Adopting A Value-Added Tax, Amending For This Purpose Certain Provisions of the National Internal Revenue Code, and For Other Purposes

EXECUTIVE ORDER NO. 273 July 25, 1987

ADOPTING A VALUE-ADDED TAX, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AND FOR OTHER PURPOSES

WHEREAS, there is a need to rationalize the present system of taxing goods and services by imposing a multi-stage value-added tax to replace the tax on original and subsequent sales tax and percentage tax or certain services;

WHEREAS, the adoption of value-added tax is one of the structural reforms provided in the 1986 Tax Reform Program which is designed to simplify tax administration and make the tax system more equitable; and

WHEREAS, it is also necessary to amend, revise and renumber the provisions of the National Internal Revenue Code and to transfer the collection of certain taxes as a consequence of these and previous amendments in order to strengthen and improve tax administration and facilitate compliance thereof;

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do hereby order:

Sec. 1. The provisions of Title IV governing excise taxes are...

Login to see full content

Summary of Executive Order No. 273 (July 25, 1987)

Adopting a Value-Added Tax (VAT) System
- Imposes a 10% VAT on sale of goods, services, and imports (Sec. 99-102)
- Defines transactions subject to VAT, including deemed sales (Sec. 100)
- Provides rules for VAT base calculation and tax credits (Sec. 104)
- Allows transitional input tax credits for existing businesses (Sec. 105)
- Provides for VAT refunds for exporters and zero-rated sales (Sec. 106)
- Requires VAT registration for businesses exceeding P200,000 annual sales (Sec. 107)
- Mandates invoicing and accounting requirements for VAT-registered persons (Sec. 108)

Excise Taxes on Certain Goods
- Imposes specific taxes on distilled spirits, wines, fermented liquors, cigars, cigarettes, mineral oils, and other fuels (Sec. 138-145)
- Levies ad valorem taxes on automobiles, jewelry, perfumes, and yachts (Sec. 149-150)
- Taxes mineral products based on market value or customs value (Sec. 151)

Tax on Income
- Renumbers and rearranges provisions on income taxation (Sec. 20-76)

Tax on Transfer of Property
- Renumbers provisions on estate and donor's taxes (Sec. 77-98)

Other Percentage Taxes
- Imposes 2% tax on persons exempt from VAT with sales below P500,000 (Sec. 112)
- Renumbers provisions on percentage taxes (Sec. 113-125)

Documentary Stamp Tax
- Renumbers provisions on documentary stamp taxes (Sec. 173-201)

Tax Compliance and Administration
- Grants assessment, audit, and enforcement powers to the Commissioner (Sec. 16, 202-228)
- Requires registration, invoicing, and recordkeeping for taxpayers (Sec. 232-244)
- Outlines tax return filing, payment procedures, and refund mechanisms (Sec. 110, 125, 127)

Tax Penalties and Offenses
- Renumbers provisions on tax evasion, fraud, and other offenses (Sec. 247-281)

Repealing and Transitory Provisions
- Repeals certain sections of the National Internal Revenue Code (Sec. 21, 287)
- Provides transitory rules for existing businesses transitioning to VAT (Sec. 25)