VAT Ruling No. 037-99

March 29, 1999 VAT RULING NO. 037-99 106; 108 000-00 037-99 Autonomous Region in Muslim Mindanao Office of the Regional Governor Cotabato City Attention: Prof . Nur Misuari Regional Governor S i r : This refers to your letter dated November 26, 1998 (received by this Office on January 22, 1999) requesting that contractor's tax imposed on infrastructure projects undertaken within the area of autonomy be paid/remitted to Revenue Districts or BIR Collection Agents located in the ARMM. LibLex It is represented that the Autonomous Region in Muslim Mindanao shares 60% of the Internal Revenue Taxes paid within the area of autonomy; that among these taxes are the 'contractor's tax' imposed on infrastructure projects undertaken within said area of autonomy; that however, such tax are being withheld by withholding agents situated outside of the ARMM and paid/remitted to Revenue Districts where the withholding agents are located, hence depriving the ARMM of its share in the subject contractor's tax. In reply, please be advised as follows: 1. The contractor's tax you are referring to is now replaced by the 10% VAT imposed on the seller or contractor under Section 106 and 108 of the Tax Code of 1997. 2. Every person liable to pay the value-added tax shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter. (Section 114(A), ibid) 3. Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid to an authorized agent bank, Revenue Collection Officer or duly authorized city or municipal Treasurer in the Philippines, located within the revenue district where the taxpayer is registered or required to register . (Section 114(B), ibid.) 4. The government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled-corporations (GOCCs) shall, before making payment on account of each purchase of goods from sellers and services rendered by contractors which are subject to the value-added tax imposed in Sections 106 and 108 of this Code, deduct and withhold the value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and six percent (6%) on gross receipts for services rendered by contractors on every sale or installment payment which shall be creditable against the value added tax liability of the seller or contractor. Provided, however, that in the case of government public works contractors, the withholding rate shall be eight and one-half percent (8.5%). [Section 114(C), ibid.] This Office may allow the payment and remittance of the tax to an authorized agent bank, Revenue Collection Officer or duly authorized city or municipal Treasurer of the place other than where the taxpayer is registered, pursuant to Section 114(B) of the Code. However, we can only provide for an alternative payment venue as this Office is not empowered to set aside the general rule on venue as provided for by law. Hence, for infrastructure projects and other transactions requiring the withholding of the VAT by the payor, all occurring within the jurisdiction of the ARMM, we hereby allow VAT payments and remittances to be paid or remitted to an Authorized Agent Bank (AAB), Revenue Collection Officer or duly authorized city or municipal treasurer within the ARMM, irrespective of the fact that the withholding agent is not registered within the area of autonomy. This letter will therefore serve as the authorization for Authorized Agent Bank (AAB), Revenue Collection Officer or duly authorized city or municipal treasurer in the area of autonomy to accept the filing and remittance of the withholding agents, irrespective of the latter's place of registration. However, in no way shall this letter be construed as precluding such withholding agents from following the venue prescribed by law. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue