RR No. 17-2005: Provides the policies, guidelines and procedures in the implementation of the tax subsidy granted by the Fiscal Incentives Review Board to the Bases Conversion and Development Authority for the Subic-Clark-Tarlac Expressway Project

Summary

RR No. 17-2005 provides policies, guidelines and procedures to implement the tax subsidy the Fiscal Incentives Review Board (FIRB) granted to the Bases Conversion and Development Authority (BCDA) for the Subic-Clark-Tarlac Expressway Project.

Key points

1. Scope of the subsidy. The privileges are limited to purchases of materials, equipment, supplies and services for the Project, within the amount, scope and period stated in the FIRB Resolution and the Certificate of Entitlement to Subsidy (CES). They are given through a Tax Subsidy Availment Certificate (TSAC), VAT Subsidy Checks (VSCs) for the primary contractors and consultant, and Sub-VAT Subsidy Checks (SVSCs) for subcontractors and suppliers.
2. VAT mechanism. The VAT subsidy covers the output VAT liability of the primary contractors and consultant that they can pass on to BCDA. The mechanism applies to both Japanese and Filipino nationals or entities as contractors, subcontractors, suppliers, sub-subcontractors and sub-suppliers up to the fourth level only.
3. No withholding and use of checks. BCDA does not withhold VAT from payments to the primary contractors and consultant. Subcontractors, suppliers, sub-subcontractors and sub-suppliers may use the VSCs and SVSCs to pay VAT liabilities under the Project and other projects, and other internal revenue taxes. The certificates are valid for 5 years from issuance of the VSCs and are then revalidated for another 5 years.
4. Process. BCDA applies to the FIRB for the CES and secures the TSAC and VSCs from the BIR. Within 3 days of receiving the CES, the Department of Budget and Management (DBM) issues a Special Allotment Release Order (SARO) in favor of the Bureau of Treasury to cover the taxes payable to the BIR. The parties submit a Quarterly Summary List of Purchases and/or Billing Statement under Revenue Regulations No. 8-2002, as amended.
5. Government delay. If the government is late releasing the SARO, TSAC, VSCs, SVSCs or TSDMs, VAT payments on the VAT returns are accepted without late payment penalty. Subcontractors, suppliers, sub-subcontractors and sub-suppliers submit their TSDMs with their filed VAT returns within 10 days after the TSDM is released.
6. Input tax paid before the regulations. Input tax paid in cash by the primary contractors and consultant before effectivity is reimbursed by BCDA in cash within 10 days of a refund request. BCDA requests a Tax Credit Certificate (TCC) from the BIR, issued within 30 days of complete documents, valid for 5 years subject to revalidation, and non-transferable. Input tax passed on but unpaid is settled using the VSCs.

Who is affected

• Bases Conversion and Development Authority
• Primary contractors and consultant
• Subcontractors, suppliers, sub-subcontractors and sub-suppliers of the Project

Deadlines and effectivity

• Issued October 19, 2005
• SARO issued within 3 days of receiving the CES
• TCC issued within 30 days of complete documents

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