EXPANDED VAT LAW

Case Overview and Summary

Summary of Republic Act No. 9337

Income Tax Rates
- Sets the corporate income tax rate at 35% effective January 1, 2009 (Section 1, 27(A))
- Allows corporations to be taxed at 15% of gross income subject to certain conditions (Section 1, 27(A))
- Sets the income tax rate for resident foreign corporations at 35% effective January 1, 2009 (Section 2, 28(A)(1))
- Sets the income tax rate for non-resident foreign corporations at 35% effective January 1, 2009 (Section 2, 28(B)(1))

Value-Added Tax (VAT)
- Increases the VAT rate from 10% to 12% effective January 1, 2006, subject to certain conditions (Sections 4, 6, 7)
- Defines the transactions subject to VAT, including sale of goods, services, and lease of properties (Sections 4, 6, 7)
- Specifies the transactions subject to 0% VAT rate, such as export sales and foreign currency denominated sales (Sections 4, 6, 7)
- Outlines the VAT exemptions, including certain agricultural products, educational services, and low-cost housing (Section 7)
- Allows VAT-registered persons to claim input tax credits and outlines the rules for refunds (Sections 8, 10, 11)
- Requires VAT-registered persons to issue VAT invoices or receipts and maintain accounting records (Section 11)
- Requires VAT-registered persons to file quarterly returns and pay VAT monthly (Section 12)
- Imposes a 3% tax on persons exempt from VAT with gross sales or receipts exceeding P1,500,000 (Section 13)

Excise Taxes
- Imposes excise taxes on manufactured oils, fuels, mineral products, and indigenous petroleum (Sections 14, 15)

Franchise Taxes
- Imposes a 3% tax on radio and television broadcasting companies with annual gross receipts not exceeding P10,000,000 (Section 15)
- Imposes a 2% tax on gas and water utilities (Section 15)

Tax on Banks and Non-Bank Financial Intermediaries
- Imposes a tax on gross receipts derived from lending activities, commissions, discounts, and other income sources (Section 16)

Tax Registration and Invoicing
- Requires all persons subject to internal revenue tax to register with the Bureau of Internal Revenue (Section 19)
- Requires the issuance of receipts or invoices for sales or services valued at P25 or more (Section 20)

Disposition of Incremental Revenues
- Allocates incremental revenues from documentary stamp taxes for various purposes, such as housing, education, and infrastructure (Section 21, 288(A))
- Allocates incremental revenues from excise taxes on tobacco products for programs benefiting tobacco farmers (Section 21, 288(B))
- Allocates incremental revenues from excise taxes on alcohol and tobacco products for health insurance and disease prevention programs (Section 21, 288(C))
- Allocates 50% of the local government unit's share from incremental VAT revenues for education, health insurance, environmental conservation, and agricultural modernization (Section 21, 288(D))
- Allocates P15,000,000 for a public information and education program on VAT (Section 21, 288(E))

Repealing and Effectivity Clauses
- Repeals certain laws or provisions that are contrary to or inconsistent with the provisions of this Act (Section 24)
- Provides for a separability clause (Section 25)
- Sets the effectivity date of the Act to July 1, 2005 (Section 26)