Regulations Implementing Republic Act No. 7643 Allocating Fifty Percent (50%) of the Excess of the Increase in Collections of National Taxes Under Sections 100, 102, and 112 of the National Internal Revenue Code, as Amended

January 11, 1996 REVENUE REGULATIONS NO. 01-96 SUBJECT : Regulations Implementing Republic Act No. 7643 Allocating Fifty Percent (50%) of the Excess of the Increase in Collections of National Taxes Under Sections 100, 102, and 112 of the National Internal Revenue Code, as Amended TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Section 245, in relation to Section 282, both of the National Internal Revenue Code, these regulations, i mplementing Republic Act No. 7643, allocating fifty percent (50%) of the National taxes collected under Sections 100, 1 02 , a nd 11 2 of the same Code in excess of the increase in collections for the immediately preceding year, are hereby promulgated. SECTION 1 . Scope . The National taxes covered by these regulations shall refer to the 10% value-added tax on the sale of goods or services prescribed under Sections 100 and 102; and three (3%) on the sale of the taxable goods or services under Section 112; SECTION 2 . Determination of the amount for disposition . For purposes of allocating the taxes covered by these regulations, the following procedure on distribution shall be observed: Step 1 Determine the amount of increase in VAT Collection by deducting from the current year collection of the immediate preceding year by Revenue District Office. 2 Compare this increase over that of the previous year increase using the same procedure in Step 1. 3 From the current annual increase deduct the annual previous year increase and the difference shall be multiplied by fifty percent (50%). 4 Determine twenty percent (20%) thereof, which shall be distributed to the municipalities/cities and 80% to be retained by the National Government. 5 The product arrived at in Step 4 earmarked for LGUs shall then be allocated to the Municipalities/Cities covered by the Revenue District Office in accordance with the rule under Section 150 of RA 7160 from January 1, 1993 to December 31, 1995. 6 Beginning January 1, 1996, the procedures from Step 1 to 4 shall be accomplished on a per city/municipality basis and no longer on the total Revenue District Office collection being allocated to the city/municipality under its jurisdiction. Example: Year VAT Collection Increase Step 1 & 2: 1994 P44.555M P20.972M 1993 23.583M 9.697M 1992 13.886M Step 3 : 1994 Increase in Collection P20,972M less: 1993 Increase in Collection 9,697M Excess of Increase Collection P11,275M ======== 50% thereof P5,638M ======== Step 4: Share of City/Municipality 20% of P5.638M P1.128M Share of National Government 80% of P5.638M P4.510M ________ Total P5,638M SECTION 3 . The distribution of the 20% tax collection accruing to the municipalities/cities s hall be made in accordance with Section 150 of RA 7160 as implemented by the Department of Budget and Management. SECTION 4 . The corresponding Certificate of Allotment to Local Government Units shall be prepared by Revenue Accounting Division, Bureau of Internal Revenue for submission to the Department of Budget and Management. SECTION 5 . These Revenue Regulations shall take effect immediately. ROBERTO F. DE OCAMPO Secretary of Finance Recommending Approval: LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue