Value-Added Tax on Tollway Operators

August 31, 2011 REVENUE MEMORANDUM CIRCULAR NO. 039-11 SUBJECT : Value-Added Tax on Tollway Operators TO : All Internal Revenue Officers and Others Concerned This Circular is being issued to fully implement Section 108 of the National Internal Revenue Code (NIRC) on Tollway Operators, in relation to the Supreme Court En Banc Decision G.R. No. 193007 dated July 21, 2011. ASICDH 1. The Value-Added Tax (VAT) shall be imposed on the Gross Receipts of Tollway Operators from all types of vehicles starting 12:01 am of October 1, 2011; 2. All Tollway Operators are required to enter into, sign and submit a Memorandum of Undertaking ("MOU") on or before October 1, 2011 regarding the implementation of VAT using the herein format marked as Annex "A"; 3. Tollway Operators which have been assessed for VAT liabilities on receipts from toll fees for prior-periods can apply for Abatement of the tax liability, surcharge, interest and penalties under Section 204 of the NIRC and Revenue Regulations No. 13-2001 ; 4. The accumulated input VAT account of Tollway Operators, if any, shall have a zero balance on October 1, 2011. Any input VAT that will thenceforth be reflected in the books of accounts and other accounting records of Tollway Operators will have to be for purchases of goods delivered and invoiced on or after October 1, 2011. Whereas, for services, it should be for purchases of services which will be rendered and receipted on or after October 1, 2011. 5. No future claims for tax credit or refunds shall be allowed for any VAT passed-on to the Tollway Operators on any of their purchases made prior to October 1, 2011. TCDHIc 6. All Tollway Operators are required to comply with the invoice/receipt format prescribed under Revenue Memorandum Circular No. 40-2005 . All revenue officials and employees are enjoined to give this Circular as wide publicity as possible. (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX A Memorandum of Undertaking KNOWN ALL MEN BY THESE PRESENTS: This Memorandum of Undertaking ("MOU") is entered into this ______ day of September 2011 between: ICTHDE (Name of Tollway Operator) with TIN (Tax Identification Number) and principal office at (address) , as the operator of (tollway line being operated) , represented by (name of authorized representative) , (Title/Position) herein referred to as Tollway Operator. and The Bureau of Internal Revenue represented by Commissioner Kim S. Jacinto-Henares herein referred to as BIR. WITNESSETH: That WHEREAS, the National Internal Revenue Code of 1997 (Tax Code), as amended, mandates the BIR to administer and execute all internal revenue tax laws; WHEREAS, the Supreme Court in an En Banc Decision G.R. No. 193007 dated July 21, 2011 already pronounced that Toll fees are subject to Value Added Tax (VAT); WHEREAS, the BIR and the Tollway Operator would like to have a smooth transition in the implementation of VAT on collection of Toll Fees; NOW, THEREFORE, for an in consideration of the foregoing premises, the Tollway Operator and the BIR, do hereby agree to the following undertakings: AICTcE UNDERTAKINGS For the Tollway Operator: 1. Toll Fees received from all types of vehicles shall be subject to VAT starting 12:01 am of October 1, 2011; 2. For open assessments involving VAT liabilities on receipts from toll fees for periods prior to October 1, 2011, we will voluntarily apply for Abatement of the tax liability, surcharge, interest and penalties under Section 204 of the NIRC and Revenue Regulations No. 13-2001; 3. The accumulated input VAT account have a zero balance on October 1, 2011. Any input VAT that will thenceforth be reflected in our books of accounts and other accounting records will have to be for purchases of goods delivered and invoiced on or after October 1, 2011. Whereas, for services, it will be for purchases of services which will be rendered and receipted on or after October 1, 2011. 4. We will have no future claims for tax credit or refunds for any VAT passed-on to the Tollway Operators on any of our purchases made prior to October 1, 2011. 5. We will comply with the invoice/receipt format prescribed under Revenue Memorandum Circular No. 40-2005. For the BIR: 1. The BIR shall collect Value Added Tax from Tollway Operator starting only on October 1, 2011. 2. The Abatement Committee of the BIR shall immediately process the application for abatement of tax liabilities, surcharge and interest on open VAT assessments on Toll Fee collection issued against Tollway Operators covering the period prior to October 1, 2011. IaHSCc IN WITNESS hereof, the parties have hereunto signed this Memorandum of Agreement, this _____ day of September 2011 in Quezon City, Philippines. TOLLWAY OPERATOR BUREAU OF INTERNAL REVENUE By: By: KIM S. JACINTO-HENARES Commissioner of Internal Revenue ACKNOWLEDGMENT BEFORE ME, a Notary Public for Quezon City, personally appeared the following individuals who exhibited to me their Community Tax Certificate/duly issued Government ID as follows: Name CTC No./Gov't. ID No. Date/Place of Issue 1. 2. Kim S. Jacinto-Henares known to me to be the same persons who executed the foregoing instrument, and they acknowledge to me that it is their true and voluntary act and deed. IN WITNESS WHEREFORE, I have hereunto affixed my signature and my notarial seal this _____ day of September 2011 in Quezon City, Philippines. NOTARY PUBLIC Doc. No. ____ Page No. ____ Book No. ____ Series of 2011