAT invoice or official receipt, with VAT actually paid for purchased services, and no input tax is allowed on goods that are the object of a financial lease.
4. Returns and payment. VAT is filed and paid on or before the 20th day after the close of the taxable month for the monthly VAT Declaration, or on or before the 25th day after the close of the quarter for the quarterly return. This is subject to EFPS rules, and BIR Form 2550M or 2550Q is accompanied by a schedule showing the VAT computation.
5. Transitional input tax and registration. Financial institutions newly liable get transitional input tax of 8% of inventory value as of December 31, 2002 or the actual VAT paid, whichever is higher. They register as VAT taxpayers on or before March 31, 2003, and submit by then an inventory of unused invoices or receipts as of December 31, 2002.
6. Receipts and January to February 2003. Unused non-VAT invoices or receipts may be used for VAT transactions until June 30, 2003 if stamped VAT registered as of _____. Gross receipts tax paid for January to February 2003 is allowed as credit against VAT payable in the first quarter return, due on or before April 25, 2003 unless the filing period is by fiscal quarter.

Who is affected

• Banks, non-bank financial intermediaries and finance companies
• All financial institutions liable to VAT

Deadlines and effectivity

• VAT imposed beginning January 1, 2003
• Monthly VAT Declaration: on or before the 20th day after month close
• Quarterly VAT return: on or before the 25th day after quarter close
• Registration and inventory of unused receipts: on or before March 31, 2003

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