(1)

August 23, 1996

REVENUE REGULATIONS NO. 13-96

SUBJECT : Further Clarification on the Date of Remittance of Internal

Revenue Collections by Authorized Agent Banks as
prescribed by Revenue Regulations No. 15-94

TO : All Officials Concerned of the Bureau of Treasury, Bureau

of Internal Revenue and Accredited Banks

Paragraph 14a of the banks' obligation under the Agreement entered into by
and between the Bureau of Internal Revenue and Accredited Banks, as prescribed
in Revenue Regulations Nos. 5-84 and 1-85, as amended by Revenue
Regulations No. 15-94, implementing paragraph 5 of Executive Order No. 937
is hereby amended to read as follows:

"(14) To protect the interest of the government, the Bank

hereby authorizes:

(a) the BSP through Accounting Department, to debit its

demand deposit accounts corresponding to the total daily
collections due for remittance on DAY 6 or 5 CALENDAR DAYS
after the date of collection OR RECEIPT OF TAX PAYMENT,
such amount to be credited by BSP to the "Special Account-BIR
Collection" of the Treasury of the Philippines."

This amendment shall take effect immediately.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 1
LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue

August 20, 1996

REVENUE REGULATIONS NO. 12-96

SUBJECT : Supplying of and Requiring the Indication of Taxpayer

Identification Number (TIN) on Certain Documents

TO : All Internal Revenue Officers and others concerned

SECTION 1. Scope. — Pursuant to Section 4 in relation to Section

245 of the National Internal Revenue Code (NIRC), as amended, these
Regulations are hereby promulgated to implement Section 236 of the same
Code and Executive Order No. 52 series of 1993 of the President of the
Philippines, regarding the supplying of tax payer identification number (TIN) and
requiring the indication thereof in certain documents.

SECTION 2. Who are required to be supplied with TIN. — Any

person required under the authority of the NIRC to make, render, or file a return,
statement, or other document shall be supplied with or assigned a taxpayer
identification number (TIN) which he shall indicate in such return, statement or
document filed with the Commissioner for his proper identification for tax
purposes. Only one TIN shall be given to a person required to have one, and any
person who shall secure more than one TIN shall be criminally liable under the
provisions of Section 274 of the NIRC, as amended.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 2
SECTION 3. Indication of TIN in certain documents. — Pursuant
to Executive Order No. 52, the Bureau of Internal Revenue shall require that the
TIN be indicated in the following documents:

a) Sugar quedans, refined sugar release order or similar

instruments to reflect the TIN of the owner or seller of the
sugar;

b) Domestic bills or lading to reflect the TINs of the shippers and

consignees of commercial value shipment;

c) Documents to be registered with the Registry of Deeds to reflect

the TINs of persons who are parties to the real property
transactions;

d) Registration certificates to reflect the TINs of owners of

transportation equipment by land, sea or air;

e) Building construction permits to reflect the TINs of owners and

contractors of buildings and civil works;

f) Such other documents which may hereafter be required, such as

but not limited to the following:

i) Official receipts, invoices, vouchers required, to be

issued by persons engaged in business and
non-governmental organizations, including non-stock,
non-profit organizations or foundations;

ii) Documents of transfer of untitled properties for issuance

of new tax declarations by the concerned Assessor's
office;

iii) Documents to be filed or registered with the Securities

and Exchange Commission;

iv) Application to open bank account and application for

loan with banks, financial institutions and other financial
intermediaries;

v) Application for business license with the Department of

Trade and industry (DTI) or franchise from the Land
Transportation Office (LTO);

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 3
vi) Application for accreditation with the Department of
Education, Culture and Sports and other agencies;

vii) Application for tax exemption and registration as donee

institution;

viii) Application for tax clearance from internal revenue tax

liabilities;

SECTION 4. Application for issuance of TIN. — Any person

applying for issuance of TIN shall attach to his application the mayor's permit if
engaging in business. The TIN shall not be a requirement when securing a mayor's
permit. A mayor's permit validity issued shall be sufficient basis for the BIR to
supply the person with a TIN.

For purposes or registration of a corporation with the Securities and

Exchange Commission (SEC), the TIN of the President or Chairman of the Board
of Directors or Board of Trustees shall initially be used and indicated in the
application for registration. Thereafter, a separate TIN shall be issued by the BIR
to the corporation upon application and presentation of the SEC Certificate of
Registration.

SECTION 5. Penalties for Non-compliance. — Any person who

fails to comply with the requirements of these regulations, including the parties
involved in transactions, as well as the private and government agencies involved
in the monitoring, registration, accreditation, issuance of license or business
permits, opening of accounts and granting of loans shall be subject to the
appropriate sanctions provided for in the NIRC and existing rules and regulations.

SECTION 6. Repealing Clause. — All rules and regulations, orders or

circulars or parts thereof which are contrary to or inconsistent with the provisions
of these regulations are hereby repealed, amended or modified accordingly.

SECTION 7. Effectivity. — These regulations shall take effect after

thirteen days following the completion of its publication in the Official Gazette or
any newspaper of general circulation, whichever comes first.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 4
Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue

August 7, 1996

REVENUE REGULATIONS NO. 11-96

SUBJECT : Revenue Regulations Prescribing the Procedures in the

Preparation and Issuance of Tax Clearance Certificate by
the Revenue District Officer upon Payment of Capital
Gains Tax, Estate and Donor's Gift Taxes, and Expanded
Creditable Withholding Tax, for Purposes of Registration
of Transfers of Real Properties

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. Scope. — In line with the computerized tax

administration and pursuant to Section 245 in relation to Sections 4 and 16(h)
of all the National Internal Revenue Code (NIRC), as amended, these
Regulations are hereby promulgated amending Revenue Regulations No. 13-85,
as amended, and other pertinent regulations and issuances regarding the
preparation and issuance of tax clearance certificate (formerly Certificate
Authorizing Registration) for registration of real estate transactions.

SECTION 2. Tax Clearance for Capital Gains Tax. — Upon

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 5
filing of the capital tax return by an individual estate or trust, and full payment of
the capital gains tax due on the sale, transfer, barter, exchange or other disposition
of real property, including conditional sale of property classified as capital asset,
the Revenue District Officer (RDO) of the revenue district where the transferor is
registered shall issue the corresponding tax clearance (TCL) certificate authorizing
the registration of the real property in favor of the transferee by the Register of
Deeds.

SECTION 3. Tax Clearance of Estate Tax. —

3.1 Upon filing of the estate tax return and full payment of the
estate tax due on the transmission of the estate of a decedent,
the RDO of the revenue district where the decedent was
previously registered shall issue the TCL.

3.2 If the decedent is not registered, the executor/administrator or

any of the heirs shall register the Estate of the decedent with the
Revenue District Office in the place of residence of the
decedent at the time of his death, and the TCL shall be issued
by the RDO of said office.

3.3 In case the decedent is a non-resident citizen or alien at the time

of his death, the resident executor/administrator or heir shall
register the Estate with the Revenue District Office where said
executor/administrator or heir is registered, in which case, upon
filing the estate tax return and payment of the estate tax the
TCL shall be issued by the RDO of the said district office.

3.4 If the executor/administrator, or heir of a non-resident decedent

(citizen or alien) has no legal residence in the Philippines, and
the return is filed with the Philippine Embassy or Consulate in
the country where the decedent was a resident at the time of his
death, the TCL shall be issued by RDO No. 51, Pasay City,
upon receipt of the copy of the estate tax return filed and
evidence of estate tax payment made with the Philippine
Embassy or Consulate.

3.5 If the estate tax return of a non-resident decedent is mailed

and/or filed directly with the Office of the Commissioner, the
estate tax payment shall be received and the TCL issued by
RDO No. 39, South Quezon City.

SECTION 4. Tax Clearance for donor's tax. — The TCL for the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 6
transfer of real property by gift shall be issued by the RDO of the revenue district
where the donor is registered.

SECTION 5. Tax Clearance for expanded creditable withholding tax.

— On cash sales of real property made by an individual, estate or trust classified as
ordinary asset, or by a corporation, whether classified as ordinary or capital asset,
the TCL shall be issued by the RDO of the revenue district where the seller is
registered.

SECTION 6. Repealing Clause. — The provisions of any revenue

regulations, memorandum order, memorandum circular or any other issuance of
the Bureau of Internal Revenue inconsistent with these Regulations are hereby
repealed, amended, or modified accordingly.

SECTION 7. Effectivity Clause. — These Regulations shall take effect

fifteen (15) days after publication in the Official Gazette or any newspaper of
general circulation whichever comes first.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommended by:

LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue

(2) (3)

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 7
August 7, 1996

REVENUE REGULATIONS NO. 10-96

SUBJECT : Regulations Implementing Sections 9 and 18 of Republic

Act No. 7686, An Act to Strengthen Manpower Education
and Training in the Philippines by Institutionalizing the
Dual Training System as an Instructional Delivery System
of Technical and Vocational Education and Training,
Providing the Mechanism, Appropriating Funds Therefor
and for Other Purposes

TO : All Internal Revenue Officers and Others Concerned.

SECTION 1. Scope. — Pursuant to Section 245 of the National

Internal Revenue Code (NIRC), as amended, the following Regulations are hereby
promulgated to implement the provisions of Sections 9 and 18 of R.A. NO. 7686,
otherwise known as "The Dual Training System Act of 1994."

SECTION 2. Definitions of Terms. — For purposes of these

Regulations, the following terms shall mean:

a. "Act" — refers to R.A. No. 7686.

b. "Appropriate Authority" — refers to the government entity in

charge of formal technical and vocational education and
training.

c. "Dual Training System" — refers to an instructional delivery

system of technical and vocational education and training that
combines inplant training and in-school training based on a
training plan collaboratively designed and implemented by an
accredited dual system educational institution/training center
and an accredited dual system agricultural, industrial or
business establishment with prior notice and advice to the local
government unit concerned. Under this system, said
establishment and the educational institution share the
responsibility of providing the trainee with the best possible job
qualifications, the former essentially through practical training

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 8
and the latter by securing an adequate level of specific, general
and occupation-related theoretical instruction. the word "dual"
refers to the two parties providing instruction; the concept
"system" means that the two instructing parties do not operate
independently of one another, but rather coordinate their efforts.

d. "Trainee" — refers to a person qualified to undergo the dual

training system for the purpose of acquiring and developing job
qualifications.

e. "Accredited Dual Training System Educational

Institution/Training Center" — refers to a public or private
institution duly recognized and authorized by the appropriate
authority, in coordination with the business and industry, to
participate in the dual training system.

f. "Establishment" — refers to an enterprise and/or service of

agricultural, industrial or business establishment.

g. "Accredited Dual Training System Agricultural, Industrial or

Business Establishment" — hereinafter referred to as
"agricultural, industrial or business establishment" refer to a
sole proprietorship, partnership, corporation or cooperative
which is duly recognized and authorized by the appropriate
authority to participate in the dual training system.

h. "Taxable income" — refers to the pertinent items of gross

income specified in the National Internal Revenue Code
(NIRC), as amended, less the deductions, if any, authorized by
such types of income, by the NIRC or other special laws.

SECTION 3. Incentives Granted to Participating Agricultural,

Industrial and Business Establishments. — Agricultural, industrial and business
establishments (i.e., corporations, sole proprietorships, partnerships and
cooperatives), which shall participate in the Dual Training System shall be entitled
to the following tax exemptions and incentives (for illustrative examples, see
Annexes A and B):

1. They shall be allowed to deduct from their taxable income the

amount equivalent to fifty percent (50%) of the actual expenses paid to the
Accredited Dual Training System Educational Institution FOR THE
ESTABLISHMENT'S TRAINEES: Provided, that such expenses shall not exceed
five percent (5%) of their total direct labor expenses but in no case to exceed

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 9
Twenty-Five Million Pesos (P25,000,000.00) a year. This incentive shall be over
the ordinary and necessary expenses for education and training actually incurred by
the establishment during the taxable year.

2. Donation, contribution, bequest, subsidy, or financial aid actually paid

or made FOR THE OPERATION OF THE SYSTEM within the taxable year shall
also be deductible for income tax purposes in an amount not in excess of 3%
of the taxable business income of the establishment computed without the benefit
of deduction. However, if the Dual Training System Educational Program is
included in the list of National Priority Programs (NPP), as determined by the
National Economic Development Authority (NEDA), then corporate contributions
to the System shall be deductible in full from its taxable business income for the
taxable period when actually made, subject to the conditions imposed under
BIR-NEDA Regulations No. 1-81, as amended, implementing Section 29(h)
of the NIRC, as amended by Batas Pambansa Blg. 45.

3. Exemption from Donor's tax, Provided, however, that not more than
thirty per centum (30%) of said gifts shall be used by the System for the
administration purposes pursuant to Section 94 (a)(3) of the NIRC, as
amended.

SECTION 4. Incentives Granted to Participating Educational

Institutions. — Essential equipment, apparatus and materials imported by
accredited dual training educational institutions shall be exempt from taxes (i.e.,
Value-Added Tax [VAT], ad valorem, or excise taxes) and duties: Provided, That,
the importation of these items shall be subject to certain qualifications as provided
for under Section 5(H) hereof.

SECTION 5. Availment of the Tax Exemptions and Incentives. —

I. BY THE PARTICIPATING ESTABLISHMENTS. — In order to

avail the tax exemptions and incentives, the concerned agricultural, industrial or
business establishment participating in the Dual Training System shall file and
submit to the Revenue District Office (RDO) of his principal place of business the
following documents to support and substantiate his claim:

A. For exemption from donor's tax and as allowable deductible expenses

from taxable income for income tax purposes.

(1) A letter of application duly signed by the appropriate authority of the

concerned agricultural, industrial or business establishment participating in the
Dual Training System;

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 10
(2) Memorandum of Agreement duly executed/signed by the accredited
dual training system agricultural, industrial or business establishment, the
accredited dual training system educational institution/training center and the
trainee;

(3) Accreditation of the dual training educational institution by the

appropriate authority;

(4) Affidavit or statement under oath by the participating educational

institution as to the actual amount received for the establishment's trainee/s, on an
annual basis; and the corresponding official receipts acknowledging the
contributions/donations made by the participating establishment;

(5) Affidavit or statement under oath by the participating establishment as

to the actual amount donated/contributed to the Accredited Dual Training System
Educational Institution for the operation of the Dual Training System, on an annual
basis and the corresponding official receipts issued by the participating educational
institution;

(6) Financial statement of the participating establishment for the year

when the tax exemption/incentive is being claimed;

(7) SEC/DTI Registration Certificate/s of the participating establishment;

and

(8) Articles of Incorporation and By-laws, or other documents showing the

nature of business of the concerned establishment.

II. BY THE PARTICIPATING PRIVATE EDUCATIONAL

INSTITUTIONS. — In order that the essential equipment, apparatus and materials
from taxes (i.e., VAT, ad valorem or excise taxes), the following
requirements should be complied with:

(1) Application for exemption shall be filed with the Revenue Office,
Department of Finance, Manila, duly signed by the Head of the accredited dual
training educational institution or his authorized representative, together with the
following documents:

(a) Bill of lading, airway bill, parcel post/notice and other shipping
documents;

(b) Commercial invoice and packing list; and

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 11
(c) Other relevant documents concerning the shipment.

(2) Certification from the appropriate authority — Technical Education

and Skills Development Authority (TESDA) — that the importer is an accredited
dual training educational institution, together with a recommendation that the
importation/s is/are necessary in connection with the dual training system;

(3) Affidavit/Statement under oath executed by the Applicant stating,

among others, that the imported articles are essential and will be used actually,
directly and exclusively in connection with the dual training system;

(4) Copy of the Charter, or Certificate of Registration of the educational

institution with the SEC or other evidence of the character of the institution;

(5) Certification from the Department of Trade and Industry or appropriate

government agency that the articles to be imported are not available locally in
sufficient quantity and of comparable quality at reasonable prices; and

(6) Affidavit or statement under oath that the imported articles, which
shall be marked "TAX AND DUTY FREE UNDER R.A. NO. 7686" in a
conspicuous place as the nature of the importation will permit, will not be sold,
transferred or otherwise disposed of in any manner without the prior approval of
the Department of Finance.

SECTION 6. List of Equipment, Apparatus and Materials which cna

be Imported by Participating Educational Institutions. — A list of essential
equipment, apparatus and materials which will enjoy exemption from customs duty
and other taxes shall be jointly formulated by TESDA, the Department of Trade
and Industry (DTI) and the Bureau of Internal Revenue (BIR).

SECTION 7. Inspection. — The Department of Finance may conduct

such inspection as may be necessary before or after approval of any application for
tax and duty incentives under the Act to ensure compliance with requirements
imposed herein.

SECTION 8. Automatic Appropriation of Taxes and Duties Pertaining

to Importation. — The taxes and duties pertaining to the importation of accredited
government and dual training educational institutions are deemed automatically
appropriated, subject to the documentary requirements enumerated above. It shall
be charged against the current year's appropriation of the contingency fund. For the
initial implementation of the Act, an amount of One Million Pesos (PhP
1,000,000.00) shall be appropriated, and thereafter, such sums as may be necessary
for its continued implementation.
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 12
SECTION 9. Non-Diminution of Incentives. — Nothing in the Act or
in these Regulations shall be construed to diminish or reduce any privilege already
enjoyed by the parties concerned under existing laws, decrees, or executive orders.

SECTION 10. Repealing Clause. — All laws, decrees, orders, rules and
regulations or parts thereof inconsistent with the Act and these Regulations are
hereby repealed or modified accordingly.]

SECTION 11. Effectivity. — These Regulations shall take effect after

completion of its publication in two (2) newspapers of general circulation.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner
Bureau of Internal Revenue

ANNEX A
TAX INCENTIVES FOR ACCREDITED
AGRICULTURAL, BUSINESS AND INDUSTRIAL ESTABLISHMENTS
Under RA 7686 (Dual Training System Act of 1994)
ILLUSTRATIVE EXAMPLE # 1

The Finance Officers of Company A have computed its net income for the taxable
year 1996 to be PhP 5,000,000.00. As a DTS accredited establishment, the
Company contributed / donated to its partner school a total amount of PhP
180,000.00 for six (6) trainees at PhP 2,500 per month per trainee across 12
months, Direct labor cost for the year reached PhP 1,500,000.00. Assuming that
DTS is not listed under NEDA's National Priority Programs and PhP 3,150.00 was
determined to be the tax due for Company A's donations, compute for the final
taxable income of this Company and the corresponding tax due.

Computation for Illustrative Example # 1:

Initial Taxable Income PhP 5,000,000.00
LESS
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 13
Tax Incentives under RA 7686
IRR (a) 50% of DTS contribution
Sec PhP 180,000.00 x 50% = PhP 90,000.00
3.1 OR

5% of Total Direct Labor Cost

PhP 1,500,000.00 x 5% = PhP 75,000.00
OR
PhP 25,000,000.00 PhP 225,000.00
IRR (b) 3% of Taxable income
Sec PhP 5,000,000.00 x 3% = PhP 150,000.00
3.2

EQUALS
Final Taxable Income PhP 4,775,000.00
INCENTIVES TO ESTABLISHMENTS IN REAL MONETARY TERMS
[For illustrative Problem # 1]
Taxable Income Corresponding Tax Due

Initial : PhP 5,000,000.00 PhP 1,750,000.00

Final : PhP 4m775,000.00 PhP 1,671,250.00
[Difference : PhP 78,750.00]
PLUS
IRR (c) Donor's Tax Exemption :
Sec 10% of DTS Donation (Donee is a Stranger)
3.3 PhP 180,000.00 x 10% = PhP 18,000.00 PhP 18,000.00
EQUALS

Actual Monetary Value Tax Incentives : PhP 96,750.00

ANNEX B
TAX INCENTIVES FOR ACCREDITED
AGRICULTURAL, BUSINESS AND INDUSTRIAL ESTABLISHMENTS
Under RA 7686 (Dual Training System Act of 1994)
ILLUSTRATIVE EXAMPLE # 2

The Finance Officers of Company A have computed its net income to the taxable
year 1996 to be PhP 5,000,000.00. As a DTS accredited establishment, the
Company contributed / donated to its partner school a total amount of PhP
180,000.00 for six (6) trainees at PhP 2,500 per month per trainee across 12
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 14
months, Direct labor cost for the year reached PhP 1,500,000.00. Assuming that
DTS is listed under NEDA's National Priority Programs and PhP 3,150.00 was
determined to be the tax due for Company A's donations, compute for the final
taxable income of this Company and the corresponding tax due.

Computation for illustrative Example # 2:

Initial Taxable Income PhP 5,000,000.00
LESS
Tax Incentives under RA 7686

IRR (a) 50% of DTS Contribution

Sec PhP 180,000.00 x 50% = PhP 90,000.00
3.1 OR
5% of Total Direct Labor Cost
PhP 1,500,000.00 x 5% = PhP 75,000.00
OR
PhP 25,000,000.00 PhP 225,000.00
IRR (b) 100% of DTS Donation
Sec PhP 180,000.00
3.2
EQUALS
Final Taxable Income PhP 4,775,000.00

INCENTIVES TO ESTABLISHMENTS IN REAL MONETARY TERMS

[For illustrative Problem # 2]
Taxable Income Corresponding Tax Due

Initial : PhP 5,000,000.00 PhP 1,750,000.00

Final : PhP 4,775,000.00 PhP 1,660,750.00

[Difference : PhP 89,250.00]

PLUS
IRR (c) Donor's Tax Exemption :
Sec 10% of DTS Donation (Donee is a Stranger)
3.3 PhP 180,000.00 x 10% = PhP 18,000.00 PhP 18,000.00
EQUALS

Actual Monetary Value Tax Incentives : PhP 107,250.00

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 15
(4)

July 26, 1996

REVENUE REGULATIONS NO. 09-96

SUBJECT : Amending Section 3 of Revenue Regulations No. 6-90

dated June 29, 1990 prescribing the time and place for the
filing of engagement letters by independent Certified Public
Accountants.

TO : All Internal Revenue Officers, independent Certified Public

Accountants (CPAs) and others concerned.

SECTION 1. Pursuant to the provisions of Section 245 of the

National Internal Revenue Code, as amended, in relation to Sections 16(h) and
232, both of the same Code , these regulations are hereby promulgated to state
and implement the revised policies and procedures in the submission and
processing of Engagement Letters by independent Certified Public Accountants.

SECTION 2. Section 3 of Revenue Regulations No. 6-90 is

hereby amended to read as follows:

Section 3. When and Where to file Engagement Letters. — The

independent Certified Public Accountants shall file the copy of the
engagement letter and renewals or subsequent agreements thereon with the
Revenue District Officer who has jurisdiction over the taxpayer's principal
place of business or residence not later than two (2) months before the
beginning of the client's taxable year covered by the agreement.

In order to have a complete master list and be able to monitor all

practising accountants relative to the clientele, the Revenue District Officers
are required to submit a list of all engagement letters filed with their offices
in accordance with the format prescribed under "Annex A" hereof to the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 16
Commissioner of Internal Revenue, Attention" Assistant Commissioner,
Assessment Service, within twenty (20) days after the end of the semester on
or before January 20 and July 20 of each calendar year. The first semestral
list, however, for the taxable year 1996 shall be submitted on or before
August 30, 1996.

SECTION 3. Repealing Clause. — The provisions of Revenue

Regulations No. 6-90 and all other existing rules and regulations or part(s) thereof
which are inconsistent with the provisions of these regulations are hereby
amended, revoked or modified accordingly.

SECTION 4. Effectivity. — These regulations shall take effect fifteen

(15) days after publication in a newspaper of general circulation in the Philippines.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommended by:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

ANNEX "A"
RDO No. _____
____________
REVENUE REGION ____

LIST OF ENGAGEMENT LETTERS

FOR THE PERIOD ____ TO ____

NAME AND ADDRESS PRC LICENSE NO NAME AND ADDRESS OF CLIENT

OF INDEPENDENT CPA

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 17
Prepared by: Date APPROVED:
____________ _________ _____________
RDO

July 26, 1996

REVENUE REGULATIONS NO. 08-96

SUBJECT : Revenue Regulations Implementing Republic Act No. 8184,

An Act Restructuring the Excise Tax on Petroleum
Products, Amending for this Purpose Pertinent Sections of
the National Internal Revenue Code, As Amended.

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. Scope. — Pursuant to the provisions of Sections 245, in

relation to Section 4 of the National Internal Revenue Code (NIRC), as amended,
these Regulations are hereby promulgated to implement the provisions of Republic
Act No. 8184 amending Sections 145 and 151(a)(2) and (4), Chapter V and VII,
Title VI of the NIRC, as amended, respectively, restructuring the excise tax rates
on petroleum products, reclassifying of natural gas and liquefied natural gas under
non-metallic minerals and quarry resources, and reducing the excise tax rate on
indigenous petroleum.

SECTION 2. Definition of Terms. — For purposes of these

Regulations and for a more effective enforcement and collection of excise taxes,
the following words and phrases shall have the meaning indicated below:

a) Act — Republic Act No. 8184

b) Automatic Oil Price Mechanism — refers to the process

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 18
adopted by the Energy Regulatory Board first after full public
hearings and subsequently without need of such hearings, to
automatically adjust the wholesale posted price of petroleum
products based on Singapore Posting and other factors and costs
resulting in the formula to be adopted by the Board.

c) Combined cycle power plant — a power station or facility

which utilizes both fuel and steam to produce electrical power
through the sequential use of energy, wherein the heat
recovered from the exhaust gases is utilized to generate
additional electricity in a separate system.

d) Fair international market price — the equivalent of the

"benchmark crude" on the date nearest to the removal of the
indigenous crude. The benchmark crude as used in this
definition shall mean the crude oil which approximates the
quality and yield of the indigenous crude. It shall be used as a
parameter to determine the quality and yield difference vis-a-vis
the indigenous crude.

e) Feedstock — a type of bunker fuel and product of similar

properties including Heavy Vacuum Gas Oil (HVGO);
Hydrocracking Unit Bottoms (HCUB) and Mobil Isomerization
Dewaxing Unit Bottoms (MIDW) which are used as a raw
material to produce petroleum products in a lubricating oil.

f) Gasoline — a volatile mixture of liquid hydrocarbons, generally

containing small amount of additives suitable for use as a fuel
in spark ignition internal combustion engines.

g) Leaded premium gasoline — a gasoline containing a maximum

of 0.150 gram per liter lead additive and a minimum octane
number of 93 Research Octane Number (RON).

h) Liquified natural gas — a natural gas which has been liquefied

by compression and or cooling to an extremely low temperature.

i) Natural gas — a mixture of naturally occurring hydrocarbon

gases of the paraffin series, at varying proportions with methane
predominating. It may exist in isolation or associated with crude
oil.

j) Petrochemical products — chemical produced from the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 19
processing generally by cracking of various feedstocks derived
from petroleum, with different feedstocks yielding different
range of products. These products may include ethylene,
propylene, butadiene, benzene, toluene, and mixed xylene.

k) Petroleum — a naturally occurring mixture of compounds of

hydrogen and carbon with a small proportion of impurities and
shall include any mineral, petroleum gas, hydrogen gas,
bitumen, asphalt, mineral wax, and all other similar or
naturally-associates substances, with the exception of coal, peat,
bituminous shale, and/or other stratified mineral fuel deposits.

l) Petroleum products — products formed in the course of refining

crude petroleum through distillation, cracking, solvent refining
and chemical treatment coming out as refinery stocks from the
refinery such as, but not limited to, LPG, Naptha, gasolines,
solvent, kerosene, aviation fuels, diesel oils, fuel oils, waxes
and petrolatums, asphalts, bitumens, coke and refinery sludges,
or such refinery petroleum fractions which have not undergone
any process or treatment as to produce separate
chemically-defined compounds in a pure or commercially pure
state and to which various substances may have been added to
make them suitable for particular uses: Provided, that the
resultant product contains not less than fifty percent (50%) by
weight of such petroleum products.

m) Processed gas — it is the lightest by-product component of

refined crude oil and is generated from the various process units
like crude distillers, hydro desulphurizers and platformers. It is
composed of pressurized gases like hydrogen, methane, ethane,
propane and butane, and is used for refinery fuel.

n) Pyrolysis gasoline — a product of thermal cracking, high in

aromatic content which may be used as a constituent of
gasoline.

o) Reprocessing — synonymous to "manufacturing" as

contemplated under Section 187(x) of the Tax Code of 1977.
Manufacturing refers to the physical or chemical process which
alters the exterior texture or form or inner substance of any raw
material or manufactured or partially manufactured product in
such manner as to prepare it for a special use or uses to which it
could not have been put in its original condition, or any such
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 20
process which alters the quality of any such raw material or
manufactured or partially manufactured product so as to reduce
it to marketable share or prepare it for any of the uses of
industry, or by any such process which combines or blends any
such raw material or manufactured or partially manufactured
products with other materials or products of the same or of
different kinds and in such manner that the finished product of
such process or manufacture can be put to a special use or uses
to which such raw material or manufactured or partially
manufactured product, in their original condition could not have
been put, and which in addition alters such raw material or
manufactured or partially manufactured products, or combines
the same to produce such finished products for the purpose of
their sale or distribution to others and not for his own use or
consumption.

p) Unleaded premium gasoline — a gasoline containing a mixture

of hydrocarbons, petrochemicals and/or additives, with a
minimum octane number of 93 RON and a maximum lead
content of 0.013 gram per liter as prescribed by the national
standards.

q) Upgrading of petroleum products — reclassification of a

petroleum product to a product subject to a higher rate of tax
without undergoing any reprocessing or blending other than
putting additives.

r) User — importer or purchaser of kerosene who resells or uses

the same as dual purpose kerosene (no matter how described) or
as aviation fuel for aircraft or private planes in which only the
specific tax on kerosene was previously paid by the said
importer or purchaser.

SECTION 3. Rates and Bases of Tax. — The following petroleum and

mineral products indicated below are subject to the excise tax in the amount as
follows:
Petroleum Products Rate of Tax

Lubricating oils and greases, including but

not limited to basestock for lube oils and
greases, high vacuum distillates, aromatic
extracts and other similar preparations, and

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 21
additives for lubricating oils and greases,
whether such additives are petroleum based
or not. P4.50 per liter

Processed gas P0.05 per liter

Waxes and Petrolatum P3.50 per kilogram

Denatured alcohol for motive power P0.50 per liter

Naptha, regular gasoline and other similar

products of distillation P4.80 per liter

Naptha used as raw material in the

production of petrochemical products or as
replacement fuel for natural gas-fired
combined cycle power plant, in lieu of
locally-extracted natural gas during the
non-availability thereof. P0.00 per liter

Leaded premium gasoline P5.35 per liter

Unleaded premium gasoline P4.35 per liter

Aviation turbo jet fuel P3.67 per liter

Kerosene P0.60 per liter

Kerosene used as aviation fuel P3.67 per liter

Diesel fuel oil, and on similar fuel oils

having more or less the same generating
power P1.63 per liter

Liquefied petroleum gas P0.00 per liter

Liquefied petroleum gas used for motive

power P1.63 per liter

Asphalts P0.56 per kilogram

Bunker fuel oil, and on similar fuel oils

having more or less the same generating

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 22
power P0.30 per liter

Mineral Products Rate of Tax

Locally extracted natural gas and liquefied 2% on actual market value

natural gas of the gross output

Indigenous petroleum 3% of fair international

market price
SECTION 4. Time and Manner of Payment of Excise Tax on
Petroleum Products Non-Metallic Minerals and Indigenous Petroleum. —

I. Petroleum Products

Without prejudice to the provisions of Section 157, Chapter 8, Title 6 of the

NIRC as amended, the excise tax shall be paid in the time and manner provided
herein below:

a) On locally manufactured petroleum products

The specific tax on petroleum products locally manufactured

or produced in the Philippines shall be paid by the manufacturer,
producer, owner or person having possession of the same, and such
tax shall be paid within fifteen (15) days from date of removal from
the place of production.

b) On imported petroleum products

The specific tax on imported products shall be paid by the

owner or importer before their release from customs custody, or by
the person who are found in possession of petroleum products which
are exempt from specific tax other than those legally entitled to
exemption.

II. Non-metallic minerals and quarry resources

The ad valorem tax on non-metallic minerals and quarry resources

shall be paid by the lessee, concessionaire, owner or operators of mines,
possessors of mineral licenses or permittees of quarry, mines, producers or
manufacturers of mineral products, before removals from the locality where
mined or removal from customs custody, in case importations. However, if
the person liable to pay the excise tax, filed an acceptable surety bond, he
may pay the excise tax due thereon within twenty (20) days after the end of

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 23
each calendar quarter.

III. Indigenous petroleum

The ad valorem on indigenous petroleum shall be paid by the buyer

or purchaser for the first taxable sale, barter, exchange or similar
transactions, within fifteen (15) days from the date of actual or constructive
delivery to the said buyer or purchaser.

SECTION 5. Upgrading of kerosene. — The tax on upgraded

kerosene shall be collected at the time of removal thereof from the place where the
same is upgraded and such upgrading shall not give rise to any crediting of the
excise taxes paid on the products originally classified under the lower tax rate.

Where the manufacture directly sells upgraded kerosene to airline

companies or aircraft owners, the excise tax for the upgraded kerosene shall be
assessed directly from the manufacturer/producer. Otherwise, the excise tax on the
upgraded petroleum product shall be assessed against the user.

The User of upgraded kerosene as aviation fuel shall pay the Avturbo jet
fuel specific tax on the upgraded kerosene on the same day that the said upgraded
kerosene (which was subjected only to the kerosene specific tax) was loaded on
their aircraft or private plane or purchased for storage, whichever comes first.
Failure to do so would subject the said user to the late payment surcharge, interest
and penalties prescribed by NIRC, as amended.

At any time, the user may be required by the Commissioner or his duly
authorized representatives to present documents evidencing purchases of jet fuel
and payment of specific taxes.

Illustration No. 1.

A manufacturer or its marketing depot removed from the place of

production on June 30, 1996 1,000 liters of kerosene and paid the tax of P0.60 per
liter thereon. On July 21, 1996, the said kerosene was upgraded by the
manufacturer to aviation turbo jet fuel by merely mixing "anti-freeze or de-icing
agent" with such kerosene. Said manufacturer is liable to pay excise tax of
P3,670.00 (1,000 liters of jet fuel x P3.67/liter) before effecting the removal
thereof from the place of upgrading on July 21, 1996 without the benefit of
crediting the P600.00 excise tax originally paid on kerosene.

Illustration No. 2

A trader imports or buys from a local oil company 1,000 liters of upgraded
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 24
kerosene and pays the kerosene specific tax of P0.60 per liter. Subsequently, the
trader sold the upgraded kerosene as avturbo jet fuel to an airline company or to
another trader. The said trader is liable to pay excise tax of P3,670.00 before
effecting the removal of the said product from his storage premises without the
benefit of crediting the P600.00 specific tax originally paid on the kerosene.

Illustration No. 3.

An airline company purchased 1,000 liters of jet fuel from unregistered

supplier. Since no proof of payment of specific tax on jet fuel could be presented
by the supplier, the airline company is required to pay the specific tax on jet fuel
on the date of purchase.

SECTION 6. Removals of Naphtha. — The excise tax rate on naphtha

removed for the following purposes shall be zero percent (0%):

a. For use as raw material in the production of petrochemical

products; and

b. For use as replacement fuel for natural gas-fired combined cycle

power plant, in lieu of locally extracted natural gas during the
non-availability thereof.

In order to avail of the foregoing privilege, prior recommendation or

indorsement should be secured by the manufacturer, producer, seller, or importer
of such petroleum products from the Department of Energy in accordance with the
rules promulgated by the Secretary of Energy in consultation with the Secretary of
Finance. In case of failure to secure the prescribed indorsement prior to actual or
constructive removals thereof, such transactions shall be subject to the excise tax
rate as prescribed under Section 145 (5) of the Tax Code, as amended by the Act.

SECTION 7. Creditable Excise Tax. — The crediting of excise taxes

paid on purchased feedstock (bunker), as defined in Section 2(e) hereof, used in
the manufacture of exciseable articles and forming part thereof shall be limited to
the proportion of the volume of such raw material used in production, in relation to
the total volume of finished goods subject to tax. For purposes of these regulations,
any excess of excise taxes paid on raw materials resulting from manufacturing,
blending, processing, storage and handling losses shall not give rise to a tax refund
or credit.

Illustration No. 1 — Volume of raw materials used is less than the volume
of the finished goods produced and removed.

A manufacturer removed 1,000 kilograms of asphalts on June 30, 1996.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 25
Based on his production records, the manufacturer purchased and used 900 liters
tax-paid bunker fuel to produce 1,000 kgs. of asphalts. The excise tax due from the
manufacturer on his removal of 1,000 kgs. of asphalts is computed as follows:
Tax due on asphalts (1,000 kgs x P0.56/kg) P560.00
Less: Creditable excise taxes on tax-paid
bunker fuel used as raw materials
in the manufacture of asphalts
(900 liters @ P0.30/liter) 270.00
————
Balance of excise tax due P290.00
=======
Only the excise tax paid on the raw materials used in production of 900
liters shall be allowed to be credited on the finished goods produced and removed.

Illustration No. 2 — Volume of raw materials used is more than the volume
of finished goods produced and removed.

A manufacturer removed 1,000 kilograms of asphalts from his place of

production on June 30, 1996. Based on his production records, the manufacturer
purchased and used 2,000 liters of bunker fuel to produce 1,000 kgs. of asphalts.
The excise tax due from the manufacturer on his removal of 1,000 kgs. of asphalts
is computed as follows:
Tax due on asphalts (1,000 kgs. @ P0.56/kg) P560.00
Less: Creditable excise taxes on tax-paid
bunker fuel used as raw materials in
the manufacture of asphalts
(2,000 liters @ P0.30/liter) 600.00
————
Difference P40.00
=======
The difference of P40.00 shall neither give rise to any claim for
refund/credit against subsequent removals.

Illustration No. 3 — Partial use of purchased raw materials and treatment of

the raw materials still in the inventory.

A manufacturer purchased 2,000 liters of tax-paid bunker fuel on June 30,

1996. On July 1 to 3, 1996, it manufactured 1,500 kilograms of asphalts using
1,500 kgs. bunker fuel as raw materials. On July 4, 1996, the company removed
from its production plant the entire production of 1,500 kgs. of asphalts. The
excise tax due on such removal shall be computed as follows:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 26
Tax due on removals of asphalts (1,500 kgs. @ P0.56/kg.) P840.00
Less: Creditable excise taxes on tax-paid bunker fuel used
as raw materials in the production of asphalts
(1,500 liters @ P0.30/liter) 450.00
————
Balance of excise tax due P390.00
=======
The excise tax paid on the 500 liters of bunker oil but still in the inventory
and did not form part of the finished goods removed from production plant shall
not be credited against the excise tax due on the finished goods actually removed.
This will be credited on the day when such raw materials shall have been produced
into asphalts and removed from the place of manufacture. The same principle also
applies if all raw materials were manufactured into asphalts but only partial
removals of finished goods have been effected.

Illustration No. 4 — Tax-exempt removals of finished goods using tax-paid

raw materials.

A manufacturer purchased 1,000 liters of tax-paid bunker fuel on June 30,

1996. These tax-paid bunker fuel were all used and formed part of the 1,000 kgs.
of manufactured asphalts. These asphalts were all removed on July 5, 1996, 500
kgs. of which were removed and delivered to a tax-exempt entity enjoying tax
exemption. The excise tax due on the transactions shall be:
Taxable removals (500 kgs. @ P0.56/kg) P280.00
Tax-exempt removals (500 kgs. @ EXEMPT) —

Total tax due thereon P280.00

Less: Creditable excise tax paid on bunker
fuel used as raw materials
(500 liters @ P0.30/liter) 150.00
————
Balance of excise tax due P130.00
=======
The excise tax paid on raw materials attributable to the production and
removal of tax exempt finished goods shall not be considered as allowable tax
credit but the same forms part of its production costs.

Illustration No. 5 — Removals of multiple finished products using tax-paid

feedstocks.

a. Without beginning and ending inventories of feedstocks.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 27
A lubricating oil refinery processes 1,000,000 liters of feedstock which was
subjected to P300,000.00 specific tax (1,000,000 ltrs x P0.30 per liter) using the
following standard conversion factors:
1 Liter of asphalt = P1.04 per kilogram; therefore specific tax
on asphalt of P0.56 per kilogram - P0.5824 per liter

1 Liter of wax = P0.82 per kilogram; therefore specific tax on

wax of P3.50 per kilogram = P2.87 per liter
The tax crediting process will be as follows:

Sp Tax Volume in Specific Creditable Net Tax

Per Liter Liters Tax Specific Tax Due
Due/Paid
Input:
Feedstock P0.30 1,000,000 P300,000.00
Output:
Baseoil P4.50 184,600 P830,700.00 P55,380.00 P775,320.00
Distillates P4.50 70,700 318,150.00 21,210.00 296,940.00
Extracts P4.50 900 4,050.00 270.00 3,780.00
Asphalt P0.5824 198,200 115,431.68 59,460.00 55,971.68
Wax P2.87 12,600 36,162.00 3,780.00 32,382.00
Fuel Oil 527,000
Refinery loss 6,000
Total 1,000,000 P1,304,493.68 P140,100.00 P1,164,303.68

The creditable excise tax on feedstocks used in production shall only be

P140,100.00 and not P300,000.00. The difference of P159,900.00 representing
excise tax on feedstocks used in producing non-exciseable finished goods and
refinery losses should be taken up as part of the cost of production.

b. With beginning and ending inventories of feedstocks.

Using the immediately preceding example but by the refinery has beginning
and ending inventories of feedstocks, the tax crediting process shall be as follows:
Volume Specific Creditable Net Tax
in Tax Specific Tax Due
Liters Due/Paid

Input:
(Feedstock)

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 28
Beg. inventory 200,000
Purchases 1,000,000
Total 1,200.00 P300,000.00
Output:
Baseoil 184,600 P830,700.00 P44,304.00 P786,396.00
Distillates 70,700 318,150.00 16,968.00 301,182.00
Extracts 900 4,050.00 216.00 3,834.00
Asphalt 198,200 115,431.68 47,568.00 67,863.68
Wax 12,600 36,162.00 3,024.00 33,138.00
Fuel Oil 527,000
Refinery loss 6,000
Total 1,000,000 P1,304,493.68 112,080.00 P1,192,413.68
Ending
Feedstock 200,000 P60,000.00
Inventory

It will be noted in the above example that the beginning inventory of

feedstock which was subjected to the "0" specific tax, prior to the effectivity of the
Act, had to be exhausted first on a "first-in, first-out" basis before the specific tax
paid on the purchases can be credited against the exciseable products produced
therefrom. The excise tax paid on the ending feedstock inventory shall be
creditable from succeeding production volumes.

The creditable excise tax on feedstocks used in production shall only be

P112,080.00. The difference of P127,920.00 representing excise tax on feedstocks
used in producing non-exciseable finished goods and refinery losses should be
taken up as part of the cost of production.

SECTION 8. Tax Treatment of Lubricating Oil and Greases Produced

from Tax-Paid Basestocks and Additives. — Removals of lubricating oils and
greases produced from tax-paid basestocks and additives shall not be subject to
excise taxes except in the following:

(a) Where excise taxes on one or more of the raw material

components (basestocks, additives whether petroleum based or
not) has not been paid; and

(b) Where the total volume of finished goods produced per product
is more than the total volume of excise tax-paid on raw
materials used.

Illustration No. 1 — Volume of finished goods produced and removed is

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 29
equal to the volume of tax-paid raw materials used.

A manufacturer of lubricating oils produced 1,000 liters of lube oil using

900 liters of basestocks and 100 liters additives as raw materials, both of which
were already subjected to excise tax. Once this finished goods are removed, the
manufacturer is no longer liable to pay the specific tax on lubricating oil.

Illustration No. 2 — Taxability of finished goods produced if the tax on one

or more raw material component is unpaid.

Using the above example but only the excise tax on basestocks was paid,
the manufacturer is still be liable to pay excise tax on that portion of lube oil
attributable to additives which were not subjected to excise tax. Hence, the tax still
due will be computed as follows:
Tax on lube oil (1,000 liters x P4.50/liter) P4,500.00
Less Excise tax attributable to tax-paid
basestocks (900/1000 x P4.50) 4,050.00
————
Excise tax still due attributable to untaxed additivesP450.00
======
Illustration No. 3 — Volume of finished goods produced and removed is
less than the volume of raw materials used.

A manufacturer produced 1,000 liters of lube oil using 900 liters of tax-paid
basestocks and 200 liters of tax-paid additives. When he removes the 1,000 liters
of lube oil from his place of production, he is no longer subject to the specific tax
on lubricating oil. The tax paid on the difference between the raw materials used in
production (1,100 liters) and the total volume of removals of finished goods (1,000
liters) will not give rise to any claim for tax refund/credit or the same be allowed to
be credited against excess tax due on subsequent removals.

Illustration No. 4 — Volume of finished goods produced and removed is

more than the volume of raw materials used.

A manufacture produced 1,000 liters of lube oil using tax-paid basestocks

of 700 liters and 200 liters of additives. Before he removes the 1,000 liters of
manufactured lubricating oil from his production plant, he is required to pay excise
tax of P450.00, computed as follows:
Excise tax due on lubricating oil (1,000 liters x P4.50)P4,500.00
Less: Excise tax paid on raw materials used
(900 liters x P4.50) 4,050.00
————

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 30
Balance still due P450.00
=======
Although the basestocks and additives used are all tax-paid, the
manufacturer is still liable to pay the balance of P450.00 due to increase in volume
of manufactured finished products.

SECTION 9. Accounting for Excise Taxes Paid on Feedstocks (Bunker

Fuel), Basestocks and Additives Used as Raw Materials in the Production of
Exciseable Articles. — Manufacturers or producers of exciseable articles using
tax-paid feedstocks (bunker fuel) as raw materials and lubricating oils and greases
using excise tax-paid basestocks and additives (whether petroleum based or not) as
raw materials in the production of such lubricating oils and greases shall maintain
a separate account in his books of accounts for excise taxes paid on such raw
materials and this tax shall be treated as an asset account in the balance sheet.
Debits to this account shall be made for each and every purchase of tax-paid
feedstocks (bunker fuel), basestocks, additives, as the case may be, while credits
shall be made for each and every application against excise taxes due on removals,
processing losses, storage gains and losses, excess tax-paid on raw material
consumption over removals of finished goods and such other adjustments
necessary to update the current and correct balance of the said account

Illustration:

A manufacturer purchased 1,000 liters of feedstocks (bunker) at a cost

P4.00 per liter for which the supplier already paid the excise taxes due thereon of
P0.30 per liter. These raw materials were used to produce or manufacture 1,000
kgs. of asphalts. These manufactured asphalts were sold to taxable and tax-exempt
entities for 700 kgs. and 300 kgs., respectively, at P7.00 per kg.

The entries in the books of the manufacturer to record the above

transactions should be as follows:
1. Upon purchase of feedstocks

Purchases 4,000
Creditable Excise Tax 300
Accounts Payable 4,300

2. Upon removal and sale of asphalts

Accounts Receivable 7,392

Cost of Sales 90
Sales 7,392

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 31
Creditable Excise Tax 90

Cost of Sales 392

Excise Tax Payable 392

Excise Tax Payable 210

Creditable Excise Tax 210

3. Upon payment of excise tax due after fifteen (15) days

Excise Tax Payable 182

Cash 182
The Excise Tax Payable of P392 corresponds to the excise tax due on
taxable removals of 700 kgs. while the Cost of Sales of P90.00 represents the
excise tax component of raw materials used in producing the 300 kgs. asphalts sold
to tax-exempt entity. The creditable excise tax of P300 representing the total excise
tax paid on raw materials of 1,000 liters feedstocks was zeroed out since these
were all sued in the production of finished goods which were all removed from the
place of production.

SECTION 10. Transitory Provisions. — For the effective

implementation of the Act, the following guidelines shall be followed during the
transitory period:

a) Applicable excise tax rates on removal of refined and

manufactured petroleum products produced from crude oil
and/or indigenous petroleum subjected to old tax, duty and
tariff rates.

a.1 Refined and manufactured products from crude oil

and/or indigenous petroleum which the 10 percent (10%)
ad valorem basic duty, ninety-five centavos (P0.95)
special levy and/or the fifteen percent (15%) excise tax
have been paid before the effectivity of the Act but
which shall be removed from the place of production or
released from customs custody, as the case may be, on or
after the effectivity of the Act, shall not be subject to the
excise tax prescribed under Section 3 of these
regulations but to the old rates of excise taxes under
Section 145 of the NIRC, as amended, prior to the Act.

a..2 Inventory of stocks purchased after the effectivity of

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 32
Republic Act No. 8180 which were subjected to the
reduced tariff duty rate of 3%, special levy of P0.95 and
15% excise tax on indigenous petroleum shall also be
subject to the excise tax rates prior to the effectivity of
the Act. However, the 7% tariff reduction shall continue
to be credited to the Oil Price Stabilization Fund (OPSF)
in accordance with the Energy Regulatory Board (ERB)
resolutions in its bi-monthly price review.

a.3 Refined and manufactured products imported prior to the

effectivity of the Act which shall be removed from the
place of production or released from customs custody, as
the case may be, on or after the effectivity of the Act,
and which were already subjected to the payment of
either the 20% ad valorem basic duty before the
effectivity of RA 8180 plus P1.00 special levy or 7% ad
valorem basic duty on or after the effectivity of RA 8180
plus the P1.00 special levy, shall be also subject to the
old excise tax rates under Section 145 of the NIRC as
amended, prior to the Act.

b) Treatment of net gains or losses on tax paid petroleum products

— Net gains or losses on petroleum products which are already
removed from the refinery or released from customs custody
and subjected to the old excise tax rates prior to the effectivity
of the Act but will be sold on or after the effectivity of these
regulations shall likewise be credited to the OPSF until such
stocks are fully exhausted.

For purposes of these Regulations, net gains/losses on sale of

petroleum products shall mean the difference between the selling
price of the aforementioned petroleum products before and after the
effectivity of the Act.

c) Conduct of general stocktaking or physical count. — Following

the guidelines and procedures prescribed under Revenue
Memorandum Order No. 16-84, the BIR shall conduct a general
or total physical inventory by actual weight, count, volume,
and/or measurement of the entire stock of raw materials
(including in-process or intermediate materials, articles or
products) and finished products then existing and actually on
hand as at the midnight of the day immediately before the

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 33
simultaneous initial implementation of the Automatic Oil
Pricing Mechanism under RA 8180 and the restructured excise
taxes under RA 8184, in the presence of the representative of
the concerned oil company who shall jointly attest to the fact of
witnessing and verifying the results thereof by affixing their
signatures on an attestation clause in the inventory certificate.

Any overage or shortage found upon reconciliation of the results of

the stocktaking with the stock balances in the Official Register Book
(ORB) as of the date and time of the stocktaking should be debited or
credited, as the case may be, in the proper official register book and
signed by the internal revenue officers with the corresponding report
and recommendation to the Commissioner of Internal Revenue.

d) Submission of Production Schedule and Estimated Inventory

Turnover. — The oil company concerned shall submit a sworn
declaration to the Commissioner of Internal Revenue not later
than the 5th day of after the conduct of the actual physical count
stating, among others, the following:

(1) The estimated number of days required to convert goods

in process raw materials on hand as of the cut-off date of
finished goods.

(2) The expected or deemed yield of goods in process and

raw materials in terms of finished products, i.e., premium
gasoline, diesel LPG, fuel oil, etc.

(e) Monitoring of movements/transfers of raw materials and/or

semi-process articles. — All transfers of raw materials and/or
goods in process covered by the old provisions of the law under
the transitory period shall be accounted for and recorded in the
Official Register Book (ORB) separately by the concerned oil
company. A monthly report of inventory utilization and
production shall be submitted to the Commissioner of Internal
Revenue on or before the 10th day of the month immediately
following the operations until such time that said inventories are
fully exhausted.

f) Accounting for stocks or inventory of goods on after the

effectivity of the Act. — For purposes of these Regulations, all
stocks on hand as of the effectivity of the Act shall be
liquidated and accounted for First-In-First-Out (FIFO) Method
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 34
of Inventory.

g) Issuances of Withdrawal Certificates. — All Withdrawal

Certificates issued covering removals of finished goods subject
to the old excise tax rates shall bear the inscription "STOCKS
ON HAND PRIOR TO RA 8184" and the same information
shall be prominently stamped on the face of all the copies of
issued Withdrawal Certificates. Removals of finished goods
supported by Withdrawal Certificates which do not bear such
information shall be subjected to the excise tax rates imposed
under these Regulations even if the same were taken from old
stocks.

Illustration:

On midnight of August 16, 1996, the BIR has conducted a stocktaking on

the oil refinery of ABC Company. Results of the said physical inventory are as
follows:
Raw Materials

Crude Oil Volume Unit of Measure

Iranian Medium 1,589,830 liters

Arabian Light 3,179,660 -do-
Miri Crude 1,589,830 -do-
Additives 500,000 -do-

Total 6,859,320 -do-

In-Process
Unleaded Premium Gasoline 150,000 -do-
Regular Gasoline 100,000 -do-
Kerosene 150,000 -do-
Raw Materials still under 300,000 -do-
distillation

Total 700,000 -do-

Finished Goods:
Unleaded Premium Gasoline 150,000 -do-
Regular Gasoline 100,000 -do-
Kerosene 100,000 -do-

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 35
Total 350,000 -do-
In compliance with the BIR requirement, ABC Co. submitted the following
Production Schedule:
Raw Materials (mixture of
Products 3 crude oils and additives) In-Process

Unleaded Premium 3,500,000 liters 250,000 liters

Gasoline
Regular Gasoline 1,589,640 liters 200,000 liters
Kerosene 1,769,680 liters 250,000 liters
Total 6,859,320 liters 700,000 liters
Using the "First-In, First-Out Method", accounting of removals of finished goods
should be as follows:
Date Unleaded
of Premium Regular
Removal Gasoline Gasoline Kerosene Remarks

Aug. 17 130,000 100,000 90,000 Removals subjects to old rates

taken from finished goods inventories
Aug. 18 150,000 85,000 150,000 Removals subject to old rates,
inventories taken partly from
finished goods and partly from
in-process
Aug. 19 400,000 350,000 500,000 Removals subject to old rates,
inventories taken partly from
in-process and partly from raw
materials
Aug. 20 750,000 400,000 450,000 Removals subject to old rates,
inventories taken from raw
materials
Aug. 21 1,300,000 700,000 550,000 Removals subject to old rates,
inventories taken from raw
materials
Aug. 22 850,000 300,000 400,000 Removals of 850,000 liters of
Unleaded Premium Gasoline,
254,640 liters of Regular
Gasoline and 379,680 liters of
Kerosene are subject to old
rates and the rest are subject to
new tax rates
Aug. 23 650,000 450,000 500,000 Removals of 320,000 liters of

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 36
Unleaded Premium Gasoline
are subject to old tax rates and
all the rest are subject to new
tax rates
Aug. 24 500,000 300,000 200,000 Removals are all subject to new
tax rates

SECTION 11. Applicability of Regulations on Petroleum Products and

Minerals and Mineral Products. — The provisions of Revenue Regulations Nos.
13-77, 7-90 and 13-94, particularly on the manner of payment of excise tax,
verification, recording and monitoring of production and removals, and such other
administrative provisions in so far as applicable are hereby adopted to form part of
these Regulations.

SECTION 12. Penalties. — Any violation of these Regulations shall be

subject to the pertinent penalties prescribed under Title X of the National Internal
Revenue Code, as amended.

SECTION 13. Repealing Clause. — All regulations, rulings, orders or

portions thereof which are inconsistent with the provisions of these regulations are
hereby revoked and/or modified accordingly.

SECTION 14. Effectivity. — These Regulations shall take effect upon

the initial implementation of automatic oil pricing mechanism pursuant to Section
14 of RA No. 8180.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 37
June 6, 1996

REVENUE REGULATIONS NO. 07-96

SUBJECT : Prescribing the Use of the Redesigned/New Forms in the

Filing of Tax and Information Returns/Declarations and
Applications for Registration and Permit

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. Scope. — In line with the computerization program of

the Bureau and pursuant to Sections 4 and 16 in relation to Section 245 all of
the National Internal Revenue Code (NIRC), as amended, these regulations are
hereby promulgated prescribing the use of the following redesigned/new forms in
the filing of tax and information returns/declarations and applications for
registration and permit.

OLD REDESIGNED/ FORM NAME

FORM NO. NEW FORM NO.

2319A 0605 Payment Form (Formerly Authority

to Accept Payment)

750AV 1600 Monthly Remittance Return Of

Internal Revenue Taxes Withheld
On Government Money Payments

1743w 1601 Monthly Remittance Return Of

Income Taxes Withheld

1745 1602 Quarterly Remittance Return Of

Final Income Taxes Withheld (On
Interest Paid On Deposits And
Yield On Deposits
Substitutes/Trusts/Etc).

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 38
1743IR 1604 Annual Information Return Of
Income Tax Withheld On
Compensation, Expanded And
Final Withholding Taxes

1701-W 1606 Withholding Tax Remittance

Return — For Transactions
Involving Motor Vehicles & Real
Property Not Subject To Capital
Gains Tax (Including Taxable And
Exempt)

1701A 1700 Annual Income Tax Return (For

Individuals Earning Purely
Compensation Income)

1701 1701 Annual Income Tax Return (For

Self-Employed, Professionals,
Estates and Trusts)

1701Q 1701Q Quarterly Income Tax Return For

Self-Employed, Professionals,
Estates & Trusts

1702 1702 Annual Income Tax Return (For

Corporations and Partnerships)

1702Q 1702Q Quarterly Income Tax Return (For

Corporations and Partnerships)

1701C 1703 Annual Income Tax Return (For

Non-Resident Citizens)

1701E/A 1706 Capital Gains Tax Return — For

Real Property Transactions
(Including Taxable & Exempt)

1701E-2 1707 Capital Gains Tax Return (For

Transactions Involving Shares Of
Stock Not Traded Through The
Local Stock Exchange)

NEW 1701AIF-1 Account Information Form For

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 39
Self-Employed & Professionals

NEW 1701AIF-2 Account Information Form For

Estates & Trusts (Engaged in Trade
or Business)

NEW 1702AIF-1 Account Information Form For

Corporations and Partnerships

NEW 1702AIF-2 Account Information Form For

General Professional Partnerships

NEW 1702AIF-3 Account Information Form For

Exempt Organizations

1805 1800 Donor's Tax Return

1801 1801 Estate Tax Return

NEW 1900 Application For Authority To Use

Loose Leaf/Computerized Books
Of Accounts

1556-A 1901 Application For Registration (For

Self-Employed, Professionals,
Estates/Trusts)

NEW 1902 Application For Registration (For

Individuals Earning Purely
Compensation Income,
OCWs/Other Non Resident
Citizens and One Time Taxpayers)

1556-A 1903 Application For Registration (For

Corporations/GOCCs and
Partnerships)

1556-A 1904 Application For Registration (For

Government Agencies & LGUs)

NEW 1905 Application For Registration

Information Update (For
Updating/Cancelling Registration

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 40
Or Replacement Of Lost TIN
Card/Certificate Of Registration)

1953A 1906 Application For Authority To Print

Receipts and Invoices

NEW 1907 Application For Permit To Use

Cash Register Machines

NEW 2000 Documentary Stamp Tax

Declaration

NEW 2200 Excise Tax Return

NEW 2201 Alcohol Products and Fermented

Liquor

NEW 2202 Tobacco Products

NEW 2203 Petroleum Products

NEW 2204 Miscellaneous Articles and Non-

Essential Goods

NEW 2205 Minerals and Mineral Products

NEW 2206 Attachment To The Details Of

Computation Of Excise Tax Due
On Minerals and Mineral Products

NEW 2207 Attachment To The Details Of

Computation Of Excise Tax Due
On Excisable Articles

NEW 2208 Attachment To The Details Of

Computation Of Excise Tax Due
On Lubricating Oils & Greases

NEW 2221 Official Register Book (Raw

Material Consumption Summary)

NEW 2222 Schedule Of Production For

Excisable Products

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 41
NEW 2223 Excise Tax Reconciliation —
Stocktaking Exceptions/Return
Adjustments

NEW 2224 Excise Tax Reconciliation —

Stocktaking Exceptions/Return
Adjustments Reports (Attachment
To The Details Of Computation Of
Excise Tax Due On Excisable
Articles)

NEW 2225 Excise Tax Reconciliation —

Stocktaking Exceptions/Return
Adjustments Reports (Attachment
To The Details of Computation of
Excise Tax Due on Minerals and
Mineral Products)

1701B 2304 Certificate Of Income Payment Not

Subject To Withholding Tax

W-4 2305 Exemption Certificate (For

Individuals)

1743-2 2306 Certificate Of Final Income Tax

Withheld

1743-750 2307 Certificate Of Creditable Tax

Withheld At Source

W2 2316 Certificate Of Income Tax

Withheld On Compensation

2550M 2550M Monthly Value-Added Tax

Declaration

2550Q 2550Q Quarterly Value-Added Tax Return

2531 2551 Quarterly Percentage Tax Return

NEW 2552 Percentage Tax Return (For

Transaction Involving Shares Of

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 42
Stock Listed and Traded Through
The Local Stock Exchange Or
Through Initial and/or Secondary
Public Offering)
SECTION 2. Requirements. — All persons, natural or juridical, who
are within the jurisdiction of any of the following Revenue District Offices, to wit:

RDO No. 30 — Binondo

RDO No. 32 — Quiapo, San Miguel, Sta. Mesa, Sampaloc
RDO No. 33 — Ermita, Intramuros, Malate
RDO No. 52 — Parañaque
RDO No. 81 — Cebu North District

which are designated as pilot areas for the roll-out of the eight re-engineered
computerized systems on July 1, 1996, to wit:

Registration System
Returns Processing System
Returns Compliance System
Accounts Receivable System
Taxpayer Accounting System
Case Monitoring System
Audit System and
Collection and Bank Reconciliation System

are required to use the corresponding prescribed redesigned and new forms in the
filing of tax and information returns/declaration forms pursuant to the pertinent
provisions of the NIRC, as amended.

All other taxpayers not within the jurisdiction of the "Pilot Areas" shall
continue to use the corresponding old forms in the filing of their tax
returns/declarations/forms and in the payment of the internal revenue taxes due if
any, in accordance with the existing provisions of the NIRC, as amended, and
implementing rules and regulations.

SECTION 3. Account Information Form. — The respective duly

accomplished Account Information Forms (AIF Nos. 1701AIF-1, 1701AIF-2,
1702AIF-1, 1702AIF-2 and 1702AIF-3) which shall contain the information lifted
from certified balance sheets, profit and loss statements and other relevant
statements shall accompany the income tax return to be filed in accordance with

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 43
Section 232, in relation to Section 16(h) both of the NIRC, as amended, and
implementing rules and regulations.

Taxpayers concerned are still required to keep the audited Financial

Statement duly certified by an independent Certified Public Accountant.

SECTION 4. Registration/Taxpayer Record Update (TRU). — All

taxpayers, including individuals receiving purely compensation and/or mixed
income, single proprietors, professionals engaged in the practice of profession,
government agencies and instrumentalities including government owned or
controlled corporations, shall register and/or update their registration record using
the NEW Registration Forms (1901, 1902, 1903, 1904 and 1905) as the case may
be, and file the same in accordance with the regulations to be promulgated by the
Secretary of Finance upon recommendation of the Commissioner.

SECTION 5. Place of Filing. — The return/declaration/form shall be

accomplished and shall still be filed in triplicate with, and the payment of tax due,
if any, made to the proper venue prescribed under existing laws, rules and
regulations.

SECTION 6. Repealing Clause. — The provisions of existing revenue

regulations and issuances inconsistent herewith are hereby repealed, amended, or
modified accordingly.

SECTION 7. Effectivity Clause. — These regulations shall take effect

fifteen (15) days after publication in any newspaper of general circulation in the
Philippines.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 44
March 13, 1996

REVENUE REGULATIONS NO. 06-96

SUBJECT : Amendments to Revenue Regulations No. 1-87

Designating Personnel of Government Offices as
Withholding Agents and Fixing Official Responsibilities, in
Relation to Executive Order No. 651.

TO : All internal revenue officers and others concerned.

Pursuant to the provisions of Section 245 of the National Internal

Revenue Code, in relation to EO 651 as implemented by Revenue Regulations No.
1-87, these regulations amend Section 2(c) of said regulations.

SECTION 1. Section 2, paragraph c, of Revenue Regulations No. 1-87

is amended to read as follows:

"Section 2. Officers required to deduct and withhold.

(c) Any public officer or employee presently charged with the

responsibility to deduct, withhold and remit taxes on compensation,
expanded and final withholding taxes as well as government money
payments on percentage, franchise, etc. and value added taxes but who does
not qualify under these regulations, shall be promptly replaced by qualified
officers or employees and their designation submitted to the Commissioner
of Internal Revenue thru the Revenue District Office where the government
office is located, within the period prescribed in Section 2(b) of Revenue
Regulations No. 1-87.

SECTION 2. Repealing Clause. — All existing rules and regulations

or parts thereof which are not consistent with the provision of these regulations are
hereby revoked.

SECTION 3. Effectivity. — These regulations shall take effect

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 45
immediately.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommended by:

LIWAYWAY VINZONS-CHATO
Commissioner

February 20, 1996

REVENUE REGULATIONS NO. 05-96

SUBJECT : Amendment to the Consolidated Value-Added tax

Regulations

TO : All Internal Revenue Officers Concerned

Pursuant to the provisions of Section 245 and 4 of the National

Internal Revenue Code (NIRC), as amended, in relation to the provisions of
Executive Order No. 273, as amended by Republic Act No. 7716, this
Regulation is hereby promulgated to implement Section 102 of Title IV of the
NIRC, as amended.

SECTIONS 4.102-2 (b) (2) and 4.103-1 (B) (c) of Revenue

Regulations No. 7-95 are hereby amended to read as follows:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 46
Section 4.102-2 (b) (2) — "Services other than processing,
manufacturing or repacking for other persons doing business outside the
Philippines for goods which are subsequently exported, as well as services
by a resident to a non-resident foreign client such as project studies,
information services, engineering and architectural designs and other similar
services, the consideration for which is paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of
the BSP."

Section 4.103-1 (B) (c) — "Sale or importation of agricultural and

marine food products in their original state, except importation of meat,
livestock and poultry of a kind generally used as or yielding or producing
foods for human consumption; and breeding stock and genetic materials
therefor. However, importation of meat from a WTO (World Trade
Organization) member shall be exempt from VAT."

xxx xxx xxx

"Polished and/or husked rice, corn grits and locally produced raw
cane sugar and ordinary salt shall be considered as agricultural food products
in their original state. Imported raw cane sugar, if originating from the
territory of a WTO member, shall also be considered as agricultural food
product in their original state."

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 47
February 29, 1996

REVENUE REGULATIONS NO. 04-96

SUBJECT : Amending Revenue Regulations No. 4-89 Requiring

Banks, Financial Institutions, Non-Bank Financial
Intermediaries, and Insurance Companies to File a
Monthly Information Return for Documentary Stamp Taxes
Paid

TO : All Banks, Financial Institutions, Non-Bank Financial

Intermediaries, Insurance Companies, Internal Revenue
Officers and Others Concerned

SECTION 1. Scope. — Pursuant to Section 245 in relation to

Section 4 of the National Internal Revenue Code (NIRC), as amended, these
regulations are hereby promulgated amending Revenue Regulations No. 4-89,
requiring Banks, Financial Institutions, Non-Bank Financial Intermediaries, and
Insurance Companies to file a monthly information return for documentary stamp
taxes paid.

SECTION 2. Requirements. — Every Bank, Financial Institution,

Non-Bank Financial Intermediary and Insurance Company doing business in the
Philippines shall file a monthly information return under a BIR Form as may be
prescribed by the Commissioner of Internal Revenue concerning its payment/s of
documentary stamp taxes during the month showing, among others, the kind or
class of taxable documents for which the documentary stamp taxes were paid, the
amount of documentary stamp taxes paid thereon, the official receipt evidencing
payment and the date/s of payment thereof.

This return shall be accomplished and filed in duplicate and shall be signed
jointly by the Company's President and Treasurer, subject to penalties of perjury.

When both parties to a document enjoy exemption from documentary stamp

tax pursuant to a special law and therefore no tax shall be due thereon, the monthly
information return shall nonetheless be filed by both parties, indicating, among
others, the special law granting the tax exemption.

SECTION 3. When and where to file. — The information return

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 48
prescribed in Section 2 hereof shall be filed within ten (10) days following the
close of the month covered by the aforesaid return.

The same shall be filed with the Revenue District Office having jurisdiction
over the place where the Head Office or Principal Office of the company is located
and registered.

SECTION 4. Penalty Clause. — Failure to file the aforesaid

information return or failure to file the same within the time herein prescribed shall
be punishable as provided for under Section 274, NIRC.

SECTION 5. Repealing Clause. — The provisions of Revenue

Regulations No. 4-89 and any revenue issuance inconsistent herewith are hereby
repealed, amended, or modified accordingly.

SECTION 6. Effectivity Clause. — These regulations shall take effect

fifteen (15) days after publication in the Official Gazette or in any newspaper of
general circulation.

The initial monthly information return to be filed as required under these

regulations shall cover the month immediately following the month when these
regulations became effective.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

(5)

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 49
February 13, 1996

REVENUE REGULATIONS NO. 03-96

SUBJECT : Implementing Rules and Guidelines on the Tax

Administration Development Fund

TO : All Internal Revenue Officials and Others Concerned

SECTION 1. Purpose. — These regulations are hereby promulgated to

implement the provisions of Section 18 of Republic Act No. 7716 creating a Tax
Administration Development Fund (TADF).

SECTION 2. Definition of Terms. — For purposes of these

regulations, the following definition of words and phrases is hereby adopted:

2.1 VAT Collections — refers to the actual internal revenue

collections of the BIR from Value Added Taxes (VAT).

2.2 Increase in VAT Collections — refers to the actual incremental

collections of the BIR between the immediately preceding year
(e.g., 1995) and the year prior to it (e.g., 1994), as reflected in
the final version of the Cash Operations Report of the Bureau of
the Treasury (BTR).

SECTION 3. Source and Expenditures of the TADF —

3.1. Source — The TADF shall be created out of five (5%) percent
of the increase in VAT collections in a given year over that of
the immediately preceding year, starting in 1995 and annually
thereafter for a period of four (4) years.

In case there is no increase in VAT collections, no

amount shall accrue to the Fund.

The Fund shall be treated as receipts automatically

appropriated in 1995. Thereafter, the amount accruing to the
Fund shall be incorporated in the General Appropriations Act.

3.2. Expenditures — All amounts accruing to this Fund shall be

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 50
used for the effective implementation of the Expanded VAT
Law; provided, however, that no part of the Fund shall be used
for the purchase of vehicles, the payment of salaries and
incentives, creation of regular positions, and construction of
buildings and offices.

The unutilized balance of the Fund at the end of the year, if any, shall be
retained by the BIR and shall be available for obligation for the purpose specified.

SECTION 4. Availment of the Fund —

4.1 Within one hundred twenty (120) days after the end of the
calendar year, the BIR shall:

4.1.1 Submit to the Secretary of Finance a VAT Collection

Report showing the actual internal revenue collections
from VAT for the immediately preceding year and that
of the previous year, the increase in VAT collections,
and the actual amount accruing to the Fund, supported by
a certification from the BTR as to the actual revenue
collections of the BIR from VAT for the pertinent years.

4.1.2 Submit a request for a special budget to the Department

of Budget & Management (DBM) for the release of
funds. This request shall be supported by a certification
of the Department of Finance on the actual internal
revenue collections of the BIR from VAT for the
applicable years as well as the certification cited in
Section 4.1.1.

4.2 The BIR shall submit a report to the Secretary of Finance on the
utilization and status of the fund, copy furnished the DBM.

SECTION 5. Accounting Entries —

The accounting entries to be followed in the implementation of these

Revenue Regulations shall be in accordance with existing accounting and auditing
rules and regulations.

SECTION 6. Effectivity —

These Regulations shall take effect immediately.

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 51
ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommended by:

LIWAYWAY VINZONS-CHATO
Commissioner

February 12, 1996

REVENUE REGULATIONS NO. 02-96

SUBJECT : Prescribing the Issuance of Plastic Taxpayer Identification

Number (TIN) Card and Charging of the Cost Thereof to
the Taxpayers

TO : All Internal Revenue Officers and Others Concerned

SECTION 1. Scope. — Pursuant to the provisions of Section 236 in

relation to Sections 4 and 245 of the National Internal Revenue Code and
Section 54, Chapter 12, Book IV of Executive Order No. 292, these
regulations are hereby promulgated to prescribe the requirements for the issuance
of plastic Taxpayer Identification Number (TIN) Cards with security features as
part of the Tax Computerization Project of the Bureau of Internal Revenue (BIR).

SECTION 2. Coverage. — All taxpayers required to make, render

or file a return, statement or other document with the BIR shall apply for the
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 52
issuance of the plastic TIN Card. These include all taxpayers with TIN Cards
already issued under the old system and new taxpayers required to apply for the
TIN Card.

SECTION 3. Description of the TIN Card. — The plastic TIN

Card shall contain a computer digitized image (taxpayer picture or company logo),
TIN number, name of taxpayer or company, birthdate/date of incorporation and
signature of taxpayer (natural or juridical).

SECTION 4. Collection of the Cost of the TIN Card. — The

actual cost of the TIN Card shall be charged and collected by the BIR directly from
the taxpayer concerned.

SECTION 5. Reports. — The concerned Regional Data Center shall

make a report containing, among others, the number of TIN Cards issued to
taxpayers and such other information as may be necessary.

SECTION 6. Penalty. — Unauthorized production of the plastic

TIN cards by any person shall be subject to criminal prosecution under Articles
171 and 172 of the Revised Penal Code.

SECTION 7. Transitory Provisions. — Existing procedures in the

issuance of TIN and/or TIN Cards shall continue to be followed in Revenue
District Offices which are not yet covered by the implementation of the issuance of
plastic TIN Cards or until such time that the plastic TIN Card issuance shall have
been fully integrated.

SECTION 8. Repealing Clause. — All rules and regulations or parts

thereof inconsistent with the provisions of these regulations are hereby amended
accordingly.

SECTION 9. Effectivity. — These regulations shall take effect

immediately.

ROBERTO F. DE OCAMPO
Secretary
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 53
Commissioner of Internal Revenue

(6)

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, implementing
Republic Act No. 7643, allocating fifty percent (50%) of the National taxes
collected under Sections 100, 102, and 112 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:

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 54
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

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 55
========

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 shall 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
Department of Finance

Recommending Approval:

LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 56
Endnotes

1 (Popup - Popup)
EO 937-1984

2 (Popup - Popup)
RA 7686

3 (Popup - Popup)
Annex A
Annex B

4 (Popup - Popup)
Annex A

5 (Popup - Popup)
RA 7716

6 (Popup - Popup)
RA 7643

Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 57